Good day, and welcome to the DHI Group, Inc. First Quarter 2020 Financial Results Conference Call. All participants will be in a 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 would now like to turn the conference over to Todd Kehrli with MKR Investor Relations. Please go ahead.

Thank you, operator. Good afternoon and welcome to DHI Group’s First Quarter Fiscal 2020 Financial Results Conference Call. With me on today’s call are DHI’s CEO, Art Zeile; and Chief Financial Officer, Kevin Bostick. Before I turn the call over to Art, I’d like to cover a few quick items. This afternoon, DHI issued a press release announcing its first quarter fiscal 2020 financial results. This release is available on the company’s website at dhigroupinc.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the Investor Relations page of the company’s website. I want to remind everyone that, during today’s call, management will make forward-looking statements that involve risks and uncertainties. Please note that, except for the historical information, statements on today’s call may constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. When used, the words anticipate, believe, expect, intend, future, and other similar expressions identify forward-looking statements. These forward-looking statements reflect DHI management’s current views concerning future events and financial performance and are subject to risks and uncertainties, and actual results may differ materially from the outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include delays in development, marketing or sales, the adverse impact of and uncertainty surrounding the COVID-19 pandemic, and other risks and uncertainties discussed in the company’s periodic reports on Form 10-K and 10-Q, and other filings with the Securities and Exchange Commission. DHI undertakes no obligation to update or revise any forward-looking statements. Lastly, during today’s call, management will refer to specific financial measures, including adjusted EBITDA, adjusted EBITDA margin, and net debt that are not prepared in accordance with U.S. GAAP. Information about and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release and on our website at www.dhigroupinc.com. I’ll now turn the call over to Art Zeile, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone, and welcome to our first quarter fiscal 2020 earnings conference call. We appreciate your interest in DHI. I want to begin by saying a few words about the impact of COVID-19 and our response to this global pandemic. First, I want to express our heartfelt concern to all of those who have been impacted. And to everyone listening today, I hope you and your family and friends are staying safe and healthy. In the past several weeks, DHI has jumped into action to aid our community by launching COVID-19 resource centers on each of our brand sites, assisting both clients and candidates alike with information relevant to their needs in these challenging times. And just last week, we launched a campaign to provide free recruitment services to U.S. hospitals to help them find technologists in fields like electronic medical records, healthcare administration, and computer system processing. As the COVID-19 pandemic continues to unfold, our foremost concern at DHI is to ensure the health and safety of our employees, their families, and our worldwide community. As such, we have taken extraordinary measures to maintain continuity of our operations and to continue to safely operate at full capacity while complying with the local, state and country-mandated protection directives. All of our employees are working from their residences using the best possible remote communication and collaboration tools, and our team members, including sales and support, marketing and R&D, continue to be highly effective. DHI has had a video meeting culture for many years, given the global nature of our team. And as a technology company, we have significant experience operating in a remote work environment. Well before this pandemic, 95% of our employees were utilizing company laptops with the ability to work from home. The vast majority…

Thank you, Art, and good afternoon, everyone. Let’s jump right into the quarterly results. For the first quarter, we reported total revenues, $6.6 million, which was down 3% from the fourth quarter and down 1% year-over-year when you exclude the impact of foreign exchange. Dice revenue was $22.5 million in the first quarter, down 3% sequentially and down 3% year-over-year. We ended the first quarter with 5,850 Dice recruitment package customers, which is down 3% sequentially and 4% year-over-year. We continue to see an increase in our average monthly revenue per recruitment package customer, which was up 2% year-over-year to $1,153, or approximately $13,840 on an annual basis. This is important, as over 90% of Dice revenue is recurring and comes from recruitment package customers. Our Dice customer renewal rate was 67% for the first quarter, down 1 percentage point year-over-year, and our revenue renewal rate was 80%, which was also down 1 percentage point when compared to the same period last year. As we look at our Dice customers, our strategy is to focus on these larger relationships, which creates a more stable customer base. By moving upstream in terms of our marketing efforts, sales activities, and go-to-market approach, we believe we are putting ourselves in the best position for stability and growth. As an example, currently 15% of our customers generate 50% of our recruitment package revenue, though no customer makes up even 1% of revenue. We think this is a good balance of a strong, stable revenue base without having customer concentration risk. First quarter revenue for eFinancialCareers was $7.2 million, down 6% from the fourth quarter and 10% year-over-year, when excluding the impact of foreign exchange rates. As expected, COVID-19 negatively impacted our performance for eFinancialCareers during the quarter. In the APAC region, eFC’s second largest…

Thanks, Kevin. I’d like to close by once again thanking all of our employees around the globe for their hard work this last quarter. It is a pleasure to be part of such a great team. With that, we’re happy to take your questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Josh Vogel with Sidoti & Company.

Thank you. Good evening, Art and Kevin. Hope you both are doing well.

I really appreciate that, Josh. Thank you. Hope you are, too.

Great. So, a lot of a – thank you – a lot of impressive commentary on the business and announcements of late, particularly working directly with the government. My question is does that potentially cannibalize any of your opportunities with the subcontractors you were working with?

No, it really doesn’t, Josh, because ultimately, when we work with a contractor, a military contractor, they’re trying to find cleared professionals to work on their own projects internally, whereas, if we’re working with a government agency, we are literally finding a technologist, in most cases, to be part of their teams, and they’re separate. So we look at it is purely additive in terms of our ability to facilitate finding those cleared professionals.

Okay. That’s great. And how to and – are you already starting to see some revenue from those relationships?

Yes, we are. The relationships span pilots, but also subscription-based contracts. And when we do put them on a subscription-based contract, that’s when a larger amount of revenue kicks in. We generally charge a small amount for a pilot to encourage them to take that risk to use the platform, but then the subscription-based contracts really are contracts that are generally substantial in nature, usually in the large tens of thousands, to even hundreds of thousands of dollar kind of value range.

Okay, great. And the announcement, I guess, last week, it’s really nice to see what you’re doing to help out U.S. hospitals. Kind of a 2-pronged question, one is, have you – I know it’s only a couple days in, but have you been seeing a meaningful bump in candidate profiles there? And then, on the other side, are you exploring this type of action for any other industries in particular?

So great questions. I would say that we have seen a meaningful bump in candidate activity on our site, and that includes registrations, but also job views and applications. And that is – I shouldn’t say just site. That is largely across all 3 sites. If you think about what’s happening in the work-from-home environment, it’s a lot easier for candidates to spend more time on these sites and to be more actively engaged. And unfortunately, a lot of people are thinking about the certainty of their own personal environment, so all those things are leading to more candidate activity. And the second question, whether or not we would bring this out to other industries, we are still thinking about how we would do that. We want to get a little bit more time behind us and experience how the hospital campaign effectively works over the next few weeks.

Okay, makes sense, makes sense. Just thinking about cash flow, did you apply for any government programs under the CARES Act or any other stimulus programs in some of the operations you have overseas?

Yes. We actually did. Based on the qualification criteria that was put together by the [SBA] [ph] originally, we applied on the April 7, which is pretty early for that particular program. And we believe that there was enough uncertainty at that point in time, back in early April, around the economic impacts of COVID-19 that we qualified for the program. However, the [SBA] [ph] issued further guidance on the qualification criteria later in the month, and specifically for public companies. And we rapidly repaid the entire loan as a result of that within days. So we did apply. We received the loan. They changed the criteria. And we returned the loan very quickly. And we haven’t looked at alternative countries, equivalent regimes, so that’s the answer to that question.

Okay, thanks. And lastly, Kevin, can you remind me what – how much you have available still on your credit facility?

Yes, sorry. We have $53 million available. It’s a $90 million credit facility and we have $37 million outstanding.

Okay, great. Well, thank you, guys.

Thanks, Josh.

Absolutely. Thank you.

[Operator Instructions] The next question will come from Kara Anderson with B. Riley FBR. Please go ahead.

Hi, good afternoon.

Hi, Kara.

I was just wondering if you could call out kind of the biggest factor behind the sequential decline in revenues at Dice, that’d be really helpful.

I would say it has been, I mean, specifically for Dice it has been the change in the leadership, meaning that we did bring on board, Arie Kanofsky at the beginning of Q4, effectively, last year. He is making a lot of changes in the team structure, in focus, in training, in discipline, and accountability, and we need a little bit more time to have that actually take effect. I’d also say that, in terms of the actual quarter itself, obviously we did see some effect to the last 2 weeks, the commercial accounts team initiative, in my opinion, looking at the first 10 weeks of the quarter, was highly successful. And as a result, we’re fully committed. We’re actually convicted that this is the right strategy for us for the long-term. But in the grand scheme of things, about 20% of our bookings plan is associated with new business, creating new business relationships. And it did slow down in those latter 2 weeks of March. The good news is that no deals were lost, but sales cycles have lengthened, which in my opinion is pretty logical. In this kind of timeframe it makes sense. It’s just harder to communicate with clients. There are usually more decision-gates right now. Customers are taking a conservative posture towards new relationships in general. But the interest was there and still is there. And even with these longer sales-cycles, we are keeping those relationships and moving forward in the sales-cycle itself.

Okay. That’s really helpful. And then, just wondering if you’re beginning to see or hear any talk about the supply and demand shifting in tech with the mounting kind of startup environment seeing lots of layoffs in the tech space. And whether or not maybe those engagement trend you’re seeing on the job seeker side are maybe early indications of that, just any thoughts around that.

So you’re asking are we seeing an effect associated with all the startups, laying off their technologists?

Yeah, I’m just wondering if you’re going to see a change in the supply of technologists versus the demand with the layoffs. And since it has really been in balance for quite some time, and then whether those engagement trends you’re seeing is maybe an indication of that.

I think that we’re seeing that right now. I was just talking to Josh Vogel from Sidoti, and he asked a similar question associated with candidate activity, and especially on the Dice platform. We’re seeing improving trends across registrations, across job views and applications. And I think it’s a combination of people that have been laid off in those areas that are associated with startups, like Silicon Valley, Austin, Texas, even New York City, but also just the uncertainty of the environment and the fact that your boss isn’t looking over your shoulder now anymore in a work environment when you want to go to the Dice home page. So all those things I think cumulatively are adding to our candidate activity on Dice.

Great. Thanks. That’s it for me.

Ladies and gentlemen, this concludes our question-and-answer session, so I’d like to return the call back to Todd Kehrli for any closing remarks.

Thanks, everyone, for your interest in DHI Group. To schedule a meeting with management, please e-mail ir@dhigroupinc.com or call 212-448-4181. Thank you for joining our call today and have a great day.

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