Brendan Metrano - VP, IR Mike Durney - President and CEO Luc Gregoire - CFO

Kara Anderson - B. Riley & Company Kip Paulson - Cantor Fitzgerald

Hello, and welcome to the DHI Group, Inc. Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I’d now like to turn the conference over to Brendan Metrano, Vice President of Investor Relations. Please go ahead sir.

Good morning, everyone. With me on the call today is Mike Durney, President and Chief Executive Officer of DHI Group Inc.; and Luc Gregoire, Chief Financial Officer. This morning, we issued a press release describing the company's results for the third quarter of 2017. A copy of that release can be reviewed on the company's website at dhigroupinc.com. Before I turn 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 in the statements here due to changes in economics, business, competitive, technological and/or regulatory factors, and the planned divestiture of our non-tech businesses, and the possibility that such divestitures does not occur. 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, Analysis of Financial Conditions and Results of Operations. The company is under no obligation to update any forward-looking statements except where it is required by federal securities laws. Today's call also includes certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin. 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. With that, I'll turn the call over to Mike.

Great. Thanks Brendan, and hi everyone, and thanks for joining this morning. I’m going to spend some time today recapping the key in initiatives that will commence to move our check-post-focused strategy forward and our progress against them in the third quarter. I’ll also discuss the market dynamics that are impacting our businesses as well as our view for what will move the dial in 2018. Then I’ll turn it over to Luc, who will provide an update on our financials. And before we open up to questions, I’ll talk briefly about the CEO succession plan that we announced this morning. During our last update we outlined strategic objectives for the second half of 2017 that we believe are paramount to us being successful. We certainly need progress on many of these and we are transitioning from the implementation state to the execution state now. We’ve got most of the people and resources in place and now we’re focusing on initiatives, evaluating feedback and making adjustments accordingly. It’s an intuitive process and with our product initiatives and refined value proposition, we expect to take some time before the impact is realized on our financial results. The first goal we have via the last quarter is returning the Dice business to growth. We’ve done a number of things to organize around this objective and we’re focused on improving our sales execution as well as evaluating our product offerings. To carry this out, we believe having a fully dedicated and tech-focused sales organization in North America will drive the growth agenda for indirect and direct sales. We hired an EVP of sales late in the quarter and expect to see improved performance from that area in the near term. In evaluating our services, we must focus our efforts on the core of…

Thank you Mike and good morning everyone. Today I’ll review the key points of our third quarter 2017 financial performance; I’ll address our fourth quarter outlook and discuss the financial aspects of our tech focus strategy. Before I begin, let me explain our new segmentation. Effective in the third quarter, the company organized its leadership around its tech focus strategy. As a result, the company is now reporting two segments, our tech focus and our healthy eCareer segments. The Tech-focused segment consists of Dice, ClearanceJobs and eFinancialCareers. Our other business is hospitality; Rigzone and BioSpace have been included in corporate and other. We’ve provided a supplement in the appendix to today’s presentation material that recasts our segmented results in prior periods. Now on to the review, third quarter results were consistent with our expectations and the rate of decline in revenue would start abating, helped by exchanged cost becoming easier with the British pound fallout in mid-2016 that followed the Brexit. Revenue for the quarter declined 7% with the Tech-focused segment down 7% and the non-Tech businesses down 5% year-on-year. Exchange was not a factor this quarter. Drilling down on the key components of our Tech-focused business, Dice US revenue declined 10%, with recruitment package customers at 6600, down 9% year-on-year. Customer renewal rates have stabilized in the mid-60%. Average monthly revenue continues to hold around 1110 per customer and 95% of our contracts are 11 months or longer. However what we’re not seeing yet is the uplift in net new and win-back customers, which we expect should occur as we gain more traction with our enhanced product features we extend a more flexible term to meet the needs of different types of customers and fully execute on our sales and marketing strategies. Moving on to eFinancialCareers; revenue declined 6%…

Thanks Luc. So before we turn it over to Q&A, I just want to address the announcement we made today that the Board of Directors now have initiated the CEO transition plan. The company continues to make progress on our single-tech-focused organization. And we continue this transition, we now a full management team in place. The Board and I believe it’s the right time for the company’s evolution to now implement the plan. So that Board has commenced a search and we’ve hired the consultants to lead that search. So I will continue to be the CEO until March 31 or until a successor is found. If earlier than I’ll help provide transition in that process and if it takes a little while longer then I’ll stay a little longer until we find that person. I think all of the people who work in the organization are absolutely focused on moving forward with our strategy and executing on our product roadmap and our strategic plan, rolling it together, this great opportunity for this business. We need to execute on that and everybody here is focused on it. The Board and the management team are all confident that we have the right strategy and we have to execute on it. So that is the focus the company has been and will continue to be for the foreseeable future. And so with I’ll turn it over to questions. Operator?

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

Recognizing that you stabilized renewal rates for Dice improvement packaged customer accounts, what kind of feedback are you receiving from those turning out and how has that conversation changed over the past year.

I think when we look at customers who don’t renew and I know we say all the time, but I’ll just remind everybody, when we talk about renewal rates of mid to higher 60%, that is measured in the month that bear up for renewal. So we get some number of those back overtime which is roughly a third to a half overtime, whether it’s the following month or two months or three months or six months later. So just by way of background and as a reminder that’s how we measure retention rates. So with that the most popular response we get is no need. Now no need comes in a variety of forms that could be somebody had a number of positions, they felt done and they don’t have a need and when they come back, they come back as shorter term customers. It may have been somebody building out a tech organization, they finished that and off they go. Competitive environment, there are generalist who get a bulk of the spend whether its LinkedIn or Indeed where customers allocate a fair amount of their spend to crossbows generalist because I serve the needs in sales and marketing and accounting and admin and operations. Customers will go to them. Those are the two biggest points of feedback we get. Occasionally we don’t find the person or the [tech crew] that they are looking for, because they are very hard to find in geographic markets that are tough to fill or in specific skillsets are tough and they come to us thinking as a specialist we’ll find them and occasionally we can’t because those people don’t exist. So that’s another reason. But those reasons generally haven’t really changed materially over the years. That has been the pattern of responses when we talk about why people don’t renew when they are up for renewal.

And then on Open Web it appears you are gaining some decent traction still, what kind of level of penetration do you think that can go to, or said differently, does Open Web not make (inaudible) and Dice equipment packaged customers.

I’ll answer the second piece. Yes, there is some component of the Dice recruitment package customer world that Open Web probably wouldn’t be appropriate, we like to think it’s appropriate for everybody. But there are some customers who like to post jobs and not search a database whether its proprietary Dice database with resumes or profiles or whether it’s the Open Web generated database with publicly available information used to create an aggregated profile. One of the things we find and I refer to this earlier and talked about usage is, we’re really trying to push Open Web as a way for customers to find both active and passive tech professionals. We generally don’t like to use (inaudible) but the world does and we refer to them as such. One of the things we find with Open Web is customers that used the Dice, they were used to interacting with tech professionals who has a resume or has a structured profile tend to be more responsive, I think it’s obvious than somebody access to Open Web who doesn’t have their profile or their resume in a place but we’ve gotten information about that person that we are able to provide. The response rates are lower and similar to what somebody like LinkedIn. So certain customers really want to address the active database much more than (inaudible) passive. So we never had thought that Open Web would have anywhere near full penetration of our customer base. While we are working on improving research, technology and how the search of the Dice database and the Open Web database interact, which we think will make it more attractive to a greater customer base. But to answer your little question is that we believe there is a limit on the number of Dice recruitment package customers that would find Open Web useful just by the nature of the way they search.

And then last one from me, on Dice Careers downloads, is that been driven job seekers and how do you connect that to monetized offerings?

The primary focus has been on existing Dice users as we’ve rolled out the features and functionality. Over time we’ll do more of a marketing push and product distribution push so that we’re reaching tech professionals that aren’t current users of Dice, because our strategy is to go find tech professionals wherever they are whenever a customer needs them not purely rely on bringing them to our site or to the mobile app. The monetization from that will be come from the increased usage in activity levels and engagement from the professionals which were monetized through clients, customers, recruiters, not for the foreseeable future through the app itself. So it is a way to reach tech professional, it’s a way for tech professionals to engage with us and ultimately see careers opportunities for which we monetize in the way we always hope.

[Operator Instructions] and then next question comes from Kip Paulson with Cantor Fitzgerald.

Wondering if you can just flush out your sales and marketing investments a bit more, any changes to your marketing strategy?

Sure. If I break that in to sales and marketing, our sales go-to-market strategy is similar to what it’s been, but we’re quite excited now about having organized the North America team around the three brands that we have as part of our Tech-focused strategy, Dice, ClearanceJobs and eFinancialCareers and expanding the opportunity to penetrate the market with each of those three to having a new leader over those three which is a position we’ve never had before in our old structure. And I think we are quite excited about that person will bring some historical knowledge and experience from the market to us. That will increase our sales performance I believe. But no real great change from sales campaign. From a marketing standpoint, the strategy continues to be to push in to the market with all offering to engage tech professionals. That will come through a variety of ways, one is, increases in product, one is social distribution and engagement techniques that aren’t what I would call traditional marketing. But from a more traditional marketing standpoint, it’s going to further distribute our offerings to places where tech professionals are and bring opportunities to those professionals again wherever they are not surely focused on trying to attract people to the site and engage on the site.

As there are no more questions at the present time, we’d like to return the call to Brendan Metrano for any closing comments.

Thanks Steve. We appreciate your interest in DHI Group. If you have any follow-up questions, you can call Investor Relations at 212-448-4181, or email ir@dhigroupinc.com.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.