Table 96: NILE Annual Cash Flow Statement $ in millions Operating Cash Flows Investing Cash Flows Financing Cash Flows Proceeds from sale of common stock, net of issuance costs Procee
Trang 1Table 94: NILE Quarterly Income Statement (cont.)
Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08E Q1-09E Q2-09E Q3-09E Q4-09E
% of Total Revenue
Q/Q change
Y/Y Change
Source: Company reports and J.P Morgan estimates
Trang 2
Table 95: NILE Annual Balance Sheet
$ in millions
2007 2008E 2009E 2010E Assets
Liabilities
Shareholder Equity
Source: Company reports and J.P Morgan estimates
Trang 3Table 96: NILE Annual Cash Flow Statement
$ in millions
Operating Cash Flows
Investing Cash Flows
Financing Cash Flows
Proceeds from sale of common stock, net of issuance costs
Proceeds from sale of mandatorily redeemable convertible preferred stock, net of issuance
Source: Company reports and J.P Morgan estimates
Trang 4Dice Holdings, Neutral, ($4.11)
We are downgrading Dice Holdings from Overweight to Neutral Although we believe the company is well-run, we think the current environment, esp in the financial sector, will not present Dice with significant opportunities for growth As such, we believe investors would do better to stay on the sidelines
• Economic, employment outlook present significant headwinds With
companies in a wide variety of fields announcing layoffs, we believe unemployment is likely to keep rising in the near term, and we expect a hiring recovery to lag the broader economy; in the last two recessions, unemployment peaked after growth had resumed Even while a majority of package customers are likely to renew, we think churn may rise as employers shelve hiring plans
• eFC segment’s exposure to financials could stymie growth… eFC accounted
for nearly a quarter of Dice Holdings revenue in F’08 As the financial industry is likely poised to continue shedding jobs for several quarters, especially in the US and UK, growth in the segment could be very hard to come by, and we don’t think the unit’s operations outside the US and UK have reached the scale to make
a meaningful contribution to growth
• …and the tech picture is not much brighter Numerous technology firms have
announced layoffs as well as hiring slowdowns We do not expect hiring to pick
up in the near term, until after consumer spending turns around Thus, we believe the outlook for growth in the company’s tech vertical remains similarly clouded
• Cost control by management likely to maintain profitability through tough
times We believe management is very conscious of costs and quite willing to
make the expense structure, especially in Sales and Marketing, appropriate to the
revenue stream
• 2009 drivers In our view, the following factors will drive shares in 2009: (1) the
employment outlook in the US and UK, (2) the health of the financial industry and hiring trends within finance, and (3) the continuing shift of employment advertising from offline to online resources
• Maintaining 4Q’08 estimates We are maintaining our 4Q’08 estimates of $36M
in revenue, $16 of EBITDA and EPS of $0.07, as well as our F’08 and F’09 estimates, which are outlined in the table below, along with our newly introduced F’10 estimates:
Table 97: Dice Holdings Financial Snapshot
$ in millions, except per share data
JPM
Consensus
Trang 5Our Estimates and Outlook for 2009
We think the employment market is likely to remain pressured through F’09 We are modeling a Y/Y decline in revenue for Dice Holdings, to $147M, down 6% Y/Y Our EBITDA estimate is $64M, and we are modeling ~20 bps of margin expansion
as the company has committed to manage its marketing costs against the tougher climate We are also maintaining our F’09 EPS estimate of $0.28
Our Estimates and Outlook for 2010
We are introducing estimates for F’10 We believe the company could begin to see revenue rebound in that year, and we are modeling 5% revenue growth in F’10, to
$154M Our new F’10 EBITDA estimate is $68M, and we are projecting EPS to rise 1c Y/Y, to $0.29
Valuation and Rating Analysis
DHX trades at 4.7x our F’09E EBITDA, a 27% discount to the 6.5x peer group average Despite the company’s international growth prospects and strong free cash flow generation, we believe the difficult outlook for the employment market makes multiple expansion unlikely in the near term As such, we are downgrading DHX to Neutral, from Overweight.
Investment Risks
We believe there are several risks to our Neutral rating on Dice:
• Upside risks: Our Neutral thesis is predicated on prolonged economic challenges on both a macro level and in the financial and tech sectors more specifically Should our expectations prove too pessimistic for the macro economy or for one of the specific industries, the company could outperform our estimates Additionally, if the company is better able to retain clients than we expect in this environment, results could exceed our expectations
• Downside risks: should the economic challenges persist longer than we expect (either broadly or in one of the two verticals on which Dice is focused), or should the company have trouble managing costs against declining revenue, the stock could see further weakness Additionally, Dice operates in a highly competitive landscape, with over 1,000 websites offering job postings, including some, such as Monster, CareerBuilder and HotJobs, with significantly more financial resources than Dice In addition, social networking sites, such as Facebook and LinkedIn, have been generating significant traffic growth and are looking at job listings as a way
to monetize traffic, while online classified companies, such as Craigslist, offer job listings for free or a small fee Success of any of Dice’s competitors in the technology and financial verticals could negatively impact our growth expectations
Trang 6Table 98: Dice Holdings Annual Income Statement
$ in millions
Reported Revenue
Y/Y revenue growth 70.7% 9.2% -5.7% 4.8%
Y/Y revenue growth 37.8% 8.1% -5.7% 4.8%
Reported operating expenses:
Cost of Revenues (includes stock-based compensation) 8.6 9.8 9.1 9.4
Product Development (includes stock-based compensation) 4.2 4.6 4.4 4.7
Sales and marketing (includes stock-based compensation) 53.4 57.9 54.9 57.6
General and Administrative (includes stock-based compensation) 19.2 21.6 20.8 21.5
Impairment of intangibles
EBITDA Margin 43.5% 43.2% 43.4% 44.0%
Operating margin 28.1% 29.9% 28.9% 29.4%
Other income
As % Revenue:
Reported revenue (Y/Y growth)
Trang 7Table 99: Dice Holdings Quarterly Income Statement
$ in millions
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08E 1Q09E 2Q09E 3Q09E 4Q09E Reported Revenue
Pro Forma Revenue:
Reported operating expenses:
Other income
Trang 8Table 99: Dice Holdings Quarterly Income Statement (cont.)
Loss from discontinued operations & Min Int (0.9) 0.2 (0.5) (0.5) 0.5
Income tax benefit of discontinued operations 5.6 (0.5) 0.2 (1.3) -
Segments as % of Revenue
Operating Expenses as % of Revenue
General and Administrative 12.7% 12.6% 13.6% 14.2% 14.0% 13.3% 13.5% 14.9% 14.0% 14.0% 14.2% 14.5%
-4.8%
Reported revenue (Y/Y growth)
Pro forma revenue (Y/Y growth)
eFC - UK/ROW revenue 67.0% 69.6% 81.3% 96.5% 77.1% 45.9% 16.1% -18.0% -15.0% -15.0% -15.0% 5.0%
Source: Company reports and J.P Morgan estimates
Trang 9Table 100: Dice Holdings Annual Balance Sheet
$ in millions
Current assets:
Other assets:
Reorg value in excess of amounts allocated to identifiable assets - - - -
Liabilities and stockholders' equity
Current liabilities:
Other long-term liabilities (includes hedging liabilities) 7.5 7.2 7.2 7.2
Minority interest in net assets of subsidiary
Stockholder's Equity
Source: Company reports and J.P Morgan estimates
Trang 10Table 101: Dice Holdings Annual Cash Flow Statement
$ in millions
Gain of sale of joint venture
Loss on interest rate hedges
Changes in operating assets and liabilities, net of effects of acquisition: 5.7 3.1 0.7 2.4
Net cash provided by operating activities of continuing operations 54.5 54.5 47.3 51.6
Net cash used for investing activities of continuing operations (3.0) (12.7) (5.8) (6.5)
Payments to holders of vested stock options in lieu of dividends (4.6) - - -
Cash received from transfer agent on behalf of former shareholders of Dice, Inc - - - -
Other, net
Net cash provided by financing activities of continuing operations (1.1) (24.7) (1.2) (1.2)
Net cash provided by operating activities of discontinued operations
Net cash used in investing activities of discontinued operations
Effects of exchange rate changes
Source: Company reports and J.P Morgan estimates