The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this report. See also our consolidated financial statements and the notes thereto and the section entitled "Note Concerning Forward-Looking Statements" in our Annual Report on Form 10-K for the year ended
December 31, 2021. Information contained herein contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include, without limitation, information concerning our possible or assumed future results of operations. These statements often include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to execute our tech-focused strategy, competition from existing and future competitors in the highly competitive markets in which we operate, failure to adapt our business model to keep pace with rapid changes in the recruiting and career services business, failure to maintain and develop our reputation and brand recognition, failure to increase or maintain the number of customers whopurchase recruitment packages, cyclicality or downturns in the economy or industries we serve, the potential impact of COVID-19 on our operations and financial results, geopolitical events, uncertainty in respect of the regulation of data protection and data privacy, failure to attract qualified professionals to our websites or grow the number of qualified professionals whouse our websites, failure to successfully identify or integrate acquisitions, U.S.and foreign government regulation of the Internet and taxation, our ability to borrow funds under our revolving credit facility or refinance our indebtedness and restrictions on our current and future operations under such indebtedness. These factors and others are discussed in more detail below and in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, under the headings "Risk Factors," "Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Information contained herein contains certain non-GAAP financial measures. These measures are not in accordance with, or an alternative for, measures in accordance with U.S.GAAP. Such measures presented herein include adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock-based compensation expense, impairment, gain or loss on sale of businesses, and certain other income or expense items, as defined, ("Adjusted EBITDA") and Adjusted EBITDA Margin. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" for definitions of these measures as well as reconciliations to the comparable GAAP measure. You should keep in mind that any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which it is made. New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy and information statements and other material information concerning us are available free of charge on the Investors page of our website at www.dhigroupinc.com. Our reports filed with the SECare also available by visiting http://www.sec.gov. 19
-------------------------------------------------------------------------------- Table of Contents Overview
We are a provider of online software products, tools and services that provide career marketplaces to candidates and employers in
In online recruitment, we specialize in employment categories in which there has been a long-term scarcity of highly skilled, highly qualified professionals relative to market demand, specifically technologists
whowork in a variety of industries or have active government security clearances. Our websites serve as online two-sided marketplaces where employers and recruiters source and connect with prospective employees, and where technologists find relevant job opportunities, data and information to further their careers. Our websites offer job postings, news and content, career development and recruiting services tailored to the specific needs of the professional community that each website serves. Majority ownership and control of DHI's eFinancialCareers ("eFC") business, which provides career websites to the financial services industry and has operations in the United Kingdom, Continental Europe, Asia, the Middle Eastand North America, was transferred to eFC management on June 30, 2021. The Company retained a 40% common share interest. As a result, all ongoing DHI operations, which include the Dice and ClearanceJobs brands, are in the United Statessubsequent to June 30, 2021. We have been in the recruiting and career development business for over 30 years. Based on our operating structure, we have identified one reportable segment, Tech-focused, which includes the Dice and ClearanceJobs businesses and corporate related costs. The Dice and ClearanceJobs businesses and corporate related costs are aggregated into the Tech-focused reportable segment primarily because the Company does not have discrete financial information for those brands or costs. As a result of the eFC separation, the eFC business was deconsolidated from the Company's consolidated financial statements as of June 30, 2021and is reflected as a discontinued operation for all periods presented on or before June 30, 2021.
Our income and expenses
We derive the majority of our revenues from customers
whopay fees, either annually, quarterly or monthly, to post jobs on our websites and to access our searchable databases of resumes. Our fees vary by customer based on the number of individual users of our databases of resumes, the number and type of job postings and profile views purchased and the terms of the packages purchased. Our Company sells recruitment packages that can include access to our databases of resumes and job posting capabilities. We believe the key metrics that are material to an analysis of our businesses are our total number of Dice and ClearanceJobs recruitment package customers and the revenue, on average, that these customers generate. The tables below detail this customer data. As of March 31, Percent Recruitment Package Customers: 2022 2021 Increase (Decrease) Change Dice 6,249 5,200 1,049 20% ClearanceJobs 1,928 1,753 175 10% Average Annual Revenue
by Client Package Recruitment(1)
Three months ended March 31, Increase Percent 2022 2021 (Decrease) Change Dice
$ 14,112 $ 13,536 $ 5764 % ClearanceJobs $ 18,408 $ 16,476 $ 1,93212 % (1) Calculated by dividing recruitment package customer revenue by the daily average count of recruitment package customers during each month, adjusted to reflect a 30-day month. The simple average of each month is used to derive the amount for each period and then annualized to reflect 12 months. 20 -------------------------------------------------------------------------------- Table of Contents Dice had 6,249 recruitment package customers as of March 31, 2022, which was an increase of 1,049, or 20%, year over year and annualized revenue per recruitment package customer for Dice increased $576, or 4%, year over year. The increases were driven by strong renewal rates and new business activity. ClearanceJobs had 1,928 recruitment package customers as of March 31, 2022compared to 1,753 as of March 31, 2021, an increase of 10%, and annualized revenue per recruitment package customer increased $1,932, or 12%, year over year. The increases for ClearanceJobs were due to continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site. Deferred revenue, as shown on the condensed consolidated balance sheets, reflects customer billings made in advance of services being rendered. Backlog consists of deferred revenue plus customer contractual commitments not invoiced representing the value of future services to be rendered under committed contracts. We believe backlog to be an important measure of our business as it represents our ability to generate future revenue. A summary of our deferred revenue and backlog is as follows: Comparison to Prior Year End Comparison Year Over Year Increase Increase 3/31/2022 12/31/2021 (Decrease) Percent Change 3/31/2021 (Decrease) Percent Change Deferred Revenue $ 56,786 $ 46,146 $ 10,64023 % $ 44,835 $ 11,95127 % Contractual commitments not invoiced 49,262 46,497 2,765 6 % 25,931 23,331 90 % Backlog(1) $ 106,048 $ 92,643 $ 13,40514 % $ 70,766 $ 35,28250 %
(1) The backlog consists of deferred revenue plus unbilled customer contractual commitments representing the value of future services to be rendered under confirmed contracts.
March 31, 2022increased $13.4 millionand $35.3 millionfrom December 31, 2021and March 31, 2021, respectively. The increase in backlog compared to December 31, 2021and March 31, 2021is due to the strong technology recruitment market driving bookings growth at both Dice and ClearanceJobs, a focus on signing multi-year contracts, and the Company's ongoing investments in sales and marketing. The first quarter of each year is generally the largest bookings quarter of the year, also contributing to the growth from December 31, 2021. To a lesser extent, we also generate revenue from advertising on our various websites or from lead generation and marketing solutions provided to our customers. Advertisements include various forms of rich media and banner advertising, text links, sponsorships, and custom content marketing solutions. Lead generation information utilizes advertising and other methods to deliver leads to customers. The Company continues to evolve and present new software products and features to attract and engage qualified professionals and match them with employers. Our ability to grow our revenues will largely depend on our ability to grow our customer bases in the markets in which we operate by acquiring new customers while retaining a high proportion of the customers we currently serve, and to expand the breadth of services our customers purchase from us. We continue to make investments in our business and infrastructure to help us achieve our long-term growth objectives, such as the innovative products in the table below. Product Releases 2022 2021 Dice
Marketplace, Dice TalentSearch Social Data
Dice TalentSearch Time Zone Search Refresh,
Brand.io, TalentSearch Personalization,
Impartial Sourcing Mode
ClearanceJobs Meetings, ClearanceJobs Video,
ClearanceJobs Live Video Team
Recruitment, shared talent pipelines,
Quality of Use Improvements Other material factors that may affect our results of operations include our ability to attract qualified professionals that become engaged with our websites and our ability to attract customers with relevant job opportunities. The more qualified professionals that use our websites, the more attractive our websites become to employers and advertisers, which in turn makes them more likely to become our customers, resulting positively on our results of operations. If we are unable to continue to attract qualified 21 -------------------------------------------------------------------------------- Table of Contents professionals to engage with our two-sided marketplaces, our customers may no longer find our services attractive, which could have a negative impact on our results of operations. Additionally, we need to ensure that our websites remain relevant in order to attract qualified professionals to our websites and to engage them in high-value tasks, such as posting resumes and/or applying for jobs. The largest components of our expenses are personnel costs and marketing and sales expenditures. Personnel costs consist of salaries, benefits, and incentive compensation for our employees, including commissions for salespeople. Personnel costs are categorized in our statement of operations based on each employee's principal function. Personnel costs incurred during the application development stage of internal use software and website development are recorded as fixed assets and amortized to depreciation expense in the statement of operations over the estimated useful life of the asset. Marketing expenditures primarily consist of online advertising, brand promotion and lead generation to employers and job seekers. Critical Accounting Estimates
There have been no material changes in our critical accounting estimates from the critical accounting policies described in our Annual Report on Form 10-K for the year ended
Three Months Ended
March 31, 2022Compared to the Three Months Ended March 31, 2021Revenues Three Months Ended March 31, Percent 2022 2021 Increase (Decrease) Change (in thousands, except percentages) Dice(1) $ 24,634 $ 19,051$ 5,583 29 % ClearanceJobs 9,700 7,625 2,075 27 % Total revenues $ 34,334 $ 26,676$ 7,658 29 %
(1) Includes dice and career events
For the three months ended
March 31, 2022we experienced an increase in revenue of $7.7 million, or 29%. Revenue at Dice increased $5.6 million, or 29%, compared to the same period in 2021 due to improvements in renewal rates and new business activity along with consistently increasing customer counts, which drives additional revenue in future periods. Revenues for ClearanceJobs increased $2.1 million, or 27%, as compared to the same period in 2021, primarily driven by continued high demand for professionals with government clearance and consistent product releases and enhancements driving activity on the site. Cost of Revenues Three Months Ended March 31, Percent 2022 2021 Increase Change (in thousands, except percentages) Cost of revenues $ 4,099 $ 3,702 $ 39711 % Percentage of revenues 11.9 % 13.9 %
Revenue cost increased
-------------------------------------------------------------------------------- Table of Contents Product Development Expenses Three Months Ended March 31, Percent 2022 2021 Increase Change (in thousands, except percentages) Product development
$ 3,942 $ 3,602 $ 3409 % Percentage of revenues 11.5 % 13.5 % Product development increased $0.3 million, or 9%, driven by an increase of $1.0 millionfrom higher compensation related costs partially offset by an increase in capitalized labor of $0.6 million, which decreases operating expenses. Sales and Marketing Expenses Three Months Ended March 31, Percent 2022 2021 Increase Change (in thousands, except percentages) Sales and marketing $ 13,941 $ 9,771 $ 4,17043 % Percentage of revenues 40.6 % 36.6 % Sales and marketing expenses increased $4.2 million, or 43% from the same period in 2021. This increase was driven by a $2.4 millionincrease in compensation related costs from higher headcount and quota attainment versus sales plan, $1.4 millionincrease in discretionary marketing expenses with strong customer recruitment activity, and a $0.4 millionincrease in operational costs, including travel and entertainment and company events as COVID-19 restrictions ease.
General and administrative expenses
Three Months Ended March 31, Percent 2022 2021 Increase Change (in thousands, except percentages) General and administrative
$ 7,766 $ 6,154 $ 1,61226 % Percentage of revenues 22.6 % 23.1 % General and administrative expenses increased $1.6 million, or 26% from the prior year. The increase was driven by stock-based compensation expense, which increased $0.6 million, primarily due to higher achievement against targets for the Company's PSUs. Compensation related costs increased $0.5 millionand operational costs, including recruiting and training, increased $0.4 million. Together these increased expense $1.5 million. Depreciation Three Months Ended March 31, Percent 2022 2021 Increase Change (in thousands, except percentages) Depreciation $ 3,958 $ 3,631 $ 3279 % Percentage of revenues 11.5 % 13.6 % Depreciation expense increased $0.3 millionor 9% from the same period in 2021 in connection with increasing capitalized development costs throughout 2021 and projects being placed into service driving higher depreciation in 2022. 23
Table of Contents Operating Income (Loss) Three Months Ended March 31, Percent 2022 2021 Increase Change (in thousands, except percentages) Revenue
$ 34,334 $ 26,676 $ 7,65829 % Operating income (loss) 628 (184) 812 (441) % Percentage of revenues 1.8 % (0.7) % Operating income for the three months ended March, 31, 2022 was $0.6 million, a positive margin of 1.8%, compared to operating loss of $0.2 million, a negative margin of 0.7%, for the same period in 2021, an improvement of $0.8 million. The increase in operating income and improved percentage margin was driven by higher revenues, partially offset by higher operating costs as the Company invests in its product and sales and marketing for future growth.
Three Months Ended March 31, Percent 2022 2021 Increase Change (in thousands, except percentages) Income from equity method investment $ 155 $ -
$ 155n/a Percentage of revenues 0.5 % - %
In the three months ended
income related to its share of the net income of POC.
Interest Expense and Other Three Months Ended March 31, Percent 2022 2021 Increase Change (in thousands, except percentages) Interest expense and other $ 245
$ 195 $ 5026 % Percentage of revenues 0.7 % 0.7 % Interest expense and other was approximately flat to the same period in 2021. Gain on Investment Three Months Ended March 31, Percent 2022 2021 Decrease Change (in thousands, except percentages) Gain on investment $ - $ 2,513 $ (2,513)(100) % Percentage of revenues - % 9.4 % During the three months ended March 31, 2021, the Company recognized a $2.5 millionunrealized gain on an equity security investment. The unrealized gain was related to a minority interest representing less than 1% of the common stock of a technology company that became publicly traded during the first quarter of 2021 after filing an initial public offering. See also Note 7 of the Notes to the condensed consolidated financial statements. 24
Table of Contents Income Taxes Three Months Ended March 31, 2022 2021 (in thousands, except percentages) Income before income taxes
$ 538 $ 2,134Income tax expense (benefit) (763) 122 Effective tax rate (141.8) % 5.7 % Our effective tax rate for the three months ended March 31, 2022, differed from the U.S.statutory rate due to a $0.8 milliontax benefit from the vesting or settlement of share-based compensation awards. The tax rate for the three months ended March 31, 2021, differed from the statutory rate because of a $0.5 milliontax benefit from the release of a valuation allowance on our capital loss carryforward.
Income from discontinued operations, net of tax
Three Months Ended March 31, Percent 2022 2021 Decrease Change (in thousands, except percentages) Income from discontinued operations, net of tax $ -
$ 659 $ (659)(100) % Percentage of revenues - % 2.5 % The Company transferred majority ownership of its eFC business on June 30, 2021to eFC management and has recorded it as a discontinued operation. Income from discontinued operations for the three months ended March 31, 2021represents eFC's earnings during the period.
Earnings per share
Three months completed
2022 2021 (in thousands, except per share amounts) Income from continuing operations $ 1,301
$ 2,012Income from discontinued operations, net of tax - 659 Net income $
Weighted-average shares outstanding - diluted $
Diluted earnings per share - continuing operations $ 0.03
$ 0.04Diluted earnings per share - discontinued operations $ - $ 0.01Diluted earnings per share $
Diluted earnings per share from continuing operations were
$0.03and $0.04and diluted earnings per share were $0.03and $0.05for the three months ended March 31, 2022and 2021, respectively. The decreases were driven by the unrealized gain on equity securities in 2021. 25
Cash and capital resources
Non-GAAP Financial Measures
We have provided certain non-GAAP financial measures as additional information for our operating results. These measures are not in accordance with, or an alternative for, measures in accordance with
U.S.GAAP and may be different from similarly titled non-GAAP measures reported by other companies. We believe the presentation of non-GAAP measures, such as Adjusted EBITDA and Adjusted EBITDA margin, provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations.
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metrics used by management to measure operating performance. Management uses Adjusted EBITDA and Adjusted EBITDA Margin as performance measures for internal monitoring and planning, including preparation of annual budgets, analyzing investment decisions and evaluating profitability and performance comparisons between us and our competitors. The Company also uses these measures to calculate amounts of performance based compensation under the senior management incentive bonus program. Adjusted EBITDA represents net income plus (to the extent deducted in calculating such net income) interest expense, income tax expense, depreciation and amortization, non-cash stock-based compensation, losses resulting from certain dispositions outside the ordinary course of business including prior negative operating results of those divested businesses, certain write-offs in connection with indebtedness, impairment charges with respect to long-lived assets, expenses incurred in connection with an equity offering or any other offering of securities by the Company, extraordinary or non-recurring non-cash expenses or losses, losses from equity method investments, transaction costs in connection with the credit agreement, deferred revenues written off in connection with acquisition purchase accounting adjustments, write-off of non-cash stock-based compensation expense, severance and retention costs related to dispositions and reorganizations of the Company, and losses related to legal claims and fees that are unusual in nature or infrequent, minus (to the extent included in calculating such net income) non-cash income or gains, including income from equity method investments, interest income, business interruption insurance proceeds, and any income or gain resulting from certain dispositions outside the ordinary course of business, including prior positive operating results of those divested businesses, and gains related to legal claims that are unusual in nature or infrequent.
Adjusted EBITDA margin is Adjusted EBITDA divided by revenue.
We also consider Adjusted EBITDA and Adjusted EBITDA Margin, as defined, to be important indicators to investors because they provide information related to our ability to provide cash flows to meet future debt service, capital expenditures, working capital requirements, and to fund future growth. We present Adjusted EBITDA and Adjusted EBITDA Margin as supplemental performance measures because we believe that these measures provide our Board, management and investors with additional information to measure our performance, provide comparisons from period to period by excluding potential differences caused by variations in capital structures (affecting interest expense) and tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and to estimate our value. We understand that although Adjusted EBITDA and Adjusted EBITDA Margin are frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our liquidity or results as reported under GAAP. Some limitations are:
•Adjusted EBITDA and Adjusted EBITDA margin do not reflect our cash expenditures, future capital expenditure requirements or contractual commitments;
•Adjusted EBITDA and Adjusted EBITDA margin do not reflect changes in or cash requirements for our working capital requirements;
•Adjusted EBITDA and Adjusted EBITDA Margin do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt; •Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect any cash requirements for such replacements; and •Other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, limiting their usefulness as comparative measures. 26
To compensate for these limitations, management evaluates our liquidity by considering the economic effect of excluded expense items independently, as well as in connection with its analysis of cash flows from operations and through the use of other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analysis. Adjusted EBITDA and Adjusted EBITDA Margin are not measurements of our financial performance under GAAP and should not be considered as an alternative to revenue, net income, net income margin, operating income, cash provided by operating activities, or any other performance measures derived in accordance with GAAP as a measure of our profitability or liquidity.
A reconciliation of Adjusted EBITDA for the three months ended
and 2021 follows (in thousands):
Three Months Ended March 31, Dollars 2022 2021 Reconciliation of Net Income to Adjusted EBITDA: Net income
$ 1,301 $ 2,671Interest expense 245 188 Income tax expense (benefit) (763) 122 Depreciation 3,958 3,631 Non-cash stock-based compensation 2,235 1,604 Income from equity method investment (155) - Gain on investment - (2,513) Severance and related costs 109 562 Income from discontinued operations, net of tax - (659) Other - 5 Adjusted EBITDA $ 6,930 $ 5,611
Reconciliation of cash provided by operating activities to adjusted EBITDA Net cash provided by operating activities
$ 9,218 $ 6,424Interest expense 245 188 Amortization of deferred financing costs (37) (37) Income tax expense (benefit) (763) 122 Deferred income taxes 1,823 304 Change in accrual for unrecognized tax benefits (93) (59) Change in accounts receivable 3,820 3,345 Change in deferred revenue (10,640) (9,351) Discontinued operations results - (1,656) Severance and related costs 109 562 Changes in working capital and other 3,248 5,769 Adjusted EBITDA $ 6,930 $ 5,611
Net profit margin and adjusted EBITDA margin for the three months ended
Three Months Ended March 31, 2022 2021 Revenues $ 34,334
$ 26,676Net Income $ 1,301 $ 2,671Net Income Margin(1) 4 % 10 % Adjusted EBITDA $ 6,930 $ 5,611Adjusted EBITDA Margin(1) 20 % 21 %
(1) Net Profit Margin and Adjusted EBITDA Margin are calculated by dividing the respective measure by revenues for that period.
27 -------------------------------------------------------------------------------- Table of Contents Cash Flows We have summarized our cash flows for the three months ended
March 31, 2022and 2021 (in thousands). Three Months Ended March 31, 2022 2021 Cash from operating activities $ 9,218 $
Cash used in investing activities
Cash used in financing activities
We have funded our operations primarily with cash from operations and borrowings under our revolving credit facility. To
Our principal internal sources of liquidity are cash and cash equivalents, as well as the cash flow that we generate from our operations. In addition, we had
$57.0 millionin borrowing capacity under our $90.0 millionCredit Agreement at March 31, 2022, subject to certain availability limits including our consolidated leverage ratio, which generally limits borrowings to 2.5 times annual adjusted EBITDA levels, as defined in the Credit Agreement. We believe that our existing cash and cash equivalents, cash generated from our continuing operations and available borrowings under our Credit Agreement will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and the foreseeable future thereafter. However, it is possible that one or more lenders under the Credit Agreement may refuse or be unable to satisfy their commitment to lend to us, we may violate one or more of our covenants or financial ratios contained in our Credit Agreement or we may need to refinance our debt and be unable to do so. In addition, our liquidity could be negatively affected by a decrease in demand for our products and services and the ability of our customers to pay for current or future services. We may also make acquisitions and may need to raise additional capital through future debt financings or equity offerings to the extent necessary to fund such acquisitions, which we may not be able to do on a timely basis or on terms satisfactory to us or at all.
Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, amortization, changes in deferred tax assets and liabilities, stock-based compensation, impairments, gain on investments, loss from sale of business, loss on disposition of discontinued operations, and the effect of changes in working capital. Net cash flows from operating activities were
$9.2 millionand $6.4 millionfor the three-month periods ended March 31, 2022and 2021, respectively. Cash inflow from operations is driven by earnings and is dependent on the amount and timing of payments to vendors and employees and billings to and cash collections from our customers. Cash provided by operating activities during the 2022 period increased $2.8 millioncompared to the same period of 2021 primarily due to strong billings to and collections from customers.
Cash used in investing activities during the three-month period ended
March 31, 2022was $4.1 millioncompared to $3.7 millionused in the same period of 2021. Cash used in investing activities in the three-month period ended March 31, 2022increased from the comparable 2021 period due to higher internal development costs, primarily driven by higher product development headcount.
Cash used in financing activities during the three-month period ended
March 31, 2022was $1.7 millionand was driven by $10.0 millionof net proceeds on long-term debt and $11.7 millionrelated to share repurchases. Cash used in financing activities during the three-month period ended March 31, 2021was $3.0 millionand was driven by share repurchases. 28
-------------------------------------------------------------------------------- Table of Contents Financing and Capital Requirements
We have a
$90 millionrevolving credit facility, which matures November 2023, with $33.0 millionof borrowings on the facility at March 31, 2022, leaving $57.0 millionavailable for future borrowings. Borrowings under the Credit Agreement bear interest, payable at least quarterly, at the Company's option, at a London Interbank Offered Rate ("LIBOR") rate or a base rate, plus a margin. Assuming an interest rate of 2.25% (the rate in effect on March 31, 2022) on our current borrowings, interest payments are expected to be $0.6and $0.8 millionin 2022 and 2023, respectively. The Credit Agreement contains various customary affirmative and negative covenants and also contains certain financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio. As of March 31, 2022, the Company was in compliance with all of the financial covenants under the Credit Agreement. Refer to Note 10 in the notes to the condensed consolidated financial statements and Item 3. "Quantitative and Qualitative Disclosures about Market Risk - Interest Rate Risk."
The Company has operating leases for corporate office space and certain equipment. The leases have terms from one year to eight years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option. No leases include options to purchase the leased property. As of
March 31, 2022, the value of our obligations under operating leases was $6.4 million. See note 6 to the condensed consolidated financial statements for further information. We make commitments to purchase advertising from online vendors, which we pay for on a monthly basis. We have no significant long-term obligations to purchase a fixed or minimum amount with these vendors.
Other capital needs
March 31, 2022, we recorded approximately $0.9 millionof unrecognized tax benefits as liabilities, and we are uncertain if or when such amounts may be settled. Related to the unrecognized tax benefits considered permanent differences, we have also recorded a liability for potential penalties and interest. Included in the balance of unrecognized tax benefits at March 31, 2022are $0.9 millionof tax benefits that would affect the effective tax rate if recognized. The Company believes it is reasonably possible that as much as $0.2 millionof its unrecognized tax benefits may be recognized in the next 12 months. The Company's Board of Directors previously approved a stock repurchase program that permits the Company to repurchase its common stock. As of March 31, 2022, the value of shares available to be purchased under the current plan was $13.1 million. Management has discretion in determining the conditions under which shares may be purchased from time to time. See note 12 of the notes to the condensed consolidated financial statements for further information. We anticipate capital expenditures in 2022 to be approximately $20 million. The increase over prior periods is due to the additional investments in the development of new products and features. We intend to use operating cash flows to fund capital expenditures.
Impact of COVID-19 on our business
The spread of the coronavirus disease ("COVID-19") caused an economic downturn on a global scale, as well as significant volatility in the financial markets. In
March 2020, the World Health Organizationdeclared the spread of the COVID-19 virus a pandemic. COVID-19 slowed recruitment activity for our businesses during 2020 as employers slowed hiring, which reduced our revenues and operating cash flows during 2020 and into the beginning of 2021. The pandemic may impact our financial performance in the coming months, but, based on information currently available, we are not anticipating a significant long-term impact on our business and operations, results of operations, financial condition, cash flows, liquidity and capital and financial resources. However, the situation is uncertain and rapidly changing. The Company cannot at this time predict the ultimate impact that the COVID-19 pandemic will have on its financial condition and operations. In an effort to protect the health and safety of our employees, we have taken action to adopt certain policies at our office locations, including working from home and the temporary closure of our locations when necessary. We may have to take further actions that we determine are in the best interests of our employees or as required by health organizations, federal, state, or local authorities. 29 -------------------------------------------------------------------------------- Table of Contents The impact of the COVID-19 pandemic continues to unfold. The extent of the pandemic's effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the further development of additional treatments or vaccines, and the resumption of widespread economic activity. While the pandemic may impact our financial performance in the coming months, due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we may not be able to predict the likely impact of the COVID-19 pandemic on our future operations.
The labor market and certain of the industries that we serve have historically experienced short-term cyclicality. However, we believe that online career websites continue to provide economic and strategic value to the labor market and industries that we serve. Any slowdown in recruitment activity that occurs could negatively impact our revenues and results of operations. For instance, the COVID-19 pandemic resulted in a slowdown of recruiting activity in 2020, which negatively impacted our business. Alternatively, a decrease in the unemployment rate or a labor shortage, including as a result of an increase in job turnover, generally means that employers (including our customers) are seeking to hire more individuals, which would generally lead to more job postings and database licenses and have a positive impact on our revenues and results of operations. Based on historical trends, improvements in labor markets and the need for our services generally lag behind overall economic improvements. Additionally, there has historically been a lag from the time customers begin to increase purchases of our recruitment services and the impact to our revenues due to the recognition of revenue occurring over the length of the contract, which can be several months to over a year. From time to time, we see market slowdowns, which can lead to lower demand for recruiting technologists and financial and security cleared professionals. In 2020 and early in 2021, the COVID-19 pandemic led to a reduction in recruitment activity. If recruitment activity slows in the industries in which we operate during the remainder of 2021 and beyond, our revenues and results of operations may be negatively impacted.
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