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Dice Focuses Job Seekers On Fast-Growing Sectors

Apr 20th, 2011 - Scot Melland joined Dice Inc. as CEO in 2001. Great timing, he jokes, alluding to the bursting of the tech bubble.

But Melland hung on as the company went private, then public again in 2007 as Dice Holdings (DHX). Melland's current timing is superb.

With the general job market in slow recovery mode, Dice operates online job boards in three industries where workers with unique skills are in high demand, drawing above-average salaries.

Dice.com and affiliate sites eFinancialCareers and Rigzone advertise jobs in technology, finance and oil and gas.

Those are good jobs requiring specialized skills. Jobs in the oil and gas exploration industries average over $100,000 in annual salary. Tech jobs average $79,000, a Dice salary survey found.

Employers are willing to pay up just to find such workers. That's why Dice was able to raise its monthly subscription price by $100 last fall.

It now gets $995 a month for a subscription, letting a single recruiter advertise five positions.

Should they want more recruiter seats to advertise more than five positions, they pay more.

Job boards such as Monster.com have grown as general sites with postings for all sorts of positions. Dice has grown with its strategy of targeting specific vertical job markets.

Difficult Recruiting

Melland favors industries "where the recruiting is difficult and complex, where they're looking for people with very specific skills and certifications."

Within its targeted job markets, Dice has been gaining share.

"Dice is gaining share from Monster," said Jordan Rohan, an analyst with Stifel Nicolaus.

"It's clear Dice has been gaining share within the entire industry," said William Blair analyst Timothy McHugh. "I do think Dice has the potential to continue to gain share within existing verticals."

One reason is that employment advertising flourishes where there is a lot of job hopping. "We like industries where there is high turnover," said CEO Melland.

The oil and gas industry fits this bill because much of the work is tied to specific drilling projects. When a drilling program ends, workers are out looking again.

Tech has high turnover as employees change jobs to learn the latest skills. Finance types are always on the lookout for a better compensation package.

Rohan notes that turnover tends to be low at the start of expanding economic cycles. From there, it "increases pretty quickly thereafter," he said. He expects increasing turnover as the current cycle matures.

"I think we're in the fourth or fifth inning in terms of accelerating turnover," he said.

The Dice formula is to attract job seekers and get them looking to the site for industry news and openings. Dice actually employs a small number of journalists. That's a rarity on a Web that draws its life by aggregating content originally produced and paid for by print publishers.

The original content makes sites such as Rigzone a go-to for oil workers looking for the hottest drilling sites and the companies that are boosting their rig counts.

The vertical sites also publish salary information and let job seekers interact through online forums.

"We offer job seekers a way to build their careers through editorial, salary information and online forums. This attracts people to the site. These are serious career professionals," said Melland.

The sweet spot for Dice is job seekers with "five to 15 years of experience," he added. Dice won't fill many CEO or CFO positions. But, as Melland noted, "it's not kids just out of school."

The presence of seasoned and skilled professionals draws corporate recruiters. And Dice will let these recruiters search specifically — for a fee — its resume database for, say, Oracle database administrators.

With easy comparisons to recession-battered results in 2009, Dice has rung up good numbers. In its most recently reported period, the fourth quarter of 2010, Dice reported revenue of just under $38 million. That represented a gain of 42% — 36% in organic growth — over the prior year. Management offered guidance of $172 million in 2011 revenue.

Dice will report first-quarter 2011 earnings April 28.

One factor contributing to earnings stability is Dice's handling of subscription revenue. Most of its subscriptions are for one year, but revenue is booked over four quarters. The commissions it pays its ad salesmen, on the other hand, are booked immediately.

With costs charged immediately but revenue reporting spaced out over several quarters, Dice.com has a built-in annuitylike revenue stream that typically extends for three quarters.

With a revival in job markets, Dice's deferred revenue has been growing. "They have a lot of visibility. Most Internet businesses do not have a year's worth of visibility like they do," noted Rohan.

Secondary Offerings

Dice.com recently sponsored two secondary offerings. These involved private investors selling their shares. Further secondary offerings, especially if they involve dilution from the issuance of new stock, could effect the stock, some analysts fret.

And Dice.com is hostage to employment growth in the industries it serves.

All three have been strong of late. Financial services, subsidized by the Fed's rock-bottom interest rates, have rebounded. Strong oil prices have swelled exploration budgets. And tech continues to ride the massive wave of consumer enthusiasm for mobile electronics.

But all that momentum could weaken with time. And Melland certainly understands that job markets are still far from robust.

Indeed, for all its recent success, Dice's performance remains well off pre-recession highs.

Dice's customer count peaked at the end of the first quarter of 2008 at 9,150. The financial crisis and recession whittled that down to 5,900 by mid-2009.

With its recent roll, Dice's customer count is back up to 7,000.

Is Dice poised to expand into another industry vertical?

Melland offers few clues, but he notes that Dice already has a small presence in the health care job market.

That may not be as glamorous as its other markets, but health care could offer added stability to core markets that are highly cyclical.

Source: http://www.investors.com/NewsAndAnalysis/Article/569694/201104201532/Website-For-Job-Seekers- Focuses-On-Fast-Growing-Industries-.htm

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