DHI GROUP, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this report. See also our consolidated financial statements and the notes thereto and the section entitled “Note Concerning Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2022. Information contained herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include, without limitation, information concerning our possible or assumed future financial condition, liquidity and results of operations, including expectations (financial or otherwise), our strategy, plans, objectives, expectations (financial or otherwise) and intentions, and growth potential. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to: our ability to execute our tech-focused strategy; write-offs of goodwill, tradename and intangible assets; competition from existing and future competitors; changes in the recruiting and career services business and technologies, and the development of new products and services; failure to develop and maintain our reputation and brand recognition; failure to increase or maintain the number of customers who purchase recruitment packages; failure to attract qualified professionals or grow the number of qualified professionals who use our websites; inability to successfully integrate future acquisitions or identify and consummate future acquisitions; misappropriation or misuse of our intellectual property, claims against us for intellectual property infringement or the failure to enforce our ownership or use of intellectual property; failure of our businesses to attract, retain and engage users; unfavorable decisions in proceedings related to future tax assessments; taxation risks in various jurisdictions for past or future sales; significant downturn not immediately reflected in our operating results; our indebtedness and the potential inability to borrow funds under our Credit Agreement (as defined below); our ability to incur additional debt; covenants in our Credit Agreement; the development and use of artificial intelligence; failure to timely and efficiently scale and adapt our existing technology and network infrastructure; capacity constraints, systems failures or breaches of network security; the usefulness of our candidate profiles; decrease in user engagement; Internet search engine methodologies and their impact on our search result rankings; failure to halt the operations of websites that aggregate our data, as well as data from other companies; our reliance on third-party data hosting facilities; compliance with laws and regulations concerning collection, storage and use of professionals’ professional and personal information; U.S. regulation of the internet; a review of strategic alternatives may occur from time to time and the possibility that such review will not result in a transaction; loss of key executives and technical personnel and our ability to attract and retain key executives, including our CEO; increases in the unemployment rate, cyclicality or downturns in the United States or worldwide economies or the industries we serve, labor shortages, or job shortages; litigation related to infringement or other claims regarding our services or content; our ability to defend ownership of our intellectual property; global climate change; compliance with changing corporate governance requirements and costs incurred in connection with being a public company; compliance with the continued listing standards of the New York Stock Exchange (the “NYSE”); volatility in our stock price; failure to maintain internal controls over financial reporting; results of operations fluctuating on a quarterly and annual basis; and disruption resulting from unsolicited offers to purchase the company. These factors and others are discussed in more detail below and in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, under the headings “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should keep in mind that any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws. In addition, information contained herein contains certain non-GAAP financial measures. These measures are not in accordance with, or an alternative for, measures in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). Such measures presented herein include adjusted earnings before interest, taxes, depreciation and amortization, and 18 Table of Contents items such as non-cash stock-based compensation, gain or loss on investments, and certain other income or expense items, as defined, (“Adjusted EBITDA") and Adjusted EBITDA Margin. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" for definitions of these measures as well as reconciliations to the comparable GAAP measure. Overview We are a provider of software products, online tools and services that deliver career marketplaces to candidates and employers in the United States. DHI’s brands, Dice and ClearanceJobs, enable recruiters and hiring managers to efficiently search, match and connect with highly skilled technologists in specialized fields, particularly technology and active government security clearance. Professionals find ideal employment opportunities, relevant job advice and personalized data that help manage their technologist lives. In online recruitment, we specialize in employment categories in which there has been a long-term scarcity of highly skilled, highly qualified professionals relative to market demand, specifically technologists who work in a variety of industries or have active government security clearances. Our websites serve as online two-sided marketplaces where employers and recruiters source and connect with prospective employees, and where technologists find relevant job opportunities, data and information to further their careers. Our websites offer job postings, news and content, career development and recruiting services tailored to the specific needs of the professional community that each website serves. We have been in the recruiting and career development business for over 30 years. Based on our operating structure, we have identified one reportable segment, Tech-focused, which includes the Dice and ClearanceJobs businesses and corporate related costs. The Dice and ClearanceJobs businesses and corporate related costs are aggregated into the Tech-focused reportable segment primarily because the Company does not have discrete financial information for those brands or costs. Recent Developments None. Our Revenues and Expenses We derive the majority of our revenues from customers who pay fees, either annually, quarterly or monthly, to post jobs on our websites and to access our searchable databases of resumes. Our fees vary by customer based on the number of individual users of our databases of resumes, the number and type of job postings and profile views purchased and the terms of the packages purchased. Our Company sells recruitment packages that can include access to our databases of resumes and job posting capabilities. We believe the key metrics that are material to an analysis of our businesses are our total number of Dice and ClearanceJobs recruitment package customers and the revenue, on average, that these customers generate. The tables below detail this customer data. As of March 31, Increase Percent Change Recruitment Package Customers: 2023 2022 Dice 6,171 6,249 (78) (1)% ClearanceJobs 2,078 1,928 150 8% Average Annual Revenue per Recruitment Package Customer (1) Three months ended March 31, 2023 2022 Increase Percent Change Dice $ 15,672 $ 14,112 $ 1,560 11 % ClearanceJobs $ 20,520 $ 18,408 $ 2,112 11 % (1) Calculated by dividing recruitment package customer revenue by the daily average count of recruitment package customers during each month, adjusted to reflect a 30-day month. The simple average of each month is used to derive the amount for each period and then annualized to reflect 12 months. Dice had 6,171 recruitment package customers as of March 31, 2023, which was a decrease of 78, or 1%, and average annual revenue per recruitment package customer for Dice increased $1,560, or 11%, from the prior year quarter. The decrease in 19 Table of Contents recruitment package customers was due to macroeconomic conditions causing customer counts to decline while the average annual revenue per recruitment package customer increased driven by strong renewal and retention rates as our larger recurring customers continue to renew with Dice. ClearanceJobs had 2,078 recruitment package customers as of March 31, 2023 compared to 1,928 as of March 31, 2022, an increase of 8%, and average annual revenue per recruitment package customer increased $2,112, or 11%, from the prior year quarter. The increases for ClearanceJobs were due to continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site. Deferred revenue, as shown on the condensed consolidated balance sheets, reflects customer billings made in advance of services being rendered. Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts. We believe backlog to be an important measure of our business as it represents our ability to generate future revenue. A summary of our deferred revenue and backlog is as follows: Comparison to Prior Year End Comparison Year Over Year 3/31/2023 12/31/2022 Increase (Decrease) Percent Change 3/31/2022 Increase (Decrease) Percent Change Deferred Revenue $ 58,844 $ 50,864 $ 7,980 16 % $ 56,786 $ 2,058 4 % Contractual commitments not invoiced 65,389 66,391 (1,002) (2) % 49,262 16,127 33 % Backlog (1) $ 124,233 $ 117,255 $ 6,978 6 % $ 106,048 $ 18,185 17 % (1) Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts. Backlog at March 31, 2023 increased $7.0 million and $18.2 million from December 31, 2022 and March 31, 2022, respectively. The increase in backlog compared to December 31, 2022 and March 31, 2022 is due to the strong technology recruitment market driving bookings growth at both Dice and ClearanceJobs, a focus on signing multi-year contracts, and the Company's ongoing investments in sales and marketing. The first quarter of each year is generally the largest bookings quarter of the year, also contributing to the growth from December 31, 2022. To a lesser extent, we also generate revenue from advertising on our various websites or from lead generation and marketing solutions provided to our customers. Advertisements include various forms of rich media and banner advertising, text links, sponsorships, and custom content marketing solutions. Lead generation information utilizes advertising and other methods to deliver leads to customers. The Company continues to evolve and present new software products and features to attract and engage qualified professionals and match them with employers. Our ability to grow our revenues will largely depend on our ability to grow our customer bases in the markets in which we operate by acquiring new customers while retaining a high proportion of the customers we currently serve, and to expand the breadth of services our customers purchase from us. We continue to make investments in our business and infrastructure to help us achieve our long-term growth objectives, such as the innovative products in the table below. Product Releases 2023 2022 Dice Invite To Apply, Dice Matchscore on Jobs Dice New Job Apply Flow, Dice TalentSearch Time Zone Search, Dice TalentSearch Auto Talent Alerts, Dice iOS App Messaging ClearanceJobs Expressed Interest, ClearanceJobs Enhanced Employer Profile ClearanceJobs Multi-Factor Authentication, ClearanceJobs Live Video, ClearanceJobs Scheduled Broadcast Messages Other material factors that may affect our results of operations include our ability to attract qualified professionals that become engaged with our websites and our ability to attract customers with relevant job opportunities. The more qualified professionals that use our websites, the more attractive our websites become to employers and advertisers, which in turn makes them more likely to become our customers, resulting positively on our results of operations. If we are unable to continue to attract qualified professionals to engage with our two-sided marketplaces, our customers may no longer find our services attractive, which could have a negative impact on our results of operations. Additionally, we need to ensure that our websites remain relevant in order 20 Table of Contents to attract qualified professionals to our websites and to engage them in high-value tasks, such as posting resumes and/or applying for jobs. The largest components of our expenses are personnel costs and marketing and sales expenditures. Personnel costs consist of salaries, benefits, and incentive compensation for our employees, including commissions for salespeople. Personnel costs are categorized in our statement of operations based on each employee’s principal function. Personnel costs incurred during the application development stage of internal use software and website development are recorded as fixed assets and amortized to depreciation expense in the statement of operations over the estimated useful life of the asset. Marketing expenditures primarily consist of online advertising, brand promotion and lead generation to employers and job seekers. Critical Accounting Estimates There have been no material changes to our critical accounting estimates as compared to the critical accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022 Revenues Three Months Ended March 31, Increase Percent Change 2023 2022 (in thousands, except percentages) Dice (1) $ 26,910 $ 24,634 $ 2,276 9 % ClearanceJobs 11,710 9,700 2,010 21 % Total revenues $ 38,620 $ 34,334 $ 4,286 12 % (1) Includes Dice and Career Events For the three months ended March 31, 2023 we experienced an increase in revenue of $4.3 million, or 12%. Revenue at Dice increased $2.3 million, or 9%, compared to the same period in 2022 due to strong renewal and retention rates. Revenues for ClearanceJobs increased $2.0 million, or 21%, as compared to the same period in 2022, primarily driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site. Cost of Revenues Three Months Ended March 31, Increase Percent Change 2023 2022 (in thousands, except percentages) Cost of revenues $ 4,912 $ 4,099 $ 813 20 % Percentage of revenues 12.7 % 11.9 % Cost of revenues increased $0.8 million, or 20%, driven by an increase of $0.7 million from higher compensation related costs, primarily from higher headcount, partially offset by an increase in capitalized labor of $0.1 million, which decreases operating expenses. Operational costs, including the amortization of cloud computing costs, increased by $0.2 million. Product Development Expenses Three Months Ended March 31, Increase Percent Change 2023 2022 (in thousands, except percentages) Product development $ 4,694 $ 3,942 $ 752 19 % Percentage of revenues 12.2 % 11.5 % 21 Table of Contents Product development expenses increased $0.8 million, or 19%, driven by an increase of $1.1 million from higher compensation related costs, primarily from higher headcount, partially offset by an increase in capitalized labor of $0.3 million, which decreases operating expenses. Operational costs, including consulting, decreased by $0.1 million. Sales and Marketing Expenses Three Months Ended March 31, Increase Percent Change 2023 2022 (in thousands, except percentages) Sales and marketing $ 16,060 $ 13,941 $ 2,119 15 % Percentage of revenues 41.6 % 40.6 % Sales and marketing expenses increased $2.1 million, or 15% from the same period in 2022. This increase was driven by a $1.9 million increase in compensation related costs from higher headcount and quota attainment versus sales plan and a $0.3 million increase in operational costs, including Company events, consulting and travel and entertainment. The increase was partially offset by $0.1 million decrease in discretionary marketing expenses. General and Administrative Expenses Three Months Ended March 31, Increase Percent Change 2023 2022 (in thousands, except percentages) General and administrative $ 8,208 $ 7,766 $ 442 6 % Percentage of revenues 21.3 % 22.6 % General and administrative expenses increased $0.4 million, or 6% from the prior year. The increase was driven by a $0.7 million increase in stock-based compensation. The increase in compensation expense is primarily due to higher achievement against targets related to the Company's PSUs. See also Note 12 of the notes to condensed consolidated financial statements. The increase was partially offset by a $0.2 million decrease in compensation related costs from lower headcount. Depreciation Three Months Ended March 31, Increase Percent Change 2023 2022 (in thousands, except percentages) Depreciation $ 4,173 $ 3,958 $ 215 5 % Percentage of revenues 10.8 % 11.5 % Depreciation expense increased $0.2 million, or 5%, compared to the same period in 2022. The increase was driven by higher capitalized internal development costs throughout 2022 and in the first quarter of 2023, which increased depreciation in the first quarter of 2023. Operating Income Three Months Ended March 31, Decrease Percent Change 2023 2022 (in thousands, except percentages) Revenue $ 38,620 $ 34,334 $ 4,286 12 % Operating income (loss) 573 628 (55) (9) % Operating margin 1.5 % 1.8 % Operating income for the three months ended March 31, 2023 was $0.6 million, a positive margin of 1.5%, compared to operating income of $0.6 million, a positive margin of 1.8%, for the same period in 2022, a decrease of $0.1 million. The decrease in operating income and percentage margin was driven by higher operating costs as the Company invests in its product and sales and marketing, primarily through higher headcount in those areas, for future growth. The decrease was partially offset by higher revenues. 22 Table of Contents Income from Equity Method Investment Three Months Ended March 31, Increase Percent Change 2023 2022 (in thousands, except percentages) Income from equity method investment $ 171 $ 155 $ 16 10 % Percentage of revenues 0.4 % 0.5 % During the three months ended March 31, 2023 and 2022, the Company recorded $0.2 million of income related to its proportionate share of eFC's net income. The Company records its proportionate share of eFC's net income three months in arrears. Interest Expense and Other Three Months Ended March 31, Increase Percent Change 2023 2022 (in thousands, except percentages) Interest expense and other $ 798 $ 245 $ 553 226 % Percentage of revenues 2.1 % 0.7 % Interest expense and other increased from the same period in 2022, primarily due to higher debt outstanding on our revolving credit facility during the current period and higher interest rates. Income Taxes Three Months Ended March 31, 2023 2022 (in thousands, except percentages) Income (loss) before income taxes $ (54) $ 538 Income tax benefit (514) (763) Effective tax rate 951.9 % (141.8) % Our effective tax rate for the three months ended March 31, 2023 and 2022 differed from the U.S. statutory rate due to tax benefits of $0.5 million and $0.8 million, respectively, from the vesting of share-based compensation awards. Earnings per Share Three Months Ended March 31, 2023 2022 (in thousands, except per share amounts) Net Income $ 460 $ 1,301 Weighted-average shares outstanding - basic 43,886 44,702 Weighted-average shares outstanding - diluted 45,240 47,170 Diluted earnings per share $ 0.01 $ 0.03 Diluted earnings per share was $0.01 and $0.03 for the three months ended March 31, 2023 and 2022, respectively. The decrease was driven by lower operating income and an increase in interest expense in the current year. 23 Table of Contents Non-GAAP Financial Measures We have provided certain non-GAAP financial information as additional measures for our operating results. These measures are not in accordance with, or an alternative for, measures in accordance with U.S. GAAP and may be different from similarly titled non-GAAP measures reported by other companies. We believe the presentation of non-GAAP measures, such as Adjusted EBITDA and Adjusted EBITDA Margin, provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures used by management to measure operating performance. Management uses Adjusted EBITDA and Adjusted EBITDA Margin as performance measures for internal monitoring and planning, including preparation of annual budgets, analyzing investment decisions and evaluating profitability and performance comparisons between us and our competitors. The Company also uses these measures to calculate amounts of performance based compensation under the senior management incentive bonus program. Adjusted EBITDA represents net income plus (to the extent deducted in calculating such net income) interest expense, income tax expense, depreciation and amortization, and items such as non-cash stock-based compensation expense, losses resulting from certain dispositions outside the ordinary course of business including prior negative operating results of those divested businesses, certain write-offs in connection with indebtedness, impairment charges with respect to long-lived assets, expenses incurred in connection with an equity offering or any other offering of securities by the Company, extraordinary or non-recurring non-cash expenses or losses, losses from equity method investments, transaction costs in connection with the credit agreement, deferred revenues written off in connection with acquisition purchase accounting adjustments, write-off of non-cash stock-based compensation expense, severance and retention costs related to dispositions and reorganizations of the Company, and losses related to legal claims and fees that are unusual in nature or infrequent, minus (to the extent included in calculating such net income) non-cash income or gains, including income from equity method investments, interest income, business interruption insurance proceeds, and any income or gain resulting from certain dispositions outside the ordinary course of business, including prior positive operating results of those divested businesses, and gains related to legal claims that are unusual in nature or infrequent. Adjusted EBITDA Margin is computed as Adjusted EBITDA divided by Revenues. We also consider Adjusted EBITDA and Adjusted EBITDA Margin, as defined above, to be important indicators to investors because they provide information related to our ability to provide cash flows to meet future debt service, capital expenditures, working capital requirements, and to fund future growth. We present Adjusted EBITDA and Adjusted EBITDA Margin as supplemental performance measures because we believe that these measures provide our Board of Directors (the "Board"), management and investors with additional information to measure our performance, provide comparisons from period to period by excluding potential differences caused by variations in capital structures (affecting interest expense) and tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and to estimate our value. We understand that although Adjusted EBITDA and Adjusted EBITDA Margin are frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our liquidity or results as reported under GAAP. Some limitations are: • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt; • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect any cash requirements for such replacements; and • Other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures. To compensate for these limitations, management evaluates our liquidity by considering the economic effect of excluded expense items independently, as well as in connection with its analysis of cash flows from operations and through the use of 24 Table of Contents other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analysis. Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of our financial performance under GAAP and should not be considered as an alternative to revenue, operating income, net income, net income margin, cash provided by operating activities, or any other performance measures derived in accordance with GAAP as a measure of our profitability or liquidity. A reconciliation of Adjusted EBITDA for the three months ended March 31, 2023 and 2022 follows (in thousands): Three Months Ended March 31, Dollars 2023 2022 Reconciliation of Net Income to Adjusted EBITDA: Net income $ 460 $ 1,301 Interest expense 798 245 Income tax benefit (514) (763) Depreciation 4,173 3,958 Non-cash stock-based compensation 2,887 2,235 Income from equity method investment (171) (155) Severance and related costs 421 109 Adjusted EBITDA $ 8,054 $ 6,930 Reconciliation of cash provided by operating activities to Adjusted EBITDA Net cash provided by operating activities $ 11 $ 9,218 Interest expense 798 245 Amortization of deferred financing costs (36) (37) Income tax benefit (514) (763) Deferred income taxes 848 1,823 Change in accrual for unrecognized tax benefits (60) (93) Change in accounts receivable 4,153 3,820 Change in deferred revenue (7,981) (10,640) Severance and related costs 421 109 Changes in working capital and other 10,414 3,248 Adjusted EBITDA $ 8,054 $ 6,930 A reconciliation of Adjusted EBITDA Margin for the three months ended March 31, 2023 and 2022 follows (in thousands): Three Months Ended March 31, 2023 2022 Revenues $ 38,620 $ 34,334 Net income $ 460 $ 1,301 Net income margin (1) 1 % 4 % Adjusted EBITDA $ 8,054 $ 6,930 Adjusted EBITDA Margin (1) 21 % 20 % (1) Net income margin and Adjusted EBITDA Margin are calculated by dividing the respective measure by that period's revenues. 25 Table of Contents Liquidity and Capital Resources Cash Flows A summary of our cash flows for the three months ended March 31, 2023 and 2022 follows (in thousands): Three Months Ended March 31, 2023 2022 Cash from operating activities $ 11 $ 9,218 Cash used in investing activities $ (4,833) $ (4,091) Cash from (used in) financing activities $ 7,184 $ (1,701) We have financed our operations primarily through cash provided by operating activities and borrowings under our revolving credit facility. At March 31, 2023, we had cash of $5.4 million compared to $3.0 million at December 31, 2022. Liquidity Our principal internal sources of liquidity are cash, as well as the cash flow that we generate from our operations. In addition, we had $54.0 million in borrowing capacity under our $100.0 million Credit Agreement, as defined below, at March 31, 2023, subject to certain availability limits including our consolidated leverage ratio, which generally limits borrowings to 2.5 times annual Adjusted EBITDA levels, as defined in the Credit Agreement. We believe that our existing cash, cash generated from our continuing operations and available borrowings under our Credit Agreement will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and the foreseeable future thereafter. However, it is possible that one or more lenders under the Credit Agreement may refuse or be unable to satisfy their commitment to lend to us, we may violate one or more of our covenants or financial ratios contained in our Credit Agreement or we may need to refinance our debt and be unable to do so. In addition, our liquidity could be negatively affected by a decrease in demand for our products and services and the ability of our customers to pay for current or future services. We may also make acquisitions and may need to raise additional capital through future debt financings or equity offerings to the extent necessary to fund such acquisitions, which we may not be able to do on a timely basis or on terms satisfactory to us or at all. Operating Activities Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, amortization, changes in deferred tax assets and liabilities, stock-based compensation, income from equity method investments, gain or impairments on investments, and the effect of changes in working capital. Net cash flows from operating activities were $0.0 million and $9.2 million for the three-month periods ended March 31, 2023 and 2022, respectively. Cash inflow from operations is driven by earnings and is dependent on the amount and timing of payments to vendors and employees and billings to and cash collections from our customers. Cash provided by operating activities during the 2023 period decreased $9.2 million compared to the same period of 2022 due to higher overall headcount, the timing of bonus payments, and the timing of payments to vendors and billings to and cash collections from our customers. Investing Activities Cash used in investing activities during the three-month period ended March 31, 2023 was $4.8 million compared to $4.1 million used in the same period of 2022. Cash used in investing activities in the three-month period ended March 31, 2023 increased from comparable 2022 period due to higher purchases of fixed assets, which is primarily comprised of capitalized development costs, as the Company continues to invest in its products. Financing Activities Cash used in financing activities during the three-month ended March 31, 2023 was $7.2 million and was driven by $16.0 million of net proceeds on long-term debt and offset by $8.8 million, net, related to share repurchases. Cash used in financing activities during the three-month period ended March 31, 2022 was $1.7 million and was driven by $10.0 million of net proceeds on long-term debt and $11.7 million related to share repurchases. 26 Table of Contents Financing and Capital Requirements Credit Agreement We have a $100 million revolving credit facility, which matures June 2027, with $ 46.0 million of borrowings on the facility at March 31, 2023, leaving $ 54.0 million available for future borrowings, subject to the terms of the Credit Agreement. Borrowings under the Credit Agreement denominated in U.S. dollars bear interest, payable at least quarterly, at the Company’s option, at the Secured Overnight Financing Rate ("SOFR") or a base rate, plus a margin. Borrowings under the credit agreement denominated in pounds sterling, if any, bear interest at the Sterling Overnight Index Average ("SONIA") rate plus a margin. The margin ranges from 2.00% to 2.75% on SOFR and SONIA loans and 1.00% to 1.75% on base rate loans, determined by the Company's most recent consolidated leverage ratio, plus an additional spread of 0.10%. The Company incurs a commitment fee ranging from 0.35% to 0.50% on any unused capacity under the revolving loan facility, determined by the Company's most recent consolidated leverage ratio. Assuming an int eres t rate of 6.90 % (the rate in effect on March 31, 2023) on our current borrowings, interest payments are expected to be $2.4 million from April 1, 2023 to December 31, 2023, $3.2 million in each of 2024, 2025 and 2026 and $1.6 million in 2027. The Credit Agreement contains various customary affirmative and negative covenants and also contains certain financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio. As of March 31, 2023, the Company was in compliance with all of the financial covenants under the Credit Agreement. Refer to Note 9 in the notes to the condensed consolidated financial statements and Item 3. "Quantitative and Qualitative Disclosures about Market Risk - Interest Rate Risk." Contractual Obligations The Company has operating leases for corporate office space and certain equipment. The leases have terms from one year to eight years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option. No leases include options to purchase the leased property. As of March 31, 2023, the value of our lease right-of-use asset was $6.1 million and the value of our lease liability was $8.0 million. See note 5 to the condensed consolidated financial statements for further information. We make commitments to purchase advertising from online vendors, which we pay for on a monthly basis. We have no significant long-term obligations to purchase a fixed or minimum amount with these vendors. Other Capital Requirements As of March 31, 2023, we recorded approximately $0.8 million of unrecognized tax benefits as liabilities, and we are uncertain if or when such amounts may be settled. Related to the unrecognized tax benefits considered permanent differences, we have also recorded a liability for potential penalties and interest. Included in the balance of unrecognized tax benefits at March 31, 2023 are $0.8 million of tax benefits that would affect the effective tax rate if recognized. The Company believes it is reasonably possible that as much as $0.2 million of its unrecognized tax benefits may be recognized in the next 12 months. The Board previously approved a stock repurchase program that permits the Company to repurchase its common stock. As of March 31, 2023, the value of shares available to be purchased under the current plan was $ 8.2 million. Management has discretion in determining the conditions under which shares may be purchased from time to time. See note 11 of the notes to the condensed consolidated financial statements for further information. We anticipate capital expenditures for the year ending December 31, 2023 to be approximately $20 million to $22 million. The increase over prior periods is due to the additional investments in the development of new products and features and leasehold improvements. We intend to use operating cash flows to fund capital expenditures. Cyclicality The labor market and certain of the industries that we serve have historically experienced short-term cyclicality. However, we believe that online career websites and marketplaces continue to provide economic and strategic value to the labor market and industries that we serve. Any slowdown in recruitment activity that occurs could negatively impact our revenues and results of operations. For instance, the COVID-19 pandemic resulted in a slowdown of recruiting activity in 2020, which negatively impacted our business. Alternatively, a decrease in the unemployment rate or a labor shortage, including as a result of an increase in job turnover, 27 Table of Contents generally means that employers (including our customers) are seeking to hire more individuals, which would generally lead to more job postings and database licenses and have a positive impact on our revenues and results of operations. Based on historical trends, improvements in labor markets and the need for our services generally lag behind overall economic improvements. Additionally, there has historically been a lag from the time customers begin to increase purchases of our recruitment services and the impact to our revenues due to the recognition of revenue occurring over the length of the contract, which can be several months to over a year. From time to time, we see market slowdowns, which can lead to lower demand for recruiting technologists and security cleared professionals.