DHI GROUP, INC. 10-K

Item 8. Financial Statements and Supplementary Data Page DHI Group, Inc. Report of Independent Registered Public Accounting Firm 52 Consolidated Financial Statements Consolidated Balance Sheets as of December 31, 2023 and 2022 55 Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 56 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021 57 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021 58 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 59 Notes to Consolidated Financial Statements 60 51 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of DHI Group, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of DHI Group, Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes, and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 52 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. Goodwill and Indefinite Long-Lived Acquired Intangible Assets – Refer to Notes 2, 9, and 10 to the financial statements Critical Audit Matter Description The Company determines whether the carrying value of recorded goodwill is impaired on an annual basis or more frequently if indicators of potential impairment exist. If the fair value of the reporting unit is less than its carrying amount, an impairment charge is recorded for the amount the carrying value exceeds the fair value. The Company determined the fair value of its reporting unit by using a combination of a discounted cash flow methodology and a market comparable method. The determination of the fair value for the Company’s reporting unit (“Tech-focused”) is judgmental and required management to make significant estimates and assumptions including forecasts of future revenue, EBITDA margin and the discount rate. The Company’s evaluation of its indefinite lived trademark and brand intangible asset (“Dice”) involves the comparison of the fair value to its carrying value. The Company determined the fair value of Dice using a relief from royalty rate valuation method. The determination of the fair value of Dice required management to make significant estimates and assumptions including forecasts of future revenue, the royalty rate and the discount rate. The goodwill balance was $128.1M as of December 31, 2023. The fair value of the reporting unit exceeded its carrying value as of the measurement date, October 1, 2023, and therefore, no goodwill impairment was recognized. The carrying value of Dice was $23.8M as of December 31, 2023.The fair value of Dice exceeded its carrying value as of the measurement date, October 1, 2023, and therefore no impairment was recognized. Given the significant estimates and assumptions management makes to estimate the fair value of the Tech-focused reporting unit and the Dice brand, performing auditing procedures to evaluate the reasonableness of management’s forecasts of revenue, EBITDA margin, the royalty rate and the discount rates required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the forecasts of future revenues, EBITDA margins and selection of the royalty and discount rates used by management to estimate the fair value of Tech-focused and Dice included the following, among others: • We tested the effectiveness of controls over the Tech-focused reporting unit and Dice trademarks and brand name impairment tests, including controls related to management’s forecasts of revenue, EBITDA margin, royalty rate and the discount rates. • We evaluated management’s ability to accurately forecast revenue growth rates and EBITDA margin by comparing actual results to management’s historical forecasts. • We evaluated the reasonableness of management’s forecasts of revenues by comparing the forecasts of revenues to external market sources. • With the assistance of our fair value specialists we evaluated the reasonableness of management’s selected long-term growth rate for revenue by comparing it to industry projections. 53 Table of Contents • With the assistance of our fair value specialists we evaluated the reasonableness of management’s selected royalty rate by comparing it to those of industry participants from external sources. • With the assistance of our fair value specialists we evaluated the reasonableness of management’s selected discount rates by computing an independent estimate of those rates and the revenue growth rate through a peer analysis. • We evaluated the reasonableness of management’s evaluation over ASC 350 qualitative impairment indicators of potential triggering events. • We evaluated the reasonableness of management’s forecasts of revenues and EBITDA through the fiscal year-end date by comparing the fourth quarter forecast to actuals. /s/ Deloitte & Touche LLP Denver, Colorado February 8, 2024 We have served as the Company's auditor since 2005. 54 Table of Contents DHI GROUP, INC. CONSOLIDATED BALANCE SHEETS As of December 31, 2023 and 2022 (in thousands, except per share data) December 31, 2023 December 31, 2022 ASSETS Current assets Cash $ 4,206 $ 3,006 Accounts receivable, net of allowance for doubtful accounts of $ 1,313 and $ 1,374 22,225 20,494 Income taxes receivable 221 — Prepaid and other current assets 4,237 4,294 Total current assets 30,889 27,794 Fixed assets, net 25,272 21,252 Capitalized contract costs 6,364 9,677 Operating lease right-of-use assets 4,759 6,581 Investments 1,918 5,646 Acquired intangible assets 23,800 23,800 Goodwill 128,100 128,100 Other assets 4,100 3,854 Total assets $ 225,202 $ 226,704 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 17,408 $ 23,818 Deferred revenue 49,463 50,121 Income taxes payable — 34 Operating lease liabilities 2,006 105 Total current liabilities 68,877 74,078 Deferred revenue 508 743 Operating lease liabilities 6,543 8,428 Long-term debt, net 38,000 30,000 Deferred income taxes 2,214 5,515 Accrual for unrecognized tax benefits 1,032 769 Other long-term liabilities 486 932 Total liabilities 117,660 120,465 Commitments and contingencies (Note 12) Stockholders’ equity Convertible preferred stock, 0.01 par value, authorized 20,000 shares; no shares issued and outstanding — — Common stock, 0.01 par value, authorized 240,000 ; issued 78,764 and 76,442 shares, respectively; outstanding: 46,875 and 47,367 shares, respectively 789 766 Additional paid-in capital 261,824 251,632 Accumulated other comprehensive loss ( 83 ) ( 481 ) Accumulated earnings 32,228 28,405 Treasury stock, 31,889 and 29,075 shares, respectively ( 187,216 ) ( 174,083 ) Total stockholders’ equity 107,542 106,239 Total liabilities and stockholders’ equity $ 225,202 $ 226,704 See accompanying notes to consolidated financial statements. 55 Table of Contents DHI GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, 2023, 2022 and 2021 (in thousands, except per share amounts) For the year ended December 31, 2023 2022 2021 Revenues $ 151,878 $ 149,680 $ 119,903 Operating expenses: Cost of revenues 19,787 17,607 15,088 Product development 17,777 17,674 16,020 Sales and marketing 57,421 59,364 43,701 General and administrative 31,273 34,049 28,583 Depreciation 16,915 17,487 16,344 Impairment of right-of-use asset — — 1,919 Restructuring 2,417 — — Total operating expenses 145,590 146,181 121,655 Other operating income: Proceeds from settlement — 2,061 — Operating income (loss) 6,288 5,560 ( 1,752 ) Income from equity method investment 502 1,597 190 Gain on investments 614 320 1,198 Impairment of investment ( 300 ) ( 2,300 ) — Interest expense and other ( 3,482 ) ( 1,580 ) ( 667 ) Income (loss) before income taxes 3,622 3,597 ( 1,031 ) Income tax expense (benefit) 131 ( 579 ) ( 629 ) Income (loss) from continuing operations 3,491 4,176 ( 402 ) Loss from discontinued operations, net of tax — — ( 29,340 ) Net income (loss) $ 3,491 $ 4,176 $ ( 29,742 ) Basic earnings (loss) per share - continuing operations $ 0.08 $ 0.09 $ ( 0.01 ) Diluted earnings (loss) per share - continuing operations $ 0.08 $ 0.09 $ ( 0.01 ) Basic earnings (loss) per share - discontinued operations $ — $ — $ ( 0.63 ) Diluted earnings (loss) per share - discontinued operations $ — $ — $ ( 0.63 ) Basic earnings (loss) per share $ 0.08 $ 0.09 $ ( 0.64 ) Diluted earnings (loss) per share $ 0.08 $ 0.09 $ ( 0.64 ) Weighted-average basic shares outstanding 43,571 44,274 46,333 Weighted-average diluted shares outstanding 44,496 46,533 46,333 See accompanying notes to consolidated financial statements. 56 Table of Contents DHI GROUP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the years ended December 31, 2023, 2022 and 2021 (in thousands) For the year ended December 31, 2023 2022 2021 Net income (loss) $ 3,491 $ 4,176 $ ( 29,742 ) Other comprehensive income (loss): Foreign currency translation adjustment 198 ( 420 ) 395 Cumulative translation adjustments reclassified to the Statements of Operations 200 — 28,063 Total other comprehensive income (loss) 398 ( 420 ) 28,458 Comprehensive income (loss) $ 3,889 $ 3,756 $ ( 1,284 ) See accompanying notes to consolidated financial statements. 57 Table of Contents DHI GROUP, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the years ended December 31, 2023, 2022, and 2021 (in thousands) Convertible Preferred Stock Common Stock Additional Paid-in Capital Treasury Stock Accumulated Earnings Accumulated Other Comprehensive Loss Total Shares Issued Amount Shares Issued Amount Shares Amount Balance at January 1, 2021 — $ — 71,233 $ 714 $ 233,554 20,013 $ ( 132,150 ) $ 53,971 $ ( 28,519 ) $ 127,570 Net loss ( 29,742 ) ( 29,742 ) Other comprehensive income 395 395 Cumulative translation adjustments reclassified to the Statements of Operations 28,063 28,063 Stock based compensation 8,303 8,303 Restricted stock issued 2,267 23 ( 5 ) 18 Performance-based restricted stock unites eligible to vest 813 8 8 Restricted stock forfeited or withheld to satisfy tax obligations ( 685 ) ( 7 ) 2 666 ( 2,073 ) ( 2,078 ) Performance based restricted stock forfeited or withheld to satisfy tax obligations ( 44 ) — 244 ( 907 ) ( 907 ) Purchase of treasury stock under stock repurchase plan 3,905 ( 15,268 ) ( 15,268 ) Balance at December 31, 2021 — — 73,584 738 241,854 24,828 ( 150,398 ) 24,229 ( 61 ) 116,362 Net income 4,176 4,176 Other comprehensive loss ( 420 ) ( 420 ) Stock based compensation 9,519 9,519 Restricted stock issued 1,242 11 ( 11 ) — Performance-based restricted stock units eligible to vest 1,773 18 ( 18 ) — Restricted stock forfeited or withheld to satisfy tax obligations ( 132 ) ( 1 ) 1 592 ( 3,197 ) ( 3,197 ) Performance based restricted stock forfeited or withheld to satisfy tax obligations ( 93 ) ( 1 ) 1 368 ( 1,958 ) ( 1,958 ) Issuance of common stock upon ESPP purchase 68 1 286 287 Purchase of treasury stock under stock repurchase plan 3,287 ( 18,530 ) ( 18,530 ) Balance at December 31, 2022 — — 76,442 766 251,632 29,075 ( 174,083 ) 28,405 ( 481 ) 106,239 Net income 3,491 3,491 Other comprehensive income 198 198 Cumulative translation adjustments reclassified to the Statements of Operations 200 200 Stock based compensation 9,916 9,916 Restricted stock issued 1,748 17 ( 17 ) — Performance-based restricted stock units eligible to vest 1,288 13 ( 13 ) — Restricted stock forfeited or withheld to satisfy tax obligations ( 502 ) ( 5 ) 5 556 ( 2,900 ) ( 2,900 ) Performance based restricted stock forfeited or withheld to satisfy tax obligations ( 326 ) ( 3 ) 3 597 ( 3,337 ) ( 3,337 ) Issuance of common stock upon ESPP purchase 114 1 298 299 Cumulative-effect of new accounting principle (See Note 2) 332 332 Purchase of treasury stock under stock repurchase plan 1,661 ( 6,896 ) ( 6,896 ) Balance at December 31, 2023 — $ — 78,764 $ 789 $ 261,824 31,889 $ ( 187,216 ) $ 32,228 $ ( 83 ) $ 107,542 See accompanying notes to consolidated financial statements . 58 Table of Contents DHI GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2023, 2022 and 2021 (in thousands) For the year ended December 31, 2023 2022 2021 Cash flows from (used in) operating activities: Net income (loss) $ 3,491 $ 4,176 $ ( 29,742 ) Adjustments to reconcile net income to net cash flows from (used in) operating activities: Depreciation 16,915 17,487 17,118 Deferred income taxes ( 3,301 ) ( 3,800 ) ( 569 ) Amortization of deferred financing costs 145 146 147 Stock based compensation 9,916 9,519 8,303 Income from equity method investment ( 502 ) ( 1,597 ) ( 190 ) Gain on investments ( 614 ) ( 320 ) ( 1,198 ) Impairment of investment 300 2,300 — Impairment of right-of-use asset — — 1,919 Change in accrual for unrecognized tax benefits 263 ( 16 ) ( 156 ) Loss on disposition of discontinued operations — — 30,203 Changes in operating assets and liabilities: Accounts receivable ( 1,398 ) ( 2,109 ) ( 1,102 ) Prepaid expenses and other assets ( 335 ) ( 1,479 ) ( 1,032 ) Capitalized contract costs 3,313 ( 545 ) ( 2,990 ) Accounts payable and accrued expenses ( 7,093 ) 7,778 ( 1,520 ) Income taxes receivable/payable ( 255 ) 388 261 Deferred revenue ( 893 ) 4,718 10,075 Other, net 1,393 ( 611 ) ( 946 ) Net cash flows from operating activities 21,345 36,035 28,581 Cash flows from (used in) investing activities: Cash transferred with discontinued operations — — ( 3,195 ) Cash paid for investment — — ( 3,000 ) Cash received from sale of investments 4,941 320 1,198 Purchases of fixed assets ( 20,252 ) ( 17,976 ) ( 14,307 ) Net cash flows used in investing activities ( 15,311 ) ( 17,656 ) ( 19,304 ) Cash flows from (used in) financing activities: Payments on long-term debt ( 25,000 ) ( 11,000 ) ( 11,000 ) Proceeds from long-term debt 33,000 18,000 14,000 Financing costs paid — ( 515 ) — Payments under stock repurchase plan ( 6,896 ) ( 18,530 ) ( 15,409 ) Purchase of treasury stock related to vested restricted and performance stock units ( 6,237 ) ( 5,155 ) ( 2,978 ) Proceeds from issuance of common stock through ESPP 299 287 — Net cash flows used in financing activities ( 4,834 ) ( 16,913 ) ( 15,387 ) Effect of exchange rate changes — — 10 Net change in cash for the period 1,200 1,466 ( 6,100 ) Cash, beginning of period 3,006 1,540 7,640 Cash, end of period $ 4,206 $ 3,006 $ 1,540 See accompanying notes to consolidated financial statements. 59 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND PRINCIPAL ACTIVITIES DHI Group, Inc. (“DHI,” the “Company,” “we,” “us” or “our”), a Delaware corporation, was incorporated on June 28, 2005. DHI is a leading provider of data, insights and employment connections through its specialized services for technology professionals and other select online communities. Its mission is to empower tech professionals and organizations to compete and win through expert insights and relevant employment connections. Employers and recruiters use its websites and services to source, hire and connect with the most qualified and highly-skilled tech professionals, while professionals use our websites and services to find ideal employment opportunities, relevant job advice and tailored career-related data. For over 30 years, through its predecessor companies, the Company was built on providing employers and professionals with career connections, news, tools and information. On June 30, 2021, the Company transferred majority ownership and control of its eFinancialCareers ("eFC") business to eFC's management, while retaining a 40 % common share interest, which was reduced to 10 % in the third quarter of 2023. The eFC business was significant to the Company and the transfer was considered to be a strategic shift from the financial services industry and from the geographies eFC serves that had a major effect on the Company's operations. As a result, the eFC business was deconsolidated from the Company's consolidated financial statements as of June 30, 2021 and is reflected as a discontinued operation in the Consolidated Statements of Operations for the year ended December 31, 2021. For further information on discontinued operations, see Note 4, “Discontinued Operations.” Unless noted otherwise, discussion in the notes to the consolidated financial statements pertain to continuing operations . The Company allocates resources and assesses financial performance on a consolidated basis, as all services pertain to the Company's Tech-focused strategy. As a result, t he Company has a single reportable segment, Tech-focused, which now includes only the Dice and ClearanceJobs brands, as well as corporate related costs. All operations are in the United States and the Company no longer has revenues and long-lived assets, which includes fixed assets and lease right of use assets, outside of the United States. 2. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation — The consolidated financial statements include the accounts of DHI and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Investments in companies that are not consolidated are included in the Company's consolidated financial statements as described in Notes 4 and 7 of the notes to consolidated financial statements. Revenue Recognition — We recognize revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts ratably over the service period. Billings with customers are based on contractual schedules. Customer billings delivered in advance and payments received in advance of services being rendered are recorded as deferred revenue and recognized over the service period. We generate revenues from the following sources: Recruitment packages. Recruitment package revenues are derived from the sale of a subscription to recruiters and employers that includes a combination of job postings and/or access to candidate profiles on Dice and ClearanceJobs. Certain of the Company’s arrangements include multiple performance obligations, which primarily consists of the ability to post jobs and access to candidate profiles. The Company determines the units of accounting for multiple performance obligations in accordance with Topic 606. Specifically, the Company considers a performance obligation as a separate unit of accounting if it has value to the customer on a standalone basis. The Company’s arrangements do not include a general right of return. Services to customers buying a package of available job postings and access to candidate profiles are delivered over the same period and revenue is recognized ratably over the length of the underlying contract, typically from one to twelve months. The separation of the package into two deliverables results in no change in revenue recognition because delivery of the two services occurs over the same time period. Advertising revenue. Advertising revenue is recognized over the period in which the advertisements are displayed on the websites or at the time a promotional e-mail is sent out to the audience. 60 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Classified revenue. Classified job posting revenues are derived from the sale of job postings to recruiters and employers. A job posting is the ability to list a job on the website for a specified time period. Revenue from the sale of classified job postings is recognized ratably over the length of the contract or the period of actual usage. Career fair and recruitment event booth rentals. Career fair and recruitment event revenues, both live and virtual, are derived from renting booth space to recruiters and employers. Revenue from these sales are recognized when the career fair or recruitment event is held. Cash— Cash consists of demand deposits with financial institutions. Concentration of Credit Risk— Cash is maintained with several financial institutions. Cash potentially subjects the Company to a concentration of credit risk as substantially all of its deposits held in financial institutions were in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits as of December 31, 2023 and 2022. The Company performs credit evaluations of its customers’ financial condition as needed and does not require collateral on accounts receivable. No single customer represents 10% or more of accounts receivable as of December 31, 2023 and 2022 and no single customer represents 10% or more of revenues for the years ended December 31, 2023, 2022 and 2021. Allowance for Doubtful Accounts— The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of DHI’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Statements of Cash Flows— All bank deposits are considered cash. The supplemental disclosures to the accompanying consolidated statements of cash flows are as follows (in thousands): 2023 2022 2021 Supplemental cash flow information: Interest paid $ 3,471 $ 1,480 $ 825 Taxes paid 3,450 2,849 393 Non-cash investing and financing activities: Capital expenditures on fixed assets included in accounts payable and accrued expenses 1,009 327 144 Fixed Assets— Depreciation of equipment, furniture and fixtures, computer software and capitalized website development costs are provided under the straight-line method over estimated useful lives ranging from two to five years . Depreciation of leasehold improvements is provided over the shorter of the term of the related lease or the estimated useful life of the improvement. The cost of additions and improvements is capitalized, and repairs and maintenance costs are charged to operations in the periods incurred. Capitalized Software Costs— Capitalized software costs consist of costs to purchase and develop software for internal use. The Company capitalizes incurred software development costs in accordance with the Internal Use Software subtopic of the FASB ASC. Costs incurred during the application-development stage for software bought and further customized by outside vendors for the Company’s use and software developed by a vendor for the Company’s proprietary use have been capitalized. These costs are amortized over the software’s estimated useful life, which generally approximates two years . Cloud Computing Arrangements— The Company incurs costs to implement cloud computing arrangements that are hosted by third party vendors. Implementation costs associated with cloud computing arrangements are capitalized when incurred during the application-development stage. The capitalized costs are amortized on a straight-line basis over approximately three years , which reflects the estimated useful life or contractual term of the underlying contract. Capitalized amounts related to such arrangements are recorded within other non-current assets in the Consolidated Balance Sheets. Website Development Costs— The Company capitalizes certain costs incurred in designing, developing, testing and implementing enhancements to its websites. These costs are amortized over the enhancement’s estimated useful life, which generally approximates two years . Costs related to the planning and post implementation phases of website development efforts are expensed as incurred. 61 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Capitalized Contract Costs— The Company capitalizes certain contract acquisition costs consisting primarily of commissions paid when contracts are signed. For costs incurred to obtain new business sales contracts, the Company capitalizes and expenses these costs over an average customer life, which was approximately three years as of December 31, 2023. For the remaining sales contracts, the Company capitalizes and expenses these costs over a weighted average contract term, which was approximately one year as of December 31, 2023. See Note 5 for additional disclosures. Leases— We determine if an arrangement is a lease at inception. The Company primarily has operating leases for corporate office space and certain equipment. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The initial measurement of the lease liability is calculated on the basis of the present value of the remaining lease payments, and the right-of-use asset is measured on the basis of this liability, adjusted by prepaid and accrued rent, lease incentives, and initial direct costs. When readily available, the Company uses the implicit rate in determining the present value of the lease payments. When leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the commencement of the lease, including the lease term. Because the implicit rate in each lease is not available, the Company used its incremental borrowing rate to determine the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Variable components of the lease payments, such as utilities and maintenance, are expensed as incurred and are not included in determining the present value. Operating lease expense is recognized on a straight- line basis over the lease term. Equity Method Investments— The Company has a 40 % non-controlling common share interest in the eFC (adjusted to 10 % as of the third quarter of 2023) and Rigzone (adjusted to zero percent as of the second quarter of 2022) businesses as the Company does not have the ability to direct the activities of the businesses that most significantly impact their economic performance. The common share interests in eFC and Rigzone, during the periods of ownership, are being accounted for under the equity method of accounting as the Company does have the ability to exercise significant influence over the businesses. The recorded value is adjusted based on the Company's proportionate share of the businesses net income and is recorded three months in arrears. See Note 7 for additional disclosures. Goodwill and Indefinite-Lived Acquired Intangible Assets— Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. The indefinite-lived acquired intangible assets include the Dice trademarks and brand name. The Company performs a test for impairment of goodwill and indefinite-lived intangible assets annually on October 1, or more frequently if indicators of potential impairment exist, to determine if the carrying value of the recorded asset is impaired. The impairment review process for goodwill compares the fair value of the reporting unit in which goodwill resides to its carrying value. The impairment review process for indefinite-lived intangible assets compares the fair value of the assets to their carrying value. The determination of whether or not the asset has become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the Company’s reporting units or the intangible asset. Changes in the Company’s strategy and/or market conditions could significantly impact these judgments and require adjustments to recorded amounts of goodwill or indefinite-lived intangible assets. See Notes 9 and 10 for discussion of impairment charges. Foreign Currency Translation— For the Company’s foreign operations, which entirely related to eFC prior to June 30, 2021, whose functional currency is not the U.S. dollar, the assets and liabilities are translated into U.S. dollars at current exchange rates. Resulting translation adjustments are reflected as Other Comprehensive Income (Loss). Revenue and expenses are translated at average exchange rates for the period. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are charged to operations as incurred. Translation adjustments subsequent to June 30, 2021 relate to the Company's equity method investment in eFC. Advertising Costs— The Company expenses advertising costs as they are incurred. Advertising expense for the years ended December 31, 2023, 2022 and 2021 were $ 14.9 million, $ 17.9 million and $ 12.5 million, respectively. Income Taxes— The Company recognizes deferred taxes by the asset and liability method. Under this method, deferred income taxes are recognized for differences between the financial statement and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The primary sources of temporary differences are stock-based compensation, amortization and impairment of intangible assets, depreciation of fixed assets, operating lease assets and liabilities, and capitalized contract costs. 62 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock-Based Compensation— The Company has a plan to grant equity awards to certain employees and directors of the Company and its subsidiaries. In accordance with FASB ASC Topic 718 Compensation-Stock Compensation , the Company accounts for forfeitures when they occur. See Note 15 for additional disclosures. Fair Value of Financial Instruments— The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, and accounts payable and accrued expenses approximate their fair values. The Company’s long-term debt consists of borrowings under its credit facility. Investments consist of common and preferred share ownership interests in businesses. See Notes 3 and 11 for additional disclosures. Risks and Uncertainties— The Company is subject to the risks, expenses and uncertainties frequently encountered by companies in the rapidly evolving markets for online products and services. These risks include the failure to develop and extend the Company’s web sites and brands, the rejection of the Company’s services by consumers, vendors and/or advertisers, the inability of the Company to maintain and increase the levels of traffic on its web sites, as well as other risks and uncertainties. In the event that the Company does not successfully execute its business plan, certain assets may not be recoverable. Use of Estimates— The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. DHI’s significant estimates include the useful lives and valuation of fixed assets and intangible assets, goodwill, lease right-of-use assets, income taxes, and the assumptions used to value the Performance-Based Restricted Stock Units (“PSUs”) of the Company. Earnings per Share— The Company follows the Earnings Per Share topic of the FASB ASC in computing earnings per share (“EPS”). Basic EPS is calculated by dividing income from continuing operations, income from discontinued operations, and net income by the weighted average number of shares outstanding. When the effects are dilutive, diluted earnings per share is calculated using the weighted average number of shares outstanding, and the dilutive effect of stock-based compensation awards as determined under the treasury stock method. Certain stock awards were excluded from the computation of diluted earnings per share due to their anti-dilutive effect. See Note 18 for additional disclosures. New Accounting Pronouncements— In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016-13 changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current "incurred loss" model with an "expected loss" model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of a financial asset. The Company adopted ASU 2016-13 on January 1, 2023, under the modified retrospective method as required by the standard. The Company recorded a cumulative-effect adjustment of $ 0.3 million to increase accumulated earnings and reduce the allowance for doubtful accounts as of January 1, 2023. Prior period amounts were not adjusted and will continue to be reported under the accounting standards in effect for the period presented. In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures . The new accounting standard relates to disclosures about a public entity’s reportable segments and provides more detailed information about a reportable segment’s expenses. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with retrospective application required. We are evaluating the effect of the standard on our consolidated financial statement disclosures. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures . The new accounting standard requires more detailed disclosures regarding the effective tax rate reconciliation and income taxes paid. The standard is effective for fiscal years beginning after December 15, 2024, and may be applied on either a prospective or retrospective basis, with early adoption permitted. We are evaluating the effect of the standard on our consolidated financial statement disclosures. 3. FAIR VALUE MEASUREMENTS The FASB ASC topic on Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value and requires certain disclosures for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. As a basis for considering assumptions, a three-tier fair value hierarchy is used, which prioritizes the inputs used in measuring fair value as follows: 63 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • Level 1 – Quoted prices for identical instruments in active markets. • Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets. • Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, other assets, accounts payable and accrued expenses and long-term debt approximate their fair values. Investments, non-current that were carried at fair value, prior to the conversion to preferred shares as described in Note 7, used a discounted cash flow technique based on the probability of one or more possible outcomes, based on Level 3 inputs, which inputs and fair value did not change during the 2022 period prior to the conversion. The estimated fair value of long-term debt is based on Level 2 inputs. Certain assets and liabilities are measured at fair value on a non-recurring basis as they are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment. Such instruments are not measured at fair value on an ongoing basis. These assets include equity investments, operating lease right-of-use assets, and goodwill and intangible assets which resulted from prior acquisitions. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable. On June 30, 2021, the Company transferred majority ownership and control of its eFC business to eFC's management, while retaining a 40 % common share interest. On June 30, 2021, the Company valued its 40 % interest in eFC utilizing a combination of a discounted cash flow and a market approach. The discounted cash flow included declining revenues for the years ending December 31, 2021 and 2022 as compared to the year ended December 31, 2020 and then increasing moderately. The discounted cash flow also included operating margin declines for the year ending December 31, 2022 compared to the year ending December 31, 2021 and then increasing moderately. The Company utilized a discount rate of 19 %. The market approach included the analysis of data from transactions on guideline companies and applied multiples of those transactions to eFC's results. 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 %. Impairment —The Company performs annual impairment tests for goodwill and the Dice trademarks and brand name as of October 1 of each year or more frequently if indicators of potential impairment exist. See Notes 9 and 10 for additional disclosures. The Company evaluates the carrying value of equity investments at each reporting period as described in Note 7. 4. DISCONTINUED OPERATIONS As further described in Notes 1 and 7, on June 30, 2021, the Company transferred majority ownership and control of its eFC business to eFC's management, while retaining a 40 % common share interest. As a result, we have reflected eFC's financial results as discontinued operations in the consolidated statements of operations for the year ended December 31, 2021. The results of discontinued operations on the consolidated statements of operations were as follows for the year ended December 31, 2021 (in thousands): 64 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenues $ 12,130 Operating expenses ( 10,821 ) Operating income 1,309 Loss on disposition of discontinued operations (1) ( 30,203 ) Other income 1 Loss before income taxes ( 28,893 ) Income tax expense 447 Net loss $ ( 29,340 ) (1) 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 investment of $ 3.6 million and eFC's earnings during the six month period ended June 30, 2021. Depreciation, fixed asset purchases and other significant non-cash items related to discontinued operations were as follows (in thousands): 2021 Depreciation $ 774 Purchases of fixed assets $ 447 Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 804 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 %. 5 . REVENUE RECOGNITION The Company recognizes revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts. We recognize revenue when control of the goods or services are transferred to the customer either on a ratable basis over the contract period beginning on the date that our service is made available to the customer or as the products and services are used. The Company excludes sales tax from the transaction price and therefore, recognizes revenue net of applicable sales taxes. Customer billings delivered in advance of services being rendered are recorded as deferred revenue and recognized over the service period. The Company generates revenue from recruitment packages, advertising, classifieds, and virtual and live career fair and recruitment event booth rentals. Disaggregation of revenue Our brands primarily serve the technology and security cleared professions. The following table provides information about disaggregated revenue by brand (in thousands): For the Year Ended December 31, 2023 2022 2021 Dice (1) $ 102,584 $ 106,957 $ 86,257 ClearanceJobs 49,294 42,723 33,646 Total $ 151,878 $ 149,680 $ 119,903 (1) Includes Dice and Career Events. 65 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Contract Balances The following table provides information about opening and closing balances of receivables and contract liabilities from contracts with customers as required under Topic 606 (in thousands): As of December 31, 2023 As of December 31, 2022 As of December 31, 2021 Receivables $ 22,225 $ 20,494 $ 18,385 Short-term contract liabilities (deferred revenue) 49,463 50,121 45,217 Long-term contract liabilities (deferred revenue) 508 743 929 We receive payments from customers based upon contractual billing schedules; accounts receivable is recorded when customers are invoiced per the contractual billing schedules. As the Company's standard payment terms are less than one year, the Company elected the expedient, where applicable. As a result, the Company did not consider the effects of a significant financing component. Contract liabilities include customer billings delivered in advance of performance under the contract, and associated revenue is realized when services are rendered under the contract. Receivables increase due to customer billings and decrease by cash collected from customers. Contract liabilities increase due to customer billings and are decreased as performance obligations are satisfied under the contracts. The Company recognized the following revenues as a result of changes in the contract liability balances in the respective periods (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021 Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period $ 50,141 $ 45,311 $ 35,692 Transaction price allocated to the remaining performance obligations Under the guidance of Topic 606, the following table includes estimated deferred revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands): 2024 2025 2026 Total Tech-focused $ 49,463 $ 419 $ 89 $ 49,971 6. LEASES The Company has operating leases for corporate office space and certain equipment. 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. 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 was consumed in 2023. The components of lease cost were as follows (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021 Operating lease cost 1 $ 1,945 $ 2,103 $ 2,277 Sublease income ( 399 ) ( 475 ) ( 543 ) Total lease cost 2 $ 1,546 $ 1,628 $ 1,734 (1) Includes short-term and variable lease costs, which are immaterial. (2) Total lease costs is recorded in general and administrative expenses in the consolidated statements of operations. 66 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Supplemental cash flow information related to leases was as follows (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021 Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 2,309 $ 2,703 $ 2,299 Right-of-use assets obtained in exchange for lease obligations: Operating leases 1 $ — $ 1,542 $ — (1) During the year ended December 31, 2022, our right-of-use asset obtained in exchanged for lease obligations was reduced by $ 2.1 million, which represents a tenant improvement allowance that was consumed in 2023. Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount rate): December 31, 2023 December 31, 2022 Operating lease right-of-use assets (as reported) 1 $ 4,759 $ 6,581 Operating lease liabilities - current $ 2,006 $ 2,231 Less: tenant improvement allowance 1 — ( 2,126 ) Operating lease liabilities - current (as reported) 2,006 105 Operating lease liabilities - non-current (as reported) 6,543 8,428 Total operating lease liabilities $ 8,549 $ 8,533 Weighted Average Remaining Lease Terms (in years) Operating leases 6.2 years 5.8 years Weighted Average Discount Rate Operating leases 4.5 % 4.4 % (1) At December 31, 2022, our right-of-use asset includes a reduction of $ 2.1 million, which represents a tenant improvement allowance that was consumed in 2023. The Company reviews its right-of-use ("ROU") assets for impairment if indicators of impairment exist. The impairment review process compares the fair value of the ROU asset to its carrying value. If the carrying value exceeds the fair value, an impairment loss is recorded. During the year ended December 31, 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 recorded an impairment charge of $ 1.9 million. No impairment was recorded during the years ended December 31, 2023 and 2022. 67 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2023, future operating lease payments were as follows (in thousands): Operating Leases 2024 $ 2,170 2025 2,419 2026 1,474 2027 575 2028 501 Thereafter 2,939 Total lease payments 10,078 Less: imputed interest ( 1,529 ) Less: tenant improvement allowance — Total $ 8,549 As of December 31, 2023, the Company has no additional operating or finance leases that have not yet commenced. No leases include options to purchase the leased property. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We do not have any lease agreements with related parties. 7. INVESTMENTS Investments, Current, at Fair Value Through its predecessor companies, the Company owned a minority interest representing less than 1% of the common stock of a technology company that completed an initial public offering ("IPO") and became publicly traded during the first quarter of 2021. Prior to the IPO, the Company had elected the measurement alternative in accordance with FASB ASC 321, Investments – Equity Securities. As of December 31, 2020, it was not practicable to estimate the fair value of its interest because there were no observable transactions for the investment. Accordingly, the investment was carried at its original cost, less impairments, which resulted in a carrying value of zero as of December 31, 2020. The investment was accounted for as an equity security, with realized and unrealized gains and losses included in earnings. During the third quarter of 2021, the investment was sold for $ 1.2 million. A realized gain of $ 1.2 million has been recorded for the year ended December 31, 2021. Investments, Non-current, at Fair Value During the third quarter of 2021, the Company invested $ 3.0 million through a subordinated convertible promissory note (the "Note") of $ 3.0 million with a values-based career destination company that allows the next generation workforce to search for jobs at companies whose people, perks and values align with their unique professional needs. The Note earned interest at 6.00 % and matured at the earlier of a Qualified Financing, as described in the Note, or settled in cash on or after August 20, 2022, at the option of the Company. Upon a Qualified Financing, the Company will convert its investment into shares of preferred stock at 80 % of the per share value in the Qualified Financing. The investment was recorded as a trading security at fair value with realized and unrealized gains and losses included in earnings. The Note was recorded at $ 3.0 million as of December 31, 2021. In the third quarter of 2022, a Qualified Financing occurred and the Note was converted into preferred shares representing 4.9 % of the outstanding equity in the underlying business, on a fully-diluted basis. The Company's preferred shares are substantially similar to shares purchased by a third party investor in the Qualified Financing that resulted in such investor becoming the majority owner of the business, holding 50.5 % of the outstanding equity in the business, on a fully-diluted basis. Therefore, the Company's shares in the business were recorded at fair value based on the price per share realized in the Qualified Financing. The value of the Company's investment was $ 0.7 million as of December 31, 2022 and is recorded as an investment in the consolidated balance sheet. Accordingly, the Company recognized an impairment loss during the year ended December 31, 2022 of $ 2.3 million. During the third quarter of 2023, the majority investor purchased additional shares of the business as was contemplated in, and at the same price as, in the Qualified Financing and additional equity based compensation was issued to the investment's management team. As a result, the majority investor's ownership was reduced to 44.8 % and the Company's ownership was reduced to 4.1 %, both on a fully-diluted basis, as of December 31, 2023. 68 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the third quarter of 2023, the investment's financial position deteriorated. To meet its financial obligations, the investment issued convertible debt (the "Convertible Debt") at a price that indicated the value of the investment had declined. As such, the Company revalued its investment to $ 0.4 million and accordingly, recognized an impairment loss of $ 0.3 million during the third quarter of 2023. The Company has elected the measurement alternative in accordance with FASB ASC 321, Investments – Equity Securities. As of December 31, 2023, subsequent to the Qualified Financing, it was not practicable to estimate the fair value of its interest because there were no observable transactions for the investment. Accordingly, the investment was carried at the value realized in the Qualified Financing as of December 31, 2023, as described above. Investments, Non-current Rigzone is a website dedicated to delivering online content, data, and career services in the oil and gas industry in North America, Europe, the Middle East, and Asia Pacific. Oil and gas companies, as well as companies that serve the energy industry, use Rigzone to find talent for roles such as petroleum engineers, sales professionals with energy industry expertise and skilled tradesmen. On August 31, 2018, the Company transferred a majority ownership and control of the Rigzone business to Rigzone management, while retaining a 40 % common share interest, with zero proceeds received from the transfer. During the second quarter of 2022, the Company sold its 40 % interest in Rigzone to Rigzone management for $ 0.3 million. At the time of the sale, the recorded value of the investment was zero. Accordingly, the Company recorded a $ 0.3 million gain on sale, which was included in gain on investments on the consolidated statements of operations. During the fourth quarter of 2022, the Company entered into a legal settlement with a former employee of Rigzone and received $ 2.1 million, net of certain legal costs and subject to other agreements. The settlement is recorded as proceeds from settlement in the consolidated statements of operations for the year ended December 31, 2022. As further described in Notes 1 and 4, on June 30, 2021, the Company transferred majority ownership and control of its eFC business to eFC's management, while retaining a 40 % common share interest with zero proceeds received from the transfer. The Company incurred approximately $ 0.1 million in selling costs and recognized a $ 30.2 million loss on the transfer in the second quarter of 2021, which included a $ 28.1 million charge related to accumulated foreign currency loss that was previously a reduction to equity. 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 %. As a result of the sale, the Company received cash of $ 4.9 million and recognized a $ 0.6 million gain, which included a $ 0.2 million charge related to accumulated foreign currency loss that was previously a reduction to equity. eFC is a financial services careers website, operating websites in multiple markets in four languages mainly across the United Kingdom, Continental Europe, Asia, the Middle East and North America. Professionals from across many sectors of the financial services industry, including asset management, risk management, investment banking, and information technology, use eFC to advance their careers. The Company has evaluated its common share interest in the eFC business and has determined the investment meets the definition and criteria of a variable interest entity ("VIE"). The Company evaluated the VIE and determined that the Company does not have a controlling financial interest in the VIE, as the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. The common share interest is being accounted for under the equity method of accounting as the Company has the ability to exercise significant influence over eFC. The investment was recorded at its fair value on June 30, 2021, the date of transfer, which was $ 3.6 million. The Company's equity in net assets of eFC as of June 30, 2021 was $ 2.2 million. The difference between the Company's recorded value and its equity in net assets of eFC is amortized against the recorded value of the investment in accordance with ASC 323 Investments - Equity Method and Joint Ventures . Accordingly, the Company recorded amortization of $ 0.1 million during the year ended December 31, 2023. The amortization was not material for the years ended December 31, 2022 and 2021. The recorded value is further adjusted based on the Company's proportionate share of eFC's net income and is recorded three months in arrears. During the years ended December 31, 2023, 2022 and 2021, the Company recorded $ 0.5 million, $ 1.6 million and $ 0.2 million, respectively, of income related to its proportionate share of eFC's net income, net of currency translation adjustments and amortization of the basis difference. At December 31, 2023, the Company held preferred stock representing a 7.3 % interest in the fully diluted shares of a tech skills assessment company. The investment is recorded at zero as of December 31, 2023 and 2022. The Company recorded no gain or loss related to the investment during the years ended December 31, 2023, 2022, and 2021. 69 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. FIXED ASSETS, NET Fixed assets, net consist of the following as of December 31, 2023 and 2022 (in thousands): 2023 2022 Computer equipment and software $ 3,921 $ 4,147 Furniture and fixtures 686 2,410 Leasehold improvements 3,961 1,817 Capitalized development costs 63,931 59,018 72,499 67,392 Less: Accumulated depreciation and amortization ( 47,227 ) ( 46,140 ) Fixed assets, net $ 25,272 $ 21,252 During the years ended December 31, 2023, 2022, and 2021, depreciation expense was $ 16.9 million, $ 17.5 million, and $ 16.3 million, respectively. 9. ACQUIRED INTANGIBLE ASSETS, NET As of December 31, 2023 and 2022, the Company had an indefinite-lived acquired intangible asset of $ 23.8 million related to the Dice trademarks and brand name. Considering the recognition of the Dice brand, its long history, awareness in the talent acquisition and staffing services market, and the intended use, the remaining useful life of the Dice.com trademarks and brand name was determined to be indefinite. We determine whether the carrying value of recorded indefinite-lived acquired intangible assets is impaired on an annual basis or more frequently if indicators of potential impairment exist. The annual impairment test for the Dice trademarks and brand name is performed on October 1 of each year. The impairment review process compares the fair value of the indefinite-lived acquired intangible assets to its carrying value. If the carrying value exceeds the fair value, an impairment loss is recorded. The impairment test performed as of October 1, 2023 resulted in the fair value of the Dice trademarks and brand name exceeding the carrying value by 51 %. The Company's operating results attributable to the Dice trademarks and brand name 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. As a result, the Company believes it is not more likely than not that the fair value of the Dice trademarks and brand name is less than the carrying value as of December 31, 2023. Therefore, no quantitative impairment test was performed as of December 31, 2023. No impairment was recorded during the years ended December 31, 2023, 2022 and 2021. 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. In the October 1, 2023 analysis, the Company utilized a relief from royalty rate method to value the Dice trademarks and brand name using a royalty rate of 4.0 %, which is based on comparable industry licensing agreements and the profitability attributable to the Dice trademarks and brand name, and a discount rate of 13.1 %. The determination of whether or not indefinite-lived acquired intangible assets have become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the indefinite-lived acquired intangible assets. 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, 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. 10. GOODWILL As of December 31, 2023, the Company has goodwill of $ 128.1 million, which was all allocated to the Tech-focused reporting unit. There were no changes to goodwill during the years ended December 31, 2023, 2022, and 2021. 70 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We determine whether the carrying value of recorded goodwill is impaired on an annual basis or more frequently if indicators of potential impairment exist. In testing goodwill for impairment, a qualitative assessment can be performed and if it is determined that the fair value of the reporting unit is more likely than not less than the carrying amount, the impairment review process compares the fair value of the reporting unit in which the goodwill resides to the carrying value of that reporting unit. If the fair value of the reporting unit is less than its carrying amount, an impairment charge is recorded for the amount the carrying value exceeds the fair value. 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, 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. As a result, the Company believes it is not more likely than not that the fair value of the reporting unit is less than the carrying value as of December 31, 2023. Therefore, no quantitative impairment test was performed as of December 31, 2023. No impairment was recorded during the years ended December 31, 2023, 2022 and 2021. The discount rate applied for the Tech-focused reporting unit in the October 1, 2023 analysis was 12.1 %. An increase to the discount rate applied or reductions to future projected operating results could result in future impairment of the Tech-focused reporting unit’s goodwill. 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, 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. Fair values are determined by using a combination of a discounted cash flow methodology and a market comparable method. The discounted cash flow methodology is based on projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions as deemed appropriate. We consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements. Additionally, the discounted cash flows analysis takes into consideration cash expenditures for product development, other technological updates and advancements to our websites and investments to improve our candidate databases. The market comparable method indicates the fair value of a business by comparing it to publicly traded companies in similar lines of business or to comparable transactions or assets. Considerations for factors such as size, growth, profitability, risk and return on investment are analyzed and compared to the comparable businesses and adjustments are made. A market value of invested capital of the publicly traded companies is calculated and then applied to the entity’s operating results to arrive at an estimate of value. Changes in our strategy and/or market conditions could significantly impact these judgments and require adjustments to recorded amounts of goodwill. 11. INDEBTEDNESS Credit Agreement —In June 2022, the Company, together with Dice Inc. (a wholly-owned subsidiary of the Company) and its wholly-owned subsidiary, Dice Career Solutions, Inc. (collectively, the “Borrowers”), entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”), which matures in June 2027 and replaces the Company's Old Credit Agreement (defined below). The Credit Agreement provides for a revolving loan facility of $ 100 million ($ 90 million under the Old Credit Agreement), with an expansion option of $ 50 million, bringing the total facility to $ 150 million, as permitted under the terms of the Credit Agreement. At the closing of the Credit Agreement, the Company borrowed $ 30 million to repay, in full, all outstanding indebtedness, including accrued interest, under the Old Credit Agreement. Unamortized debt issuance costs from the previous credit agreement of $ 0.2 million and debt issuance costs of $ 0.5 million related to the new agreement were recorded as other assets on the consolidated balance sheets and are recorded to interest expense over the term of the Credit Agreement. Borrowings under the Credit Agreement denominated in U.S. dollars bear interest, payable at least quarterly, at the Company’s option, at the Secured Overnight Financing Rate ("SOFR") or a base rate plus a margin. Borrowings under the credit agreement denominated in pounds sterling, if any, bear interest at the Sterling Overnight Index Average ("SONIA") rate plus a margin. The margin ranges from 2.00 % to 2.75 % on SOFR and SONIA loans and 1.00 % to 1.75 % on base rate loans, determined by the Company’s most recent consolidated leverage ratio, plus an additional spread of 0.10 %. The Company incurs a commitment fee 71 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. There were no borrowings in pounds sterling as of December 31, 2023 and 2022. The facility may be prepaid at any time without penalty. The Credit Agreement contains various affirmative and negative covenants and also contains certain financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio. Borrowings are allowed under the Credit Agreement to the extent the consolidated leverage ratio is equal to or less than 2.50 to 1.00 , subject to the terms of the Credit Agreement. Negative covenants include restrictions on incurring certain liens; making certain payments, such as stock repurchases and dividend payments; making certain investments; making certain acquisitions; making certain dispositions; and incurring additional indebtedness. Restricted payments are allowed under the Credit Agreement to the extent the consolidated leverage ratio, calculated on a pro forma basis, is equal to or less than 2.00 to 1.00 , plus an additional $ 7.5 million of restricted payments each fiscal year, as described in the Credit Agreement. The Credit Agreement also provides that the payment of obligations may be accelerated upon the occurrence of events of default, including, but not limited to, non-payment, change of control, or insolvency. As of December 31, 2023, the Company was in compliance with all of the financial covenants under the Credit Agreement. The obligations under the Credit Agreement are guaranteed by one of the Company’s wholly-owned subsidiaries and secured by substantially all of the assets of the Borrowers and the guarantors. Previous Credit Agreement - The Borrowers previously maintained a Second Amended and Restated Credit Agreement (the "Old Credit Agreement"), which was scheduled to mature in November 2023. The Old Credit Agreement, when entered into during November 2018, provided for a revolving loan facility of $ 90 million, with an expansion option of $ 50 million, bringing the total facility to $ 140 million, as permitted by the terms of the Old Credit Agreement. Borrowings under the Old Credit Agreement accrued interest, at the Company's option, at the London Inter-bank Offered Rate ("LIBOR") or a base rate plus a margin. The margin ranged from 1.75 % to 2.50 % on LIBOR loans and 0.75 % to 1.50 % on base rate loans, determined by the Company's most recent consolidated leverage ratio. The Company incurred a commitment fee ranging from 0.30 % to 0.45 % on any unused capacity under the revolving loan facility, determined by the Company’s most recent consolidated leverage ratio. There was no penalty for prepayment of the Old Credit Agreement. The amounts borrowed as of December 31, 2023 and 2022 are as follows (dollars in thousands): December 31, 2023 December 31, 2022 Long-term debt under revolving credit facility (1) $ 38,000 $ 30,000 Available to be borrowed under revolving facility (2) $ 62,000 $ 70,000 Interest rates: LIBOR rate loans: Interest margin (3) 2.35 % 2.35 % Actual interest rates 7.71 % 6.67 % Commitment Fee 0.40 % 0.40 % (1) In connection with the Credit Agreement, during the second quarter of 2022, the Company recorded deferred financing costs of $ 0.7 million recorded to other assets on the condensed consolidated balance sheets. Accumulated amortization as of December 31, 2023 was $ 0.2 million. (2) The amount available to be borrowed is subject to certain limitations, such as a consolidated leverage ratio, as defined in the Credit Agreement. (3) Includes additional spread of 0.10 %. There are no scheduled payments until maturity of the Credit Agreement in June 2027. 72 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. COMMITMENTS AND CONTINGENCIES Litigation The Company is subject to various claims from taxing authorities, lawsuits and other complaints arising in the ordinary course of business. The Company records provisions for losses when claims become probable and the amounts are reasonably estimable. Although the outcome of these legal matters cannot be determined, it is the opinion of management that the final resolution of these matters will not have a material adverse effect on the Company’s financial condition, operations or liquidity. Tax Contingencies The Company operates in a number of tax jurisdictions and is routinely subject to examinations by various tax authorities with respect to both income and indirect taxes. The determination of the Company’s provision for taxes requires judgment and estimation. The Company has reserved for potential examination adjustments to our provision for income taxes and accrual of indirect taxes in amounts which the Company believes are reasonable. 13. EQUITY TRANSACTIONS Stock Repurchase Plans — The Company's Board of Directors ("Board") approved a stock repurchase program that permits the Company to repurchase its common stock. Management has discretion in determining the conditions under which shares may be purchased from time to time. The following table summarizes the stock repurchase plans approved by the Board of Directors: May 2020 to May 2021 (1) Feb 2021 to Jun 2022 (2) Feb 2022 to Feb 2023 (3) Feb 2023 to Feb 2024 (4) Approval Date May 2020 February 2021 February 2022 February 2023 Authorized Repurchase Amount of Common Stock $ 5 million $ 20 million $ 15 million $ 10 million (1) During the first quarter of 2021, the Company completed its purchases under the plan, which consisted of 2.2 million shares for $ 5.0 million, effectively ending the plan prior to its original expiration date. (2) During the second quarter of 2021, the Company amended its $ 8.0 million stock repurchase program approved in February 2021 and allowed for the purchase of an additional $ 12.0 million of our common stock through June 2022, bringing total authorized purchases under the plan to $ 20.0 million. During the first quarter of 2022, the Company completed its purchases under the plan, which consisted of approximately 4.4 million shares for $ 20.0 million, effectively ending the plan prior to its original expiration date. (3) During February 2023, the stock repurchase program approved in February 2022 expired with a total of 2.6 million shares purchased for $ 14.7 million. (4) On February 9, 2023, the Company announced that its Board approved a new stock repurchase program that permits the purchase of up to $ 10.0 million of the Company's common stock through February 2024. As of December 31, 2023, the value of shares available to be purchased under the current plan was $ 4.8 million. Purchases of the Company's common stock pursuant to the Stock Repurchase Plans were as follows: Year Ended December 31, 2023 2022 2021 Shares repurchased (1) 1,661,278 3,287,096 3,905,050 Average purchase price per share (2) $ 4.17 $ 5.66 $ 3.92 Dollar value of shares repurchased (in thousands) (3) $ 6,928 $ 18,596 $ 15,323 (1) No shares of our common stock were purchased other than through a publicly announced plan or program. (2) Average price paid per share includes costs associated with the repurchases. (3) The value of shares repurchased as of December 31, 2023, 2022, and 2021 includes $ 33,331 , $ 65,990 , and $ 55,780 , respectively, of costs associated with the repurchase. There were 19,220 and 48,260 unsettled shares as of December 31, 2022 and 2021, respectively. No shares were unsettled as of December 31, 2023. Stock Repurchases Pursuant to the 2022 Omnibus Equity Award Plan, as Amended and Restated -Under the 2022 Omnibus Equity Award Plan, as Amended and Restated as further described in Note 15 to the consolidated financial statements, the 73 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Company repurchases its common stock withheld for income tax from the vesting of employee restricted stock or ("PSUs"). The Company remits the value, which is based on the closing share price on the vesting date of the common stock withheld to the appropriate tax authority on behalf of the employee and the related shares become treasury stock. Purchases of the Company's common stock pursuant to the 2022 Omnibus Equity Award Plan, as Amended and Restated were as follows: Year Ended December 31, 2023 2022 2021 Shares repurchased upon restricted stock/PSU vesting 1,152,993 948,582 910,171 Average purchase price per share $ 5.41 $ 5.43 $ 3.27 Dollar value of shares repurchased upon restricted stock/PSU vesting (in thousands) $ 6,237 $ 5,155 $ 2,978 Convertible Preferred Stock— The Company has 20 million shares of convertible preferred stock authorized, with a $ 0.01 par value. No shares have been issued and outstanding since prior to our initial public offering in 2007. The rights, preferences, privileges and restrictions granted to and imposed on the convertible preferred stock are as set forth below. The Company currently has no preferred stock outstanding. The Company’s amended and restated certificate of incorporation permits the terms of any preferred stock to be determined at the time of issuance. Dividend provisions The preferred stockholders would be entitled to dividends only when dividends are paid to common shareholders. In the event of a dividend, the holders of the preferred shares would be entitled to share in the dividend on a pro rata basis, as if their shares had been converted into shares of common stock. Conversion rights Any holder of preferred stock has the right, at its option, to convert the preferred shares into shares of common stock at a ratio of one preferred stock share for one common stock share. The holders of 66 2 / 3 % of all outstanding preferred stock have the right at any time to require all the outstanding shares of preferred stock to be converted into an equal number of shares of common stock. Voting rights include the right to vote at a special or annual meeting of stockholders on all matters entitled to be voted on by holders of common stock, voting together as a single class with the common stock. There are no redemption rights associated with the preferred stock. Liquidation rights Upon the occurrence of liquidation, the holders of the preferred shares shall be paid in cash for each share of preferred stock held, out of, but only to the extent of, the assets of the Company legally available for distribution to its stockholders, before any payment or distribution is made to any shareholders of common stock . The liquidation value is $ 2.17 per share, subject to adjustments for stock splits, stock dividends, combinations, or other recapitalizations of the preferred stock. Dividends— No dividends were declared during the years ended December 31, 2023, 2022 or 2021. Our Credit Agreement limits our ability to declare and pay dividends. See Note 11 for additional disclosures. 14. ACCUMULATED OTHER COMPREHENSIVE LOSS FASB ASC topic on Comprehensive Income establishes standards for the reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. This statement requires that all items that are required to be recognized as components of comprehensive income be reported in a financial statement with the same prominence as other financial statements. During the year ended December 31, 2021, the Company had $ 28.1 million of currency translation adjustments reclassified to the Statements of Operations related to the removal of eFC's net assets. The Company had no amounts reclassified out of accumulated other comprehensive income for the year ended December 31, 2022. During the year ended December 31, 2023, the Company had $ 0.2 million of currency translation adjustments reclassified to the Statements of Operations related to selling a portion of its eFC ownership. The foreign currency translation adjustments impact 74 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS comprehensive income. Accumulated other comprehensive income (loss), net consists of the following components, net of tax (in thousands): Year Ended December 31, 2023 2022 2021 Foreign currency translation: Balance at beginning of year $ ( 481 ) $ ( 61 ) $ ( 28,519 ) Foreign currency translation adjustment 198 ( 420 ) 395 Cumulative translation adjustments reclassified to the Statements of Operations 200 — 28,063 Balance at end of year $ ( 83 ) $ ( 481 ) $ ( 61 ) 15. STOCK BASED COMPENSATION On July 13, 2022, the stockholders of the Company approved the DHI Group, Inc. 2022 Omnibus Equity Award Plan, which had been previously approved by the Company's Board of Directors on May 13, 2022 (the "2022 Omnibus Equity Award Plan"). The 2022 Omnibus Equity Award Plan generally mirrors the terms of the Company's prior omnibus equity award plan, which expired in accordance with its terms on April 20, 2022 (the "2012 Omnibus Equity Award Plan"). On April 26, 2023, the stockholders of the Company approved the DHI Group, Inc. 2022 Omnibus Equity Award Plan, as Amended and Restated, which had been previously approved by the Company’s Board of Directors on March 16, 2023 (the "2022 Omnibus Equity Award Plan, as Amended and Restated"). The 2022 Omnibus Equity Award Plan was amended and restated to, among other things, increase the number of shares of common stock authorized for issuance as equity awards under the plan by 2.9 million shares. The Company has previously granted restricted stock and PSUs to certain employees and directors pursuant to the 2012 Omnibus Equity Award Plan and continues to grant restricted stock and PSUs to certain employees and directors pursuant to the 2022 Omnibus Equity Award Plan, as Amended and Restated. The Company also offers an Employee Stock Purchase Plan. Stock-based compensation disclosures within this note include expense and shares related to the eFC business through June 30, 2021. The Company recorded stock based compensation expense of $ 9.9 million, $ 9.5 million, and $ 8.3 million during the years ended December 31, 2023, 2022, and 2021, respectively. At December 31, 2023, there was $ 9.9 million of unrecognized compensation expense related to unvested awards, which is expected to be recognized over a weighted-average period of approximately 1.0 years. Restricted Stock— Restricted stock is granted to employees of the Company and its subsidiaries, and to non-employee members of the Company’s Board. These shares are part of the compensation plan for services provided by the employees or Board members. The closing price of the Company’s stock on the date of grant is used to determine the fair value of the grants. The expense related to the restricted stock grants is recorded over the vesting period as described below. There was no cash flow impact resulting from the grants. The restricted stock vests in various increments on the anniversaries of each grant, subject to the recipient’s continued employment or service through each applicable vesting date. Vesting occurs over one year for Board members and over two to four years for employees. A summary of the status of restricted stock awards as of December 31, 2023, 2022, and 2021 and the changes during the periods then ended is presented below: 75 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2023 2022 2021 Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date Non-vested at beginning of the period 2,639,286 $ 3.96 3,371,832 $ 2.80 3,877,853 $ 2.49 Granted 1,748,172 $ 4.95 1,238,331 $ 5.13 2,267,683 $ 2.98 Forfeited ( 502,018 ) $ 5.22 ( 132,218 ) $ 3.43 ( 684,976 ) $ 2.73 Vested ( 1,552,004 ) $ 3.78 ( 1,838,659 ) $ 2.68 ( 2,088,728 ) $ 2.43 Non-vested at end of period 2,333,436 $ 4.55 2,639,286 $ 3.96 3,371,832 $ 2.80 Expected to vest 2,333,436 $ 4.55 2,639,286 $ 3.96 3,371,832 $ 2.80 PSUs— PSUs are granted to employees of the Company and its subsidiaries. The fair value of the PSUs are measured at the grant date fair value of the award, which was determined based on an analysis of the probable performance outcomes. The performance period is over one year and is based on the achievement of bookings targets during the year of grant, as defined in the agreement. The earned shares will then vest over a three year period, one-third on each of the first, second, and third anniversaries of the grant date, or if later, the date the Compensation Committee certifies the performance results with respect to the performance period. There were no cash flow impacts resulting from the grants. A summary of the status of PSUs as of December 31, 2023, 2022, and 2021 and the changes during the periods then ended, is presented below: Year Ended December 31, 2023 2022 2021 Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date Non-vested at beginning of the period 2,086,933 $ 3.48 1,593,775 $ 2.62 1,352,438 $ 2.50 Granted (1) 1,552,715 $ 5.28 1,553,332 $ 3.77 990,000 $ 2.62 Forfeited (2) ( 603,836 ) $ 5.15 ( 93,341 ) $ 2.40 ( 161,946 ) $ 2.63 Vested ( 1,418,850 ) $ 3.54 ( 966,833 ) $ 2.64 ( 586,717 ) $ 2.32 Non-vested at end of period 1,616,962 $ 4.52 2,086,933 $ 3.48 1,593,775 $ 2.62 Expected to vest 1,616,962 $ 4.52 2,086,933 $ 3.48 1,593,775 $ 2.62 (1) PSUs granted includes 587,587 additional PSUs granted in the first quarter of 2023 related to the bookings achievement for the performance period ended December 31, 2022 and 853,332 additional PSUs granted in the first quarter of 2022 related to the bookings achievement for the performance period ended December 31, 2021. (2)PSUs forfeited includes 48,633 PSUs forfeited in the first quarter of 2021 related to the bookings achievement for the performance period ended December 31, 2020. Stock Options— No stock options were granted during the years ended December 31, 2023, 2022, and 2021, and there were no stock options outstanding as of December 31, 2023, 2022 and 2021. During the year ended December 31, 2021, 110,000 stock options were forfeited. Employee Stock Purchase Plan— On March 11, 2020 the Company's Board of Directors adopted an Employee Stock Purchase Plan ("ESPP"). The ESPP was approved by the Company's stockholders on April 21, 2020. The ESPP provides eligible employees the opportunity to purchase shares of the Company's common stock through payroll deductions during six-month offering periods. The purchase price per share of common stock is 85 % of the lower of the closing stock price on the first or last trading day of each offering period. The offering periods are January 1 to June 30 and July 1 to December 31. The maximum number of shares of common stock available for purchase under the ESPP is 500,000 , subject to adjustment as provided under the ESPP. Individual employee purchases are limited to $ 25,000 per calendar year, based on the fair market value of the shares 76 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on the purchase date. The first offering period commenced January 1, 2022. During the years ended December 31, 2023 and 2022, 114,002 and 67,905 shares, respectively, were issued under the plan. No shares were issued during the year ended December 31, 2021. 16. INCOME TAXES Deferred tax assets (liabilities) included in the balance sheet as of December 31, 2023 and 2022 are as follows (in thousands): 2023 2022 Deferred tax assets: Capital loss carryforward $ 22,976 $ 4,904 Allowance for doubtful accounts 349 380 Depreciation of fixed assets 989 — Provision for accrued expenses and other, net 893 1,040 Investments 620 534 Stock-based compensation 2,505 2,692 Operating lease liabilities 2,102 2,066 Tax credit carryforward 311 303 30,745 11,919 Less valuation allowance 23,852 5,694 Deferred tax asset, net of valuation allowance 6,893 6,225 Deferred tax liabilities: Acquired intangibles ( 6,355 ) ( 6,325 ) Depreciation of fixed assets — ( 1,416 ) Capitalized contract costs ( 1,578 ) ( 2,391 ) Operating lease assets ( 1,174 ) ( 1,608 ) Deferred tax liability ( 9,107 ) ( 11,740 ) Net deferred tax liability $ ( 2,214 ) $ ( 5,515 ) The Company had deferred tax assets of $ 23.0 million and $ 4.9 million, respectively, at December 31, 2023 and 2022 related to capital loss carryforwards and $ 0.3 million at December 31, 2023 and 2022 related to tax credit carryforwards. The capital losses expire in 2024 through 2028, and the tax credits expire in 2025 through 2032. The Company has recorded valuation allowances of $ 23.9 million and $ 5.7 million, respectively, at December 31, 2023 and 2022 in order to measure only the portion of the deferred tax assets which are more likely than not to be realized. Tax expense (benefit) for the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands): 2023 2022 2021 Current income tax expense (benefit): Federal $ 2,631 $ 2,478 $ ( 332 ) State 801 743 154 Current income tax expense (benefit) 3,432 3,221 ( 178 ) Deferred income tax expense (benefit): Federal ( 2,648 ) ( 3,173 ) ( 414 ) State ( 653 ) ( 627 ) ( 37 ) Deferred income tax expense (benefit) ( 3,301 ) ( 3,800 ) ( 451 ) Income tax expense (benefit) $ 131 $ ( 579 ) $ ( 629 ) 77 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A reconciliation between tax expense (benefit) at the federal statutory rate and the reported income tax expense (benefit) is summarized as follows: Year Ended December 31, 2023 2022 2021 Federal statutory rate $ 760 $ 755 $ ( 216 ) Loss on sale of investments ( 22,881 ) — ( 251 ) Expiration of capital loss carryforward 4,680 — — Stock-based compensation ( 399 ) ( 1,130 ) ( 84 ) State tax expense, net of federal effect 80 139 110 Change in accrual for unrecognized tax benefits 263 ( 16 ) ( 155 ) Executive compensation 1,214 266 541 Research and development tax credits ( 1,651 ) ( 763 ) ( 478 ) Income from equity method investment ( 105 ) ( 335 ) — Change in valuation allowance 18,158 555 — Other 12 ( 50 ) ( 96 ) Income tax expense (benefit) $ 131 $ ( 579 ) $ ( 629 ) Effective tax rate 3.6 % ( 16.1 ) % 61.0 % An uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a tax return not yet filed, that has not been reflected in measuring income tax expense for financial reporting purposes. At December 31, 2023 and 2022, the Company's accrual for unrecognized tax benefits consists of the following: 2023 2022 Unrecognized tax benefits $ 979 $ 734 Estimated accrued interest and penalties 53 35 Accrual for unrecognized tax benefits, as recorded $ 1,032 $ 769 During the years ended December 31, 2023, 2022 and 2021, interest expense (income) and penalties recorded in the consolidated statements of operations were $ 18,000 , $( 20,000 ), and $( 27,000 ), respectively. Following is a reconciliation of the amounts of unrecognized tax benefits, net of tax and excluding interest and penalties, for the years ended December 31, 2023, 2022 and 2021 (in thousands): 2023 2022 2021 Unrecognized tax benefits—beginning of period $ 734 $ 730 $ 858 Increases in tax positions related to current year 282 194 165 Increases (decreases) in tax positions related to prior year 131 — ( 42 ) Lapse of statute of limitations ( 168 ) ( 190 ) ( 251 ) Unrecognized tax benefits—end of period $ 979 $ 734 $ 730 The foregoing table indicates unrecognized tax benefits, net of tax and excluding interest and penalties. The balance of gross unrecognized benefits was $ 1.0 million, $ 0.8 million, and $ 0.8 million at December 31, 2023, 2022, and 2021, respectively. If the unrecognized tax benefits at December 31, 2023, 2022, and 2021 were recognized in full, tax benefits of $ 1.0 million, $ 0.8 million, and $ 0.8 million, respectively, would affect the effective tax rate. The Company has filed income tax returns in the U.S. and various foreign jurisdictions. The foreign returns relate to the eFC business, of which the Company transferred a majority interest and control to eFC's management on June 30, 2021. See Notes 1 and 4 for additional disclosures. The Company is generally no longer subject to examinations by U.S. federal tax authorities for tax years prior to 2020, or by U.S. state and foreign authorities for tax years prior to 2019. The Company believes it is reasonably possible that as much as $ 0.2 million of its unrecognized tax benefits may be recognized by the end of 2024 as a result of a lapse of the statute of limitations. 78 Table of Contents DHI GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. EMPLOYEE SAVINGS PLAN The Company has a savings plan (the “Savings Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the Savings Plan, participating employees may defer a portion of their pretax earnings, up to the Internal Revenue Service annual contribution limit. The Company contributed $ 2.4 million, $ 2.1 million, and $ 1.7 million for the years ended December 31, 2023, 2022 and 2021, respectively, to match employee contributions to the Savings Plan. 18. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed based on the weighted-average number of shares of common stock outstanding plus common stock equivalents, where dilutive. The following is a calculation of basic and diluted earnings (loss) per share and weighted-average shares outstanding (in thousands, except per share amounts): 2023 2022 2021 Income (loss) from continuing operations $ 3,491 $ 4,176 $ ( 402 ) Income (loss) from discontinued operations, net of tax $ — $ — $ ( 29,340 ) Net Income (loss) $ 3,491 $ 4,176 $ ( 29,742 ) Weighted-average shares outstanding—basic 43,571 44,274 46,333 Add shares issuable from stock-based awards (1) 925 2,259 — Weighted-average shares outstanding—diluted $ 44,496 $ 46,533 $ 46,333 Basic earnings (loss) per share - continuing operations $ 0.08 $ 0.09 $ ( 0.01 ) Diluted earnings (loss) per share - continuing operations $ 0.08 $ 0.09 $ ( 0.01 ) Basic earnings (loss) per share - discontinued operations $ — $ — $ ( 0.63 ) Diluted earnings (loss) per share - discontinued operations $ — $ — $ ( 0.63 ) Basic earnings (loss) per share $ 0.08 $ 0.09 $ ( 0.64 ) Diluted earnings (loss) per share $ 0.08 $ 0.09 $ ( 0.64 ) Shares excluded from the calculation of diluted earnings per share (2) 2,009 137 — (1) For the twelve months ended December 31, 2021, 2.6 million shares were excluded from the computation of shares contingently issuable upon exercise as we recognized a net loss from continuing operations. (2) Represents outstanding stock-based awards that were anti-dilutive and excluded from the calculation of diluted earnings per share. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None.