What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-10 compared with 2023-11-01 · 122 added, 249 removed, 222 unchanged (63% of the section changed)

14 unchanged sentences

failure to develop and maintain our reputation and brand recognition;

failure to increase or maintain the number of

customers who purchase recruitment packages;

failure to increase or maintain the number of customers who purchase recruitment packages;

failure to attract qualified professionals or grow the number of qualified professionals who use our websites;

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regulation of the internet;

a review of strategic alternatives may occur from time to time and the possibility that such review will not result in a transaction;

a review of strategic alternatives may occur from time to

time and the possibility that such review will not result in a transaction;

loss of key executives and technical personnel and our ability to attract and retain key executives, including our CEO;

4 unchanged sentences

compliance with changing corporate governance requirements and costs incurred in connection with being a public company;

compliance with the continued listing standards of the New York Stock Exchange (the “NYSE”);

compliance with the continued listing standards of the New York Stock Exchange;

volatility in our stock price;

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These measures are not in accordance with, or an alternative for, measures in accordance with generally accepted accounting principles in the United States ("U.S.

Such measures presented herein include adjusted earnings before interest, taxes, depreciation and amortization, and items such as non-cash stock-based compensation, gain or loss on investments, and certain other income or expense items, as defined.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" for definitions of these measures as well as reconciliations to the mostly directly comparable GAAP measure.

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The Dice and ClearanceJobs businesses and corporate related costs are aggregated into the Tech-focused reportable segment primarily because the Company does not have discrete financial information for those brands or costs.

Recent Developments

Director Appointment

On July 26, 2023, Joseph Massaquoi, Jr.

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

Chief Financial Officer Transition

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

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

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

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

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

Our Revenue and Expenses

1 unchanged sentence

Our fees vary by customer based on the number of individual users of our databases of resumes, the number and type of job postings and profile views purchased and the terms of the packages purchased, which are predominately annual agreements.

Our Company sells recruitment packages, which comprise approximately 90% or our total revenue, that can include access to our databases of resumes and job posting capabilities.

Our Company sells recruitment packages, which comprise greater than 90% or our total revenue, that can include access to our databases of resumes and job posting capabilities.

We believe the key metrics that are material to an analysis of our businesses are our total number of Dice and ClearanceJobs recruitment package customers and the revenue, on average, that these customers generate.

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The tables below detail this customer data.

As of September 30, Increase (Decrease) Percent

As of March 31, Increase (Decrease) Percent

Recruitment Package Customers:

2 unchanged sentences

Average Annual Revenue per Recruitment Package Customer (1)

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

Three months ended March 31,

2024 2023 Increase Percent

Change 2023 2022 Increase Percent

Dice $ 15,997 $ 15,672 $ 325 2 %

2 unchanged sentences

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

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

Dice had 5,250 recruitment package customers as of March 31, 2024, which was a decrease of 921, or 15%, and average annual revenue per recruitment package customer for Dice increased $325, or 2%, from the prior year quarter.

The decrease in recruitment package customers was due to macroeconomic conditions causing customer counts to decline while the average annual revenue per recruitment package customer increased driven by strong retention rates as our larger recurring customers continue to renew with Dice.

ClearanceJobs had 2,054 recruitment package customers as of September 30, 2023 compared to 2,030 as of September 30, 2022, an increase of 1%, and average annual revenue per recruitment package customer increased $2,114, or 11%, from the prior year quarter.

The increases for ClearanceJobs were due to continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

ClearanceJobs had 2,032 recruitment package customers as of March 31, 2024 compared to 2,078 as of March 31, 2023, a decrease of 2%, and average annual revenue per recruitment package customer increased $2,530, or 12%, from the prior year quarter.

The increased revenue per recruitment package customer for ClearanceJobs was due to continued high demand for professionals with government security clearance and consistent product releases and enhancements driving activity on the site.

The lower customer count was the result of uncertainty among ClearanceJob's smaller customers related to a possible government shutdown, which could delay payments to government contractors.

Deferred revenue, as shown on the condensed consolidated balance sheets, reflects customer billings made in advance of services being rendered.

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(1) Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts.

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

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

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

To a lesser extent, we also generate revenue from advertising on our various websites or from lead generation and marketing solutions provided to our customers.

Backlog at March 31, 2024 increased $6.4 million from December 31, 2023 but decreased $9.7 million from March 31, 2023.

The increase in backlog compared to December 31, 2023 is primarily due to the seasonally higher bookings in the first quarter of each year.

The decrease in backlog compared to March 31, 2023 is due to macroeconomic conditions causing lower demand for the Company's services.

Our contracts are subject to delay or default and contracts in the Company's backlog are subject to changes in the scope of services to be provided as well as adjustments to the costs relating to the applicable contracts.

Backlog may also be affected by, among other things, external market and economic factors beyond our control.

Accordingly, there is no assurance that the entirety of our backlog will be realized.

The timing of new contracts and the mix of services can significantly affect backlog.

Backlog at any given point in time may not accurately represent the future revenue that may be realized and should not be relied upon as a stand-alone indicator of future revenues.

To a lesser extent, we also generate revenue from advertising on our various websites, employer branding solutions or from lead generation and marketing solutions provided to our customers.

Advertisements include various forms of rich media and banner advertising, text links, sponsorships, and custom content marketing solutions.

Lead generation information utilizes advertising and other methods to deliver leads to customers.

Employer branding pages provide an opportunity for customers to promote company culture and values to candidates.

The Company continues to evolve and present new software products and features to attract and engage qualified professionals and match them with employers.

2 unchanged sentences

Product Releases

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

ClearanceJobs Comments, ClearanceJobs Expressed Interest, ClearanceJobs Enhanced Employer Profile, ClearanceJobs Mobile App ClearanceJobs Multi-Factor Authentication, ClearanceJobs Live Video, ClearanceJobs Scheduled Broadcast Messages

Dice Discover Companies, TopResume Integration Dice Premium Enhanced Company Profile, Dice Remote and Company Preferences, Dice Invite To Apply, Dice Matchscore on Jobs, Dice Connections

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

Other material factors that may affect our results of operations include our ability to attract qualified professionals that become engaged with our websites and our ability to attract customers with relevant job opportunities.

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Personnel costs are categorized in our statement of operations based on each employee’s principal function.

Personnel costs incurred during the application development stage of internal use software and website development are recorded as fixed assets and amortized to

depreciation expense in the statement of operations over the estimated useful life of the asset.

Personnel costs incurred during the application development stage of internal use software and website development are recorded as fixed assets and amortized to depreciation expense in the statement of operations over the estimated useful life of the asset.

Marketing expenditures primarily consist of online advertising, brand promotion and lead generation to employers and job seekers.

Critical Accounting Estimates

There have been no material changes to our critical accounting estimates as compared to the critical accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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

Three Months Ended September 30, Increase (Decrease) Percent

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Three Months Ended March 31, Increase (Decrease) Percent

(in thousands, except percentages)

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(1) Includes Dice and Career Events

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

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

Revenues for ClearanceJobs increased $1.5 million, or 13%, as compared to the same period in 2022, primarily driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

For the three months ended March 31, 2024, we experienced a decrease in revenue of $2.6 million, or 7%.

Revenue at Dice decreased $3.7 million, or 14%, compared to the same period in 2023 due to macroeconomic conditions continuing to drive lower renewal rates, lower new business activity and lower activity with Dice's non-annual products.

Revenues for ClearanceJobs increased $1.1 million, or 10%, as compared to the same period in 2023, primarily driven by continued high

demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site.

Cost of Revenue

Three Months Ended September 30, Increase Percent

Three Months Ended March 31, Decrease Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 13.5 % 12.7 %

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

Cost of revenue was flat year over year, driven by a decrease of $0.2 million from a reduction in compensation related costs partially offset by technology costs, including software subscriptions and web hosting.

Product Development Expenses

Three Months Ended September 30, Decrease Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 13.3 % 12.2 %

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

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

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

Product development expenses increased $0.1 million, or 2% from the prior year.

The increase was driven by $0.9 million of lower capitalized labor, which increases operating expenses, partially offset by a $0.7 million reduction in compensation related costs, primarily related to lower headcount and wages.

Sales and Marketing Expenses

Three Months Ended September 30, Decrease Percent

Three Months Ended March 31, Decrease Percent

(in thousands, except percentages)

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Sales and marketing expenses decreased $3.4 million, or 21% from the prior year.

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

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

This decrease was driven by a $2.6 million decrease in compensation related costs, primarily related to lower commissions and headcount, a $0.3 million decrease in operational costs, including credit card fees and travel, and a $0.2 million decrease in discretionary marketing expenses.

General and Administrative Expenses

Three Months Ended September 30, Decrease Percent

Three Months Ended March 31, Decrease Percent

(in thousands, except percentages)

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General and administrative expenses decreased $1.0 million, or 12% from the prior year.

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

Three Months Ended September 30, Decrease Percent

The decrease was driven by a $0.7 million decrease in stock-based compensation and a $0.3 million decrease in operational costs, including consulting.

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 12.4 % 10.8 %

Depreciation expense decreased $0.2 million, or 4%, compared to the same period in 2022.

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

Restructuring

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

Restructuring $ 302 $ — $ 302 n/a

Percentage of revenue 0.8 % — %

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

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

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

Depreciation expense increased $0.3 million, or 7%, compared to the same period in 2023.

The increase was primarily driven by depreciation related to capitalized development costs.

Operating Income

Three Months Ended September 30, Increase (Decrease) Percent

Three Months Ended March 31, Increase (Decrease) Percent

(in thousands, except percentages)

2 unchanged sentences

Operating margin 5.5 % 1.5 %

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

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

Operating income for the three months ended March 31, 2024 was $2.0 million, a positive margin of 5.5%, compared to operating income of $0.6 million, a positive margin of 1.5%, for the same period in 2023, an increase of $1.4 million.

The increase in operating income and percentage margin was driven by lower operational costs, primarily related to sales and marketing, during the quarter.

Income from Equity Method Investment

Three Months Ended September 30, Decrease Percent

Three Months Ended March 31, Decrease Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 0.4 % 0.4 %

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

During the three months ended March 31, 2024 and 2023, the Company recorded $0.1 million and $0.2 million, respectively, of income related to its proportionate share of eFinancialCareer's net income.

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

See note 6 for additional information.

Gain on Sale of Investment

Three Months Ended September 30, Increase Percent

(in thousands, except percentages)

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

Percentage of revenue 1.6 % — %

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

See note 7 for additional information.

Impairment of Investment

Three Months Ended September 30, Decrease Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

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

Impairment of Investment $ 400 $ — $ 400 n/a

Percentage of revenue 1.1 % — %

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

During the three months ended March 31, 2024, the Company recognized a $0.4 million loss related to the impairment of an investment.

See note 6 for additional information.

Interest Expense and Other

Three Months Ended September 30, Increase Percent

Three Months Ended March 31, Increase Percent

(in thousands, except percentages)

1 unchanged sentence

Percentage of revenue 2.6 % 2.1 %

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

Three Months Ended September 30,

Interest expense and other of $0.9 million increased $0.1 million, or 19%, from the prior year, primarily due to higher interest rates.

Three Months Ended March 31,

(in thousands, except

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Effective tax rate 299.7 % 951.9 %

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

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

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

The effective tax rate for the three months ended March 31, 2024, differed from the statutory rate due to tax expense of $1.8 million from the tax impacts of share-based compensation awards and $0.2 million from state taxes related to research and development expenditures.

The tax rate for the three months ended March 31, 2023 differed from the statutory rate due to tax benefits of $0.5 million from the tax impacts of share-based compensation awards.

Earnings per Share

Three Months Ended September 30,

Three Months Ended March 31,

(in thousands, except

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Diluted earnings (loss) per share $ (0.03) $ 0.01

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

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

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

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

$ 77,952 $ 78,799 $ (847) (1) %

ClearanceJobs 36,639 31,119 5,520 18 %

Total revenue $ 114,591 $ 109,918 $ 4,673 4 %

(1) Includes Dice U.S.

and Career Events

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

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

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

Cost of Revenue

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Cost of revenue $ 14,839 $ 12,841 $ 1,998 16 %

Percentage of revenue 12.9 % 11.7 %

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

Product Development Expenses

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Product development $ 13,284 $ 12,982 $ 302 2 %

Percentage of revenue 11.6 % 11.8 %

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

Sales and Marketing Expenses

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Sales and marketing $ 44,819 $ 43,207 $ 1,612 4 %

Percentage of revenue 39.1 % 39.3 %

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

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

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

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

General and Administrative Expenses

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

General and administrative $ 23,871 $ 25,543 $ (1,672) (7) %

Percentage of revenue 20.8 % 23.2 %

General and administrative costs decreased $1.7 million, or 7%, from the prior year.

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

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

Depreciation $ 12,576 $ 12,594 $ (18) — %

Percentage of revenue 11.0 % 11.5 %

Depreciation expense is consistent with the prior year.

Restructuring

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Restructuring $ 2,417 $ — $ 2,417 n/a

Percentage of revenue 2.1 % — %

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

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

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

Operating Income

Nine Months Ended September 30, Increase (Decrease) Percent

(in thousands, except percentages)

Revenue $ 114,591 $ 109,918 $ 4,673 4 %

Operating income 2,785 2,751 34 1 %

Operating margin 2.4 % 2.5 %

Operating income and margin were primarily flat year over year.

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

Income from Equity Method Investment

Nine Months Ended September 30, Decrease Percent Change

(in thousands, except percentages)

Income from equity method investment $ 428 $ 1,107 $ (679) (61) %

Percentage of revenue 0.4 % 1.0 %

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

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

See note 7 for additional information.

Gain on Sale of Investments

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

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

Percentage of revenue 0.5 % 0.3 %

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

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

See note 7 for additional information.

Impairment of Investment

Nine Months Ended September 30, Decrease Percent

(in thousands, except percentages)

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

Percentage of revenue 0.3 % 2.1 %

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

See note 7 for additional information.

Interest Expense and Other

Nine Months Ended September 30, Increase Percent

(in thousands, except percentages)

Interest expense and other $ 2,616 $ 990 $ 1,626 164 %

Percentage of revenue 2.3 % 0.9 %

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

Nine Months Ended September 30,

(in thousands, except

Income before income taxes $ 911 $ 888

Income tax benefit (432) (937)

Effective tax rate (47.4) % (105.5) %

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

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

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

Earnings (Loss) per Share

Nine Months Ended September 30,

(in thousands, except

per share amounts)

Net income $ 1,343 $ 1,825

Weighted-average shares outstanding - basic 43,582 44,503

Weighted-average shares outstanding - diluted 44,579 46,711

Diluted earnings per share $ 0.03 $ 0.04

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

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

Diluted earnings (loss) per share was $(0.03) and $0.01 for the three months ended March 31, 2024 and 2023, respectively.

The decrease was driven by lower revenue, impairment of investment, and tax expense, as described above, partially offset by lower operational costs.

Liquidity and Capital Resources

A summary of our cash flows for the three months ended March 31, 2024 and 2023 follows (in thousands):

Three Months Ended March 31,

Cash from operating activities $ 2,087 $ 11

Cash used in investing activities $ (4,442) $ (4,833)

Cash from financing activities $ 1,389 $ 7,184

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

At March 31, 2024, we had cash of $3.2 million compared to $4.2 million at December 31, 2023.

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

In addition, we had $50.5 million in borrowing capacity under our $100.0 million Credit Agreement, as defined below, at March 31, 2024.

Borrowings are subject to certain availability limits including our consolidated leverage ratio, which generally limits borrowings to 2.5 times annual Adjusted EBITDA levels, as defined in the Credit Agreement.

We believe that our existing cash, cash generated from our continuing operations and available borrowings under our Credit Agreement will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and the foreseeable future thereafter.

However, it is possible that one or more lenders under the Credit Agreement may refuse or be unable to satisfy their commitment to lend to us, we may violate one or more of our covenants or financial ratios contained in our Credit Agreement or we may need to refinance our debt and be unable to do so.

In addition, our liquidity could be negatively affected by a decrease in demand for our products and services and the ability of our customers to pay for current or future services.

We may also make acquisitions and may need to raise additional capital through future debt financings or equity offerings to the extent necessary to fund such acquisitions, which we may not be able to do on a timely basis or on terms satisfactory to us or at all.

Operating Activities

Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, amortization, changes in deferred tax assets and liabilities, stock-based compensation, income from equity method investments, gain or impairments on investments, and the effect of changes in working capital.

Net cash flows from operating activities were $2.1 million and $0.0 million for the three-month periods ended March 31, 2024 and 2023, respectively.

Cash inflow from operations is driven by earnings and is dependent on the amount and timing of payments to vendors and employees and billings to and cash collections from our customers.

Cash provided by operating activities during the 2024 period increased $2.1 million compared to the same period of 2023 due to lower people costs, including lower payments for bonus, wages and commissions and the timing of payments to vendors.

The reductions were partially offset by lower billings to and cash collections from our customers.

Investing Activities

Cash used in investing activities during the three-month period ended March 31, 2024 was $4.4 million compared to $4.8 million used in the same period of 2023.

Cash used in investing activities in the three-month period ended March 31, 2024 is comprised of $3.4 million of capitalized development costs, and $0.9 million of costs associated with the Company's office space.

Cash used in investing activities in the three-month period ended March 31, 2023 is comprised of $4.6 million of capitalized development costs.

The $1.2 million reduction in capitalized development costs is due to the restructuring completed in the second quarter of 2023.

Financing Activities

Cash from financing activities during the three-month period ended March 31, 2024 was $1.4 million and was driven by $3.0 million of net proceeds on long-term debt, partially offset by $1.6 million related to share repurchases.

Cash from financing activities during the three-month period ended March 31, 2023 was $7.2 million and was driven by $16.0 million of net proceeds on long-term debt, partially offset by $8.8 million related to share repurchases.

Non-GAAP Financial Measures

We have provided certain non-GAAP financial information as additional measures for our operating results.

These measures are not in accordance with, or an alternative for, measures in accordance with U.S.

We have provided certain non-GAAP financial information as additional information for our operating results.

These measures are not in accordance with, or alternatives to measures in accordance with U.S.

GAAP and may be different from similarly titled non-GAAP measures reported by other companies.

We believe the presentation of non-GAAP measures, such as Adjusted EBITDA and Adjusted EBITDA Margin, provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations.

In addition, the Company’s management uses these measures for reviewing the financial results of the Company and for budgeting and planning purposes.

Non-GAAP results exclude the impact of items that management believes affect the comparability or underlying business trends in our condensed consolidated financial statements in the periods presented.

The non-GAAP measures apply to consolidated results or other measures as shown within this document.

The Company has provided required reconciliations to the most comparable GAAP measures below.

Adjusted EBITDA and Adjusted EBITDA Margin

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The Company also uses these measures to calculate amounts of performance-based compensation under the senior management incentive bonus program.

Adjusted EBITDA represents net income plus (to the extent deducted in calculating such net income) interest expense, income tax expense, depreciation and amortization, and items such as non-cash stock-based compensation expense, losses resulting from certain dispositions outside the ordinary course of business including prior negative operating results of those divested businesses, certain write-offs in connection with indebtedness, impairment charges with respect to long-lived assets, expenses incurred in connection with an equity offering or any other offering of securities by the Company, extraordinary or non-recurring non-cash expenses or losses, losses from equity method investments, transaction costs in connection with the credit agreement, deferred revenue written off in connection with acquisition purchase accounting adjustments, write-off of non-cash stock-based compensation expense, impairment of investment, severance and retention costs related to dispositions and reorganizations of the Company, restructuring charges and losses related to legal claims and fees that are unusual in nature or infrequent, minus (to the extent included in calculating such net income) non-cash income or gains, including income from equity method investments, interest income, business interruption insurance proceeds, and any income or gain resulting from certain dispositions outside the ordinary course of business, including prior positive operating results of those divested businesses, and gains related to legal claims that are unusual in nature or infrequent.

Adjusted EBITDA represents net income plus (to the extent deducted in calculating such net income) interest expense, income tax expense, depreciation and amortization, and items such as non-cash stock-based compensation expense, losses resulting from certain dispositions outside the ordinary course of business including prior negative operating results of those divested businesses, certain write-offs in connection with indebtedness, impairment charges with respect to long-lived assets, expenses incurred in connection with an equity offering or any other offering of securities by the Company, extraordinary or non-recurring non-cash expenses or losses, losses from equity method investments, transaction costs in connection with the credit agreement, deferred revenue written off in connection with acquisition purchase accounting adjustments, write-off of non-cash stock-based compensation expense, impairment of investment, severance and retention costs related to dispositions and reorganizations of the Company, restructuring charges and losses related to legal claims and fees that are unusual in nature or infrequent, minus (to the extent included in calculating such net income) non-cash income or gains, including income from equity method investments, interest income, business interruption insurance proceeds, and gains related to legal claims that are unusual in nature or infrequent.

Adjusted EBITDA Margin is computed as Adjusted EBITDA divided by revenue.

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• Other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures.

other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analysis.

To compensate for these limitations, management evaluates our liquidity by considering the economic effect of excluded expense items independently, as well as in connection with its analysis of cash flows from operations and through the use of other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analysis.

Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of our financial performance under GAAP and should not be considered as an alternative to revenue, operating income, net income, net income margin, cash provided by operating activities, or any other performance measures derived in accordance with GAAP as a measure of our profitability or liquidity.

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

Nine Months Ended September 30,

Reconciliation of Net Income to Adjusted EBITDA:

Net income $ 1,343 $ 1,825

A reconciliation of Adjusted EBITDA for the three months ended March 31, 2024 and 2023 follows (in thousands):

Three Months Ended March 31,

Reconciliation of Net Income (Loss) to Adjusted EBITDA:

Net income (loss) $ (1,512) $ 460

Interest expense 946 798

Income tax benefit (432) (937)

Income tax expense (benefit) 2,269 (514)

Depreciation 4,456 4,173

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Income from equity method investment (134) (171)

Gain on sale of investments (614) (320)

Impairment of investment 400 —

Severance and related costs — 421

Restructuring 2,417 —

Adjusted EBITDA $ 8,569 $ 8,054

Reconciliation of cash provided by operating activities to Adjusted EBITDA

Reconciliation of Cash Flows from Operating Activities to Adjusted EBITDA

Net cash provided by operating activities $ 2,087 $ 11

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Amortization of deferred financing costs (36) (36)

Income tax benefit (432) (937)

Income tax expense (benefit) 2,269 (514)

Deferred income taxes (980) 848

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Severance and related costs — 421

Restructuring 2,417 —

Changes in working capital and other 573 10,414

Adjusted EBITDA $ 8,569 $ 8,054

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

Nine Months Ended September 30,

A reconciliation of Adjusted EBITDA Margin for the three months ended March 31, 2024 and 2023 follows (in thousands):

Three Months Ended March 31,

Revenue $ 36,025 $ 38,620

Net income $ 1,343 $ 1,825

Net income margin (1)

Net income (loss) $ (1,512) $ 460

Net income (loss) margin (1)

Adjusted EBITDA $ 8,569 $ 8,054

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(1) Net income margin and Adjusted EBITDA Margin are calculated by dividing the respective measure by that period's revenue.

Liquidity and Capital Resources

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

Nine Months Ended September 30,

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

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

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

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

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

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

In addition, we had $60.0 million in borrowing capacity under our $100.0 million Credit Agreement, as defined below, at September 30, 2023, subject to certain availability limits including our consolidated leverage ratio, which generally limits borrowings to 2.5 times annual Adjusted EBITDA levels, as defined in the Credit Agreement.

In addition, our liquidity could be negatively affected by a decrease in demand for our products and services and the ability of our customers to pay for current or future services.

Operating Activities

Net cash flows from operating activities were $13.7 million and $28.7 million for the nine-month periods ended September 30, 2023 and 2022, respectively.

Cash inflow from operations is driven by earnings and is dependent on the amount and timing of payments to vendors and employees and billings to and cash collections from our customers.

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

Investing Activities

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

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

Financing Activities

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

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

Critical Accounting Estimates

Financing and Capital Requirements

Credit Agreement

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

We have a $100 million revolving credit facility, which matures June 2027, with $ 41.0 million of borrowings on the facility at March 31, 2024, leaving $ 50.5 million available for future borrowings, subject to the terms of the Credit Agreement, which generally limits borrowings to 2.5 times annual Adjusted EBITDA levels.

Borrowings under the Credit Agreement denominated in U.S.

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The Company incurs a commitment fee ranging from 0.35% to 0.50% on any unused capacity under the revolving loan facility, determined by the Company's most recent consolidated leverage ratio.

Assuming an int eres t rate of 7.67 % (the rate in effect on September 30, 2023) on our current borrowings, interest payments are expected to be $0.8 million from October 1, 2023 to December 31, 2023, $3.1 million in each of 2024, 2025 and 2026 and $1.5 million in 2027.

The Credit Agreement contains various customary affirmative and negative covenants and also contains certain financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio.

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

Assuming an int eres t rate of 7.78 % (the rate in effect on March 31, 2024) on our current borrowings, interest payments are expected to be $2.4 million from April 1, 2024 to December 31, 2024, $3.2 million in each of 2025 and 2026, and $1.6 million in 2027.

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.

As of March 31, 2024, the Company was in compliance with all of the financial covenants under the Credit Agreement.

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

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The Company has operating leases for corporate office space and certain equipment.

The leases have terms from one year to eleven years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option.

The leases have terms from one year to ten years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option.

No leases include options to purchase the leased property.

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

As of March 31, 2024, the value of our lease right-of-use asset was $4.5 million and the value of our lease liability was $8.2 million.

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

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Other Capital Requirements

As of September 30, 2023, we recorded approximately $1.2 million of unrecognized tax benefits as liabilities, and we are uncertain if or when such amounts may be settled.

As of March 31, 2024, we recorded approximately $1.1 million of unrecognized tax benefits as liabilities, and we are uncertain if or when such amounts may be settled.

Related to the unrecognized tax benefits considered permanent differences, we have also recorded a liability for potential penalties and interest.

Included in the balance of unrecognized tax benefits at September 30, 2023 are $1.2 million of tax benefits that would affect the effective tax rate if recognized.

Included in the balance of unrecognized tax benefits at March 31, 2024 are $1.1 million of tax benefits that would affect the effective tax rate if recognized.

The Company believes it is reasonably possible that as much as $0.2 million of its unrecognized tax benefits may be recognized in the next 12 months.

The Board previously approved a stock repurchase program that permits the Company to repurchase its common stock.

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

The Board previously approved a stock repurchase program that permitted the Company to repurchase its common stock.

As of March 31, 2024, the Company had no stock repurchase programs and all previously approved stock repurchase programs had expired in accordance with their terms.

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

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We anticipate capital expenditures for the year ending December 31, 2024 to be approximately $15 million to $17 million.

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

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

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However, we believe that online career websites and marketplaces continue to provide economic and strategic value to the labor market and industries that we serve.

Any slowdown in recruitment activity that occurs could negatively impact our revenue and results of operations.

For instance, the COVID-19 pandemic resulted in a slowdown of recruiting activity in 2020, which negatively impacted our business.

Alternatively, a decrease in the unemployment rate or a labor shortage, including as a result of an increase in job turnover, generally means that employers (including our customers) are seeking to hire more individuals, which would generally lead to more job postings and database licenses and have a positive impact on our revenue and results of operations.

Any slowdown in recruitment activity that occurs could negatively impact our revenues and results of operations.

A decrease in the unemployment rate or a labor shortage, including as a result of an increase in job turnover, generally means that employers (including our customers) are seeking to hire more individuals, which would generally lead to more job postings and database licenses and have a positive impact on our revenues and results of operations.

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

Additionally, there has historically been a lag from the time customers begin to increase purchases of our recruitment services and the impact to our revenue due to the recognition of revenue occurring over the length of the contract, which can be several months to over a year.

Additionally, there has historically been a lag from the time customers begin to increase purchases of our recruitment services and the impact to our revenues due to the recognition of revenue occurring over the length of the contract, which can be several months to over a year.

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis