DHI Group, Inc. (DHX) Q1 2015 Earnings Report, Transcript and Summary

Good morning, and welcome to the DHIs First Quarter 2015 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jennifer Milan, Director of Investor Relations. Please go ahead Ma’am.

Thanks, and good morning everyone. With me on the call today is Mike Durney, President and Chief Executive Officer of DHI Group, Inc.; along with John Roberts, our Chief Financial Officer. This morning, we issued a press release describing the company's results for the first quarter. A copy of that release can be viewed on the company's website at dhigroupinc.com. Before I hand the call over to Mike, I'd like to note that today's call includes certain forward-looking statements, particularly statements regarding future financial and operating results of the company and its businesses. These statements are based on management's current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in the economic, business, competitive, technological and/or regulatory factors. The principal risks that could cause our results to differ materially from our current expectations are detailed in the company's SEC filings, including our annual report on Form 10-K, in the sections entitled Risk Factors, Forward-looking Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. The company is under no obligation to update any forward-looking statements, except as required by the federal securities laws. Today's call also includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin and free cash flow. For details on these measures, including why we use them and reconciliations to the most comparable GAAP measures, please refer to our earnings release and our Form 8-K that has been furnished to the SEC, both of which are available on our website. Now I'll turn the call over to Mike.

Great, thanks Jenny and welcome to our first earnings call as DHI Group Inc. Last week announced that we changed the name of our company from Dice Holding to DHI, which we did for a couple of reasons. First, it was to recognize that the company has evolved from predominantly one brand as it was until several years ago to a multi brand company serving a number of vertical markets across different geographies. Second, we value the organization around focus on providing value to the organizations that use our services to source and recruit professionals and to the professionals who are looking to us for recruit guidance. Our company now embodies delivering higher insights, a tagline that reinforces our focus on providing data, analytics and insights to those organizations and those professionals. Our new name is symbolic of how far we’ve come from being purely a tech focused job board to delivering services that extend beyond the traditional job posting and resume database services that have been the hallmark of our business for almost 25 years. While job postings continue to be one of the most important methods for recruitment advertising and proprietary data bases of resumes remain incredibly valuable from a sourcing standpoint. We recognized early on that there were other methods developing of identifying, engaging with and recruiting professionals. When we look at the company’s opportunities, we see a number of new avenues for growth. For example, we’ve developed sourcing concierge services where we utilize our expertise to source and engage the professionals on behalf of our clients, who either don’t have the domain expertise or don’t have the time to efficiently source candidates on their own. Open Web and the technology behind it also provide capabilities to lead us in new directions. To date Open Web has been important in increasing the value of our tech and financial services brands and it will do the same for other brands. Open Web can lead us into new services and new territories. The technology platform aggregates data that can be used for other initiatives like FreshUp, which is in its early stages as a product. We’ve also expanded our business with the addition of new brands, specifically with the acquisition of HEALTHeCAREERS, Hcareers and BioSpace in November 2013. We expanded into new markets that add incremental value and diversify our portfolio. So we’re now DHI. A little more than a year ago, we outlined a number of goals and strategic initiatives designed to strengthen our company’s performance and better position us for growth and we’ve accomplished a great deal. Well, it’s definitely a work in process, I’m pleased with results to date and the continued progress made in the first quarter. The first two goals were improving Dice in the areas of product development, marketing and sales and investing technology in support for additional products built around our WorkDigital team. The other strategic goals we articulated were building out our data and analytics capabilities and investing in mobile. In the first quarter we further improvements of Dice, the launch of new mobile services and the ongoing deployment of enhanced products for clients and professionals across our brands. We continue to leverage our development teams with the launch of an Open Web mobile app for recruiters eFinancialCareers, and enhancements made to further strengthen the standalone Open Web service for both eFinancialCareers and the IT Job Board. To enhance our capabilities in predictive analytics by identifying positive candidates, willingness to change jobs. This is another example where we provide greater efficiency for our customers. We also made great progress in building a comprehensive skills knowledge base in our technology and financial services verticals. At Dice, we continue to evolve the Open Web service with the further roll out of an integrated Open Web and Talent Match experience. With this integrated experience, we have unified the work flow for recruiters to manage their candidate search in one place for all actionable candidates. We launched integrated search agents for recruiters, so they’ll be alerted to new candidates that meet their criteria while they’re active or passive. We’re already seeing improved product usage for both Open Web and Talent Match as a result. For Dice’s Open Web, we’re seeing continued demand as we added a 125 net new annual customers during the quarter and the number of Open Web clients increased more than 20% since the end of 2014. Also at Dice, we continue to refine the experience the candidates, while we continue to make improvements, we’re seeing great results in terms of engagement which leads to better performance from players. For instance, while overall traffic was up modestly year-over-year, applications were more than 30% and registrations were up 47%. This is just one example of the work we’re doing across our brands, where we’ve been taking services with success and improving them even further. At Dice, we’re also seeing continued success with our sourcing concierge product which posted its strongest quarter revenue. At eFinancialCareers where we launched Open Web in December as a standalone service, with a search algorithm based on skills and companies specific to financial services. Clients have been very receptive to the new tool with 72 clients signed up as of March 31st. The launch of eFinancialCareers, Open Web highlights our ability to use and analytics to enhance efficiency in a recruiting process. Concierge services and financial services continues to perform well for clients and we launched a new sponsored content or native advertising product in February that is generating early interest with a number of clients. Looking forward to the reminder of the year, the environment for most of our primary verticals remains broadly similar to recent trends with the exception of energy where sentiment has continued to worsen. Job cuts have now reached a 100,000 and are likely to be deeper than previously anticipated. More announcements are being made on the project deferrals as E&P companies refined their 2015 investment plans. Rig counts in the US have declined for 20 straight weeks and are now down about 60% since October. We’ve seen estimated budget cuts of approximately 30% in North America and 16% internationally. From a hiring and recruiting standpoint, historically dramatic changes in the price oil have caused the industry to go into stand still and this time it’s no different. We continue to believe however, that once the turmoil in the industry mitigates, recruiting activity will start to recover. This is supported by the feedback we’re receiving from clients and we remain confident in our overall opportunity in the market place longer term. In late March, we successfully completed the integration of our OilCareers product into our RIGZONE platform. With that integration we now have one globally centralized online oil and gas talent base that is the largest in the world with almost 2 million search for resumes and over 3 million registered users. User engagement has been strong so far and in addition to the integration work, we want to complete refresh of the RIGZONE site in early May. Our approach is to continue on the path of innovation and vertical leadership. We’ve made great progress in 2014 and early 2015 and are confident in our direction, although we do recognize there’s more to do. In this regard sourcing remains a priority for us as we continue to see sourcing evolve as an emerging theme in recruiting. Companies and recruiters are spending more time and resources on sourcing candidates versus the past and talent sourcing has become more of a strategic initiative. Companies are no longer recruiting purely around open positions, but are engaging in ongoing dialogue with communities or potential candidates in an effort to establish themselves as employer brands of choice. We’ve been a leader in sourcing from its early stages, when Dice created the first profile database for IT professionals and that leadership has continued with the success of Open Web, where we’re providing efficient access to professionals, companies would not have previously discovered. Our deep specialized focus on professional communities is more relevant today than ever and gives us a leg up in how we discover and engage with talent. We’re investing in sourcing products that will continue our leadership position in this area. Specifically, in the near term we’ll continue to work on improving product performance and capabilities across all of our brands. We’ll also continue to enhance our products with actionable data and improve depth of analysis while iterating and launching new versions of Open Web. At the same time we’ll build on our now stronger platform with strategic expansion initiatives. This will include expansion of tech in EMEA, with the launch of the Dice brand and platform has been intended with the acquisition of the IT Job Work. We’re also building up more offerings in healthcare where we’re also working on a new sourcing product that will extend the opportunity for us, more about that in Q2. As we maintain our elevated sense of urgency to capitalize in the investments we’ve made in innovation and bringing the products to market, we expect to see ongoing levels in investment in product and sales. In short, 2015 is a year in which we continue on our path of product innovation and building organizational leverage as we work to better position the company for a longer term. We have a strong team in place throughout the entire organization and are intensely focused on delivering against our key strategic initiatives. Before I turn it over to John, I just like to take a moment to acknowledge and thank all of our employees for their ongoing hard work and dedication individually and collectively, they’re focused, engaged, and executing at a higher level. The team has accomplished a great deal so far, and have a lot to be proud of. With increased collaboration, has come more frequent product innovations, resulting in added efficiencies for both employers and professionals. We’re building a much stronger foundation for long term, which will ultimately translate into improvements in our operating and financial performance. With that I just want to turn it over to John.

Thanks, Mike. I will review the details of our Q1financial performance and then we’ll open the call to questions. Overall we’re pleased with the continued progress we made on our operations during the first quarter, despite headwinds from currency effects and the negative impacts of declining oil prices on our energy business. Recruitment activity in the first quarter was fairly consistent across our brands, with the exception of energy where the recruitment market has gotten worse compare to what we saw in Q4 and at the beginning of Q1. For the first quarter, I want to highlight a few areas important to our results. First, year-over-year growth in revenues including growth in most of our operating segments; second, higher year-over-year revenue per recruitment package customer at Dice, reflecting the positive impact of Open Web and increased service levels by customers and third, strong cash flows from operations, while we continue to invest in innovation for future growth. First quarter revenues increased 5% year-over-year to $63.5 million, compared to $60.7 million last year. After adding back the $1.2 million of fair value adjustment to differed revenue in Q1 2014, adjusted revenues grew 3% year-over-year in spite of negative currency impacts. The majority of the growth came from our tech and clearance segment, including growth from all brands within that segment. Now for more detail on the specific segments, I will compare Q1 revenues on a segment basis to adjusted revenues in Q1 2014 where appropriate. Adjusted revenues, adds back to differed revenue adjustment to Q1 2014, which effectively has the impact of lowering the year-over-year growth rates. We feel it is appropriate to give this comparison in order to provide a more fair perspective of our relative performance, especially in the healthcare and hospitality verticals given the size of the differed revenue adjustment in those segments. There is a reconciliation between revenues and adjusted revenues in our press release. For tech and clearance, revenues increased 4% year-over-year, compared to adjusted revenues. For Dice, revenues increased 3% year-over-year. At March 31st, Dice recruitment package customers were roughly 7,800, which is flat to the count at the end of the fourth quarter. Within the Dice recruitment package customer base, there were minimal shifts quarter-over-quarter between shorter term and annual customers, with about 93% or nearly 7,300 of our customers under annual contract at quarter end. The renewal rate on annual contracts was relatively flat on a sequential basis, but has been on moderate up tick over the course of the last year. The renewal rate was 69% in the quarter, with about 2,200 customers up for renewal during the quarter. In Q1 recruitment package customers spent on average $1,055 per month, up 3% year-over-year, as continued to increase their levels of service including Open Web. Finally within the tech and clearance segment, clearance jobs, while only 4% of our overall revenues achieved tech and clearance growth of 19% in revenues. Growth in this segment was driven primarily by improved market conditions, continued shortage of cleared professionals as well as the clearance jobs product launch of pay-per-view job postings. Moving on to our finance segment, revenues decreased 3% year-over-year, to $8.6 million. Translation from foreign currencies negatively impacted revenues by $600,000 compared to the first quarter a year ago, so on a constant currency basis revenues increased by 5% year-over-year. I’ll be discussing the regions in their respective functional currency to give perspective on the underlying business trends. Overall the trend is positive in the major financial centers. In the UK, revenues increased 3% year-over-year in sterling and accounted for about 43% of the segments revenues in the quarter, broadly the environment continues to be better than last year. In the Asia Specific region, which is 26% of overall segment revenues, revenues were up 10% in Singapore dollars, with stronger performance in Asia which was up 15% year-over-year including Hong Kong and Singapore. In continental Europe and the Middle East, a combined 18% of the segment, revenues increased 16% in Euros above by country or territory such as Switzerland in the Middle East, sentiment is more mixed. And in the US, which is 14% of the segment revenues, was up 2% year-over-year. In our energy segment, revenues were $6.3 million, up 4% year-over-year compared to adjusted revenues. This includes OilCareers which we acquired in March 2014. In the quarter we saw disruption in the energy market, caused by the volatility in falling oil prices, resulting in a deterioration of the recruitment market. We expect the impacts to continue as we move forward into 2015, given layoffs at several large energy companies and the impact on hiring plans. Well, we’re committed to our long term position in the energy market and are not broadly scaling back our presence or cost base, we’ll be making adjustments to shorter term discretionary spending. In our healthcare segment, revenues were $7.1 million, up 3% year-over-year compared to adjusted revenues, primarily due to increased usage by customers. The hospitality segment contributed $4 million in revenue in the quarter, up approximately a $0.5 million or 16% year-over-year compared adjusted revenues, again primarily due to increased usage by customers. There were a number of customers where we saw acceleration of their buying patterns, as they expanded the volume of job postings purchased. Finally, corporate and other, this segment contains Slashdot Media and WorkDigital. Slashdot Media revenues decreased 7% year-over-year, primarily due to its largest customer selling a portion of their business and reducing corresponding advertising as well, as well as the recent changes to Google’s search algorithms. This segment also contains our corporate related costs, which were $3.9 million in the quarter. On a year-over-year basis for our segments, Q1 billings for tech and clearance were down 1%, including a decrease of 2% year-over-year at Dice, which was due to the timing in Q1 2014 of a bill for one large customer. Finance billings were down 6%, although up 1% on a constant currency basis and energy billings decreased 21%. For healthcare, Q1 billings increased 13% year-over-year and hospitality billings were up 9%, driven by the timing of a few large contracts and annual renewals. Differed revenue which totaled $90.8 million at the end of Q1 was up 3% or $2.6 million from the end of Q1 2014. The year-over-year increase was primarily driven by our tech and clearance segment as well as finance, partially offset by a decrease in our energy segment. On the expense side, operating expenses increased 3% year-over-year to $54.6 million, primarily due to higher year-over-year sales and marketing expense tech and clearance segment and a full quarters worth of OilCareers cost given their March 2014, acquisition. Depreciation and amortization was $1.2 million lower than last year at roughly $6 million, primarily due to pure depreciable assets and certain intangible assets becoming fully amortized. Adjusted EBITDA totaled $17.6 million during the first quarter, effectively with last year. After adding back the differed revenue adjustment $1.2 million to Q1 2014, adjusted EBITDA is down approximately $1 million from last year. Reconciliations of adjusted EBITDA to net income and net cash flow from operations are provided in our press release. The company posted net income in Q1 of $5.1 million, resulting in diluted EPS of $0.09. Cash flow from operations totaled $19.1 million in the first quarter compared to $12 million last year. This is up 59% year-over-year, while we continue to invest in our business for growth and innovation. The increase was primarily driven by improved cash generated from accounts receivable and lower payments related to the onTargetjobs acquisition that were made in Q1 2014. The financial strength and consistency of our business allowed us to expand strategically and continued to return cash to stockholders through our buyback program. We generated free cash flow in the quarter of $16.6 million. The main uses of that free cash flow were; one, we used about $9.2 million to repurchase approximately one million share of our common stock at an average cost of $8.91 per share, leaving us in quarter end with about $41 million on our current authorization. Two, we reduced our net debt balance by approximately 45.6 million; and three, we paid the final portion of the earn-out IT Job Board acquisition for approximately $3.8 million. Now, I’d like to turn to our outlook for the reminder of the year. For 2015, we’ve revised our expected our range of performance to reflect the worsening of our energy segment. Our guidance includes ranges for both the upcoming quarter and the full year. For 2015, we anticipate revenues in the range $263 million to $271 million and adjusted EBITDA of $77 million to $82 million. In Q2, we expect revenues of $64 million to $65.5 million and adjusted EBITDA of $17 million to $18 million. There are a few items impacting the Q2 guidance specifically that I want to highlight. One, as we mentioned the worsening of the energy recruitment market is projected to have a greater than anticipated impact on Q2 revenues. Because we believe the negative impact to not be permanent, we’re not making wholesale reductions in the expenses in our energy segment, however we are reducing short term discretionary spending where appropriate. And two, on a year-over-year basis, the strengthening dollar is expected to have approximately a $1.4 million negative impact on Q2 revenue. With that we’re ready to open the call up for questions.

[Operator Instructions] And the first question comes from Kara Anderson with B. Riley & Company.

Hi. Good morning. With regards to dice.com recruitment package customers, what's the biggest driver behind getting that number to grow again?

So Kara, this is Mike. I think there’s a couple of things. One, further penetration of Open Web and further adoption of Open Web would be a big driver. I think the amount of business that opens from having the conversations around Open Web with customer prospects has been pretty significant, but that’s a long lead time sale as companies are not used to that type of sourcing, so further adoption of Open Web is a big piece. The other area that we’ve struggled with from a pure account standpoint is, shorter term customers and we’re looking at variety of ways to increase shorter term customers. If we you look at annual customer count, it’s been relatively steady for quite a period of time, but having shorter term customers as a pipeline for upgrading into a longer term is a key initiative for us, that we’re spending time on in terms of packaging, delivery and we’re going to try a couple of things over the course of the next few months.

Okay. And then on Open Web, you added fewer net subscribers for financial services than technology. Is that reflective of sort of where you are in the cycle, or does the use of Open Web differ for financial services than technology?

I think it’s really the fact that the customer base opportunity is for smaller and financial services. If you think of technology as an employment category - an employment vertical and so it reaches lots of potential customers, so the customer prospect pipeline for the tech segment is pretty large. Financial services, you have a relatively defined number of potential customers, that’s the biggest driver plus where we are from the adoption cycle, we’ve only had it launched in financial services for four months.

And did you guys provide - I don't know if I missed it - the total number of Open Web subscribers?

So if you look at the three different businesses where Open Web is currently being sold, so Dice, EFC and IT Job Board. If you look at all the customers there at the end of the quarter, it’s just over 900.

Okay. And then, for the change in guidance for the year, I know you guys commented on that, but is that really just reflective of a weaker energy segment or is there other changes, since you provided initial 2015 guidance in January?

No, the vast majority is energy. So there is some FX in there, as FX has gotten a little bit worse, but the vast majority of it is the energy business.

Great, thank you. That's it for me.

Thank you.

Thank you. And the next question comes from Youssef Squali with Cantor Fitzgerald.

Thank you. Good morning, a couple questions, maybe just starting with one. If I look at the guidance for the second quarter, and then for the year and look at trying to figure out kind of the linearity or the variance versus your prior guidance, it looks like you're basically assuming a worse Q2, but for the year, you're effectively assuming some sort of improvement in the second half. So maybe you can walk us through your thinking there and why that should happen. I think you only called out FX as a kind of a headwind for Q2. And then I have a couple of follow up.

Sure, so there are a couple of pieces to it Youssef. So take FX first, so if you look at where the pound to the dollar was as a trend in 2014. It certainly had more of a negative impact or where we think it’s going to have more of a negative impact on us in Q2 than it did in Q, if you look at where the rates were, that worsening effect will - so would get better for us over the course of the year. They still will have less currency as we move through the course of the year given where the rates were in 2014. So I think that’s certainly a piece of it. I think another piece of it is that as we look at some of the - and Mike talked about some of the new products on the horizon, particularly in healthcare and as we continue to make progress in tech and clearance. As we move through the course of the year, we expect to see some benefits from some of those products, some of the newer ones and some of the existing work we’ve been doing over the course of the last year to 18 months as we move through the rest of 2015. So I think there’s a couple of impacts that you’re seeing reflected in that.

Okay. And then on corp and other, can you just, again, go through what happened to Slashdot. I think you also called out the Google algo change. So, how did that impact the - is that impact in Slashdot, in particular, or is that impact in some other piece of the business?

No, Youssef that’s purely on Slashdot. The SourceForge piece of the business, which is the bigger piece of the Slashdot Media business, it generated revenue at variety of ways, traditional - display advertising , lead generation and there are offers around downloads and given the way Google’s changed the algorithm, it’s had a disproportionate negative impact on the download business and other offers that we have associated with downloads. Not on like what others in our space have seen.

Okay, but, arguably, that's not a one quarter thing. That's probably going to take several quarters to remedy if it's remedied, right?

Yeah, we believe it will have an impact through the rest of this year. Now, when you look at the Slashdot business, there is some seasonality to the Slashdot business, putting aside the impact of the search algorithm. So the display and lead generation tends to ramp up late in the year. So we think, the second half of the year is going to be better than the first half of the year for the overall Slashdot Media business. But the Google algorithm change impacts a portion of the SourceForge business today.

Got it. And lastly, on the clearance revenue growth of 19%, maybe can you, again, just help explain what drove that and how sustainable that is, going forward, I guess at least in Q2 and the rest of the year?

So there’s a couple of things there. One is, the business has rebounded from what happened in 2013 and the 2014 sequestration and the government shut down - maybe it’s related to the presidential cycle, but there’s certainly a lot more money in government contracting business today than it was a year and two years ago. So we’ve seen a steady amount of growth and now we’re seeing a significant growth year-over-year kind of in the core business. The other thing we’ve done is we’ve launched in that business pay-per-view pricing to a number of customers, which to date has been incredibly successful. So it’s driven a fair amount of the revenue growth for a defined set of customers and so we’re expanding it now a little more broadly within clearance jobs, but it’s been - the reception has been great and the impact on revenue has been great.

Okay, thanks a lot.

Thank you. And the next question comes from Jeffrey Silber with BMO.

Hi, good morning. It's Henry Chien, calling in for Jeff. Did you guys give out an organic growth rate for 1Q, if you have it?

We did not, so we gave a growth rate of 5%. So the thing that’s impacting it a little bit is the OilCareers acquisition, it was in Q1 of 2014, but now that’s had business, so the OilCareers business as we discussed is basically integrated within the RIGZONE platform. It’s not a separate standalone business that we track, it’s the part of the energy segment. So while it’s blended in within the Q1 - it’s blended in within the Q1 numbers now. So the other thing we talked about is that without FX the growth was about 3%.

Okay, just 3% and the OilCareers is the only -

Yeah, it increased [ph] at a partial quarter in 2014.

Got it. Okay, thanks. And for your full-year guidance, I know you said its $1.4 million currency impact for 2Q. Do you have an estimate of what that number is for the full year?

It’s going to be closer to about $4 million for the full year.

Thank you. And how shall we think about product development expenses and sales and marketing, going forward? It looks like that - I know you mentioned some investments in new products. I'm just wondering how we should think about that for the rest of the year.

Yeah, I mean I think, you should think about it on a similar trend as to where it’s been over the last I’d say year, year and a half. I mean those are the areas that we’ve continued to make investment in and so we’ve talked about the areas of investment in Dice product, in technology, the WorkDigital team et cetera, as well as some of the sales and marketing initiatives. I think from a percentage of revenue basis you should think about it as continuing on a similar trend to where it’s been in the last number of quarters. We talk a lot about investing further, but as we’ve said through 2014, we did ramp up investments, so when you look out for the rest of the year, I don’t think you’re going to see a tremendous amount of incremental investment over where we are today. We’ve set the level from a resource standpoint, we’ll mix and match a little bit, but you won’t see further ramping.

Got it. Okay, great. Thanks so much.

Thank you. And the next question comes from Randy Reece with Avondale Partners.

Good morning. You had a sequential downtick in the average revenue per Dice recruitment package customer. I was wondering what the dynamics were beneath that change.

I’m not sure if there’s anything in particular Randy, except that if you look at kind of the full adoption and integration of Open Web into the business as well as the other services or sourcing concierge and so forth that have been driving algorithm over the course of the last year. I think what you’re seeing is that, some of that is now in the base as you’re comparing it to Q1 of last year. We’re left within the base as you move backward obviously, given the newness of some of those products.

Yes, I was just a little surprised that, compared with Q4, that it would be lower. I didn't - given that the number of customers was in line with our expectations, it didn't look like that there was necessarily any kind of customer mix shift. Is that accurate?

I think that’s true, I don’t think there was any significant customer mix shift.

Also, on your guidance, it implies a somewhat - like $2 million to $3 million less operating expenses in fiscal ‘15. Is there anything that changed there? Is that any cost control or reflecting recent trends? What's going on?

Yeah, so I think some of it is related to what we talked about it, what I mentioned with the energy business. So we certainly brought down our expectations on revenue, again primarily related to energy and one of the things I mentioned is that we’re going to - I’d say be cautious as we look at shorter term discretionary spending in the energy business. Well, we’re not going through any level of significant cost reduction in the energy business per say. We’re going to make sure that we’re increasingly cautious and aware and taking a look at some of the shorter term discretionary spending. So I think that’s the primary piece.

That looks - is it accurate to say your guidance implies energy could tail down to $5 million to $6 million a quarter in the second half of the year?

Yes.

Very good. Thank you very much.

Thank you.

Thank you. [Operator Instructions] And we do have a question from Tracy Young with Evercore ISI.

Yes, hi. You made a comment about Slashdot and the loss of a client. Did that happen this quarter? And how shall we think about Slashdot for the full year? Thanks.

It did happen this quarter, so it was related to a - one of their largest customers who sold a portion of their business and there was some specific advertising that customer was doing related to that business that they sold. So that business effectively, it was gone for I think Q1, it’s effectively gone moving forward given what the customer did. Now, Slashdot’s off obviously working to try and replace that revenue with other customers, but that discreet of business, you can think about that as not there.

Okay, thank you.

Thank you.

Thank you. And the next question comes from Bill Sutherland with Emerging Growth Equities.

Thanks. Hey, Mike, I wonder if you could help us just, maybe, step back a little bit in terms of the IT market, both here and for IT Job Board. And we've - we all know how tight it is and how tough it is for employers right now and just if you could give us some sense in terms of turnover and the factors that really impact your business? Because it would seem to me that you might be seeing a little more acceleration there than you are in Dice itself. Thanks.

Sure, so turnover is high. We’ve talked about turnover and how significant turnovers to our business for a long period of time, it took a long time coming out of the recession for turnover to bounce back in professional and business services, which now has for a period of time. So generally that’s good for our business. The unemployment rate in tech is now below 2% I believe, it fluctuates between below 2% and above 2%. The unemployment which is full employment were full employment, as much of our economist - an unemployment rate where essentially as people look forward to it, any unemployment in tech is voluntary. So you have to want to not be working now to not have a job in technology. That unemployment rates that low are not ideal for our business because the need for using services like ours declines at a certain point when there’s full employment because you don’t have that rate of activity. Now, the amount of activity on the side continues to be pretty healthy and I think it demonstrates the value that we have as a career management tool, I suppose just place people go to get jobs. But you’re seeing a role in technology in especially in the harder areas, people are getting jobs and employers are finding people offline. So they’re doing through referrals and doing it through other means besides using services like ours. So ideally from a step back standpoint and looking overall, the unemployment rate at the level of this is again not ideal or slightly higher unemployment rate where there’s more need for our services would be a better scenario for us, that’s in the US. In Europe it’s lesser, so it’s mixed obviously through the different market we operate in. We’re in UK, Germany and the Benelux countries and the employment situation is similar although not identical. There from our standpoint, we’ve seen some growth in the tech business outside of North America, but the competition for us is stiffer over there because there are more direct competitors to the IT Job Board. And one of the reasons why we’re relatively focused on rolling out the Dice brand and Dice platform into those to market to supplement what we have in IT Job Board is because we think the user experience will be improved, which should allow us to better compete with those direct competitors over there.

So, when you look at this cycle, compared to past cycles, do you think the turnover, voluntary turnover, is as high as you would expect it to be, given the - just the current status of the market, the IT market? Because it seems that the turnover might overcome this issue, because I understand this unemployment issue, and how that inhibits growth.

Yeah, I think it’s a tale of kind of two ends of the spectrum, alright. So as we describe it, if you’re closer to the customer, the need for you is much greater. So developer is on the front end. The further you are away from the customer, the more risk there is and there’s slightly higher unemployment rate there is. That’s the bulk of technology in the US, there’s about six to seven million technology professionals in the United States and while, what happens in Silicon Valley and Silicon Alley and some of the other hot funding development tech markets gets a lot of press, but the majority of the employment in technology sits farther away from the customer and that’s the one that has most risk to it. As you get more cloud computing and more SAFS and IAS providers - that market doesn’t have quite the velocity that the developer market does.

Right. Okay, that's helpful. I wondered - last thing - if you could give us a little more color on FreshUp? Kind of how it - well, just how it works and the expected impact. Thanks.

Sure, FreshUp, which we’ve talked about in the past is a product that has been developed out of the original Open Web technology infrastructure, essentially what the FreshUp product does is, it takes publically available information, aggregates profiles and can be used to freshen up databases of clients. So as we’ve talked about before and we haven’t talked about it a lot yet because it’s still in my view not a business yet, it’s a little product, which we’re trying to develop into a business. The usage for that would be like customer lists of tech marketers, that could be periodicals or publishers who have customer list that are dated and you can use the publically available that we’ve aggregated into profiles to freshen up your customer lists. And so we’re in the process of building strategic plans around how we make that product into a business. So at this point that’s all we have to say about it, it doesn’t generate much revenue. It does generate some revenue, but not very much, but it is a key initiative for us to determine whether there’s actually a business there. We’re pretty excited about it.

I'm sorry.

Sorry?

It's not a subscription, is it?

It’s not a subscription, it could be overtime, but it is a product that’s sold today on a one off basis to let’s a publisher to freshen up their list.

Right. I get it. Thanks a lot.

Thank you. And as there are no more questions at the present time, I’d like to turn the call back over to Jennifer Milan for any closing remarks.

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