Announces Organizational Restructuring
After market close yesterday, DHI Group (DHX) filed an 8-K announcing an organizational restructuring that will reduce the company’s workforce by approximately 25%. The reduction in force primarily impacts headcount associated with the Dice brand and related back-office support functions. Among the 90 employees departing the company, our understanding is that half are in sales, another third in marketing and technology, and the remainder in various support functions. Approximately $4.2 million in cash charges tied to employee severance and benefits will be recognized in Q2 ’25 with all of the related cash payments made by year-end. Once the actions associated with the restructuring are completed, DHI Group expects to realize cost savings of $14.0-$16.0 million on an annual basis.
Recall that earlier this year, DHI Group reorganized the company into two distinct divisions corresponding to the company’s branded career marketplaces, Dice and ClearanceJobs. This in turn paved the way for greater disclosure around the profitability of each brand. Specifically, we now know that ClearanceJobs boasts an adjusted EBITDA margin in excess of 40%, while Dice’s adjusted EBITDA margin checks in at nearly 20% despite a significantly larger revenue base. As such, we believe the actions announced yesterday represent a logical next step as management seeks to close the margin gap between the two brands. Importantly, we do not believe the restructuring reflects further deterioration in the Dice business, and we still expect Dice’s bookings to trough either this quarter or next.
Given the timing of the workforce reduction, we expect DHI Group to benefit from nearly two full quarters of cost savings in FY ’25, which would add $7.0 to $8.0 million in incremental adjusted EBITDA to our estimate, all else equal. That said, we plan to await an update to management’s FY ’25 guidance prior to revising our model. Our price target remains $5.00 based on an unchanged FY ’25 EV/Sales multiple of 2.0x.
Our report with model 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.