Good day, and welcome to the DHI Group Incorporated Fourth Quarter and Full Year 2021 Financial Results. 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, MKR Investor Relations. Please go ahead.

Thank you, operator. Good afternoon and welcome to DHI Group Fiscal 2021 Fourth-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'd like to cover a few quick items this afternoon, DHI issued a press release announcing its Fiscal 2021, fourth-quarter, and full-year financial results. The release is available on the company's website at DHI Group, Inc. dot 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, and the adverse impact of, and uncertainties 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 be referring to specific financial measures including adjusted EBITDA, adjusted EBITDA margin and adjusted earnings per share that are not prepared in accordance with U.S. GAAP. Information about and reconciliations of the non-GAAP measures to the most directly comparable GAAP measures are available in the earnings release and on our website at dhigroupinc.com, in the Investor Relations section. And I'll turn the call over to Art Zeile, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone, and welcome to our fiscal 2021 fourth quarter and full-year earnings conference call. Thank you for joining us today. In 2021, we focused on improving our industry-leading subscription software tools, which we sell into the technology career marketplace through our two brands, Dice and ClearanceJobs. This focus, along with the significant investments we have made to improve our products and sales and marketing over the past year, has allowed us to accelerate our bookings and revenue growth on both platforms during the second half of 2021. As a result, we finished the year strong with fourth-quarter total revenue growth of 25% year-over-year, and total bookings growth of 35% year-over-year. As more employers use our subscription software tools. As the demand for technologies continues to grow at a rapid pace, and the unemployment rate for technologies remains at an all-time low, employers need sophisticated tools like ours to find, attract, and engage with the right tech candidates. Dice, and ClearanceJobs are tech-focused career marketplaces that attract the highest quality tech professionals and enable employers to find and engage these skilled candidates on our platforms as they look to fill the millions of new technology jobs being added over the next five years. Enabling our customers to use our patent pending skills mapping technology to find and engage with the best tech candidates, is a substantial competitive advantage for both Dice and ClearanceJobs. And significantly differentiates our offering from other well-known career sites. Unlike these sites, we are solely focused on serving the technology market where candidates are measured on the technology skills they have acquired over their career, and not a simple job title. Demand for these skilled technology candidates continues to increase as employers require more technologists to drive their evolving digital strategies. As…

Thank you, Art. And good afternoon, everyone. Let me go into a bit more detail on our fourth quarter financial results. We reported total revenue of $33.7 million, which was up 10% sequentially, and 25% year-over-year. Total bookings for the quarter were $36.2 million, up 35% year-over-year. Dice revenue was $24.4 million, up 9% sequentially, and 26% year-over-year. Dice bookings were $25.9 million, up 35% year-over-year. We ended the quarter with 6,004 Dice recruitment package customers, which is up 4% sequentially and up 17% year-over-year. Our average monthly revenue per Dice recruitment package customer was up both sequentially and year-over-year to $1,160 or $13,920 on an annual basis. Approximately 90% of Dice revenue is recurring and comes from annual or multiyear contracts. Our Dice revenue renewal rate was 91% for the fourth quarter, down one percentage point from 92% last quarter, and up 16% percentage points year-over-year. Our Dice customer count renewal rate was 86%, up three percentage points from last quarter, and up 18 percentage points when compared to the same period last year. These metrics continue to demonstrate the strength of the tech job market and the value of the Dice products in recruiting technology professionals. ClearanceJobs revenue was $9.4 million, which was up 11% sequentially, and up 23% year-over-year. Bookings for CJ were $10.3 million, up 35% year-over-year. We ended the fourth quarter with 1,878 CJ recruitment package customers, which is up 3% sequentially and up 9% year-over-year. Our average monthly revenue per CJ recruitment package customer was up 5% sequentially, and up 8% year-over-year to $1,486 or $17,832 on an annual basis. Similar to Dice, approximately 90% of CJ revenue is recurring and comes from annual contracts. Our CJ revenue renewal rate was 105% for the fourth quarter, up 11 percentage points from 94% last quarter,…

Thank you, Kevin. I would like to close by once again, thanking all of our employees for their hard work over this past year. Your determination and dedication to executing our growth plan has paid off. It's a pleasure to be part of such a great team. With that, we're happy to take your questions.

We will now begin the Q&A session to ask a question, [Operator Instruction]. At this time, we will pause momentarily to assemble our roster. The first question comes from Eric Martinuzzi with Lake Street. Please go ahead

Congratulations on the terrific numbers for the quarter.

Thank you.

My question has to do just kind of high level here. Omicron seemed to impact a lot of people in November, December, January timeframe. I know obviously this is not dealing with COVID is not a new phenomenon, but I'm wondering if there was anything new and how you manage the business with regard to Omicron recently?

That's a great question, Eric, really appreciate it. And I'd have to say the answer is no. I check in with our sales leadership every couple of weeks to ask them about what they're seeing in terms of client sentiment, I actually checked in with one of our key leaders just about two hours ago, and they have, to a person, said that Omicron has really not affected people's view of 2022 and their hiring needs. And so, we feel pretty confident that we're in a good place right now.

Okay. You're making some pretty big investments here in 2022, and I can't disagree with it. I'm a big fan of growth as far as the trade-off between growth and profits and you guys targeting that at a near 20% for 2022, despite the double-digit growth here. Curious to know how those changes in 2022 versus 2021, and I'm specifically talking about the Dice side of the house. Are you -- is it just going to be, hey, we invested in commercial teams last year and we're going to continue that 20% growth in sales, gets pointed there, is it towards the staffing and recruiting side of the house, how is the investment being pointed in 2022?

Great question as well. I would say that part of the investment was making sure that we had fully staffed product development teams. And we were able to do that exiting 2021, moving into 2022. What I think about as the substantial portion of our investment for this year is really in Dice Commercial Accounts team expansion. And so, we still believe that we have 80,000 plus targets that we can go after that are viable for the Dice platform, and we want to make sure that we have the number of feet on the street to engage in those relationships. So, it's mostly about that sales investment. We are very bullish on the success that we saw as a result of our brand awareness campaigns focused on technologists, so we'll be roughly doubling that spend in 2022, but I'd say if I was to prioritize the level of investment, the majority of it is going towards expanding those commercial accounts. Team -- those teams for Dice.

Okay. And then my final question is probably more for Kevin. As you had customers coming into deciding what their package was going to be for 2022, did you see a change? Obviously, everybody is going to come actions, say hey, we're buying more seats and so we want a discount on the volume, or we want to do it. Can we get a different price if we do it for a longer, a multi-year commitment? What was the buyer behavior as you wrapped up Q4?

Good question. It really wasn't any different. We continue to see new customers and new customers seeing value in the platform. So, we really haven't seen any sort of behavior changes as far as pricing or expected pricing or discount. We did see retention rates slightly above a 100% in Q4 for Dice, we saw retention rates much higher than that in CJ, so there really was not a push for any beneficial pricing by buying more products.

Okay. Congrats again on the numbers, and looking forward to 2022.

Thanks so much, Eric. Appreciate it.

The next question comes from Josh Vogel with Sidoti & Company. Please go ahead.

Thanks. Good afternoon, guys. And congratulations on the performance to date. Really impressive.

Thanks.

The first question, maybe more so for Kevin and I know you gave some nice guidance here for Q1 and just thinking about the trajectory throughout the year and the cadence of revenue, given the level of deferred revenue and backlog, is it fair to assume that revenue should step up quarter-to-quarter before maybe getting back to more seasonal trends in 2023 and beyond?

We expect to see quarter-over-quarter growth throughout the year. Keep in mind some of the earlier quarters in 2021 were effectively lower based on the 2020 bookings. And so, we are seeing a very strong quarter for 2021, sorry, 2022 as we shared. That is likely to come down a bit throughout the year just simply from the comparative periods being much harder. But as we think about for the full year, for each quarter in the full year, we still feel comfortable that we will be in that double-digit range of growth year-over-year.

Okay. Great. Thanks. And I may have missed it in your prepared remarks, but in looking at the renewal business and how wage inflation comes up and plays into your value prop, can you just talk about how pricing is looking on renewal business relative to -- prior to the pandemic.

Yes. We do have an auto-renewal clause in 90% of our contracts approximately today, and that does have a price escalation feature that helps us with regard to seeing a better price attainment. We argue that we are improving our platforms each day for that matter in terms of our customer experience, and so I would say that we believe we can continue to see Dice revenue renewal rate in the 90s in terms of percentile, as well as ClearanceJobs. Now ClearanceJobs popped out and was a 100 and -- it was over 100% -- 105% this particular fourth-quarter. But I'd say that we would anticipate that the '90s is considered to be best-of-class in terms of both platforms performance.

Alright, great. And I saw the product development spike sequentially in year-over-year. I'm just curious, was there something kind of one-time in there? Just seemed like a big number compared to what my model is showing?

I would say that in general, we like our clients for that matter. We're working very diligently to fill our own technologist staffing verse technologists needs inside of our teams and hats off go to our HR and our recruitment teams because we were able to do so by the end of last year. We really feel like we have very stable technology teams. There are 14 teams that are built on a principal called Domain Driven Engineering and so they have their own domain of expertise. And some of those teams were partially staffed for most of 2021, but we were able to catch up by the end of the year. And Kevin I'd ask, is there anything else that you'd add there?

The only thing I would add is, our product team was also responsible for separating the eFC business. And so, the work they did on separating the eFC business cannot be capitalized, it has to be expensed. So that resulted in a higher expense for the product team flowing through the income statement for the full year 2021.

That's helpful. Thank you. And just lastly, how many quotA -bearing sales headcount do you have today? I just want to get a sense of, when you say you're going to add 20% more this year, how many actual heads that is?

So, I would say that at exiting last year, 2021, we had roughly 90 quotA -bearing reps. And so, if you think about 20%, we're roughly saying an incremental 18 to 20 individuals that will be replaced in these new business teams.

Perfect. Well, thanks for taking my questions, guys. Congratulations again.

Thank you very much, Josh, appreciate the questions.

The next question comes from Zach Cummins with B. Riley Securities. Please go ahead.

Hi. Good afternoon. Thanks for taking my questions. I'll echo the sentiments of the prior two analysts on the strong results here in Q4. Kevin, could you remind us on the percentage of bookings that typically fall into Q4 and 1Q when we're looking at a full-year basis. I'm just trying to get a sense of the visibility that you guys have into the business, and the confidence behind their sustainable double-digit growth.

We are in the neighborhood of 60% of our bookings would be in those two quarters. Now, of course that changes a little bit when the new business team continues to add more and more bookings. But I would say right now, a good rule of thumb for where we are as a business is ballpark 60% between the two quarters.

Got it, that's helpful. And in terms of the sales hiring, looking to expand quota carrying reps sped by about 20% from a capacity basis, how should we think about the pace of the hiring there? I would imagine trying to get them in the door as quickly as possible to get them productive in 2022. I'm just trying to get a sense of how you're going to balance that phase of hiring versus maintaining the strong productivity you've seen with the existing team?

Well, roughly I would say, the answer is that we're going to be hiring them equivalently over the quarters. And the key thing to understand is that for each one of these sales reps there's an ecosystem that supports them. And what I mean by that is we have to make sure that we have the right number of marketing qualified leads that we hand off to these new reps. We need to make sure that they have the right training in place during their ramp period, which is six months. We need to make sure that they have the right ratio of sales development reps, those are the folks that to do outbound calling as well as qualification calls for the reps themselves. So, there is a lot that goes into the equation of making a rep successful. And so, we want to make sure that we're balancing all those ingredients as we hire them and not overwhelming the system if you will.

Understood. And final question for me is just around your product development road map. Can you give us a sense of the key focus areas for the Dice platform in particular in the coming year?

Sure. So, I would say that the key area of focus this year is going to be the technologist experience. What we found is that we were able to obviously expand the number of clients that we had last year with both Dice and CJ. We want to make sure we have a balanced marketplace, meaning we have just as much new candidate engagement in the platform, as a result of the new client engagement. And so, we're rolling out, for example, a new apply flow that makes it a lot easier for a candidate to apply to a job. We have a new detailed job view, which is the page that essentially provides all the details about the job, the opening itself. There is a new technologist on-boarding, so there is going to be a process that's much more streamlined for a technologist creating their profile, uploading their resume, effectively becoming a part of the community very -- in a very short manner. And so, that's just giving you a view of the technologist's experience that's going to change and improve over the course of the year. But we have equivalent releases and important, I would say milestones for the client experience, for making sure that we also increased connectivity between clients and candidates, as well as branding. As we kind of indicated in our past earnings calls, we believe that branding is a significant weapon in the arsenal of clients to essentially bring on tech candidates telling their story about their mission, their values, their culture. That's all important in a time that the technology unemployment rate at least for January was 1.7%. You really have to embrace the idea that you are selling yourself to a candidate to bring them on board your company because there's such a supply-demand imbalance.

Understood. Thanks for taking my questions, and congrats, again, on the strong results.

Of course. Appreciate it, Zach.

[Operator Instruction] The next question comes from Kevin Liu with K. Liu & Company. Please go ahead.

Good afternoon, guys. First question here. Just in terms of your new bookings, especially for the Dice platform, curious as to how that mix is coming in from the traditional staffing firms versus some of these commercial accounts you're now targeting?

So, I'm going to ask Kevin if he has the exact numbers but approximately, I'd say 60% of the new bookings are coming in for commercial accounts and 40% for staffing recruiting agencies. And that's, I think, representative of the fact that there's demand across both categories. But also, the fact that, from a legacy perspective, we've had that staff in recruiting new business team in place a little bit longer than the commercial accounts team. So, we're -- as I illustrated in the answer to our questions, we're actually building up those commercial accounts team to make it even larger than it was in 2021.

No, your air numbers are directionally correct, Art. That's right.

And then just given kind of the war for talent that we're seeing out there today, can you just talk about how that's impacting kind of demand for your ancillary services are the less recurring pieces of business and what sort of growth you would expect for that lecture as clients think about ways to capture more talent?

Yeah, I think that's a great question, Kevin. So just big picture wise, 90% roughly of our revenue comes from subscription base contracts. So, the other 10% falls into this category of ancillary services, of which I'd say the important ones are sourcing services virtual career events, as well as branding and advertising. I think it's notable that sourcing services, which is focused on having our internal team of recruiters use our only tool or tools, Dice and ClearanceJobs to really find candidates for problematic positions. And so, that particular group saw a very large increase in demand in fourth quarter. Now, again, I don't want to overstate that because that's less than 10% of our total revenue. But I think it's also a very good indication to your point of people's interest in solving the problem for hiring technologists at this point in time. So, we would expect to see that particular group sourcing services have an even bigger impact in 2022.

That's great to hear. And then just lastly for me, you highlighted some of the marketing efforts you have around getting more candidate profiles into the Dice platform. Can you just talk a little bit about how engaged the new candidates are, whether they're coming into the platform and immediately interacting with some of the clients you have on the employer side, and what sort of success your customer base is seeing from all these new profiles?

Sure. So just to provide some statistics for January, a big picture for the Dice platform. Rough order of magnitude we have at about 200,000 unique live jobs on Dice in January. We believe that there are 350,000 job openings, roughly speaking, across the United States. So, a pretty good cross-section of those openings across the United States. We had a total of 1.5 million visits by candidates over the course of the month, and they generated 500,000 applications to those jobs. So, I think we're seeing a good amount of engagement on the platform. Now I could tell you that we are doubling the budget associated with these brand awareness campaigns, so we think that we can do even better yet in 2022.

Okay, great congrats on the strong finish to the year and good luck here in '22.

Thank you, much Kevin, really appreciate that.

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

Well, thank you very much. I just wanted to say thank you, everyone, for your interest in DHI Group, and I hope everybody has a great day, week and year to come.

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