Ziprecruiter, Inc. Q4 FY2025 Earnings Call

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to ZipRecruiter Q4 2025 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. You are limited to one question and one follow-up question during the session. If you'd like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Emilio Satori, Head of Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon. Thank you for joining us for our earnings conference call, during which we will discuss ZipRecruiter's performance for the fourth quarter and full year ended December 31st, 2025, and our guidance for the first quarter of 2026. Joining me on the call today are Ian Siegel, Co-Founder and CEO, David Travers, President, and Tim Yarbrough, CFO. Before we begin, please be reminded that forward-looking statements made today are subject to risks and uncertainties related 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 annual report on Form 10-K for the year ended December 31, 2025, 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-K. And now, I will turn the call over to Ian.

Thank you. Good afternoon to everyone joining us today. 2025 was a year of stabilization and strategic execution for ZipRecruiter. After multiple quarters of sequential growth, I'm pleased to share that we achieved year-over-year revenue growth in Q425, the first time a quarter has grown year-over-year since Q3 of 2022. Throughout 2025, we remain focused on our mission to actively connect people to their next great opportunity by delivering high-impact product enhancements. We upgraded Zipintro and our resume database to drive faster connections, deployed new AI-powered suggested screening questions to decrease the time it takes employers to vet the candidates they receive, and optimized our automated campaigns to deliver better performance for our enterprise clients. In January of 2026, we took another Leaks Forward with the launch of Be Seen First, a product which enables job seekers to jump to the top of an employer's candidate list. Job seekers earn this advantage when they tell the employer why they're excited about the role and what skills they bring to the table. The results are promising. Be Seen First candidates are nearly two times more likely to have a conversation with an employer. Following the sequential growth in Q2 and Q3 of 2025, Q425 marked a return to year-over-year revenue growth. We achieved this milestone despite a challenging macroeconomic backdrop. That said, hiring demand in Q425 was soft. Hiring demand dropped below what normal seasonality would have predicted, and job openings declined 10% year-over-year. As a result, Q126 started from a lower base of paid employers our q126 revenue guidance of 106 million at the midpoint reflects this lower holiday baseline however in q1 of 26 paid employer trends have rebounded year-to-date those trends are in fact stronger than the trends we called out as noteworthy in q1 of 25. we are encouraged by the momentum we see in performance marketing revenue year-over-year performance marketing revenue increased 5% in Q3 of 25 and 9% in Q4 of 25. Our go-to-market motion and product offerings continue to resonate with and drive value for our larger enterprise customers. This performance gives us confidence that our product improvements and technology investments are driving us forward in this environment with our underlying momentum intact. for the full year 2026 we expect hiring demand to follow a typical seasonal cadence albeit at subdued levels given the lower starting point post holidays we believe a likely result in this scenario is for us to achieve flat year-over-year revenue in 2026 compared to the five percent decline in 2025. further in this scenario we expect adjusted EBITDA margins to expand by five percentage points, from 9% in 2025 to 14% in 2026. This improvement reflects our rigorous cost discipline alongside targeted investments aimed at capturing growth. In addition to addressing our business specifically, we have been receiving many questions about AI and its impact on the labor market. While some attribute the current high-wing slowdown to AI displacement, ZipRecruiter employer survey data tells a different story. According to ZipRecruiter customer responses in our Q4 2025 Annual Employer Survey, the current labor market trends are primarily driven by economic factors, such as lower customer spending or cost-cutting mandates, rather than technology-driven automation. AI is currently having little to no impact on our customers' hiring plans. This matches the sentiment from a large number of economists on the topic. over the long term we expect ai to be a substantial boon to the labor market history shows that major technological shifts displace specific roles but ultimately unlock productivity and enhance labor demand we believe ai will follow a similar trajectory we further believe zip recruiter is uniquely positioned to lead this next wave of ai driven acceleration since our inception we have invested over a billion dollars to build an enduring brand that resonates with both employers and job seekers our proprietary ai matching technology trained on billions of interactions continuously learns to surface the right roles and deliver qualified candidates faster our team and our technology investments are laser focused on continuously improving the process of finding a great job or a great employee ZipRecruiter remains committed to its mission of actively connecting people to their next great opportunity through every economic cycle we believe we will continue to lead the shift in recruiting from offline to online and we are prepared for this new wave of ai driven innovation before i turn the call over to dave as you read in our shareholder letter our cfo tim yarborough has decided to pursue a new opportunity and will be departing zip recruiter on behalf of the board and the entire zip recruiter team i want to thank him for his over a decade of dedicated service. We wish him continued success in his next opportunity. Dave Travers, our current president and previous CFO of six years, is stepping in as interim chief financial officer effective February 26th. Dave's deep familiarity with our business, financial operations, and history will ensure a seamless transition during this interim period. We've also initiated a comprehensive search for a permanent CFO. And with that, I'll turn the car all over to Dave to share some business highlights.

Thanks, Ian. And good afternoon. Our performance in the fourth quarter reflects the continued success of our product-led strategy. Even in a complex hiring environment, our investments in matching technology and seamless integrations are delivering clear value to both employers and job seekers. I'm excited to share several highlights with you. Q425 revenue reached 112 million, representing 1% year-over-year growth. This is a significant milestone, marking our first quarter of year-over-year growth since the market decline began in Q3 of 22. This performance is consistent with the scenario we outlined over the course of 2025, and we believe our execution, brand resilience, and strong market position overcame what continues to be a challenging macroeconomic backdrop. We finished the year with over 59,000 quarterly paid employers in Q4, up 2% year-over-year and down 12% sequentially, consistent with historical federal patterns. This is our second consecutive quarter of year-over-year expansion, signaling the long-term health of our employer base. This January, we launched Be Seen First, a new product designed to help job seekers break through the application black hole and turn one-way applications into real two-way conversations. By adding a short note to their application, job seekers move to the top of an employer's applicant list, highlighting essential skills and enthusiasm that resumes often miss. This provides recruiters with critical context and surfaces the most engaged talent. Employers are prioritizing these high-intent applicants, and be seen first candidates are nearly two times more likely to have a conversation with the employer. In response to the shifting SEO landscape, we optimized our marketplace for generative AI discovery. This drove a significant increase in engagement with site visits from AI engines more than doubling year over year in Q4. Additionally, ZipRecruiter's job seeker traffic outperformed our largest competitors throughout 2025, validating our ongoing product improvements. By reaching job seekers, regardless of where they begin their search, we believe we are uniquely positioned to capitalize on the eventual acceleration of U.S. hiring. Since its U.S. launch in 2025, Break Room has published over 16,000 employer profiles, powered by 1.6 million employee ratings. We recently integrated these ratings directly into ZipRecruiter, enhancing 8.7 million job postings and over 9,000 company pages with transparent workplace insights providing job seekers with transparency to better evaluate potential employers and increasing the likelihood of a strong long-term match in 2024 we launched zip intro an ai-powered solution that speeds up hiring by rapidly connecting employers and job seekers for face-to-face conversations enterprise adoption of zip intro grew consistently throughout 2025. In Q4 alone, scheduled sessions increased 17% sequentially and expanded by more than 5x year over year. To further optimize the platform, we recently made a number of targeting improvements that drove a 32% increase in sessions that met or exceeded RSVP targets, delivering a more predictable candidate flow for employers. We've enhanced our resume database to allow employers to filter by recent platform activity, such as whether they are new to the ZipRecruiter marketplace or if the candidate recently updated their profile. Employers are finding these real-time insights incredibly valuable. The resume unlock rate for candidates with these activity labels is 66% higher than those without. When thinking through specific questions to ask candidates, employers often struggle when starting from the blank page. In Q4, we launched an AI-driven tool that automatically generates tailored screening questions. Employers have quickly embraced this upgrade, with 93% of new employers using our AI-recommended screening questions in Q4. By automating this key step, we drive higher quality connections faster. ZipRecruiter's enterprise-focused strategy is gaining significant traction, fueled by high demand for automated tools. In Q4, adoption of our automated campaign performance solution increased 32% year-over-year. This and other enterprise enhancements led to a 9% year-over-year increase in performance marketing revenue in Q4, an increase from 5% growth seen in Q3. Despite a complex hiring landscape, these results demonstrate that our programmatic tools are successfully delivering the efficiency and candidate quality that large employers prioritize. For over a decade, ZipRecruiter has invested in building a network of over 180 ATS integrations to streamline the enterprise hiring process. This momentum continued in Q4 with the launch of an enhanced Workday integration and a new Bullhorn partnership. By connecting with these major ats platforms recruiters can now source talent from our resume database and export candidates to their preferred system with a single click drastically reducing applicant friction and accelerating time to hire with that i'll now turn the call over to tim to run through the

financial results tim thank you dave and good afternoon everyone our fourth quarter revenue of 111.7 million dollars represents one percent growth year over year and a three percent decline quarter over quarter our first year over year increase since q3 of 2022 was primarily driven by higher performance based revenue from enterprise employers which grew to 25 percent of total revenue the sequential decline is consistent with seasonal hiring patterns in the fourth quarter we finished the year with over 59 000 quarterly paid employers representing a two percent increase year-over-year and a 12% decrease sequentially. This marks our second consecutive quarter of year-over-year growth, demonstrating the stability of our employer base despite macroeconomic volatility. The sequential decline is consistent with our historical seasonal patterns and reflects the typical slowdown of hiring during the holiday period. Revenue per paid employer was $1,889, down 2% year-over-year and up 10% sequentially. The year-over-year decrease reflects continued softness in the hiring demand, particularly among SMB customers. The sequential increase is primarily driven by the seasonal reduction in the number of paid employers in the fourth quarter. Our net loss in the fourth quarter was $0.8 million. Adjusted EBITDA in Q425 was $16.2 million, equating to a margin of 15%. This is higher compared to 13% in Q424 and 8% in Q325, with increases driven by a return to revenue growth and continued expense discipline. Our full-year adjusted deficit margin of 9% exceeded the mid-single-digit expectations we shared at the beginning of the last year. Cash, cash equivalents, and marketable securities was $409.1 million as of December 31st, 2025. During Q425, we repurchased 1.8 million shares, totaling $8 million. As Ian mentioned, after more than 10 incredible years at ZipRecruiter, I'll be stepping down from my role as CFO to pursue a new opportunity. I'm deeply grateful for the growth and experiences that have shaped both my career and me personally. Thank you to our amazing employees for your dedication and partnership. It's been an honor to be a part of this team, and I'm excited to see how ZipRecruiter will continue to transform how hiring is done. With that, I'll pass it back to Dave to discuss our guidance.

Thanks, Tim. I echo Ian's comments, and we wish you luck in your future endeavors. Moving on to quarterly guidance, our Q1 2026 revenue guidance of 106 million at the midpoint, down 4% year-over-year and 5% sequentially, reflects the lower baseline of paid employers as we started Q1. Our adjusted EBITDA guidance midpoint of $5 million represents a 5% margin, which is flat year-over-year and demonstrates our financial flexibility as we navigate the current labor market backdrop. Looking beyond Q1, we expect hiring demand to follow a typical seasonal cadence over 2026, albeit at subdued levels given the lower starting point post-holidays. We believe a likely result in this scenario is first to achieve flat year-over-year revenue in 2026, which is a five-percentage point improvement over last year. In this scenario, we expect adjusted EBITDA margins to expand by 5 percentage points from 9% in 2025 to 14% in 2026. This improvement reflects our continued cost discipline alongside targeted investments to ensure Zip Recruiter emerges from this cycle in a position of strength. The stabilization in the business we've seen despite a weak hiring environment is encouraging and we remain confident in our long-term growth opportunity we believe our flexible operating model and healthy balance sheet position zip recruiter to take advantage of growth opportunities and position us to outperform the broader hiring category over time with that we can now open the line for questions operator

as a reminder if you'd like to ask a question press star followed by one on your telephone keypad your first question comes from the line of eric sheridan from goldman sachs

Thanks so much for taking the questions. And Tim, thanks for all the help over the years, wishing you the best of luck. Maybe two, if I can. First, if you look at the demand environment you're facing right now, any different characterizations you would give on the employer side from what you're seeing from large enterprises relative to SMB? And any indications how that might change as we progress into Q1 and deeper into the year? Thanks so much.

Hey, Eric. This is Dave. Great question. Yeah, so what we saw last quarter was in the latter half of the quarter over the holiday period, after a strong start to the quarter, was a slowdown in S&B demand particularly. And we've been encouraged since the beginning of the year, as we said, that S&B demand looks as good or actually slightly better than last year and better than we've seen in several years. So our expectation is that from a lower baseline, given the latter half of a holiday period of last quarter, from that lower baseline, we'll see a stable overall macro environment. And that our ongoing investments and continued operational improvements, as we just detailed, zip intro, resume database, and most importantly, perhaps our execution enterprise, where we see a similarly, you know, forecasting as the most likely scenario, a similarly stable demand environment. But where our execution and obsession with hitting customers' targets, defining clearly for them what their target is and what their definition of success is, and then making sure we hit it and are having both our product and our go-to-market teams work relentlessly to make sure that happens, that's paying off. And we see it for the first time in four years, seeing slight sequential growth in performance marketing revenue in Q4 versus Q3. So what we foresee is we're ready for a wide range of scenarios as always, but the most likely scenario being the overall demand environment for both SMB and enterprise being flat from this lower start and that our investments allow us, despite a weak starting point to start the year in Q1, that we get to flat this year and are able to expand margins as we do it so that we're increasing revenue by five percentage points versus last year and increasing margin by 5 percentage points at the same time.

Great. Thank you.

Your next question comes from the line of Ralph Sackhart from William Blair. Your line is live.

Good afternoon. Thanks for taking the question. Maybe just a follow-up on Eric's question. Just trying to square a little bit, I guess, some of the more soft conditions you saw in Q4 after a strong start, compared with, I guess, a stronger rebound in Q1. particularly i think you call that smb anything that you sort of you know call out there for the i guess the dramatic uh or three sharp uh rebound there and then two just in terms of the traffic you're seeing from the lms can you maybe sort of you know walk us through how that traffic is uh behaving performing um you know perhaps um converting and then you know is it at a level perhaps in 2026 when it could start to impact the results just any other color in that long

traffic be great. Thank you. Thanks, Ralph. This is Dave. I'll take the first one and let Ian take the second one. So on the soft Q4, I think it very much, what we saw in Q4 very much mapped to what the job openings numbers from the government look like, where we saw that 10% decline. And each, even when you seasonally adjust it, December is always the hardest month of the year to forecast and is always the seasonally weakest month. But even when you adjust for seasonality as the government does in their official data. There was a month over month decline each month in Q4 in terms of job openings, and that's very consistent with what we saw. And as we, you know, look at it, as we always say, you know, our employer base looks like the whole U.S. economy, but when we look at particular areas of weakness and strength, You know, healthcare remained resilient, as it has for several years now, and demographic changes and other structural reasons for that in the U.S. economy. But on the flip side, retail, food service, education were all areas of weak spots during the quarter, and we saw those degrade. And then, you know, to the point I said earlier, starting January 1st, we saw a different story where we've seen a nice pickup in activity. And so that gives us the confidence to say the most likely scenario of those that we prepare for is that we'll be flat from that lower baseline for the year.

And speaking to the LLM question, to give context, ZipRecruiter gets traffic from a wide array of different media sources and sites. And that includes everything from other job sites to organic traffic to SEM to response advertising. and LLMs are just one part of the mix. What makes them interesting is they are the fastest growing in terms of both they themselves as a category, as well as the traffic that we are getting from them. However, in the overall mix of traffic that ZipRecruiter gets, overwhelmingly still traffic that is highly engaged and active on the site is still coming from the variety of traditional sources. The difference between LLM traffic and those sources is not much. They are active job seekers who are eager and engaged. They are still continuing to grow at a healthy pace, and we are excited about the momentum that we see with LLMs. Great. Thanks, Ian. Thanks, David,

and best of luck, Tim. Your next question comes from the line of Trevor Young from Barclays. Your line is live. Great. Thanks for letting me ask some questions here. First one, just as we

think about the cadence of growth throughout the year, it would kind of suggest that 1Q is maybe the low point for the year, and you would exit the year at low single-digit territory or something like that, such that you're flat overall, even with tough compares. What kind of informs that view that growth will accelerate from here, given that backdrop, particularly because you are seeing EBITDA margin expansion, so that would maybe suggest not leaning in on marketing meaningfully? And then second one, just on capital allocation, you have about $200 million in cash on hand, guide implies free cash flow maybe improves a bit here in 26 clearly a willingness to buy back stock in the last year should we expect opportunistic repurchases of the stock given a bit of an uptick in the outlook here and then relatedly any thoughts on the trade-off of stock versus debt repurchases because i know a lot of folks on the credit side also i'll care on that thank you

great thanks trevor um so in terms of the cadence throughout the year um i think what gives us confidence is A, what we've seen year-to-date since January 1st, and B, you know, going back longer than year-to-date, the momentum we have with enterprise. And to the point you made, which is astute, that, you know, margins going up while we see the cadence of improvement over the course of the year being the most likely scenario is consistent with enterprise continuing to outperform where we're not as, you know, the demand generation is much more sales led and much less marketing led on the enterprise side of things. And so, you know, those teams are more, the expense line on those teams is more stable and preexisting. And we see a lot of investments that we've made over the past couple of years starting to pay off and is less dependent on same quarter sales and marketing obviously we remain you know flexible to and will adapt based on you know changing environments we see but that's the most likely thing we see and we see you know more than just dating back to january 1st in terms of momentum there with that part of the business um and then yet to your to your question on capital allocation so you know our our sort of strategic framework remains the same uh the the top priority always is organic growth we were not just EBITDA profitable last year but free cash flow profitable as well and obviously talk about seeing expanding margins this year so in terms of organic growth we're well covered but we'll always prioritize that first the second priority is M&A opportunities you saw us take action there in terms of break room where you know there's a really strong value proposition to both job seekers and employers about how our entire marketplace gets stronger with better employer branding and giving job seekers the real straight dope on what it's like to work, and frontline workers in particular, what it's like to work at a particular employer. The third priority is return of capital. And so, as you pointed out, we've been a consistent returner of capital last quarter, about $8 million for about 1.8 million shares. And every single time we have an opportunity to allocate capital we think about you know what are our resources we currently have a very robust balance sheet um and lots of liquidity as you um mentioned and you know we look at the um you know different opportunity set of different opportunities to repurchase shares or or bonds or whatever as as you mentioned and look at the the roi there and we'll take action And accordingly, you've seen us do that before. We will continue to evaluate that as we see opportunities to do so.

Thanks for all that detail, and best of luck, Tim.

Your next question comes from the line of Josh Chan from UBS. Your line is live.

Hi. Good afternoon, Ian, Dave, and good luck, Tim. I guess maybe it's just two questions. I guess the first, you know, what do you make of the Q4 slowdown and then Q1 recovery, you know, and relatedly, you know, why doesn't, you know, the Q1 recovery get you back to the same spot? Is it just like not enough of a recovery in magnitude? And then the second question would be, are you seeing meaningful changes in terms of how employers are trying to find candidates as in moving away from the traditional resume? I mean, you launched this Be Seen First feature, which allows people to feature different things other than their resume. So just curious if something like that is starting to happen in the environment.

Yeah. So on the first one, your question is a good one. So the way we think about it in terms of the cadence in Q1, it is very typical in Q1, given the seasonality I mentioned, or we mentioned before, that the holiday period is the weakest period of the year seasonally. Then Q1 can look fairly flat to q4 in a typical year plus or minus a couple points but it's really a story of building throughout the quarter from a lower starting point um given what happens the slow down over the holidays especially in the smbs part of the business and so what we see here is just a steeper climb and the the the the starting point was lower the trend line within the quarter looks good, but we're just starting from a lower point where the SMB part of the business was a little bit weaker over the course of late November and December, which is what causes that cadence.

And then on Be Seen First, without question, the world of recruiting is experiencing a renaissance as it relates to both the way candidates are sourced and the way that the opportunities they have to communicate with the employers and the hiring managers. Resumes are very much still in play. They are a necessary part of a comfortable, expected process that employers are not willing to let go of. What BC First is, is really a mechanism for job seekers to show their enthusiasm, to stand out when they apply to a job in a novel way, and job seekers are using it exactly as we intended. They are not spamming employers with be seen first. They're being selective about which jobs that they express their enthusiasm for, and employers are responding as we would expect, which is in a sea of candidates, many of whom's resumes look highly qualified for the role in which they are applying. They are looking for other signals that will allow certain candidates to stand out from the rest of the pack. A candidate participating in be seen first, showing their enthusiasm and getting pushed to the top is not only advantaging themselves, they're actually doing the employer a favor by giving them one more method from which to assess the pool of candidates they received to decide who were the very best that they want to bring in for an interview. Yeah, that's great color. And thank you. Thank you both for the color.

your next question comes from the line of kishan patel from raymond james your line is live

hey this is kishan patel on for josh back you mentioned in shareholder letter that you're optimizing the platform for gen ai discovery how do you think about optimizing the zipper

through the platform for agentic search or engagement by job seekers well this is certainly

a topic that we are spending a lot of time thinking about and we are excited about the potential and opportunities but is represented by ai there are so many different directions we could choose to take this in and certainly already ai is permeating our site i mean you can go all the way back to our s1 when we first went public where we described ourselves as an ai-powered marketplace long before there was ever an llm and everyone was talking about ai and when we talked about ai we were really talking about the matching engines that we built that are powered by those billions and billions of interactions between employers and job seekers, which is what allows us not only to do an exceptional job of matching keywords and resumes to the keywords in job description, but also to benefit from what's known as the wisdom of the crowd, where insights can be gleaned by the different AI methodologies that we were applying in order to find the very best jobs for job seekers and the very best candidates for employers. As we look at our own service today, already you can see AI making its way in. We talked about suggested screening questions in our shareholder letter. That is a product that has reached massive levels of adoption in our product. It's skyrocketed with the launch of suggested screening questions. The difference between putting a blank page in front of an employer and saying, come up with screening questions versus putting a set of AI-created pre-written screening questions in front of them has been fundamentally night and day. It has been a sea change in how our product works and how applications are processed. And it's fantastic for employers because, again, employers are always looking for signal. How can I differentiate between the seemingly equally qualified candidates who I have received? Screening questions is a fantastic tool for that. I would expect you will hear many more AI-driven features coming through the ZipRecruiter development team and entering into our platform over the coming years. And I think you will see that AI becomes a fundamental tool and a fundamental advantage for ZipRecruiter to enhance the marketplace that we have already created.

Thank you, guys, and best of luck, Tim.

There are no further questions. That concludes the question and answer session. That also concludes today's meeting. You may now disconnect.