DHI GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except per share data) | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ | 4,966 | | | $ | 1,540 | |
Accounts receivable, net of allowance for doubtful accounts of $759 and $733 | 22,205 | | | 18,385 | |
Income taxes receivable | — | | | 354 | |
Prepaid and other current assets | 3,557 | | | 4,177 | |
Total current assets | 30,728 | | | 24,456 | |
Fixed assets, net | 20,712 | | | 20,581 | |
Capitalized contract costs | 9,615 | | | 9,131 | |
Operating lease right-of-use assets | 6,445 | | | 6,888 | |
Investments | 3,932 | | | 3,769 | |
Investments, at fair value | 3,000 | | | 3,000 | |
Acquired intangible assets | 23,800 | | | 23,800 | |
Goodwill | 128,100 | | | 128,100 | |
Other assets | 2,087 | | | 1,853 | |
Total assets | $ | 228,419 | | | $ | 221,578 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current liabilities | | | |
Accounts payable and accrued expenses | $ | 11,916 | | | $ | 15,859 | |
Deferred revenue | 55,787 | | | 45,217 | |
Income taxes payable | 599 | | | — | |
Operating lease liabilities | 2,424 | | | 2,388 | |
Total current liabilities | 70,726 | | | 63,464 | |
Deferred revenue | 999 | | | 929 | |
Operating lease liabilities | 6,360 | | | 6,982 | |
Long-term debt, net | 32,767 | | | 22,730 | |
Deferred income taxes | 7,492 | | | 9,315 | |
Accrual for unrecognized tax benefits | 878 | | | 785 | |
Other long-term liabilities | 992 | | | 1,011 | |
Total liabilities | 120,214 | | | 105,216 | |
Commitments and Contingencies (Note 11) | | | |
Stockholders’ equity | | | |
Convertible preferred stock, $.01 par value, authorized 20,000 shares; no shares issued and outstanding | — | | | — | |
Common stock, $.01 par value, authorized 240,000; issued: 76,114 and 73,584 shares, respectively; outstanding: 49,211 and 48,756 shares, respectively | 762 | | | 738 | |
Additional paid-in capital | 244,065 | | | 241,854 | |
Accumulated other comprehensive loss | (53) | | | (61) | |
Accumulated earnings | 25,530 | | | 24,229 | |
Treasury stock, 26,903 and 24,828 shares, respectively | (162,099) | | | (150,398) | |
Total stockholders’ equity | 108,205 | | | 116,362 | |
Total liabilities and stockholders’ equity | $ | 228,419 | | | $ | 221,578 | |
See accompanying notes to the condensed consolidated financial statements. | | | |
DHI GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Revenues | $ | 34,334 | | | $ | 26,676 | |
| | | |
Operating expenses: | | | |
Cost of revenues | 4,099 | | | 3,702 | |
Product development | 3,942 | | | 3,602 | |
Sales and marketing | 13,941 | | | 9,771 | |
General and administrative | 7,766 | | | 6,154 | |
Depreciation | 3,958 | | | 3,631 | |
Total operating expenses | 33,706 | | | 26,860 | |
Operating income (loss) | 628 | | | (184) | |
Income from equity method investment | 155 | | | — | |
Interest expense and other | (245) | | | (195) | |
Gain on investment | — | | | 2,513 | |
Income before income taxes | 538 | | | 2,134 | |
Income tax expense (benefit) | (763) | | | 122 | |
Income from continuing operations | 1,301 | | | 2,012 | |
Income from discontinued operations, net of tax | — | | | 659 | |
Net income | $ | 1,301 | | | $ | 2,671 | |
| | | |
Basic earnings per share - continuing operations | $ | 0.03 | | | $ | 0.04 | |
Diluted earnings per share - continuing operations | $ | 0.03 | | | $ | 0.04 | |
| | | |
Basic earnings per share - discontinued operations | $ | — | | | $ | 0.01 | |
Diluted earnings per share - discontinued operations | $ | — | | | $ | 0.01 | |
| | | |
Basic earnings per share | $ | 0.03 | | | $ | 0.06 | |
Diluted earnings per share | $ | 0.03 | | | $ | 0.05 | |
| | | |
Weighted-average basic shares outstanding | 44,702 | | | 46,993 | |
Weighted-average diluted shares outstanding | 47,170 | | | 48,606 | |
See accompanying notes to the condensed consolidated financial statements.
DHI GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
(in thousands)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Net income | $ | 1,301 | | | $ | 2,671 | |
| | | |
Other comprehensive income: | | | |
Foreign currency translation adjustment | 8 | | | 297 | |
Total other comprehensive income | 8 | | | 297 | |
Comprehensive income | $ | 1,309 | | | $ | 2,968 | |
See accompanying notes to the condensed consolidated financial statements.
DHI GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Convertible Preferred Stock | | Common Stock | | Additional Paid-in Capital | | Treasury Stock | Accumulated Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total |
Shares Issued | | Amount | | Shares Issued | | Amount | | Shares | | Amount | |
Balance at December 31, 2021 | — | | | $ | — | | | 73,584 | | | $ | 738 | | | $ | 241,854 | | | 24,828 | | | $ | (150,398) | | | $ | 24,229 | | | $ | (61) | | | 116,362 | |
Net income | | | | | | | | | | | | | | | 1,301 | | | | | 1,301 | |
Other comprehensive income - translation adjustments | | | | | | | | | | | | | | | | | 8 | | | 8 | |
Stock-based compensation | | | | | | | | | 2,235 | | | | | | | | | | | 2,235 | |
Restricted stock issued | | | | | 932 | | | 9 | | | (9) | | | | | | | | | | | — | |
Performance-Based Restricted Stock Units eligible to vest | | | | | 1,773 | | | 17 | | | (17) | | | | | | | | | | | — | |
Restricted stock forfeited or withheld to satisfy tax obligations | | | | | (82) | | | (1) | | | 1 | | | 417 | | | (2,309) | | | | | | | (2,309) | |
Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations | | | | | (93) | | | (1) | | | 1 | | | 356 | | | (1,893) | | | | | | | (1,893) | |
Purchase of treasury stock under stock repurchase plan | | | | | | | | | | | 1,302 | | | (7,499) | | | | | | | (7,499) | |
Balance at March 31, 2022 | — | | | $ | — | | | 76,114 | | | $ | 762 | | | $ | 244,065 | | | 26,903 | | | $ | (162,099) | | | $ | 25,530 | | | $ | (53) | | | $ | 108,205 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Convertible Preferred Stock | | Common Stock | | Additional Paid-in Capital | | Treasury Stock | Accumulated Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total |
Shares Issued | | Amount | | Shares Issued | | Amount | | Shares | | Amount | |
Balance at December 31, 2020 | — | | | $ | — | | | 71,233 | | | $ | 714 | | | $ | 233,554 | | | 20,013 | | | $ | (132,150) | | | $ | 53,971 | | | $ | (28,519) | | | $ | 127,570 | |
Net income | | | | | | | | | | | | | | | 2,671 | | | | | 2,671 | |
Other comprehensive income - translation adjustments | | | | | | | | | | | | | | | | | 297 | | | 297 | |
Stock-based compensation | | | | | | | | | 1,758 | | | | | | | | | | | 1,758 | |
Restricted stock issued | | | | | 1,468 | | | 15 | | | | | | | | | | | | | 15 | |
Performance-Based Restricted Stock Units eligible to vest | | | | | 813 | | 8 | | | | | | | | | | | | 8 | |
Restricted stock forfeited or withheld to satisfy tax obligations | | | | | (204) | | | (2) | | | | | 369 | | | (984) | | | | | | | (986) | |
Performance-Based Restricted Stock Units forfeited or withheld to satisfy tax obligations | | | | | (39) | | | — | | | | | 139 | | (357) | | | | | | | (357) | |
Purchase of treasury stock under stock repurchase plan | | | | | | | | | | | 590 | | | (1,546) | | | | | | | (1,546) | |
Balance at March 31, 2021 | — | | | $ | — | | | 73,271 | | | $ | 735 | | | $ | 235,312 | | | 21,111 | | | $ | (135,037) | | | $ | 56,642 | | | $ | (28,222) | | | $ | 129,430 | |
See accompanying notes to the condensed consolidated financial statements.
DHI GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands) | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Cash flows from (used in) operating activities: | | | |
Net income | $ | 1,301 | | | $ | 2,671 | |
Adjustments to reconcile net income to net cash flows from (used in) operating activities: | | | |
Depreciation | 3,958 | | | 4,096 | |
Deferred income taxes | (1,823) | | | (304) | |
Amortization of deferred financing costs | 37 | | | 37 | |
Stock-based compensation | 2,235 | | | 1,758 | |
Income from equity method investment | (155) | | | — | |
Gain on investment | — | | | (2,513) | |
Change in accrual for unrecognized tax benefits | 93 | | | 59 | |
Changes in operating assets and liabilities: | | | |
Accounts receivable | (3,820) | | | (3,345) | |
Prepaid expenses and other assets | 386 | | | 629 | |
Capitalized contract costs | (483) | | | (794) | |
Accounts payable and accrued expenses | (3,941) | | | (6,270) | |
Income taxes receivable/payable | 954 | | | 1,127 | |
Deferred revenue | 10,640 | | | 9,351 | |
Other, net | (164) | | | (78) | |
Net cash flows from operating activities | 9,218 | | | 6,424 | |
Cash flows from (used in) investing activities: | | | |
Purchases of fixed assets | (4,091) | | | (3,703) | |
Net cash flows used in investing activities | (4,091) | | | (3,703) | |
Cash flows from (used in) financing activities: | | | |
Payments on long-term debt | (4,000) | | | (5,000) | |
Proceeds from long-term debt | 14,000 | | | 5,000 | |
Payments under stock repurchase plan | (7,499) | | | (1,669) | |
Purchase of treasury stock related to vested restricted and performance stock units | (4,202) | | | (1,343) | |
Net cash flows used in financing activities | (1,701) | | | (3,012) | |
Effect of exchange rate changes | — | | | (30) | |
Net change in cash and cash equivalents for the period | 3,426 | | | (321) | |
Cash and cash equivalents, beginning of period | 1,540 | | | 7,640 | |
Cash and cash equivalents, end of period | $ | 4,966 | | | $ | 7,319 | |
| | | |
See accompanying notes to the condensed consolidated financial statements.
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of DHI Group, Inc. (“DHI” or the “Company”) have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and disclosures normally included in annual audited consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been omitted and condensed pursuant to such rules and regulations. In the opinion of the Company’s management, all adjustments (consisting of only normal and recurring accruals) have been made to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. Although the Company believes that the disclosures are adequate to make the information presented not misleading, these financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report on Form 10-K”). Operating results for the three-month period ended March 31, 2022 are not necessarily indicative of the results to be achieved for the full year.
Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the condensed consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Actual results could differ materially from management’s estimates reported in the condensed consolidated financial statements and footnotes thereto. There have been no significant changes in the Company’s assumptions regarding critical accounting estimates during the three-month period ended March 31, 2022.
On June 30, 2021, the Company transferred majority ownership and control of its eFinancialCareers ("eFC") business to eFC's management, while retaining a 40% common share interest. The eFC business was significant to the Company and the transfer was considered to be a strategic shift from the financial services industry and from the geographies eFC serves that had a major effect on the Company's operations. As a result, the eFC business was deconsolidated from the Company's consolidated financial statements as of June 30, 2021 and is reflected as a discontinued operation in the condensed consolidated balance sheets and the condensed consolidated statements of operations for all periods presented. The historical condensed consolidated statements of comprehensive income (loss), stockholders’ equity and cash flows have not been revised to reflect the effects of the transfer of control of eFC. For further information on discontinued operations, see Note 4, “Discontinued Operations.” Unless noted otherwise, discussion in the notes to the condensed consolidated financial statements pertain to continuing operations.
The Company allocates resources and assesses financial performance on a consolidated basis, as all services pertain to the Company's Tech-focused strategy. As a result, the Company has a single reportable segment, Tech-focused, which now includes only the Dice and ClearanceJobs brands, as well as corporate related costs. All operations are in the United States and the Company no longer has revenues and long-lived assets, which includes fixed assets and lease right of use assets, outside of the United States.
2. NEW ACCOUNTING STANDARDS
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current "incurred loss" model with an "expected loss" model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of a financial asset. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2022 for Smaller Reporting Companies. The Company is evaluating the expected impact of this standard on its consolidated financial statements.
3. FAIR VALUE MEASUREMENTS
The FASB ASC topic on Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value and requires certain disclosures for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. As a basis for considering assumptions, a three-tier fair value hierarchy is used, which prioritizes the inputs used in measuring fair value as follows:
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
•Level 1 – Quoted prices for identical instruments in active markets.
•Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets.
•Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, other assets, accounts payable and accrued expenses and long-term debt approximate their fair values. Investments, non-current that are carried at fair value use a discounted cash flow technique based on the probability of one or more possible outcomes, based on Level 3 inputs, which inputs and fair value did not change during the three-month period ended March 31, 2022. The fair value of the long-term debt was estimated using present value techniques and market based interest rates and credit spreads. The estimated fair value of long-term debt is based on Level 2 inputs.
Certain assets and liabilities are measured at fair value on a non-recurring basis. These assets include equity investments, operating right-of-use assets and goodwill and intangible assets which resulted from prior acquisitions. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable. Such instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment.
On June 30, 2021, the Company transferred majority ownership and control of its eFC business to eFC's management, while retaining a 40% common share interest. The Company valued its 40% interest in eFC utilizing a combination of a discounted cash flow and a market approach. The discounted cash flow included declining revenues for the years ending December 31, 2021 and 2022 as compared to the year ended December 31, 2020 and then increasing moderately. The discounted cash flow also included operating margin declines for the year ending December 31, 2022 compared to the year ending December 31, 2021 and then increasing moderately. The Company utilized a discount rate of 19.0%. The market approach included the analysis of data from transactions on guideline companies and applied multiples of those transactions to eFC's results.
4. DISCONTINUED OPERATIONS
As further described in Note 1, on June 30, 2021, the Company transferred majority ownership and control of its eFC business to eFC's management, while retaining a 40% common share interest. As a result, we have reflected eFC's financial results as discontinued operations in the condensed consolidated balance sheets and the condensed consolidated statements of operations for all periods presented on or before June 30, 2021.
The results of discontinued operations on the condensed consolidated statements of operations were as follows (in thousands):
| | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | 2021 |
Revenues | | | $ | 5,957 | |
Operating expenses | | | (5,275) | |
Operating income | | | 682 | |
Other income | | | 2 | |
Income before income taxes | | | 684 | |
Income tax expense | | | 25 | |
Net income | | | $ | 659 | |
| | | |
|
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Depreciation, fixed asset purchases and other significant non-cash items related to discontinued operations were as follows (in thousands):
| | | | | | | | | | | |
| | | Three Months Ended March 31, |
| | | 2021 |
Depreciation | | | $ | 465 | |
Purchases of fixed assets | | | $ | 124 | |
| | | |
Cash paid for amounts included in measurement of lease liabilities: | | |
Operating cash flows from operating leases | | | $ | 391 | |
5. REVENUE RECOGNITION
The Company recognizes revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts ratably over the service period. Customer billings delivered in advance of services being rendered are recorded as deferred revenue and recognized over the service period. The Company generates revenue from recruitment packages, advertising, classifieds, and virtual and live career fair and recruitment event booth rentals.
Disaggregation of revenue
Our brands primarily serve the technology and security cleared professions. The following table provides information about disaggregated revenue by brand and includes a reconciliation of the disaggregated revenue (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Dice(1) | $ | 24,634 | | | $ | 19,051 | |
ClearanceJobs | 9,700 | | | 7,625 | |
Total | $ | 34,334 | | | $ | 26,676 | |
| | | |
(1) Includes Dice and Career Events | | | |
Contract Balances
The following table provides information about opening and closing balances of receivables and contract liabilities from contracts with customers as required under Topic 606 (in thousands):
| | | | | | | | | | | | | | | | | |
| | As of March 31, 2022 | | As of December 31, 2021 | |
| | | | | |
Receivables | | $ | 22,205 | | | $ | 18,385 | | |
Short-term contract liabilities (deferred revenue) | | 55,787 | | | 45,217 | | |
Long-term contract liabilities (deferred revenue) | | 999 | | | 929 | | |
We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when customers are invoiced per the contractual billings schedules. As the Company's standard payment terms are less than one year, the Company elected the practical expedient, where applicable. As a result, the Company does not consider the effects of a significant financing component. Contract liabilities include customer billings delivered in advance of performance under the contract, and associated revenue is realized when services are rendered under the contract.
Receivables increase due to customer billings and decrease by cash collected from customers. Contract liabilities increase due to customer billings and are decreased as performance obligations are satisfied under the contracts.
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company recognized the following revenues as a result of changes in the contract liability balances in the respective periods (in thousands):
| | | | | | | | | | | |
| Three Months Ended |
| March 31, 2022 | | March 31, 2021 |
Revenue recognized in the period from: | | | |
Amounts included in the contract liability at the beginning of the period | $ | 20,940 | | | $ | 17,296 | |
The following table includes estimated deferred revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Remainder of 2022 | | 2023 | | 2024 | | 2025 | | Total |
Tech-focused | $ | 52,404 | | | $ | 4,092 | | | $ | 274 | | | $ | 16 | | | $ | 56,786 | |
6. LEASES
The Company has operating leases for corporate office space and certain equipment. The leases have original terms from one year to eight years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option. No leases include options to purchase the leased property. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We do not have any lease agreements with related parties.
The components of lease cost were as follows (in thousands):
| | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| | 2022 | | 2021 |
Operating lease cost(1) | $ | 509 | | | $ | 564 | |
Sublease income | (123) | | | (180) | |
Total lease cost | | $ | 386 | | | $ | 384 | |
| | |
(1) Includes short-term lease costs and variable lease costs, which are immaterial. |
Supplemental cash flow information related to leases was as follows (in thousands):
| | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| | 2022 | | 2021 |
Cash paid for amounts included in measurement of lease liabilities: | | | |
| Operating cash flows from operating leases | $ | 674 | | | $ | 1,003 | |
| | | | |
Right-of-use assets obtained in exchange for lease obligations: | | | |
| Operating leases | $ | — | | | $ | — | |
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Supplemental balance sheet information related to leases was as follows (in thousands, except lease term and discount):
| | | | | | | | | | | | | | |
| | March 31, 2022 | | December 31, 2021 |
Operating lease right-of-use-assets | $ | 6,445 | | | $ | 6,888 | |
| | | |
Operating lease liabilities - current | 2,424 | | | 2,388 | |
Operating lease liabilities - non-current | 6,360 | | | 6,982 | |
| Total operating lease liabilities | $ | 8,784 | | | $ | 9,370 | |
| | | | |
Weighted Average Remaining Lease Term (in years) | | | |
| Operating leases | 3.4 | | 3.6 |
| | | | |
Weighted Average Discount Rate | | | |
| Operating leases | 3.81 | % | | 3.80 | % |
The Company reviews its right-of-use ("ROU") assets for impairment if indicators of impairment exist. The impairment review process compares the fair value of the ROU asset to its carrying value. If the carrying value exceeds the fair value, an impairment loss is recorded. No impairment was recorded during the three-month periods ended March 31, 2022 and 2021.
As of March 31, 2022, future operating lease payments were as follows (in thousands):
| | | | | | | | |
| Operating Leases |
April 1, 2022 through December 31, 2022 | $ | 2,029 | |
2023 | 2,451 | |
2024 | 1,965 | |
2025 | 1,946 | |
2026 | 992 | |
2027 and thereafter | 85 | |
| Total lease payments | $ | 9,468 | |
Less imputed interest | 684 | |
| Total | $ | 8,784 | |
As of March 31, 2022 the Company has no additional operating or finance leases that have not yet commenced.
7. INVESTMENTS
Investments, Current, at Fair Value
Through its predecessor companies, the Company owned a minority interest representing less than 1% of the common stock of a technology company that completed an initial public offering ("IPO") and became publicly traded during the first quarter of 2021. Prior to the IPO, the Company had elected the measurement alternative in accordance with FASB ASC 321, Investments – Equity Securities. As of December 31, 2020, it was not practicable to estimate the fair value of its interest because there were no observable transactions for the investment. Accordingly, the investment was carried at its original cost, less impairments, which resulted in a carrying value of zero as of December 31, 2020. The investment was accounted for as an equity security, with realized and unrealized gains and losses included in earnings. During the first quarter of 2021, the Company recognized a $2.5 million unrealized gain on the investment. During the second and third quarters of 2021, the Company recognized unrealized losses of $0.7 million and $0.6 million, respectively, related to the investment. The investment was sold during the third quarter of 2021, and the Company recognized a realized gain of $1.2 million for the nine months ended September 30, 2021. Accordingly, the recorded value as of December 31, 2021 was zero.
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Investments, Non-current, at Fair Value
During the third quarter of 2021, the Company invested $3.0 million through a subordinated convertible promissory note (the "Note") of $3.0 million with a values-based career destination company that allows the next generation workforce to search for jobs at companies whose people, perks and values align with their unique professional needs. The Note earns interest at 6.00% and matures at the earlier of a Qualified Financing, as described in the Note, or settled in cash on or after August 20, 2022, at the option of the Company. Upon a Qualified Financing, the Company will convert its investment into shares of preferred stock at 80% of the per share value in the Qualified Financing. The investment is recorded as a trading security at fair value with realized and unrealized gains and losses included in earnings. The Note is recorded at $3.0 million as of March 31, 2022 and December 31, 2021 and there was no gain or loss included in earnings during the three months ended March 31, 2022.
Investments, Non-current
Rigzone is a website dedicated to delivering online content, data, and career services in the oil and gas industry in North America, Europe, the Middle East, and Asia Pacific. Oil and gas companies, as well as companies that serve the energy industry, use Rigzone to find talent for roles such as petroleum engineers, sales professionals with energy industry expertise and skilled tradesmen. On August 31, 2018, the Company transferred a majority ownership and control of the Rigzone business to Rigzone management, while retaining a 40% common share interest, with zero proceeds received from the transfer. The Company has evaluated the 40% common share interest in the Rigzone business and has determined the investment meets the definition and criteria of a variable interest entity ("VIE"). The Company evaluated the VIE and determined that the Company does not have a controlling financial interest in the VIE, as the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. The common share interest is being accounted for under the equity method of accounting as the Company has the ability to exercise significant influence over Rigzone. As accumulated earnings of the VIE have been approximately zero since the date of transfer, the investment is recorded at zero at March 31, 2022.
As further described in Notes 1 and 4, on June 30, 2021, the Company transferred majority ownership and control of its eFC business to eFC's management, while retaining a 40% common share interest with zero proceeds received from the transfer. The Company incurred approximately $0.1 million in selling costs and recognized a $30.2 million loss on the transfer in the second quarter of 2021, which included a $28.1 million charge related to accumulated foreign currency loss that was previously a reduction to equity.
eFC is a financial services careers website, operating websites in multiple markets in four languages mainly across the United Kingdom, Continental Europe, Asia, the Middle East and North America. Professionals from across many sectors of the financial services industry, including asset management, risk management, investment banking, and information technology, use eFC to advance their careers. The Company has evaluated the 40% common share interest in the eFC business and has determined the investment meets the definition and criteria of a variable interest entity ("VIE"). The Company evaluated the VIE and determined that the Company does not have a controlling financial interest in the VIE, as the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. The common share interest is being accounted for under the equity method of accounting as the Company has the ability to exercise significant influence over eFC. The investment was recorded at its fair value on June 30, 2021, the date of transfer, which was $3.6 million. The Company's equity in net assets of eFC as of June 30, 2021 was $2.2 million. The difference between the Company's recorded value and its equity in net assets of eFC is amortized against the recorded value of the investment in accordance with ASC 323 Investments - Equity Method and Joint Ventures. The amortization was not material for the three months ended March 31, 2022. The recorded value is further adjusted based on the Company's proportionate share of eFC's net income and is recorded three months in arrears. During the first quarter of 2022, the Company recorded $0.2 million of income related to its proportionate share of eFC's net income, net of currency translation adjustments and amortization of the basis difference.
At January 1, 2018, the Company held preferred stock representing a 10.0% interest in the fully diluted shares of a tech skills assessment company. During 2018, the skills assessment company completed an additional equity offering, lowering DHI's total interest to 7.6%. The Company did not adjust the recorded value of the investment because the shares issued under the new share offering were not similar to the Company's share rights. As of December 31, 2019 it was not practicable to estimate the fair value of the preferred stock as the shares are not traded. The investment was carried at its original cost of $2.0 million and was included in the other assets section of the condensed consolidated balance sheets. During the three months ended March 31, 2020, based on the investment's historical cash burn rate, uncertainty of its ability to meet revenue and cash flow projections, current liquidity position, lack of access to additional capital, and impacts from the COVID-19 pandemic, the
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Company determined the value to be zero. Accordingly, the Company recorded an impairment charge of $2.0 million during the first quarter of 2020. As of March 31, 2022, there have been no additional shares issued that were similar to the Company's share rights and the investment is recorded at zero as of March 31, 2022.
8. ACQUIRED INTANGIBLE ASSETS, NET
Considering the recognition of the Dice brand, its long history, awareness in the talent acquisition and staffing services market, and the intended use, the remaining useful life of the Dice.com trademarks and brand name was determined to be indefinite. We determine whether the carrying value of recorded indefinite-lived acquired intangible assets is impaired on an annual basis or more frequently if indicators of potential impairment exist. The impairment review process compares the fair value of the indefinite-lived acquired intangible assets to its carrying value. If the carrying value exceeds the fair value, an impairment loss is recorded.
As of March 31, 2022 and December 31, 2021, the Company had an indefinite-lived acquired intangible asset of $23.8 million related to the Dice trademarks and brand name. No impairment was recorded during the three-month periods ended March 31, 2022 and 2021.
The projections utilized in the October 1, 2021 analysis included increasing revenues at rates approximating industry growth projections. The Company’s ability to achieve these revenue projections may be impacted by, among other things, uncertainty related to COVID-19, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers. The October 1, 2021 analysis included operating margins during the year ending December 31, 2021 that approximate operating margins for the year ended December 31, 2020 and then increasing modestly. If future cash flows that are attributable to the Dice trademarks and brand name are not achieved, the Company could realize an impairment in a future period. The Company's operating results attributable to the Dice trademarks and brand name through March 31, 2022 and projections of future results have met or exceeded those included in the projections utilized in the October 1, 2021 analysis. In the October 1, 2021 analysis, the Company utilized a relief from royalty rate method to value the Dice trademarks and brand name using a royalty rate of 4.0% based on comparable industry studies and a discount rate of 12.5%.
The determination of whether or not indefinite-lived acquired intangible assets have become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the indefinite-lived acquired intangible assets. Fair values are determined using a profit allocation methodology which estimates the value of the trademarks and brand name by capitalizing the profits saved because the company owns the asset. We consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements. Changes in our strategy, uncertainty related to COVID-19, and/or changes in market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets. If projections are not achieved, the Company could realize an impairment in the foreseeable future.
9. GOODWILL
Goodwill for the Tech-focused reporting unit as of March 31, 2022 and December 31, 2021 was $128.1 million. There were no changes to goodwill from December 31, 2021 to March 31, 2022.
The annual impairment test for the Tech-focused reporting unit is performed on October 1 of each year. The results of the impairment tests indicated that the fair value of the Tech-focused reporting unit was substantially in excess of the carrying value as of October 1, 2021.
Results for the Tech-focused reporting unit for the fourth quarter of 2021 and the first quarter of 2022 and estimated future results as of March 31, 2022 have exceeded the projections used in the October 1, 2021 analysis. As a result, the Company believes it is not more likely than not that the fair value of the reporting unit is less than the carrying value as of March 31, 2022. Therefore, no quantitative impairment test was performed as of March 31, 2022. No impairment was recorded during the three-month periods ended March 31, 2022 and 2021.
The projections utilized in the October 1, 2021 analysis included increasing revenues at rates approximating industry growth projections. The Company’s ability to achieve these revenue projections may be impacted by, among other things, uncertainty related to COVID-19, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers. The October 1,
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2021 analysis included operating margins during the year ending December 31, 2021 that approximate operating margins for the year ended December 31, 2020 and then increasing modestly. If future cash flows that are attributable to the Tech-focused reporting unit are not achieved, the Company could realize an impairment in a future period. The discount rate applied for the Tech-focused reporting unit in the October 1, 2021 analysis was 11.5%. An increase to the discount rate applied or reductions to future projected operating results could result in future impairment of the Tech-focused reporting unit’s goodwill. It is reasonably possible that changes in judgments, assumptions and estimates the Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the goodwill of the Tech-focused reporting unit to become impaired. In addition, a future decline in the overall market conditions, uncertainty related to COVID-19, and/or changes in the Company’s market share could negatively impact the estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable future.
The determination of whether or not goodwill has become impaired is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results, such as forecasted revenues and earnings before interest, taxes, depreciation and amortization margins and capital expenditure requirements. Fair values are determined either by using a discounted cash flow methodology or by using a combination of a discounted cash flow methodology and a market comparable method. The discounted cash flow methodology is based on projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions as deemed appropriate. Factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements are considered. Additionally, the discounted cash flows analysis takes into consideration cash expenditures for product development, other technological updates and advancements to the websites and investments to improve the candidate databases. The market comparable method indicates the fair value of a business by comparing it to publicly traded companies in similar lines of business or to comparable transactions or assets. Considerations for factors such as size, growth, profitability, risk and return on investment are analyzed and compared to the comparable businesses and adjustments are made. A market value of invested capital of the publicly traded companies is calculated and then applied to the entity’s operating results to arrive at an estimate of value. Changes in our strategy and/or market conditions could significantly impact these judgments and require adjustments to recorded amounts of goodwill.
10. INDEBTEDNESS
Credit Agreement—In November 2018, the Company, together with Dice Inc. (a wholly-owned subsidiary of the Company) and its wholly-owned subsidiary, Dice Career Solutions, Inc. (collectively, the “Borrowers”), entered into a Second Amended and Restated Credit Agreement, as further amended in June 2021 (the “Credit Agreement”), which matures in November 2023, and replaced the previously existing credit agreement dated November 2015. The June 2021 amendment modified the credit agreement to allow for the disposition of the eFC business, removed the option to borrow in Euros and Sterling, and incorporated certain form updates. The Credit Agreement provides for a revolving loan facility of $90 million, with an expansion option up to $140 million, as permitted under the terms of the Credit Agreement.
Borrowings under the Credit Agreement bear interest, at the Company’s option, at a LIBOR rate or a base rate plus a margin. The margin ranges from 1.75% to 2.50% on LIBOR loans and 0.75% to 1.50% on base rate loans, determined by the Company’s most recent consolidated leverage ratio. The Company incurs a commitment fee ranging from 0.30% to 0.45% on any unused capacity under the revolving loan facility, determined by the Company’s most recent consolidated leverage ratio. The facility may be prepaid at any time without penalty.
The Credit Agreement contains various customary affirmative and negative covenants and also contains certain financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio. Borrowings are allowed under the Credit Agreement to the extent the consolidated leverage ratio, calculated on a pro forma basis, is equal to or less than 2.50 to 1.00. Negative covenants include restrictions on incurring certain liens; making certain payments, such as stock repurchases and dividend payments; making certain investments; making certain acquisitions; making certain dispositions; and incurring additional indebtedness. Restricted payments are allowed under the Credit Agreement to the extent the consolidated leverage ratio, calculated on a pro forma basis, is equal to or less than 2.00 to 1.00, plus an additional $5.0 million of restricted payments. The Credit Agreement also provides that the payment of obligations may be accelerated upon the occurrence of customary events of default, including, but not limited to, non-payment, change of control, or insolvency. As of March 31, 2022, the Company was in compliance with all of the financial covenants under the Credit Agreement.
The obligations under the Credit Agreement are guaranteed by two of the Company’s U.S. based wholly-owned subsidiaries and secured by substantially all of the assets of the Borrowers and the guarantors.
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The amounts borrowed as of March 31, 2022 and December 31, 2021 are as follows (dollars in thousands):
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Amounts borrowed: | | | |
Revolving credit facility | $ | 33,000 | | | $ | 23,000 | |
Less: deferred financing costs, net of accumulated amortization of $503 and $467 | (233) | | | (270) | |
Long-term debt, net | $ | 32,767 | | | $ | 22,730 | |
| | | |
Available to be borrowed under revolving facility, subject to certain limitations | $ | 57,000 | | | $ | 67,000 | |
| | | |
Interest rates: | | | |
LIBOR rate loans: | | | |
Interest margin | 1.75 | % | | 1.75 | % |
Actual interest rates | 2.25 | % | | 1.88 | % |
| | | |
Commitment fee | 0.30 | % | | 0.30 | % |
There are no scheduled principal payments until maturity of the Credit Agreement in November 2023.
11. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is subject to various claims from taxing authorities, lawsuits and other complaints arising in the ordinary course of business. The Company records provisions for losses when claims become probable and the amounts are reasonably estimable. Although the outcome of these legal matters, except as described below and recorded in the condensed consolidated financial statements, cannot be determined, it is the opinion of management that the final resolution of these matters will not have a material effect on the Company’s financial condition, operations or liquidity.
Tax Contingencies
The Company operates in a number of tax jurisdictions and is routinely subject to examinations by various tax authorities with respect to income taxes and indirect taxes. The determination of the Company’s liability for taxes requires judgment and estimation. The Company has reserved for potential examination adjustments to our provision for income taxes and accrual of indirect taxes in amounts which the Company believes are reasonable.
12. EQUITY TRANSACTIONS
Stock Repurchase Plans—The Company's Board of Directors ("Board") approved a stock repurchase program that permits the Company to repurchase its common stock. Management has discretion in determining the conditions under which shares may be purchased from time to time. The following table summarizes the Stock Repurchase Plans approved by the Board:
| | | | | | | | | | | | | | | | | |
| May 2020 to May 2021(1) | | Feb 2021 to Jun 2022(2) | | Feb 2022 to Feb 2023(3) |
Approval Date | May 2020 | | February 2021 | | February 2022 |
Authorized Repurchase Amount of Common Stock | $5 million | | $20 million | | $15 million |
| | | | | |
(1) During the first quarter of 2021, the Company completed its purchases under the plan, which consisted of 2.2 million shares for $5.0 million, effectively ending the plan prior to its original expiration date. |
(2) During the second quarter of 2021, the Company amended its $8.0 million stock repurchase program approved in February 2021 and allowed for the purchase of an additional $12.0 million of our common stock through June 2022, bringing total authorized purchases under the plan to $20.0 million. During the first quarter of 2022, the Company completed its purchases under the plan, which consisted of approximately 4.4 million shares for $20.0 million, effectively ending the plan prior to its original expiration date. |
(3) On February 15, 2022, the Company announced that its Board of Directors approved a new stock repurchase program that permits the purchase of up to $15 million of the Company's common stock through February 2023. |
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2022 the value of shares that may yet be purchased under the current plan was $13.1 million.
Purchases of the Company's common stock pursuant to the Stock Repurchase Plans were as follows:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Shares repurchased(1) | 1,302,226 | | | 589,899 | |
Average purchase price per share(2) | $ | 5.78 | | | $ | 2.62 | |
Dollar value of shares repurchased (in thousands) | $ | 7,525 | | | $ | 1,546 | |
(1) No shares of our common stock were purchased other than through a publicly announced plan or program.
(2) Average price paid per share includes costs associated with the repurchases.
There were 20,665 and 11,394 unsettled share repurchases as of March 31, 2022 and 2021, respectively.
Stock Repurchases Pursuant to the 2012 Omnibus Equity Award Plan—Under the 2012 Omnibus Equity Award Plan, as further described in note 13 to the condensed consolidated financial statements, the Company repurchases its common stock withheld for income tax from the vesting of employee restricted stock or Performance-Based Restricted Stock Units (“PSUs”). The Company remits the value, which is based on the closing share price on the vesting date, of the common stock withheld to the appropriate tax authority on behalf of the employee and the related shares become treasury stock.
Purchases of the Company’s common stock pursuant to the 2012 Omnibus Equity Award Plan were as follows:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Shares repurchased upon restricted stock/PSU vesting | 773,048 | | | 508,899 | |
Average purchase price per share | $ | 5.44 | | | $ | 2.64 | |
Dollar value of shares repurchased upon restricted stock/PSU vesting (in thousands) | $ | 4,202 | | | $ | 1,343 | |
13. STOCK-BASED COMPENSATION
Under the 2012 Omnibus Equity Award Plan, the Company has granted restricted stock and Performance-Based Restricted Stock Units (“PSUs”) to certain employees and directors. The Company also offers an Employee Stock Purchase Plan. Stock-based compensation disclosures within this footnote include expense and shares related to the eFC business through June 30, 2021.
The Company recorded total stock-based compensation expense of $2.2 million and $1.8 million during each of the three-month periods ended March 31, 2022 and 2021, respectively. At March 31, 2022, there was $18.1 million of unrecognized compensation expense related to unvested awards, which is expected to be recognized over a weighted-average period of approximately 1.5 years.
Restricted Stock—Restricted stock is granted to employees of the Company and its subsidiaries, and to non-employee members of the Company’s Board. These shares are part of the compensation plan for services provided by the employees or Board members. The closing price of the Company’s stock on the date of grant is used to determine the fair value of the grants. The expense related to restricted stock grants is recorded over the vesting period as described below. There was no cash flow impact resulting from the grants.
Restricted stock vests in various increments on the anniversaries of each grant, subject to the recipient’s continued employment or service through each applicable vesting date. Vesting occurs over one year for Board members and over two to four years for employees.
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A summary of the status of restricted stock awards as of March 31, 2022 and 2021 and the changes during the periods then ended is presented below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Three Months Ended March 31, 2022 | | Three Months Ended March 31, 2021 |
| Shares | | Weighted- Average Fair Value at Grant Date | | Shares | | Weighted- Average Fair Value at Grant Date |
Non-vested at beginning of the period | 3,371,832 | | | $ | 2.80 | | | 3,877,853 | | | $ | 2.49 | |
Granted | 932,500 | | | $ | 5.17 | | | 1,468,223 | | | $ | 2.62 | |
Forfeited | (81,714) | | | $ | 2.90 | | | (204,175) | | | $ | 2.76 | |
Vested | (1,098,127) | | | $ | 2.48 | | | (1,034,684) | | | $ | 2.58 | |
Non-vested at end of period | 3,124,491 | | | $ | 3.62 | | | 4,107,217 | | | $ | 2.50 | |
PSUs—PSUs are granted to employees of the Company and its subsidiaries. These shares are granted under two compensation agreements that are for services provided by the employees. The fair value of the PSUs is measured at the grant date fair value of the award, which was determined based on an analysis of the probable performance outcomes. The performance period is over one year and is based on the achievement of bookings targets during the year of grant, as defined in the agreement. The earned shares will then vest over a three year period, one-third on each of the first, second, and third anniversaries of the grant date, or if later, the date the Compensation Committee certifies the performance results with respect to the performance period.
There was no cash flow impact resulting from the grants.
A summary of the status of PSUs as of March 31, 2022 and 2021 and the changes during the periods then ended is presented below:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2022 | | Three Months Ended March 31, 2021 |
| Shares | | Weighted- Average Fair Value at Grant Date | | Shares | | Weighted- Average Fair Value at Grant Date |
Non-vested at beginning of the period | 1,593,775 | | | $ | 2.62 | | | 1,352,438 | | | $ | 2.50 | |
Granted(1) | 1,553,332 | | | $ | 3.77 | | | 990,000 | | | $ | 2.62 | |
Forfeited(1) | (93,341) | | | $ | 2.40 | | | (105,656) | | | $ | 2.14 | |
Vested | (928,717) | | | $ | 2.61 | | | (339,111) | | | $ | 2.58 | |
Non-vested at end of period | 2,125,049 | | | $ | 3.48 | | | 1,897,671 | | | $ | 2.54 | |
(1) PSUs granted for the three-month period ended March 31, 2022 includes 853,332 additional PSUs granted related to the bookings achievement for the performance period ended December 31, 2021. PSUs forfeited for the three-month period ended March 31, 2021 includes 48,633 PSUs forfeited related to the bookings achievement for the performance period ended December 31, 2020. |
Stock Options—The fair value of each option grant is estimated using the Black-Scholes option-pricing model. This valuation model requires the Company to make assumptions and judgments about the variables used in the calculation, including the fair value of the Company’s common stock, the expected life (the period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock, a risk-free interest rate and expected dividends. The expected life of options granted is derived from historical exercise behavior. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury rates in effect at the time of grant. The stock options vest 25% after one year, beginning on the first anniversary date of the grant, and 6.25% each quarter following the first anniversary. There was no cash flow impact resulting from the grants. No stock options were granted during the three months ended March 31, 2022 and 2021.
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
There were no options exercisable as of or during the period ended March 31, 2022. A summary of the status of options previously granted as of March 31 2021, and the changes during the period then ended, is presented below:
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2021 |
| Options | | Weighted-Average Exercise Price | | Aggregate Intrinsic Value |
Options outstanding at beginning of the period | 110,000 | | | $ | 7.40 | | | $ | — | |
Forfeited | (85,000) | | | $ | 7.38 | | | $ | — | |
Options outstanding at end of period | 25,000 | | | $ | 7.50 | | | $ | — | |
Exercisable at end of period | 25,000 | | | $ | 7.50 | | | $ | — | |
Employee Stock Purchase Plan—On March 11, 2020 the Company's Board of Directors adopted an Employee Stock Purchase Plan ("ESPP"). The ESPP was approved by the Company's stockholders on April 21, 2020. The ESPP provides eligible employees the opportunity to purchase shares of the Company's common stock through payroll deductions during six-month offering periods. The purchase price per share of common stock is 85% of the lower of the closing stock price on the first or last trading day of each offering period. The offering periods are January 1 to June 30 and July 1 to December 31. The maximum number of shares of common stock available for purchase under the ESPP is 500,000, subject to adjustment as provided under the ESPP. Individual employee purchases are limited to $25,000 per calendar year, based on the fair market value of the shares on the purchase date.
14. EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed based on the weighted-average number of shares of common stock outstanding. Diluted EPS is computed based on the weighted-average number of shares of common stock outstanding plus common stock equivalents, where dilutive. The following is a calculation of basic and diluted earnings per share and weighted-average shares outstanding (in thousands, except per share amounts):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Income from continuing operations | $ | 1,301 | | | $ | 2,012 | |
Income from discontinued operations, net of tax | $ | — | | | $ | 659 | |
Net income | $ | 1,301 | | | $ | 2,671 | |
| | | |
Weighted-average shares outstanding—basic | 44,702 | | | 46,993 | |
Add shares issuable from stock-based awards | 2,468 | | | 1,613 | |
Weighted-average shares outstanding—diluted | 47,170 | | | 48,606 | |
| | | |
Basic earnings per share - continuing operations | $ | 0.03 | | | $ | 0.04 | |
Diluted earnings per share - continuing operations | $ | 0.03 | | | $ | 0.04 | |
| | | |
Basic earnings per share - discontinued operations | $ | — | | | $ | 0.01 | |
Diluted earnings per share - discontinued operations | $ | — | | | $ | 0.01 | |
| | | |
Basic earnings per share | $ | 0.03 | | | $ | 0.06 | |
Diluted earnings per share | $ | 0.03 | | | $ | 0.05 | |
| | | |
| | | |
| | | |
|
|
|
DHI GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15. INCOME TAXES
The Company’s effective tax rate was (142)% and 6% for the three months ended March 31, 2022 and 2021, respectively. The following items caused the effective tax rate to differ from the U.S. statutory rate:
•A tax benefit of $0.8 million during the three months ended March 31, 2022, from the vesting or settlement of share-based compensation awards.
•A tax benefit of $0.5 million during the three months ended March 31, 2021, from the release of a valuation allowance on the Company's capital loss carryforward.