What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-08 compared with 2023-02-10 · 97 added, 297 removed, 345 unchanged (53% of the section changed)

16 unchanged sentences

As a result of the eFC separation, the eFC business was deconsolidated from the Company's consolidated financial statements as of June 30, 2021 and is reflected as a discontinued operation.

During the third quarter of 2023, the Company sold a portion of its ownership in eFC reducing its total interest in eFC from 40% to 10%.

We have been in the recruiting and career development business for over 30 years.

2 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 served 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 Revenues and Expenses

16 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 6,311 recruitment package customers as of December 31, 2022, which was an increase of 307, or 5%, year over year and average revenue per recruitment package customer for Dice increased 7% for the year ended December 31, 2022.

The increases were driven by strong renewal rates and new business customers.

ClearanceJobs had 2,064 recruitment package customers as of December 31, 2022 compared to 1,878 as of December 31, 2022, an increase of 10%, and average revenue per recruitment package customer increased 12%.

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.

Dice had 5,492 recruitment package customers as of December 31, 2023, which was a decrease of 819, or 13%, year over year while average revenue per recruitment package customer for Dice increased 7% for the year ended December 31, 2023.

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 2,055 recruitment package customers as of December 31, 2023 compared to 2,064 as of December 31, 2022, a less than 1% decrease, and average revenue per recruitment package customer increased 11%.

The increase in average annual revenue per recruitment package customer for ClearanceJobs was 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 consolidated balance sheets, reflects customer billings made in advance of services being rendered.

9 unchanged sentences

(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 December 31, 2022 increased $24.6 million from December 31, 2021 due to the strong technology recruitment market driving bookings growth for both Dice and ClearanceJobs, investments in product, sales and marketing and a focus on signing multi-year contracts.

Backlog at December 31, 2023 decreased $9.2 million from December 31, 2022.

The decrease is primarily due to macroeconomic conditions causing lower demand for the Company's services.

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 Employer Multi-Factor Authentication, Revamped technologist onboarding, New Job Page, Dice New Job Apply Flow, Dice TalentSearch Time Zone Search, Dice TalentSearch Auto Talent Alerts, Dice iOS App Messaging

Dice Marketplace, Dice TalentSearch Social Data Refresh, Brand.io, TalentSearch Personalization, Unbiased Sourcing Mode

ClearanceJobs Company Page, ClearanceJobs Multi-Factor Authentication, ClearanceJobs Live Video, ClearanceJobs Scheduled Broadcast Messages

ClearanceJobs Meetings, ClearanceJobs Video, Team Recruiting, Shared Talent Pipelines, Quality of Use Improvements

Dice Premium Enhanced Company Profile, Dice Remote and Company Preferences, Dice Invite to Apply, Dice Matchscore on Jobs, Dice Connections, SMS Notifications, Company Search Dice Employer Multi-Factor Authentication, Revamped technologist onboarding, New Job Page, 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 Live Stream ClearanceJobs Company Page, ClearanceJobs Multi-Factor Authentication, ClearanceJobs Live Video, ClearanceJobs Scheduled Broadcast Messages

Other material factors that may affect our results of operations include, but are not limited to, our ability to attract qualified professionals that become engaged with our websites and our ability to attract customers with relevant job opportunities.

11 unchanged sentences

We based our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe are reasonable.

In many cases, we could reasonably have used different accounting policies and estimates.

In many cases, we could reasonably have used different accounting policies and

In some cases, changes in the accounting estimates are reasonably likely to occur from period to period.

6 unchanged sentences

Our annual impairment test for goodwill is performed on October 1 of each year.

The annual impairment test for the Tech-focused reporting unit performed as of October 1, 2022 resulted in the fair value of the reporting unit being substantially in excess of the carrying value with fair value exceeding the carrying value by 154%.

The annual impairment test for the Tech-focused reporting unit performed as of October 1, 2023 resulted in the fair value of the reporting unit being substantially in excess of the carrying value.

Results for the Tech-focused reporting unit for the fourth quarter of 2023 and estimated future results as of December 31, 2023 approximate the projections used in the October 1, 2023 analysis.

1 unchanged sentence

Therefore, no quantitative impairment test was performed as of December 31, 2023.

During the third quarter of 2020, the impacts of the COVID-19 pandemic continued and the Company's projected earnings and cash flows for the Tech-focused reporting unit declined as compared to the projections used in the March 31, 2020 analysis.

As a result, the Company performed an interim impairment analysis as of September 30, 2020, which resulted in the Company recording an impairment charge of $23.6 million during the three month period ended September 30, 2020.

No impairment was recorded during the years ended December 31, 2023, 2022 and 2021.

3 unchanged sentences

It is reasonably possible that changes in judgments, assumptions and estimates the Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the goodwill of the Tech-focused reporting unit to become impaired.

In addition, a future decline in the overall market conditions, uncertainty related to COVID-19, political instability, and/or changes in the Company’s market share could negatively impact the estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable future.

In addition, a future decline in the overall market conditions, political instability, and/or changes in the Company’s market share could negatively impact the estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable future.

The determination of whether or not goodwill has become impaired is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results, such as forecasted revenues and earnings before interest, taxes, depreciation and amortization margins and capital expenditure requirements.

13 unchanged sentences

The brand has a significant presence in online recruiting and career development services.

Considering the recognition and the awareness of the Dice brand in the talent acquisition and staffing services market, Dice’s long operating history and the intended use of the Dice brand, the remaining useful life of the Dice trademark, trade name and domain name was determined to be indefinite.

Considering the recognition and the awareness of the Dice brand in the talent acquisition and staffing services market, Dice’s long operating

history and the intended use of the Dice brand, the remaining useful life of the Dice trademark, trade name and domain name was determined to be indefinite.

We determine whether the carrying value of our recorded indefinite-lived acquired intangible asset is impaired on an annual basis or more frequently if indicators of potential impairment exist.

6 unchanged sentences

No impairment was recorded during the years ended December 31, 2022 and 2021.

During the first quarter of 2020, because of the initial impacts of the COVID-19 pandemic and its potential impact on future earnings and cash flows that are attributable to the Dice trademarks and brand name, the Company performed an interim impairment analysis.

As a result of the analysis, the Company recorded an impairment charge of $7.2 million during the first

quarter of 2020.

During the third quarter of 2020, the impacts of the COVID-19 pandemic continued and the Company's projected earnings and cash flows that are attributable to the Dice trademarks and brand name declined as compared to the projections used in the March 31, 2020 analysis.

As a result, the Company performed an interim impairment analysis as of September 30, 2020, which resulted in the Company recording an additional impairment charge of $8.0 million during the three month period ended September 30, 2020.

The projections utilized in the October 1, 2022 analysis included increasing revenues at rates approximating industry growth projections.

The Company’s ability to achieve these revenue projections may be impacted by, among other things, uncertainty related to COVID-19, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers.

The October 1, 2022 analysis included operating margins during the year ending December 31, 2022 that approximate operating margins for the year ended December 31, 2021 and then increasing modestly.

The Company’s ability to achieve the projections used in the October 1, 2023 analysis may be impacted by, among other things, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers.

If future cash flows that are attributable to the Dice trademarks and brand name are not achieved, the Company could realize an impairment in a future period.

2 unchanged sentences

Fair values are determined using a profit allocation methodology which estimates the value of the trademark and brand name by capitalizing the profits saved because the company owns the asset.

We consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements.

Changes in our strategy, uncertainty related to COVID-19, and/or changes in market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets.

We consider factors such as historical performance, anticipated market conditions, revenues, operating expense trends and capital expenditure requirements.

Changes in our strategy and/or changes in market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets.

If projections are not achieved, the Company could realize an impairment in the foreseeable future.

6 unchanged sentences

Results of Operations

A discussion of our comparison between 2023 and 2022 is presented below.

A discussion of the changes in our results of operations between the years ended December 31, 2022 and December 31, 2021 has been omitted from this Annual Report on Form 10-K but may be found in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 10, 2023, which is available free of charge on the SEC’s website at www.sec.gov and our corporate website (www.dhigroupinc.com).

Our historical financial information discussed in this Annual Report has been derived from the Company’s financial statements and accounting records for the years ended December 31, 2023 and 2022.

1 unchanged sentence

For the year ended December 31,

(in thousands) 2022 2021 2020 2022 vs 2021 2021 vs 2020

(in thousands) 2023 2022 2023 vs 2022

Revenues $ 151,878 $ 149,680 $ 2,198

5 unchanged sentences

Depreciation 16,915 17,487 (572)

Impairment of intangible assets — — 15,200 — (15,200)

Impairment of goodwill — — 22,607 — (22,607)

Impairment of right-of-use asset — 1,919 — (1,919) 1,919

Restructuring 2,417 — 2,417

Total operating expenses 145,590 146,181 (3,008)

3 unchanged sentences

For the year ended December 31,

2022 2021 2020

Revenues 100.0% 100.0%

5 unchanged sentences

Depreciation 11.1 % 11.7 %

Impairment of intangible assets — % — % 13.7 %

Impairment of goodwill — % — % 20.3 %

Impairment of right-of-use asset — % 1.6 % — %

Restructuring 1.6 % — %

Total operating expenses 95.9 % 97.7 %

11 unchanged sentences

We experienced an increase in revenue of $2.2 million, or 1.5%.

Revenue at Dice increased by $20.7 million, or 24.0%, compared to the same period of 2021 due to improvements in renewal rates and new business activity along with increasing customer counts, which drives additional revenue.

Revenue at Dice decreased by $4.4 million, or 4.1%, compared to the same period of 2022 as bookings performance in 2022 delivered revenue for Dice early in 2023 but macroeconomic conditions throughout 2023 drove lower new business activity and lower activity with Dice's non-annual products.

Revenues for ClearanceJobs increased by $6.6 million, or 15.4%, as compared to the same period of 2022, driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

4 unchanged sentences

Percentage of revenues 13.0 % 11.8 %

Cost of revenues increased by $2.5 million, or 16.7%, driven by an increase of $1.8 million from higher compensation related costs, primarily from higher headcount.

Operational costs, including the amortization of cloud computing and consulting costs, increased by $0.7 million.

Cost of revenues increased by $2.2 million, or 12.4%, driven by an increase of $1.2 million from higher compensation related costs and $1.0 million in operational costs, primarily related to the amortization of cloud computing costs.

Product Development Expenses

3 unchanged sentences

Percentage of revenues 11.7 % 11.8 %

Product development expenses increased $1.7 million, or 10.3%, driven by an increase of $5.0 million from higher compensation related costs, primarily due to higher headcount, partially offset by an increase in capitalized labor of $3.8 million, which decreases operating expenses.

Additionally, operational costs, including consulting, education and training costs, increased by $0.5 million.

Product development expenses increased $0.1 million, or 0.6%, driven by a decrease of $1.2 million in compensation related costs, primarily related to lower headcount and bonus expense, which was offset by lower capitalized labor of $1.3 million as compared to the prior year period, which increases operating expenses.

Sales and Marketing Expenses

Year Ended December 31, Increase Percent

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 37.8 % 39.7 %

Sales and marketing expenses increased $15.7 million, or 35.8%, from the same period in 2021.

The increase was primarily driven by $9.4 million increase in compensation related costs due to increased headcount and higher quota attainment versus sales plan, and a $5.1 million increase in discretionary marketing expenses supporting the growth in the sales team, and a $1.1 million increase in operational costs, including company events, credit card fees, and hotel and travel.

Sales and marketing expenses decreased $1.9 million, or 3.3%, from the same period in 2022.

The decrease was primarily driven by a $3.0 million decrease in discretionary marketing expenses, which was partially offset by an increase of $0.8 million in operational costs, primarily discretionary marketing expenses.

General and Administrative Expenses

Year Ended December 31, Increase Percent

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 20.6 % 22.7 %

General and administrative costs increased $5.5 million or 19.1%, primarily due to an increase in compensation related costs of $3.7 million, which includes a $1.8 million increase in stock-based compensation.

The increase in compensation expense is primarily due to higher achievement against targets for the Company's bonus and stock-based compensation plans.

Operational costs, including bad debt expense and consulting increased by $1.8 million.

Year Ended December 31, Increase Percent

General and administrative costs decreased $2.8 million or 8.2%, from prior year.

The decrease was driven by a $1.9 million decrease in compensation related costs, primarily due to lower bonus expense in 2023, and a decrease of $1.0 million in other operating costs including recruiting, software, and insurance costs.

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenues 11.1 % 11.7 %

Depreciation expense increased $1.1 million or 7.0% from the same period in 2021, in connection with increasing internal development costs driving higher depreciation.

Impairment of right-of-use asset

Year Ended December 31, Decrease Percent

Depreciation expense decreased $0.6 million or 3.3% from the same period in 2022.

The decrease was driven by the timing of assets being placed into service.

Restructuring

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Impairment of right-of-use asset $ — $ 1,919 $ (1,919) (100.0) %

Restructuring $ 2,417 $ — $ 2,417 — %

Percentage of revenues 1.6 % — %

During the third quarter of 2021, due to the continuing impacts of COVID-19 on the real estate markets and its impact on the future cash flows attributable to its right-of-use ("ROU") assets, the Company performed an impairment analysis of a sublease within its ROU assets.

As a result, the Company recorded an impairment charge of $1.9 million during the third quarter of 2021, which did not reoccur in 2022.

During 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%.

Proceeds from settlement

Year Ended December 31, Increase Percent

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

6 unchanged sentences

Revenue $ 151,878 $ 149,680 $ 2,198 1.5 %

Operating income (loss) 5,560 (1,752) $ 7,312 (417.4) %

Operating income 6,288 5,560 $ 728 13.1 %

Percentages of revenues 4.1 % 3.7 %

Operating income for the year ended December 31, 2022 was $5.6 million, a margin of 3.7%, compared to operating loss of $1.8 million, a negative margin of 1.5%, for the same period in 2021.

The increase in operating income and improved percentage margin was driven by higher revenues and proceeds from settlement, partially offset by higher operating costs as the Company invests in its product and sales and marketing for future growth.

Operating income for the year ended December 31, 2023 was $6.3 million, a margin of 4.1%, compared to operating income of $5.6 million, a margin of 3.7%, for the same period in 2022.

The increase in operating income and improved percentage margin was driven by higher revenues and a decrease in operational costs, as discussed above.

Income from equity method investment

Year Ended December 31, Increase Percent

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

3 unchanged sentences

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

The increase of $1.4 million is primarily due to the 2022 period reflecting a full year of activity.

See note 7 of the notes to consolidated financial statements for additional information.

Impairment of investment

3 unchanged sentences

Percentage of revenues 0.2 % 1.5 %

During the third quarter of 2022, the Company recognized a $2.3 million loss related to an impairment of a subordinated convertible promissory note as further described in Note 7 of the notes to consolidated financial statements.

Gain on investment

Year Ended December 31, Decrease Percent

During the years ended December 31, 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 of the notes to consolidated financial statements for additional information.

Gain on investments

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Gain on investment $ 320 $ 1,198 $ (878) (73.3) %

Gain on investments $ 614 $ 320 $ 294 91.9 %

Percentage of revenues 0.4 % 0.2 %

During the second quarter of 2022, the Company recognized a $0.3 million gain from the sale of its 40% common share interest in Rigzone.

The gain on investment of $1.2 million for the year ended December 31, 2021 relates to a minority interest representing less than 1% of the common stock of a technology company that became publicly traded during the first quarter of 2021 after its initial public offering.

The Company sold 100% of this investment during the third quarter of 2021.

See also Note 7 of the notes to consolidated financial statements.

During the year ended December 31, 2023, the Company recognized a $0.6 million gain from a partial sale of its 40% common share interest in eFC.

During the year ended December 31, 2022, the Company recognized a $0.3 million gain from the sale of its 40% common share interest in Rigzone.

See note 7 of the notes to consolidated financial statements for additional information.

Interest Expense and Other

3 unchanged sentences

Percentage of revenues 2.3 % 1.1 %

Interest expense and other increased by $0.9 million, or 136.9%, from the same period in 2021 due to higher debt outstanding under the Credit Agreement during the current period and higher interest rates.

Interest expense and other increased by $1.9 million, or 120.4%, from the same period in 2022 due to higher debt outstanding on our revolving credit facility during 2023 and higher interest rates.

Year Ended December 31,

(in thousands, except

Income (loss) before income taxes $ 3,597 $ (1,031)

Income tax benefit (579) (629)

Income before income taxes $ 3,622 $ 3,597

Income tax expense (benefit) 131 (579)

Effective tax rate 3.6 % (16.1) %

A reconciliation between the income tax expense (benefit) at the federal statutory rate and the reported income tax benefit is summarized as follows:

A reconciliation between the income tax expense at the federal statutory rate and the reported income tax expense (benefit) is summarized as follows:

Year Ended December 31,

Federal statutory rate $ 760 $ 755

Gain on sale of businesses or investments — (251)

Loss on sale of investments (22,881) —

Expiration of capital loss carryforward 4,680 —

Stock-based compensation (399) (1,130)

6 unchanged sentences

Other 12 (50)

Income tax benefit $ (579) $ (629)

Income tax expense (benefit) $ 131 $ (579)

Our effective income tax rate was 3.6% and (16.1)% for the years ended December 31, 2023 and 2022, respectively.

The 2022 tax rate differed from the federal statutory rate primarily because of a tax benefit related to the vesting of stock-based compensation;

tax credits for research and development;

and an increase in the valuation allowance associated with an investment.

The 2021 tax rate differed from the federal statutory rate primarily because of the utilization of a capital loss carryforward to offset a gain on an investment;

deduction limitations on executive compensation;

and tax credits for research and development.

Income (loss) from discontinued operations, net of tax

For the year ended December 31, Increase Percent

(in thousands, except percentages)

Loss from discontinued operations, net of tax $ — $ (29,340) $ 29,340 (100) %

Percentage of revenues — % (24.5) %

During the second quarter of 2021, the Company transferred majority ownership of its eFC business to eFC management and has recorded it as a discontinued operation.

As a result, the Company experienced a loss from discontinued operations, net of tax, of $29.3 million.

The loss was comprised of $28.1 million related to the reclassification of currency translation adjustments and $5.2 million from the removal of eFC's net assets.

The loss was partially offset by the recording of an equity method investment of $3.6 million and eFC's earnings during the period.

The 2023 tax rate differed from the federal statutory rate primarily because of permanent book/tax differences in basis related to the sale of investments, the expiration of a capital loss carryforward, a tax benefit related to the vesting of stock-based compensation, deduction limitations on executive compensation, tax credits for research and development, and an increase in the valuation allowance for capital loss carryforwards.

The 2022 tax rate differed from the federal statutory rate primarily because of a tax benefit related to the vesting of stock-based compensation, tax credits for research and development, and an increase in the valuation allowance associated with an investment.

Earnings per Share

2 unchanged sentences

per share amounts)

Income (loss) from continuing operations $ 4,176 $ (402)

Loss from discontinued operations, net of tax — (29,340)

Net income (loss) $ 4,176 $ (29,742)

Net income $ 3,491 $ 4,176

Weighted-average shares outstanding - basic 43,571 44,274

Weighted-average shares outstanding - diluted 44,496 46,533

Diluted earnings (loss) per share - continuing operations $ 0.09 $ (0.01)

Diluted earnings (loss) per share - discontinued operations $ — $ (0.63)

Diluted earnings (loss) per share $ 0.09 $ (0.64)

Diluted earnings (loss) per share from continuing operations was $0.09 and $(0.01) for the years ended December 31, 2022 and 2021, respectively.

The improvement in the 2022 period was primarily driven by higher revenues, partially offset by higher operating costs as the Company invests in its product and sales and marketing for future growth.

The prior year loss was driven by an ROU asset impairment and higher depreciation expense partially offset by gain on investment.

Diluted earnings (loss) per share was $0.09 and $(0.64) for the years ended December 31, 2022 and 2021, respectively.

The prior year loss per share was driven by the loss from discontinued operations.

Comparison of Years Ended December 31, 2021 and 2020

Year Ended December 31, Increase (Decrease) Percent

(in thousands, except percentages)

$ 86,257 $ 82,190 $ 4,067 4.9 %

ClearanceJobs 33,646 28,977 4,669 16.1 %

Total revenues $ 119,903 $ 111,167 $ 8,736 7.9 %

(1) Includes Dice and Career Events

We experienced an increase in revenue of $8.7 million, or 7.9%.

Revenue at Dice increased by $4.1 million, or 4.9%, compared to the same period in 2020 due to improvements in renewal rates and new business activity along with consistently increasing customer counts during 2021, which drives additional revenue in future periods.

Revenues for ClearanceJobs increased by $4.7 million, or 16.1%, as compared to the same period of 2020, driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

Cost of Revenues

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Cost of revenues $ 15,088 $ 14,286 $ 802 5.6 %

Percentage of revenues 12.6 % 12.9 %

Cost of revenues increased by $0.8 million, or 5.6%, driven by an increase of $0.4 million associated with web hosting and cloud computing, consistent with the Company's investment in its products and tools to enhance sales processes.

The Company also experienced a $0.4 million increase in headcount related costs.

Product Development Expenses

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Product development $ 16,020 $ 14,887 $ 1,133 7.6 %

Percentage of revenues 13.4 % 13.4 %

Product development expenses increased $1.1 million or 7.6%.

Within product development, the Company experienced a decrease in capitalized labor of $0.7 million, which increased expense, along with an increase in consulting costs of $0.3 million.

Sales and Marketing Expenses

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Sales and marketing $ 43,701 $ 39,693 $ 4,008 10.1 %

Percentage of revenues 36.4 % 35.7 %

Sales and marketing expenses increased $4.0 million, or 10.1%, from the same period in 2020.

The increase was primarily driven by $2.4 million increase in compensation related costs due to increased headcount and higher quota attainment versus sales plan, and a $1.5 million increase in discretionary marketing expenses as customer recruitment activity rebounded.

General and Administrative Expenses

Year Ended December 31, Increase Percent

(in thousands, except percentages)

General and administrative $ 28,583 $ 26,625 $ 1,958 7.4 %

Percentage of revenues 23.8 % 24.0 %

General and administrative costs increased $2.0 million or 7.4%, primarily due to an increase in compensation related costs of $2.9 million with business performance driving achievement for the bonus and stock-based compensation plans.

This was partially offset by lower bad debt expense of $0.7 million.

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Depreciation $ 16,344 $ 10,259 $ 6,085 59.3 %

Percentage of revenues 13.6 % 9.2 %

Depreciation expense increased $6.1 million or 59.3%, from the same period in 2020, in connection with increasing internal development costs during 2019 and 2020 that were then placed in service, primarily in late 2020, and depreciated.

Internal development costs are reflected as purchases of fixed assets in the consolidated statements of cash flows.

Impairment of intangible assets

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

Impairment of intangible assets $ — $ 15,200 $ (15,200) (100.0) %

Percentage of revenues — % 13.7 %

The Company has an indefinite-lived acquired intangible asset related to the Dice trademarks and brand name.

During the first and third quarters of 2020, because of the impacts of the COVID-19 pandemic, the Company performed an interim impairment

analysis of the Dice trademarks and brand name.

As a result of the analysis, the Company recorded an impairment charge of $15.2 million during the nine months ended September 30, 2020.

See also Note 9 of the notes to consolidated financial statements.

Impairment of goodwill

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

Impairment of goodwill $ — $ 22,607 $ (22,607) (100.0) %

Percentage of revenues — % 20.3 %

During the third quarter of 2020, because of the impacts of COVID-19 pandemic, the Company performed an interim impairment analysis of goodwill.

As a result of the analysis, the Company recorded an impairment charge of $22.6 million in the third quarter of 2020.

See also Note 10 of the notes to consolidated financial statements.

Impairment of right-of-use asset

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Impairment of right-of-use asset $ 1,919 $ — $ 1,919 — %

Percentage of revenues 1.6 % — %

During the third quarter of 2021, due to the continuing impacts of COVID-19 on the real estate markets and its impact on the future cash flows attributable to its ROU assets, the Company performed an impairment analysis of a sublease within its ROU assets.

As a result, the Company recorded an impairment charge of $1.9 million during the third quarter of 2021.

Operating Income (Loss)

Year Ended December 31, Increase (Decrease) Percent

(in thousands, except percentages)

Revenue $ 119,903 $ 111,167 $ 8,736 7.9 %

Operating income (loss) $ (1,752) $ (32,390) $ 30,638 (94.6) %

Percentage of revenues (1.5) % (29.1) %

Operating loss for the year ended December 31, 2021 was $1.8 million, a negative margin of 1.5%, compared to operating loss of $32.4 million, a negative margin of 29.1%, for the same period in 2020.

The decrease in operating loss and improved percentage margin was primarily driven by non-cash impairments of goodwill and intangible assets of $37.8 million during the 2020 period, partially offset by increased investments in sales and marketing, higher depreciation, and the ROU asset impairment of $1.9 million in the third quarter of 2021.

Income from equity method investment

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

Income from equity method investment $ 190 $ — $ 190 — %

Percentage of revenues 0.2 % — %

During the fourth quarter of 2021, the Company recorded $0.2 million of income related to its proportionate share of eFC's net income.

Impairment of Investment

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Impairment of investment $ — $ (2,002) $ 2,002 (100.0) %

Percentage of revenues — % (1.8) %

During the first quarter of 2020, due to the impacts from the COVID-19 pandemic, the Company determined the value of its 7.6% interest in a leading tech skills assessment company to be zero.

Accordingly, the Company recorded an impairment charge of $2.0 million during the first quarter of 2020.

Gain on investment

Year Ended December 31, Increase Percent

(in thousands, except percentages)

Gain on investment $ 1,198 $ — $ 1,198 — %

Percentage of revenues 1.0 % — %

The gain on investment of $1.2 million relates to a minority interest representing less than 1% of the common stock of a technology company that became publicly traded during the first quarter of 2021 after filing an initial public offering.

The Company sold 100% of this investment during the third quarter of 2021.

See also Note 7 of the notes to consolidated financial statements.

Interest Expense and Other

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

Interest expense $ 667 $ 831 $ (164) (19.7) %

Percentage of revenues 0.6 % 0.7 %

Interest expense and other decreased by $0.2 million, or 19.7%, from the same period in 2020.

The decrease in interest expense was primarily due to lower weighted average debt outstanding during the year.

The 2020 period included a $0.2 million gain recognized in the second quarter of 2020 on the sale of the Company's 20% interest in BioSpace.

Year Ended December 31,

(in thousands, except

Loss before income taxes $ (1,031) $ (35,223)

Income tax benefit (629) (2,826)

Effective tax rate 61.0 % 8.0 %

A reconciliation between tax benefit at the federal statutory rate and the reported income tax benefit is summarized as follows:

Year Ended December 31,

Federal statutory rate $ (216) $ (7,397)

Gain on sale of businesses or investments (251) (42)

Stock-based compensation (84) 432

Nondeductible impairment — 5,029

State tax expense (benefit), net of federal effect 110 (514)

Change in accrual for unrecognized tax benefits (155) (216)

Executive compensation 541 323

Research and development tax credits (478) (530)

Other (96) 89

Income tax benefit $ (629) $ (2,826)

Our effective income tax rate was 61.0% and 8.0% for the years ended December 31, 2021 and 2020, respectively.

The 2021 tax rate differed from the federal statutory rate primarily because of the utilization of a capital loss carryforward to offset a gain on an investment;

deduction limitations on executive compensation;

and tax credits for research and development.

The 2020 tax rate differed from the federal statutory rate primarily because of tax deficiencies in stock-based compensation;

nondeductible impairment charges;

state tax benefits;

and tax credits for research and development.

Income (loss) from discontinued operations, net of tax

Year Ended December 31, Decrease Percent

(in thousands, except percentages)

Income (loss) from discontinued operations, net of tax $ (29,340) $ 2,382 $ (31,722) (1,331.7) %

Percentage of revenues (24.5) % 2.1 %

During the second quarter of 2021, the Company transferred majority ownership of its eFC business to eFC management and has recorded it as a discontinued operation.

As a result, the Company experienced a loss from discontinued operations, net of tax, of $29.3 million.

The loss was comprised of $28.1 million related to the reclassification of currency translation adjustments and $5.2 million from the removal of eFC's net assets.

The loss was partially offset by the recording of an equity method investment of $3.6 million and eFC's earnings during the period.

Income from discontinued operations for the year ended December 31, 2020 represents eFC's earnings during the period.

Loss per share

Year Ended December 31,

(in thousands, except

per share amounts)

Loss from continuing operations $ (402) $ (32,397)

Income (loss) from discontinued operations, net of tax (29,340) 2,382

Net loss (29,742) (30,015)

Weighted-average shares outstanding-diluted 46,333 48,278

Diluted loss per share - continuing operations (0.01) (0.67)

Diluted earnings (loss) per share - discontinued operations (0.63) 0.05

Diluted loss per share (0.64) (0.62)

Diluted loss per share from continuing operations was $0.01 and $0.67 for the years ended December 31, 2021 and 2020, respectively.

The decrease in diluted loss per share was primarily driven by the non-cash impairment charges during 2020 and

the gain on investment in the 2021 period, partially offset by the ROU asset impairment and higher depreciation expense in the 2021 period.

Diluted loss per share was $0.64 and $0.62 for the years ended December 31, 2021 and 2020, respectively.

Current year to date loss per share is primarily driven by the loss on discontinued operations.

The prior year loss per share is primarily driven by the impairment charges.

Diluted earnings per share $ 0.08 $ 0.09

Diluted earnings per share was $0.08 and $0.09 for the years ended December 31, 2023 and 2022, respectively.

The lower 2023 earnings per share was driven by slightly lower net income, partially offset by lower diluted shares outstanding.

Non-GAAP Financial Measures

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The Company also uses this measure 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, 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 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, 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, 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 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 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, and 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, 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 is frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our liquidity or results as reported under GAAP.

We understand that although Adjusted EBITDA and Adjusted EBITDA Margin is 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:

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Interest expense 3,482 1,580 748

Income tax benefit (579) (629) (2,826)

Income tax expense (benefit) 131 (579) (629)

Depreciation 16,915 17,487 16,344

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Income from equity method investment (502) (1,597) (190)

Impairment of intangible assets — — 15,200

Impairment of goodwill — — 22,607

Impairment of investment 2,300 — 2,002

Impairment of right-of-use asset — 1,919 —

Proceeds from settlement — (2,061) —

Gain on investments (614) (320) (1,198)

Impairment of right-of-use asset — — 1,919

Impairment of investment 300 2,300 —

Severance and related costs 1,167 445 1,969

Loss (income) on discontinued operations, net of tax — 29,340 (2,382)

Loss on discontinued operations, net of tax — — 29,340

Restructuring 2,417 — —

Other — — (80)

4 unchanged sentences

Amortization of deferred financing costs (145) (146) (147)

Income tax benefit (579) (629) (2,826)

Income tax expense (benefit) 131 (579) (629)

Deferred income taxes 3,301 3,800 569

4 unchanged sentences

Severance and related costs 1,167 445 1,969

Restructuring 2,417 — —

Changes in working capital and other 2,528 (7,592) 7,481

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Year Ended December 31,

2022 2021 2020

Cash from operating activities $ 21,345 $ 36,035

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Cash flows from operating activities primarily consists of net income adjusted for certain non-cash items, including depreciation, changes in deferred tax assets and liabilities, stock based compensation, impairments, and the effect of changes in working capital.

Net cash flows from operating activities were $36.0 million and $28.6 million for the years ended December 31, 2022 and 2021, respectively, an increase of $7.4 million.

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 year ended December 31, 2022 increased primarily due to strong billings to and collections from customers and the timing of certain vendor and tax payments.

Net cash flows from operating activities were $21.3 million and $36.0 million for the years ended December 31, 2023 and 2022, respectively, a decrease of $14.7 million.

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 year ended December 31, 2023 decreased as compared to

the prior year due to the amount and timing of bonus payments, of payments to vendors, and of billings to and cash collections from our customers.

Investing Activities

During the year ended December 31, 2023, cash used in investing activities was $15.3 million compared to $17.7 million of cash used in investing activities during the year ended December 31, 2022.

Cash used in investing activities during the year ended December 31, 2023 is comprised of $20.3 million of purchases of fixed assets, partially offset by $5.0 million of cash received from sale of investment.

Cash used in investing activities during the year ended December 31, 2022 is primarily comprised of $18.0 million of 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 year ended December 31, 2021 is comprised of $3.2 million of cash transferred to eFC related to the transfer of ownership in the prior year period, $3.0 million of cash paid for an investment as described in Note 7 of the notes to consolidated financial statements, and $14.3 million of fixed assets purchases, which is primarily comprised of capitalized development costs, partially offset by cash proceeds of $1.2 million from the sale of an investment.

Financing Activities

Cash used in financing activities during the year ended December 31, 2022 was $16.9 million primarily due to cash uses of $23.4 million, net, related to share repurchases and $0.5 million from financing costs paid, partially offset by $7.0 million of net proceeds on long-term debt.

Cash used during the year ended December 31, 2021 was $15.4 million and was driven by $18.4 million of share repurchases, partially offset by $3.0 million of net borrowings on long-term debt.

Comparison of Years Ended December 31, 2021 and 2020

Operating Activities

Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, changes in deferred tax assets and liabilities, stock based compensation, impairments, and the effect of changes in

working capital.

Net cash flows from operating activities were $28.6 million and $18.7 million for the years ended December 31, 2021 and 2020, respectively, an increase of $9.9 million.

Cash inflow from operations is driven by earnings and is dependent on the amount and timing of billings and cash collection from our customers.

Cash provided by operating activities during the year ended December 31, 2021 increased primarily due to strong billings to and collections from customers.

Investing Activities

During the year ended December 31, 2021, cash used in investing activities was $19.3 million compared to $15.9 million of cash used in investing activities during the year ended December 31, 2020.

Cash used by investing activities during the year ended December 31, 2021 increased from the comparable 2020 period due to cash transferred to the eFC business and cash paid for investment, partially offset by lower internal development costs, primarily driven by lower headcount and development activities dedicated to the transfer of the eFC business, partially offset by higher proceeds from sale of investments.

Financing Activities

Cash used in financing activities during the year ended December 31, 2021 was $15.4 million primarily due to $3.0 million of net borrowings on long-term debt and $18.4 million of repurchases of common stock.

Cash used during the year ended December 31, 2020 was $0.5 million primarily due to $10.5 million of repurchases of common stock, partially offset by $10.0 million of net borrowings on long-term debt.

Cash used in financing activities during the year ended December 31, 2023 was $4.8 million primarily due to cash uses of $12.8 million, net, related to share repurchases, partially offset by $8.0 million of net proceeds on long-term debt.

Cash used during the year ended December 31, 2022 was $16.9 million primarily due to cash uses of $23.4 million, net, related to share repurchases and $0.5 million from financing costs paid, partially offset by $7.0 million of net proceeds on long-term debt.

Financings and Capital Requirements

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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.

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 interest rate of 7.71% (the rate in effect on December 31, 2023) on our current borrowings, interest payments are expected to be $2.9 million per year in years 2024 through 2026 and $1.5 million in 2027.

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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 ten 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 December 31, 2023 the value of our lease right-of-use asset was $4.8 million and the value of our lease liability was $8.5 million.

Our recorded lease right-of-use asset and lease liability were each reduced $2.1 million as of December 31, 2022, which represents a tenant improvement allowance that is expected to be consumed in 2023.

See also Note 6 of the notes to consolidated financial statements for further information.

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

Subsequent to December 31, 2022, the Company's Board of directors announced a new stock repurchase program that permits the repurchase of up to $10 million of the Company's common stock through February 2024.

See also Note 13 of the notes to consolidated financial statements for further information.

We anticipate capital expenditures in 2024 to be approximately $15 million to $17 million.

The increase over prior periods is due to the additional investments in the development of new products and features.

We intend to use operating cash flows to fund capital expenditures.

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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 and early in 2021, 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 databases licenses and have a positive impact on our revenues and results of operations.

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 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.

1 unchanged sentence

From time to time, we see market slowdowns, which can lead to lower demand for recruiting technologists and financial and security cleared professionals.

In 2020 and early in 2021, the COVID-19 pandemic led to a reduction in recruitment activity.

If recruitment activity slows in the industries in which we operate, our revenues and results of operations could be negatively impacted.

2 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis