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Dice Holdings, Inc. (DHX)
Q2 2008 Earnings Call Transcript
July 24, 2008 8:30 am ET
Jennifer Bewley – Director, IR
Scot Melland – Chairman, President & CEO
Mike Durney – SVP, Finance & CFO
Youssef Squali – Jefferies & Co.
John Janedis – Wachovia Capital Markets
Doug Anmuth – Lehman Brothers
Collis Boyce – Morgan Stanley
Imran Khan – JP Morgan
Tobey Sommer – SunTrust Robinson Humphrey
Previous Statements by DHX
» Dice Holdings, Inc. Q4 2008 Earnings Call Transcript
» Dice Holdings Q3 2008 Earnings Call Transcript
» Dice Holdings, Inc Q1 2008 Earnings Call Transcript
As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Jennifer Bewley, Director of Investor Relations. Please proceed.
Thanks, Frances, and good morning, everyone. With me on the call today is Scot Melland, Chairman, President, and Chief Executive Officer of Dice Holdings, along with Mike Durney, Senior Vice President, Finance and Chief Financial Officer.
Please note this morning we issued a press release describing the company's results for the second quarter of 2008. A copy of that release can be viewed on the company's website at diceholdingsinc.com.
Before we begin, I'd like to note that today's call includes certain forward-looking statements, particularly statements regarding future financial and operating results of the company and its businesses. These statements are based on management's current expectations and beliefs, and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological, and/or regulatory factors. The principal risks that could cause our results to differ materially from our current expectations are detailed in the company's SEC filings, including our Annual Report on Form 10-K in the sections entitled ‘Risk Factors,’ ‘Forward-Looking Statement,’ and ‘Management's Discussion and Analysis of Financial Conditions and Results of Operations.’ The company is under no obligation to update any forward-looking statements except as required by federal securities laws.
Today's call also includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow. For details on these measures, including why we use them, and reconciliations to the most comparable GAAP measures, please refer to our earnings release and our Form 8-K that has been furnished to the SEC, both of which are available on our website.
With that out of the way, I'll turn it over to Scot.
Thank you, Jennifer. First, let me welcome all of you to the Dice Holdings second quarter 2008 conference call. I'll start today by discussing our second quarter performance, including our perspective on the current market conditions here in the U.S. and elsewhere, and how they are impacting our business. I will also share with you some of the details around our new website launches. Then I'll hand it over to Mike Durney, our CFO, to take you through our financial performance in greater detail and our guidance going forward. After Mike, I'll make a few closing remarks, and then we'll open up the call for questions.
Now, let me say a few words about the second quarter. Overall, we turned in solid performance despite market conditions that continued to soften in the U.S. and the U.K. Worldwide, our revenues increased 15% year-over-year on a comparable basis, profitability remained strong with adjusted EBITDA margins of 42%, and we generated more than $12 million of free cash flow during the quarter.
In the U.S., DCS Online, our largest business segment, comprised of Dice.com and ClearanceJobs, grew 9% year-over-year, driven by growth in both the number of recruitment package customers and revenue per customer. Looking at the U.S. in more detail, not much has changed from the trends we noted in the first quarter. In general, recruiting activity at direct hiring companies, both large and small, has slowed with the slowing economy. Given the uncertainty in the economy, many of these companies don't feel the urgency to fill positions today or to make longer term commitments on renewals or new business.
On the recruiting, staffing, and consulting side of our business, many of which have sizeable tech sector operations, the larger staffing and consulting firms are holding up well, with softness more prevalent in the small recruiter segment. Overall, in the U.S. many of our customers and prospects remain uncertain about the health of the economy, and as a result, have slowed their recruiting activity, and that is impacting our growth.
Outside the U.S., eFinancialCareers had another strong quarter. Revenues increased 46% year-over-year on a comparable basis, with growth widespread across all of our country markets. As we mentioned in our Q1 conference call, we expected to experience a slowdown in the U.K., and we did indeed experience a slowdown of activity, as some of the banks have reduced their recruiting in response to economic conditions.
Outside the U.S. and the U.K., in continental Europe, the Middle East, and Asia-Pacific, business sentiment is cautious but generally positive, and the performance of each of those markets continues to be quite strong.
As you know, one of the key goals for eFinancialCareers is to expand the eFC franchise to additional capital markets around the world. In the second quarter we made significant progress against this goal, launching eFC service in three new markets - South Africa, Scandinavia, and Japan, where we now have an English language site serving the expat community and bilingual candidates. These countries join Canada as the four new markets we have launched this year. And although none of these markets will be material revenue contributors in the near term, these additional countries immediately increase the scope and value of our service to our customers and expand the overall growth opportunity for eFC in the years ahead.