DHI Group, Inc. (DHX) Q2 2016 Earnings Report, Transcript and Summary

Good morning and welcome to DHI's Second Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Rachel Ceccarelli, Director of Corporate Communications. Please go ahead.

Thanks Keith 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 second quarter of 2016. 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 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 and quarterly report on Form 10-Q in the sections entitled Risk Factors, Forward-looking Statements, and Management's Discussion and Analysis of Financial Condition and Results and Operations. The company is under no obligation to update any forward-looking statements except or as required by the federal securities laws. Today's call also includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA excluding Slashdot Media, adjusted revenues, adjusted revenues excluding Slashdot Media, net income excluding Slashdot Media, net income excluding impairment of goodwill, diluted earnings or loss per share excluding impairment of goodwill, adjusted EBITDA margin, free cash flow, and net cash to net debt. For details on these measures, including why we use them and reconciliations to 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 we’ll turn the call over to Mike.

Great, thanks Rachel. And welcome to the DHI Group second quarter earnings call. Today, I’ll talk about ways we are improving the company and leveraging efficiencies in order to provide more value to our customers and professionals, and about developments of BrightMatter where we have our next generation products. Then I’ll turn it over to John Roberts and he’ll provide updates on our second quarter financial performance, and lastly we’ll open the call up to your questions. But before we start, I just want to announce that John will be leaving us as CFO at the end of August. He’s been CFO for almost 3 years enjoying just as I was transitioning into the CEO role and he’s been a big support for me and the organization with his financial leadership over those three years. And we as a company, and I personally, will miss him. And we have started now our search to replace John. So, moving on to the business. The recruiting industry has been transforming and employers today are continually looking for providers with tools to deliver candidates who are more qualified and to do it more efficiently. We’ve been making changes to build on our core offerings and to move us towards providing more complete digital recruitment platform. We’ve organized the company in a way to add new products and services and while still early are developing product plan at BrightMatter and specifically the getTalent product has met the expectations we’ve made for this group. We’re doing a number of things that are moving the overall business forward, although we haven't yet seen the fruits of it in our financial results. We’ve aligned the Global Industry Group brands, which include eFinancialCareers, Rigzone, Hcareers and BioSpace to achieve the benefit of synergy, while leveraging the expertise we have within the organization. Operationally, I believe returning a corner and anticipate we will see the financial results from these moves in the near future, but not overnight. Even with these changes we realize there is more to do. We recognize we did not only build more value into our services, especially Dice, but we also have to demonstrate value more clearly in a competitive world. We've laid the building blocks for the future and started much of the work that will invigorate the core of Dice, improve key drivers of the business, and prepare this service for its next generation. At Dice, we’ve been working on a number of things to improve the performance of our business. Dice recently launched its all-new mobile app called Dice Careers, the iOS and Android app allows tech professionals to map skills with salary data as they develop their career goals, as well as search and apply for jobs within a defined geographic location. Since launch, new users on the app have jumped 82% year-over-year and 60% of all users who’ve downloaded the app have engaged with the skills map and our proprietary salary mapping algorithm. On site applies to jobs from mobile users rose over 80%, overall sessions have more than doubled. As more professionals engage, we gather more relevant data. The app leverages Open Web data to popularly use the data and create a well-rounded profile of candidates resulting in a better user experience, and then enhancements to the Open Web data itself. We're not just launching new products we’re conceptually changing the focus of Dice to more appropriately reflect the change in recruitment market. The brand has huge value and continues to deliver, but needs to continue to adapt to the market. One issue that permeates the digital recruitment industry is attribution or the proper credit for value delivered. With multiple sources of candidates, an applicant tracking systems that have poor interfaces and tracking capabilities we work hard to get credit for the candidates we provide. To address the issue, we've intensified our effort on integrating the Dice service with more SMB customer’s internal recruitment systems. To date, we've done more than 500 of them and the customer renewal rate and revenue retention and upsell on those customers is quite a bit higher than the overall average. It’s a small detail on the grand scheme of things, but it's an important step in increasing performance and increasing the credit we get for our performance. Getting accurate credit for performance drives higher retention overall. We are creating new affiliate partnerships and refocusing our marketing initiatives on key markets, building in part on our hottest in tech campaign from last year which we are retooling and reintroducing. We've also invested in better reporting tools for customers to provide more analytics to serve them better. Each of these items individually may not resonate as significant, but each of them is starting to have an impact on our ability to deliver and improve our performance. We’re addressing social sourcing on the pursuit of the hard to find candidates who may not be actively looking for a job, but are willing to make a move if the right opportunity presents itself. Dice's Open Web continues to add new customers and show increasing engagement. A new alternative profile view model is driving a rise in customers with multiple users for the service. And the retention rate for Open Web customers was higher in Q2, as compared to Q2 last year. Dice has certainly been a place where recruiters can find a range of talent from actively looking to more passive career managers. That certainly continues to be the case, but the more passive talent is harder and harder to find, and harder and harder to engage. Open Web is proving that it is a valuable source for those hard to find candidates, but in our sales process, the Open Web sale is often secondary were in this ultracompetitive environment we need to make it more top of mind. The receptivity of social sourcing tools has grown quite a bit in those small part due to the efforts on Open Web and now we believe strategically in tech it’s time to move towards leading with Open Web and our go-to-market approach and describing the unique nature of the combination of the social profiles together with the value of the resumes and profiles we have on Dice. If you as a customer believe that there is significant value in social sites in reaching hard to find candidates than those people will be found on Open Web. We know that Dice's financial performance needs to improve and we believe it well based on the types of things we’re addressing today. As we work and make progress and deliver results there is no doubt we’re facing headwinds in some of our businesses, particularly energy. And there is a new level of uncertainty as we think about the impact of the United Kingdom's vote to lead the European Union on our global brands. While a relatively small part of our business is based in the UK, it’s strategically important for the eFinancialCareers. This issue will be top of mind however it's too early to gauge the overall impact. Uncertainty could be a challenge for our business. Uncertainty slows hiring decisions, and can further lengthen already above average time to fill positions. It puts us making hiring decisions in pause mode even when hiring is necessary to move projects forward. At this point, few of our clients have raised an immediate issue related to hiring, but it's clear no one knows what's to come related to Brexit or the timeline. We do believe though that this decision would great opportunity elsewhere as other European markets look to fill roles outside the UK. It’s likely that European financial markets like Paris, Frankfurt, Brussels and Dublin for example will jockey to become bigger players and that Germany, Ireland and other countries will like to become larger tech players. This won't happen in the near term, but we are preparing now for what opens up in the future. As hiring organizations everywhere evaluate the best partner to unlock insights and discover the right connections, the right talent, we will be poised to provide actual data, workforce analytics, and innovative hiring solutions. For us innovation in improving our competitive position remains key. As we've discussed before we believe innovation needs to take place at several levels in the company. We’re investing and innovating at the brand level across the global industry group and within BrightMatter through next-generation talent acquisition and talent sourcing products and services. BrightMatter offers sourcing management issues, and focus on bringing new products to market to work across all of our verticals. getTalent, our new SaaS sourcing and talent relationship management platform designed to help hiring organizations easily pipeline and engage candidate leads. We are in the pre-apply phase, launched its version 2.0 at the tail end of the first quarter. Our conversations with customers have been productive and we’re gaining insight into the sales cycle with large enterprises and midmarket customers. getTalent's unique product vision continues to engage perspective customers and while still early customers interest in pipelining talent is strong. The BrightMatter teams have been working in tandem with our brands garnering leads from each of the verticals and testing pricing models. getTalent's unique value proposition comes from a combination of other offerings from BrightMatter such as FreshUp, a Cloud based service that updates resumes and customer records based on the latest social information and from Open Web. There are more developments to launch soon from BrightMatter, including tools aimed at helping employers reach highly targeted candidates at scale through tailored recruitment messages across social channels. This ongoing building of social data, new interaction methods and recruiting marketing solutions are key components for getTalent. This is how we offer services that help hiring organizations everywhere operate efficiently and effectively. GIG is making progress helping certain brands realize their market opportunities, as well as leverage expertise across marketing sales content product and technology. The structure has worked well, since we put it in place and the individual brands are benefitting from the collaboration and streamlined process. Leveraging data and workforce analytics to assist our clients in making better hiring decisions is one example of this. At eFinancialCareers, our client reporting tool is one way we deliver data to provide deeper market insights to our clients, while reinforcing our unique value proposition. Content is another way we provide value to customers and professionals. Leading up to and in the aftermath of the Brexit vote, eFinancialCareers saw a significant uptick in traffic and record page views as the site publish unique interviews with senior finance professionals along with our proprietary data. In healthcare, demand for professionals continues to be good pressuring healthcare organizations to find alternative methods to recruit and to hire talent. DHI has seen an evolution over the past few years and we’re finding new ways to support hiring managers and HR organizations. As the hiring landscape changes, economic uncertainties arise and technology shifts to new recruiting forms, our goal will remain the same and that’s to provide employers with the best candidates, the best insights and the best connections so they can make the best hiring decisions most efficiently and most effectively. As professionals consider resources to manage their carriers, the HR and our brands will be at the forefront of advice, insights and data to help them make the next step towards building their carriers. We’ve refined our brand and product portfolio with the goals of providing the best value to our customers and we’ll focus our best people on the most important things to drive improvement and results. I’m pleased to welcome Jen Deason to our board; as she had joined earlier in July. Jen is an Executive Vice President at Bain Capital and among other things has held a number of senior level roles at companies in which Bain has invested. She brings a wealth of operating, financial and strategic experience to our board and we are thrilled to have her. I’m also happy to report we’ve hired a new Head of Inventor Relations, who will be starting in August and we look forward to many of you having the opportunity to meet and speak with him in the months ahead. I continue to be impressed how passionate our people are about providing professionals with tools to manage their carriers, helping them find opportunities to thrive and this is hard work and I thank them for the dedication and commitment every day. And so, with that I’m going to turn it over to John.

Great. Thanks, Mike. I will review our Q2 financial performance and then we will open up the call for questions. This quarter, we continue to see some signs of progress and growth across the organization despite ongoing instability within energy and the negative impacts of foreign currency translation. We continue to believe that the steps we are taking to drive the business forward and the recent investments we have made will help us in achieving both our short and long terms goals. Some of the key growth drivers for this quarter were, one, solid revenue and billings growth in several of our talent acquisition brands more specifically Health eCareers and ClearanceJobs, as well as eFinancialCareers on a constant currency basis. And two, higher year-over-year revenue per average recruitment package customer at Dice. In the second quarter, overall revenues were down 1% year-over-year on a constant currency basis, excluding Slashdot Media and energy. For the tech and clearance segment, revenues were down 2%, excluding currency impacts. Within that segment, Dice U.S. revenues, which constitute approximately 83% of total segment revenues, were down 5%, due to both lower revenue from short-term contracts and classifieds, as well as overall lower recruitment package customer account, partially offset by higher average revenue per customer. As of June 30, Dice’s recruitment package customer count was approximately 7,300. Of Dice’s recruitment package customers, 93% were under an annual contract at quarter end. The renewal rate on annual contracts was 68% with approximately 1,650 customers up for renewal in Q2. In the second quarter, recruitment package customers on average spent $1,124 per month, up 4% year-over-year. ClearanceJobs continue to growth this quarter with revenues up 22%. Favorable market conditions, increased sales of its pay-per-performance product and a rising number of active job boastings are the main drivers of this revenue again. There are approximately 14,500 jobs on ClearanceJobs on any given day, up 30% year-over-year. Dice Europe revenues were down 13% on a reported basis and down 10% on a constant currency basis, due to changes in contract terms with two large customers. Q2 billings for the tech and clearance segment were down 2% year-over-year with strong billings growth of 25% at ClearanceJobs offset by a drop in Dice and Dice U.S. billings. Turning to our healthcare segment, revenues were $7 million, up 8%. Primary revenue drivers for the quarter were increased usage of core products such as job postings and resume access, and new products such as its pay-per-performance product, as well as benefits from favorable market conditions. Now to the Global Industry Group or GIG, GIG revenues and billings were down 19% and 14% respectively, driven significantly by energy business declines and negative currency impacts. Revenues at eFinancialCareers increased 1% to $9.1 million and on a constant currency basis revenues increased 6% with most of its key markets seeing some growth this quarter. Today, market sentiment across all of the major financial centers remains uncertain, especially with the unclear longer term impact of Brexit. On a constant currency basis, UK revenues increased 2% in sterling, Asia-Pacific revenues were up 9% in Singapore dollars, Continental Europe and the Middle East revenues increased 11% and in the U.S. revenues were down 10%. On a reported basis, eFinancialCareers billings were down 1%, but they were up by 4% on a constant currency basis. Turning to energy, Q2 revenues were $2.4 million, down 58% and Q2 billings decreased 56%. Revenue and billings declines are still due in large part to ongoing disruption within the energy market with customers continuing to hold-off on recruitment plans until more clarity is provided. Even though there has been some signs of stabilization in the overall energy market itself, we do not see major improvement in our energy business in the second half of this year, as we would expect several quarter of lag between energy market stabilization and recruitment market pickup. Hcareers, our hospitality brand reported $4 million in revenue this quarter, a 6% decline due in large part to sales performance. Deferred revenue for the quarter, excluding Slashdot Media totaled $85.9 million, up 3% from the end of 2015, which is a slight improvement from the growth in deferred revenue in the first six months of 2015. This growth is due to 6% growth within Tech and clearance partially offset by a decline in energy. Expenses for Q2 were down approximately $2.2 million, excluding the impact of Slashdot Media expenses from Q2 2015. The decline is largely due to lower amortization expenses of $1.7 million, lower sales and marketing expenses of $1.3 million, partially offset by an increase in investment at BrightMatter of approximately $800,000. Adjusted EBITDA was $16 million or a margin of 28%. We were able to manage costs effectively in the quarter, while continuing to invest in the next generation of new products and services. EBITDA is down approximately $3 million from Q2 2015 and there are few main items contributing to this decline. One, the decline in energy revenue and related EBITDA reflected in overall GIG EBITDA declining by $1.6 million; additional investment in the BrightMatter Group of approximately $800,000; and three, increase in corporate costs of approximately $800,000 related to professional fees including consulting and legal costs. These professional fees should go down through the reminder of the year. This quarter, the effective tax rate was 36.5% compared to a rate of 41.5% in Q2 of last year. The tax rate was higher last year because of changes resulting from a state tax examination. On a reported basis, the company posted net income of $4.9 million in the quarter or $0.10 per share. I would now like to discuss guidance for the rest of 2016. For reference please turn to the table provided in the business outlook section of our press release. For the full year 2016, we are reducing our revenue outlook, due to negative currency and other impacts of Brexit, as well as lower expectations for Dice. However, we are maintaining our adjusted EBITDA and diluted EPS outlook due to ongoing cost management across our organization. So for 2016, we now anticipate revenues in the range of $233 million to $237 million, total adjusted EBITDA in the range of $67 million to $70 million and diluted EPS in the range of $0.44 to $0.47. For Q3, we expect revenues of $57.5 million to $58.5 million and talent acquisition brand adjusted EBITDA less corporate expenses of $18.5 million to $19.5 million or 32% to 33% of revenues. We also expect to use $2 million to $2.5 million of that EBITDA as a continued investment in the BrightMatter Group in Q3. So this quarter, we made some good progress despite current market headwinds and currency impacts. We are particularly pleased with the strong performance in healthcare, ClearanceJobs and eFinancialCareers. In the second half of 2016, we will continue to work toward the goals we outlined at the beginning of this year while also continuing to deliver high quality, high value products and services to our customers and to professionals. With that, we are ready to open the call up for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Jeff Silber of BMO Capital Markets.

Thanks so much. In your prepared remarks, you alluded to the Brexit impact in terms of your lower guide. I was wondering if you can give a little bit more color on that. Are you seeing any meaningful changes over the past month or so since the vote and if so, where? Thanks.

Sure. So there is a little bit, it’s not large. We did see immediately after the vote that there was a pretty significant slowdown specifically in the recruit agency. There’s been – so not so much in the direct client business building the recruitment agencies in the week or two – week to two weeks after. We’ve seen that stabilize a little although there is – I’m sure you now understand why it gets quite a slower than it began with. So we believe it’s still early. I think the initial shot certainly is over, but there was a little bit and I think people are now assessing how much they want to invest in the UK and where they move people and how they recruit them into the UK. In the near-term, we don’t think the impact to be overly significant, but there is a level of uncertainty and that will impact the business slightly.

Can you just remind us where your UK exposure is, if I’m wrong, correct me, it’s in eFinancialCareers, but just curious what it is for that division in the entire company?

Sure. So for eFinancialCareers in the UK, it’s about 40% of the eFinancialCareers business, this also impacts in Dice Europe, obviously, so that’s based in London as well. But most of the impact for us is in the eFinancialCareers business.

Okay, great. And again, going back to your guidance, you talked about the cost management and the adjusted EBITDA side, I guess we saw that in the quarter that just ended as well. Can you give us a little bit more color on exactly or roughly what you are doing there to manage cost in this environment?

Sure. So there is a couple of things. First, within Q2, there are some costs that aren’t going to recur. As we move through the years, I mentioned some corporate costs, some professional fees around consulting and legal roughly $800,000 or so, so there is some natural kind of tearing down of those expenses as we move through the rest of the year. And I think what you’ll see from an ongoing cost management standpoint for the rest of the year, is what we’ve been doing over the last number of quarter, which is thoughtful continued investment through the business, but doing it in a way as we manage the overall cost profile at the same time.

Okay. And my final question, even in this environment, the company does a very good job of generating free cash flow. Can you just remind us your priorities for capital development? Thanks.

Sure. So I think they remain the same. So first and foremost, it’s about investing in the business for future growth, which we’ve done in the past and I think we will continue to do as we move forward. After that investment we are left with a healthy amount of free cash flow. In the quarter, we bought back stock as we’ve done in the first part of this year. We’ve got a $50 million authorization from the end of last year with about half of it remaining as of the end of Q2. So I think the capital allocation strategy continues on the same pattern it’s been on.

All right, great. Thank you so much.

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

Good morning. We’ve heard some – just anecdotal reports of kind of the disruptions in IT hiring demand in a couple of markets in the U.S., specifically New York and Silicon Valley. Just wondering if this is something that has been visible to you in recent months?

We have seen a little – I think it’s very little at this point. There has been some slowdown. We see it a little bit with staffing firms and the volume of activity that they see. But I would say at this point what we’ve seen is quite slight.

Is that more on the staffing side?

Yes.

Okay. When you are looking at your clients’ future needs, is there any kind of change in this multi-year trend we had seen with – looks like greater emphasis on spending on direct sourcing and narrowing of the spend on job marketing?

I think what we’ve seen is a continuing increase in the receptivity there and the willingness of customers to think more broadly about how they market themselves as employers and some are certainly more progressive than others, but we continue to see much more willingness to entertain approaches that are something other than how many applies to a job that they get and the literal measurement of ROI based on how much I spend on a job posting and the number of applies. When we – think about getTalent, getTalent’s early, we are still developing the product, we are having lots of conversations with the customers selling the service, but taking input and correcting the product around the needs of customers. We’ve been surprised at the number of entities and the different types of entities that are willing to entertain discussions about a product like that and these are entities generally speaking a little – historically been very focused on ROI measuring job applies to job postings. So I think we have seen and we certainly believe we will continue to see much more openness about looking at different types of products to serve their needs.

I’m intrigued by the progress that you’ve made in mobile. Feel like that’s a very important power ground over the long-term in this business. How do you expect the change in engagement to affect your business fundamentally?

So I think there is a couple of places, so one is, I think, it’s just from awareness, as we promote it, we really haven’t started to even promote the new app at scale, but that certainly is one and having deeper engagement. But the other thing we expect over time is this really is to be viewed as a carrier management tool, a carrier management app, not purely a job posting and apply to a job on my mobile device. So, I mentioned before that 60% of users already have engaged with the salary tool and the skills mapping, again, this is before we even promote it at scale. And what that’s likely to do is attract new users who tend to be more passive. So, we don’t like to focus on active and passive, that’s two polar opposites, but attracting users, tech users who are not actively looking for job and therefore not visiting Dice recurring to apply to a job, this is a tool for them that’s text specific, that speaks their language, that has information and data, that is all about the tech environment and we expect that the usage among the broad range of active to passive users will increase over time, which will increase the interaction with us generally, Dice Open Web and other.

Great. Thank you very much.

Thank you. And the next question comes from Kip Paulson with Cantor Fitzgerald.

Hi, good morning. This is Kip Paulson on for Youssef. Just a couple for me. First, EBITDA on the quarter came in a little bit above your guidance range and just wanted to get a sense of how much of this was due to efficiencies from the new Global Industry Group team structure versus margin improvement elsewhere in the business? And my second question, I just wanted to dig into the engagement on the Dice mobile app a bit more. You noted an 82% year-on-year jump in new users and engagement, but what would the impact be on a total engagement basis, if you try to de-duplicate for a mix shift from say PC or mobile web to app usage or do you think this engagement is mostly incremental? Thanks.

Sure, Kip. Let me take on EBITDA first. I mean, I think there is a number of things in there, I think, you are right. There is certainly were efficiencies that we were able to gain through the GIG reorder that we did back in Q1. So I think we are certainly on plan or ahead of plan there in terms of some of the efficiencies we are seeing across the GIG organization and it’s a number of other areas kind of broadly across the spectrum whether it’s efficiencies within BrightMatter or within some of the other brands as well, but I think the GIG efficiencies certainly standout in terms of helping us to broadly manage cost and efficiencies across the organization.

Yeah, just to add to that, if you remember when we announced the GIG Group, the focus is really on best practices and leveraging the organization to go to market with the poor brands and address issues and priorities once instead of four times across four brands. That is actually happening. We didn’t really do it to save cost, although we thought that would be a derivative benefit and that now has happened. So, if you look at marketing for example, you know we now have 8 marketing service organization that serves the four. The goal is to spend less or market less, but it is a by-product and that is what’s happened is that we are much more efficient in how we market the four services than we were before, so I use that just as one example. On the mobile app, there is some transition from desktop to mobile embedded in there, but when we look at the monthly performance numbers on the iOS app and on the Android app there is a significant bump from pre this app to post this app and it’s very clear. So there’s no question that from a number of sessions, number of screen views, and number of applies that go through the app now that a majority of that at the least is new and incremental and again, what I said before in response to Randy’s question, we expect we will get a fair amount more usage from people who don’t come to the Dice site routinely and this is one of the ways we’re going to reach them, it’s early, so it’s only been a couple of months since we launched this new app, but we believe that’s what we’re going to benefit from is reaching the more passive person who wants information about what’s going on in the industry that helps them from a career standpoint. I hope that helped.

All right great. That helps, thank you very much. And John, best of luck on your next move.

Thanks Kip, I appreciate that.

Thank you. [Operator Instructions] And our next question comes from Doug Arthur with Huber Research.

Yeah, two quick segment questions, Hcareer revenues were down in Q2, you talked about you made some mention of sales, I don’t know reorganization, not clear what you were talking about there, you are - it looks like you are expecting that to bounce back in Q3 and then I'm wondering if you just elaborate a little bit on the weakness at Dice? Thanks.

Yeah, so Doug within Hcareers, so one of the things that is really impacting kind of the year-over-year performance, as well as - there were some more - really some onetime items that happened in Q2 of last year, so given the size of that business when events like that happen, it makes the year-over-year little tough from a comparison standpoint given that there is $4 million of revenue in that business. So that’s really kind of what’s contributing in the, you know if you just look at the year Q2 year-over-year, as we look out for the rest of the year, we certainly expect that that comparison from a year-over-year basis will get better than what it looks like in Q2 and that’s kind of reflected in the outlook for the year.

Doug, you mentioned reorganization, so it wasn't the huge reorganization, but one of the benefits of GIG is looking at the best way to organize the sales forces and so one of the things we've done at Hcareers is reorganize, and I don't mean that to reduce, but reorganize into teams that serve markets differently than we have done before. So we have put people into different territories and give slightly different roles, pattern on what we've done at Rigzone and at eFinancialCareers over the years. So the expectation is now the measurements of those territories would be greatly improved as compared to the way that we have structured it before. So that was the reference for reorganization, it wasn't anything more than that. And your second question was about Dice, and the performance of Dice, and look I think we have a service that works really well for a large number of clients, we need to continue to adapt that business there's been a couple of things we've done over time and some things we’re doing that are new, so one of the things we've done over time is we’ve deemphasized short-term agreements and that's been going on for a period of time because the retention rate on short-term agreements when somebody buys a 30 day package from us, which we used to sell quite a bit of years ago, the ability to serve the customer in 30 days is very hard in the market where it takes more than 30 days, far more than 30 days to fill a role and so we deemphasized that. And so that has had an impact over time and that impact happened to be greater in Q2 than it was before I mentioned attribution before, we battled the attribution issue for years, I think we’re making a lot of progress now, but we haven't seen the benefit of that from a revenue standpoint, but we expect we will over time as we've done more integrations with customers, ATFs, their back-office, which has been a challenge in the past, but we think we've found a way and now we've done over 500 of them for small and medium-size businesses. So, we're addressing a number of things, but I think there is a couple of things in there and John talked about, we have a lower number of recruitment package customers today, but a driver, and not insignificant driver is the emphasis of short-term deals because the retention of those just got harder and harder over time.

Okay great, thank you.

Thank you. And the next question comes from Tracy Young with Evercore ISI.

Yeah, hi. Just looking for to Rigzone what are you expecting in terms of growth in that area are you seeing any stabilization, some of what we've been seeing is that there’s been some shift in jobs, away from possibly some of the [indiscernible] to some other areas?

So Tracy from Rigzone standpoint for the rest of this year, I mean we don't see much marked improvement in Rigzone between you know for the rest of this year. I mean, I think there are some signs of overall energy market stabilization be it through oil prices are other measures. Historically though and I think we expect the pattern to continue, historically when there has been volatility in the energy market, the recruitment market typically lags by several quarters, two to three quarters, it’s not an exact science, but it certainly lags the energy market stabilization. So we just, as we look out for the rest of this year that lag will be there and we just don't see that there’s going to be a recruitment market pickup as we are moving to the rest of 2016. We’re hopeful obviously that if the energy market continues to stabilize and improve as we move through 2016 that we’ll see that out into the future, but we can't sit here and see that today.

Okay, thank you. And then I may have missed this, I know you mentioned that your exposure to UK is primarily in the financial area, did you say what the percentages of UK, of your total revenue?

Our international business overall is about 25% or 30% of the company, and a good portion of that is within the UK.

Okay. Thank you, very much.

Thank you

And as there are no more questions at the present time, I would like to turn the call to Rachel Ceccarelli for any closing comments.

All right, thank you for your time this morning and for you interest in DHI. Management will be available to answer any follow-up questions you may have. Please call Investor Relations at 212-448-4181 to be placed in the queue. Have a great day.

Thank you. The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.