Reports Q2 Results Ahead of Street Expectations; Reaffirms FY ’26 Guidance
DHI Group (DHX) reported Q2 ’26 results above consensus. Relative to our model, revenue was a hair shy, while adjusted EBITDA and EPS beat. Both ClearanceJobs and Dice posted revenue a tick below our estimates. Bookings from both segments were also slightly softer than we projected, primarily due to lower retention rates than we assumed. We note, however, that much of the headwind there was offset by stronger growth in new business bookings. In this regard, management highlighted a 75% Y/Y increase in new business bookings for ClearanceJobs, including the largest new customer contract in its history with Shield AI. We believe this is just the beginning of a strong growth cycle for ClearanceJobs driven by material increases in global defense spending. As for Dice, the pace of recovery has been slower than we hoped, but with the declines still moderating and new business bookings now trending higher, we remain optimistic that bookings will largely stabilize by year-end. Below the revenue line, gross margin was short of our assumption due to higher costs associated with the inclusion of Point Solutions Group’s staffing services revenue. However, this was more than offset by lower operating expenses than we modeled, resulting in both adjusted EBITDA and EPS easily exceeding our estimates.
With the year largely tracking as anticipated, management reaffirmed its prior FY ’26 guidance. For Q3, management’s revenue guidance left our prior estimate and consensus at the high-end. Worth noting, ClearanceJobs’ pipeline is at the highest level seen in five years, and management expressed confidence in returning the business to double digit organic growth over the coming quarters. Bookings growth was 7% for ClearanceJobs during Q2. Dice is also expected to see improved results as the year progresses, but the bar there is much lower with management currently anticipating flat to modest growth in FY ’27. Overall, the growth trajectories across both segments are generally consistent with the assumptions underlying our model. Reflecting the slight shortfall relative to our forecasts in Q2, however, our estimates decline slightly for this year and next. That said, we think the potential for outperformance over the remainder of this year and next is rising given the step-function increase in demand for technology professionals over the past 90 days. Our price remains $5.00 based on an unchanged FY ’26 EV/Sales multiple of 2x.
Exhibit I: Reported Results and Guidance Versus Expectations
Sources: DHI Group; K. Liu & Company LLC; FactSet Estimates
Q2 revenue of $31.3 million (-2.1% Y/Y) was just shy of our $31.5 million estimate but was ahead of the Street’s $30.9 million. Both ClearanceJobs revenue of $15.6 million (+14.1% Y/Y) and Dice revenue of $15.8 million (-14.2% Y/Y) were approximately in line with our $15.6 million and $15.9 million estimates, respectively. Revenue from the acquisition of Point Solutions Group of $2.0 million, which is included in the ClearanceJobs segment, was also consistent with our forecast.
ClearanceJobs bookings of $14.3 million (+23.9% Y/Y) were below our $15.2 million projection, and Dice bookings of $13.4 million (-14.1% Y/Y) also fell short of our $14.1 million forecast. The shortfalls were largely attributable to higher churn among the company’s smaller customers. Consistent with the past several quarters, average revenue per customer continued to move higher for both ClearanceJobs and Dice, while customer counts declined due to the loss of smaller customers paying less than $15,000 annually.
Exhibit II: Key Metrics
Sources: DHI Group; K. Liu & Company LLC
Gross margin of 79.9% was below our 81.0% assumption due to higher costs from the inclusion of Point Solutions Group than we projected. However, this was more than offset by total operating expenses coming in below our estimate. As a result, adjusted EBITDA of $8.3 million (26.5% margin) easily exceeded our $7.4 million estimate and the Street’s $7.2 million. Non-GAAP EPS of $0.09 also beat our estimate of $0.07 and the Street’s $0.06.
In Q2, DHI Group generated $6.1 million in cash flow from operations and used $1.6 million for capital expenditures. Cash at quarter-end totaled $3.8 million, while outstanding debt declined from $33.0 million to $32.0 million. During the quarter, the company repurchased 664,750 shares at a total cost of $1.9 million, leaving $4.5 million remaining under the current repurchase authorization.
Turning to the outlook, management reaffirmed its prior FY ‘26 guidance for $124.0-$128.0 million in revenue and an adjusted EBITDA margin of 25%, implying adjusted EBITDA of $31.0-$32.0 million. For Q3, management’s guidance calls for revenue of $30.0-$32.0 million. Prior to revisions, both our estimate and consensus stood at $32.0 million.
Exhibit III: Estimate Revisions
Source: K. Liu & Company LLC
We lower our revenue estimates for this year and next, primarily reflecting more conservative bookings assumptions for both ClearanceJobs and Dice. However, we also reduce our operating expense assumptions, resulting in only modest declines in adjusted EBITDA. We note that our EPS estimates actually increase due to a decline in our D&A forecast and a lower share count following another quarter of repurchases by the company.
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.