Good afternoon and welcome to the DHI Group Inc., First Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] I would now like to turn the conference over to Todd Kehrli of MKR Investor Relations. Please go ahead.

Thank you operator, Good afternoon and welcome to DHI Group's fiscal 2021 first quarter earnings 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 would like to cover a few quick items. This afternoon DHI issued a press release announcing its Fiscal 2021 First Quarter 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 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 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 Exchange Commission. DHI undertakes no obligation to update or revise any forward-looking statements. Lastly, during today's call, management will be referring to specific financial measures, including Adjusted EBITDA, Adjusted EBITDA margin and, net debt that are not prepared in accordance with US 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 dhigroupinc.com in the Investor Relations section. With that, I'll now turn the conference over to Art Zeile, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone. And welcome to our Fiscal 2021 First Quarter Earnings Conference Call. Thank you for joining us today. I hope that everyone is staying safe and healthy. Let's start with a quick summary of the highlights of the quarter, and then I'll dig deeper into our improved sales performance, product updates and our expectations for revenue growth in the second half of the year. I'm pleased to report another strong quarter of bookings for DHI with our three new business teams handily exceeding their year-over-year average monthly bookings level, during the first quarter. These include our Dice's commercial accounts team; our Dice's staffing, and recruiting team and our ClearanceJobs, new business team. Another highlight of the quarter is that our Dice's revenue renewal rate continues to strengthen and came in at 82% for the quarter up from 75% in the fourth quarter and higher than Q1 2020. Dice's is poised to benefit from the healthy economy ahead and the increase in hiring as enterprises focus on tech enabling their business models. We have created the industry leading online marketplaces for matching companies with the highest quality tech professionals and are now positioned to capitalize on the millions of new technologists jobs expected over the next five years, we are successfully executing the business plan that we've put in place. We spent 2019 and 2020 building a better product. And in 2021, we will capitalize on that product innovation through accelerating our sales and marketing efforts. We have already seen some early success from these efforts with our solid bookings over the past two quarters and as such, we expect DHI to return to total revenue growth for the first time in over five years, starting in the second half of this year. Now let me…

Thank you Art and good afternoon everyone. I'll start by going through the financial results then at a few comments about the business. For the first quarter, we reported total revenues of $32.6 million, which was down 2% compared to the fourth quarter and down 11% year-over-year. Dice revenue was $19.1 million in the first quarter down 2% sequentially and 15% year-over-year. We ended the first quarter with 5,200 Dice recruitment package customers, which is up 1% sequentially and down 11% year-over-year. Our average monthly revenue per Dice recruitment package customer was up slightly on a sequential basis, but down 2% versus the year ago quarter to $1,128 or $13,536 on an annual basis. Over 90% of Dice revenue is recurring and comes from annual contracts. Our Dice revenue renewal rate was 82% for the quarter up seven percentage points from 75% last quarter and up two percentage points year-over-year. Our Dice customer count renewal rate was 71% up three percentage points from last quarter and up four percentage points. When compared to the same period last year. The tech job market continues to show signs of a rebound, especially as it relates to our staffing and recruiting business, which is driving the improvement in our Dice renewal rates. In addition, our client success organization continues to focus on improving its processes around onboarding and ongoing touch points that we believe have positively impacted both our customer and revenue renewal rates. ClearanceJobs first quarter revenue was $7.6 million, which was flat with the proceeding fourth quarter and up 11% year-over-year. As Art mentioned, we attribute the flat sequential performance and the less than usual growth year-over-year to the change in the U S presidential administration. First quarter revenue for each financial careers was $6 million, which was down 4% sequentially…

Thank you, Kevin. I'd like to close by once again, thanking all of our employees around the globe for their hard work over the past several quarters. Your determination and dedication to executing our growth plan is unmatched. It is a pleasure to be part of such a great team. With that, we're happy to take your questions.

We will now begin the question and answer session. [Operator Instructions]. Our first question is from Aman Gulani - B. Riley. Please go ahead.

Hey guys. Thanks for taking the question here. Can you give us an idea of the go forward margin profile for the business or any potential major changes to our model, a few divest you financial careers?

Sure. this is Kevin. We believe that we will still be at a roughly 20% margin throughout the balance of this year. We even with the divestiture eFC that we're still evaluating and finalizing the cost structure, we think we'll maintain that 20% adjusted EBITDA margins. And in addition, as we continue to see strong bookings performance and expect to see the revenue growth in the second half of this year, we will continue to invest in sales and marketing initiatives that do have an upfront cost associated with them that will ultimately drive improvement in bookings, which, which to the point Art made. You start to see that benefit in revenue, you know, a quarter or two later. So we do think that we will maintain the 20% margin throughout the year with, or without eFC.

Thank you. And then I know you've seen some positive momentum in bookings and with some positive data points come as a labor market and the expectations for material job growth in April. Have you seen the cadence for bookings accelerate sequentially into the second quarter from what you've seen so far?

Yes. the answer is absolutely. In fact, we saw it accelerate during the quarter and my own personal view is that people feel much more confident about the state of the economy, the state of the United States in particular, with regard to vaccines being rolled out. So from January to March, there was even a gradient and then it continues forward into Q2 as far as closing out April.

Got it. Okay. Thank you. And then in terms of adoption for some of the new features that you've rolled out for ClearanceJobs such as TJ meetings, and then also on the Dice side, with the Dice marketplace how would you say that's resonating with with your customers you know, your existing customers and then also you know, how are your sales team teams able to leverage that when talking to, to new potential customers?

So I think that the sales team are able to leverage it by basically telling them the story that Dice and CJ are innovators, and we're constantly tuned to making sure that we can improve their workflow, make them more efficient as recruiters. So it's a net positive. In general, when we roll out a new feature, it takes about three to nine months for it to be recognized and fully understood by our different customer bases, whether it's Dice CJ or eFC. So I like to report the statistics roughly at about the six month point, because I think it's much more relevant in the case of CJ meetings and video. We just rolled those out at the very end of Q1, so adoption rate is pretty low but with training and with a lot of marketing effort, we believe that the adoption rate should trend very nicely into the end of 2021. But again, it's a big deal to be able to talk about a new feature, to talk about something that really attends to the recruiter's needs during the course of a sales conversation.

[Operator Instructions] The next question is from Josh Vogel with Sidoti & Co., please go ahead.

Hi, afternoon, Art and Kevin. First question, consistent with some of the data points you provided in the prepared remarks. I'm starting to see very positive pattern emerge when I track the job openings across your sites, especially Dice and CJ that have shown mid single digit increases on a year-over-year basis over the past two weeks. So I was just curious what I could extrapolate from that is that more openings being posted from existing clients, or is that a mix of that and new clients that are now on the platform?

It's certainly a mix because we're seeing a lot of new bookings activities, meeting new clients, new logos as well. I think it is a very healthy mix of existing customers that are now seeing a need for more job postings, because they feel better about the economy, but also a net add of customers to the platform.

Sure. And as job postings, inherently pickups does that ultimately give you any more leverage or success in on one side of it going out and track the candidates to the platform and on the other side of it from a potential pricing standpoint?

Absolutely and you've picked up on a very important point, which is as a marketplace, we're trying to attend to the needs of both sides of the community, meaning the recruiters but also the candidates. And once the candidates believe, that there are more interesting job opportunities that are available that's essentially what attracts them to our platform naturally. And it does give us pricing leverage as we have a better candidate base, a better pool of candidates that are engaged with our platform itself. So I would agree with both ideas.

Great, I think it was last quarter and I apologize if I missed it if you can remark on it this time around, but you were talking about the sales cycle on the commercial accounts front, I was seeing a little bit of delays there since then have you seen any easing in the sales cycle?

Yes, I would tell you that my own personal view is that as we emerged from 2020, the staffing and recruiting agencies really surged; it was the easiest way for most businesses to find talent quickly. And now that most commercial accounts meaning the vast majority of enterprises in the United States feel good about the economic recovery they themselves are ready to hire. So we first saw kind of a wave of interest by staff and recruiting. And now we're seeing a wave of interest by the regular population of enterprises in the United States.

Great, I think he said that in the staff and recruiting market, you're only servicing, I think it was less than 25% of the op the market opportunity, I think 4,000 of 18,000, if that's right. And that's, I'm curious if you have internal targets where you hope that to be by the end of the year also how many of those 18,000 were you working with pre pandemic?

So, we don't have internal targets per say. Our targets are really predicated on quotas and the total budget that we have given to our staff and recruiting new business and account management teams. But I can tell you that we do believe that there's a huge opportunity here. Again, I referenced this statistic that came out of staffing industry analysts. They're an association for the staffing recruiting industry at large. They had a survey that went out last year of revenue associated with the membership, and that revenue has grown sequentially over the course of the back half of the year. And they also had a forecast for revenue growth, 2021, over 2020, that they just updated in March. That's what I referenced 9% growth year-over-year. And you might say, well, 2020 is a base year. That's a hard one to compare to, but what was really interesting is that it actually would mean that the revenue potential for the IT portion of staffing recruiting would actually exceed what it was in 2019. So a really big rebound for staffing and recruiting agencies.

Yes, for sure. And I just have one more just around that unrealized gains on the equity securities; Is this something that you're going to now Mark to market each going forward needs to, could add a little bit to the results, or do you sell it in the open market?

Yeah, we of course will have to market Mark to market at the end of the quarter based on the trading value in the public markets, but it is our expectation we will evaluate liquidating that if we're comfortable with where the stock price is.

Understood we'll. Art and Kevin thank you for taking my questions, looking forward to watching your progress. Maybe appreciate it.

The next question is a follow-up from Aman Gulani with B. Riley, please go ahead.

Hey, I just wanted to ask one more question here. I think you mentioned the increase in head count. Was it 16 new sales guys that you added during the quarter?

Yes.

That was on the commercial side for the most part or on the staff?

It's mostly on the commercial side, although there were a couple of reps that were hired for our staffing and recruiting new business teams, but I'd say the majority were focused on commercial accounts, kind of going back to our original strategy of saying our largest market by you know, Tam is commercial accounts. So we should really be putting our investment there. So it was mostly commercial accounts.

Okay. And then last question from me, how should we think about you know, increasing your sales head count for the commercial account side throughout the year?

I would say our plan is to roughly double the number of commercial accounts, new business reps over the course of this year. And so we're back on a track to really putting meaningful investment dollars behind that initiative to go after what is basically the broad business base of the United States. Those folks that are again hiring technologists at some level of critical mass.

Got it. Thank you. I'll jump back in the queue.

This concludes our question and answer session. I would like to turn the conference back over to Art Zeile for any closing remarks.

Thanks Gary. And thanks everyone for your interest in DHI group. Thanks for joining our call today and hope you have yourself a great year to come.

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