DHI Group, Inc. 2026 Q2 Earnings Call

Good afternoon, welcome to DHI Group's second quarter earnings conference call for 2026. Joining me today are DHI's CEO, Art Zeile, and CFO, Greg Skippers. 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 2026. 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, 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's current views concerning future events and financial performance and are subject to risks and uncertainties. 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 the reconciliations to the most directly comparable GAAP measures are available in our earnings release, which can be found on our website, again, 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, and good afternoon, everyone. We appreciate you joining us today. At DHI, our mission remains straightforward. We help employers connect with highly skilled technology professionals through our two platforms, ClearanceJobs and Dice, each of which plays a critical role in the technology hiring ecosystem. Our exclusive focus on technology occupations, combined with product innovation, creates a durable competitive advantage. Today, approximately 5,500 employers, staffing firms, and recruiting organizations subscribe to our platforms, and roughly 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 Martin, Booz Allen Hamilton, Leidos, Raytheon, and many others. During the quarter, ClearanceJobs surpassed the milestone of 2 million cleared candidate profiles, reinforcing our position as the industry's premier destination for cleared technology talent.

Dice is the largest technology-focused talent marketplace in the United States, built over more than 35 years with nearly 8 million technology profiles. Unlike generalized professional networking platforms, Dice organizes talent around more than 100,000 distinct technology skills, allowing recruiters to identify candidates based on the precise capabilities they need. Together, these two platforms have become essential tools for employers seeking highly specialized technology professionals. This quarter reflects a company executing against the strategy we outlined at the beginning of the year. ClearanceJobs is performing exceptionally well, while Dice is progressing along the recovery path we anticipated. We continue to invest in products to position us for long-term growth. Let me start with ClearanceJobs, which is the primary growth engine for DHI Group. During the quarter, ClearanceJobs delivered another period of strong performance, with bookings up 24% year-over-year and healthy profitability.

Even excluding the contribution from our Point Solutions Group acquisition, CJ generated 7% organic bookings growth, demonstrating the underlying strength of the business. Perhaps the most encouraging indicator has been new customer activity. New business sales at ClearanceJobs increased by approximately 75% compared with the prior year quarter. While our pipeline reached its highest level in more than five years, we are seeing demand not only from our traditional defense contractor customer base, but also from an expanding group of commercial companies pursuing government contracts for the first time. One example is Shield AI, which became the largest new business customer in ClearanceJobs history during the quarter. Wins like this reinforce the expanding opportunity for the platform as defense spending increases and the customer base broadens.

According to an analysis by the Center for Strategic and International Studies, roughly 10,000 new defense companies have entered the market over the past two years. These include venture-backed startups, commercial technology companies, and other non-traditional defense contractors that are increasingly competing for Department of Defense programs. As these companies grow, they need access to cleared engineers, cybersecurity professionals, and other highly specialized talent. That's creating an expanding addressable market for ClearanceJobs beyond the traditional large defense primes. Our existing customer relationships also remain healthy. Revenue retention rates within our mid-market and enterprise customer segments remain strong, demonstrating the value customers place on the platform. Point Solutions Group also exceeded our expectations. Since completing the acquisition earlier this year, revenue has grown sequentially as we expand relationships with major government contractors.

PSG remains an important strategic extension of our Expand the Mission strategy, enabling us to deepen customer relationships beyond recruiting into adjacent defense workforce solutions. Our AgileATS business made steady progress as well. We are adding customers at a healthy pace and recently introduced updated pricing and dedicated sales resources to further accelerate adoption over time. We are also encouraged by the adoption of our premium candidate subscription for CJ. While a relatively small contributor to revenue today, subscriber growth accelerated in the quarter following the launch of our mobile experience, particularly among younger professionals. We believe this represents an attractive long-term monetization opportunity that complements our existing employer subscription business. Stepping back, we believe ClearanceJobs is uniquely positioned to benefit from several long-term secular trends, including increased U.S. and allied defense spending, growing cybersecurity requirements, and the increasing need for highly specialized cleared technology professionals.

With over 10,000 employers and more than 100 government agencies in need of cleared tech professionals, combined with increased defense spending, CJ has a significant growth opportunity as government contractors look to staff new projects. We believe we're in the early stages of this growth cycle. Turning to Dice, we see encouraging signs that the technology hiring market is improving. Importantly, the business is largely in line with the recovery path we outlined at the beginning of the year. Bookings decline continue to improve sequentially with improved performance from our new business sales organization and increased activity among small and mid-size staffing firms supporting AI initiatives. As we move into next year, we expect renewals from our existing customer base to increasingly reflect the improving hiring environment, providing an opportunity for bookings growth as those contracts come up for renewal.

While overall revenue reflects the slower hiring environment of recent years, we remain encouraged by improving leading indicators across the market. Technology job postings are strengthening. In the second quarter, new technology job postings increased by about 30% year-over-year, with June approaching the 300,000 monthly posting level that has historically signaled improving hiring conditions. Even more important is the composition of those jobs. Approximately 75% of new technology job postings now require at least one AI-related skill, nearly doubling from roughly 38% one year ago. This directly challenges one of the most common misperceptions surrounding artificial intelligence. Rather than replacing technology professionals, AI is increasing demand for highly skilled engineers capable of designing, deploying, and maintaining AI systems. We see this reinforced by announcements from leading technology companies.

Google Cloud recently announced a significant expansion of its AI organization, including substantial investments in forward-deployed engineers to help enterprise customers implement agentic AI solutions. Similar hiring initiatives have been announced across the industry. At the same time, a growing number of industry leaders have acknowledged that earlier predictions of the widespread white-collar job displacement have not materialized. Instead, AI is increasingly seen as a productivity multiplier that requires more skilled technology talent, not less. This trend plays directly into Dice's strengths. Because Dice organizes candidates around highly specialized technology skills, including more than 360 individual AI-related skills, it enables employers to identify and match candidates based on specific skill sets, providing significantly greater precision than broad-based networking platforms. We are also expanding our product capabilities.

During the quarter, we launched the Dice Model Context Protocol, MCP Server, enabling AI assistants such as ChatGPT, Claude, and Gemini to interact directly with Dice's job database. This allows candidates to search naturally with AI, creating a more modern and differentiated user experience. We are also making progress with our self-service digital experience offering as marketing initiatives gain traction and customer adoption grows. From a financial perspective, DHI generates healthy free cash flow, providing significant flexibility in how we allocate capital. During the quarter, we reduced debt while repurchasing approximately 700,000 shares under our $10 million authorization, demonstrating our confidence in the company's long-term value. In summary, we believe DHI is uniquely positioned at the intersection of two powerful, durable trends, rising global defense spending and growing demand for highly specialized technology talent, particularly in AI.

ClearanceJobs is delivering strong growth and is benefiting from an expanding market opportunity as demand from government agencies and defense contractors accelerates. Dice is well-positioned to benefit from the recovery in tech hiring, supported by our differentiated skills-based approach and ongoing 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 in growth while returning 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 our financial results in greater detail.