DHI GROUP, INC. 10-Q

ITEM 1. Financial Statements DHI GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except per share data) June 30, 2024 December 31, 2023 ASSETS Current assets Cash $ 2,955 $ 4,206 Accounts receivable, net of allowance for doubtful accounts of $ 1,238 and $ 1,313 22,269 22,225 Income taxes receivable 360 221 Prepaid and other current assets 3,746 4,237 Total current assets 29,330 30,889 Fixed assets, net 23,168 25,272 Capitalized contract costs 7,078 6,364 Operating lease right-of-use assets 7,098 4,759 Investments 1,873 1,918 Acquired intangible assets 23,800 23,800 Goodwill 128,100 128,100 Other assets 3,938 4,100 Total assets $ 224,385 $ 225,202 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 12,205 $ 17,408 Deferred revenue 51,709 49,463 Operating lease liabilities 1,715 2,006 Total current liabilities 65,629 68,877 Deferred revenue 559 508 Operating lease liabilities 9,533 6,543 Long-term debt 35,000 38,000 Deferred income taxes 2,264 2,214 Accrual for unrecognized tax benefits 1,145 1,032 Other long-term liabilities 432 486 Total liabilities 114,562 117,660 Commitments and contingencies (Note 11) Stockholders’ equity Convertible preferred stock, $ .01 par value, authorized 20,000 shares; no shares issued and outstanding — — Common stock, $ .01 par value, authorized 240,000 ; issued: 80,902 and 78,764 shares, respectively; outstanding: 48,348 and 46,875 shares, respectively 810 789 Additional paid-in capital 266,253 261,824 Accumulated other comprehensive loss ( 30 ) ( 83 ) Accumulated earnings 31,659 32,228 Treasury stock, 32,554 and 31,889 shares, respectively ( 188,869 ) ( 187,216 ) Total stockholders’ equity 109,823 107,542 Total liabilities and stockholders’ equity $ 224,385 $ 225,202 See accompanying notes to the condensed consolidated financial statements. 2 Table of Contents DHI GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenue $ 35,833 $ 38,538 $ 71,858 $ 77,158 Operating expenses: Cost of revenue 5,200 4,956 10,077 9,868 Product development 4,729 4,158 9,527 8,852 Sales and marketing 12,019 14,723 24,717 30,783 General and administrative 7,296 8,453 14,523 16,661 Depreciation 4,586 4,162 9,042 8,335 Restructuring — 2,115 — 2,115 Total operating expenses 33,830 38,567 67,886 76,614 Operating income (loss) 2,003 ( 29 ) 3,972 544 Income from equity method investment 168 104 302 275 Impairment of investment — — ( 400 ) — Interest expense and other ( 845 ) ( 879 ) ( 1,791 ) ( 1,677 ) Income (loss) before income taxes 1,326 ( 804 ) 2,083 ( 858 ) Income tax expense (benefit) 383 ( 677 ) 2,652 ( 1,191 ) Net income (loss) $ 943 $ ( 127 ) $ ( 569 ) $ 333 Basic earnings (loss) per share $ 0.02 $ — $ ( 0.01 ) $ 0.01 Diluted earnings (loss) per share $ 0.02 $ — $ ( 0.01 ) $ 0.01 Weighted-average basic shares outstanding 44,569 43,460 44,386 43,672 Weighted-average diluted shares outstanding 45,037 43,460 44,386 44,682 See accompanying notes to the condensed consolidated financial statements. 3 Table of Contents DHI GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) $ 943 $ ( 127 ) $ ( 569 ) $ 333 Other comprehensive income: Foreign currency translation adjustment 31 6 53 156 Total other comprehensive income 31 6 53 156 Comprehensive income (loss) $ 974 $ ( 121 ) $ ( 516 ) $ 489 See accompanying notes to the condensed consolidated financial statements. 4 Table of Contents DHI GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited) (in thousands) Convertible Preferred Stock Common Stock Additional Paid-in Capital Treasury Stock Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Total Shares Issued Amount Shares Issued Amount Shares Amount Balance at December 31, 2023 — $ — 78,764 $ 789 $ 261,824 31,889 $ ( 187,216 ) $ 32,228 $ ( 83 ) $ 107,542 Net loss ( 1,512 ) ( 1,512 ) Other comprehensive income - translation adjustments 22 22 Stock-based compensation 2,144 2,144 Restricted stock issued 1,344 13 ( 13 ) — Performance-Based Restricted Stock Units eligible to vest 457 5 ( 5 ) — Restricted stock forfeited or withheld to satisfy tax obligations ( 1 ) — — 304 ( 750 ) ( 750 ) Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations — — — 342 ( 861 ) ( 861 ) Balance at March 31, 2024 — $ — 80,564 $ 807 $ 263,950 32,535 $ ( 188,827 ) $ 30,716 $ ( 61 ) $ 106,585 Net income 943 943 Other comprehensive income - translation adjustments 31 31 Stock-based compensation 2,160 2,160 Restricted stock issued 318 3 ( 3 ) — Restricted stock forfeited or withheld to satisfy tax obligations ( 54 ) ( 1 ) 1 15 ( 34 ) ( 34 ) Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations ( 8 ) — — 4 ( 8 ) ( 8 ) Issuance of common stock upon ESPP purchase 82 1 145 146 Balance at June 30, 2024 — $ — 80,902 $ 810 $ 266,253 32,554 $ ( 188,869 ) $ 31,659 $ ( 30 ) $ 109,823 5 Table of Contents Convertible Preferred Stock Common Stock Additional Paid-in Capital Treasury Stock Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Total Shares Issued Amount Shares Issued Amount Shares Amount Balance at December 31, 2022 — $ — 76,442 $ 766 $ 251,632 29,075 $ ( 174,083 ) $ 28,405 $ ( 481 ) $ 106,239 Net income 460 460 Other comprehensive income - translation adjustments 150 150 Stock-based compensation 2,887 2,887 Restricted stock issued 1,107 11 ( 11 ) — Performance-Based Restricted Stock Units eligible to vest 1,288 13 ( 13 ) — Restricted stock forfeited or withheld to satisfy tax obligations ( 4 ) — — 386 ( 2,278 ) ( 2,278 ) Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations — — — 512 ( 3,017 ) ( 3,017 ) Purchase of treasury stock under stock repurchase plan 743 ( 3,521 ) ( 3,521 ) Cumulative-effect of new accounting principle (See Note 2) 332 332 Balance at March 31, 2023 — $ — 78,833 $ 790 $ 254,495 30,716 $ ( 182,899 ) $ 29,197 $ ( 331 ) $ 101,252 Net loss ( 127 ) ( 127 ) Other comprehensive income - translation adjustments 6 6 Stock-based compensation 2,667 2,667 Restricted stock issued 176 2 ( 2 ) — Restricted stock forfeited or withheld to satisfy tax obligations ( 183 ) ( 2 ) 2 26 ( 95 ) ( 95 ) Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations ( 110 ) ( 1 ) 1 — — — Purchase of treasury stock under stock repurchase plan 919 ( 3,375 ) ( 3,375 ) Issuance of common stock upon ESPP purchase 45 — 148 148 Balance at June 30, 2023 — $ — 78,761 $ 789 $ 257,311 31,661 $ ( 186,369 ) $ 29,070 $ ( 325 ) $ 100,476 See accompanying notes to the condensed consolidated financial statements. 6 Table of Contents DHI GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Six Months Ended June 30, 2024 2023 Cash flows from (used in) operating activities: Net income (loss) $ ( 569 ) $ 333 Adjustments to reconcile net income (loss) to net cash flows from (used in) operating activities: Depreciation 9,042 8,335 Deferred income taxes 50 ( 2,075 ) Amortization of deferred financing costs 72 72 Stock-based compensation 4,304 5,554 Income from equity method investment ( 302 ) ( 275 ) Impairment of investment 400 — Change in accrual for unrecognized tax benefits 113 303 Changes in operating assets and liabilities: Accounts receivable ( 45 ) 1,837 Prepaid expenses and other assets 581 329 Capitalized contract costs ( 714 ) 2,325 Accounts payable and accrued expenses ( 4,248 ) ( 9,557 ) Income taxes receivable/payable ( 139 ) ( 1,231 ) Deferred revenue 2,297 2,570 Other, net 308 ( 443 ) Net cash flows from operating activities 11,150 8,077 Cash flows used in investing activities: Purchases of fixed assets ( 7,913 ) ( 9,221 ) Net cash flows used in investing activities ( 7,913 ) ( 9,221 ) Cash flows from (used in) financing activities: Payments on long-term debt ( 16,000 ) ( 12,000 ) Proceeds from long-term debt 13,000 25,000 Payments under stock repurchase plan — ( 6,896 ) Purchase of treasury stock related to tax withholdings on vested equity awards ( 1,633 ) ( 5,390 ) Proceeds from issuance of common stock through ESPP 145 148 Net cash flows from (used in) financing activities ( 4,488 ) 862 Net change in cash for the period ( 1,251 ) ( 282 ) Cash, beginning of period 4,206 3,006 Cash, end of period $ 2,955 $ 2,724 See accompanying notes to the condensed consolidated financial statements. 7 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of DHI Group, Inc. (“DHI” or the “Company” or "we," "our" or "us") have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and disclosures normally included in annual audited consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been omitted and condensed pursuant to such rules and regulations. In the opinion of the Company’s management, all adjustments (consisting of only normal and recurring accruals) have been made to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. Although the Company believes that the disclosures are adequate to make the information presented not misleading, these financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report on Form 10-K”). Operating results for the three and six-month periods ended June 30, 2024 are not necessarily indicative of the results to be achieved for the full year or any other future period. Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the condensed consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Actual results could differ materially from management’s estimates reported in the condensed consolidated financial statements and footnotes thereto. There have been no significant changes in the Company’s assumptions regarding critical accounting estimates during the three and six-month periods ended June 30, 2024. 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 includes the Dice and ClearanceJobs brands, as well as corporate related costs. All operations are in the United States. 2. NEW ACCOUNTING STANDARDS 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 are to 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 then-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. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2022 for Smaller Reporting Companies. 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. 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 8 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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: • 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 condensed consolidated balance sheets for cash, accounts receivable, other assets, accounts payable and accrued expenses and long-term debt approximate their fair values. 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. 4. 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 which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts ratably over the service period. 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 and includes a reconciliation of the disaggregated revenue (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 ClearanceJobs $ 13,277 $ 12,266 $ 26,123 $ 23,976 Dice (1) 22,556 26,272 45,735 53,182 Total $ 35,833 $ 38,538 $ 71,858 $ 77,158 (1) Includes Dice and Career Events 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 June 30, 2024 As of December 31, 2023 Receivables $ 22,269 $ 22,225 Short-term contract liabilities (deferred revenue) 51,709 49,463 Long-term contract liabilities (deferred revenue) 559 508 We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when customers are invoiced per the contractual billings schedules. As the Company's standard payment terms are less than one year, 9 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS the Company elected the practical expedient, where applicable. As a result, the Company does 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 revenue as a result of changes in the contract liability balances in the respective periods (in thousands): Three Months Ended Six Months Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period $ 26,105 $ 27,225 $ 36,742 $ 36,218 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): Remainder of 2024 2025 2026 2027 Total Tech-focused $ 41,730 $ 10,294 $ 213 $ 31 $ 52,268 Credit Losses The Company is exposed to credit losses through the inability of its customers to make required payments on accounts receivable. The Company segments accounts receivable based on credit risk characteristics and estimates future losses for each segment based on historical trends and current market conditions, as applicable. Expected losses on accounts receivable are recorded as allowance for doubtful accounts in the condensed consolidated balance sheets and as an expense in the condensed consolidated statement of operations. The portion of accounts receivable that is reflected as deferred revenue in the condensed consolidated balance sheets is not considered at risk for credit losses. 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. 5. RESTRUCTURING In May 2023, the Company announced 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 %. As a result of the restructuring, the Company recognized a charge of $ 2.1 million in the second quarter of 2023 consisting of $ 1.8 million of employee severance costs, of which $ 0.5 million was paid during the second quarter of 2023, and $ 0.3 million of stock-based compensation related to the acceleration of restricted stock and performance-based restricted stock units. There was no restructuring during the three and six month periods ended June 30, 2024. In July 2024, the Company announced an additional organizational restructuring intended to streamline its operations, drive business objectives, and reduce operating costs. This included a reduction of the Company’s current workforce by approximately 7 %. The Company estimates that it will incur a charge of approximately $ 1.1 million during the third quarter of 2024 in connection with the restructuring. 6. LEASES The Company has operating leases for corporate office space and certain equipment. The leases have original 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. 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. 10 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The components of lease cost were as follows (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2024 2023 2024 2023 Operating lease cost (1) $ 442 $ 575 $ 836 $ 1,178 Sublease income ( 30 ) ( 169 ) ( 30 ) ( 299 ) Total lease cost $ 412 $ 406 $ 806 $ 879 (1) Includes short-term lease costs and variable lease costs, which are immaterial. Supplemental cash flow information related to leases was as follows (in thousands): For the Six Months Ended June 30, 2024 2023 Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 739 $ 1,329 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 2,930 $ — Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount): June 30, 2024 December 31, 2023 Operating lease right-of-use-assets (as reported) $ 7,098 $ 4,759 Operating lease liabilities - current (as reported) 1,715 2,006 Operating lease liabilities - non-current (as reported) 9,533 6,543 Total operating lease liabilities $ 11,248 $ 8,549 Weighted Average Remaining Lease Term (in years) Operating leases 7.7 years 6.2 years Weighted Average Discount Rate Operating leases 5.5 % 4.5 % 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. No impairment was recorded during the three and six month periods ended June 30, 2024 and 2023. 11 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 2024, future operating lease payments were as follows (in thousands): Operating Leases July 1, 2024 through December 31, 2024 $ 925 2025 2,206 2026 2,211 2027 1,331 2028 1,276 2029 and thereafter 6,155 Total lease payments $ 14,104 Less: imputed interest ( 2,856 ) Total $ 11,248 As of June 30, 2024 the Company has no additional operating or finance leases that have not yet commenced. 7. INVESTMENTS eFinancialCareers 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 with zero proceeds received from the transfer. 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 the 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 was reduced during the third quarter of 2023, as described above, as the Company reduced its ownership in eFC. The remaining basis difference at the time of sale was $ 0.3 million and is being amortized against the recorded value of the investment in accordance with ASC 323 Investments - Equity Method and Joint Ventures . Amortization expense during the three and six month periods ended June 30, 2024 and 2023 was not significant. 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. The Company recorded income related to its proportionate share of eFC's net income, net of currency translation adjustments and amortization of the basis difference, of $ 0.2 million and $ 0.3 million for the three and six month periods ended June 30, 2024, respectively, and recorded $ 0.1 million and $ 0.3 million for the three and six month periods ended June 30, 2023, respectively. Other During 2021, the Company invested $ 3.0 million through a subordinated convertible promissory note (the "Note") 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 investment was recorded as a trading security at fair value and was recorded at $ 3.0 million as of December 31, 2021. In the third quarter of 2022, 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 12 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS third party investor that resulted in such investor becoming the majority owner of the business. Therefore the Company's shares in the business were recorded at fair value based on the price per share realized in the conversion. The value of the Company's investment was $ 0.7 million as of December 31, 2022 and was 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 investment's financial position deteriorated. To meet its financial obligations, the investment issued 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. During the first quarter of 2024, the investment's financial position further deteriorated. To meet its financial obligations, the investment issued additional convertible debt at a price that indicated the value of the investment had declined. As such, the Company revalued its investment to zero and accordingly, recognized an impairment loss of $ 0.4 million during the first quarter of 2024. The Company's ownership of the investment, on a fully diluted basis, as of June 30, 2024 is less than 0.10 %. At June 30, 2024, 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 June 30, 2024 and December 31, 2023. The Company recorded no gain or loss related to the investment during the three and six month periods ended June 30, 2024 and 2023. 8. ACQUIRED INTANGIBLE ASSETS, NET 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.com 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. There were no indicators of impairment for the Dice.com trademarks and brand name for the three and six month periods ended June 30, 2024. As of June 30, 2024 and December 31, 2023 the Company had an indefinite-lived acquired intangible asset of $ 23.8 million related to the Dice trademarks and brand name. No impairment was recorded during the three and six month periods ended June 30, 2024 and 2023. 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 trademarks and brand name by capitalizing the profits saved because the company owns the asset. We consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements. Changes in our strategy 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. 9 . GOODWILL Goodwill as of June 30, 2024 and December 31, 2023, which was allocated to the Tech-focused reporting unit, was $ 128.1 million. The annual impairment test for the Tech-focused reporting unit is performed on October 1 of each year. The results of the impairment test indicated that the fair value of the Tech-focused reporting unit was substantially in excess of the carrying value as of October 1, 2023. Results for the Tech-focused reporting unit through June 30, 2024 and estimated future results as of June 30, 2024 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 June 30, 2024. Therefore, no quantitative impairment test was performed as of June 30, 2024. No impairment was recorded during the three and six month periods ended June 30, 2024 and 2023. 13 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The Company’s ability to achieve the projections used in the October 1, 2023 analysis may be impacted by, among other things, general market conditions, 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 Tech-focused reporting unit are not achieved, the Company could realize an impairment in a future period. 10. 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. The Credit Agreement provides for a revolving loan facility of $ 100 million, 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 previous 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 condensed 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 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. All borrowings as of June 30, 2024 and December 31, 2023 were in U.S. dollars. 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 June 30, 2024, 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. 14 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The amounts borrowed as of June 30, 2024 and December 31, 2023 are as follows (dollars in thousands): June 30, 2024 December 31, 2023 Long-term debt under revolving credit facility (1) $ 35,000 $ 38,000 Available to be borrowed under revolving facility (2) $ 57,000 $ 62,000 Interest rate and margin: Interest margin (3) 2.35 % 2.35 % Actual interest rates (4) 7.69 % 7.71 % Commitment fee 0.40 % 0.40 % (1) In connection with the Credit Agreement, the Company had deferred financing costs of $ 0.7 million and accumulated amortization of $ 0.3 million recorded in other assets on the condensed consolidated balance sheets. (2) The amount available to be borrowed is subject to certain limitations, such as a consolidated leverage ratio which generally limits borrowings to 2.5 times annual Adjusted EBITDA, as defined in the Credit Agreement. (3) Computed as the weighted average interest margin on all borrowings, including an additional spread of 0.10 %. (4) Computed as the weighted average interest rate on all borrowings. There are no scheduled principal payments until maturity of the Credit Agreement in June 2027. 11 . 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, except as described below and recorded in the condensed consolidated financial statements, cannot be determined, it is the opinion of management that the final resolution of these matters will not have a material 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 income taxes and indirect taxes. The determination of the Company’s liability 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. 12. EQUITY TRANSACTIONS Stock Repurchase Plans —The Company's Board of Directors ("Board") has previously approved stock repurchase programs that permitted the Company to repurchase its common stock. Management had discretion in determining the conditions under which shares may be purchased from time to time. The number, price, structure, and timing of the repurchases, if any, were at our sole discretion and future repurchases were evaluated by us depending on market conditions, liquidity needs, restrictions under the agreements governing our indebtedness, and other factors. Share repurchases could be made in the open market or in privately negotiated transactions. The repurchase authorizations did not oblige us to acquire any particular amount of our common stock. The Board could have suspended, modified, or terminated a repurchase program at any time without prior notice. The following table summarizes the stock repurchase plans previously approved by the Board: 15 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS February 2022 to February 2023 (1) February 2023 to February 2024 (2) Approval Date February 2022 February 2023 Authorized Repurchase Amount of Common Stock $ 15 million $ 10 million (1) 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. (2) During February 2024, the stock repurchase program approved in February 2023 expired with a total of 1.4 million shares purchased for $ 5.2 million. As of June 30, 2024 the Company has no stock repurchase programs and all previously approved stock repurchase programs have expired in accordance with their terms. Purchases of the Company's common stock pursuant to the stock repurchase plans were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Shares repurchased — 918,742 — 1,661,278 Average purchase price per share (1) $ — $ 3.69 $ — $ 4.17 Dollar value of shares repurchased (in thousands) (1) $ — $ 3,393 $ — $ 6,928 (1) Average price paid per share and dollar value of shares repurchased include costs associated with the repurchases. There were no unsettled share repurchases as of June 30, 2024 and 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 defined below), and as further described in note 13 to the condensed consolidated financial statements, the Company repurchases its common stock withheld for income tax from the vesting of employee restricted stock or Performance-Based Restricted Stock Units (“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: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Shares repurchased upon restricted stock/PSU vesting 18,780 26,261 665,068 925,151 Average purchase price per share $ 2.24 $ 3.62 $ 2.49 $ 5.83 Dollar value of shares repurchased upon restricted stock/PSU vesting (in thousands) $ 42 $ 95 $ 1,653 $ 5,390 No shares of the Company's common stock were purchased other than through the stock repurchase plans and the 2022 Omnibus Equity Award Plan, as Amended and Restated, as described above. 13. 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 the 2022 Omnibus Equity Award Plan and will continue to grant restricted stock and PSUs to 16 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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. The Company recorded total stock-based compensation expense of $ 2.2 million and $ 4.3 million during the three and six month periods ended June 30, 2024, respectively, and $ 2.7 million and $ 5.6 million during the three and six month periods ended June 30, 2023. At June 30, 2024, there was $ 11.8 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 restricted stock grants is recorded over the vesting period as described below. There was no cash flow impact resulting from the grants. 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 three years for employees. A summary of the status of restricted stock awards as of June 30, 2024 and 2023 and the changes during the periods then ended is presented below: Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date Non-vested at beginning of the period 2,960,787 $ 3.65 2,780,108 $ 4.88 Granted 318,239 $ 2.49 175,998 $ 3.67 Forfeited ( 54,002 ) $ 3.71 ( 182,679 ) $ 4.75 Vested ( 242,587 ) $ 3.68 ( 198,502 ) $ 4.55 Non-vested at end of period 2,982,437 $ 3.52 2,574,925 $ 4.82 Expected to vest 2,982,437 $ 3.52 2,574,925 $ 4.82 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date Non-vested at beginning of the period 2,333,436 $ 4.55 2,639,286 $ 3.96 Granted 1,661,739 $ 2.53 1,282,998 $ 5.56 Forfeited ( 55,002 ) $ 3.73 ( 186,679 ) $ 4.92 Vested ( 957,736 ) $ 4.31 ( 1,160,680 ) $ 3.66 Non-vested at end of period 2,982,437 $ 3.52 2,574,925 $ 4.82 Expected to vest 2,982,437 $ 3.52 2,574,925 $ 4.82 PSUs —PSUs are granted to employees of the Company and its subsidiaries. These shares are granted under compensation agreements that are for services provided by the employees. The fair value of the PSUs is 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 applicable award 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 was no cash flow impact resulting from the grants. 17 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A summary of the status of PSUs as of June 30, 2024 and 2023 and the changes during the periods then ended is presented below: Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Shares (1) Weighted- Average Fair Value at Grant Date Shares (2) Weighted- Average Fair Value at Grant Date Non-vested at beginning of the period 1,579,491 $ 3.50 2,208,445 $ 4.77 Forfeited ( 22,923 ) $ 3.52 ( 163,018 ) $ 4.77 Vested ( 12,222 ) $ 3.56 — $ — Non-vested at end of period 1,544,346 $ 3.50 2,045,427 $ 4.78 Expected to vest 1,544,346 $ 3.50 2,045,427 $ 4.78 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Shares (1) Weighted- Average Fair Value at Grant Date Shares (2) Weighted- Average Fair Value at Grant Date Non-vested at beginning of the period 1,616,962 $ 4.52 2,086,932 $ 3.48 Granted 960,000 $ 2.54 1,357,587 $ 5.62 Forfeited ( 253,214 ) $ 4.95 ( 163,018 ) $ 4.77 Vested ( 779,402 ) $ 3.99 ( 1,236,074 ) $ 3.51 Non-vested at end of period 1,544,346 $ 3.50 2,045,427 $ 4.78 Expected to vest 1,544,346 $ 3.50 2,045,427 $ 4.78 (1) PSUs forfeited during the first quarter of 2024 related to the bookings achievement for the performance period ended December 31, 2023. (2) PSUs granted in the first quarter of 2023 includes 587,587 additional PSUs related to the bookings achievement for the performance period ended December 31, 2022. 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 on the purchase date. During each of the three and six months periods ended June 30, 2024, 81,874 shares were issued under the plan. During each of the three and six month periods ended June 30, 2023, 45,407 shares were issued under the plan. 14. INCOME TAXES The Company’s effective tax rate was 29 % and 127 % for the three and six months ended June 30, 2024, respectively, and 84 % and 139 % for the three and six months ended June 30, 2023, respectively. The following items caused the effective rate to differ from the statutory rate: • Tax expense of $ 0.1 million and $ 1.9 million during the three and six months ended June 30, 2024, respectively, and tax benefits of $ 0.4 million during the six months ended June 30, 2023, from the tax impacts of share-based compensation awards. • Tax expense of $ 0.2 million during the six months ended June 30, 2024, from state taxes related to research and development expenditures. • Tax benefits of $ 0.4 million during the three and six months ended June 30, 2023, from research tax credits. 18 Table of Contents DHI GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 15. EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed based on the weighted-average number of shares of common stock outstanding. Diluted EPS 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 per share and weighted-average shares outstanding (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) $ 943 $ ( 127 ) $ ( 569 ) $ 333 Weighted-average shares outstanding—basic 44,569 43,460 44,386 43,672 Add shares issuable from stock-based awards (1) 468 — — 1,010 Weighted-average shares outstanding—diluted 45,037 43,460 44,386 44,682 Basic earnings (loss) per share $ 0.02 $ — $ ( 0.01 ) $ 0.01 Diluted earnings (loss) per share $ 0.02 $ — $ ( 0.01 ) $ 0.01 Dilutive shares issuable from unvested equity awards (1) 468 — — 1,010 Anti-dilutive shares issuable from unvested equity awards (2) 3,497 2,611 3,201 2,194 (1) For the six months ended June 30, 2024, 0.5 million shares were excluded from the computation of shares contingently issuable upon exercise as we recognized a net loss. For the three months ended June 30, 2023, 0.7 million shares were excluded from the computation of shares contingently issuable upon exercise as we recognized a net loss. (2) Represents outstanding stock-based awards that were anti-dilutive and excluded from the calculation of diluted earnings per share.