What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-01 compared with 2023-08-02 · 141 added, 120 removed, 330 unchanged (44% of the section changed)

2 unchanged sentences

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.

9 unchanged sentences

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 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;

39 unchanged sentences

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

Professionals find ideal employment opportunities, relevant job advice and personalized data that help manage their technologist lives.

6 unchanged sentences

Recent Developments

Director Appointment

On July 26, 2023, Joseph Massaquoi, Jr.

was appointed as a member of the Board of Directors of the Company and a member of the Audit Committee.

Chief Financial Officer Transition

On August 7, 2023, Kevin Bostick resigned from his position as the Chief Financial Officer of the Company, effective September 1, 2023.

Bostick will continue to serve the Company through December 31, 2023 in order to help support a transition.

Accordingly, on August 28, 2023 the Board of Directors of the Company appointed Art Zeile, the Company’s current President and Chief Executive Officer, to also serve as Interim Chief Financial Officer while the Company searched for a permanent Chief Financial Officer.

On October 25, 2023, the Board of Directors of the Company appointed Raime Leeby Muhle, as the Company’s Chief Financial Officer, effective December 4, 2023.

Leeby Muhle will have overall responsibility for the Company’s financial organization, including financial planning, accounting, financial reporting, investor relations, treasury, internal audit and tax matters.

Our Revenue and Expenses

5 unchanged sentences

The tables below detail this customer data.

As of June 30, Increase (Decrease) Percent

As of September 30, Increase (Decrease) Percent

Recruitment Package Customers:

2 unchanged sentences

Average Annual Revenue per Recruitment Package Customer (1)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 Increase Percent

4 unchanged sentences

The simple average of each month is used to derive the amount for each period and then annualized to reflect 12 months.

Dice had 6,007 recruitment package customers as of June 30, 2023, which was a decrease of 379, or 6%, and average annual revenue per recruitment package customer for Dice increased $1,230, or 9%, from the prior year quarter.

The decrease in 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 2,069 recruitment package customers as of June 30, 2023 compared to 1,976 as of June 30, 2022, an increase of 5%, and average annual revenue per recruitment package customer increased $2,134, or 11%, from the prior year quarter.

Dice had 5,752 recruitment package customers as of September 30, 2023, which was a decrease of 657, or 10%, and average annual revenue per recruitment package customer for Dice increased $663, or 4%, from the prior year quarter.

The decrease in 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 retention rates as our larger recurring customers continue to renew with Dice.

ClearanceJobs had 2,054 recruitment package customers as of September 30, 2023 compared to 2,030 as of September 30, 2022, an increase of 1%, and average annual revenue per recruitment package customer increased $2,114, 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.

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.

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(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 June 30, 2023 increased $0.5 million and $13.6 million from December 31, 2022 and June 30, 2022, respectively.

The increase in backlog compared to December 31, 2022 and June 30, 2022 is due to the Company's focus on signing multi-year contracts.

The first quarter of each year is generally the largest bookings quarter of the year, also contributing to the growth from December 31, 2022.

Backlog at September 30, 2023 decreased $8.9 million from December 31, 2022 but increased $5.5 million from September 30, 2022.

The decrease in backlog compared to December 31, 2022 is primarily due to macroeconomic conditions causing lower demand for the Company's services.

The increase in backlog compared to September 30, 2022 is due to the Company's focus on signing multi-year contracts, partially offset by the macroeconomic conditions.

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.

5 unchanged sentences

Product Releases

Dice Premium Enhanced Company Profile, Dice Remote and Company Preferences, Dice Invite To Apply, Dice Matchscore on Jobs New Job Apply Flow, Dice TalentSearch Time Zone Search

ClearanceJobs Comments, ClearanceJobs Expressed Interest, ClearanceJobs Enhanced Employer Profile Multi-Factor Authentication, ClearanceJobs Live Video

Dice Premium Enhanced Company Profile, Dice Remote and Company Preferences, Dice Invite To Apply, Dice Matchscore on Jobs, Dice Connections Dice New Job Apply Flow, Dice TalentSearch Time Zone Search, Dice TalentSearch Auto Talent Alerts, Dice iOS App Messaging

ClearanceJobs Comments, ClearanceJobs Expressed Interest, ClearanceJobs Enhanced Employer Profile, ClearanceJobs Mobile App 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.

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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.

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.

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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 June 30, 2023 Compared to the Three Months Ended June 30, 2022

Three Months Ended June 30, Increase (Decrease) Percent

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

Three Months Ended September 30, Increase (Decrease) Percent

(in thousands, except percentages)

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(1) Includes Dice and Career Events

For the three months ended June 30, 2023 we experienced an increase in revenue of $1.5 million, or 4%.

For the three months ended September 30, 2023, we experienced a decrease in revenue of $1.1 million, or 3%.

Revenue at Dice decreased $2.6 million, or 9%, compared to the same period in 2022 due to macroeconomic conditions driving lower new business activity and lower activity with Dice's non-annual products.

1 unchanged sentence

Cost of Revenue

Three Months Ended June 30, Increase Percent

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 13.3 % 11.8 %

Cost of revenue increased $0.8 million, or 19%, driven by an increase of $0.4 million from higher compensation related costs.

Operational costs, including the amortization of cloud computing costs and software subscriptions, increased by $0.3 million.

Cost of revenue increased $0.4 million, or 9%, driven by an increase of $0.4 million from operational costs, including the amortization of cloud computing costs and software subscriptions.

Product Development Expenses

Three Months Ended June 30, Decrease Percent

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

2 unchanged sentences

Product development expenses decreased $0.2 million, or 5% from the prior year.

The decrease was driven by a $0.6 million reduction in compensation related costs, primarily related to lower headcount and bonus expenses.

These decreases were partially offset by lower capitalized labor of $0.3 million from the prior year, which increases operating expenses.

The decrease was driven by a $1.0 million reduction in compensation related costs, primarily related to lower headcount and bonus expense.

These decreases were partially offset by lower capitalized labor of $0.7 million as compared to the prior year period, which increases operating expenses.

Sales and Marketing Expenses

Three Months Ended June 30, Increase Percent

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 37.5 % 38.9 %

Sales and marketing expenses increased $0.4 million, or 3% from the prior year.

This increase was driven by a $0.8 million increase in amortization related to capitalized contract costs and a $0.2 million increase in operational costs, including Company events and consulting.

The increase was partially offset by $0.3 million decrease in discretionary marketing expenses and $0.2 million decrease in compensation related costs, primarily related to lower headcount and bonus expense.

Sales and marketing expenses decreased $1.0 million, or 6% from the prior year.

This decrease was driven by a $0.8 million decrease in discretionary marketing expenses and a $0.5 million decrease in compensation related costs, primarily related to lower headcount and bonus expense.

The decrease was partially offset by a $0.3 million increase in operational costs, primarily consulting.

General and Administrative Expenses

Three Months Ended June 30, Decrease Percent

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

2 unchanged sentences

General and administrative expenses decreased $1.5 million, or 17% from the prior year.

The decrease was driven by a $0.6 million decrease in compensation expense, primarily related to lower headcount and bonus expense.

Three Months Ended June 30, Decrease Percent

The decrease was driven by a $0.8 million decrease in compensation related costs, primarily related to lower headcount and bonus expense, and $0.5 million decrease in stock-based compensation and a $0.2 million decrease in operational costs, including bad debt expense.

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

4 unchanged sentences

Restructuring

Three Months Ended June 30, Increase Percent

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 0.8 % — %

During the three months ended June 30, 2023, the Company recorded restructuring charges of $2.1 million as part of an organizational restructuring intended to streamline its operations, drive business objectives, reduce operating expenses and improve operating margins.

The restructuring included a reduction of the Company’s then-current workforce by approximately 10%.

There were no restructuring charges during the three months ended June 30, 2022.

During the three months ended September 30, 2023, the Company recorded restructuring charges of $0.3 million as part of an organizational restructuring intended to streamline its operations, drive business objectives, reduce operating expenses and improve operating margins.

The restructuring was announced in the second quarter of 2023 and included a reduction of the Company’s then-current workforce by approximately 10%.

There were no restructuring charges during the three months ended September 30, 2022.

Operating Income

Three Months Ended June 30, Increase (Decrease) Percent

Three Months Ended September 30, Increase (Decrease) Percent

(in thousands, except percentages)

Revenue $ 37,433 $ 38,527 $ (1,094) (3) %

Operating income (loss) (29) 905 (934) (103) %

Operating income 2,241 1,218 1,023 84 %

Operating margin 6.0 % 3.2 %

Operating income (loss) for the three months ended June 30, 2023 was approximately zero compared to operating income of $0.9 million, a positive margin of 2.4%, for the same period in 2022, a decrease of $0.9 million.

The decrease in operating income and percentage margin was primarily driven by the restructuring charges, as discussed above.

Operating income for the three months ended September 30, 2023 was $2.2 million, a positive margin of 6.0%, compared to operating income of $1.2 million, a positive margin of 3.2%, for the same period in 2022, an increase of $1.0 million.

The increase in operating income and percentage margin was primarily driven by lower operational costs during the quarter.

Income from Equity Method Investment

Three Months Ended June 30, Decrease Percent

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 0.4 % 1.5 %

During the three month periods ended June 30, 2023 and 2022, the Company recorded $0.1 million and $0.4 million, respectively, of income related to its proportionate share of eFinancialCareer's net income.

During the three month periods ended September 30, 2023 and 2022, the Company recorded $0.2 million and $0.6 million, respectively, of income related to its proportionate share of eFinancialCareer's net income.

The Company records its proportionate share of eFinancialCareer's net income three months in arrears.

See note 7 for additional information.

Gain on Investment

Three Months Ended June 30, Decrease Percent

Gain on Sale of Investment

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

Gain on Investment $ — $ 320 $ (320) (100) %

Gain on sale of investment $ 614 $ — $ 614 n/a

Percentage of revenue 1.6 % — %

During the three months ended June 30, 2022, the Company recognized a $0.3 million gain from the sale of its 40% common share interest in Rigzone.

During the three months ended September 30, 2023, the Company recognized a $0.6 million gain from sale of a portion of its investment in eFinancialCareers.

See note 7 for additional information.

Impairment of Investment

Three Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of Investment $ 300 $ 2,300 $ (2,000) (87) %

Percentage of revenue 0.8 % 6.0 %

During the three month periods ended September 30, 2023 and 2022, the Company recognized a $0.3 million and a $2.3 million, respectively, loss related to the impairment of an investment.

See note 7 for additional information.

Interest Expense and Other

Three Months Ended June 30, Increase Percent

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 2.5 % 1.2 %

Interest expense and other increased from the prior year, primarily due to higher debt outstanding on our revolving credit facility during the current period and higher interest rates.

Three Months Ended June 30,

Interest expense and other of $0.9 million increased $0.5 million, or 110%, from the prior year, primarily due to higher debt outstanding on our revolving credit facility during the current period and higher interest rates.

Three Months Ended September 30,

(in thousands, except

Income (loss) before income taxes $ 1,769 $ (938)

Income tax benefit (677) (162)

Income tax expense (benefit) 759 (12)

Effective tax rate 42.9 % 1.3 %

Our effective tax rate for the three months ended June 30, 2023, differed from the U.S.

statutory rate due to a tax benefit of $0.4 million from research tax credits.

The tax rate for the three months ended June 30, 2022, differed from the statutory rate due to tax benefits of $0.2 million from the vesting of share-based compensation awards, $0.1 million from research tax credits, and $0.1 million from the release of a valuation allowance on our capital loss carryforward.

Our effective tax rate for the three months ended September 30, 2023, differed from the U.S.

statutory rate due to tax expense of $0.1 million from deduction limitations on executive compensation and $0.1 million from a valuation allowance related to the impairment of an investment.

The tax rate for the three months ended September 30, 2022, differed from the statutory rate due to tax benefits of $0.1 million each from the vesting of share-based compensation awards and research tax credits, and due to tax expense of $0.5 million from a valuation allowance related to the impairment of an investment.

Earnings per Share

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except

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Weighted-average shares outstanding - diluted 44,324 44,190

Diluted earnings per share $ — $ 0.03

Diluted earnings per share was zero and $0.03 for the three months ended June 30, 2023 and 2022, respectively.

The decrease was primarily driven by the restructuring charges, as discussed above.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Six Months Ended June 30, Increase Percent

Diluted earnings (loss) per share $ 0.02 $ (0.02)

Diluted earnings (loss) per share was $0.02 and $(0.02) for the three months ended September 30, 2023 and 2022, respectively.

The increase was primarily driven by the gain on sale of investment and lower operational costs.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

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We experienced an increase in revenue of $4.7 million, or 4%.

Revenue at Dice increased by $1.7 million, or 3%, compared to the prior year as bookings performance in 2022 delivered revenue in the first half of 2023 while macroeconomic conditions in the first half of 2023 have driven lower new business activity and lower activity with Dice's non-annual products.

Revenue at Dice decreased by $0.8 million, or 1%, compared to the prior year as bookings performance in 2022 delivered revenue for Dice early in 2023 but macroeconomic conditions in the first nine months of 2023 have driven lower new business activity and lower activity with Dice's non-annual products.

Revenue at ClearanceJobs increased by $5.5 million, or 18%, as compared to the prior year, primarily driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

Cost of Revenue

Six Months Ended June 30, Increase Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 12.9 % 11.7 %

Cost of revenue increased $1.6 million, or 19%, driven by an increase of $1.2 million from higher compensation related costs, primarily from higher headcount.

Operational costs, including amortization of cloud computing, increased by $0.3 million.

Cost of revenue increased $2.0 million, or 16%, driven by an increase of $1.1 million from higher compensation related costs and $0.9 million in operational costs, including the amortization of cloud computing costs and software subscriptions.

Product Development Expenses

Six Months Ended June 30, Increase Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 11.6 % 11.8 %

Product development increased $0.6 million, or 7%, driven primarily by an increase of $0.6 million from higher compensation related costs.

Product development increased $0.3 million, or 2%, driven by a decrease of $0.4 million in compensation related costs, primarily related to lower headcount and bonus expense, which was offset by lower capitalized labor of $0.7 million as compared to the prior year period, which increases operating expenses.

Sales and Marketing Expenses

Six Months Ended June 30, Increase Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

2 unchanged sentences

Sales and marketing expenses increased $1.6 million, or 4% from the prior year.

The increase was driven by a $2.7 million increase in compensation related costs, including higher headcount during the periods and an increase in the amortization of capitalized contract costs as commissions from the strong bookings performance during 2022 increased the amortization of capitalized contract costs during the current period.

Also contributing to the increase was a $0.5 million increase in operational costs, including consulting, travel and entertainment, and company events.

The increase was driven by a $1.9 million increase in compensation related costs, including higher wages during the periods and an increase in the amortization of capitalized contract costs as commissions from the strong bookings performance during 2022 increased the amortization of capitalized contract costs during the current period.

Also contributing to the increase was a $0.8 million increase in operational costs, primarily consulting.

These increases were partially offset by a $1.4 million decrease in discretionary marketing expenses.

General and Administrative Expenses

Six Months Ended June 30, Decrease Percent

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

3 unchanged sentences

The decrease was driven by a $1.6 million decrease in compensation related costs, primarily due to lower bonus expense in the current period.

The decrease was partially offset by an increase in stock-based compensation of $0.5 million, which is driven by strong performance of the 2022 performance-based restricted stock units.

Six Months Ended June 30, Increase Percent

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 11.0 % 11.5 %

Depreciation expense increased $0.1 million, or 2%, from the prior year in connection with increasing capitalized development costs throughout 2022 and projects being placed into service driving higher depreciation in 2023.

Depreciation expense is consistent with the prior year.

Restructuring

Six Months Ended June 30, Increase Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 2.1 % — %

During the six months ended June 30, 2023, the Company recorded restructuring charges of $2.1 million as part of an organizational restructuring intended to streamline its operations, drive business objectives, reduce operating expenses and improve operating margins.

During the nine months ended September 30, 2023, the Company recorded restructuring charges of $2.4 million as part of an organizational restructuring intended to streamline its operations, drive business objectives, reduce operating expenses and improve operating margins.

The restructuring included a reduction of the Company’s then-current workforce by approximately 10%.

There were no restructuring charges during the six months ended June 30, 2022.

There were no restructuring charges during the nine months ended September 30, 2022.

Operating Income

Six Months Ended June 30, Increase (Decrease) Percent

Nine Months Ended September 30, Increase (Decrease) Percent

(in thousands, except percentages)

2 unchanged sentences

Operating margin 2.4 % 2.5 %

Operating income for the six months ended June 30, 2023 was $0.5 million, a positive margin of 0.7%, compared to operating income of $1.5 million, a positive margin of 2.1%, for the same period in 2022, a decrease of $1.0 million.

The decrease in operating income and lower percentage margin was driven by the restructuring charges, as discussed above.

Operating income and margin were primarily flat year over year.

Higher revenues during the nine month period ended September 30, 2023 was offset by higher operating expenses resulting in operating margin being approximately flat.

Income from Equity Method Investment

Six Months Ended June 30, Decrease Percent Change

Nine Months Ended September 30, Decrease Percent Change

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 0.4 % 1.0 %

During the six month periods ended June 30, 2023 and 2022, the Company recorded $0.3 million and $0.5 million, respectively, of income related to its proportionate share of eFC's net income.

During the nine month periods ended September 30, 2023 and 2022, the Company recorded $0.4 million and $1.1 million, respectively, of income related to its proportionate share of eFinancialCareer's net income.

The Company records its proportionate share of eFC's net income three months in arrears.

See note 7 for additional information.

Gain on Investment

Six Months Ended June 30, Decrease Percent

Gain on Sale of Investments

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Gain on investment $ — $ 320 $ (320) (100) %

Gain on sale of investments $ 614 $ 320 $ 294 92 %

Percentage of revenue 0.5 % 0.3 %

During the six months ended June 30, 2022, the Company recognized a $0.3 million gain from the sale of its 40% common share interest in Rigzone.

During the nine month period ended September 30, 2023, the Company recognized a $0.6 million gain from a partial sale of its 40% common share interest in eFinancialCareers.

During the nine month period ended September 30, 2022, the Company recognized a $0.3 million gain from the sale of its 40% common share interest in Rigzone.

See note 7 for additional information.

Impairment of Investment

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Impairment of investment $ 300 $ 2,300 $ (2,000) (87) %

Percentage of revenue 0.3 % 2.1 %

During the nine month periods ended September 30, 2023 and 2022, the Company recognized a $0.3 million and $2.3 million, respectively, loss related to the impairment of an investment.

See note 7 for additional information.

Interest Expense and Other

Six Months Ended June 30, Increase Percent

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

2 unchanged sentences

Interest expense and other increased $1.6 million, or 164%, compared to the same period in 2022, due to higher debt outstanding on our revolving credit facility during the current period and higher interest rates.

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except

Income (loss) before income taxes $ (858) $ 1,826

Income before income taxes $ 911 $ 888

Income tax benefit (432) (937)

Effective tax rate (47.4) % (105.5) %

Our effective tax rate for the six months ended June 30, 2023, differed from the U.S.

Our effective tax rate for the nine months ended September 30, 2023, differed from the U.S.

statutory rate due to tax benefits of $0.4 million from the vesting of share-based compensation awards and $0.4 million from research tax credits.

The tax rate for the six months ended June 30, 2022, differed from the statutory rate due to tax benefits of $1.0 million from the vesting of share-based compensation awards, $0.1 million from research tax credits, and $0.1 million from the release of a valuation allowance on our capital loss carryforward.

The tax rate for the nine months ended September 30, 2022, differed from the statutory rate due to tax benefits of $1.1 million from the vesting of share-based compensation awards.

Earnings (Loss) per Share

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except

4 unchanged sentences

Diluted earnings per share $ 0.03 $ 0.04

Diluted earnings per share were $0.01 and $0.06 for the six months ended June 30, 2023 and 2022, respectively.

The current year earnings per share was driven by lower operating income, primarily driven by the restructuring charges, as discussed above and an increase in interest expense in the current period.

Diluted earnings per share were $0.03 and $0.04 for the nine months ended September 30, 2023 and 2022, respectively.

The lower current period earnings per share was driven by slightly lower net income, partially offset by lower diluted shares outstanding.

Non-GAAP Financial Measures

7 unchanged sentences

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 revenue 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, restructuring charges 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 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 revenue written off in connection with acquisition purchase accounting adjustments, write-off of non-cash stock-based compensation expense, impairment of investment, severance and retention costs related to dispositions and reorganizations of the Company, restructuring charges 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 revenue.

11 unchanged sentences

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 six months ended June 30, 2023 and 2022 follows (in thousands):

Six Months Ended June 30,

A reconciliation of Adjusted EBITDA for the nine months ended September 30, 2023 and 2022 follows (in thousands):

Nine Months Ended September 30,

Reconciliation of Net Income to Adjusted EBITDA:

5 unchanged sentences

Income from equity method investment (428) (1,107)

Gain on investment — (320)

Gain on sale of investments (614) (320)

Impairment of investment 300 2,300

Severance and related costs 1,140 319

14 unchanged sentences

Adjusted EBITDA $ 26,191 $ 22,852

A reconciliation of Adjusted EBITDA Margin for the six months ended June 30, 2023 and 2022 follows (in thousands):

Six Months Ended June 30,

A reconciliation of Adjusted EBITDA Margin for the nine months ended September 30, 2023 and 2022 follows (in thousands):

Nine Months Ended September 30,

Revenue $ 114,591 $ 109,918

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Liquidity and Capital Resources

A summary of our cash flows for the six months ended June 30, 2023 and 2022 follows (in thousands):

Six Months Ended June 30,

A summary of our cash flows for the nine months ended September 30, 2023 and 2022 follows (in thousands):

Nine Months Ended September 30,

Cash from operating activities $ 13,724 $ 28,686

Cash used in investing activities $ (10,047) $ (13,073)

Cash from (used in) financing activities $ 862 $ (9,163)

Cash used in financing activities $ (2,959) $ (13,305)

We have financed our operations primarily through cash provided by operating activities and borrowings under our revolving credit facility.

At June 30, 2023, we had cash of $2.7 million compared to $3.0 million at December 31, 2022.

At September 30, 2023, we had cash of $3.7 million compared to $3.0 million at December 31, 2022.

Our principal internal sources of liquidity are cash, as well as the cash flow that we generate from our operations.

In addition, we had $57.0 million in borrowing capacity under our $100.0 million Credit Agreement, as defined below, at June 30, 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.

In addition, we had $60.0 million in borrowing capacity under our $100.0 million Credit Agreement, as defined below, at September 30, 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.

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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 $8.1 million and $19.4 million for the six-month periods ended June 30, 2023 and 2022, respectively.

Net cash flows from operating activities were $13.7 million and $28.7 million for the nine-month periods ended September 30, 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 $11.4 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.

Cash provided by operating activities during the 2023 period decreased $15.0 million compared to the same period of 2022 due to higher overall headcount during the period, including severance paid in the 2023 period related to the restructuring, the timing of bonus payments, the timing of payments to vendors and billings to and cash collections from our customers.

Investing Activities

Cash used in investing activities during the six-month period ended June 30, 2023 was $9.2 million compared to $8.2 million used in the same period of 2022.

Cash used in investing activities in the six-month period ended June 30, 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.

Cash used in investing activities during the nine-month period ended September 30, 2023 was $10.0 million compared to $13.1 million used in the same period of 2022.

Cash used in investing activities in the nine-month period ended September 30, 2023 decreased from the comparable 2022 period due to cash received from sale of investment, partially offset by higher purchases of fixed assets.

Financing Activities

Cash from financing activities during the six-month ended June 30, 2023 was $0.9 million and was driven by $13.0 million of net proceeds on long-term debt, partially offset by $12.1 million, net, related to share repurchases.

Cash used in financing activities during the six-month period ended June 30, 2022 was $9.2 million and was driven by $15.8 million related to share repurchases and $0.5 million of financing costs paid related to the Company's Credit Agreement, partially offset by $7.0 million of net proceeds on long-term debt.

Cash used in financing activities during the nine-month ended September 30, 2023 was $3.0 million and was driven by $10.0 million of net proceeds on long-term debt, partially offset by $13.0 million, net, related to share repurchases.

Cash used in financing activities during the nine-month period ended September 30, 2022 was $13.3 million and was driven by $7.0 million of net proceeds on long-term debt, and offset by $19.8 million, net, related to share repurchases and $0.5 million from financing costs paid.

Financing and Capital Requirements

Credit Agreement

We have a $100 million revolving credit facility, which matures June 2027, with $ 43.0 million of borrowings on the facility at June 30, 2023, leaving $ 57.0 million available for future borrowings, subject to the terms of the Credit Agreement.

We have a $100 million revolving credit facility, which matures June 2027, with $ 40.0 million of borrowings on the facility at September 30, 2023, leaving $ 60.0 million available for future borrowings, subject to the terms of the Credit Agreement.

Borrowings under the Credit Agreement denominated in U.S.

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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 7.52 % (the rate in effect on June 30, 2023) on our current borrowings, interest payments are expected to be $1.6 million from July 1, 2023 to December 31, 2023, $3.2 million in each of 2024, 2025 and 2026 and $1.6 million in 2027.

Assuming an int eres t rate of 7.67 % (the rate in effect on September 30, 2023) on our current borrowings, interest payments are expected to be $0.8 million from October 1, 2023 to December 31, 2023, $3.1 million in each of 2024, 2025 and 2026 and $1.5 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 June 30, 2023, the Company was in compliance with all of the financial covenants under the Credit Agreement.

As of September 30, 2023, the Company was in compliance with all of the financial covenants under the Credit Agreement.

Refer to Note 10 in the notes to the condensed consolidated financial statements and Item 3.

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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.

The leases have terms from one year to eleven 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 June 30, 2023, the value of our lease right-of-use asset was $5.6 million and the value of our lease liability was $7.5 million.

As of September 30, 2023, the value of our lease right-of-use asset was $5.1 million and the value of our lease liability was $8.0 million.

See note 6 to the condensed consolidated financial statements for further information.

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Other Capital Requirements

As of June 30, 2023, we recorded approximately $1.1 million of unrecognized tax benefits as liabilities, and we are uncertain if or when such amounts may be settled.

As of September 30, 2023, we recorded approximately $1.2 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 June 30, 2023 are $1.1 million of tax benefits that would affect the effective tax rate if recognized.

Included in the balance of unrecognized tax benefits at September 30, 2023 are $1.2 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 June 30, 2023, the value of shares available to be purchased under the current plan was $ 4.8 million.

As of September 30, 2023, the value of shares available to be purchased under the current plan was $ 4.8 million.

Management has discretion in determining the conditions under which shares may be purchased from time to time.

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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,

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 revenue and results of operations.

Alternatively, a decrease in the unemployment rate or a labor shortage, including as a result of an increase in job turnover, 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 revenue and results of operations.

Based on historical trends, improvements in labor markets and the need for our services generally lag behind overall economic improvements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis