Q4 2022 Ziprecruiter Inc Earnings Call
Ladies and gentlemen, good afternoon. My name is Abby and I will be your conference operator today.
At this time I would like to welcome everyone to the ZIP recruiter incorporated fourth quarter 2022 earnings conference call.
Today's conference is being recorded and all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question you must press star one once again.
Thank you and I will now turn the conference over to drew Haroldson Investor Relations. You may begin thank you operator and good afternoon.
Thank you for joining us on our earnings conference call during which we will discuss <unk> performance for the quarter and year ended December 31, 2022 and guidance for the first quarter and full year 2023.
Joining me on the call today are Ian Siegel co founder and CEO , David <unk>, 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 the future financial performance of <unk>.
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 <unk> annual report on Form 10-K for the year ended December 31, 2022, which will be 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 zipper greater assumes no obligation to update or revise them, whether as a result of new developments or otherwise.
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.
A substitute for or in isolation from GAAP results reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in depth recruiters shareholder letter and in our Form 10-K, and now I will turn the call over to Ian.
Thank you drew and good afternoon to everyone joining us today.
2022 was another strong year for ZIP recruiter revenue grew 22% in 2022 to 905 million, notably our 2022 revenue marks that 28% compounded annual growth rate from 2019, we.
We delivered 20% adjusted EBITDA margin up from 15% in 2021, and while we expect headwinds on topline revenue our guidance calls for a strong 24% EBITDA margins in 2023.
<unk> results demonstrate the resiliency of our business model and volatile macro environment, and we have achieved strong profitability, while leaning into long term strategic investments in both product and matching technology.
We made great strides towards building the world's best jobs marketplace, bringing both employers and job seekers together with leading edge matching technology.
As you can see in our shareholder letter our employer cohorts remained strong with each annual cohort showing increasing revenue per paid employer this year.
We also serve 42 million active job seekers in 2022, a 20% increase from 2021.
Despite the current macroeconomic backdrop I remained steady and my conviction that we will continue to succeed over the long term.
First our flexible operating expense profile gives us the ability to rapidly adjust sales and marketing investments up or down.
That lets us take advantage of unique opportunities as they arise or in conditions like we've observed in 2023, so far conserved capital when the ROI is not there.
While forecasting topline revenue for 2023 is challenging the levers we have to make driving adjusted EBITDA far more predictable.
Our track record of strong profitability paired with the $570 million of cash on hand puts us in a position of financial strength.
Second feedback from job seekers, and our own data shows that our investment in fill our AI personnel recruiter for job seekers is working bill.
Bill has proven to be an engagement amplifier driving job seekers activity on zipper triggered a record levels.
As an example of this phenomenon from last quarter till now lets job seekers preview how they appear to employers 60.
60% of job seekers, who see this preview choose to edit and improve their presentation.
This high level of interaction with a new feature is what Phil brings to the table.
Puts a human face on navigating the job search process and you can expect a persistent drumbeat of new capabilities for bill over the coming quarters.
Third our move up market into enterprise continues to succeed performance based revenue grew 48% year over year and accounted for 24% of total revenue in the most recent quarter.
That means our marketplace is increasingly balanced with opportunities from companies of all sizes.
Continue to believe that over the long term, we will approach a 50 50 split between SMB and enterprise revenue.
Fourth our aided brand awareness is now 80% on both the employer and the job seeker side of our marketplace.
The significant investments we've made in job seeker marketing over the last two years have paid off we believe this balanced awareness across job seekers and employers alike positions us for success in both robust and challenging labor market.
Fifth and finally, we believe that we are at the beginning of a generational shift in how technology enables job seekers and employers to come together are.
Our key strategies of improving bill leveraging modern algorithmic matching and building the best user experiences remain fully staffed and funded our level of investment in technology will increase in 2023.
You will see us at the forefront of that generational shift.
Now I'll turn it over to Dave to talk through some of our progress against the three pillars of our marketplace strategy.
Thank you Ian.
Looking back at 2022, we made significant progress against the three key pillars of our strategy.
We're in the early innings of capitalizing on the massive market opportunity and fundamentally changing how employers and job seekers interact.
Investments reflect that I'm excited to share some highlights with you.
We will start with our first strategic pillar, which is increasing the number of employers and revenue per paid employer in our marketplace.
While 2022 with a historically tight labor market in June we began to see employers reduce the number of jobs posted this dynamic continued throughout the balance of the year and has persisted so far into 2023.
Finished 2022 with 108000 quarterly paid employers in Q4, a decrease of 26% year over year.
We have seen smbs react earlier and more dramatically to macroeconomic uncertainty than larger enterprises have reacted the dynamic that is consistent with what we've seen in prior cycles. However.
However, we continue to succeed delivering industry, leading metric technology to our customers employers of all sizes getting confidence that could pay more to get more by investing in upsells and increasing their effective bids in our marketplace.
As a result revenue per paid employer grew to $1944 in Q4, an increase of 30% year on year.
Annual employer cohort trends remained strong throughout 2022.
The average revenue for the 2022 employer cohort was approximately 17% higher than the 2021 cohort.
First year.
We saw this growth in revenue per paid employer across employers of all sizes, continuing the year's warm trend of increasing year, one revenue per employer for each annual cohort. Additionally revenue per paid employer continued to grow across each annual cohort for example, 1001.
<unk> hundred $46. The average monthly revenue per paid employer in our 2016 cohort has grown by nearly five times since year one.
Further we continued our growth momentum with larger enterprise customers performance based revenue, which was driven predominantly by enterprise customers.
Increased 48% year over year in 2022.
This represented 24% of revenue in Q4, compared with 20% in Q4 the year prior.
While our marketplace of jobs already reflects the diversity of the United States in terms of geography industry and skill level, we have a growing base of larger enterprises with more persistent hiring needs of our marketplace.
We are in the early stages of penetrating the enterprise segment and expect meaningful opportunities for growth in this area over the long term.
Now I'll move on to our second pillar, increasing the number of job seekers of our marketplace.
In 2022 active job seekers on ZIP recruiter grew to $42 million, a 20% increase from 2021.
We believe that investments in our brands have made ZIP recruiter of destination for job seekers in their time of need.
Product improvements have also positioned us well to capitalize on this moment as the labor market cools. It provides an opportunity to prove the value of our marketplace to job seekers and create enduring loyalty.
Bill has changed the way job seekers find work last quarter, we introduced our job calibration feature through Phil which allows job seekers to train Zip recruiter on the jobs they prefer by reviewing and providing feedback on a set of potential opportunities in Q4, we redesigned the process flows such that over 50% of job seekers now.
And the job calibration process when prompted to do so which ultimately leads to better potential opportunities.
One of the reasons why our job seeker products are rated number one in both the iOS and Android App stores is that we bring more transparency to the job seeking process.
In Q4, we introduced a new feature allowing job seekers, who receive an invitation to apply to a job the opportunity the previewed how their application would look to the employer.
After engaging with our new view of employer feature over 60% of job seekers updated their profiles. This not only gives job seekers more insight into and control over the job search process, but also provides our marketplace with more data for better matching results.
Over the course of 2022, we introduced new marketing creative.
Building mind share around Zip recruiter being the best place for job seekers to find their next great opportunity. These.
These investments have borne fruit aided brand awareness among job seekers grew to 80% in Q4, an all time high.
I'll conclude with our progress around our third pillar, making our matching technology smarter overtime.
We bring employers and job seekers together using industry, leading matching technology.
This technology benefits from the billions of data points, we gather as jobseekers and employers interact leading to better matches overtime.
As a result of our advancements with matching we delivered over $30 million great match candidates in 2022.
In Q4, we introduced more improvements to the metal learning model, giving job seekers more relevant opportunities to apply to for example by intelligently factoring in how a job seekers search patterns influenced the jobs, they're shown our latest metal learning model drove up the 8% more applications.
From job seekers.
Many of our job seekers come does it preclude or through job had just found be it search events in Q4, we deployed a new algorithm to more intelligently ranked job advertisements display.
Curated pages focused on particular jobs in specific regions.
These geographically and occupation targeted pages resulted in a 10% increase in job seeker registration right.
The progress we've made in 2022 gives us greater confidence in our ability to execute going forward now I will turn it over to Tim to talk through the fourth quarter results as well as guidance for the first quarter and full year for 2023, Tim. Thank.
Thank you, Dave and good afternoon, everyone.
Our fourth quarter revenue of $210 5 million exceeded the high end of the guidance we provided in November .
This represents a 4% decline year over year and is reflective of a continued softening in the hiring market as well as facing particularly challenging comparisons against Q4 'twenty. One when we grew 93% year over year in the post COVID-19 reopening of the economy.
Beta employers were 108000, representing a 26% decrease versus Q4, 'twenty, one and a 20% decrease versus Q3 dollars 22.
Excluding labor market combined with the typical seasonal decline drove the sequential decrease in Q4 as employers continued to feel the impact of rising operating expenses and other macroeconomic headwinds.
GAAP net income was $19 4 million in the fourth quarter of 2022 compared to net income of $21 million in Q4 of 2021.
Q4, 'twenty two adjusted EBITDA was $58 6 million equating to a margin of 24% compared to $47 6 million.
Margin of 22% in Q4, 'twenty, one and $51 7 million a margin of 23% in Q3 2022.
The adjusted EBITDA margin expansion year over year, primarily reflects lower sales and marketing expenses, we are committed to prudent capital allocation at all stages of the economic cycle, while still remaining focused on long term strategic investments.
Cash cash equivalents in marketable securities was $574 million as of December 31, 2022, compared to $669 7 million as of September 32022.
The decrease in cash cash equivalents in marketable securities quarter over quarter was primarily due to $146 million spent on repurchases of class a common stock under our share repurchase program, partially offset by $44 5 million in operating cash flow during the fourth quarter.
Turning to guidance in June of 2022, we saw at the beginning of what would prove to be a persistent decline in the number of jobs posted we now start 2023 with an increasingly difficult macroeconomic backdrop employers have been decreasing their willingness to pay for hires and many companies are executing layoffs as they tightened budgets.
Other than showing a more typical seasonal rebound from the lows of the December holiday period, we saw online job postings in our marketplace remained depressed.
As a result January revenue was down approximately 15% year over year.
Our 2023 in Q1 'twenty three revenue guidance assumes that trend persists throughout the year, we expect Q1, 'twenty three revenue of $179 million at the midpoint, implying a 21% decrease year over year.
At $780 million at the midpoint full year 2023 revenue implies a 14% decrease compared to 2022.
Our Q1, 'twenty three adjusted EBITDA guidance of $25 million equates to a 14% adjusted EBITDA margin at the midpoint.
$185 million, our full year adjusted EBITDA guidance reflects an adjusted EBITDA margin of 24% at the midpoint. This is in line with our 2022 adjusted EBITDA, while demonstrating a margin expansion of 400 basis points.
The increase in adjusted EBITDA margin reflects our discipline. During this part of the economic cycle, while still allowing us to maintain significant investments in our product and matching technology with.
With a proven flexible and profitable business model robust balance sheet and continued focus on innovation for both sides of our marketplace. We expect to continue delivering value to employers jobseekers and shareholders through economic cycles.
With that we can now open the line for questions operator.
Thank you.
At this time I would like to remind everyone in order to ask a question press Star and then the number one on your telephone keypad, we will pause for just a moment to compile the Q&A roster.
And we will take our first question from Aaron Kessler with Raymond James Your line is open.
Yeah, Hi, guys. Thanks for the questions first just maybe on the revenue guidance for the year obviously the.
The guidance for kind of Q2 to Q4 assumes a recovery off the Q1 level just what's your confidence in that today and then secondly, just on the expenses for the EBITDA guide for the year is that I assume that's primarily coming from sales and marketing leverage or are you also slowing spend some of the other opex lines as well. Thank you.
Thanks for the question Aaron This is Ian and.
I just wanted to start by saying some things as plainly as possible which is.
Clearly, we're in a macroeconomic slowdown and online recruiting has effectively cold across the country, especially among smbs.
So if you look at other job companies at our scale, they're delivering the same message that we're delivering today and.
Similarly, or correspondingly to what you would expect from a macro slowdown we are seeing a surge in job seekers. When there are less jobs, it's going to take these job seekers longer to find work and that is in fact, what we are seeing.
Based on that backdrop, we made the assumption using the information that was available to us at the time from January that theres going to be a softer hiring environment. Throughout 2023, we don't have a better prediction on that.
As we have repeatedly told you however that if there is a softening labor market if there are less.
Opportunity to invest if we don't see the ROI, we have the ability to rapidly pulse spending down and then as you saw in particular in the post Covid period. When the recovery comes we get very early indication and we're able to rapidly invest to write it back up this is going to be one of those periods, where we pulled back and so profitability.
Is going to go up.
If you look at the short term, yes, our topline revenue is growing our outlook for it is coming down but.
If you look at our profit outlook you look at our cash flow outlook. If you look at our long term growth outlook those remain very strong.
We continue to expect to grow our EBITDA margins to 30% plus over time.
And I just want to reiterate if you ask me why am I feel confident in our long term.
I would point to the fact that fundamentally every quarter, we'll share the data with you we get better at delivering the right candidates to employers that's just something we're persistently improving at.
We delivered $8 million right that is just last quarter and that was in one of the tightest labor market that any any of Athena historically tight labor market.
And then on top of that.
You know not only do we have 80% brand awareness within players we've been able to drive brand awareness with job seekers to 80% after almost a $1 billion of investment in order to build those brands and that's the strategy that seems to be paying off because now that the labor market is rebalancing the job seekers are coming back and we are in a.
A strong position to.
Serve their needs as they look for work and then I would just also emphasize that all of our long term initiatives.
Our focus on innovation, whether it's Phil personally I recruiter or the modern matching techniques were working on or the novel user experiences we're putting together.
All of those remain fully staffed and funded in fact R&D investment is going to go up this year and when you when you pair that with the size and scale of our existing market play and the brand awareness we have.
I feel very confident in the long term as to the two questions you asked one regarding the.
Why do we have Q2 to Q3 climbing.
Actually I'm going to turn over to Tim our CFO and let him take these two questions.
Yes, Hi, Tim here.
Click on a couple of items that Ian mentioned already so as he said January came in quite a bit below what we would have normally expected because of this unique macroeconomic environment that Ian mentioned.
Assumption in the guidance both for Q1 as well for the full year is that that same kind of lower level of recruiting activity continues throughout 2023.
Notably the significant step down from what we've seen in 2022, and what we otherwise would've expected.
The slowdown that we've seen is among both smbs and enterprises, although smbs tend to react a bit faster to macroeconomic changes while enterprises more consistent hiring needs.
So with our revenue mix today being a bit more skewed towards smbs. This means that the impact of these macroeconomic changes both positive and negative will be more pronounced.
So jumping to kind of seasonality then I'll take your question on Opex and a little bit.
So for seasonality we would.
Expect paid employers to be roughly flat.
Through Q2, and Q1, and Q2 and Q3, and then probably ticking down sequentially in Q4, and Thats pretty consistent with what we've seen in Q4 as in the past revenue per paid employer, we have high confidence that that will continue to go up into the right over the balance of the year and that's really driven by a couple of factors.
One would be with the generally flat Pete employer base that means that our paid employers will skew more towards the larger mature or does that have more persistent hiring needs and as you've seen in our cohort data.
As employers have.
Imperatively higher revenue per paid employer and the second thing is.
Our gradual shift towards the enterprise business. So last year as we noted performance marketing grew 48%.
Year.
And while we expect the growth to be more moderated in 'twenty three but still excited that that business is going to continue it's going to continue to grow and so those factors combined will push revenue per paid employer up throughout the course of the year and that kind of gives the size and shape of the sequential.
Our revenue growth.
On the Opex question.
Most of the Opex reductions that are embedded in our guidance from sales and marketing.
From the simple fact that we're scientist not ours when it comes to our capital allocation and to the extent that the rois are shaping up.
And marketing, we're going to conserve capital and save it for other opportunities.
There is we're going to slow down our hiring plan on SG&A, but as Ian noted already we are going to continue investing in technology, because thats, where we think.
Our advantages and we want to keep pushing that advantage.
Great. Thank you.
Okay.
We'll take our next question from Mark Mahaney with Evercore. Your line is open.
A couple of questions first.
A 15% year over year decline in January the guidance for the March quarter implies whatever low twenty's declined so it implies that things.
Are going to deteriorate through the balance of the quarter. Just the dumb question is that what you're already seeing its February already declining more than than January and then secondly, higher level question. Ian for you you talked about accelerating innovation in in.
'twenty three are there particular areas that you had that Youre focused on do you think they are particularly opportunistic now for for innovation.
I'll just leave it at those two questions. Thank you.
Yeah, Hey, Mark This is Tim I'll take your first one so.
On the shape of Q1, yet so the 15% we've already noted in the call 15% down year over year, when we kind of zoom out and look at the quarter overall, we think that.
Provided for Q1 as appropriate given everything that we've seen to date.
Okay.
Mark.
Thanks for the question. This is Ian yes, Theres a couple of areas.
Excited about one of them, it's Phil we've been talking about sell for a couple of years now and.
<unk> mentioned with Bell teaching still a variety of new skills and expanding the breadth of information that is available to tell and fundamentally everywhere he'll start interacting with job seekers, we see records in terms of engagement. It's clearly a strategy that is.
Proving through data that it is the right approach job seekers seem to really like having a career coach you are guiding them through everything from making himself look better when they.
Get presented to employers to giving them advice about which jobs to apply it to and then even going so far as to advocate for them. That's obviously something that job seekers lack a lot so that the employers reach out to the job seeker before they are applied and say Hey will you. Please a part of my job that's our <unk> feature.
And really fundamentally what I see happening in the world of recruiting right now the big shift.
Is proactive sourcing which is where.
Secondly in players go first so.
That is manifest arm zipper treater through our end beitzel apply solution, that's where and in player.
<unk> a curated list of job seekers that our advanced matching algorithms have selected the best available candidates in market and then the employer has the opportunity to invite those candidates to apply to their shops.
Job seekers to get that message from an employer.
I mean, it has the highest response rate of any message we've ever sent to a job seeker ever when they do apply it has the highest thumbs up rate and other quality signals that we collect.
Any applicants ever so really it's fundamentally a solution where both sides of the marketplace.
If you look at who is having success or I should say the most success on zipper trigger really hiring in general because if you look at the last couple of years and you look at just any data source on proactive sourcing and what you saw massive surge in the percentage of overall hires that were coming from proactive sourcing versus sort of the traditional posts and weight approach.
Sure.
So I really feel like we're just at the tip of the spear in terms of where the market is going and Thats where were pushing a lot of our innovation focus which is.
Another way of saying it is like how fast and we make higher staffing we are laser focused on bringing down the time to hire and making this process simpler for employers as a results for job seekers as well.
Thank you Ian Thank you Tim.
We will take our next question from Eric Sheridan with Goldman Sachs. Your line is open.
Thanks, so much for taking the questions maybe two follow ups of things that have already been asked I. Appreciate the color from an SMB versus enterprise perspective, any color you could give us or the industry vertical of what you're seeing how much are we supposed to read into how many things you have seen might be either leading or lagging in terms of indicators.
First is your broader array of customers across all the industry vertical exposure that would be number one and then number two maybe just following up on mark there.
I think those of us who've done the sector for a long time sort of continue to come back to this theme of the companies that invested through downturns, especially when they see an addressable market dynamic can capture some of that exit velocity, what do you see as the most mission critical investments to make in 2003, when do you think against the landscape of capturing more of the job market.
Exiting 2003 and going into 'twenty four thanks, so much.
Thanks, Eric This is Dave.
So on the industry verticals.
First.
Yes, we do see a little bit of variance among verticals.
As you might expect healthcare.
Is particularly stable and strong.
And appears to be less sensitive to the macro backdrop that we're seeing in retail is actually reasonably strong.
Well.
And on the other side of things.
Finance and technology are on the weaker side of the spectrum.
Terms of industry breakdowns in terms of geography, it's pretty well spread across so we don't see a huge variance there and then.
We noted earlier, we are seeing across the economy, but more of an SMB.
Price.
Sure.
Going into last from last year, where we had stronger growth in the performance marketing side, where we had 40% growth year over year and 22 from the performance marketing revenue line, but that comes largely from enterprises.
And then on the mission critical investments side, so yes within the the R&D realm is where the majority of those mission critical.
Investments are secondarily to that I would say the enterprise sales team is an area, where we continue to invest given the momentum there, but on the R&D side.
Ian referenced earlier.
Things that enable us to go faster and create better matching so that means pulling in more sources of data both directly from our own jobseekers and employers.
And from third parties like applicant tracking systems, where we made several announcements about new integrations with key partners. There allows us to bring the matching algorithms with more data to make better and better decisions that give us that over ability to generate over $30 million great matches last year, So I would.
That number to go up over time as both the size of both sides of the marketplace grow and as our matching technology gets better and then finally, making the process more human so Ian spoke a little bit about Phil, but making each individual employer in each individual job seeker feel like.
The marketplace is working for them and they arent just a user interface receptacle for a massive.
Piece of technology, but rather that they are seeing for the individuals that they are individual companies that they are and the needs. They have for this particular search for opportunities.
Yes, I'm just going to Indiana.
Yes.
I just want to tack on that like when I think about mission critical investment, obviously I think about our ongoing work to move upmarket into enterprise. We grew at 48% last year, we have tremendous momentum there is still a lot of market share that we havent penetrated yet so I remain optimistic about our growth prospects for it even in 2023.
And I think that overtime, we are going to balance our marketplace and more of a 50 50 spread between SMB and enterprise.
Thanks for the color.
We will take our next question from Doug Anmuth of Jpmorgan. Your line is open.
Thanks, so much for taking the questions I have two.
Just first on the January performance.
What youre seeing is broad based across the industry.
Does feel like maybe some are down perhaps a bit less than you are just trying to understand if thats purely driven in your view by the SMB versus enterprise mix or is there anything else more company specific that's going on.
That's one and then just second just following up on enterprise and Ian You mentioned, the 50 50 split.
Anything you'd point to there in terms of timeframe or kind of target goal that you think about.
In reaching that split.
Okay.
Thanks, Doug Yeah. So in terms of how we think about the.
Year over year decline, obviously, we've heard other large players in the online job space talk over the past couple of weeks about hiring freezes.
In Tampa and outlooks for.
The future we've heard.
About layoffs at another.
So this is a trend that we're that we're seeing in terms of the quantum.
I don't believe we've seen directly what the January .
Specific numbers are for many of them, but as we look across our data points and across the industry. This looks.
Very much to be an industry wide phenomenon to us and I think from an SMB concentration.
Standpoint, given our higher than them.
76% coming from the subscription side of our revenue.
Revenue model this mainly driven by Smbs last quarter that concentration is probably going to make us a little bit more.
Acutely feeling the January slowdown then.
Potentially some others who are more <unk>.
Enterprise focused but we'll see.
But what we feel extremely confident in us over the medium to long term nothing has changed about our outlook, where we are in a growing Tam where employers continue to feel like the.
The importance of finding the next great talent is.
<unk> mission critical for their business.
And we're <unk>.
Market, where online is going to continue to take share from offline and nothing about our medium to long term outlook and you've seen that in prior cycles from Covid et cetera, and Youll see that again next time as the economy stabilizes and recovers.
To your question about enterprise.
Yes.
Sure.
I think the.
Core.
The core of our.
<unk> ability to drive enterprise to being something more like 50 50 in our marketplace is our ability to build our brand with enterprises and speak to them in a more sophisticated multi touch way that's different than how smbs purchase from us where it's often more of a one touch are fully online.
Experience to get them started and only two they start talking to people here after they are already customers.
A couple of years old rather than more than a decade old is the sales motion for us and we're getting more and more sophisticated.
As we go and continue to grow that team that will increasingly cover the large enterprises out there. So I don't think it is a.
Super near term.
The path to 50 50, but the path to us given our current momentum and what the feedback is from customers who are using us increasingly in the enterprise space makes it increasingly clear that we will get there.
Great. Thank you Dave.
Yeah.
We will take our next question from Trevor Young with Barclays. Your line is open.
Great. Thanks.
First one just as we look longer term towards a potential revenue recovery and I think you've mentioned mean backend on marketing once you start to see those signs how should we think about kind of deleverage from that line how much of the margin gain that you get this year are you potentially going to get back in the future in light of the fact that you have really hybrid aided brand awareness.
Ernest among both job seekers and employers and then second one just how are you thinking about approach to capital allocation in 2003 in light of the revenue headwinds do you still have appetite for share repurchases given free cash flow generation.
Well I'll take the first part of your question again, and I would say that our posture remains opportunistic and that when we see a buying opportunity we intend to buy and.
We think that there is a lot of headroom for growth still in this business and we expect to grow so in a scenario where we see.
A healthy return on investment we will invest to the maximum.
Scenarios.
So that we can become a bigger company. The bigger we are the more liquidity, we have in our marketplace for both sides of our marketplace fundamentally makes our product better for both sides of our marketplace, though that's how we look at it Dave do you want to take the second part.
Yes so.
But the employment from a deleverage standpoint, the sharper the recovery the more we will lean into it and the more you will see revenue growth tick up more more rapidly and will be willing to invest some of that profitability in the short term to generate outsized growth in the long term and we find that when we're more decisive and act.
<unk>.
At the beginning of cycles is often one of the best times to invest in that way and then in terms of capital allocation nothing has changed about our underlying view of the intrinsic value of our business.
Our ability to generate free cash flow per share greater greater rates over time.
<unk> gives us a strong sense of.
When.
Buying our own stock creates real meaningful opportunity for significant returns if not still part of our long term ongoing strategy, but when we see an outsized opportunity will continue to do it so obviously.
Last year, we bought over 18 million shares we now have just under.
119 million shares outstanding.
The average price of that was a little over $18.
The thing about our view of intrinsic value, we have changed our balance sheet remains exceptionally strong and our ability to generate cash flow remains strong. So our posture remains aggressive when we see an exceptional opportunity to be aggressive.
Yes. This is Greg ill just add on just to reiterate our priorities when it comes to capital allocation our first priority.
It has been and still is organic investments.
As we talked about before we're fully funded we're pulling back on sales and marketing, but fully funding your product roadmap and our tech teams.
Our second priority is.
M&A Corp, Dev activities, we have.
So the process is going on there and then the third would be.
Shareholder capital returns like Dave just talked about but that probably restructure remains.
As it was in the past.
Great. Thanks, guys.
And we will take our last question from Ralph <unk> with William Blair. Your line is open.
Great. Thanks for taking the question just first question philosophically on margins. Obviously your model provides you a lot of flexibility.
Variable environment, which is great, but if the macro were continued to I guess sort of stiff and going forward I guess, how committed are you to protecting margins and is there I guess, a minimum base level of sales and marketing spend that you would need to carry through 2023 or is that going to continue to be variable and then just lastly, clarifying question for Tim Tim.
I think in Aaron's question, you talked about paid employers being sort of flat Q1 to Q3.
Would that be flat off of the most recent quarter or should we expect a step down in Q1 and sort of flatten out for Q1 Q3.
In 2020 story. Thank you.
Yes, Ralph.
Clarify that for the second 0.1st.
So we would expect to employers to be roughly flat.
Sequentially Q4 to Q1 would be I think a reasonable assumption.
For your other question about margins.
I'm targeting very specific margins necessarily but we're much more bottoms up and how we're focusing our dollars.
So that means to the extent that we see opportunities pencil out.
There's going to be return.
And that investment.
There is a lot of flexibility in our operating expense structure that we are able to.
<unk>, 24% EBITDA margins at the midpoint of our guidance.
This year.
That flexibility comes primarily from sales and marketing like I said before.
However, we have more flexibility.
If need be both up and down.
There is a minimum amount of spend of course, when it comes to marketing, where we already enjoy 80%.
Plus aided brand awareness on both job seeker, and <unk> sides of our marketplace.
Because we've invested a lot of capital and it's less expensive to maintain that brand awareness than it is to build it. So I think I think we're going to be well positioned to benefit from that brand recognition over the long run without having to do.
Increased our sales marketing investments massively there.
The other thing I'll say is.
To the point of our flexible operating expense structure.
If you go back to Covid from Q1 to Q2 of 2020, we took down our total operating expenses by roughly 50% and so we're not planning on doing that I don't think that's necessary right now.
Consistent with our guidance, but we have that ability to flex very quickly if we need to.
Okay. Thanks, Tim.
Yeah.
And ladies and gentlemen, this concludes today's conference call and we thank you for your participation you may now disconnect.
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