DHI Group, Inc. — FY 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Amounts are in U.S. dollars; financial figures are in millions unless stated otherwise. This is an annual report, with fourth-quarter results noted separately.
Business context and reporting period
DHI operates specialized online career marketplaces, principally Dice for technology professionals and ClearanceJobs for security-cleared talent. Most revenue comes from recruitment packages that combine job postings and access to candidate profiles. On June 30, 2021, DHI transferred control and majority ownership of eFinancialCareers (eFC) to its management, retained a 40% interest, and classified eFC as a discontinued operation. Continuing operations are reported as one Tech-focused segment.
Financial performance and liquidity
| Metric | FY 2021 | FY 2020 | Change |
|---|---|---|---|
| Revenue | $119.9 | $111.2 | +7.9% |
| Operating income (loss) | $(1.8) | $(32.4) | Loss narrowed |
| Continuing-operations income (loss) | $(0.4) | $(32.4) | Loss narrowed |
| Net income (loss) | $(29.7) | $(30.0) | Loss of similar size |
| Diluted loss per share | $(0.64) | $(0.62) | Loss increased |
| Cash from operating activities | $28.6 | $18.7 | +53% |
| Adjusted EBITDA (non-GAAP) | $26.2 | $22.6 | +16% |
| Adjusted EBITDA margin (non-GAAP) | 22% | 20% | +2 percentage points |
Dice revenue rose 4.9% to $86.3 million; ClearanceJobs revenue rose 16.1% to $33.6 million. Q4 revenue was $33.7 million, up approximately 25% year over year; Q4 operating income was $0.2 million and continuing-operations income was $0.2 million.
GAAP operating margin was negative 1.5%, versus negative 29.1% in 2020. The improvement primarily reflects the absence of $37.8 million of 2020 goodwill and intangible-asset impairments; 2021 included a $1.9 million right-of-use asset impairment. Revenue grew for the first time since 2012, according to management.
Cash and cash equivalents were $1.5 million at year-end, compared with $4.5 million of continuing-operations cash on the 2020 balance sheet. Investing activities used $19.3 million and financing activities used $15.4 million in 2021. The company reported $23.0 million of revolving-credit borrowings, $67.0 million of remaining capacity under its $90.0 million facility, and covenant compliance at year-end. The facility matures in November 2023. Total assets were $221.6 million and stockholders’ equity was $116.4 million.
Deferred revenue was $46.1 million and reported backlog was $92.6 million, up 44% year over year. Backlog includes deferred revenue and unbilled contractual commitments. DHI repurchased 3.9 million shares for $15.3 million during 2021; $5.8 million remained authorized at year-end. Management anticipated 2022 capital expenditures of $16 million to $19 million, primarily for product development.
Material changes versus prior periods
- Revenue increased 7.9% in 2021 after declining 5.2% in 2020. Management attributed the recovery to stronger renewals, new business, customer growth, product investment, and a stronger technology recruiting market.
- Recruitment-package customers increased year over year: Dice by 17% to 6,004 and ClearanceJobs by 9% to 1,878. Revenue renewal rates were 87% for Dice and 96% for ClearanceJobs. Bookings reached $133.4 million, up 35%.
- Net loss remained near the prior-year level despite improved continuing operations: the 2021 net loss included a $29.3 million after-tax discontinued-operations loss, mainly from the eFC transfer. That loss included a $28.1 million currency-translation reclassification and $5.2 million from removing eFC net assets, partly offset by the recorded $3.6 million equity-method investment and eFC earnings.
- Sales and marketing expense rose 10.1% to $43.7 million, product development expense rose 7.6% to $16.0 million, and depreciation rose 59.3% to $16.3 million. Management cited increased sales staffing and marketing, and depreciation of previously capitalized software development.
- The annual impairment tests found no 2021 impairment. Year-end goodwill was $128.1 million and the Dice indefinite-lived trademark asset was $23.8 million. In 2020, DHI recorded $22.6 million of goodwill impairment and $15.2 million of intangible-asset impairment.
Outlook, commentary, risks, and unusual items
DHI provided no specific revenue or earnings guidance in the filing. Management cited bookings growth, higher customer counts, product launches, and an improved sales and marketing organization as support for continued growth, while planning $16 million to $19 million of 2022 capital expenditures. It stated that available cash, operating cash flow, and borrowing capacity were expected to meet anticipated requirements for at least the next 12 months, subject to demand, lender availability, and credit-agreement limits.
Key risks include competition and execution of the tech-focused strategy; dependence on recruitment activity and recruitment-package customers; recruiting-market cyclicality and labor-market conditions; privacy and data-security requirements; technology availability and reliance on AWS; debt covenants and refinancing; and COVID-19-related uncertainty. Future goodwill or Dice-brand impairment remains possible if forecasts weaken or discount-rate assumptions rise. The company also disclosed tax uncertainty, including $0.8 million of unrecognized tax benefits, and said no material unrecorded legal proceedings were pending.
The financial statements received an unqualified audit opinion. Deloitte & Touche also issued an unqualified opinion on internal control over financial reporting. The auditor identified the eFC deconsolidation and goodwill valuation as critical audit matters.
Important facts for investors to verify
- Whether bookings, backlog, customer additions, and renewal rates convert into sustained revenue growth and cash generation.
- The underlying earnings picture excluding the eFC disposal loss, and the cash, tax, and currency effects of the transaction and retained 40% stake.
- Whether low year-end cash remains adequate given planned capital expenditures, share repurchases, and $23.0 million of debt due at the November 2023 facility maturity.
- The assumptions supporting goodwill and Dice-brand valuations, particularly projected growth, margins, and discount rates.
- Whether increased product and sales-and-marketing spending delivers durable returns, and how privacy, cybersecurity, competition, and recruiting-market conditions affect results.