DHI Group, Inc. (DHX) Earnings

Management highlights

### Core Business Strategy & Positioning - DHI’s mission is connecting employers to highly skilled technology professionals via two specialized platforms: Clearance Jobs (for cleared U.S. security professionals) and Dice (for general technology talent), with ~90% of total revenue recurring. - DHI is positioned to benefit from two durable secular trends: rising U.S. and allied defense spending, and growing demand for specialized technology talent to support AI development. ### Clearance Jobs Operational Highlights - Surpassed a company milestone of 2 million cleared candidate profiles this quarter, reinforcing its leading market position. - New business sales increased ~75% YoY, with the sales pipeline reaching its highest level in over five years. Demand is growing not only from traditional large defense primes, but also from new, non-traditional commercial defense entrants (over 10,000 new defense companies have entered the market in the past two years, creating significant greenfield expansion opportunity). - PSG, acquired earlier in 2026, exceeded performance expectations, with sequential revenue growth and deepening relationships with major government contractors. - Agile ATS (applicant tracking system) development and customer adoption is progressing steadily, with updated pricing and dedicated sales resources added to accelerate growth. - Premium candidate subscriptions for Clearance Jobs saw accelerated subscriber growth this quarter after the launch of a new mobile experience, creating a new long-term complementary monetization opportunity. ### Dice Operational Highlights - Dice is progressing along the expected recovery path from the 2024-2025 tech hiring slowdown, with sequential improvements in bookings decline trends, driven by an improved new business sales organization and rising activity from small and mid-sized AI-focused staffing firms. - Dice organizes candidate profiles around over 100,000 distinct technology skills, including more than 360 individual AI-related skills, giving it a competitive advantage over generalist networking platforms for precise talent matching. - Q2 2026 saw a 30% YoY increase in new tech job postings on the platform, with 75% of new postings now requiring at least one AI-related skill (up from 38% one year prior), confirming AI acts as a productivity multiplier that increases demand for skilled tech talent rather than replacing it. - Launched the Dice Model Context Protocol (MCP) server this quarter, enabling leading AI assistants like ChatGPT, Claude, and Gemini to directly interact with Dice's job database for improved candidate search experiences. - Adoption of Dice's new self-service digital experience platform is growing as marketing initiatives gain traction, with the platform's flexible monthly subscriptions expected to reduce churn among smaller customers. ### Financial & Capital Allocation Highlights - DHI generates consistent strong free cash flow, providing flexibility for growth investment and capital return to shareholders. - This quarter, DHI reduced outstanding debt while repurchasing ~700,000 shares under its $10 million share repurchase authorization. - Operating expenses decreased 17% YoY, demonstrating progress on targeted efficiency improvements.

Guidance

- Full year 2026 total DHI revenue guidance is maintained at $124 million to $128 million, with both Clearance Jobs and Dice each expected to contribute $62 million to $64 million in full year revenue. - Clearance Jobs bookings growth is expected to accelerate in the second half of 2026, with management targeting double-digit organic full year revenue growth for the segment. - The rate of YoY bookings decline for Dice is expected to continue improving in the second half of 2026, but Dice is not expected to return to positive YoY bookings growth in 2026. - Third quarter 2026 total revenue is expected to be $30 million to $32 million, with Clearance Jobs and Dice each expected to contribute $15 million to $16 million in revenue. - Full year adjusted EBITDA margin guidance is maintained at 25% for total DHI, and 40% for Clearance Jobs. Dice's full year adjusted EBITDA margin target has been raised upward to 24% from the prior target. - Full year 2026 capital expenditures are expected to be between $6 million and $7 million, down from $7.3 million in 2025. - Management expects Dice to return to flat to marginal YoY revenue growth in 2027, barring unexpected changes in the tech hiring environment.

Segment performance

DHI Group operates two core product segments: Clearance Jobs (CJ) and Dice. 1. Clearance Jobs: Q2 2026 revenue was $15.6 million, up 14% year-over-year (YoY) and 11% sequentially. Bookings hit $14.3 million, up 24% YoY. Acquired Point Solutions Group (PSG) contributed $2 million in revenue and bookings this quarter, for 7% organic YoY bookings growth. The segment ended the quarter with 1,735 recruitment package customers, down 7% YoY and flat sequentially. Average annual revenue per customer was $28,255, up 9% YoY and 4% sequentially. Revenue renewal rate was 87% and overall retention rate was 110%. Adjusted EBITDA for the segment was $6 million, with a 39% adjusted EBITDA margin. Clearance Jobs contributed 50% of DHI's total Q2 2026 revenue. 2. Dice: Q2 2026 revenue was $15.8 million, down 14% YoY and up 1% sequentially. Bookings were $13.4 million, down 14% YoY. The segment ended the quarter with 3,702 recruitment package customers, down 15% YoY and 3% sequentially. Average annual revenue per customer was $15,899, up 3% both YoY and sequentially. Revenue renewal rate was 66% and overall retention rate was 98%. Adjusted EBITDA for the segment was $4.2 million, with a 26% adjusted EBITDA margin. Dice contributed 50% of DHI's total Q2 2026 revenue.

Risks & headwinds

No new material risks were disclosed in this call. Management noted that forward-looking statements are subject to general risks and uncertainties that could cause actual results to differ materially, including risks detailed in DHI's prior SEC filings (Form 10-K, Form 10-Q). The key known risk referenced in the call is continued softness in the broader technology hiring environment, which has caused customer churn (disproportionately among small Dice customers) and suppressed Dice revenue growth over the past two years.

Analyst Q&A

• Q: What is the primary driver of Clearance Jobs' 110% retention rate: upselling, seat growth, or pricing increases? /

  A: Management states the strong retention is a combination of all three factors, but it is most heavily weighted to increased consumption of profile views, a core included feature of employer subscriptions. Profile views are the critical input for recruiters searching for candidates to fill open roles, so higher consumption directly demonstrates the core value customers get from the platform.

• Q: Is organic Clearance Jobs growth expected to accelerate in the second half of 2026 compared to Q2's 7% organic growth? /

  A: Management confirmed that accelerated organic growth in the second half is expected, and that the company remains on track to hit its target of double-digit organic revenue growth for the full year 2026. Gross margin compression in Q2 was tied entirely to the incremental labor costs from the PSG acquisition, and Q2 gross margin is not representative of the ongoing run rate.

• Q: After the 50% engineering team restructuring in 2025, is DHI still able to support ongoing product innovation? /

  A: Management explains the restructuring was intentionally timed after 80-90% of development for Dice's new self-service digital platform was completed. The remaining product roadmap can be supported with the smaller team, and the restructuring has not slowed delivery of new innovations, including the MCP server launch and Clearance Jobs product improvements delivered this quarter.

• Q: Is the new Dice MCP AI integration currently monetizable, and how will it impact Dice's monetization and go-to-market strategy long-term? /

  A: The current MCP server for candidate job search is not monetized; management launched it to meet the demand of Dice's highly tech-native candidate base for modern AI-powered search tools. Long-term, management plans to launch a paid MCP capability for recruiters to search candidate profiles via AI agents, which will be monetized behind Dice's paywall, with additional profile view consumption driving incremental revenue.