DHI Group, Inc. Aktie

Hello, and welcome to the Annual Meeting of Stockholders of DHI Group, Inc. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Art Zeile, President and CEO of DHI Group, Inc. Mr. Zeile, the floor is yours.

Good afternoon, ladies and gentlemen. I'm Art Zeile, President and CEO of DHI Group, Inc. It is a pleasure to welcome you here today. It is 11:00 a.m. Mountain Time, and in accordance with the notice of this meeting, I hereby call to order our Annual Meeting of Stockholders. As noted in our proxy statement, we have decided to continue hosting the Annual Meeting virtually to provide for greater participation as our stockholders are not centrally located. Thank you very much to those who are participating in our virtual meeting online today.

Displayed on the screen is the agenda for this meeting. It is our intention to conduct this meeting in accordance with this agenda. Stockholders may submit questions by clicking on the Dialogue icon in the upper right corner of the meeting center screen. If you need a copy of the annual report or the proxy statement the links are provided online. The rules of conduct for this meeting can be found on the meeting website. We are conducting this meeting in accordance with our second amended and restated bylaws and the rules of conduct.

Before proceeding to the business of the meeting, I'd like to introduce members of DHI's management who are joining us today. Greg Schippers, our Chief Financial Officer; Jack Connolly, our Chief Legal Officer and Corporate Secretary; and Shannon Gausman, our Senior Corporate Attorney. Also present with us today Greg Spiers of Deloitte & Touche LLP, who is the company's independent public accountant for the fiscal year which ended December 31, 2025. If questions arise during the discussion period, that would more appropriately be addressed by Greg, he will be glad to respond. We will also be assisted today by June Lutes from our transfer agent, Computershare, Inc. in the tabulation of proxies and ballots.

At this meeting, the stockholders will be asked to: first, elect 2 directors of DHI. Second, ratify the Board's selection of RSM US LLP as DHI's independent registered public accounting firm for the current fiscal year, which ends on December 31, 2026. Third, provide an advisory vote on executive compensation of our named executive officers. Fourth, approve the Second Amendment to the DHI Group, Inc. 2022 Omnibus Equity Award Plan as amended and restated; and finally, fifth, approve the First Amendment to the DHI Group Inc. 2020 Employee Stock Purchase Plan.

Let's now move on to the business at hand. I would like to turn it over to Jack Connolly, our Chief Legal Officer and Corporate Secretary.

Thank you, I hereby appoint June Lots from Computershare to serve as Inspector of Election at this meeting and at any adjournment. Ms. Lutes will now report on the mailing of the notice of this meeting and the presence of a quorum.

Thank you, Mr. Connolly. This meeting is held pursuant to the printed notice mailed on or about April 2, 2026 to each stockholder of record on March 20, 2026, who is entitled to vote. An affidavit of mailing has been delivered to show that notice of this meeting was properly given. A list of stockholders entitled to vote at this meeting has been prepared by Computershare and has been available at the DHI office in Centennial, Colorado and open to examination by any stockholder for the past 10 days. The list is also available at this meeting for examination by any stockholder by clicking the shareholder list link in the meeting center. The count of shares present immediately prior to the commencement of the meeting indicated that in excess of -- I beg your pardon. I will have to report that in a meeting, Jack, if you want to just say the other part.

I'm sorry, June, what's that?

Can you say your other part, and I have just lost that attachment? I'm sorry.

Okay. We will -- are you talking about the number of shares present at the meeting?

Yes.

It is 37,856,759.

Yes, correct. And the percentage of voting stock of the company is 91.31%.

Thank you, June. On that basis, I hereby declare a quorum present at the meeting. On behalf of the Board of Directors of the company, I would like to express our appreciation to all stockholders who returned their proxies. If you have not voted or wish to change your vote, you may do so now by clicking the link provided online. Any shareholder who has already voted and does not wish to change their vote, do not take any further action.

The first meeting to be acted upon by the stockholders is the election of 2 Class I directors to serve for a 3-year term or until each director's successor is duly elected and qualified. The nominees are Art Zeile and Elizabeth Salomon. I have just introduced the nominees and additional information about them is available in our proxy statement. I will now entertain a motion to nominate these individuals for whom proxies were solicited. Will someone please move the nomination of these individuals.

I so move.

Will someone second the nomination?

I second the nomination.

I hereby declare Art Zeile and Elizabeth Salomon nominated. The company has not received notice of any other nomination by a stockholder, and therefore, I declare the nominations closed.

The next matter being submitted to stockholders for action is the ratification of the selection by the Board of Directors of RSM US LLP referred to throughout this meeting as RSM as the independent registered public accounting firm of the company. I would like to call upon Greg Schippers, our CFO, for the recommendation in this regard.

Mr. Connolly, the audit committee was assigned the responsibility of recommending auditors to be selected by the Board of Directors. During the fourth quarter of 2025, to ensure the cost of our annual audit were competitive, the company initiated a request for proposal for the audit of its 2026 consolidated financial statements and quarterly reviews. The review of the proposals received considered a number of factors, including the firm's qualifications, independence, service approach and overall cost. As a result of the proposals received and reviewed, the Audit Committee appointed RSM as the company's independent registered public accounting firm following the completion of the audit of the company's consolidated financial statements for 2025.

The Board subsequently approved the selection of RSM. The decision to change auditors was not the result of any disagreement with Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures. The Board and management team would like to thank Deloitte & Touche LLP for their years of service and professionalism. I now hereby move the ratification of the selection of RSM US LLP as the company's independent registered public accounting firm for the fiscal year ending on December 31, 2026.

Thank you, Greg. You have heard the motion. Will someone second that motion?

I second the motion.

I hereby declare the proposal duly submitted. The next matter being submitted to stockholders for action is an advisory vote on compensation of named executive officers. As part of our commitment to strong corporate governance and in compliance with Section 14A of the Securities Exchange Act we are submitting to our stockholders for approval a nonbinding resolution to ratify named executive compensation as described in the proxy statement. The proposed resolution reads: resolved that the shareholders approve on an advisory basis, the company's named executive officer compensation as disclosed pursuant to Item 402 of Regulation S-K, including the compensation discussion and analysis and the tabular disclosure regarding named executive officer compensation, together with the accompanying narrative disclosure in the proxy statement for this meeting.

Although your vote is nonbinding, the Board of Directors and Compensation Committee expect to take account of the outcome of the vote when considering future executive compensation decisions. I have just introduced the proposed resolution and additional information about it is contained in the proxy statement. I will now entertain a motion to submit the matter for vote. Will someone please move in favor of voting on the proposed resolution.

I so move.

Will someone second the motion?

I second the motion.

I hereby declare the resolution proposed. The next matter being submitted to stockholders is a request for approval of the Second Amendment to the 2022 DHI Group, Inc. Omnibus Equity Award Plan as amended and restated, referred to as the equity plan. The purpose of this amendment is to, among other things, increase the number of shares of common stock authorized for issuance under the equity plan by 2,800,000 newly reserved shares. A full discussion of the proposed amendment to the equity plan is set forth in the proxy statement.

I have just introduced the request for approval of the Second Amendment to the DHI Group, Inc. Omnibus Equity Award Plan as amended and restated, with additional information about the proposal contained in the proxy statement. I will now entertain a motion to submit the matter for vote. Will someone please move in favor of approving the Second Amendment to the DHI Group, Inc. 2022 Omnibus Equity Award Plan as amended and restated.

I so move.

Will someone second the motion?

I second the motion.

I hereby declare the request for approval submitted. The next matter being submitted to stockholders is a request for approval of the First Amendment to the DHI Group, Inc. 2020 Employee Stock Purchase Plan, also referred to as the ESPP. The purpose of this amendment is to increase the maximum number of shares of common stock authorized for issuance over the term of the ESPP by 500,000 shares. A full discussion of the proposed amendment to the ESPP is set forth in the proxy statement. Have just introduced the request for approval of the First Amendment to the DHI Group, Inc. 2020 Employee Stock Purchase Plan with additional information about the proposal contained in the proxy statement. I will now entertain a motion to submit the matter for vote. Will someone please move in favor of approving the amendment to the Employee Stock Purchase Plan.

I so move.

Will someone second the motion?

I second the motion.

I hereby declare the request for approval submitted. We have received no notices of other business to come before the meeting. The online voting is now closed and I will turn the meeting back over to Art Zeile, our President and Chief Executive Officer.

We will now entertain general questions and discussion. Anyone wishing to address the meeting should submit a question through the virtual meeting platform to be recognized. Please state your name, indicate whether you are a stockholder or a proxy for a stockholder and proceed with your question or comment. Each stockholder is limited to a total of not more than 2 questions or comments, no more than one of which may be on a single topic.

Given that there are no questions or comments, at this time, I would like to answer -- to ask the Inspector of Elections to please report the results of the balloting.

The ballots have been counted. A majority of votes cast in person or by proxy have been voted for the election of the director nominees named in the proxy statement serving for a 3-year term. In connection with the ratification of the selection of independent auditors, 37,467,481 shares, being more than a majority of the shares present or by proxy have been voted in favor of, 2,632 shares have been voted against and 343,961 shares have abstained from the vote on the ratification of the selection of RSM US LLP as the company's independent registered public accounting firm for the fiscal year ending on December 31, 2026. In connection with the resolution relating to the advisory vote on executive compensation, 26,222,150 shares being more than a majority of the shares present or by proxy have been voted in favor of 3,301,930 shares have been voted against and 2,481,264 shares have abstained from the vote on the resolution.

In connection with the proposal relating to the approval of the Second Amendment to the DHI Group, Inc. 2022 Omnibus Equity Award Plan as amended and restated, 28,502,404 shares being more than a majority of the shares present or by proxy have been voted in favor of, 3,196,573 shares have been voted against and 306,367 shares have abstained from the vote on the resolution. In connection with the proposal relating to the approval of the First Amendment to the DHI Group, Inc. 2020 Employee Stock Purchase Plan, 31,154,634 shares being more than a majority of the shares present or by proxy have been voted in favor of 589,233 shares have been voted against and 261,477 shares have abstained from the vote on the resolution.

Thank you, June. I hereby declare that, first, the nominees for Director have been duly elected. Second, the selection of RSM US LLP as the company's independent registered public accountants for the year ending December 31, 2026, has been ratified. Third, the advisory vote on the executive compensation resolution has been approved. Fourth, the Second Amendment to the DHI Group, Inc. 2022 Omnibus Equity Award Plan as amended and restated has been approved. And finally, fifth, the First Amendment to the DHI Group, Inc. 2020 Employee Stock Purchase Plan has been approved.

If there is no other business, this concludes our meeting. I declare the formal portion of the meeting to be adjourned. I would again like to express my sincere appreciation and thanks to all of the DHI Group employees who have worked so hard over the past year. I would also like to thank all of our stockholders who continue to support the company. Thank you for coming to our Annual Stockholders' Meeting. We look forward to seeing you again next year.

This concludes the meeting. You may now disconnect.

Good day, and welcome to the DHI Group, Inc. First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note today's event is being recorded.

I would now like to turn the conference over to Todd Kehrli of PondelWilkinson. Please go ahead.

Thank you, operator. Good afternoon, and welcome to DHI Group's first quarter earnings conference call for 2026. Joining me today are DHI's CEO, Art Zeile; and CFO, Greg Schippers. Before I hand the call over to Art, I'd like to address a few quick items. This afternoon, DHI issued a press release announcing its financial results for the first quarter of 2026. The release is available on the company's website at dhigroupinc.com and 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 the federal securities laws. 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 the 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, on today's call, management will reference specific financial measures, including adjusted EBITDA, adjusted EBITDA margin, free cash flow and non-GAAP earnings per share, which are not prepared in accordance with U.S. GAAP. Information regarding those non-GAAP measures and reconciliations to the most directly comparable GAAP measures are available in our earnings press release, which can be found 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, and good afternoon, everyone. We appreciate you joining us today. At DHI, our mission is simple. We help employers connect with highly skilled technology professionals through 2 platforms, ClearanceJobs and Dice, both of which serve critical roles in the tech hiring ecosystem. Our exclusive focus on tech occupations, combined with ongoing product innovation gives us a durable competitive advantage. Today, approximately 6,000 employers and staffing and recruiting companies subscribe to our platforms and approximately 90% of our revenue is recurring.

ClearanceJobs is the leading marketplace for professionals with active U.S. security clearances, serving approximately 1,700 customers, including Lockheed, Booz Allen Hamilton, Leidos, Raytheon and many others. With 2 million candidates on our platform, we have the largest number of profiles of U.S. cleared professionals, giving CJ a significant competitive advantage as a platform for hiring cleared tech talent for the defense sector.

Dice is essentially LinkedIn for tech hiring, built over 35 years with 7.8 million profiles in our database, representing the vast majority of technology professionals in the United States. While LinkedIn emphasizes a person's title, we focus on tech skills, of which there are over 100,000 distinct skills in our data model. Tech professionals on Dice actively update their profiles with new skills, making Dice the most relevant platform for recruiters who need to source tech talent.

With these 2 platforms, we have become an essential software tool used by employers and recruiters to find top tech talent for their open positions. This quarter reflects a company executing well against a clear strategy with strong momentum in ClearanceJobs and encouragingly early progress across our strategic initiatives. Let me start with ClearanceJobs, which remains the primary growth engine of DHI Group.

In the first quarter, we achieved revenue growth of 5% and bookings growth of 7% year-over-year. Additionally, CJ delivered an adjusted EBITDA margin of 40%. This underscores the strength of the underlying business and improving demand trends. We are also seeing a more positive market environment following the passage of the U.S. defense budget in late January. While there is typically a lag between budget approval and hiring activity, customer sentiment has improved significantly and we are beginning to see that reflected in stronger engagement and demand. The $1 trillion U.S. defense budget for fiscal year 2026 represents a substantial 1-year increase over the previous year's budget.

Additionally, NATO countries are increasing their defense budgets, aiming to allocate 5% of GDP, which could lead to more than $500 billion in additional spending annually with U.S. contractors likely to receive a substantial share of this expenditure. These dynamics are promising for ClearanceJobs. With over 10,000 employers of cleared tech professionals and more than 100 government agencies in need of them, CJ has a significant growth opportunity as government contractors look to staff new projects. We believe we are in the early stages of this growth cycle.

Consistent with CJ's expand the mission strategy, we acquired Point Solutions Group, or PSG, inside the quarter and are encouraged by the early results. In a short period, we have increased the number of contractors deployed and grown the number of active contracts with major prime contractors. We are also seeing strong engagement from those partners as we develop and deepen relationships and pursue additional opportunities. While still early, the initial performance supports our strategy to expand the ClearanceJobs platform into adjacent high-value services and further monetize the relationships we have built over the past 24 years.

Our AgileATS business also continues to make steady progress. While still modest in scale, we are consistently adding customers and increasing sales investment to support future growth. We are also seeing early traction with our premium candidate subscription on ClearanceJobs. Since its formal launch in mid-February, adoption has surpassed expectations with quick growth in paid subscribers. Although the immediate revenue impact is modest, this is an important new long-term monetization opportunity.

Stepping back, our strategy is clear. We are leveraging the strength of the ClearanceJobs platform and our long-standing relationships with top government contractors to grow into related services and talent acquisition and management. This platform-driven approach positions us for sustained long-term growth.

Turning to Dice. We are in the beginning -- we are beginning to see the signs of stabilization in the tech hiring market. As CompTIA stated in its report on the month of March, companies are beginning to move away from the more conservative approaches of the past year and are considering investments in talent to support strategic digital initiatives. Leading indicators, including job postings and customer activity are improving, and we are seeing increased engagement from both staffing firms and commercial customers.

There were more than 537,000 job postings for tech positions in March, including 254,000 new postings, an increase of 19% year-over-year. While we are not yet seeing a recovery in Dice bookings, the trend lines are encouraging. AI continues to be the most important long-term driver. As of March 2026, 67% or 2/3 of U.S. tech job postings required AI-related skills, more than double the 29% we saw a year ago. Over that same period, job postings requiring machine learning skills have increased 167%. We view this as a powerful validation of our strategy. Rather than reducing the need for talent, AI is increasing demand for highly skilled technical professionals.

Dice is well positioned here with a deep skills-based model that allows employers to identify candidates based on more than 360 distinct AI-related skills. Rather than treating AI as a single generic category, Dice enables employers to identify and match candidates based on specific skill sets, an increasingly critical capability as AI roles become more specialized. We have also made it easier for candidates to access Dice job postings by being the first career platform with a Claude connector. This is only one of many Dice features that implement an AI model solution.

As you recall, we enabled 2 self-service options for Dice late last year and we are already seeing a steady progression of transactions as we ramp our marketing campaign spend. While near-term performance will depend on the pace of recovery in the broader tech hiring market, we believe Dice is strategically well positioned, especially as demand for AI-related skills continues to grow.

From a financial perspective, DHI continues to generate strong free cash flow, supported by our subscription model and disciplined cost structure. This allows us to take a balanced approach to capital allocation, investing in growth initiatives, pursuing strategic acquisitions and returning capital to shareholders through an active share repurchase program. As a reminder, our Board approved a $10 million share repurchase program in the first quarter, demonstrating our confidence in the company's long-term value.

In summary, we believe DHI is uniquely positioned at the intersection of 2 powerful and durable trends; increasing global defense spending and growing demand for highly specialized technology talent, particularly in AI. ClearanceJobs continues to demonstrate strong growth and expanding opportunity as government and contractor demand accelerates, while Dice is well positioned to benefit from an eventual recovery in tech hiring, supported by our differentiated skills-based approach and continued product innovation.

At the same time, we are successfully extending our platforms into adjacent services, creating new monetization opportunities and deepening our relationships with customers. Importantly, our highly recurring revenue model and strong free cash flow give us the flexibility to invest for growth while continuing to return capital to shareholders. Taken together, we believe we are building a more durable, high-growth business with multiple levers for value creation.

With that, I'll turn the call over to Greg to walk you through the financial results in more detail.

Thank you, Art, and good afternoon, everyone. I'll start with a brief overview of our first quarter results before walking through each of the segments in more detail. While total revenue and bookings declined year-over-year, our results reflect the continued strength of ClearanceJobs, which delivered both revenue and bookings growth as well as the benefits of the actions we've taken to improve efficiency across the business. Importantly, we delivered solid adjusted EBITDA growth and margin expansion in the quarter, along with strong free cash flow generation.

Overall, our performance highlights the durability of our subscription-based model, the growth opportunity in ClearanceJobs and the significantly improved profitability we are seeing in Dice as we position the business for an eventual recovery. With that context, let's turn to our segment performance, starting with ClearanceJobs.

ClearanceJobs revenue was $14.0 million, up 5% year-over-year and roughly flat compared to the prior quarter. Bookings for CJ were $18.0 million, up 7% year-over-year. PSG acquired at the end of February, contributed $700,000 of revenue and bookings in the quarter for CJ. We ended the first quarter with 1,741 CJ recruitment package customers, which was down 8% on a year-over-year basis and down 2% on a sequential basis. CJ accounts spending greater than $15,000 in annual recurring revenue increased versus the prior year. Our average annual revenue per CJ recruitment package customer was up 6% year-over-year and roughly flat on a sequential basis to $27,286. Approximately 90% of CJ revenue is recurring and comes from annual or multiyear contracts.

For the quarter, CJ's revenue renewal rate was 88% and CJ's retention rate was 105%. The revenue renewal rate was negatively impacted by a customer with annual spend over $500,000 that did not renew in the quarter, but is expected to return later this year. The solid retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals.

Dice revenue was $15.7 million, which was down 17% year-over-year and down 10% sequentially. Dice bookings were $20.2 million, down 20% year-over-year. We ended the quarter with 3,832 Dice recruitment package customers, which is down 7% from the last quarter and down 15% year-over-year. Dice revenue renewal rate was 71% for the quarter and its retention rate was 100%. The reduction in customer count and Dice's renewal rate from the prior year quarter continues to be attributable to churn with smaller customers spending less than $15,000 per year, representing 80% of the total churn on count and who are more likely to be impacted by the difficult macro environment and uncertainty.

We believe the introduction of our new Dice platform, which offers customers the flexibility of monthly subscriptions will offset the churn among smaller accounts by lowering upfront commitment and improving affordability. Our average annual revenue per Dice recruitment package customer was $15,466, down 6% year-over-year and down 1% sequentially. As with CJ, approximately 90% of Dice revenue is recurring and comes from annual or multiyear contracts.

Deferred revenue at the end of the quarter was $44.5 million, down 12% from the first quarter of last year. Our total committed contract backlog at the end of the quarter was $99.0 million, which was down 8% from the end of the first quarter last year. Short-term backlog was $77.2 million at the end of the quarter and long-term backlog, that is revenue to be recognized in 13 or more months, was $21.8 million.

Both brands onboarded notable clients in the first quarter. For CJ, this includes Akamai Intelligence, SynthBee and Michigan Technological University, while Dice landed Avera Health, Fourth Yuga Tech and Parkland Center for Clinical Innovation as customers in Q1. Now let's move to operating expenses.

For the quarter, our operating expenses decreased $15.0 million or 36% to $26.6 million when compared to $41.6 million in the year ago quarter. Improvements to our operating efficiency, including the Dice Employer Experience platform, along with adjusting the business for the difficult market environment over the past few years has significantly reduced our annual operating expenses and capitalized development costs.

For the quarter, we had income tax expense of $1.0 million on income before taxes of $2.5 million. Our tax rate for the quarter differed from our approximate statutory rate of 25% due to the tax impacts of stock-based compensation. Although our income subject to tax has grown, the tax law change in 2025, which allows for the immediate deduction of R&D costs will partially offset our 2026 cash outlay for income taxes.

Moving on to the bottom line. We reported net income of $1.5 million or $0.04 per diluted share in the quarter. For the prior year quarter, we reported a net loss of $9.8 million or $0.21 per diluted share, which included a $7.8 million Dice goodwill impairment charge and a $2.3 million restructuring charge. Non-GAAP earnings per share for the quarter was $0.08 per share compared to $0.04 per share for the prior year quarter. Diluted shares outstanding for the quarter were 42.4 million shares, down 3.1 million shares or 7% from the prior year quarter as we continue to return cash to shareholders through our share repurchase program.

Adjusted EBITDA for the quarter was $8.1 million, a margin of 27% compared to $7.0 million or a margin of 22% a year ago. On a segmented basis, CJ adjusted EBITDA remained strong at $5.7 million in the first quarter, representing a 40% adjusted EBITDA margin as compared to adjusted EBITDA of $5.7 million or a margin of 43% in the prior year period. Dice's adjusted EBITDA increased to $4.3 million, representing a 28% adjusted EBITDA margin compared to $3.4 million and an 18% margin last year.

Operating cash flow for the first quarter was $8.4 million compared to $2.2 million in the prior year period. Free cash flow, which is operating cash flows less capital expenditures, was $6.8 million for the first quarter compared to $88,000 in the first quarter of last year. Our capital expenditures, which consist primarily of capitalized development costs were $1.6 million in the first quarter compared to $2.2 million in the first quarter last year, an improvement of 24%.

Capitalized development costs in the first quarter for CJ were $577,000 compared to $362,000 a year ago, while capitalized development costs for Dice were $1 million this quarter as compared to $1.7 million a year ago. We are targeting total capital expenditures in 2026 to range between $7 million and $8 million as compared to $7.3 million last year.

From a liquidity perspective, at the end of the quarter, we had $3.0 million in cash, and our total debt was $33 million, an increase of $3 million from the last quarter despite cash outlays in the quarter of $5 million for the purchase of PSG and $4.7 million for the purchase of 2 million shares under our stock repurchase programs. Leverage at the end of the quarter was 0.91x our adjusted EBITDA and we continue to target 1x leverage for the business. At the end of the quarter, we had $6.4 million remaining on our $10 million share repurchase program.

Moving on to guidance. We continue to expect ClearanceJobs bookings to grow in 2026. However, we do not anticipate Dice bookings growth resuming until tech hiring improves. As a result, we expect DHI revenue of $124 million to $128 million for the full year. And for the second quarter, we expect revenue of $30 million to $32 million. For CJ, with the addition of PSG, we expect revenue of $62 million to $64 million for the full year. And for the second quarter, we expect revenue of $15 million to $16 million. At Dice, we expect revenue of $62 million to $64 million for the full year. And for the second quarter, we expect revenue of $15 million to $16 million.

From a profitability standpoint, we continue to target full year adjusted EBITDA margin for DHI of 25% and margins of 40% for CJ and 22% for Dice. Our focus remains on delivering long-term sustainable and profitable revenue growth, along with strong free cash flow generation, averaging at or above 10% of revenues.

To wrap up, although the hiring environment over the past few years has impacted our revenue growth, we remain optimistic about the road ahead. We anticipate the record-breaking defense budget will be a growth driver for CJ and that companies across all industries will steadily increase their investments in technology initiatives, creating a strong growth opportunity for both ClearanceJobs and Dice. We remain focused on strengthening our industry-leading solutions, optimizing our go-to-market strategy and executing with efficiency, ensuring we are well positioned to capitalize on the opportunities that lie ahead.

And with that, let me turn the call back to Art.

I want to thank all of our team members once again for their outstanding work this quarter. It is a pleasure to be part of such a great team. That said, we are happy to answer your questions.

We'll now begin the question-and-answer session. [Operator Instructions] And today's first question comes from Gary Prestopino with Barrington Research.

Greg, what was the -- I'm sorry, I didn't get a chance to write down the capitalized development costs. What were they in the quarter?

So in the quarter, the capitalized development costs were $1.6 million, Gary.

Okay. $1.6 million. And then with the acquisition of PSG, is that really entirely the reason for the revenue -- the increase in the revenue range at CJ? Or are you performing better than you expected from the start of the year?

Yes. Good question, Gary. And that is purely related to the revenue from PSG at this stage. And we anticipated some improvement within CJ in the budget, but more in the bookings area as opposed to in revenue, which, as you may recall, had some revenue -- or had some bookings challenges in the mid- to latter part of 2025 for CJ. And so that -- as that converts to revenue, that is going to challenge revenue in 2026 minus PSG.

And then lastly, and I'll jump off and let somebody else go. Dice retention increased to 100% from 92%, which basically means you're getting good renewals and you're not losing that base business, I suppose, as I'm reading that right. Is that kind of a good leading -- somewhat of a leading indicator for Dice? Or am I just reading that wrong?

So Gary, you're reading that absolutely correctly. I think that we're seeing a stabilization in demand in the environment. And it's consistent with the fact that staffing industry analysts as well as a number of different resources have indicated that we've kind of crossed the line for tech staffing and it's going to be a growth area for 2026. And we're seeing that sentiment improve across our staffing firms.

And our next question today comes from Max Michaelis with Lake Street.

First one for me. When we look at the CompTIA and the job postings, I think you said 537,000 jobs this month or month of March and then 254,000 new jobs. I know a lot of it's related to AI, but you said you haven't really seen an uptick in bookings from that. I figured you would have. Is there a reason why? Has there always been kind of a laggard effect with CompTIA and the impact on bookings?

And then I guess with that, what are some of the things you're hearing from your customers? Is it going to be more of a late 2026 where they see more of their -- or more business coming on to your platform, I guess, lack of a better word?

Yes, that's a great question, Max. And I have to say that the number of new tech job postings is definitely a leading indicator. But you have to understand that the historical pattern of our customers have been to essentially have their contracts start in every month in the year, right? There is kind of a crescendo that takes place in December and January. So they're thinking about how they're going to renew in forward months based on what they're seeing as a leading indicator today in terms of new tech job postings. But it's pretty significant.

Like I said, 19% growth of March 2026 over March 2025 is a pretty big signal. As an aside, staffing industry analysts just posted an article yesterday that's entitled IT staffing turning the corner. And Bloomberg, the same day yesterday, posted an article that's entitled companies increasingly favor temps over permanent hires and kind of they're both coupled. We believe that in this kind of environment, it's a less risky move to essentially go to a staffing agency for your tech hiring needs rather than going to permanent hire. So it's all kind of coming together right now.

So really, the impact of this, you really wouldn't see that towards the end -- until the end of 2026, correct?

I think it's -- that's correct. It's going to be playing out over the course of the year. And again, those folks that are intended to renew in third quarter and fourth quarter are probably now starting to factor this in, seeing that the demand is increasing. And like I said, 254,000 jobs is a significant increase over the roughly 200,000 jobs that we saw most of last year. So it's a pretty good signal.

Okay. That makes sense. And if we look at some of the acquisitions you've made, the Point Solutions, ATS, you said they were performing better than what you guys had originally expected. I mean is that with just a revenue standpoint? Or can you help me out or is there anything else you can offer that can kind of give me a better understanding of how these are actually outperforming better than what you originally expected?

So that comment in the earnings call was really intended to focus on AgileATS. And I would say that the bookings and revenue figure are performing better than expected, although it was a pretty small base when we bought the company back in July of last year. For PSG, Point Solutions Group, it's a little bit too early to tell. We closed that transaction right at the end of February. And so we're kind of moving into the integration phase. But the good news is we actually have now established 2 new relationships, 2 new subcontracts to primes even within that short period of time. So it feels like we're on our way.

All right. Last one for me, and then I'll hang up the mic. It seems to be a common thing you guys are acquiring companies kind of in the defense space. I mean is there an active pipeline right now where you guys could see yourself acquiring another one of these companies kind of in that defense adjacent landscape?

Yes. I would say that true to what we described, we view CJ as a platform and that we have these trusted relationships with 1,800 very important military contractors. We want to sell them more and especially sell them more in that talent acquisition and management space. So there is a view to additional tuck-in acquisitions over the course of time.

[Operator Instructions] Our next question comes from Kevin Liu at K. Liu & Company LLC.

I know on CJ, a lot of the traction there and momentum is going to be tied to kind of this defense funding. But I was curious if you guys had any exposure to DHS and whether you think kind of the recent funding approval there, if that kind of resuscitates any deals you had in the pipeline?

That's actually very insightful. I would have to say that one of our larger customers was the Cybersecurity Infrastructure Services Administration, CISA, which is a division of DHS. And they did not renew last year. I think that's based on 2 different factors. It was based on the fact that their funding was uncertain at the time, but also the fact that there is a hiring freeze across most government institutions. We believe, based on the fact that there was a leak that took place that indicated that they are down in terms of their staffing by 40%, that they will be allowed to kind of hire again and they're going to need a platform to do so. So there are elements of the government that I think that will be kind of freed by this funding of DHS and then the need to essentially plug holes in really critical areas in the government.

Got it. And just related to that, you guys did reference kind of a large contract that hadn't renewed early in the year, but should come back later in the year. Was that related to this at all? Or is that just kind of a separate deal?

It was unrelated. In this particular case, the customer in a cost-saving move believed that they could move to a competitor of ours called ClearedJobs.Net. This is a platform that is roughly about 120th our size, and they've already admitted that this was probably not in their best interest. So we're still in discussions with them and we hope that they will essentially renew a subscription at their next budget cycle, which is in third quarter.

All right. Sounds good. And then I was hoping you could put a finer point just on the contribution from Point Solutions Group. What's kind of the expected contribution to the revenue line, both in Q2 and the full year?

Yes, this is Greg. Kevin, so we -- and you can really kind of see this in the guidance. We uplifted our guidance by approximately $6 million for the full year. And so that's roughly where we're anticipating for this 10-month period to land with PSG.

All right. That's helpful. And then just lastly for me, as it seems like the environment starts to turn here, just wondering how you're thinking about kind of the timing of maybe investing a bit more on either the sales or marketing side.

That's a great question. I can tell you that we've always been pretty conservative, especially over the last 3 years as we're kind of waiting for this tech hiring recession to resolve itself. I would say that for ClearanceJobs because we see a clear signal associated with the defense budget being put into law this past January and kind of a robust amount of interest, that's where we would essentially hire more people into sales and have more marketing spend at this point in time. But it's early days.

I would say that we want to see that play out, and we want to see the firming up and stabilization and increasing of demand before we do. So I would not assume that we're going to change our sales and marketing pattern for either brands for now, but we're assessing it real time for the remainder of the year.

The one other thing I might just add to that is we do have some additional investment in marketing for Dice, specifically related to the self-service platform, the digital experience platform in the remainder of the year to drive some revenue from that platform.

Congrats on a [ full expected year ].

And that does conclude our question-and-answer session. I'd like to turn the conference back over to Art Zeile for any closing remarks.

Well, thank you, Rocco, and thank you all for joining us today. As always, if you have any questions about our company or would like to speak with management, please reach out to Todd Kehrli, and he will assist you in arranging a meeting. Thank you, everyone, for your interest in DHI Group, and have a great Cinco de Mayo.

Thank you, sir. And everyone, that does conclude our conference for today. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful evening.

Good day, and welcome to the IAccess Alpha Virtual Best Ideas Spring Investment Conference 2026. Our next presenting company is DHI. [Operator Instructions] I'd now like to turn the floor over to today's host, Art Zeile, CEO of DHI. Please go ahead.

Thank you. We'll be going through our investor presentation, and then we'll be available for Q&A afterwards. We have included our standard forward-looking statements waiver with the normal caveats. In the big picture, DHI Group is listed on the New York Stock Exchange under the symbol DHX, and we are headquartered in Denver, Colorado. Our ClearanceJobs and Dice brands are the leading platforms for employers to find and engage with top tech talent.

We create platforms that allow our clients who are recruiters and hiring managers to connect with tech candidates. These are 2-sided marketplaces that, by definition, serve the needs of both clients and candidates in order to succeed. This might sound familiar to LinkedIn or Indeed, but we have 2 key differentiators that make us a necessary tool for recruiters and hiring managers looking specifically for technology professionals. First, we have built special search algorithms to find candidates based on their specific tech skills. And secondly, we have spent literally decades attracting the highest quality talent to our platforms. We have the profiles of over 9 million technology professionals on these 2 platforms, representing 2/3 of the total skilled technologists in the United States. We are constantly evolving our offering to be more relevant to our community.

This year, we created a brand-new self-service option to buy Dice online, and we just released our new ClearanceJobs premium candidate experience formally last week. It's our first opportunity to monetize our candidate base. Last year, we also bought an applicant tracking system named AgileATS that is optimized for government hiring and have integrated it with the ClearanceJobs platform. And on Friday of -- 2 weeks ago, we acquired a specialized government staffing firm named Point Solutions Group that delivers top secret rated professionals for a number of prime contracts. We largely make money by charging our clients for subscription contracts that allow them to access our platforms. Over 90% of our revenue is recurring as a result.

Here is a summary overview of our 2025 annual financial performance and 5-year CAGR trends. Greg will be providing quarterly performance later in the presentation. DHI drove $128 million in revenue and $126 million in bookings last year. The 5-year CAGRs are 2% for revenue and a 1% decline for bookings. This is due to the hiring recession that we've seen over the past years, but that is changing rapidly, particularly for the tech staffing sector, which constitutes 80% of Dice's revenue. Our adjusted EBITDA was $35 million, delivering a 27% adjusted EBITDA margin last year. We delivered $21 million in operating cash flow and $14 million of free cash flow. Almost all of our CapEx is capitalized labor used in software development. Greg will brief you on how we have reduced CapEx significantly this year.

We reinstituted our share buyback program a year ago and repurchased $11.4 million of shares in 2025 and ended the year with net debt of $27 million, equating to less than 1x leverage. As you can see, we have had a long-term commitment to buying back our shares and recently instituted a new $10 million buyback program at the beginning of 2026 because our Board believes that our shares are undervalued. The U.S. has become a tech-oriented economy and has grown the tech workforce by approximately 3% each year over the past 25 years, only flattening for short periods of time in 2001, 2008 and 2020. We have a very unique pool of candidates that cannot be found on other career sites.

Based on our research, roughly 20% to 30% of our candidates can be found on alternative career sites like CareerBuilder + Monster, ZipRecruiter, Indeed and LinkedIn with an up-to-date profile. When they are found on these other platforms, they generally do not have resume or contact information. ClearanceJobs is the dominant leader in its market for delivering access to technology professionals with a government clearance. LinkedIn does not offer a solution to find cleared candidates. A LinkedIn profile has no field for government clearance and government workers and military contractors in general are restricted from using this site because it is known to be a target of foreign spies.

Tech professionals are well compensated. The average salary for a tech professional in the United States last year was roughly $127,000, whereas the average worker in the United States made around $50,000. As a company, you have basically 2 choices when hiring tech workers, use a recruiter or do it yourself. If you do use a recruiter, you will generally be charged between 20% and 25% of first year salary. The alternative is to pay Dice roughly $7,000 for our entry-level annual subscription or ClearanceJobs about $15,000 for the equivalent subscription and then you find and engage the tech talent yourself. As you can tell, even hire easily pays for itself compared to paying an external recruiting agency. We target companies that plan for at least 5 hires over the next year, driving an even more compelling return on investment.

Our value to the tech industry was validated by Forbes Magazine back in 2024 when it announced Dice is the #1 career site for tech and IT jobs. The elevated interest rate environment clearly suppressed hiring demand since the end of 2022. That after all was the Federal Reserve's intended result. But as the famous quote goes, every company now is a software business because of our reliance on technology and automation in general to drive our business models. For that reason, the Bureau of Labor Statistics and CompTIA Association forecast that over the next 10 years, the tech workforce will grow by at least 15%, a growth rate that is twice as fast as the overall employment growth rate for the United States. The growth is coming from the interest in skills that you would logically suspect, the need for ever more data scientists and engineers to implement and manage AI and more cybersecurity engineers to protect us from ever-increasing threats.

Many people question whether or not AI will reduce the need for coders or software developers. Several independent studies from McKinsey and other consultants show otherwise. And there is quite -- there is a lot of evidence to this trend on our own site. At the end of 2025, 55% of Dice jobs required at least one AI skill, which compares to 28% at the end of 2024. So we expect AI to increase the demand for tech professionals over the long term as tech pros skills evolve from basic coding to developing and managing AI agents. As I stated earlier, our special sauce is our focus on profiling tech skills. LinkedIn and other career sites create a user profile based on titles and their concept of skills are soft skills like public speaking.

Our special sauce comes from the way that we profile and search for candidates. We have spent over a decade perfecting a taxonomy that catalogs over 100,000 different tech skills that candidates identify with their profile. We received a U.S. patent for skills taxonomy several years ago, and it's the heart of our value proposition. Our customers are hyper-focused on hiring people to manage their AI projects in today's environment. Our taxonomy manages over 360 distinct AI skills rather than treating it as one umbrella term. This allows employers to find the exact right tech workers they need for their projects. We win in the market for tech talent because we're a specialist in technology skills and not a generalist recruiting platform.

Over the years, we have accelerated the pace of innovation on both platforms. We generally have 1 or 2 major releases on each platform each quarter and hundreds of minor releases each year. For ClearanceJobs, we completed 2 acquisitions in the last 9 months to extend the product set we can sell into our 1,800 client relationships. AgileATS is an applicant tracking system, a CRM for recruiters that allows them to efficiently manage their candidate pipeline. AgileATS is built specifically for recruiting and hiring cleared professionals in the GovTech space. As I indicated earlier, we just announced the acquisition of Point Solutions Group. This is a highly specialized cleared staffing firm that supports multiple prime contracts. Although there are thousands of staffing firms in the United States, there are very few that can deliver cleared personnel, making this a very unique capability.

We also just released ClearanceJobs premium candidate subscription, which is the first time we have charged candidates for additional special features that help them with their job search. For Dice, we spent 2.5 years rewriting the entire code base to deliver a new self-service platform last year. For the very first time in 35 years, you could now go to the site, put in your credit card information and immediately start posting jobs and searching the candidate database. We are in the midst of rolling out the first recruiter marketplace of tools that can help recruiters improve their efficiency. We will be continuously adding partnerships in this marketplace over the course of the next year.

We have a very large TAM for each one of our platforms. In the case of ClearanceJobs, we have approximately 1,800 subscription customers today. The government has publicly stated that there are over 10,000 contractors that hold a facility clearance, allowing them to conduct business with cleared personnel. We also know that there are over 100 government agencies that we can directly contract with as well. For Dice, we have approximately 4,100 subscription clients today and know that tens of thousands more fit our ideal customer profile. There are also thousands of additional staffing and recruiting firms that we can target as well. But before I transition to Greg, I'll leave you with this quick summary of how we make money and have strong visibility into future revenue.

First and foremost, clients pay for the opportunity to access our platform. There is no charge for a candidate to register, create a profile and start using the platform. As I indicated earlier, because we are largely a subscription-based service with 1-year minimum contracts, over 90% of our revenue is recurring today. And a majority of our contracts include an auto renewal clause with an automatic price escalator. Within each platform, we allow unlimited e-mails and text, which is another key competitive differentiator. We encourage the recruiter and the candidate to engage in conversations. That's how they both win and the reason for them to come back to our platforms time and time again.

So with that, I'd like to introduce Greg Schippers, our CFO, who will take us through the rest of the presentation. Greg?

Thank you, Art. I'll share some additional financial data and insights. DHI bookings, which represent the value of our contracts that will be recognized as revenue within 12 months of the contract start date has declined at a 1% CAGR since 2021, while revenue has risen at a 2% CAGR over the same period. With over 90% of our bookings and revenue recurring, DHI is a very predictable revenue model with approximately 50% of each year's revenue already under contract at the start of each year.

DHI's adjusted EBITDA margin has expanded since 2021 to 27% in 2025. Because of the more difficult market conditions in the last few years, we have reduced costs through restructurings over the past several years. Together, these restructurings have reduced our operating costs by approximately $35 million. The restructure that occurred in early 2025 also separated our Dice and ClearanceJobs organizations, which was designed to better deliver results for our shareholders, maximize profitability and provide stronger long-term strategic options. We are targeting a 25% adjusted EBITDA margin for 2026.

As previously mentioned, challenging market conditions in the HR tech space persisted in 2025 with bookings and revenue declining on a year-over-year basis. As we also previously noted, we managed our cost structure to grow our adjusted EBITDA margin to 27% in 2025. Our subscription-based business creates predictable revenue with revenue generally being recognized ratably over the annual contract term as services are delivered to our customers. This slide depicts how our committed contracts at the start of the year shown as backlog become revenue over the year and then our customers up for renewal during the year drive revenue as the year progresses. The remainder of our revenue comes from our new business efforts and transactional business, which primarily includes short-term job postings, career events and our talent sourcing products.

DHI produces strong operating cash flows with the low points for operating cash flows over the past 5 years at $21 million and the strong markets in 2021 and 2022, driving operating cash flows to $29 million and $36 million. DHI's capitalized development costs, which are part of fixed assets in our cash flow statement, primarily represent the cost of our internal labor to build the products and features on the ClearanceJobs and Dice websites. With lower internal headcount resulting from the restructurings, capitalized development costs declined to $7 million in 2025 as compared to $12 million in 2024.

DHI's free cash flow, which is operating cash flow less capital expenditures, is driven by adjusted EBITDA levels and capitalized development costs. Over time, we target free cash flow at 10% or more of revenue. We suspended our share repurchase program in the middle of 2023 to focus on paying down debt. Our debt at the end of 2025 was $30 million, which resulted in leverage at 0.85x our adjusted EBITDA levels. We generally maintain approximately $2 million of cash on hand and utilize our $100 million revolver to manage liquidity. Since 2020, DHI has repurchased over 18 million shares and has reduced shareholder dilution by approximately 4 million shares or 9%. We recently announced a new share buyback program, which allows us to repurchase up to $10 million of common stock through February of 2027.

CJ is a dual-sided marketplace that drove $55 million of revenue in 2025 and is comprised of 1,800 subscription clients in a market with roughly 10,000 client opportunities and 100 government agencies. Here, you can see a number of notable customers of ClearanceJobs. CJ's quarterly bookings have seasonality with the first quarter being the largest of the year. CJ's bookings have a 5-year CAGR of 9%. And most recently, Q4 bookings were up 3% with 90% revenue renewal rate and a 109% retention rate. With the $1 trillion defense budget approved, we expect ClearanceJobs to return to double-digit bookings growth as we exit 2026. ClearanceJobs revenue has a 5-year CAGR of 12% with the fourth quarter of 2025 being up 1% year-over-year.

As you can see, CJ is very profitable with adjusted EBITDA margin above 40% and low spend on capitalized development. Like CJ, Dice is a dual-sided marketplace that drove $73 million of revenue in 2025 and is comprised of 4,100 subscription clients in a market with roughly 100,000 client opportunities between the commercial and staffing and recruiting accounts. These logos represent a sampling of Dice's customers. Our market opportunity in commercial is comprised of companies across various industries such as General Motors, VITAS Healthcare, the CIA and Capital One, who aren't traditionally tech companies, but certainly hire many tech professionals every year and leverage our platform for their tech hiring needs.

Dice's quarterly bookings also have seasonality with the first quarter being the largest of the year. Dice bookings have a 5-year CAGR of negative 7%. And most recently, Q4 bookings declined 11% year-over-year as the HR tech hiring environment remained challenged. Dice's renewal rate for the fourth quarter was 78%, while its retention rate was 94%. Dice revenue has a 5-year CAGR of negative 4% with the most recent quarter being down 17%. Dice adjusted EBITDA margin has increased in recent quarters due to the restructurings discussed earlier and with the most recent quarter being at 30%. Dice capitalized development costs have steadily decreased as well and were $1 million in Q4.

Looking ahead, ClearanceJobs and Dice are positioned for growth, supported by large totable addressable markets, the $1 trillion defense budget, our cleared staffing offering and Dice's new self-service option. Our recent acquisitions of Point Solutions Group and AgileATS further strengthens our portfolio as we continue to look for additional tuck-in acquisition opportunities for ClearanceJobs. Today, these initiatives create a clear path for sustainable growth. In summary, DHI is well prepared to capture growth in the tech hiring in the coming years.

With that, we're happy to take any questions.

Thank you. We do have some questions that were submitted by investors. I'll go ahead and read those now. The first question is, you've described the tech hiring market as gradually recovering after a challenging macro environment. What leading indicators are you watching most closely that signal when demand for tech talent and for platforms like Dice will return to sustained growth?

It's a great question. I'd say that there are 3 very important indicators. The first is associated with the tech staffing sector. So it's important to understand that about 80% of the activity on Dice is associated with tech staffing companies like the tech division of Robert Half or Kforce, Kelly Services, but also the long tail of multiple tech staffing firms in the United States. There is an association called SIA, Staffing Industry Analysts that surveys their population and determines each 60 days the level of revenue growth or decline within that tech staffing sector. And the good news is that after a pretty severe recession taking place in 2023, 2024, we turned the corner in the back half of 2025. So that's indicator #1, the health of the tech staffing sector.

Indicator #2 is broader. There's another association named CompTIA, which is an association for tech workers in the United States. And they post their review of the jobs report each month. And so they analyze the Bureau of Labor Statistics, JOLTS reports and other sources, and we chart that. And the bottom line is that this year, it appears that the level of new tech job postings is actually increasing after, again, a number of years of decline or just bumping at the bottom.

The third really important metric that we look at is the number of tech recruiter job postings, which we get from a service called Lightcast. Obviously, the reason why you're hiring tech recruiters is because you intend to hire tech workers. And so that number very importantly, has grown over the last, I'd say, 6 months from a bottomed out number in 2024.

Okay. Great. The next question is ClearanceJobs has been growing, while Dice has faced headwinds. What are the key structural differences between these 2 businesses? And what strategic steps are you taking to restore stronger growth at Dice?

So that's a great question. I can answer that one. I would say they are in different markets. There is a very low amount of competition for ClearanceJobs. As I indicated in the course of the presentation, we really don't have a meaningful competitor. LinkedIn does not have a field for clearance level, and you're not supposed to use it if you do have a clearance in the United States. So it is distinctly less competition in that ClearanceJobs arena.

What are we doing to essentially supercharge growth for Dice? I'd say structurally, we're making it a less friction-fold experience to get a subscription to Dice. So I indicated that after 2.5 years, we've actually created a self-service option. You can go to the site today and quite literally put in a credit card and immediately be activated for Dice so that you can start using the experience. It doesn't involve a salesperson whatsoever. And we have seen since the beginning of the year, the amount of activity in that self-service mode grow quite significantly.

I would also say that the macro environment really affects Dice. Obviously, being a hiring platform, given that we've gone through a hiring recession these past few years, once we see the environment improving for need for technology workers and especially the tech staffing firms hiring tech workers, I think you're going to see the prospects of Dice improve significantly.

Okay. Thank you. Next question is AI's impact on recruiting and DHI's product strategy. So the question is, DHI positions itself as an AI-powered career marketplace. How do you see AI changing the way companies source and evaluate tech talent? And what differentiated capabilities is DHI building to stay ahead of that shift?

So that's a great question. I can answer that as well. So we've seen a lot of different capabilities come to market in the last year that assist recruiters, and they can fundamentally be built into the ATS, the Applicant Tracking System. They could be tools that essentially automate the interviews that take place or the screening of candidates at the very beginning of a search process. For us, we have used AI for at least 15 years now. It's the real source of strength for our search process on both platforms.

When we essentially look at a job posting, we're stripping out all the skills that are being requested by that job posting and then quite literally matching it against the 9 million-plus profiles we have across both platforms on a skill basis. So instead of looking for a Java developer in a particular location, we're looking for a Java developer that has maybe 30 distinct skills, and we're surveying our entire profile database to give the best match to our clients, the hiring managers or the recruiters. So it's been involved in our platform for quite some time, and we're constantly adding new AI-related features.

Okay. Great. Next question. You recently announced an acquisition expanding the mission of ClearanceJobs. Can you tell us more about this new opportunity? And if there are other opportunities to expand the mission of CJ or Dice?

Yes. We announced the acquisition of Point Solutions Group, which is a cleared staffing firm. It is located in Denver, Colorado. It attends to 10 prime contracts where we essentially have roughly about 40 cleared contractors on the customer's premise. And it is operating at the top secret level. So that's very unique itself. It's established about 7 years of operating history, which is important when you think about government contracts in general. They generally ask you for your requisite government history working with the government or working with contractors. So it gives us the ability to essentially build off of those existing prime contracts, but seek additional contract work with the government.

And again, it's a very important capability that it's infrequent in the United States. We like to think of it as also just an expansion of what we can deliver for our recruiters and our military contractors. You can now source the talent yourself through our ClearanceJobs platform. You could ask us to do permanent placement, and we'll essentially deliver a candidate after doing the recruitment activity ourselves or you could ask for a contractor in a staffing assignment. So we are providing the full continuum of talent resources for our clients with this acquisition.

Okay. And the last question I have from the investors is, if we look out 3 to 5 years, what does success look like for DHI Group, whether that's growth in revenue, the mix between Dice and ClearanceJobs or the broader role you want the company to play in the tech talent ecosystem?

We have a very clear mission as expressed by our Board, which is to get ClearanceJobs back to double-digit revenue growth, Dice back to single-digit revenue growth while maintaining our profitability. And that's expressed as above 40% EBITDA margins for ClearanceJobs and above 20% margins for Dice. So that is the mission. That's what we're striving for every day.

Okay. Great. Well, I'll turn it back to you to give any closing remarks.

Well, thank you very much. And I just wanted to say that we are happy to set up a one-on-one meeting, and please reach out to Todd Kehrli, our IR adviser, if you'd like to do so. Thank you very much for your time today.

That concludes DHI's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.

Good day, and welcome to the DHI Group, Inc. Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Todd Kehrli, PondelWilkinson Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and welcome to DHI Group's fourth quarter and year-end earnings conference call for 2025. Joining me today are DHI's CEO, Art Zeile; and CFO, Greg Schippers. Before I hand the call over to Art, I'd like to address a few quick items.

This afternoon, DHI issued a press release announcing its financial results for the fourth quarter and year-end 2025. The 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 historical information, statements on today's call may constitute forward-looking statements within the meaning of the federal securities laws. 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 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, on today's call, management will reference specific financial measures, including adjusted EBITDA, adjusted EBITDA margin, free cash flow and non-GAAP earnings per share, which are not prepared in accordance with U.S. GAAP. Information regarding these non-GAAP measures and reconciliations to the most directly comparable GAAP measures are available in our earnings release, which again can be found on our website at dhigroupinc.com in the Investor Relations section.

With that, I'll turn the call over to Art Zeile, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone, and thank you for joining us today. I'm Art Zeile, CEO of DHI Group; and with me is Greg Schippers, our CFO. To start, I want to remind everyone that at DHI, our mission is simple. We help employers find and connect with the technology professionals who drive innovation across the U.S. economy. We do this through our 2 brands, ClearanceJobs and Dice, both with strong positions in attractive markets.

Our model is straightforward. More than 90% of our revenue comes from annual or multiyear subscriptions. Customers who are employers or recruiters use our platforms to search for, engage with and recruit tech talent. Our exclusive focus on tech occupations, along with our ongoing product innovation gives us a durable competitive advantage. ClearanceJobs is the leading marketplace for professionals with active U.S. security clearances, serving approximately 1,800 customers, including Lockheed, Booz Allen Hamilton, Leidos, Raytheon and many others. With 1.9 million candidates on our platform, we have the largest number of profiles of U.S. cleared professionals, giving CJ a significant competitive advantage as a platform for hiring cleared tech talent for the defense sector.

Dice is essentially LinkedIn for tech hiring, built over 35 years with 7.7 million profiles in our database, representing the vast majority of technology professionals in the United States. While LinkedIn emphasizes a person's title, we focus on tech skills, of which there are over 100,000 distinct skills in our data model. Tech professionals on Dice actively update their profiles with new skills, making Dice the most relevant platform for recruiters who need to source tech talent.

Both businesses generate strong recurring revenue and robust EBITDA margins, particularly at ClearanceJobs, where margins run at or above 40% and helps drive strong free cash flow conversion. Investors often mistake us for a staffing and recruiting firm, but we are an essential software tool used by employers and recruiters to find top tech talent for their open positions. Approximately 6,000 employers and staffing companies subscribe to our 2 SaaS platforms.

Now I would like to provide an overview of our brand performance this quarter and outline the steps we've taken to improve our position moving forward. Starting with ClearanceJobs, we believe the fourth quarter marked an inflection point. Bookings returned to positive year-over-year growth in the quarter, following a decline in the third quarter. This improvement reflects both market tailwinds and improved sales execution following leadership changes earlier in the year. The $1 trillion U.S. defense budget for fiscal year 2026 marks an enormous single year increase over the previous year's budget. Historically, the defense budget has grown roughly in line with GDP growth rates of around 3%. So this is a significant year-over-year increase.

Also, NATO countries are boosting defense spending with a target of 5% of their GDPs, which would represent a spending increase of more than $500 billion per year, with U.S. contractors likely to secure a significant portion of this incremental spend. Traditionally, over 60% of EU defense procurement spending goes to U.S. military contractors.

These dynamics are promising for ClearanceJobs. With over 10,000 employers of cleared tech professionals and more than 100 government agencies in need of cleared tech professionals, CJ has a significant growth opportunity as government contractors look to staff new projects.

We are also excited about the progress that we have made with our AgileATS acquisition. It has been integrated with ClearanceJobs, and we have doubled its revenue in less than 6 months. This acquisition is a clear illustration of what we can -- that we can "expand the mission" for ClearanceJobs and leverage the solid relationships we have built with 1,800 military contractors over the past 24 years. Looking back, we have almost doubled the revenue of ClearanceJobs in the last 5 years, and we continue to expect ClearanceJobs to be our primary growth engine in the near and medium term as defense contractors are increasingly ramping up hiring activity in anticipation of funded programs.

We also continue to innovate within ClearanceJobs. During the quarter, we piloted a premium candidate subscription, initially marketing it to a very small subset of our database. Early results were encouraging, validating the concept as a new recurring revenue stream. Broader marketing to our full candidate base will occur in stages during 2026, and we expect this to become a more meaningful contributor over time.

Turning to Dice. The commercial technology hiring environment remains challenging. Dice's performance in the fourth quarter improved in that the rate of decline narrowed, but both bookings and revenue were still down year-over-year. We believe Dice is well positioned to benefit as broader commercial tech hiring accelerates, but we are not assuming a return to bookings growth in Dice until the tech hiring market returns to growth. Industry data continues to show that overall tech job postings are largely flat compared with late 2024, neither materially better nor worse. That said, tech staffing trends have improved meaningfully.

Staffing Industry Analysts, SIA, now suggests that U.S. tech staffing declined by about 10% in 2023, 6% in 2024 and about 2% in 2025, with growth projected to return in 2026. During the quarter, we continued our rollout of the Dice Employer Experience, an online self-service platform. The platform serves 2 strategic purposes. First, it expands our addressable market, particularly among commercial employers who want flexible, lower commitment access to Dice through monthly subscriptions or individual job postings. Second, it improves operating efficiency by enabling greater self-service in all our customer relationships.

Importantly, Dice Employer Experience is a platform transition, a full-scale rewrite of our Dice code base. Customers will be fully migrated into the new platform by the end of Q1, moving to a modernized interface and workflow, allowing for faster and more efficient new and enhanced product releases.

A key long-term demand driver across Dice and the broader tech labor market continues to be AI-related hiring. At the end of 2025, 55% of Dice job postings required AI-related skills, up from 28% a year earlier. Dice differentiates itself through its deep AI skills taxonomy, which covers more than 360 distinct AI-related skills. Rather than treating AI as a single generic category, Dice enables employers to identify and match candidates based on specific validated skill sets, an increasingly critical capability as AI roles become more specialized. We believe this depth of skill intelligence positions Dice as a differentiated platform for AI talent over the long term.

Looking ahead, we expect ClearanceJobs to deliver continued growth driven by defense spending, improved execution and our expanded offerings. ClearanceJobs operates in a specialized high-barrier market at the intersection of defense, security and technology, with significant upside from defense budget growth and NATO spending. For Dice, while we believe it is increasingly becoming the go-to destination for AI talent acquisition, we expect it to continue to be challenged until the commercial tech hiring market returns to growth.

Having said that, our subscription model and margin structure give us resilience and allows us to deliver significant free cash flow. We are confident in our ability to deliver strong free cash flow going forward and continue to believe the market doesn't fully reflect the value of each of our distinct brands today, which is why our Board authorized a new $10 million buyback program starting this month. Over time, as we execute, grow our customer base and deliver solid profits and robust free cash flow, we see a clear path to continued meaningful shareholder value creation.

With that, I'll turn the call over to Greg to walk you through the financial results and our guidance in more detail. Greg?

Thank you, Art, and good afternoon, everyone. Jumping right in, we reported total revenue of $32.4 million for the fourth quarter, which was down 10% on a year-over-year basis and roughly flat compared to the third quarter. Total bookings for the quarter were $31.2 million, down 5% year-over-year. Our total recurring revenue was down 12% compared to the prior year and the bookings that drive our recurring revenue were down 6% for the quarter.

ClearanceJobs revenue was $13.9 million, up 1% year-over-year and flat sequentially. Bookings for CJ were $14.6 million, up 3% year-over-year. We ended the fourth quarter with 1,775 CJ recruitment package customers, which was down 9% on a year-over-year basis and down 3% on a sequential basis. This reduction continues to be attributable to churn with customers spending less than $15,000 in annual recurring revenue. CJ accounts spending greater than $15,000 in annual recurring revenue increased by approximately 60 accounts versus the prior year and includes approximately 25 accounts that upgraded from a lower tier. Our average annual revenue per CJ recruitment package customer was up 8% year-over-year and up 2% sequentially to $27,246. Approximately 90% of CJ revenue is recurring and comes from annual or multiyear contracts.

For the quarter, CJ's revenue renewal rate was 90% and CJ's retention rate was 109%. These solid rates demonstrate the continued value CJ delivers in recruitment of cleared professionals. Dice revenue was $17.4 million, which was down 17% year-over-year and down 4% sequentially. Dice bookings were $16.6 million, down 11% year-over-year. We ended the fourth quarter with 4,132 Dice recruitment package customers, which is down 3% from last quarter and down 12% year-over-year.

Dice revenue renewal rate was 78% for the quarter, and its retention rate was 94%. The reduction in customer count from the prior year quarter continues to be attributable to churn with smaller customers spending less than $15,000 per year, which represent approximately 75% of the total churn on count and who are more likely to be impacted by the difficult macro environment and uncertainty. We believe the introduction of our new Dice platform, which offers customers the flexibility of monthly subscriptions, will help reduce future churn among smaller accounts by lowering upfront commitment and improving affordability. Our average annual revenue per Dice recruitment package customer was $15,635, down 5% year-over-year and down 1% sequentially. Approximately 90% of Dice revenue is recurring and comes from annual or multiyear contracts.

Both brands continue to onboard notable new clients. In the fourth quarter, ClearanceJobs secured annual contracts with ServiceNow, Forward Edge-AI and Pennsylvania State University, while Dice landed Ameriprise Financial, Atlas Copco Group and the Metropolitan Water District of Southern California, demonstrating that employers outside the traditional tech industry are using our platforms to hire talent to fulfill their tech develop needs.

Now let's move to operating expenses. For the fourth quarter, our operating expenses decreased $5.3 million to $27.7 million when compared to $33.1 million in the year ago quarter and includes a $1.4 million impairment of a right-of-use asset as we intend to sublease our New York City office space. Excluding the impairment, our fourth quarter operating expenses declined $6.7 million or 20%. Improvements to our operating efficiency, including the Dice employer experience platform, along with adjusting the business for the difficult market environment over the past few years, we have reduced our annual operating expenses and capitalized development costs by approximately $35 million.

For the quarter, we had income tax expense of $800,000 on income before taxes of $2.2 million. Our tax rate for the quarter differed from our approximate statutory rate of 25% due to a nondeductible impairment. Tax law changes, which allowed for the immediate deduction of R&D costs helped reduce our 2025 income tax payments by $3.1 million as compared to 2024 and will favorably affect our 2026 cash outlay for income taxes.

Moving on to the bottom line. We recorded net income of $1.3 million or $0.03 per diluted share in the fourth quarter. For the prior year quarter, we reported net income of $1 million or $0.02 per diluted share. Net income for the quarter was impacted by the previously mentioned $1.4 million impairment and a $900,000 impairment of an investment.

Non-GAAP earnings per share for the quarter was $0.09 per share compared to $0.07 per share for the prior year quarter. Diluted shares outstanding for the quarter were 44.6 million shares, down 1.3 million shares or 3% from the prior year quarter. Adjusted EBITDA for the fourth quarter was $9.4 million, a margin of 30% compared to $9.2 million or a margin of 26% in the fourth quarter a year ago. On a segmented basis, CJ adjusted EBITDA remained strong at $6 million in the fourth quarter, representing a 43% adjusted EBITDA margin as compared to adjusted EBITDA of $6.4 million or a margin of 47% in the prior year period. Dice's adjusted EBITDA increased to $5.2 million, representing a 30% adjusted EBITDA margin compared to $4.3 million and a 20% margin last year.

Operating cash flow for the fourth quarter was $7.2 million compared to $4.4 million in the prior year period. Free cash flow, which is operating cash flows less capital expenditures, was $5.7 million for the fourth quarter compared to $1.6 million in the fourth quarter of last year. Our capital expenditures, which consist primarily of capitalized development costs, were $1.4 million in the fourth quarter compared to $2.7 million in the fourth quarter last year, a savings of $1.3 million or 47%.

Capitalized development costs in the fourth quarter of 2025 for CJ were $454,000 compared to $524,000 in the 2024 period, while capitalized development costs for Dice were $1 million this quarter as compared to $1.6 million in the 2024 period. We are targeting total capital expenditures in 2026 to range between $6 million and $7 million as compared to $7.3 million last year.

For the full year, we generated $13.8 million of free cash flow compared to $7.1 million last year. From a liquidity perspective, at the end of the quarter, we had $2.9 million in cash, and our total debt was $30 million under our $100 million revolver, resulting in leverage of 0.85x our adjusted EBITDA. We continue to target 1x leverage for the business.

Deferred revenue at the end of the quarter was $39.9 million, down 12% from the fourth quarter of last year. Our total committed contract backlog at the end of the quarter was $99.6 million, which was down 5% from the end of the fourth quarter last year. Short-term backlog was $76.1 million at the end of the fourth quarter, a decrease of $2.6 million or 3% year-over-year. Long-term backlog, that is revenue to be recognized in 13 or more months, was $23.5 million at the end of the quarter, a decrease of $2.6 million or 10% from the prior year quarter.

During the quarter, we repurchased 2.9 million shares for $5.2 million under our stock repurchase program. For the year, we repurchased a total of 5.5 million shares for $11.4 million. And over the past 3 years, we've repurchased 9.1 million shares for $26.5 million, all under our stock repurchase programs and from the vesting of share-based awards.

Following the close of the fourth quarter, we completed the $5 million plan authorized in November 2025. And last week, our Board approved a new $10 million stock repurchase program, which will begin this month and will run through February of 2027.

Moving on to guidance. We expect ClearanceJobs bookings to grow in 2026. However, we do not anticipate Dice bookings growth resuming until tech hiring improves. As a result, we expect DHI revenue of $118 million to $122 million for the full year; and for the first quarter, we expect revenue of $28 million to $30 million. For CJ, we expect revenue of $56 million to $58 million for the full year; and for the first quarter, we expect revenue of $13 million to $14 million. At Dice, we expect revenue of $62 million to $64 million for the full year; and for the first quarter, we expect revenue of $15 million to $16 million.

We expect the CJ bookings miss that occurred in the third quarter of 2025 to cause a small sequential and year-over-year revenue decline for CJ in the first quarter but returning to growth in the second quarter of 2026. From a profitability standpoint, we are targeting a full year adjusted EBITDA margin for DHI of 25% and margins of 40% for CJ and 22% for Dice. The lower year-over-year margins are driven by bookings challenges in 2025 related to the continued soft tech hiring environment and uncertainty surrounding government defense spending. These bookings challenges in 2025 drive the lower revenue in 2026. Our focus remains on delivering long-term sustainable and profitable revenue growth into strong free cash flow generation, averaging at or above 10% of revenues.

To wrap up, although the hiring environment over the past 2-plus years has impacted our revenue growth, we remain optimistic about the road ahead. We anticipate the record-breaking defense budget will be a growth driver for CJ and that companies across all industries will steadily increase their investments in technology initiatives, creating a strong growth opportunity for both ClearanceJobs and Dice. We remain focused on strengthening our industry-leading solutions, optimizing our go-to-market strategy and executing with efficiency, ensuring we are well positioned to capitalize on the opportunities that lie ahead.

And with that, let me turn the call back to Art.

Thanks, Greg. I want to thank all of our employees once again for their outstanding work this quarter. It is a pleasure to be part of such a great team. That said, we are happy to answer your questions.

[Operator Instructions] The first question comes from Zach Cummins with B. Riley Securities.

Congrats on the solid results here in Q4, and nice to see ClearanceJobs moving towards sustained growth here in 2026. Just starting with ClearanceJobs. Yes, I'm curious on your assumptions around just the bookings trajectory in the business. Obviously, potentially a lot of tailwinds with the strong defense spending environment that we're seeing going into next year. So just curious of your assumptions that you're making on the bookings front with your initial guidance for ClearanceJobs in 2026.

Well, first and foremost, Zach, that's a great question. I will tell you that we think that part of the results of last year was due to sales execution and leadership. And we do have a new leader coming onboard. We did have our President, who's the previous VP of Sales for CJ, drop into the role in late October, and he made an immediate difference. And you can see that obviously swinging from negative 7% year-over-year bookings for Q3 to plus 3% in Q4.

I would say we do foundationally believe that the new defense budget that was just passed yesterday is going to be a tailwind for CJ. We could see visibly the larger customers in Q4, despite having the largest government shutdown in the history of the United States, feel very confident in their position and renew at elevated rates. So we think that that's going to be more pervasive in kind of the community as we move forward into 2026, especially in the aftermath of that defense budget being passed and then obviously put into law by President Trump.

Understood. And then just shifting over to Dice. Obviously, nice to see some green shoots with the overall staffing side of it potentially returning to growth this year. But as the mix of overall AI-related job postings continues to grow on your platform, I mean, how are you thinking about just the overall value for Dice and potentially even kind of outperforming a potential inflection in the broader commercial environment inflection that we're hoping to see there?

That's a great question and a question that is asked by just about everyone, including our Board last week at our quarterly Board meeting. I can tell you that there's obviously a mix of opinions, a range of opinions as to how AI affects the coding community, programmers in the United States. I can tell you that we believe that this is the year that that's going to become very visible.

We do see signs that there is this one particular philosophy that if you become more efficient in anything that is generated, there is higher demand for it. And we think that, that is evidenced by the discussions that are being happened by like Marc Andreessen and Sam Altman saying, no, we think that there's going to be kind of a mini explosion of demand for AI.

Now that has played out in terms of the demand for AI professionals on the Dice site, but I think that commercial activity in general is still subdued, and there's kind of a wait-and-see approach. But I think this is the year that we figure out whether or not AI really is a substitute for development capacity and for the community at large and tech professionals. But we're seeing signs that there is high demand. There's no question about that.

Understood. And then just final question. On the margin front for Dice, is it really just the factors of kind of a lower revenue base that's causing the margins to compress here? Or are there any incremental investments that you're planning on in 2026 for Dice?

Yes. So Zach, this is Greg. Yes, the compression on margin is purely related to the revenue. Well, in the end, it's the bookings challenges and then that flowing through to revenue in 2026. So we are targeting lower OpEx in 2026 versus 2025, but it just doesn't quite keep up with the decline in revenue.

And as it relates to investments in Dice, we do continue to invest in Dice. I think as Art commented, the platform is much more efficient now. We can do a lot more development and a lot more enhancements faster with fewer people. And so we took those folks out last year. So we intend to continue to invest, but the -- just the runoff of that bookings in 2025 is going to slow revenue in 2026 and cause margin compression in the short term.

Our next question comes from Gary Prestopino with Barrington Research.

Art, could you just elaborate a little bit on the new premier subscription package that you're putting out for CJ?

Yes, I'm happy to do so. So that has been in the works for quite some time since middle of 2025. In many respects, it has the same kind of attributes, same kind of feature set as LinkedIn premium subscription. And the LinkedIn price point is pretty substantial. It's about $60 per month. We rolled that out to a small user group at the beginning of Q4 and expanded to about 1,000 total candidates that were given the opportunity to buy this subscription.

Subsequently, moving into January, we've been kind of advancing that to about 10,000 total candidates. And it has seen a take rate of about 1.5%, and it's growing. So it feels pretty good. We also, at the same time, essentially randomized pricing. So we offered some candidates low pricing at $9.95; another set of candidates, $12.99; another set of candidates, $14.99; another set of candidates, $19.99. And it looks like the most promising price point is $12.99. So we are going to go out to the full set of about 1.9 million candidates and make this offer to them for premium candidate experience or subscription by the end of Q1. We're just kind of literally rolling it out in phases week by week.

But could you explain what the premium subscription does? I'm a little bit, I guess, fuzzy on that. What exactly are you offering the candidate?

Absolutely. So as one example, you can see who looked at your profile over the last week, 30 days, 60 days, 90 days. What that is to a candidate is a signal that a recruiter is very interested in your profile. So you can reciprocate by going straight to that recruiter and saying, "Hey, I looked at -- I know that you looked at my profile. Would you like to engage in a conversation?"

You also can look at a particular job posting and get a score, 0 to 100, as to how close you match the required attributes of that particular job posting. And it will also tell you what the gap is, what you should go out and learn if you really want those kind of career opportunities in the future. It will also give you a boost towards those jobs that are being searched for. So if a recruiter is searching for a Java developer in Centennial, Colorado and you have this premium candidate subscription, it will boost your profile a little bit closer to the top so that you're more visible to that recruiter. They take your profile more seriously.

Those are just 3 of the features that are embedded in this. There's probably like 10 features, and I can definitely get you a much more comprehensive summary of that, Gary. But it really is promoting a candidate's -- their ability to essentially use the platform with more sophistication and have more engagement with recruiters because it's always about the engagement with recruiters and giving them more signals as to what they need to do with their career.

Okay. And you also mentioned besides the fact you've cut expenses, you've got new products rolling out, did some personnel changes, particularly on the sales side or Head of Sales. Could you just talk a little bit about that?

Yes. I will tell you that, at the beginning of last year, January 2025, we essentially separated the brands and we designated presidents. Alex Schildt is the President of ClearanceJobs, and he used to be the VP of Sales of ClearanceJobs. So he was promoted from VP of Sales to President, and we had to find a replacement for him. Unfortunately, I think that we found a person that didn't really scale to the full size of the CJ sales team, which consists of about 50 people. So it's a pretty meaningful sized team to manage. And we saw bookings decay Q1, Q2, Q3. We thought that, that was part of the macro environment or at least partially due to the macro environment, but then we convinced ourselves that we really needed to find a new leader.

At the time that we decided that in October, Alex dropped into his old role. He became the acting VP of Sales for CJ at the same time that he was the President. And so he was doing double duty, but we saw an immediate remarkable improvement in bookings. Like literally, we went from negative 7% or a decline of 7% in bookings Q3 year-over-year to positive 3% in Q4. And I think that, that trend will continue over the course of 2026.

So we think that there is a -- it does make a difference having the right person in the role. We convinced ourselves of that. And we do believe that the macro environment did, to a certain degree, hold us back. But now the macro environment feels a lot different, a lot better and especially in light of the defense budget that was passed into law yesterday.

Okay. And this individual can -- do you think he can continue to have double responsibility as President and then Head of Sales, too?

No, we are actually bringing onboard and announcing a new VP of Sales in the next few weeks. And so we've been hard at it through a Heidrick & Struggles-led search to find the new VP of Sales for ClearanceJobs. And I personally think the candidate -- the person that is going to become our new VP of Sales is spectacular. So again, I don't want to announce it too early, but it will be announced within a few weeks.

Okay. And then just lastly, I mean, if you could cite maybe 3 or 4 encouraging signs that you're seeing, I mean, obviously, the ClearanceJobs bookings were up. But what else is happening on a macro environment plane? We know about the fact that you've cut costs, and that's great and all that. But what's giving you some encouragement here?

I personally think that the context of the defense budget is going to help us a lot. You know that most of our roles are very heavily technical and weighted towards software development on the ClearanceJobs platform and programs like the Golden Dome are all about software. So I think that, that fact that we are moving to a much more technology-rich defense budget will help us, and we're already seeing that, obviously.

The other really big macro effect for us is the Dice dependency on staffing recruiting agencies. So we have been in a staff -- a tech staffing recession since 2023. And that's clearly evidenced by the staffing industry analyst kind of figures that I pronounced in my side of the script. We're coming out of that. You can go to Staffing Industry Analysts. They have a new tech staffing bullhorn indicator, and it shows the revenue growth in the tech staffing industry month-over-month previous period, and it shows that we are going towards growth in 2026. The Staffing Industry Analysts Pulse report that comes out after -- every 60 days showed that the median tech staffing firm in December of last year, the median grew 10%. The 75th percentile tech staffing firm in the United States grew 32%. So we're seeing kind of a surge in tech staffing demand.

Now obviously, I'm not trying to overplay that. It's an uncertain world that we live in today. But you can definitely see the trend lines if you go to Staffing Industry Analysts and look at these indicators. And again, we've been in a recession. So it's a cyclical business. We're hopefully coming out of the cycle.

The next question comes from Max Michaelis with Lake Street Capital Markets.

Great quarter. A few questions for me. I kind of want to stick with ClearanceJobs here. It's good to see bookings up 3% in Q4 and then your guidance for ClearanceJobs of 4%. Going back to your comments earlier in the call about bookings growth expected to continue in ClearanceJobs. Should we expect acceleration from this 3%? I know quarterly volatility is a thing. But should we expect ClearanceJobs bookings growth to kind of creep up into the mid-single-digit range? Anything else there?

Yes, this is Greg. And Max, yes, you should expect that to trip up through the year. So we expect it to get a little more legs under it as the -- this new defense budget kind of gets moving and stuff. There's going to be a little bit of lag with everyone getting their contracts in order, but we definitely expect that to happen through the year.

Okay. And then for ClearanceJobs margins, I think adjusted EBITDA margin was 43% in 2025 and then your guidance calls for around 40%. Is there any reason for that step down in 2026 investment there? Help me out with that.

Yes. Yes, that's a good question. And it's really -- it is a result of the rather flat bookings through 2025 and in particular, the decline in the third quarter of 7%. In 6 months or so, that moves over to revenue. And we have a pretty consistent OpEx base, if not increasing a little bit at CJ expected through 2026 as we continue to invest in that business. So that's going to compress that margin a little bit. But again, we're still in that 40% range with CJ, but the revenues will be just a bit more challenged because of the lag in that bookings miss.

Okay. And then shifting over to Dice. This is my last question. Going back to an earlier question talking about the green shoots in staffing. Can you remind me what the percentage of revenue is between staffing and commercial accounts at Dice?

Approximately 80% is really dependent upon tech staffing firms in the United States. So we have some of the very largest tech staffing firms in the United States and the world. Adecco is the largest customer for us. Robert Half is #2. We have Randstad, Kforce, Jobbot.

And then there is a very, very long tail of tech staffing firms in the United States. There's approximately 18,000 tech staffing firms. So the bottom line is that we have traditionally been very dependent upon them because, for them, the Dice platform is the equivalent of salesforce.com to a salesperson. It's up on their laptop or their screen every single day, every hour of the day as they're searching for candidates. They have a lot of urgency of getting people in the seat, so to speak, because they can only bill their customers when they actually do land in the position. So again, we're kind of a go-to platform for many of the tech staffing firms in the United States.

I knew it was high. I just couldn't remember the exact number.

The next question comes from Kevin Liu with K. Liu & Company.

Congrats on a solid finish to the year. Maybe if I could just continue on that line of questioning for the staffing and recruiting piece of Dice. Can you talk a little bit about the trends you've seen within business with those companies? And as they start to see their own businesses stabilize, is it possible that you'll see growth there, which has been kind of offset by the commercial side of your business?

That's a great question, Kevin, as always. I would have to say that as we looked at this SIA Pulse report over the course of the year, it bumped along not really meaningfully changing as an indicator for the first half of the year. I personally think that that's because of the macro environment, tariff announcements and just uncertainty in general coming into a new administration. Then in the second half of the year, you can see a distinct trend where the 75th percentile was always doing extremely well. The 25th percentile was still in a tough shape where there were revenue declines. So I used to tell the sales team, it feels like it's a tale of 2 cities, and we have to go after those staffing firms that have requisitions and that are doing extremely well.

So when you ask, will we see increases, we are already seeing it with certain companies that are doing well kind of exiting 2025. We always look at the median as illustration of what the average firm is doing or what their performance looks like. And the average firm up until this last Pulse report was like 0% to 1% to 2%, but it looks pretty good moving into 2026 based on how we exited the year.

And I'd also say the interesting thing about it is that December is a tough month. Generally speaking, our industry in general, whether it's staffing or it's hiring people commercially, is always down in the month of December, generally just because, I mean, it's the holiday season. So people aren't hiring that -- with velocity. Now I could also tell you that our book of business in terms of renewals has a peak around December and January just because people have liked to line up their contracts with their calendar year or fiscal year.

Yes. And just on that note, I wanted to chat a little bit about kind of the renewal trends you've been seeing of late. Obviously, Q4 looked like a nice bounce back from Q3 levels. Can you talk about just kind of how easy or difficult it was to kind of get your larger customers, especially to renew during that period and what you've seen kind of into the new year? And then as we look out for '26, just wondering if you would expect to see continued improvement in overall renewal rates.

Yes, I would say -- well, speaking to each brand individually, ClearanceJobs actually had a very nice bounce back as we've been talking about, a great revenue renewal rate for Q4. I would say that the larger customers felt very bullish about their prospects moving into 2026 because they knew that they were going to see a larger defense budget. And as you probably heard, President Trump has even promoted the idea of a $1.5 trillion defense budget for fiscal year 2027, which starts, obviously, October of this year.

So it feels like we've turned the corner with CJ. And this is, again, in the kind of overshadowing event of the government shutdown, which lasted longer than any other shutdown in history. That mostly kind of affected the confidence of the small and medium firms because they obviously have a different balance sheet profile than the large ones.

Turning over to Dice. I would say, again, we had a bounce back in terms of revenue renewal rate. Our bigger customers felt better, kind of in line with that idea that there are certain tech staffing firms that are doing a lot better than they did at the beginning of 2025, and we were the beneficiaries of that during the renewal season. So that's just generally how I'd describe it.

Okay. Great. And then just on CJ as well, it was kind of interesting to hear that the AgileATS revenue base has kind of doubled already. I know it's off a small base. But how are you thinking about how Agile can contribute to growth on the CJ side this year?

Well, I think it's going to be still growing steadily. I think that it really does fit a great market need. It's generally for smaller and midsized companies. So that's what we're doing, is we're pitching for those type of customers.

I would say that because of the early success that we saw with AgileATS bookings and revenue, we're actually adding to the sales team, specifically to essentially promote AgileATS moving into 2026. We felt enough confidence in what we had seen that we wanted to expand on that success. And so we're adding resources, and we think that it is going to be a bigger growth driver for us in the year ahead.

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

Thank you, operator, and thank you all for joining us today. As always, if you have any questions about our company or would like to speak with the management team, please reach out to Todd Kehrli, and he will assist in arranging a meeting. Thank you for your interest in DHI Group, and have a wonderful day.

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

good afternoon, everyone, and welcome to the DHI Group, Inc. Third Quarter 2025 Financial Results Conference Call.

[Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Todd Kehrli with PaondaleWilkinson. Please go ahead.

Thank you, operator. Good afternoon, and welcome to DHI Group's Third Quarter Earnings Conference Call for 2025. Joining me today are DHI's CEO, Art Zeile; and CFO, Greg Schippers.

Before I hand the call over to Art, I'd like to address a few quick items. This afternoon, DHI issued a press release announcing its financial results for the third quarter of 2025. The 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 the federal securities laws. 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 the 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, on today's call, management will reference specific financial measures, including adjusted EBITDA, adjusted EBITDA margin, free cash flow and non-GAAP earnings per share, which are not prepared in accordance with U.S. GAAP. Information regarding these non-GAAP measures and reconciliations to the most directly comparable GAAP measures are available in our earnings release, which can be found on our website at dhigroupinc.com in the Investor Relations section.

With that, I'll now turn the call over to Art Zeile, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone, and thank you for joining us today. I'm Art Zeile, CEO of DHI Group, and with me is Greg Schippers, our CFO.

If you're new to the story, welcome. At DHI, our mission is simple. We help employers find and connect with the technology professionals who drive innovation across the U.S. economy. We do this through 2 brands, ClearanceJobs and Dice, both with strong positions in attractive markets.

Our model is straightforward. More than 90% of our revenue comes from annual or multiyear subscriptions. Customers who are employers or recruiters use our platforms to search, engage and recruit tech talent. Our exclusive focus on tech occupations, brand longevity, scale of our communities, data insights and continued product innovation give us a durable competitive advantage.

ClearanceJobs is the leading marketplace for professionals with active U.S. security clearances, serving over 1,800 customers, including Lockheed, Booz Allen Hamilton, Leidos, Raytheon and many others. With 1.9 million candidates on our platform, we have the largest number of profiles of U.S. cleared professionals, giving CJ a significant competitive advantage as a platform for hiring cleared talent.

Dice is essentially LinkedIn for tech hiring, built over 35 years with 7.6 million profiles in our database, representing the vast majority of technology professionals in the U.S. while LinkedIn emphasizes a person's title, we focus on tech skills. Tech professionals on Dice actively update their profiles with new tech skills, making it the most relevant platform for recruiters who need to source tech talent.

Both businesses generate strong recurring revenue and robust EBITDA margins, particularly at ClearanceJobs, where margins run above 40%. Investors often mistake us for a staffing and recruiting firm, but we are an essential software tool used by employers and recruiters to find top tech talent for their open positions. Over 6,000 employers and staffing companies subscribe to our 2 SaaS platforms.

Despite a mixed macro backdrop and recent headlines, tech hiring has stabilized this year, although remaining under historical levels. While we don't have updated BLS tech job posting figures due to the government shutdown, we know from our alternative source, Lightcast, that new tech job postings were roughly the same as second quarter.

Dice is an essential platform for staffing firms. And according to the staffing industry analysts pulse reports, the median tech staffing firm in their membership is now growing revenue in low single digits compared to 2024.

The most notable trend driving current and future tech worker demand is AI. At the beginning of 2024, approximately 10% of job postings on Dice required at least one AI skill. As of last month, that number has risen above 50%. As companies expand their use of AI, the need for skilled technologists that implement these projects will only increase.

Platforms like ClearanceJobs and Dice with their combined databases of over 9 million tech professionals are an essential tool for employers seeking to find, attract and hire the tech talent they need to fill these projects.

Now I would like to provide an overview of our brand performance this quarter and outline the steps we've taken to improve our position moving forward. ClearanceJobs continues to generate strong margins and retain its leadership position despite a bookings decline of $0.8 million or 7% due to the government hiring freeze and eventual shutdown.

But the long-term outlook is very favorable. The proposed $1.1 trillion U.S. defense budget for fiscal year 2026 marks the largest single year increase in peacetime history, representing a 13% increase over the previous year's budget. Historically, the defense budget has grown roughly in line with GDP growth rates of around 3%. So this is a significant year-over-year increase.

Also, NATO countries are boosting defense spending with a target of 5% of their GDPs, which would represent a spending increase of more than $500 billion, with U.S. contractors likely to secure a significant portion of this incremental spend. Traditionally, over 60% of EU defense procurement spending goes to U.S. military contractors.

These dynamics are promising for ClearanceJob with over 10,000 employers of cleared tech professionals and more than 100 government agencies also in need of cleared tech professionals, CJ has a significant growth opportunity as government contractors look to staff new projects.

On the product side, we've integrated AgileATS with our ClearanceJobs offering and are beta testing our premium candidate subscription ahead of its general release in Q1 of 2026, our first candidate monetization opportunity.

As we announced last quarter, AgileATS is the only applicant tracking system in the market designed specifically for the cleared recruiting environment. It's the only ATS on the market developed from the ground up to meet the unique regulatory and compliance requirements of government contractors.

With AgileATS now integrated with ClearanceJob, we have begun offering a bundled solution to customers who want a seamless end-to-end cleared hiring workflow. Based on our analysis, we believe approximately half of our CJ customers today meet the target profile for this solution. With a historical average contract value of around $7,000 annually, we see strong incremental recurring revenue potential for AgileATS, both from our existing CJ customer base and from new customers in the broader GovTech market.

Additionally, we are excited about the opportunity for CJ to create a new recurring revenue stream from our new premium candidate subscription. We will be looking to roll out a similar offering on Dice in the future. With our Dice brand, in the third quarter, we continue to face macro headwinds from tariffs, budget uncertainty and higher interest rates. As a result, the number of new tech job postings remain around [70%] of normal resulting in Dice bookings being down 17% year-over-year.

Having said that, as I mentioned earlier, we are seeing significant interest in AI-related job postings, which we believe will drive future tech hiring demand. During the quarter, we made meaningful progress with our Dice platform from a product perspective. More than half of our 4,200 customers, primarily smaller accounts, have now migrated to the new platform with all customers expected to be migrated by the end of Q1 2026. This new platform allows existing customers to add new products to their existing subscription online. It also allows new customers to sign up for a subscription with a swipe of a credit card.

The price point is $650 a month for the lowest tier subscription package, which is easier for smaller customers to manage than an annual upfront charge. This move to a more self-service model allowed us to reduce Dice operating expenses significantly moving forward.

Looking ahead, even though the past few years have been difficult, we have successfully laid the foundation for future growth. Dice is increasingly becoming the go-to destination for AI talent, and ClearanceJobs operates in a specialized high-barrier market at the intersection of defense, security and technology, with significant upside from defense budget growth and NATO spending.

Our subscription model and margin structure give us resilience. We continue to believe the market doesn't fully reflect the value of each distinct brand today, which is why our Board authorized a new $5 million buyback program starting this month. Over time, as we execute, modernize our platforms and grow our customer base, we see a clear path to meaningful continued shareholder value creation. And as always, we remain committed to delivering solid profits and robust free cash flow for our shareholders.

With that, I'll turn the call over to Greg to walk you through the financial results and our guidance in more detail. Greg?

Thank you, Art, and good afternoon, everyone. Jumping right in, we reported total revenue of $32.1 million, which was down 9% on a year-over-year basis and roughly flat compared to the second quarter.

Total bookings for the quarter were $25.4 million, down 12% year-over-year. Our total recurring revenue was down 11% compared to the prior year and the bookings that drive our recurring revenue were down 13% for the quarter.

ClearanceJobs revenue was $13.9 million, up 1% year-over-year and up 2% sequentially. Bookings for CJ were $12 million, down 7% year-over-year. We ended the third quarter with 1,822 CJ recruitment package customers, which was down 8% on a year-over-year basis and down 2% on a sequential basis. This reduction is attributable to churn with smaller customers, whereas the number of CJ accounts spending greater than $15,000 in annual recurring revenue increased versus prior year.

Also, as Art mentioned, CJ's new business teams were impacted by uncertainty surrounding the federal budget freeze and eventual shutdown. Our average annual revenue per CJ recruitment package customer was up 7% year-over-year and up 2% sequentially to $26,600. Approximately 90% of CJ revenue is recurring and comes from annual or multiyear contracts.

For the quarter, CJ's revenue renewal rate was 85% and CJ's retention rate was 106%. This solid retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals.

Dice revenue was $18.2 million, which was down 15% year-over-year and down 1% sequentially. Dice bookings were $13.4 million, down 17% year-over-year. We ended the quarter with 4,239 Dice recruitment package customers, which is down 3% from last quarter and down 13% year-over-year. Dice revenue renewal rate was 69% for the quarter and its retention rate was 92%. The reduction in customer count in Dice's renewal rate from the prior year quarter is mainly attributable to churn with smaller customers spending less than $15,000 per year, representing over 75% of the total churn on count and who are more likely to be impacted by the difficult macro environment and uncertainty.

We believe the introduction of our new Dice platform, which offers customers the flexibility of monthly subscriptions will help reduce future churn among smaller accounts by lowering upfront commitment and improving affordability. Our average annual revenue per Dice recruitment package customer was $15,727, down 4% year-over-year and up 2% sequentially.

As with CJ, approximately 90% of Dice revenue is recurring and comes from annual or multiyear contracts. Despite this churn, both brands onboarded notable clients in the third quarter. For CJ, this includes Blue Origin, Boston Fusion and CDW, while Dice landed HighIQ Robotics, CloudAI Technologies and Mango Analytics as customers in Q3.

Now let's move to operating expenses. For the third quarter, our operating expenses increased $1.9 million to $36.6 million when compared to $34.7 million in the year ago quarter and includes a $9.6 million impairment of the intangible assets. Excluding the impairment, our third quarter operating expenses declined $7.6 million or 22%. Because of the difficult market conditions over the past 2.5 years, we have reduced costs through restructurings in the second quarter of 2023, in the third quarter of 2024 in January of this year and most recently in June. Together, these restructurings have reduced our annual operating expenses and capitalized development costs by approximately $35 million.

For the quarter, we had an income tax benefit of $800,000 on a loss before taxes of $5 million. Our tax rate for the quarter differed from our approximate statutory rate of 25% due to deduction limitations on executive compensation. The new tax law signed in early July allows for the immediate deduction of R&D costs, which will reduce our income tax payments in 2025 by over $2 million, while also providing an incentive for technology spending in the broader U.S. market, thereby increasing tech hiring.

Moving on to the bottom line. We recorded a net loss of $4.3 million or $0.10 per diluted share in the third quarter. For the prior year quarter, we reported a net loss of $200,000 or $0.00 per diluted share. Net loss for the quarter was impacted by the previously mentioned $9.6 million impairment. Non-GAAP earnings per share for the quarter was $0.09 per share compared to $0.05 per share for the prior year quarter. Diluted shares outstanding for the quarter were 44.8 million shares, down slightly from the prior year quarter.

Adjusted EBITDA for the third quarter was $10.3 million, a margin of 32% compared to $8.6 million or a margin of 24% in the third quarter a year ago. Margin for the quarter benefited from certain expense savings that are not expected to recur.

On a segmented basis, CJ adjusted EBITDA remained strong at $5.9 million in the third quarter, representing a 43% adjusted EBITDA margin as compared to adjusted EBITDA of $6.3 million or a margin of 46% in the prior year period.

Dice's adjusted EBITDA increased $2.2 million or 56% to $6.2 million, representing a 34% adjusted EBITDA margin, which compares to $4.0 million and a 19% margin last year. Operating cash flow for the third quarter was $4.8 million compared to $5.5 million in the prior year period.

Free cash flow, which is operating cash flows less capital expenditures, was $3.2 million for the third quarter compared to $2.3 million in the third quarter of last year. Our capital expenditures, which consist primarily of capitalized development costs were $1.6 million in the third quarter compared to $3.2 million in the third quarter last year, a savings of $1.6 million or 51%.

Capitalized development costs in the third quarter of 2025 were $400,000 for CJ and $1.1 million for Dice as compared to $600,000 for CJ and $2.5 million for Dice in the 2024 period. We are targeting total capital expenditures in 2025 to range between $7 million and $8 million as compared to $13.9 million last year.

From a liquidity perspective, at the end of the quarter, we had $2.3 million in cash, and our total debt was $30 million under our $100 million revolver, resulting in leverage at 0.86x our adjusted EBITDA. We continue to target 1x leverage for the business.

Deferred revenue at the end of the quarter was $41 million, down 13% from the third quarter and of last year. Our total committed contract backlog at the end of the quarter was $94.3 million, which was down 9% from the end of the third quarter last year. Short-term backlog was $72 million at the end of the third quarter, a decrease of $2.2 million or 3% year-over-year.

Long-term backlog, that is revenue to be recognized in 13 or more months was $22.3 million at the end of the quarter, a decrease of $500,000 or 2% from the prior year quarter.

During the quarter, we repurchased 741,000 shares for $2.1 million under our stock repurchase program. For the year, we repurchased a total of 2.6 million shares or $6.2 million under our stock repurchase program and from the vesting of share-based awards.

Following the close of the third quarter, we completed the $5 million plan authorized in January. And last week, our Board approved a new $5 million stock repurchase program, which will begin this month and will run through November of 2026.

Moving to guidance. We are reiterating our annual revenue guidance of $126 million to $128 million. For the fourth quarter, we expect revenue to be in the range of $29.5 million to $31.5 million. We are raising our full year adjusted EBITDA margin guidance to 27%, reflecting our cost management and operational efficiency.

To wrap up, although the hiring environment over the past 2-plus years has impacted our revenue growth, we remain optimistic about the road ahead. We anticipate the record-breaking defense budget will be a growth driver for CJ and that companies across all industries will steadily increase their investments in technology initiatives, creating a strong growth opportunity for both ClearanceJobs and Dice.

We remain focused on strengthening our industry-leading solutions, optimizing our go-to-market strategy, and executing with efficiency, ensuring we are well positioned to capitalize on the opportunities that lie ahead.

And with that, let me turn the call back to Art.

Thank you, Greg. I want to thank all of our employees once again for their outstanding work this quarter. It has been a pleasure to be part of such a great team. That said, we are happy to answer your questions.

[Operator Instructions]

And our first question today comes from Gary Prestopino from Barrington Research.

Several questions, but I won't ask them all at one time, somebody else can get in the queue. But the Dice margin expansion is just fantastic. And I guess there's no one-timers or anything in there, right? That is just pure adjusted EBITDA numbers quarter-to-quarter.

So yes, Gary, I'll take that. There are a few, I would call, true-ups in there. And so really, what's driving that is we had some headcount vacancies during the third quarter that have now largely been backfilled. And then we also had a few what I would call year-to-date expense true-ups that were the result of some of our margin changes throughout the year and forecast on the revenue side.

And then also, as it relates to Dice, the tech team had a very efficient quarter. Therefore, there was more costs allocated to the capitalized development costs in the quarter as opposed to operating expenses. And really, that was a result of the delivery of the DX platform that we've been talking about that was delivered in September and another release in October.

And so that team really zeroed in. And as a result, there was a classification from OpEx down to capitalized development. But from a dollar perspective, there was no change to free cash flow on that. So I would expect that we're going to return to a little bit more of a normalized margin on Dice next quarter.

And what would that be?

So on Dice, we had been running in the mid-20s. So I would say we're going to stay in that range.

Okay. Yes. Okay. That's helpful. And then -- what was the write-off for $9 million? Was that in Dice, ClearanceJobs or...

Yes. It was the Dice trade name, which is directly related to Dice revenue. Trade name valuation uses a technique called a relief of royalty rate. And so you apply a third-party royalty rate to a revenue stream and discount that back. And so that's the nature of that test that has to be done every year and it resulted in impairment in this case, given the revenue declines that Dice has experienced. It's...

Okay. And then. Lastly -- yes. Okay. And I'll let somebody jump in. Capitalized development, you're looking at $7 million to $8 million for this year. Given what's going on in the market, particularly with Dice, do you see that, that changes in any way to the upside in next year?

Our spending on cap dev will get better next year as in decrease?

Okay.

Is that you're question...

Are you talking about...

Yes, yes. I'm just -- get an idea if you're kind of a steady state with all that's going on in the market and then all you've done.

Yes. I don't anticipate we're going to have a significant decrease next year because our teams are pretty well, I think, put together now. I think we have the right staffing levels. And so we'll continue largely at a level similar to what you would see this year, maybe slightly less, given that the first part of the year, we had more employees before the restructure that happened in June.

And our next question comes from Zach Cummins from B. Riley.

This is Ethan Widell calling in for Zach Cummins. I guess to start with the -- I think you said [17%] bookings declined from government volatility, maybe can you speak to how much of that impact you're seeing from government shutdown versus maybe government efficiency initiatives or just broader volatility? And how do you view that dynamic being offset going forward in light of the robust defense budget?

So ultimately, I think that we have seen a lot of the smaller and midsized defense contractors become more conservative over the last let's say, 3 to 6 months. We're entering a period of time right now, specifically in December and January, where we have seasonal high amount of our larger enterprise bookings take place. And these are with firms like Lockheed and Raytheon and Booz Allen Hamilton. They are actually feeling much more bullish because they can obviously withstand the government shutdown. They could withstand kind of the turbulence of the market in general. They have larger balance sheets.

So I personally think that we're getting now to the point where people acknowledge that the $1.1 trillion budget is going to be a big benefit to the defense establishment in the United States in total. We mentioned also the impact of NATO spending is positive for the U.S. military establishment.

I would say that we have to get to the actual bills being passed and signed into law by President Trump. So there's still a process of reconciliation between the House bill, the Senate bill, and they've got to be debating this. They have to essentially make sure that the reconciliation process happens. This year, it took until February, March for the reconciliation to take place. So we don't really have an estimate as to when this is going to happen for fiscal year 2026.

But there seems to be more urgency, I have to say, also with the administration. The articles you read just about every day indicate that Secretary Hegseth wants speed to be part of the equation for getting more military gear and weaponry and preparedness into the hands of our war fighters.

Got it. That's some helpful color there. And then in terms of the new platform migration, it's nice to see that you're seeing traction there. I guess, are there any particular actions that need to be taken to onboard the remaining customers that you have by first quarter? And do you expect any uptick in churn with your final customers on the legacy platform?

So I would say that much like any major technology implementation, any feature that's delivered on either one of the platforms. We always make the migration to smaller -- of our smaller customers first because it's just a risk-off kind of way of kind of moving through waves of customer migrations.

And so we've had a very good experience with those customers moving over. We've moved over half of them. I personally do not perceive that there is churn risk with the remainder of the customers that we move. Now they become the mid- and large-sized customers. So the stakes are higher, but I think that we've also honed the process by virtue of these small customer migrations.

Our next question comes from Max Michaelis from Lake Street.

A few for me. First, I kind of want to start with just the macro in general. I know you said Dice seems to be stabilizing. Play devil's advocate just a little bit here. The bookings seem to -- bookings decline seemed to increase from last quarter, so down 17% versus down 16%. Can you kind of characterize the stabilization you are seeing in the market, just to kind of give me a better sense?

That's a good point to say that it ticked up by 1 percentage point versus the last quarter. I would say the 2 things that are giving me confidence personally, and then I'll turn it over to Greg, are that we are seeing this slow and steady increase in the number of new tech job postings, and they are very much AI related.

So I believe that, that is indicative that the United States economy is moving towards one that is going to accept AI at ever larger scale. And then I'd say the third quarter is traditionally our smallest renewal book for the business, and it consists of our smaller customers. So I don't think that it's necessarily a matter of the percentage point decrease that really should be focused on. But Greg, do you have additional thoughts?

Yes. The one other thing I'd mention is the amount of inbound opportunities has started to pick up a bit. That doesn't necessarily translate quite yet to bookings, but there is a little more activity in that area, too, there has been for a while.

Makes sense. And you brought up AI. What percentage of your job postings on your platform? And maybe I know a lot of postings probably mention AI, but how many are actually related to an AI-related job? I guess, I don't know how to characterize that, but I'll let you take it.

So over 50% as of October are related to an AI project. So the person is being hired specifically to tackle an AI project for the firm that's hiring them. And that's grown from 25% at the beginning of the year and 10% at the beginning of 2024. So it is a very significant trend from our perspective.

Wow, that's a lot. And then the last one for me. It's a little -- if we look out kind of into the future, I know you guys acquired AgileATS a few months ago. But I mean, is there any other opportunities out in the GovTech space that you guys can go after? That's it for me.

Yes, that's a great question. I would say that we are evaluating a number of them. We think that CJ is a great platform. It has a great reputation with its customer community, has high credibility, has always been the platform of choice for anybody that is hiring cleared technology professionals.

So I do think that there are adjacencies. In fact, we always show a diagram to our Board that says that talent sourcing is just one part of the whole end-to-end process for hiring an individual, onboarding them and then managing them in the cleared context or any context. So I think that there will be more opportunities for us in the future, yes.

[Operator Instructions] Our next question comes from Kevin Liu from Kevin Liu & Company.

Maybe just starting with CJ, and I apologize if you addressed this in your prepared remarks, I joined a little bit late. But can you put a finer point in terms of how kind of renewal activity versus new business activity has kind of trended since the shutdown? And then your sense as to any sort of pent-up demand that could come through, assuming the shutdown ends shortly?

I think those are the exact right questions to ask. I would say we have seen a solidification of renewal rates in third quarter and even moving into fourth quarter. Our bigger customers definitely feel bullish about the future. And as I kind of indicated in one of the answers, they have the balance sheets to withstand whatever kind of a government shutdown we actually endure.

It's been the smaller and medium-sized customers that have been more challenged even with new business activity. But I'd say new business activity has picked up, and we have seen bigger pipeline than we have in a long time. Speaking to the second part of your question, which is I think that if -- once we get back to the business of running the government, I do think -- and we have to have a defense bill passed or actually, it's a multitude of different bills that constitute the defense budget, then there will be more activity, more projects that will allow these smaller defense contractors to feel really good about where they stand with regard to their future success and therefore, their willingness to purchase a platform like ClearanceJobs.

Got it. And maybe switching gears to the new Dice platform. Can you talk -- I know it's still early days, but maybe talk a little bit about what you're seeing in terms of new customer signings and in particular, how that kind of impacts your cost per acquired customer? And then anything notable in terms of customers that have migrated over and kind of their renewal rates or upsell potential?

Yes. I think that, obviously, this is pretty new for us. And I have to say that with regard to the idea of swiping a credit card, what we found is that the customers are less willing to do that for an annual subscription, even the lowest tier of package because it involves roughly about $6,000 to $7,000.

And so that's a large charge at one point in time. Once we rolled out the monthly option, which, I mean, as you're well aware, is part of a lot of different B2B and B2C experiences, that's when we saw the number of people signing up start to escalate. So $650 for a month worth of Dice seems like it's a lot more tolerable, a lot more kind of like from a psychology perspective, more acceptable. So that's what we've seen so far.

I know that Greg is working on how to essentially report that for the future because most of our reporting metrics in the past have been associated with subscription activity. We do have what we call transactional or nonsubscription activity, but I think that's going to be a part of how we essentially report progress in the future as a lot of people will be taking, especially new customers, this monthly option. But Greg, do you have any additional thoughts?

Yes. I would just point out that at this stage, we haven't advertised anything new around the platform, and that is going to get kicked off this week. So we're very interested to see how that takes off with an advertising campaign that's coming up. But we're getting new customer relationships on there literally every day with no advertising, kind of no focus on it yet. So it's only been out there a few weeks, and I think early results are pretty good in that respect.

Yes. Interesting. And just so I can clarify, it sounds like your current reporting metrics around customer recruitment packages since that's on an annual basis, you're not including any of these customers.

Yes. We're working out still the kind of fine-tuning the best way to report that information. If you think about a self-service versus a managed customer relationship, for instance, it's going to change a little bit on how we think about the business and how we report it through our calls and through investors and analysts. So we'll be forthcoming with that probably in our Q1 call -- or call in February.

Right. And just lastly for me, it's good to see the buyback authorization the other day. Can you talk a little bit about kind of your appetite for being aggressive on that, given where the stock price is currently and trying to balance that with some of the ongoing uncertainty, both with the shutdown as well as the macro conditions?

Yes. There's always a balance with capital allocation, of course. And our Board is comfortable with this 1x leverage. And so we're going to continue to target in that neighborhood. We're a bit under it right now. We're a bit over it last quarter, I think. And so we're comfortable with this $5 million plan. And it definitely we'll keep -- continue to evaluate as we move through the next couple of quarters and as we evaluate our 2026 plan and kind of see where it takes us. But right now, I think we're pretty comfortable with that mix.

And with that, ladies and gentlemen, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Art Zeile for any closing remarks.

Thank you, operator, and thank you all for joining us today. And as always, if you have any questions about our company or would like to speak with management, please reach out to Todd Kehrli, and he will assist in arranging a meeting.

And thank you, everyone, for your interest in DHI Group. Hope you have a great day and week to come.

And the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.

Good day, and welcome to the DHI Group, Inc. Second Quarter 2025 Financial Results Conference Call. Please. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Todd Kehrli with PaondaleWilkinson. Please go ahead, sir.

Thank you, operator. Good afternoon, and welcome to DHI Group's Second Quarter Earnings Conference Call for 2025. Joining me today are DHI's CEO, Art Zeile; and CFO, Greg Schippers. Before I hand the call over to Art, I'd like to address a few quick items. This afternoon, DHI issued a press release announcing its financial results for the second quarter of 2025. The 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 the federal securities laws. 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 the risks and uncertainties described 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, on today's call, management will reference specific financial measures, including adjusted EBITDA, adjusted EBITDA margin, free cash flow and non-GAAP earnings per share, which are not prepared in accordance with U.S. GAAP. Information regarding these non-GAAP measures and reconciliations to the most directly comparable GAAP measures are available in our earnings release, which can be found again on our website at dhigroupinc.com in the Investor Relations section. I'll now turn the call over to Art Zeile, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone. Thank you for joining us today. I want to begin with a brief overview of DHI Group, who we are, the problems we solve and why our role is more important than ever in today's tech hiring environment. DHI Group owns ClearanceJobs and Dice, which are platforms for finding and engaging with top tech talent, including engineers, software developers, data scientists, cybersecurity experts and more. With over 9 million tech professional profiles on our 2 platforms, we use AI-powered tools and our proprietary skills algorithm to connect employers with the most qualified candidates for their job openings.

Unlike generalist job boards, our platforms directly connect employers with highly skilled tech professionals based on each candidate's actual tech skills, making it faster and easier for employers to find the right talent for their specific needs. ClearanceJobs is the go-to platform for finding tech professionals with government security clearances. And Dice is our platform for finding non-cleared tech professionals. Trusted by recruiters who need to cut through the noise and hire top tech talent efficiently, ClearanceJobs and Dice are the secret weapon for smarter, faster tech hiring. Investors often make the mistake -- often mistake us for a staffing and recruiting firm, but we are an essential software tool used by employers and recruiters to find top tech talent for their open positions.

Over 6,000 employers and staffing companies subscribe to our 2 SaaS platforms, generating over 90% recurring revenue for DHI. We are excited to add to our list of essential recruiter tools with the acquisition of AgileATS, which we announced this afternoon. AgileATS is the only applicant tracking system in the market designed specifically for the cleared recruiting environment. Unlike generic ATS solutions, it was engineered from the ground up to meet the unique regulatory and compliance requirements of government contractors.

Our intent is to integrate AgileATS into the ClearanceJobs platform by the fourth quarter, offering a bundled solution to customers who want a seamless end-to-end hiring workflow. Based on our analysis, we believe approximately half of our CJ customers today meet the target profile for this solution.

And with over 10,000 employers of cleared tech professionals and a historical average contract value of around $7,000 annually, we see strong recurring revenue potential, both from our existing CJ customer base and from new customers in the broader GovTech market. Now I would like to provide an overview of our performance this quarter and outline the steps we've taken to improve our position moving forward.

First, looking at the company as a whole, despite an 11% decline in total revenue in the second quarter, we achieved adjusted EBITDA of $8.5 million with an adjusted EBITDA margin of 27%, well above consensus. From a segment perspective, ClearanceJobs continues to demonstrate its value as a highly profitable and strategically differentiated platform. CJ reported another quarter of strong profitability with adjusted EBITDA of $6.1 million and an adjusted EBITDA margin of 45%. CJ bookings remained flat year-over-year as we faced headwinds due to the uncertainty surrounding the federal budget negotiations.

But with the first $1 trillion-plus defense budget ever approved, CJ is well positioned for long-term growth because of its leadership role in the GovTech market. In fact, at a recent client event, one of our top customers said, "I wish many my other vendors had the same level of service and ROI that we get with CJ, reinforcing the indispensable value of CJ to recruiters in the cleared space. As expected, Dice faced a more challenging environment this quarter with bookings down 16% year-over-year. The feedback we received from customers was that they continue to be cautious in hiring and spending in general due to the uncertain economic environment. We continue to focus on aligning Dice's cost structure with current market conditions, achieving adjusted EBITDA of $4.2 million and an adjusted EBITDA margin of 23%.

Now let's examine the current state of the tech labor market, which serves as a key indicator of our revenue growth. Since the Federal Reserve began raising interest rates over 2 years ago, hiring activity has declined across nearly all sectors. National tech job postings are about 70% of what we would consider to be normal volume. According to CompTIA, tech job postings in the second quarter have remained fairly consistent, averaging $208,000 per month, which is about 6% higher year-over-year. The number of tech job postings appears to be stabilizing rather than declining despite economic uncertainty. Notably, AI continues to be a key driver of demand for tech professionals.

At the beginning of 2024, only about 10% of Dice jobs listed required AI skills. By June of this year, that percentage had increased to over 38%. We are seeing strong demand for roles involving AI solutions, especially among larger companies and consulting firms. As companies keep expanding their use of AI, the need for skilled technologists to effectively implement these projects will only increase. To support this anticipated increase in hiring, platforms like ClearanceJobs and Dice, along with their database of over 9 million tech professionals will become an essential tool for employers seeking to find, attract and hire the tech talent they need. Now let's explore our 2 brands and examine the opportunities each offers as we move forward. Let me start with ClearanceJobs, our marketplace for professionals with active federal security clearances.

As I mentioned earlier, we are very encouraged by positive signs for the defense sector. At $1.1 trillion, the U.S. defense budget for fiscal year 2026 is a 13.4% increase over the previous year's budget. Historically, the defense budget has grown roughly in line with GDP growth rates. Additionally, at the 2025 NATO Summit in the Hague, NATO leaders committed to having all member countries spend 5% of their GDP on defense and security. Traditionally, over 60% of EU defense spending goes to the U.S. military contractors, and we believe the EU will find it difficult to develop weapons manufacturing facilities quickly enough to meet this increased defense investment. These dynamics are promising for ClearanceJobs.

Our team recently analyzed the flow of funds into defense spending from 2010 to today and found it to be a statistically significant predictor of ClearanceJobs revenue growth. With over 10,000 employers of cleared tech professionals and more than 100 government agencies also needing cleared tech professionals, not to mention the EU opportunity I just outlined, CJ has a significant growth opportunity as government contractors look to staff new projects. Earlier this year, we implemented segment reporting to give investors better transparency into the financial performance of each of our 2 brands. With that information, it became clear that while ClearanceJobs was operating with very strong margins, Dice was falling below target levels. We knew we had to adjust Dice's cost structure to match current market conditions.

At the same time, we were completing a 2-year effort to create a brand-new Dice platform, which we call DX for digital experience that allows companies and recruiters to both sign up for a Dice subscription with a credit card and to renew and add products to their existing subscription. Both considerations led us to make the decision to downsize the Dice sales and engineering teams in June. This restructure is expected to save about $15 million annually, including approximately $12 million from operating expense reductions and around $3 million in capitalized development savings. With these changes, we expect a notable improvement in Dice's margins going forward.

Looking ahead, even though the past few years have been difficult, we remain optimistic about DHI Group's future. We have proactively taken steps to manage costs, invest in new products and position our brands for growth as market conditions improve. We expect increased defense spending in the U.S. and worldwide to drive CJ's bookings and revenue growth. At the same time, we anticipate Dice will rebound to growth once businesses begin to focus on growth initiatives alongside profitability and as tech professionals resume their usual pattern of changing jobs every 3 to 4 years. We also believe Dice is well positioned to benefit from the growing adoption of AI in U.S. businesses. It will be the tech professionals, those who incorporate generative AI into core business processes who will lead the next wave of automation and in turn, drive Dice's growth.

And as always, we remain committed to delivering solid profits and robust free cash flow for our shareholders. With that, I'll turn the call over to Greg to walk you through the financial results in more detail. Greg?

Thank you, Art, and good afternoon, everyone. Jumping right in, we reported total revenue of $32.0 million, which was down 11% on a year-over-year basis and roughly flat compared to the first quarter. Total bookings for the quarter were $27.1 million, down 10% year-over-year. Our total recurring revenue was down 7% compared to the prior year quarter and the bookings that drive our recurring revenue were down 10% for the quarter.

ClearanceJobs' revenue was $13.6 million, up 1% year-over-year and up 2% sequentially. Bookings for CJ were $11.6 million, flat year-over-year. We ended the second quarter with 1,868 CJ recruitment package customers, which was down 7% on a year-over-year basis and down 1% on a sequential basis. This reduction is attributable to churn with smaller customers, whereas the number of CJ accounts spending greater than $15,000 in annual recurring revenue increased versus prior year.

Also, as Art mentioned, CJ's new business teams were impacted by uncertainty surrounding the federal budget negotiations. Our average annual revenue per CJ recruitment package customer was up 7% year-over-year and up 1% sequentially to $26,000. Approximately 90% of CJ revenue is recurring and comes from annual or multiyear contracts. For the quarter, CJ's revenue renewal rate was 87% and CJ's retention rate was 103%. This solid retention rate demonstrates the continued value CJ delivers in the recruitment of cleared professionals. Dice revenue was $18.4 million, which was down 18% year-over-year and down 3% sequentially. Dice bookings were $15.6 million, down 16% year-over-year. We ended the quarter with 4,365 Dice recruitment package customers, which is down 3% from the last quarter and down 13% year-over-year.

Dice revenue renewal rate was up sequentially to 75% for the quarter, and its retention rate was 102%, the highest point in 2 years. The reduction in customer count in Dice's renewal rate from the prior year quarter is mainly attributable to churn with smaller customers spending less than $15,000 per year, representing 75% of the total churn on count and are more likely to be impacted by the difficult macro environment and uncertainty. We did lose 2 larger customers during the quarter, accounting for over $1 million in renewal bookings.

One was a staffing firm that has gone out of business, while the other was a consulting firm negatively impacted by the government hiring freeze, but has an opportunity for a win back in the future. Our average annual revenue per Dice recruitment package customer was $15,400, down 5% year-over-year and down 6% sequentially. As with CJ, approximately 90% of Dice revenue is recurring and comes from annual or multiyear contracts. Despite this churn, both brands onboarded notable clients in the quarter.

For Dice, this includes Atlas Air, the Central Intelligence Agency and Vitas Healthcare. ClearanceJobs landed Voyager Space Holdings, Technical Intelligence Solutions, [ Fiduius Healthcare ] as customers in Q2. Turning to operating expenses. Second quarter operating expenses decreased $500,000 to $33.3 million when compared to $33.8 million in the year ago quarter and includes a $4.2 million charge from the June Dice restructuring. Excluding that charge, our second quarter operating expenses declined $4.7 million or 14%.

Because of the difficult market conditions over the past 2.5 years, we have reduced costs through restructurings in the second quarter of 2023 in the third quarter of 2024 in January of this year and most recently in June. Together, these restructurings have reduced our annual operating expenses and capitalized development costs by approximately $35 million. For the quarter, we had an income tax benefit of $1.1 million on a loss before taxes of $1.9 million. Our tax rate for the quarter differed from our approximate statutory rate of 25% due to research and development tax credits. The new tax law signed in early July will once again allow for the immediate deduction of R&D costs which we expect will reduce our income tax payments while also providing an incentive for technology spending in the broader U.S. market, thereby increasing tech hiring.

In fact, a recent Wall Street Journal article estimates 2025 cash tax savings for larger tech companies to be in the billions. Moving on to the bottom line. We recorded a net loss of $800,000 or $0.02 per diluted share in the second quarter. For the prior year quarter, we reported net income of $900,000 or $0.02 per diluted share. Net loss for the quarter was impacted by the previously mentioned $4.2 million restructuring charge associated with our June restructuring, which included a reduction of approximately 25% of DHI's workforce. Non-GAAP earnings per share for the quarter was $0.07 compared to earnings of $0.06 per share in the prior year quarter. Diluted shares outstanding for the quarter were 45.4 million compared to 45.0 million in the prior year quarter.

Adjusted EBITDA for the second quarter was $8.5 million, a margin of 27% compared to $9.0 million or a margin of 25% in the second quarter a year ago. On a segmented basis, CJ adjusted EBITDA was very strong at $6.1 million in the second quarter, representing a 45% adjusted EBITDA margin as compared to adjusted EBITDA of $6.0 million or a margin of 44% in the prior year period. Dice's adjusted EBITDA was $4.2 million, representing a 23% adjusted EBITDA margin, which compares to $4.8 million and a 22% margin last year.

Operating cash flow for the second quarter was $6.9 million compared to $9.1 million in the prior year period. Free cash flow, which is operating cash flows less capital expenditures, was $4.8 million for the second quarter compared to $5.6 million in the second quarter of last year. Our capital expenditures, which consist primarily of capitalized development costs were $1.9 million in the second quarter compared to $3.2 million in the second quarter last year, a savings of $1.3 million or 41% -- capitalized development costs in the second quarter of 2025 were $300,000 for CJ and $1.6 million for Dice as compared to $700,000 for CJ and $2.6 million for Dice in the 2024 period.

Following the restructurings, we expect further reductions to our capitalized development costs in 2025 as compared to 2024. We are targeting total capital expenditures in 2025 to range between $7 million and $8 million as compared to $13.9 million last year. From a liquidity perspective, at the end of the quarter, we had $2.8 million in cash, and our total debt was $30 million under our $100 million revolver, resulting in leverage at 0.90x our adjusted EBITDA. We continue to target 1x leverage for the business. Deferred revenue at the end of the quarter was $46.9 million, down 10% from the second quarter of last year.

Our total committed contract backlog at the end of the quarter was $101.2 million, which was down 2% from the end of the second quarter last year. Short-term backlog was $77.4 million at the end of the second quarter, a decrease of $2.1 million or 3% year-over-year. Long-term backlog, that is revenue to be recognized in 13 or more months, was $23.8 million at the end of the quarter, a decrease of $400,000 or 2% from the prior year quarter. During the quarter, we repurchased 900,000 shares for $1.8 million, and we repurchased 1.8 million shares for $4.0 million since the end of last year. In January, our Board approved a $5 million stock repurchase program, which began in February and will run through February 2026.

At the end of the quarter, we had $2.5 million remaining on our $5 million repurchase program. As Art mentioned, the company recently purchased the assets of AgileATS. The purchase price is estimated at $2.0 million, which included an upfront payment of $1.5 million and another $500,000 that may be earned over the next 2 years.

Moving to guidance. Given the continued weakness in the overall tech hiring environment, we are reducing our annual revenue guidance from $131 million to $135 million to $126 million to $128 million. For the third quarter, we expect revenue to be in the range of $31 million to $32 million. With the recently announced restructuring, we are raising our full year adjusted EBITDA margin guidance to 26%, reflecting our continued cost management and operational efficiency. To wrap up, although the hiring environment over the past 2-plus years has impacted our revenue growth, we remain optimistic about the road ahead.

We anticipate the record-breaking defense budget will be a growth driver for CJ and the companies across all industries will steadily increase their investments in technology initiatives, creating a strong growth opportunity for both ClearanceJobs and Dice. In the meantime, we remain focused on strengthening our industry-leading solutions, optimizing our go-to-market strategy and executing with efficiency, ensuring we are well positioned to capitalize on the opportunities that lie ahead. And with that, let me turn the call back to Art.

Thanks, Greg. I want to thank all of our employees once again for their outstanding work this quarter. It is a pleasure to be part of such a great team. That said, we are happy to answer your questions.

And the first question will come from Zach Cummins with B. Riley Securities.

First question is really just around ClearanceJobs. I mean, can you talk about maybe a little bit of the bookings performance that we saw here in Q2 and the confidence that you see, whether that be just activity in the pipeline or just incremental updates you can give around confidence that bookings can return to growth here in the second half of the year?

Great question, Zach. And I think that the answer is that we did have a choppy second quarter for renewals as well as new business activity for CJ. And it was really a matter of the client psychology around the budget process as well as the after effects of Dodge. Doge was still in like a mode of looking at all government agencies even in the second quarter of this year. I'd have to say that everybody was on pins and needles to figure out whether or not we're going to have a budget that at one point was going to be 8% cost savings or a budget that we landed on, which is a $1.1 trillion budget. And as I reflected in my remarks, worth the equivalent of like 4 years of budget increase in one step. So everybody feels a lot more confident that the environment is much more stable. The psychology of fear and uncertainty is kind of past us at least once the budget was, in fact, approved.

Understood. And just building upon that a bit, I mean, can you speak to your acquisition of AgileATS -- kind of what hole does this plug in the ClearanceJobs platform? And how do you think about this in terms of maybe potentially accelerating either new customer acquisition or maybe even driving better retention and expansion within that existing base?

So great question. I appreciate you asking it. So an ATS, an Applicant Tracking System itself is a direct adjacency to what we do as a sourcing tool. Most of our larger customers have an ATS. Think of that as like SIMS or Greenhouse or Workday, and they are importing data from CJ into that Applicant Tracking System because the Applicant Tracking System is how they essentially schedule and manage their engagement with individual candidates. In this particular case, this is an Applicant Tracking System that was created by the founder of a cleared staffing company when he realized that none of the tools in the environment actually worked for cleared workers and they didn't work for a staffing modality.

And he did it from the ground up. He did it in the course of about 4 years. It's gone through multiple evolutions. We're going to combine the 2 products. That's not to say that you have to buy the ATS when you buy CJ, but you can do so at your choice. We believe it is a natural extension for ClearanceJobs. As I indicated in my part of the script, we have an ideal candidate profile setup, and that is cleared companies that have between 10 and 250 FTEs. If you think about that, the ones that do not have an Applicant Tracking System today comprise about half of our clearance jobs total customer population.

We think that the price point that it's selling at today is very achievable, which is $7,000 per subscription per year. So we feel very good about how we move forward with this in the future. It does have a number of different government compliance features that are built in so that if you are ever audited as a government contractor, you can immediately show them all of the compliance reports at the audit. It also has a toggle such that if you do not use the ATS for cleared workers, you don't see any of those compliance features. You don't see a field for clearance. And so it can be sold to Dice customers as well. And we fully intend to sell it through our Dice marketplace, which we intend to launch in the first quarter of 2026.

Got it. And just my final question is pivoting over to Dice. Just after all the restructuring actions and realizing that the current environment is still challenging on the tech hiring front, how do you think about just stabilizing that Dice business and maybe the potential time line as we think about continuing to refine that go-to-market motion and driving more consistent execution on that front?

So the way that I think about it is that we need to see the demand environment stabilize and improve. We do believe that it has stabilized. As I indicated, if you looked at the track record of CompTIA open tech postings for the first half of this year, it's been kind of a flat lake. It's been around 210,000 open tech job postings month after month, which actually paradoxically may seem negative. But from our perspective, it means that it's stabilizing. There is a question that's still in the market about the overall health of the economy. I think that, that's holding us back a little bit. But we're seeing encouraging signs in the staffing recruiting consulting segment. And if you recall from past conversations, that's the majority of our customers by count and by revenue for Dice.

And what I'm speaking to is that CompTIA does a forecast of the tech sector staffing revenue growth each year, and they believe that it's going to be flat or slightly positive this year. Robert Half just announced their revenue growth for their tech segment a couple of weeks back, and they indicated a 4% sequential growth in revenue compared to the first quarter of this year. And that's the first growth the first growth that they have seen since 2021 sequentially. Then the other 2 major staffing firms that have already announced, Kforce indicated a 1.4% sequential growth. That's the first growth that they have seen since the end of 2022.

Then finally, Adecco, which is our largest customer for Dice, they announced a very positive quarter in terms of revenue growth for the Americas division. So we're starting to see green shoots. Now that's not a prediction. That's not a forecast. We're not trying to be over our skis at all. But staffing recruiting is the essential customer segment for Dice, and it feels like we've stabilized and there are signs of improvement.

The next question will come from Gary Prestopino with Barrington Research.

Art, you mentioned something about AI driving job postings growth. What percentage of job postings now have AI versus -- you mentioned a number or a percentage. I didn't quite catch it versus where it was a couple of years ago.

So great question. So the reference statistic that I gave was the number of Dice jobs that required one or more AI skills inside of the job posting itself. You know that the job posting has minimum requirements and the preferred requirements. So at the beginning of last year, about 10% of our job postings on Dice required at least one AI skill. As of June of this year, that percentage became 36%. A full 1/3 of the job postings on our site require AI skills. It's that big of a surge. Now I personally think that a lot of CEOs and CFOs are both encouraging AI adoption inside of their companies, but also taking a watchful look at the rest of their competitive environment to see what everybody else is doing.

So we have this surge, but it's also an environment where even the question of what AI means to their particular businesses is playing out real time. But I do believe that we will see an ever-increasing number of job postings that require AI skills because the trend line is dramatic. And you can go to our July 2025 Dice jobs report, and you'll see the graph and it's up and to the right. I can't -- I don't see it plateauing.

Okay. And then shifting to AgileATS, a couple of questions here. First of all, did this company have any revenues to speak of?

Yes, although it's in the order of less than $1 million. And what we found is that they did not have a sales and marketing team. So think of it as the founder really focused on creating a solution for his own internal use and then selling it by word-of-mouth referral. And we believe that having the embedded 1,900 ClearanceJobs customers, most of which are fitting that ideal candidate profile, we will be the sales engine for the success of AgileATS for the future.

And again, as I kind of mentioned in my last comment to Zach Cummins, -- we also have the ability to sell this into our Dice customer set as well. And we believe, nevertheless, that it should be integrated with ClearanceJobs because it is focused primarily on finding and managing a cleared professional recruitment process. But again, we can flip a switch and take off all of those compliance features that don't apply to folks that aren't in the government, GovCon, GovTech space.

Okay. Will this in the back half of the year, diminish CJ's EBITDA margins given that there's minimal revenue? I'd assume there's got to be some expenses associated with it. So you got to get some revenue up and running here. Is that kind of a safe assumption to make?

Gary, this is Greg. Good talking with you. There really won't be a meaningful amount of revenue in the second half of the year. It will start to flow in more in 2026. But that said, the purchase price is one thing, but that isn't going to impact our margin from an EBITDA perspective. And there won't be a meaningful amount of costs associated with it either. So I wouldn't expect anything really to change the trajectory of CJ's margin for the second half of the year. -- over time, we do expect it to be incremental and accretive to CJ, though.

Right. So it's basically a SaaS software platform, right?

Yes. Yes. It's really a technology acquisition for the actual technology and software.

Okay. And you said it was like something like $7,000 per seat? Or do you just sell one license to an entire company and they use it across the spectrum across the enterprise?

So we do sell it by the seat and the $7,000 per year reference price was the average of what they were selling to date across their existing customer base. And so we just want to use that as a simple average, but you can actually even go on to the site itself. The pricing is freely available to look at in terms of what it costs per seat or a bundle of seats. So I would say we are anticipating that we can continue forward at least selling each individual deal at the $7,000 per year level.

Okay. And then if you could, because I'm a little fuzzy on what this thing does. Could you just kind of give us a very simple real-life explanation as to how this works with your clients, what it does for your clients?

Yes. I will tell you that it's almost like a CRM but in use by a recruiter. So think of it as a number of columns. And in each of those columns, you're tracking candidates for a particular job posting that you have. The first column says identified candidate. The second column says first e-mail outreach. The third column says first contact with the candidate. So you're moving candidates along in a pipeline so that they get to the end result of saying, yes, I'm ready to take your offer letter. But it literally is a pipeline for recruiters.

Okay. That helps because I was just trying to -- I was having difficulty trying to understand what the functionality was here.

Absolutely, Gary. app.

Your next question will come from Kevin Liu with K. Liu & Company LLC.

I wanted to start with CJ and kind of the selling environment as you see it moving forward. With obviously, the budget increase in place, do you think you could start to see benefits as early as Q3 here? Or would you wait until kind of the next government fiscal year to really start to see some acceleration on the new bookings front?

So that's a great question. And I'd say that we should be able to see an improvement in even Q3 because it will change the mentality of the customers. in the sense that they have more confidence of their future. Now we know that our best bet of getting new ClearanceJobs customers is if the system actually takes that budget and essentially puts it to bid and then announces awards. In fact, in that particular case, when a new award is delivered to a contractor, they're very urgently looking for a number of cleared workforce professionals.

We see them literally asking for tens, dozens, hundreds of cleared professionals at the same time because many of these contracts are built on a time and material basis, meaning that you don't really -- you don't have the opportunity to build the government until you have the people do the work. So you want the people in the seat to do the work. That's the real I would say, strongest benefit of the ClearanceJobs platform. But I think for existing customers, they will feel more confident even moving into Q3 and Q4 because this debate as to where the budget would land is behind us.

Understood. That's helpful. And then just on the Dice side of things, you guys touched on the 2 large contracts that went away. Was that the kind of main driver for ARPU being down year-over-year for Dice? Or have you seen other instances where customers are either kind of downsizing engagements or other sorts of impacts to the average revenue per customer number?

Yes. You're right. That was -- that is a big driver, 2 distinct customers. The renewal rate jumped up a bit in the quarter. So that is a positive and the retention rate was pretty good for the customers that did stay at 102% for the quarter. So there are some positive signs, and Art mentioned, I think, a little momentum with our staffing and recruiting businesses and the consulting businesses. So the bigger driver was definitely those 2 customers.

Got it. And then maybe just lastly on Dice as well. You guys mentioned kind of the new platform being launched. Can you just talk about the timing for when that work was completed or is expected to be completed and kind of what you expect the benefits to be over the longer term?

Sure. That's a great question. Like I said in my portion of the remarks, it's called digital experience. We've been working on it for 2 years with multiple teams. It allows for individual recruiters or companies to go to the Dice site and literally put in a credit card and start using Dice immediately. Now I will tell you that we launched this approximately a week ago, and it is now being launched in kind of a traditional product fashion where 10% of the page views get to see this capability, then it's going to move up to 20%, 50% and then 100%. So you're not going to be able to see it 100% of the time for a couple of weeks.

And we're still essentially getting the feedback from customers that use the site. But we think it's a revolutionary capability for Dice. Dice has always been a product that you had to go to a salesperson to get any aspect of the value proposition of Dice. So we are now allowing people to buy Dice from scratch using a credit card, like I said, going straight to the site, just like a lot of modern SaaS experiences. And we are moving approximately 90% of our customers to this platform over the course of the second half of the year. So once they get there, they're going to be able to renew themselves.

They're going to be able to upsell themselves because they're going to see all the other products in the product catalog. And they're also going to be triggered with certain opportunities. Like, for example, if you see that a job has been in place for 45 days, meaning that you're having a difficult time finding the right candidates for that job. We're going to say, try a boost. And a boost for us is the same thing as a sponsored ad in Google's nomenclature.

So you essentially go to the top of the sort order for searches when candidates make a search for that particular title or that particular skill set. So we're going to be able to use the platform in a much more thoughtful way to create upsell opportunities.

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

Thank you, operator, and thank you all for joining us today. As always, if you have any questions about our company or would like to speak with the management team, myself, Greg, anybody else, please reach out to Todd Kehrli, and he will assist in arranging a meeting. Thank you, and have yourself a great day.

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