Welcome everyone to the DHI Group Third Quarter 2019 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Rachel Ceccarelli Director of Corporate Communications. Please go ahead.

Thank you, Andrea and good afternoon and welcome to DHI Group's third quarter fiscal 2019 financial results conference call. With me on today's call are DHI's Chief Executive Officer; Art Zeile and Chief Financial Officer Luc Grégoire. Before I turn the call over to Art, I would like to cover a few quick items. This afternoon, DHI issued a press release announcing its third quarter fiscal 2019 financial results. This 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'd like to remind everyone that on 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 Section 21E of the Securities Exchange Act of 1934. When used, the words anticipates, believes, expects, intend, future, and other similar expressions identify forward-looking statements. These forward-looking statements reflect DHI management's current views concerning to future events and financial performance and are subject to risks and uncertainties and actually results may differ materially from the outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from the actual results include delays in development, marketing, or sales and other 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, during today's call, management will be referring to certain financial measures, including adjusted revenues, adjusted EBITDA, and adjusted EBITDA margin, that are not prepared in accordance with U.S. GAAP. Information about reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release and on our website at www.dhigroupinc.com in the Investor Relations section. I will now turn the conference over to Art Zeile, CEO of DHI Group.

Thank you, Rachel. Good afternoon, everyone and welcome to our third quarter fiscal 2019 earnings conference call. We appreciate your interest in DHI. During the quarter, we continue to make progress towards returning the company to overall positive revenue growth. While we have not yet turned the corner from a revenue perspective, we have made significant headway in the third quarter by further strengthening our product offering and our go-to-market strategy, both of which are critical drivers for our future revenue growth. We believe these efforts are positioning DHI to become the industry leader in the growing market for matching technologists with employers. Now let me elaborate on some of the things we accomplished this quarter. Let's start with the progress we made in our product offer, as many of you know we have three platforms Dice, eFinancialCareers and ClearanceJobs. During this past year we have delivered more product innovation in Dice and eFinancialCareers than had been delivered in several years. We are proud of the progress we have made to date but we want to do more and we want to do it faster. During the third quarter, we began hiring additional engineering talent to help accelerate our product roadmaps. This quarter we launched two significantly enhanced candidate facing features on Dice, job search and job alerts, both utilize our proprietary technology skill data model to create a better job search experience for our candidates. This data model is a key differentiator against generalist recruiting tools and recently submitted for patent protection. With an improved search algorithm, filtering capabilities and more preferences tailored to users, our enhanced job search and job alerts features make it easier for technologist that find relevant jobs that fit their skills and requirements. The significant product improvements we have made to Dice over this past year including IntelliSearch, Candidate Match, pay-per-view pricing, job management and now job search and job alerts are delivering improved Dice engagement metrics for both clients and candidates. During the quarter we also continue to improve our eFinancialCareers platform by releasing our new recruiter profile and messaging features. The eFC recruiter profile allows recruiters to create rich profiles highlighting their interests, contact information and job postings they wish to share with candidates. It allows candidates and recruiters to engage in a multitude of new ways to create stronger relationships. Our eFinancialCareers messaging service allows recruiters and candidates to chat in real-time on the platform. These features were proven successful at ClearanceJobs and we are seeing the same positive engagement trends now on eFinancialCareers. These and the other unique features we have introduced over the past year are stepping stones for our transition from a jobber to becoming a dynamic marketplace for matching technologists and employers. ClearanceJobs continues to drive innovation. In the third quarter, ClearanceJobs released its new employer dashboard which focuses on delivering real-time user engagement metrics and uses automated intelligence powered by IntelliSearch to recommend new connections for both clients and candidates. Additionally, ClearanceJobs added 12 new curated groups, which are segmented discussion forums tailored to important career marketplace topics. These groups are designed to foster dialog, creating a stronger and more engaged community on the platform. As I stated in the past, ClearanceJobs is our most robust product offering from both the user experience and a future perspective. And it has generated solid double-digit revenue growth for many quarters. As such, we are taking the industry leading product features from ClearanceJobs and implementing them in the Dice and eFinancialCareers platforms. By creating more value for clients and candidates we are building the foundation from which we can begin to accelerate revenue growth. Looking ahead, we have a clear product roadmap in front of us for each of our platforms. We are working now to add recruiter profile and messaging to Dice and IntelliSearch and Candidate Match to eFinancialCareers. We expect those features to be live in the first half of next year. ClearanceJobs has a number of features planned for 2020 to advance the Cleared Network with a focus on further automating recruiter workflow. In addition to our product updates, we are seeing successful growth in our managed services offering. While still relatively small, this team's work is superb important because it delivers a full service solution for our commercial customers. Now let's talk about the second key driver to our future revenue growth, which is improving our go-to-market strategy. A few quarters ago, we established a new Dice commercial accounts team to test the concept of selling to customers who have their own internal recruiting teams. We are highly confident that this new approach to our go-to-market plan is working. Our market research and this team's performance have demonstrated this is a big opportunity for the company. We will be significantly expanding this team in 2020. With the studies conducted over the last two quarters, we believe that there are 10s of 1000s of specific commercial targets in tech and non-tech companies in our putting together sales territory plans to go after them. We are ready to accelerate this effort now that we have hired new sales leadership. Arie Kanofsky joined the company on October 23. Arie has demonstrated experience scaling high performance sales teams and as a background in selling software products within the recruitment industry. We are very excited to have Arie on board and we believe we are now back on track with our plan to drive top line growth in both Dice and the company as a whole. Our market research shows that the online recruiting industry is projected to grow over 7% annually from 2018 to 2023. And that the tech professional subset is forecast to grow faster at a rate of approximately 12% annually. We believe we have a better tool than our competitors for companies that are hiring technologists and are confident that with our improved product offering and go-to-market strategy we can grow our revenue at market rates. While this won't happen overnight, we are building the foundation upon which to achieve this growth. Lastly, we continue to see our candidate registration and surgical profile metrics improve as a result of improved marketing programs. The heart of our value proposition is delivering high-quality candidates to our clients. And in the third quarter, our digital marketing channels again drove significant growth in new candidate activity. In closing, we continue to be excited about the market opportunity in front of us. As the Wall Street Journal recently reported in their article on the most promising careers of the next decade three of the top 10 most promising careers are technology related. With the top one being application software developers. Over the next decade, the number of application software developers is expected to grow by 28%. The other two tech careers in the top 10 list are also expecting double-digit growth. We believe this highlights the opportunity we have in front of us and shows that we are in the right place at the right time. With that, let me turn the call over to Luc who will take you through our quarterly financials and then we'll take any questions you may have. Luc? Luc Grégoire: Thank you, Art, and good afternoon, everyone. As a reminder and for those on the call that may be new to our story since the end of 2017 and through the third quarter of 2018 we divested four non-core brands and closed our Dice Europe business. We're now solely concentrated on three set focus platforms as such today, my remarks and related revenue comparisons will refer only to the results of these remaining businesses. Jumping right in for the third quarter, we reported $37.2 million, which was flat both year-over-year and sequentially, excluding the impact of foreign exchange. Dice revenues were $22.9 million in the third quarter down 3% year-over-year and 1% sequentially. The stabilizing of Dice revenue represents an improved performance from the third quarter last year when revenue declined 6% on a year-over-year basis. We expect a significant product innovation we are delivering on Dice as well as our increasing investments in sales and marketing to drive improved performance and move into positive growth territory next year. The trend in Dice recruitment package customers has remained stable following many years of decline. We ended the third quarter in line with the first two with 6100 customers. Our renewal rate on customer count of 66% and our revenue renewal rate of 76% were both slides at the same period last year. Our average monthly revenue per recruitment package customers was up slightly year-over-year to $1131 or approximately $13,600 on an annual basis, which is significant as over 90% of our Dice revenues are recurring and come from recruitment package customers. The average contract length of these packages, have been steady at slightly over 12 months. Third quarter revenue for eFinancialCareers was $7.9 million, down 5% from the prior year or 2% excluding the impact of foreign exchange rates. The eFinancialCareers performance this quarter was negatively impacted by Brexit, where we saw a slowdown in recruiting volume across the U.K. and European financial industry because of the current uncertainty. The protests in Hong Kong were also slowing contributors to our contracting there. ClearanceJobs third quarter revenues were $6.3 million for an increase of 17% year-over-year. This continued solid double-digit revenue growth rate, which we've seen now for several years, is reflected on CJs strong product innovation and competitive differentiation. And we continue to see strong growth prospects for this platform going forward. Overall, the substantial changes we've made over to past year has help to stabilize our total revenue and laid a foundation we can build upon. As Art described, we're now adding the building blocks to increased innovation and sales, while these ongoing investments result in an immediate jump to our revenue growth rates we are confident that our plan once fully executed will put us in the position to generate sustained long-term revenue growth beginning next year. Looking to the fourth quarter, we expect our total revenue to remain around the third quarter level with stability at Dice that we continue to invest in more product innovation and begin the ramp up of our commercial sales organization and with continued strong growth on ClearanceJobs offsetting the continued geopolitical impacts on eFinancialCareers. Third quarter operating expenses were $31.9 million, representing a reduction of $5.2 million or 40% year-over-year, of which $1.9 million related to our divested business and the closure of Dice Europe last year. The decline in operating expenses and our remaining core business came from spending efficiencies generated from the expense reduction project, we discussed on the last few calls as well as the non-recurrence of the consulting fees related to that project. These efficiencies are helping fund the current ramp up of our sales and engineering capability. Also, helping our operating expense performance in this quarter was the greater proportion of product and engineering resources applied to discrete product development activities, which increased our capitalization rates. As Art mentioned, we're seeing good initial traction from the commercial accounting and with our new CRO on board, we intend to substantially add to our commercial account sales coverage over the next two quarters, which will drive increased sales expense. As discussed, we'll also be adding additional engineering talent to accelerate the deployment of our new features, which will drive some increased product expense and capital expenditures in the coming quarters. Tax expense for the third quarter was $700,000, reflecting an effective tax rate for the year-to-date period of 25%. Net income for the quarter was $4.4 million or $0.08 per diluted share against net income of $930,000 or $0.02 per diluted share a year ago. This quarter's earnings per share had one penny benefit from discrete tax items, while last year the rate was adversely impacted by $0.04 per diluted share from disposition related in other costs and a small book loss on the spin-off of Brazil. So excluding those items, on a normalized basis EPS for the quarter were $0.07, again $0.06 last year. Adjusted EBITDA margin for the third quarter came in at 23%, up two percentage points from the same quarter last year. For the full fiscal year, we continue to expect our adjusted EBITDA margin to come in at approximately 23%, even with our increased investment in sales and engineering capabilities. We generated $4.6 million of operating cash flow in the third quarter, representing a substantial increase of $4.2 million year-over-year with higher income and normalized invoicing having cycle through the more flexible billing practices that were introduced last year. Turning to our balance sheet, we expect the modest increase in the current run rate of capital expenditures in the fourth quarter as we continue to invest in innovation with an increase in product and engineering headcount. As a reminder, our capital expenditure is mostly made up of capitalized salaries of our development stuff. At the end of the quarter, our total debt was $8 million bringing our debt cash to $3.5 million. Deferred revenue at the end of the quarter was $51.1 million compared with $56.1 million, a year ago reflecting the more flexible billing practices introduced last year. As a remainder, deferred revenue represents the portion of our contracts that have been invoiced in advance of services to be delivered. It's important to note that, the current reduction in the freight revenue is not indicative of a slowing of our overall business, but rather merely a reduction of the portion of our contracts that are being invoiced upfront. When we had the unbilled portion of our contract to the revenue our committed contract backlog at the end of the quarter was actually slightly above end of the third quarter last year. We repurchased approximately 367,000 shares during the quarter at an average price of $3.46 leaving approximately $6 million remaining of the current $7 million buyback program, which runs through May 2020. We believe our buyback program is appropriate given in the current valuation and you can also help offset the dilutive impact of stock-based compensation. So to recap, we made significant progress this year, we stabilized the business, improved our profitability, delivered $10 million more in operating cash flow than last year and paid down a significant portion of our debt, and are supporting our stock with our buybacks. We've now laid a solid foundation and are putting in place building blocks upon which we'll return to sustained revenue growth. While we made much progress, we remain focused on continued execution of our game plan and we look forward to reporting on our evolution in the coming quarters. As always, thank you for your interest today. And with that, let me turn the call back to Art.

Thanks Luc. I'd like to close by once again thanking all our employees around the globe for their hard work this last quarter. It is a pleasure to be part of such a great team. With that, we're happy to take your questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Josh Vogel of Sidoti & Co. Please go ahead.

Thank you. How you doing Art and Luc? It's nice to hear about all the positive developments in the business.

I really appreciate it, Josh. Luc Grégoire: Thank you, Josh.

Great. So I have a couple of questions for you, I guess, to start there is obviously the comments around investing in your sales and engineering capabilities, were you already doing that in Q3 or is that's what's really plan for Q4, because when we look at some of your operating expense lines, they were not only down fairly significantly year-over-year, but also sequentially, I guess, maybe if you can give us a sense or quantify how product development, as sales and marketing and G&A will trend over the next couple of quarters that would be really helpful.

So I'll cover off the first part of your question Josh and then I'll hand it off to Luc. In the grand scheme of things, yes, we are investing in sales and in engineering resources. I would say that as a result of our Chief Revenue Officer leaving us at the end of June, we've put a pause on all sales related investment and that's because I'm a believer that the new CRO, Arie Kanofsky should have the right to pick his own team and format that appropriate to his strategy. And we feel like we are now back on that track in Q4. We did actually hire quite a number of engineering resources in Q3. That's as part of an initiative to make sure that we have all the necessary domains of expertise that we need to accelerate our product road maps in 2020. So there was a pretty considerable amount of engineering hires, but again, the bigger picture is that we did pause on sales. Luc Grégoire: Yeah, and just to give you a bit more of a sense on the numbers side, we already started on the engineers, but even on sale, the sales numbers are up a little bit, but remember we generated about $7 million in efficiencies in our efforts last year, and that's been able to find the increase so far. That being said and some of the reductions by the way are coming from higher capitalization rate. So we're adding engineers, but we're also reducing the amounts that are going to operating expense, but you'll notice that the capital expenditures ticked up a little bit this quarter as well. So just to give you a sense of how that's playing out, but that being said, I think going forward given where we're ramping, you could expect -- that you could expect some decrease in the margins and that's going to be temporary, while we go through our investment cycle and beyond that we would expect to get back to operating expenditure. That's basically trying to show off the business and then to put us back on growth. So I think that would be the main explanation. Just one more point I guess on the capital expenditures this quarter, there is a runway element to the engineering of the capitalization there is, but they're all -- there was also about half the increase that you saw this quarter is of increasing some office space. Again that should be a one-time item and not an ongoing running costs. So just to give you a sense of where things are going to go. It will impact margins, but not as dramatic way. We continue to be very focused on them. And we'll have more to say about that in the fourth quarter when we talk about our budget.

Sounds great. That's helpful. Thank you. And when we think about your go-to-market strategy and how many are on the team today and you -- aren't you mentioned that you're significantly going to expand the team in 2020. Can you just put some numbers behind that, and also I am an analyst so I like numbers. Can you put a dollar amount or quantify the team successes to date if possible?

So let me give you a little bit of a framework to think about that first part of your question, which is that the team today for commercial accounts consists of individuals that are renewing customer accounts meaning that they are taking an existing contract in renewing it for the next year. And then there are elements of that team that are effectively new business relationship sales reps, and we are continuing to expand the new business sales team within the overarching commercial accounts team. And that's the one that we should see a doubling out as a minimum in terms of their team strength this next year in 2020. Roughly speaking that's a team that's a little bit less than 10 people. So think if it as doubling to roughly 20 people. In terms of the actual bookings figures for this year-to-date for the commercial accounts team I don't have the exact numbers in front of me, but I could tell you that they have exceeded their targets and they are on a nice increase or an incline and we feel very comfortable that that increase can continue because of the depth of the market. If you think about the fact that we have 6,100 customer relationships today and the results of our study from Q2 and Q3 indicate that we are roughly 88,000 solid targets to go after. We feel comfortable that there is a lot of runway left for that team to continue to succeed with.

That's great. Thank you. And Luc I'm sorry I missed what you said the numbers were on the share repurchases in the quarter and the average price and then just kind of building off that and thinking about capital allocation. Can you guys please talk to your appetite today for potential acquisitions? If you're open to exploring deals, and if so would it be maybe a geographic strategy or brand or product enhancement type of play? Thank you. Luc Grégoire: I'll give you a comment on the numbers, I'm sure Art will want to call it on the strategy the kind of acquisition we consider, but on the buyback, it's in the 10-Q as well, but 367,000 share and the $3.46. Again, we look at capital efficiency more than in general capital allocation strategy, there's some points -- some by point for us that we consider are useful. And if you look at year-to-date, it’s about $2.80 that we bought back about 700,000 shares. Our strategy continues to be to put our capital in the business and as you can see here our capital that we're putting at play is to invest in sale force to investing in our engineering capabilities that's always going to be the first place to show-off the business. If beyond that, the debt is almost all paid off as you know. Beyond that I think we're going to continue to want to see where there is opportunities for the business maintain our flexibility and we look outside typically for potential wedge opportunities, but I think we let Art speak to that. And in the past, when we covered all those basis, I think you know our history of returning capital to shareholders.

So, let me give you a couple of additional thoughts Josh. I would say that our first focus is to fix the companies, the brands that we manage today. And when I say fix them, I mean invest in product and our go-to-market strategies so that they are creating growth -- revenue growth. And we are nevertheless opportunistic when it comes to thinking about acquisitions. We do get presented various opportunities from time-to-time. When you ask me whether or not I think acquisitions from a geographic perspective or from a brand perspective, it's definitely brand specific. And I would tell you that we are committed to the idea that we are a specialist provider, focused on tech. So anything that allows us to essentially deliver a better value proposition to tech recruiters would be the right kind of acquisition for us to take on. But again, I would say that our priority is to fundamentally transform the individual brands as they exist today in terms of product and go-to-market approach.

Thank you. And just one more and I'll hop back in the queue. Understanding that, there will be a little bit of margin compression with all of your planned investments. But, is it too early to give us a read on what your adjusted EBITDA margin could look like in 2020, should we still expect to see ongoing expansion? Luc Grégoire: I think in 2020, because of the investments and even the annualization of what we're putting in right now, I would expect the margins to come down somewhat, but not in a dramatic way for 2020. And again, we'll have more specifics to provide in our fourth quarter.

Sounds good. Thank you, guys, for taking my questions.

Thanks very much, Josh.

Thank you, Art. [Operator Instructions] And our next question will come from Kara Anderson of B. Riley FBR. Please go ahead.

Hey guys. This is Aman Gulani. I'm jumping in for Kara.

Hi.

Hey. So, I just wanted to get a sense for how you're progressing with your pay-per-view model. Are you able to comment on like how much of the user base is pay-per-view versus subscription?

So I don't have the exact statistics in front of me Aman, but I can tell you that we view pay-per-view as an enabler for that commercial accounts team that I was just talking about. And so, a pretty good percentage I don't again, have the exact figures off the top my head off of new customers are taking a pay-per-view contract. And what we're finding is that we are able to accelerate the number of jobs that they are actually posting as well as provide direct value to them in terms of their discovery of the benefits of the platform. We want to make the pay-per-view format so compelling that it made it an easy value proposition for them to say yes too. But again, I'd say, I believe that if it's not the majority. It's at least close to 50:50 of all new business, that's flowing through a commercial accounts is taking that pay-per-view format. Luc Grégoire: And then, I would add a line that it continues to progress in a good fashion, but still not at a material level that we talked about specifically.

Got it. That's helpful. So how should we think about like the economics for the pay-per-view subset of users versus the subscription subset of users from the perspective of average monthly revenue per user? Luc Grégoire: So I would say that as it turns out, it looks like it is about the same or more than what we have generated in the past from an average user perspective. You know that our average annualized contract value is roughly about $13,500 per year. It looks like the statistics are generally in that range, but of course that's an average and there is a lot of variability when you think about the size of customers. We're signing up some customers as commercial accounts that are over $100,000 as their first contract. We are singing some on pilot basis for less than 5,000 let's say. It would be like a 90-day pilot kind of format.

But we've seen a slight tick up in our average contract value of new business acquisition over the last several quarters, and we feel that that will be a contributor to it. We also know that our customers are renewing and going from one form to the other, and on the conversion we are seeing accretion as well. Luc Grégoire: Yes, it's net revenue accretive.

That's helpful. Okay. And then I mean last question from me, so I mean over the last year or so, you've rolled out a number of new products and features across your portfolio of brands. I mean could you talk about, which are the products or features that you've rolled out that has been most effective in customer engagement?

So I personally think that all of them in combination really make the value proposition behind the platform, but if I was to really think about the individual capabilities that we've rolled out that make a difference in terms of views and applications, it would be IntelliSearch and then Candidate Match. And we're seeing a large amount of engagement in those two particular features. Again, pay-per-view is important as well, but it's really a pricing mechanism, not per se a feature on the platform. Those would be the three ones that I think are very notable. I think they're all part of following the ClearanceJobs format, and ClearanceJobs continues to hit a new height every quarter in terms of the level of engagement with our candidates and with the employer. So everything that we see there confirms that we're on the right track to continue to improve the product connections with customers and the candidates.

Thank you. That's very helpful. I'll jump back in the queue.

Great, appreciate Aman.

This concludes our question-and-answer session. I would like to turn the conference back over to Rachel Ceccarelli for any closing remarks.

All right. Thanks everyone for your interest in DHI Group. To schedule a meeting with management, please email ir@dhigroupinc.com or call 212-448-4181. Thanks for joining our call, and have a great day.

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