DHI GROUP, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this report. See also our consolidated financial statements and the notes thereto and the section entitled “Note Concerning Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2023. Information contained herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include, without limitation, information concerning our possible or assumed future financial condition, liquidity and results of operations, including expectations (financial or otherwise), our strategy, plans, objectives, and intentions, and growth potential. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to: our ability to execute our tech-focused strategy; write-offs of goodwill, tradename and intangible assets; competition from existing and future competitors; changes in the recruiting and career services business and technologies, and the development of new products and services; 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 attract qualified professionals or grow the number of qualified professionals who use our websites; inability to successfully integrate future acquisitions or identify and consummate future acquisitions; misappropriation or misuse of our intellectual property, claims against us for intellectual property infringement or the failure to enforce our ownership or use of intellectual property; failure of our businesses to attract, retain and engage users; unfavorable decisions in proceedings related to future tax assessments; taxation risks in various jurisdictions for past or future sales; significant downturn not immediately reflected in our operating results; our indebtedness and the potential inability to borrow funds under 19 Table of Contents our Credit Agreement (as defined below); our ability to incur additional debt; covenants in our Credit Agreement; the development and use of artificial intelligence; failure to timely and efficiently scale and adapt our existing technology and network infrastructure; capacity constraints, systems failures or breaches of network security; the usefulness of our candidate profiles; decrease in user engagement; Internet search engine methodologies and their impact on our search result rankings; failure to halt the operations of websites that aggregate our data, as well as data from other companies; our reliance on third-party data hosting facilities; compliance with laws and regulations concerning collection, storage and use of professionals’ professional and personal information; U.S. 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; loss of key executives and technical personnel and our ability to attract and retain key executives, including our CEO; increases in the unemployment rate, cyclicality or downturns in the United States or worldwide economies or the industries we serve, labor shortages, or job shortages; litigation related to infringement or other claims regarding our services or content; our ability to defend ownership of our intellectual property; global climate change; 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; volatility in our stock price; failure to maintain internal controls over financial reporting; results of operations fluctuating on a quarterly and annual basis; and disruption resulting from unsolicited offers to purchase the company. These factors and others are discussed in more detail below and in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, under the headings “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should keep in mind that any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws. In addition, information contained herein contains certain non-GAAP financial measures. 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. GAAP"). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures" for definitions of these measures as well as reconciliations to the mostly directly comparable GAAP measure. Overview We are a provider of software products, online tools and services that deliver career marketplaces to candidates and employers in the United States. DHI’s brands, Dice and ClearanceJobs, enable recruiters and hiring managers to efficiently search, match and connect with highly skilled technologists in specialized fields, particularly technology and active government security clearance. Professionals find ideal employment opportunities, relevant job advice and personalized data that help manage their technologist lives. In online recruitment, we specialize in employment categories in which there has been a long-term scarcity of highly skilled, highly qualified professionals relative to market demand, specifically technologists who work in a variety of industries or have active government security clearances. Our websites serve as online two-sided marketplaces where employers and recruiters source and connect with prospective employees, and where technologists find relevant job opportunities, data and information to further their careers. Our websites offer job postings, news and content, career development and recruiting services tailored to the specific needs of the professional community that each website serves. We have been in the recruiting and career development business for over 30 years. Based on our operating structure, we have identified one reportable segment, Tech-focused, which includes the Dice and ClearanceJobs businesses and corporate related costs. 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. Our Revenue and Expenses We derive the majority of our revenue from customers who pay fees, either annually, quarterly or monthly, to post jobs on our websites and to access our searchable databases of resumes. 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 greater than 90% of 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 20 Table of Contents customers and the revenue, on average, that these customers generate. The Company's management uses these metrics to monitor the current and future activity of the businesses. The tables below detail this customer data. As of June 30, Increase (Decrease) Percent Change Recruitment Package Customers: 2024 2023 ClearanceJobs 2,009 2,069 (60) (3)% Dice 5,031 6,007 (976) (16)% Average Annual Revenue per Recruitment Package Customer (1) Three months ended June 30, Six months ended June 30, 2024 2023 Increase Percent Change 2024 2023 Increase Percent Change ClearanceJobs $ 24,275 $ 20,842 $ 3,433 16 % $ 23,662 $ 20,681 $ 2,981 14 % Dice $ 16,294 $ 15,534 $ 760 5 % $ 16,146 $ 15,602 $ 544 3 % (1) Calculated by dividing recruitment package customer revenue by the daily average count of recruitment package customers during each month, adjusted to reflect a 30-day month. The simple average of each month is used to derive the amount for each period and then annualized to reflect 12 months. ClearanceJobs had 2,009 recruitment package customers as of June 30, 2024 compared to 2,069 as of June 30, 2023, a decrease of 3%, and average annual revenue per recruitment package customer increased $3,433, or 16%, 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 churn among ClearanceJob's smaller customers while larger customers expanded the value of their contracts with ClearanceJobs. Dice had 5,031 recruitment package customers as of June 30, 2024, which was a decrease of 976, or 16%, and average annual revenue per recruitment package customer for Dice increased $760, or 5%, 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. Deferred revenue, as shown on the condensed consolidated balance sheets, reflects customer billings made in advance of services being rendered. Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts. We believe backlog to be an important measure of our business as it represents our ability to generate future revenue. A summary of our deferred revenue and backlog is as follows: Comparison to Prior Year End Comparison Year Over Year 6/30/2024 12/31/2023 Increase (Decrease) Percent Change 6/30/2023 Increase (Decrease) Percent Change Deferred Revenue $ 52,268 $ 49,971 $ 2,297 5 % $ 53,434 $ (1,166) (2) % Contractual commitments not invoiced 58,037 58,126 (89) — % 64,328 (6,291) (10) % Backlog (1) $ 110,305 $ 108,097 $ 2,208 2 % $ 117,762 $ (7,457) (6) % (1) Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts. Backlog at June 30, 2024 increased $2.2 million from December 31, 2023 but decreased $7.5 million from June 30, 2023. The increase in backlog compared to December 31, 2023 is primarily due to seasonally higher bookings in the first quarter of each year, which drives increases to backlog. The decrease in backlog compared to June 30, 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. 21 Table of Contents 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. Our ability to grow our revenue will largely depend on our ability to grow our customer bases in the markets in which we operate by acquiring new customers while retaining a high proportion of the customers we currently serve, and to expand the breadth of services our customers purchase from us. We continue to make investments in our business and infrastructure to help us achieve our long-term growth objectives, such as the innovative products in the table below. Product Releases 2024 2023 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. The more qualified professionals that use our websites, the more attractive our websites become to employers and advertisers, which in turn makes them more likely to become our customers, resulting positively on our results of operations. If we are unable to continue to attract qualified professionals to engage with our two-sided marketplaces, our customers may no longer find our services attractive, which could have a negative impact on our results of operations. Additionally, we need to ensure that our websites remain relevant in order to attract qualified professionals to our websites and to engage them in high-value tasks, such as posting resumes and/or applying for jobs. The largest components of our expenses are personnel costs and marketing and sales expenditures. Personnel costs consist of salaries, benefits, and incentive compensation for our employees, including commissions for salespeople. 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. Marketing expenditures primarily consist of online advertising, brand promotion and lead generation to employers and job seekers. Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023 Revenue Three Months Ended June 30, Increase (Decrease) Percent Change 2024 2023 (in thousands, except percentages) ClearanceJobs $ 13,277 $ 12,266 $ 1,011 8 % Dice (1) 22,556 26,272 (3,716) (14) % Total revenue $ 35,833 $ 38,538 $ (2,705) (7) % (1) Includes Dice and Career Events For the three months ended June 30, 2024, we experienced a decrease in revenue of $2.7 million, or 7%. Revenues for ClearanceJobs increased $1.0 million, or 8%, as compared to the same period in 2023, primarily driven by continued high 22 Table of Contents demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site. 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. Cost of Revenue Three Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Cost of revenue $ 5,200 $ 4,956 $ 244 5 % Percentage of revenue 14.5 % 12.9 % Cost of revenue expense increased $0.2 million, or 5% from the prior year. The increase was driven by $0.2 million of lower capitalized labor, which increases operating expenses. Product Development Expenses Three Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Product development $ 4,729 $ 4,158 $ 571 14 % Percentage of revenue 13.2 % 10.8 % Product development expenses increased $0.6 million, or 14% from the prior year. The increase was driven by $0.6 million of lower capitalized labor, which increases operating expenses. Sales and Marketing Expenses Three Months Ended June 30, Decrease Percent Change 2024 2023 (in thousands, except percentages) Sales and marketing $ 12,019 $ 14,723 $ (2,704) (18) % Percentage of revenue 33.5 % 38.2 % Sales and marketing expenses decreased $2.7 million, or 18% from the prior year. This decrease was driven by a $1.8 million decrease in compensation related costs, primarily related to lower commissions and headcount, a $0.5 million decrease in discretionary marketing, and a $0.4 million decrease in operational costs, including credit card fees and sales performance incentives. General and Administrative Expenses Three Months Ended June 30, Decrease Percent Change 2024 2023 (in thousands, except percentages) General and administrative $ 7,296 $ 8,453 $ (1,157) (14) % Percentage of revenue 20.4 % 21.9 % General and administrative expenses decreased $1.2 million, or 14% from the prior year. The decrease was driven by a $0.6 million decrease in operational costs, including bad debt expense and consulting, and a $0.5 million decrease in compensation related costs, primarily due to headcount and stock-based compensation. Depreciation Three Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Depreciation $ 4,586 $ 4,162 $ 424 10 % Percentage of revenue 12.8 % 10.8 % 23 Table of Contents Depreciation expense increased $0.4 million, or 10%, compared to the same period in 2023. The increase was primarily driven by depreciation related to capitalized development costs. Restructuring Three Months Ended June 30, Decrease Percent Change 2024 2023 (in thousands, except percentages) Restructuring $ — $ 2,115 $ (2,115) (100) % Percentage of revenue — % 5.5 % During the three months ended June 30, 2023, the Company recorded restructuring charges of $2.1 million as part of an organizational restructuring intended to streamline its operations, drive business objectives, reduce operating expenses and improve operating margins. The restructuring included a reduction of the Company’s then-current workforce by approximately 10%. There were no restructuring charges during the three months ended June 30, 2024. Operating Income Three Months Ended June 30, Increase (Decrease) Percent Change 2024 2023 (in thousands, except percentages) Revenue $ 35,833 $ 38,538 $ (2,705) (7) % Operating income 2,003 (29) 2,032 n.m. Operating margin 5.6 % (0.1) % Operating income for the three months ended June 30, 2024 was $2.0 million, a positive margin of 5.6%, compared to operating income of zero for the same period in 2023, an increase of $2.0 million. The increase in operating income and percentage margin was driven by lower sales and marketing, general and administrative, and restructuring charges, partially offset by lower revenue in the current year period. Income from Equity Method Investment Three Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Income from equity method investment $ 168 $ 104 $ 64 62 % Percentage of revenue 0.5 % 0.3 % During the three months ended June 30, 2024 and 2023, the Company recorded $0.2 million and $0.1 million, respectively, of income related to its proportionate share of eFinancialCareer's net income. The Company records its proportionate share of eFinancialCareer's net income three months in arrears. See note 7 for additional information. Interest Expense and Other Three Months Ended June 30, Decrease Percent Change 2024 2023 (in thousands, except percentages) Interest expense and other $ 845 $ 879 $ (34) (4) % Percentage of revenue 2.4 % 2.3 % Interest expense and other of $0.8 million was approximately flat from the prior year. 24 Table of Contents Income Taxes Three Months Ended June 30, 2024 2023 (in thousands, except percentages) Income (loss) before income taxes $ 1,326 $ (804) Income tax expense (benefit) 383 (677) Effective tax rate 28.9 % 84.2 % The effective tax rate for the three months ended June 30, 2024, differed from the statutory rate due to tax expense of $0.1 million from the tax impacts of share-based compensation awards. The tax rate for the three months ended June 30, 2023, differed from the statutory rate due to a tax benefit of $0.4 million from research tax credits. Earnings per Share Three Months Ended June 30, 2024 2023 (in thousands, except per share amounts) Net Income (loss) $ 943 $ (127) Weighted-average shares outstanding - basic 44,569 43,460 Weighted-average shares outstanding - diluted 45,037 43,460 Basic earnings (loss) per share $ 0.02 $ — Diluted earnings (loss) per share $ 0.02 $ — Diluted earnings (loss) per share was $0.02 and zero for the three months ended June 30, 2024 and 2023, respectively. The increase was driven by higher operating income, as discussed above. Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023 Revenue Six Months Ended June 30, Increase (Decrease) Percent Change 2024 2023 (in thousands, except percentages) Tech-focused ClearanceJobs 26,123 23,976 2,147 9 % Dice (1) $ 45,735 $ 53,182 $ (7,447) (14) % Total revenue $ 71,858 $ 77,158 $ (5,300) (7) % (1) Includes Dice and Career Events We experienced a decrease in revenue of $5.3 million, or 7%. Revenue at ClearanceJobs increased by $2.1 million, or 9%, 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. Revenue at Dice decreased by $7.4 million, or 14%, compared to the prior year due to macroeconomic conditions continuing to drive lower renewal rates, lower new business activity and lower activity with Dice's non-annual products. 25 Table of Contents Cost of Revenue Six Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Cost of revenue $ 10,077 $ 9,868 $ 209 2 % Percentage of revenue 14.0 % 12.8 % Cost of revenue increased $0.2 million, or 2%, driven by an increase of $0.2 million from higher operational costs, primarily software subscriptions. Product Development Expenses Six Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Product development $ 9,527 $ 8,852 $ 675 8 % Percentage of revenue 13.3 % 11.5 % Product development increased $0.7 million, or 8%, driven by lower capitalized labor of $1.5 million, which increases operating expense, from the restructuring in the second quarter of 2023. The increase was partially offset by a $0.7 million decrease in compensation related costs due to lower headcount. Sales and Marketing Expenses Six Months Ended June 30, Decrease Percent Change 2024 2023 (in thousands, except percentages) Sales and marketing $ 24,717 $ 30,783 $ (6,066) (20) % Percentage of revenue 34.4 % 39.9 % Sales and marketing expenses decreased $6.1 million, or 20% from the prior year. The decrease was driven by a $4.6 million decrease in compensation related costs, including lower commissions and headcount, a $0.8 million decrease in operational costs, including credit card fees and company events, and a $0.7 million decrease in discretionary marketing expenses. General and Administrative Expenses Six Months Ended June 30, Decrease Percent Change 2024 2023 (in thousands, except percentages) General and administrative $ 14,523 $ 16,661 $ (2,138) (13) % Percentage of revenue 20.2 % 21.6 % General and administrative costs decreased $2.1 million, or 13%, from the prior year. The decrease was driven by a $1.1 million decrease in operational costs, including lower bad debt expense and consulting costs, and a $1.0 million decrease in compensation related costs, primarily related to stock-based compensation. Depreciation Six Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Depreciation $ 9,042 $ 8,335 $ 707 8 % Percentage of revenue 12.6 % 10.8 % Depreciation expense increased $0.7 million, or 8%, compared to the same period in 2023. The increase was primarily driven by depreciation related to capitalized development costs. 26 Table of Contents Restructuring Six Months Ended June 30, Decrease Percent Change 2024 2023 (in thousands, except percentages) Restructuring $ — $ 2,115 $ (2,115) n/a Percentage of revenue — % 2.7 % During the six months ended June 30, 2023, the Company recorded restructuring charges of $2.1 million as part of an organizational restructuring intended to streamline its operations, drive business objectives, reduce operating expenses and improve operating margins. The restructuring included a reduction of the Company’s then-current workforce by approximately 10%. There were no restructuring charges during the six months ended June 30, 2024. Operating Income Six Months Ended June 30, Increase (Decrease) Percent Change 2024 2023 (in thousands, except percentages) Revenue $ 71,858 $ 77,158 $ (5,300) (7) % Operating income 3,972 544 3,428 630 % Operating margin 5.5 % 0.7 % Operating income for the six months ended June 30, 2024 was $4.0 million, a positive margin of 5.5%, compared to operating income of $0.5 million, a positive margin of 0.7%, for the same period in 2023, an increase of $3.4 million. The increase in operating income and higher percentage margin was primarily driven by lower sales and marketing, general and administrative, and restructuring charges, partially offset by lower revenue in the current year period. Income from Equity Method Investment Six Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Income from equity method investment $ 302 $ 275 $ 27 10 % Percentage of revenue 0.4 % 0.4 % During each of the six month periods ended June 30, 2024 and 2023, the Company recorded $0.3 million 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. Impairment of Investment Six Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Impairment of investment $ 400 $ — $ 400 — % Percentage of revenue 0.6 % — % During the six month period ended June 30, 2024, the Company recognized a $0.4 million loss related to the impairment of an investment. See note 7 for additional information. 27 Table of Contents Interest Expense and Other Six Months Ended June 30, Increase Percent Change 2024 2023 (in thousands, except percentages) Interest expense and other $ 1,791 $ 1,677 $ 114 7 % Percentage of revenue 2.5 % 2.2 % Interest expense and other increased $0.1 million, or 7%, compared to the same period in 2023, due to higher interest rates. Income Taxes Six Months Ended June 30, 2024 2023 (in thousands, except percentages) Income (loss) before income taxes $ 2,083 $ (858) Income tax expense (benefit) 2,652 (1,191) Effective tax rate 127.3 % 138.8 % Our effective tax rate for the six months ended June 30, 2024, differed from the statutory rate due to tax expense of $1.9 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 six months ended June 30, 2023, differed from the statutory rate due to tax benefits of $0.4 million from the tax impacts of share-based compensation awards and $0.4 million from research tax credits. Earnings (Loss) per Share Six Months Ended June 30, 2024 2023 (in thousands, except per share amounts) Net income (loss) $ (569) $ 333 Weighted-average shares outstanding - basic 44,386 43,672 Weighted-average shares outstanding - diluted 44,386 44,682 Basic earnings (loss) per share $ (0.01) $ 0.01 Diluted earnings (loss) per share $ (0.01) $ 0.01 Diluted earnings (loss) per share was $(0.01) and $0.01 for the six months ended June 30, 2024 and 2023, respectively. The decrease was driven by the tax impacts of stock-based compensation, as described above. Liquidity and Capital Resources Cash Flows A summary of our cash flows for the six months ended June 30, 2024 and 2023 follows (in thousands): Six Months Ended June 30, 2024 2023 Cash from operating activities $ 11,150 $ 8,077 Cash used in investing activities $ (7,913) $ (9,221) Cash from (used in) financing activities $ (4,488) $ 862 28 Table of Contents We have financed our operations primarily through cash provided by operating activities and borrowings under our revolving credit facility. At June 30, 2024, we had cash of $3.0 million compared to $4.2 million at December 31, 2023. Liquidity Our principal internal sources of liquidity are cash, as well as the cash flow that we generate from our operations. In addition, we had $57.0 million in borrowing capacity under our $100.0 million Credit Agreement, as defined below, at June 30, 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 $11.2 million and $8.1 million for the six-month periods ended June 30, 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 $3.1 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 six-month period ended June 30, 2024 was $7.9 million compared to $9.2 million used in the same period of 2023. Cash used in investing activities in the six-month period ended June 30, 2024 is primarily comprised of $6.6 million of capitalized development costs and $1.0 million of costs associated with the Company's office space. Cash used in investing activities in the six month period ended June 30, 2023 is primarily comprised of capitalized development costs. The reduction to capitalized development costs in the current year period is due to lower headcount from the May 2023 restructuring. Financing Activities Cash used in financing activities during the six-month period ended June 30, 2024 was $4.5 million and was driven by $3.0 million of net payments on long-term debt, partially offset by $1.5 million related to share repurchases. Cash from financing activities during the six-month period ended June 30, 2023 was $0.9 million and was driven by $13.0 million of net proceeds on long-term debt, partially offset by $12.1 million related to share repurchases. 29 Table of Contents Non-GAAP Financial Measures 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 Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures used by management to measure operating performance. Management uses Adjusted EBITDA and Adjusted EBITDA Margin as performance measures for internal monitoring and planning, including preparation of annual budgets, analyzing investment decisions and evaluating profitability and performance comparisons between us and our competitors. 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, 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. We also consider Adjusted EBITDA and Adjusted EBITDA Margin, as defined above, to be important indicators to investors because they provide information related to our ability to provide cash flows to meet future debt service, capital expenditures, working capital requirements, and to fund future growth. We present Adjusted EBITDA and Adjusted EBITDA Margin as supplemental performance measures because we believe that these measures provide our Board of Directors (the "Board"), management and investors with additional information to measure our performance, provide comparisons from period to period by excluding potential differences caused by variations in capital structures (affecting interest expense) and tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and to estimate our value. We understand that although Adjusted EBITDA and Adjusted EBITDA Margin are frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our liquidity or results as reported under GAAP. Some limitations are: • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA and Adjusted EBITDA Margin do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt; • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect any cash requirements for such replacements; and • Other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures. 30 Table of Contents 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 six months ended June 30, 2024 and 2023 follows (in thousands): Six Months Ended June 30, Dollars 2024 2023 Reconciliation of Net Income (Loss) to Adjusted EBITDA: Net income (loss) $ (569) $ 333 Interest expense 1,791 1,677 Income tax expense (benefit) 2,652 (1,191) Depreciation 9,042 8,335 Non-cash stock-based compensation 4,304 5,284 Income from equity method investment (302) (275) Impairment of investment 400 — Severance and related costs 223 521 Restructuring — 2,115 Adjusted EBITDA $ 17,541 $ 16,799 Reconciliation of Cash Flows from Operating Activities to Adjusted EBITDA Net cash provided by operating activities $ 11,150 $ 8,077 Interest expense 1,791 1,677 Amortization of deferred financing costs (72) (72) Income tax expense (benefit) 2,652 (1,191) Deferred income taxes (50) 2,075 Change in accrual for unrecognized tax benefits (113) (303) Change in accounts receivable 45 (1,837) Change in deferred revenue (2,297) (2,570) Severance and related costs 223 521 Restructuring — 2,115 Changes in working capital and other 4,212 8,307 Adjusted EBITDA $ 17,541 $ 16,799 A reconciliation of Adjusted EBITDA Margin for the six months ended June 30, 2024 and 2023 follows (in thousands): Six Months Ended June 30, 2024 2023 Revenue $ 71,858 $ 77,158 Net income (loss) $ (569) $ 333 Net income (loss) margin (1) (1) % — % Adjusted EBITDA $ 17,541 $ 16,799 Adjusted EBITDA Margin (1) 24 % 22 % (1) Net income margin and Adjusted EBITDA Margin are calculated by dividing the respective measure by that period's revenue. 31 Table of Contents 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, 2023. Financing and Capital Requirements 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.,entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”), which matures in June 2027. Under the Credit Agreement, we have a $100 million revolving credit facility, with an expansion option of $50 million, bringing the total facility to $150 million, with $ 35.0 million of borrowings on the facility at June 30, 2024. The Company has $ 57.0 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. 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. Assuming an int eres t rate of 7.69 % (the rate in effect on June 30, 2024) on our current borrowings, interest payments are expected to be $1.3 million from July 1, 2024 to December 31, 2024, $2.7 million in each of 2025 and 2026, and $1.3 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 June 30, 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. "Quantitative and Qualitative Disclosures about Market Risk - Interest Rate Risk." Contractual Obligations The Company has operating leases for corporate office space and certain equipment. The leases have terms from one year to ten years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option. No leases include options to purchase the leased property. As of June 30, 2024, the value of our lease right-of-use asset was $7.1 million and the value of our lease liability was $11.2 million. See note 6 to the condensed consolidated financial statements for further information. We make commitments to purchase advertising from online vendors, which we pay for on a monthly basis. We have no significant long-term obligations to purchase a fixed or minimum amount with these vendors. Other Capital Requirements As of June 30, 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 June 30, 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 permitted the Company to repurchase its common stock. As of June 30, 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. See note 13 of the notes to the condensed consolidated financial statements for further information. We anticipate capital expenditures for the fiscal year ending December 31, 2024 to be approximately $14 million to $16 million. We intend to use operating cash flows to fund capital expenditures. 32 Table of Contents Cyclicality The labor market and certain of the industries that we serve have historically experienced short-term cyclicality. 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 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 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.