Thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to ZipRecruiter, Inc Q3 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Andrew Haroldson, Investor Relations. Andrew?

Thank you, operator and good afternoon. Thank you for joining us in our earnings conference call during which we will discuss ZipRecruiter’s performance for the quarter ended September 30, 2024 and guidance for the fourth quarter 2024. Joining me on the call today are Ian Siegel, Co-Founder and CEO; David Travers, President; and Tim Yarborough, CFO. Before we begin, please be reminded that forward-looking statements made today are subject to risks and uncertainties relating to future events and/or the future financial performance of ZipRecruiter. Actual results could differ materially from those anticipated in these forward-looking statements. A discussion of some of the risk factors that could cause actual results to differ materially from any forward-looking statements can be found in ZipRecruiter’s quarterly report in Form 10-Q for the quarter ended September 30, 2024, which is available on our investor website and the SEC’s website. The forward-looking statements in this conference call are based on the current expectations as of today, and ZipRecruiter assumes no obligation to update or revise them, whether as a result of new developments or otherwise. In addition, during today's call we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in ZipRecruiter’s shareholder letter and in our Form 10-Q. And now I will turn the call over to Ian.

Thank you, and good afternoon to everyone joining us today. ZipRecruiter continues to navigate a protracted labor market downturn. In Q3 2024 revenue of $117.1 million was down 25% year-over-year. Net loss in Q3 was $2.6 million, while adjusted EBITDA was $15 million, equating to a net loss margin of negative 2% and an adjusted EBITDA margin of 13%. Notably both revenue and adjusted EBITDA in the quarter came in above the high end of guidance. We continue to balance financial strength with investing in strategic initiatives that we believe will drive a strong ROI positioning ZipRecruiter for success with job seekers and employers alike. While there are many ways to measure market share in our industry, we have been acutely focused on winning share with job seekers via a superior job search experience. Our strategy around product and technology has proven effective as ZipRecruiter has grown job seeker traffic year-over-year in Q3 at least 13 percentage points more than any of our largest competitors. Our multi-year investments in brand, advancements with our AI-driven career advisor, and focus on matching technology have all played a role in winning trust and loyalty with job seekers. We firmly believe that over time revenue from employers will follow the market share shifts with job seeker activity. While each labor market cycle is distinct by several measures, this is one of the more prolonged downturns in hiring activity. Seasonally adjusted hires have declined on a year-over-year basis every month since August of 2022, which is approaching the same duration in hiring declines as the recession of 2008. Further, the great stay continues with currently employed individuals leaving their jobs at the lowest rate since 2015, excluding the onset of the COVID pandemic. This persistent reduction in employee churn is further driving down hiring levels. While it is difficult to predict exactly when hiring activity will recover, we are confident in the long-term health of the US labor market and see the end of the great stay as a future tailwind. Despite the duration of the hiring decline, our operating philosophy of remaining nimble, responding to the macroeconomic environment, while investing in our product and technology has proven effective during this period. We believe that when businesses resume hiring they will experience a much improved marketplace with better tools and a greater supply of candidates to find a great fit for their job openings through labor market cycles. We remain intently focused on our mission of actively connecting people to their next great opportunity. With that, I will now turn the call over to Dave to review progress on our growth strategies.

Thank you, Ian and good afternoon. Q3 was another strong quarter of execution toward building out each of our three strategic pillars. Our first strategic pillar is to increase the number of employers and the revenue per paid employer in our marketplace. Last quarter we highlighted the initial rollout of ZipIntro. ZipIntro is essentially speed dating for hiring, where employers pick a time for an interview and then ZipRecruiter's smart matching technology brings them qualified job seekers to speak with back to back over video. Employers love ZipIntro’s ability to accelerate face-to-face connections for a faster and more personal hiring experience. The results were exceptional, with over 90% of job seekers saying they're likely to use ZipIntro again. And employers receiving over three times more quality applications per job utilizing ZipIntro. ZipIntro fully launched to all subscription customers in Q3. And the results continue to confirm the value this product generates for our marketplace. With ZipIntro, most employers received their first application in under 20 minutes and spoke to a candidate the next day. This product has gained strong traction in the early stages with the full launch of ZipIntro seeing over a threefold increase in adoption after the initial rollout. In Q3, we also launched our next-generation resume database, which helps employers find qualified candidates in minutes. The new resume database features cutting-edge search and filtering capabilities, instant access to candidate contact information, and fresh workflow management tools. After searching for the right candidates, employers can unlock the resumes and contact information of qualified candidates. In the first week of launch, we saw an over 20% increase in average weekly candidate profile unlocks compared to unlocks before the launch in 2024. Turning to our second pillar, increasing the number of job seekers in our marketplace. As Ian mentioned, we have been investing heavily into the job seeker experience, given our belief that market share shifts in job seeker activity will be followed by market share shifts in employer revenue dollars. Our gains this year, for organic and total job seekers have continued. In Q3, total ZipRecruiter web traffic, as measured by SimilarWeb in the US, grew by 21% year-over-year, which is at least 13 percentage points more than any of our largest competitors. This includes organic job seeker traffic growth of 23%. We believe these gains have been a result of a multi-year investment in brand, product, and technology. We create rich profiles for job seekers using resume data information gleaned by our AI-based career advisor and other data they provide about their skills and backgrounds. More comprehensive and up-to-date job seeker profiles make for better matches to jobs creating value for both job seekers and employers. In Q3, we rolled out several product improvements that make it easier for job seekers to upload and review their resumes, add a photo, build out their profiles, and ultimately present their best selves to employers. Notably we've improved how we pull content from a job seeker's resume to populate their profile, an update that helps job seekers quickly populate their work history, education details, and more. We believe that making it easier for job seekers to maintain and enhance their profiles improves their job search experience. It also makes employer products like our next-generation resume database more valuable for employers. I'll conclude with our third pillar, making our matching technology smarter over time. In Q3, we rolled out a meaningful improvement to the algorithm powering the email notifications we send job seekers that feature newly posted relevant jobs. These email notifications are highly effective at driving applications to a job shortly after the job is posted, making it more likely the applicant will be hired and delighting employers who aim to hire quickly. We saw an increase in job seeker engagement as a result of the update with clicks from the email notifications increasing by 100% and applications from those emails increasing by 120%. I'll now turn the call over to Tim, to review financial results and guidance.

Thank you, Dave and good afternoon everyone. Our third quarter revenue of $117.1 million represents a 25% decline year-over-year, primarily due to reduced demand from SMBs with continued uncertainty and volatility in the labor market. Quarterly paid employers were 65,000, representing a 27% decrease versus Q3 2023 and a 7% decrease sequentially. The year-over-year and quarter-for-quarter decreases in quarterly paid employers are primarily reflective of reduced demand from SMBs and the continued uncertainty and volatility of the labor market. Revenue per paid employer was $1795, up 3% year-over-year and up 2% sequentially. The increases year-over-year and quarter-for-quarter are primarily due to the slight mix shift from subscription revenue to performance revenue. Net loss was $2.6 million in Q3 2024, compared to net income of $24.1 million in Q3 2023 and net income of $7 million in Q2 2024. Q3 2024 adjusted EBITDA was $15 million, equating to a margin of 13% compared to $54.4 million, a margin of 35% in Q3 2023 and $27.8 million with a margin of 23% in Q2 2022. Net income and adjusted EBITDA decreases year-over-year were driven by revenue declines, while the sequential decreases were driven by revenue declines and higher operating expenses. Cash, cash equivalents, and marketable securities were $498 million as of September 30, 2024. Moving on to guidance, our Q4 2024 revenue guidance of $107 million at the midpoint represents a 21% decline year-over-year and a 9% decline quarter-over-quarter. The year-over-year decline represents the continuation of a prolonged labor market downturn, while the quarter-over-quarter decline reflects our expectation of a seasonally softer Q4. Our adjusted EBITDA guidance for Q4 2024 is $9 million at the midpoint or an 8% adjusted EBITDA margin. On a sequential basis, this implies a slight decrease in operating expenses as we moderate marketing during a seasonally soft period. Our fourth-quarter guidance implies a full year 2024 adjusted EBITDA margin of 16% within the expectations we outlined at the beginning of the year and leveling off adjusted EBITDA margins in the low to mid-teens. As we finish 2024 and enter 2025, our operating philosophy remains unchanged. We remain nimble and are prepared to quickly adjust to a wide range of scenarios, while the labor market remains challenging and uncertain. ZipRecruiter maintains a healthy balance sheet and a flexible operating model. We are positioned well to continue investing in our strategic growth drivers and remain ready for recovery in hiring activity. With that, we can now open the line for questions.

We will now begin the question-and-answer session. Your first question comes from the line of Ralph Schackart with William Blair. Ralph, your line is now open.

Hi, good afternoon. Thanks for taking the questions. First question just in terms of the verticals that you serve, maybe David can you just give a highlight, any pockets of strength that you're seeing and then the early cycle verticals that initially saw the softness, be it technology or anything else, anything you'd call out there or any color you could add on those early cycle verticals? Then I have a follow-up?

Yeah, thanks Ralph. Our business looks like the whole US economy, so we're not particularly concentrated in one sector in a way that isn't representative of the economy as a whole. But looking at verticals, healthcare despite softness we saw remained fairly robust compared to other verticals, and healthcare is a significant chunk of the economy. So that was a notable bright spot I would say. On the more negative side of things, we saw transportation, storage, travel and leisure being on the weaker side of the ledger where we saw softer performance. In terms of those early verticals you talked about, finance and technology in particular, which is where we saw weakness at the very beginning of this particular downturn back in mid-2022, they were in the middle, in between the bookends of healthcare being a little bit stronger and things like transportation and storage being on the weaker side.

Great. Just follow-up sounds like SMBs continue to be cyclically challenged, so just if you can get an update on what you're seeing from your enterprise customers? Thanks.

Yeah. So enterprise customers, as evidenced by the fact that our percentage of revenue that comes from performance marketing, which is driven by enterprise customers, ticked up to 22%. Enterprise customers were a little bit more robust than SMBs during the quarter. What we've seen there is a combination of good execution on our part and also some hiring needs in particular areas like healthcare, as I mentioned where areas like major medical centers continue to have structural shortages in things like nurses. I’m pleased with the execution of our teams there and what has been difficult for a couple of years, but we're really optimistic that we've got a long way to go here that 22% is still less than the roughly 50% of the market opportunity in the US that enterprises represent, and our optimism remains very strong as we look at potential for further growth with enterprises.

Great. Thanks, Ian.

Your next question comes from the line of Josh Chan with UBS. Josh, your line is now open.

Hi, thank you. Good afternoon. I guess in your remarks, you mentioned the great stay. I was just wondering if there's any house view on what will cause it to end and how that would kind of unfold. I know it's an open-ended question but appreciate any color there.

Yeah. Thanks for the question. This is Ian, and we are definitely students of the labor market as we enter our 26 months in a row where hires have declined on a year-over-year basis, and a substantial portion of that decline is coming from the fact that people are just fundamentally quitting at a much lower rate than they previously did. In fact, that is what drives a substantial portion of the overall hiring in the US. If you go back to January of 2022, the quit rate was 3%. And if you look at the most recent month, it was under 2%. So it's falling by more than one-third. It seems like a combination of factors are causing people to stay. A lot of people in the post-COVID rehiring when the economy was opening back up are benefiting now from either top-of-market or even above-market salaries, jobs that included a record number of perks, including things like bonuses and benefits. Furthermore, a lot of people got into home at extremely low interest rates. We think there is going to be a natural period of time where as the economy returns to a more steady-state normal, this is going to work its way through the system and the hiring will resume. I would just say if you were to go back to 2001 or 2008 and look at the pattern that came with those recessions, we are entering close to record territory in terms of the duration of this particular recession. In every previous recession, there have been questions about whether there has been a structural change. If you ask for our house view it is that the best bet over the long term is the health of the US labor economy and that hiring will resume and that we will see a more balanced normal in the future here.

That's really helpful color. I really appreciate that, Ian.

Just to add on to that, the other thing I would say is that the drop in the quit rate is significant because people quitting represents a large part of job seeking activity. In that context, the growth we've observed in job seekers, both in absolute terms and the 13 percentage points of market share gained relative to our large competitors, reinforces our confidence in the strength of that performance, which we have discussed over several quarters now.

Thanks. That makes sense. Thank you, Dave. I would like to follow up with a question about the Q4 guidance. I understand that the labor market typically slows down a bit seasonally in Q4. Does this Q4 guide take into account a standard level of seasonal slowdown? I would appreciate any insights you could provide. Thank you.

Hi, Josh. This is Tim. Yes, the Q4 guide takes into account two things. One would be a seasonal decline, and we would expect that decline primarily to be from SMBs that would be a more typical pattern, but also recognizing that the labor market still remains soft. It takes both of those dynamics into consideration.

Great. Thank you, Tim, and thanks, everybody, for your time. Good luck in Q4.

Your next question comes from the line of Doug Anmuth with JPMorgan. Doug, your line is now open.

Hi. This is Maggie Hoffman on for Doug. Thanks for taking the question. I was just wondering if there's any color you can provide around the timeline for the launch of Breakroom in the US? And then maybe just more broadly as you roll out new products and features, how we should think about the monetization opportunity there over time? Thanks.

Thanks, Maggie. Yeah. So Breakroom, we continue to be very excited about. Obviously, we're a few months into the integration since we acquired them a few months ago. First of all, they're performing great in the UK. They're a young business, so it's not a material portion of our revenue at this point. But they're building both on the job seeker side, where we see strong growth in the UK and on the employer side, where they're performing very well. Work is underway to launch Breakroom in the US. We already have several components of the work that's been done and look forward to updating you on that in 2025 as that launch comes together in the US.

I will add on new products. We have several new products that have already been launched, including the new Resume Database and ZipIntro. Now that these products are in the market and being used by customers, we are receiving very positive feedback regarding their features and a number of requests for enhancements. This trend has been consistent in our business over the years. We aim to maximize the value we deliver while also recognizing the necessity to capitalize on that value. Currently, we are in the phase of maximizing value. In 2025, both of these products are expected to generate revenue, though their impact on the overall results for the year is not anticipated to be significant. However, we believe they will greatly enhance customer satisfaction. Over time, we expect these products to become increasingly important contributors to our overall suite of innovations.

Great. Thank you so much.

And your next question comes from Glenn Shell with Raymond James. Glenn, you can go ahead.

Good evening. I was just wondering how are you thinking about balancing investments for maintaining a low to mid-teens margin profile?

Yes. Our philosophy really hasn't changed. We've been in a dynamic environment for the last couple of years, and we respond to that environment as it comes. Over the course of this year, especially we've seen hiring trends to be relatively flat towards the front part of the year, and then that trend start to soften toward the back end of the year, and we've adjusted accordingly. We're delivering margins in the low to mid-teens, consistent with the feedback we've provided all year long. But we're doing that not in response to or in direction of any single quarter's performance but in terms of long-term performance. That's the primary lens that we use.

Okay. Thank you. And then, you're obviously making really good progress on job seeker traffic growth. What tailwinds do you see coming from this momentum, whether new employer conversations, better matching, anything like that? I have one more follow-up if we have time.

Yes. This is Dave. So, on the job seeker front, obviously we're a two-sided marketplace. We monetize entirely on the employer side of the marketplace, but job seekers are the foundational element that brings our employers here. As we grow and as we grow relative to our competitors, on the job seeker front that makes everything in our business work better, from new business acquisition to matching technology to retention of customers and keeping customers happy. It's not only the absolute number but it's the compounding trend line of being the fastest growing highest momentum job seeker destination in the job space that gives us a lot of confidence. Every major move in our view of the history of the online job space in terms of employer revenue dollars has been preceded by a major move in job seeker market share. We're seeing that job seeker market share in our business, which makes us very optimistic for the future as the macro environment changes.

This is Ian. I would just say that in an environment where every player in the recruiting space is confronted with the reality of reduced hiring demand from employers, the one place where we feel we can clearly see and fight for market share is with job seekers. The measure of how our marketplace is improving is made apparent by how successful we've been, not just in the quarter, not just in the year, but over the last two years in the steady increase in job seeker traffic where we have been a disproportionate winner relative to all our peers.

Great. Thank you. And then more on the employer side, you said that some employers are coming back to ZipRecruiter without a marketing effort. How should we factor that into our models? And is that a growing trend that you're seeing?

Yes, great question. We're extremely excited about driving brand awareness above 80% on both the job seeker and the employer side of the marketplace. From a standing start a little over a decade ago to where we are today, that's been a significant and ongoing investment. We're still in the growth and early stages of building this marketplace. We plan to continue to invest in that brand. Significant numbers of every single cohort come back to us as their hiring needs return. This is especially true in the small business segment where hiring needs are often intermittent. Staying top of mind between job searches is critical for us, and having brand awareness is beneficial. We're going to continue to invest in that. We've seen marketing and sales come down over time as businesses mature. As we've studied this business and other online job marketplaces, we have high confidence that already at our current scale and brand awareness, we're reaching virtually every job seeker and employer with our messaging each year, often multiple times.

I would just add that if you go back to the post-COVID initial recovery when we were still careful with our marketing dollars, we were not yet certain about the steadiness or persistence of the recovery. The advantage of having top-of-mind brand recognition becomes apparent when hiring demand increases. Without spending money on marketing, we saw a surge in organic business, which manifested into the operating leverage that we have come to appreciate. We're well-positioned as a top-of-mind answer for most employers in America about where to post their job; ZipRecruiter is one of the obvious solutions. That's a real advantage.

Okay. Thank you very much.

There's no further question at this time, and that concludes today's call. Thank you all for joining. You may now disconnect.