Good afternoon everyone and welcome to the DHI Group Incorporated third quarter 2020 financial results conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note, today's event is being recorded. At this time I would like to turn the conference call over to Todd Kehrli with MKR Investor Relations. Sir, please go ahead.

Thank you operator. Good afternoon and welcome to DHI Group's fiscal 2020 third quarter financial results conference call. With me on today's call are DHI's CEO, Art Zeile, and Chief Financial Officer, Kevin Bostick. 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 fiscal 2020 third quarter financial results. This release is available on the company's website. This call is being broadcast live over the internet and the webcast will be archived on the Investor Relations page of the company's website. Please note that during today's call, management will make forward-looking statements that involve risks and uncertainties. Except for the 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, words such as anticipate, believe, expect, intend, and other similar expressions identify forward-looking statements. These statements reflect DHI management's current views concerning future events and financial performance and are subject to risks and uncertainties. Actual results may differ materially from the outcomes contained in any forward-looking statements. I will now turn the call over to Art Zeile, CEO of DHI Group.

Thank you Todd. Good afternoon everyone and welcome to our fiscal 2020 third quarter earnings conference call. As always, we appreciate your interest in DHI. Let me first start with a quick update on our operation status as it relates to the COVID-19 pandemic. Our foremost concern at DHI is to ensure the health and safety of our DHI community. As such, the majority of our employees continued to work from home during the quarter, using the best possible remote communication and collaboration tools. Our team members in sales, support, marketing, and product development continued to be highly effective. We currently have several offices open, though the return to office is optional for all employees. We are looking forward to having more employees back in the office when it is safe. Rest assured, we are taking significant precautions to maintain the safety of our employees, whether they are in the office or working from home. Now let's jump into a review of the quarter. While the pandemic continues to challenge the way we all live and work, we actually saw job postings stabilize during the summer, although they were lower in total than the year before. The sentiment is that many companies paused their hiring during this time as they reformulated their hiring plans based on their view of the economic recovery to come. However, in September, we saw the sentiment change for the better, as evidenced by a notable uptick in job postings as well as an increase in our bookings. Based on our Burning Glass feed, there are over 2,200 companies that have more than 20 open tech job postings right now. Companies like Amazon, Microsoft, and J.P. Morgan Chase have over 1,000 active tech jobs posted today. Both the Staffing Industry Analysts and TechServe Alliance, industry research firms that focus on tech-centric staffing and recruiting firms, are forecasting a bounce back in the IT staffing market in 2021 to almost pre-pandemic levels. The SIA is forecasting year-over-year market growth of 7%, which would get the market back to 98% of 2019 IT staffing revenue levels, representing an almost complete rebound. As I mentioned last quarter, a report released by Microsoft in July predicts that the worldwide digital jobs will grow from 41 million in 2020 to 190 million in 2025. Of the 149 million new digital jobs to be created, 98 million are forecast to be in software development. It's clear that our collective future will be more online and businesses will accelerate their efforts to digitize. These efforts will, of course, require technologists. As we continue to execute on our plan to create the best tech-focused career marketplaces using our technology skills data model, we stand ready to capitalize on these trends. Now let me provide some detail regarding our product development efforts during the quarter. Our product development team continued to deliver its usual high pace of product innovation. With the release of Dice IntelliSearch Based Job Alerts, job alerts are automatically generated based on the specific skillset and location found in the candidate's profile. This creates a virtuous circle that encourages candidates to register and keep their profiles up-to-date. This new feature illustrates how our patent-pending tech skills data model can be used in several high-impact use cases within our platform. The Dice recruiter profile, which we delivered last quarter, experienced the fastest adoption rate the company has ever seen from any of its product releases in the past two years. During the third quarter, one-third of all Dice recruiters completed their new Dice Recruiter Profile. This allows our clients to enrich their profiles with photos, personal information, details about corporate brand and culture, news and latest hires, upcoming events, and future hiring needs, all of which create more transparency and personalize the recruiter behind the role. Dice Recruiter Profile was the first major release in Dice's transformation from a job board to a full-scale career marketplace. With Dice marketplace, we are creating a trusted environment where recruiters and candidates can learn much more about each other to facilitate more effective career discussions. During the quarter, we also launched the ClearanceJobs Client Team Dashboard, which allows clients to have a full view of their recruitment team activity on the site, linking activities to successful hiring patterns. ClearanceJobs continues to be our test bed for key market-leading features. We also launched new features on eFinancialCareers called Follow, Voice, and Video. The Follow feature allows candidates to follow recruiters and get a news feed of their content weekly. Voice and Video allow finance and tech professionals and recruiters to connect virtually with video and voice calling, as well as instant messaging through the eFC platform, which is highly relevant in the work-from-home environment. These capabilities were delivered as we announced the completion of the first iteration of the fully functional eFC marketplace, a huge milestone for the company. eFC follows CJ as the second brand to complete the transformation from job board to full-scale career marketplace. We have many new product releases planned for the fourth quarter. Dice is completing the design for its own messaging system with an expected launch at year-end. Recruiters and candidates will be able to message each other within the platform similarly to Facebook Messenger. This is the second critical ingredient for full marketplace capability and creates in-platform engagement and stickiness. Protecting our clients' and candidates' information is incredibly important to us. Therefore, in the fourth quarter, Dice has already released a new authentication and authorization system which moves it to an industry-standard secure login protocol. This feature is a stepping stone to multifactor authentication in early 2021. We are also working on delivering calendar and schedule integration for ClearanceJobs, which will allow for recruiters and candidates to seamlessly schedule meetings and communicate from a system integrated into the platform connecting to users' native email applications. Lastly, eFC has already released IntelliSearch based job alerts in the fourth quarter, similar to what I just described for Dice. Now let me touch briefly on our sales performance for each brand before I turn it over to Kevin. As I have said before, I believe we were experiencing a checkmark-shaped recovery versus a V-shaped recovery. As I mentioned earlier, we saw a notable uptick in sentiment in bookings in September. We had several sales teams reach or exceed their pre-pandemic bookings production for the quarter as a result of the rebound, including both CJ's new business and account management teams, as well as Dice's staffing and recruiting new business team. Renewal rates for all account management teams improved during the month. Dice commercial accounts continue to be affected by the current environment due to the uncertainty around hiring plans. We have worked with one very large enterprise that has dramatically changed their hiring plan four times in the past four months. The good news is that our sales team's pipeline of deal activity has continued to grow despite sales cycles lengthening. We continue to see increased engagement from candidates in the current work-from-home environment. On the client side, we saw an increase in marketing qualified leads through the contract me form fills on our Dice site which is a leading indicator of pipeline growth. The rebound in Dice's staffing and recruiting new business highlights that Dice is a necessity for staffing and recruiting firms focused on tech. The need for technologists is expected to grow strongly in the new post-pandemic economy. Due to the success we see in CJ and Dice's staffing and recruiting new business teams, we have shifted several sales reps from Dice's commercial accounts team to these two teams with the mantra to sell to those who are buying now. ClearanceJobs has been relatively unaffected by the pandemic as its performance is generally correlated to the U.S. Department of Defense budget, which remains relatively predictable. We continue to work hard on expanding CJ's addressable market through direct sales to U.S. government agencies and expect ClearanceJobs to add more government customers as we close out the remainder of this year. Finally, eFinancialCareers remains our most challenged brand. It is still being affected by the protests in Hong Kong, uncertainty around Brexit in the U.K., and the expected longer recession for the global banking industry as credit quality remains uncertain and under continuous reassessment. There is no question that the uncertainty in the banking industry has weighed down eFC's performance to-date and will continue to do so for the foreseeable future. As I conclude my remarks, I want to reiterate that we are successfully executing on our plan to build career marketplaces for matching tech professionals with employers while exceeding our adjusted EBITDA targets. We believe we have created a better online platform than our competitors for matching companies with the highest quality tech professionals and believe we can capitalize on the millions of new technologist jobs expected over the next five years. While this growth won't happen overnight and COVID-19 certainly presents uncertainty, we are confident in our business plan and the continued progress we are making towards achieving our goal of returning to growth. With that, let me turn the call over to Kevin, who will take you through our financials and then we will take any questions you may have.

Thank you Art, and good afternoon everyone. I will start by going through the financial results, then add a few comments about the business. For the third quarter, we reported total revenues of $33.3 million, which was down 2% from the second quarter and 11% year-over-year. Dice revenue was $19.8 million in the third quarter, down 3% sequentially and 13% year-over-year. We ended the third quarter with 5,300 Dice recruitment package customers, which is down 3% sequentially and 13% year-over-year. Our average monthly revenue per Dice recruitment package customer was down 1% versus the year-ago quarter to $1,122 or $13,464 on an annual basis. Over 90% of our Dice revenue is recurring and comes from recruitment package customers. Our Dice customer renewal rate was 63% for the third quarter, up from 57% last quarter, but down three percentage points year-over-year. Our Dice revenue renewal rate was 66%, up five percentage points from last quarter, but down 10 percentage points when compared to the same period last year. While we did see lower in-period renewal rates, which is customers renewing prior to or at contract termination, we are maintaining an ongoing dialogue with these non-renewal customers with the expectation that they will re-sign when there is further recovery in the economy. As we mentioned last quarter, we hired a new leader for our client success organization, who has implemented new processes around onboarding and ongoing touchpoints that we believe should have a positive impact on both customer and revenue renewal rates. As we look at Dice, our strategy continues to focus on larger customer relationships. We believe this will put us in the best position for stability and growth. Currently, approximately 13% of our customers generate 50% of our recruitment package revenue, though no one customer makes up 1% of revenue. We think this is a good balance of a strong stable revenue base without having a significant customer concentration risk. ClearanceJobs third quarter revenue was $7.3 million, an increase of 3% sequentially and 16% year-over-year. This continued solid double-digit revenue growth year-over-year is reflective of ClearanceJobs' strong innovative products and competitive differentiation as well as the somewhat insulated market it serves. Third quarter revenue for eFinancialCareers was $6.1 million, which was down 1% sequentially and down 25% year-over-year when excluding the impact of foreign exchange rates. As expected, COVID negatively impacted our performance for eFC during the quarter. In the U.K., which is our largest geography by revenue for eFC, we were impacted by the COVID shutdown as well as the U.K. furloughs which were extended through October of this year. In the APAC region, eFC's second largest geography, we continued to experience difficulties primarily due to the impact of the Coronavirus pandemic. Turning to operating expenses, third quarter operating expenses were $61.8 million, which includes non-cash impairment charges of both the Dice trade name of $8 million and goodwill of $23.6 million, both of which I will address in a moment. Excluding the impairment charges, operating expenses were $30.2 million, representing a decrease of $1.7 million or 5% year-over-year. This decrease in operating expenses was primarily the result of the comprehensive cost management exercise which began in late March and continues currently, as well as more efficient third-party marketing spend. Income tax benefit for the third quarter was $1.5 million, resulting in an effective tax rate of 5%, which includes the impact of the non-cash impairment charges. This rate is lower than our expected statutory rate of 25% due to nondeductible impairment charges and the allocation of loss between jurisdictions. As I mentioned, during the third quarter, we recorded non-cash impairment charges related to the Dice trade name of $8 million and goodwill of $23.6 million. The impairment charge for the trade name was primarily driven by a decline in the royalty rate used in valuing the Dice trade name, an assumption driven by the impact of COVID-19. The $23.6 million goodwill impairment is the result of the impact of the pandemic and the expectation that a broader recovery will extend into 2021, whereas previously we expected the recovery towards the end of 2020. Including these non-cash impairment charges, we recorded a net loss for the third quarter of $27.3 million, a loss of $0.57 per diluted share, compared to net income of $4.4 million or $0.08 per diluted share a year ago. This quarter's net loss was negatively impacted by $29.3 million of charges substantially from the non-cash impairments of goodwill and intangible assets. Last year's net income was positively impacted by $500,000 from discrete tax items. Adjusted diluted earnings per share for the quarter was $0.04 versus $0.07 last year. Adjusted EBITDA for the third quarter was $7.6 million, a margin of 23%, which was consistent with the second quarter of this year and the third quarter of last year. As we stated on our last call, our goal is to manage the business to approximately 20% adjusted EBITDA margins. We continue to focus on supporting our customers as well as investing in sales, marketing, and product while being equally mindful of the overall cost structure of the business. Our current cost structure has become our new normal for how we think about headcount, marketing, and other third-party spend. We generated $4.4 million of operating cash flow in the third quarter, compared to $4.6 million in the prior year quarter. From a liquidity perspective, at the end of the quarter, our total debt was $37 million. We had $26.8 million of cash resulting in net debt of $10.2 million. Even with the incremental borrowing we did in the first quarter, we still have significant borrowing capacity available to us under our credit facility. We do expect to begin reducing our debt outstanding in the coming quarters as we have better visibility into cash flow, notably around customer payments. Deferred revenue at the end of the quarter was $41.9 million, compared to $47.2 million in the second quarter and $51.1 million in the year-ago quarter. This is due to the impacts of COVID-19, more contracts having monthly or quarterly payment terms, and the normal seasonality of bookings. When we add the unbilled portion of our contracts to deferred revenue, our committed contract backlog at the end of the quarter was down 12% from the end of the third quarter last year. During the quarter, we repurchased approximately 349,000 shares for $854,000 or $2.45 per share. In total, we have used approximately $1.4 million of the current $5 million buyback program which runs through May of 2021. We continue to believe that buybacks are a recognition of the strength and long-term prospects of our business. Consistent with our previous programs, we will continue to evaluate investment opportunities in the business against buying back shares. As we look ahead, bookings are improving for the company as a whole. As Art mentioned, for Dice we saw a notable uptick in job postings and bookings in September as companies increased their use of technology in this environment. We are seeing strength in our staffing and recruiting business as these firms realize they need our technology to effectively do their job. With regards to ClearanceJobs, we expect them to continue to grow because their success is correlated to the U.S. Department of Defense budget, which, relatively speaking, has been immune to the environment we find ourselves in. For eFinancialCareers, we continue to expect significant headwinds as our two largest regions, the U.K. and APAC, continue to be impacted by COVID, the ongoing geopolitical issues in Hong Kong, as well as a potential impact to hiring in the banking sector. Looking forward, we believe we have the right ongoing cost structure in place to operate the business and support our customers while continuing to invest in our business to drive long-term revenue growth. While not providing specific guidance, we continue to manage the business to margins in the 20% range. Let me sum up by saying that while we continue to find ourselves in very challenging times, we feel our business model provides us some protection and predictability, and we are confident in the investments we have made in innovation and sales. We remain focused on the continued execution of our business plan and look forward to reporting on our progress as we finish 2020 and enter into 2021. And with that, let me turn the call back to Art.

Thanks Kevin. I would 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 are happy to take your questions.

And our first question today comes from Aman Gulani from B. Riley Securities. Please go ahead with your question.

Hi guys. Thanks for taking my question. I guess the first question, given that eFC continues to have declining revenues with fairly low visibility, have you considered potentially spinning off or divesting that piece of the business?

Aman, I appreciate the question. eFC is certainly our most challenged business and continues to face those significant headwinds that we indicated and will for the foreseeable future. There is no question that the banking industry is going to be in a longer-term recession than many of the other industry sectors across the globe. When we compare eFC to CJ, which is continuing to grow really nicely, as well as Dice, which we expect to benefit from the expansion of tech jobs in the United States over the next five years, I think it is fair to say that any continued poor performance by eFC would offset the positive performance of CJ and Dice and mask their growth effectively. So we are definitely looking closely at the eFC business and evaluating all our options, quite frankly. So I would say the answer is, yes.

Got it. Thank you. And maybe a bit of greater clarity, how do you expect the recovery of two of those in renewals and bookings? And when do you think DHI can begin to just get back to sequential growth?

So each team within the individual brands has its own dynamics. I think we saw in October more so than the earlier part of the summer that we are growing our renewal rates from a revenue perspective. We get revenue and renewal counts themselves. If we think about the business broadly speaking, especially for Dice, the largest brand, we have a large amount of our revenue tied to staffing, recruiting, and consulting agencies. I think that they feel better about their future. We are seeing those renewal rates improve. We have seen many customers that paused on their subscriptions with Dice come back, especially at the end of the quarter. New business, I would say, is the bigger challenge across all brands. It makes sense because it's a new relationship and the client has to be firm about their hiring plans for the future. This is still a period of time which is uncertain for many industries about their hiring plans. But in general, we saw a better end of the quarter than the beginning, and we feel more confident moving into 2021. Obviously, when I talk about these figures, I am really talking about bookings. And if we both a dollar of revenue today that has to be divided by 12 into the next subsequent 12-month period. So it doesn’t reflect itself in revenue immediately, but over the long run. This firming up of bookings, we expect to essentially allow us to have better revenues towards the end of 2021. That's how we would fundamentally look at the situation as it's evolving today.

Got it. Okay. And then just last question from me. Can you just talk about some of the trends you see in renewal rates in October and the start of November relative to what you saw in the third quarter?

Yes. I would say that in terms of renewal rates, October feels like it's another month that is softer than, well, I shouldn’t say, it's a little bit softer than September, but it's still on the same trajectory. We feel like we are moving toward that checkmark-shaped recovery in bookings. Certain teams appear to be doing fantastic. I mentioned them in my portion of the earnings call. We have seen the CJ new business teams exceed their pre-pandemic levels in bookings. The account management team has done the same. The staffing and recruiting and consulting new business team has also exceeded what they were producing at the beginning of January and February of this year. Some teams act as a possible engine for growth. We've transferred sales reps to those teams with the idea that we just want to facilitate more bookings wherever they are taking place right now. The great thing about Ari Kanofsky's leadership of our sales program is that we can be that nimble and take advantage of trends we are seeing in real-time. Another important part of our strategy is using the Burning Glass feed that shows how many tech postings are open each night across the United States. We are being targeted toward clients we don't have today that have a large number of postings and trying to sell the value proposition there.

Got it. Thank you. I will pass it on.

Thank you very much Aman. Appreciate the questions.

Our next question comes from Josh Vogel from Sidoti & Co. Please go ahead with your question.

Thanks. Good evening guys. Hope you are doing well.

Thanks Josh.

My first question is, for the second quarter in a row talking about how you did see some clients pause subscriptions, but starting to come back or you are hoping for a win-back there. So maybe not so much anyone who paused subscriptions that came up in Q3, but of those that were paused in Q2, is that where you are starting to see some of those subscriptions come back?

Yes. In fact, the real key to understanding the Dice business, especially, is that a lot of our customers are in the staffing, recruiting, and consulting category. We believe you fundamentally can't do your job unless you have Dice as a tool if you are looking for technologists. When they paused in Q2, they could rely on the contacts they had essentially harvested from Dice over the course of the previous period. At a certain point, that data becomes stale. Q3 was an important quarter for those staffing and recruiting agencies to make a decision as to how they view their future, especially when moving into 2021 and using Dice and other recruitment tools to ensure they are getting a flow of candidates to their clients.

I appreciate the insights. Some encouraging data points put out by some industry research firms like SIA. Thinking about where they see the market next year and building off one of the prior questions regarding getting back to sequential growth in Dice, is 7% growth a number that we can possibly benchmark? I know that the subscription model is different from a straight recruiting model. But what do we deduce from taking that data point from SIA and comparing it to your business?

Yes. I think it's a good benchmark. It's the right way to frame it. It actually correlates to some other studies we've seen where the online recruitment tools market as a whole historically has been growing or is projected to grow with a 7% CAGR over the next five years. We believe the tech sector part of that overall market is growing faster, but 7% is a pretty good benchmark. It just happens to be the same as SIA's figure for how they look at the rebound. We have a good close relationship with SIA. They are confident that we will get back on track and that the IT staffing sector itself is becoming healthier than it was at the beginning of the pandemic.

All right. Great. I know that CJ is correlated to the defense budget, but I don’t have statistics from prior elections. But does whoever ends up in the White House potentially have an effect on the prospects of ClearanceJobs, in your opinion?

I think it does over the long term and it really comes down to whether or not the President who proposes the budgets associated with all forms of the government has a real bullish view of the need for defense. My view based on Biden's background and experiences is that he is pro-defense. Clearly, President Trump today is pro-defense and has sequentially increased the military budget, the DOD budget. You can say both have a common view that we live in an uncertain world and we need to be strong on defense. If one President in the future were to be less aggressive about defense posture and that represented itself in smaller defense budgets, I think that would affect CJ. There is no question about it.

Yes. Okay. And just one more question, and I will let someone else ask some questions. The gross margin has been coming in low the last couple of quarters. Is that due to pricing and mix or is there something else going on there?

Kevin, do you want to address that?

Yes, I will. It really comes down to us being very cost-conscious about where we spend our money. We are very careful about hiring backfills. We are focused on ensuring our marketing spend is getting the appropriate IRR. I don't think there is any one particular area, but rather just cost containment around the entire income statement. This mentality is present across the company. I'm not sure it's due to any one particular initiative or line item, just us being cost-conscious across the whole business. Clearly, we see a little benefit from digital advertising rates which have come down as it's a less competitive environment. That's helpful.

Fair. Well, thanks for taking my questions guys.

Thank you Josh. I appreciate it.

And ladies and gentlemen, at this time, we will conclude today's question-and-answer session. I would like to turn the conference call back over to Art Zeile for any closing remarks.

Thanks everyone for your interest in DHI Group and thanks for joining us on our call today. Have a great day.

Ladies and gentlemen, with that, we will conclude today's conference call. We thank you for attending. You may now disconnect your lines.