Announces Organizational Restructuring

After market close yesterday, DHI Group (DHX) filed an 8-K announcing an organizational restructuring that will result in a 7% reduction of the company’s workforce and generate annualized savings of $4 million to $6 million. Approximately $1.1 million in charges related to employee severance and benefits will be incurred during Q3 ’24. We believe the cuts largely affect the sales and product development teams associated with Dice, which continues to face a sluggish demand environment. We note that the U.S. Bureau of Labor Statistics (BLS) will release employment data for the month of May later this morning. The prior release reflected a downward revision in the number of job openings for the month of March and a sequential decline in April. Interestingly, CompTIA’s June 2024 Tech Jobs Report reflects a modest increase in tech job postings from April to May, which could foreshadow a similar trend in the upcoming BLS data. Regardless, even a modest sequential increase would still imply year-over-year declines in job postings in the mid-teens range, suggesting the demand environment has not improved since the start of the year.

All else equal, our Q4 ’24 adjusted EBITDA estimate would increase by $1.3 million and our FY ’25 adjusted EBITDA estimate would increase by $5.0 million. We surmise, however, that our bookings and revenue assumptions may need to come down some to account for ongoing macroeconomic softness. As such, we plan to await the company’s Q2 ’24 earnings release prior to making any adjustments to our model. Ultimately, we doubt the adjustments to our top line projections will be material, and we suspect our FY ’24 and FY ‘25 adjusted EBITDA estimates are likely to be flat to up slightly. We therefore maintain our price target of $7.00 based on an unchanged FY ’24 EV/Sales multiple of 2.5x. In our opinion, management’s focus on enhancing profitability during a period when growth is already expected to remain challenged should be viewed positively. We continue to see significant upside in shares once the current technology hiring cycle turns.

Oure model with report and disclosures is available here.

Disclosure(s):

K. Liu & Company LLC (“the firm”) receives or intends to seek compensation from the companies covered in its research reports. The firm has received compensation from DHI Group, Inc. (DHX) in the past 12 months for “Sponsored Research.”

Sponsored Research produced by the firm is paid for by the subject company in the form of an initial retainer and a recurring monthly fee. The analysis and recommendations in our Sponsored Research reports are derived from the same process and methodologies utilized in all of our research reports whether sponsored or not. The subject company does not review any aspect of our Sponsored Research reports prior to publication.