Dhi Group, Inc. (NYSE:DHX)

DHI Group, Inc. (NYSE:DHX) ($3.12; $171.2M market cap), a company that provides data, insights, and connections services to professional communities in the United States and internationally reported Q1 2019 results:

• Sales of $37.1 million vs $43.0 million in the prior year and in-line with analyst estimates of $37.1 million
• Non-GAAP EPS of $0.07 vs $0.06 in the prior year and slightly ahead of analyst estimates of $0.06 (the company paid a 54% tax rate this quarter vs 43% last year; management expects normalize tax rate of ~25% for the balance of the year)

The company didn't provide Non-GAAP EPS in its release. Furthermore, headlines on Google mention that the company missed EPS estimates. However, we noticed that there were some non-cash items and non operating costs broken out In the companies presentation of adjusted EBITDA calculation. Some of these costs should be added back to gaap earnings per share in order to calculate a non-gaap or adjusted earnings per share figure. The conference call commentary confirms this.

We speculate that long investors that just took a cursory glance at the press release may sell the stock. We would see selling pressure as a buying opportunity for us.

Comments from press release:

"Our solid quarterly results, which included revenue growth from our ongoing tech-focused business for the first time in several years, reflect the continued positive momentum we are generating against our tech-focused strategy and the hard work of our entire team. We continued to deliver solid adjusted EBITDA margins while also investing in sales, marketing and innovation."

Recent Developments

“In April 2019, the Board of Directors authorized the purchase of up to an additional $7 million of the Company's common stock through May 2020, renewing the Company's prior stock repurchase program. Under the plan, management has discretion in determining the conditions under which shares may be purchased from time to time.”

Business Outlook

“The Company believes that its ongoing tech-focused business will continue to achieve modest improvements in revenue growth rate as the year progresses. The Company further anticipates that Dice will turn to positive year over year revenue growth in the second half of 2019. The Company expects to make further progress on rationalizing its expenses, while at the same time investing prudently for growth, which should enable the Company to maintain its current level of Adjusted EBITDA margin2 for the year. The Company is unable to provide guidance for net income, because it cannot reasonably assess the impact of stock-based compensation and income tax expense.”

Conference call comments:

We saw growth in Asia Pacific, where we continue to see strong demand by the Tier 1 banks and growing penetration of the Tier 2 banks, which represent a substantial pool of potential clients.

This growth was offset by some macro headwinds we're seeing in Europe and some competitive challenges in North America. We're currently testing pay-per-view in these markets and looking to progress further down our innovation roadmap to help address these challenges.

Overall, we believe we've reached the turning point and are at the beginning of sustained long-term revenue growth. We expect that our tech-focused businesses will achieve modest year-over-year revenue growth in the first half of 2019 and continue to improve as the year progresses.

On April 12, 2019 we highlighted some of the key takeaways from our interview with DHX investor relations which led us to add the stock to our Favorite Stock Portfolio as new management continues to execute its turnaround plan.