Q3 2023 ZipRecruiter Inc Earnings Call
Speaker 1: Thank you for standing by. My name is Aaron and I will be your conference operator for today. At this time, I'd like to welcome everyone to the ZipRecruiter Q3 2023 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 and if you would like to ask a question during this time, simply press star followed by the number one on your touch tone.
Thank you for standing by my name is Aaron and I will be your conference operator for today at this time I'd like to welcome everyone to the ZIP recruiter Q3 2023 earnings call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session and if you would like to ask a question. During this time simply press star followed by the number one and you touched on keypad.
Speaker 1: If you would like to withdraw your question, press star followed by the number 1 again.
If you would like to withdraw your question Press Star followed by the number one again thank you.
Speaker 1: I would now like to turn our call over to Drew Heroldson with Investor Relations. Drew, please go ahead.
I would now like to turn our call over to drew Haroldson with Investor Relations true. Please go ahead.
Thank you operator and good afternoon. Thank you for joining us on our earnings conference call during which we'll discuss <unk> performance for the quarter ended September 32023 and guidance for the fourth quarter 2023, joining me today on the call are Ian Siegel co founder and CEO.
Speaker 2: Thank you, operator, and good afternoon. Thank you for joining us in our earnings conference call, during which we will discuss Zipper Crews performance for the quarter ended, September 30th, 2023, in guidance for the fourth quarter, 20...
Speaker 2: Joining me today on the call 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 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.
David travelers President Jimmy <unk> CFO before we begin please be reminded that forward looking statements made today are subject to risks and uncertainties relating to future events or the future financial performance of different rigor.
Actual results could differ materially from those anticipated in these forward looking statements.
Speaker 2: A discussion of some of the risk factors that could cause actual results to differ materially from any forward-looking statements can be found on Zipper Cruder's quarterly report on Form 10-Q for the quartering of December 30, 2023, 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 Cruder 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 claims.
A discussion of some of the risk factors that could cause actual results to differ materially from any forward looking statements can be found on <unk> quarterly report on Form 10-Q for the quarter ended September 32023, which will be available on our investor website and the Sec's website. The forward looking statements. In this conference call are based on current expectations as of today and zipper.
<unk> 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.
Speaker 2: These non-GAAP financial measures should be considered in addition to, as a substitute for or in isolation from, GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in the Zipper Credence Shareholder Letter and in our Form 10Q.
A substitute for or in isolation from GAAP results reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in the ZIP brokerage to shareholder letter and in our Form 10-Q.
And now I will turn the call over to Ian.
Thank you drew good afternoon to everyone joining us today.
Speaker 3: Thank you, Drew. Good afternoon to everyone joining us today.
Speaker 3: Before we get started, I wanted to say a few words about Zipper Critters, Tel Aviv employees.
Before we get started I wanted to say a few words about <unk> Tel Aviv employees.
Speaker 3: As the conflict in Israel and Gaza unfolds, our number one priority has been the health and safety of our people.
Has the conflict in Israel in Gaza unfolds, our number one priority has been the health and safety of our people.
Speaker 3: While all Tel Aviv-based employees have been impacted to some degree, unfortunately some of them have been directly impacted.
All Tel Aviv based employees have been impacted to some degree unfortunately, some of them have been directly impacted.
Speaker 3: our hearts go out to them for their losses, and the conditions under which they must now operate.
Our hearts go out to them for their losses, and the conditions under which they must now operate.
Speaker 3: I have watched with pride and gratitude as ZipperCooter team members around the globe have proactively taken on extra responsibilities so that our Israeli employees can prioritize taking care of their families.
I have watched with private and gratitude as Nick or team members around the globe have proactively taken on extra responsibilities that are Israeli that players can prioritize taking care of their families.
Speaker 3: The well-being of our Elo team members will remain top of mind as we hope for peace and security in the region.
Well being of our fellow team members will remain top of mind as we hope for peace and security in the region.
Turning to our results.
Speaker 3: Third quarter financials further demonstrate Zipp Recruiters' resilience and durability as macroeconomic conditions saw.
Third quarter financials further demonstrate zipper critters resilience and durability as macroeconomic conditions softened.
Speaker 3: Adjusted EBITDA of $54 million and adjusted EBITDA margin of 35% exceeded the high point of our...
Adjusted EBITDA of 54 million and adjusted EBITDA margin of 35% exceeded the high point of our guidance.
Speaker 3: Notably, adjusted EBITDA and adjusted EBITDA margin were all-time highs despite a weakening top.
Notably adjusted EBITDA and adjusted EBITDA margin were all time highest despite a weakening top line.
Speaker 3: ZipRecruiter has a resilient business model that has allowed us to weather the industry-wide hiring slowdown and maintain strong adjusted EBITDA profitability while still investing for the long term.
Peter has a resilient business model that has allowed us to weather the industry wide hiring slowdown and maintain strong adjusted EBITDA profitability, while still investing for the long term.
Speaker 3: The dramatic change in the hiring market has impacted Zipper Cooter's business, along with other offline and online hiring related businesses in the United States.
The dramatic change in the hiring market has impacted different triggers business, along with other offline and online hiring related businesses in the United States.
Speaker 2: Despite some positive economic news, such as real GDP growth of 4.9% and Q3 of 23, an unemployment of 3.8% in September of 2020.
Despite some positive economic news such as real GDP growth of four 9% in Q3 of 'twenty three and unemployment of three 8% in September of 2023. These data points only show a part of the complicated picture that as the U S labor economy.
Speaker 2: These data points only show a part of the complicated picture that is the US labor
Speaker 2: The Federal Reserve's 525 basis point increase in interest rates over the past 18 months has increased the cost of capital for business.
The federal Reserve's 525 basis point increase in interest rates over the past 18 months has increased the cost of capital for businesses, leading to employers taking a far more cautious approach to hiring than just a few quarters to grow.
Speaker 2: leading to employers taking a far more cautious approach to hiring than just a few quarters to grow.
Speaker 2: This increased caution manifests itself in both the number of job openings and the urgency with which those openings need to be filled.
This increased caution manifest itself in both the number of job openings and the urgency with which those openings needed to be felt.
Speaker 2: As a result, job seekers are taking longer to find work, and those currently employed are changing jobs with less...
As a result job seekers are taking longer to find work and those currently employed are changing jobs with less frequency.
Speaker 2: The great resignation is over, with quit rates returning to pre-COVID levels.
Great resignation is over with quit rates returning to pre COVID-19 levels.
Speaker 2: This rapid change in the hiring market has impacted Dippa Cooter's business along with other offline and online hiring related businesses in the United States.
This rapid change in the hiring market has impacted different triggers business, along with other offline and online hiring related businesses in the United States.
Speaker 2: any short-term period the cyclical nature of the US labor market will create a dynamic operating environment for us to navigate.
Over any short term period, the cyclical nature of the U S labor market will create a dynamic operating environment for us to navigate.
Speaker 2: flexibility and profitability of our business model have allowed us to weather this protracted downturn while continuing to invest in product innovation, technological advancement, and increasing awareness of our already famous recruiting.
<unk> ability and profitability of our business model have allowed us to weather this protracted downturn, while continuing to invest in product innovation technological advancement and increasing awareness of our already famous recruiting brand.
Speaker 2: While the total number of people employed in the United States from Q3 of 2019 to Q3 of 2023 has increased by approximately 3%, Ziffer Critters revenue has increased by 38%.
While the total number of people employed in the United States from Q3 of 2019 to Q3 2023 has increased by approximately 3% zipper.
<unk> revenue has increased by 38% and adjusted EBITDA margin has expanded from 2% to 35%.
Speaker 2: and adjusted EBITDA margin has expanded from 2% to 35%.
Speaker 2: We believe the opportunity in front of us to continue to capture more market share through continuous product innovation and technological advancement. It's bigger than...
We believe the opportunity in front of us to continue to capture more market share through continuous product innovation and technological advancement is bigger than it has ever been.
Speaker 2: Now I'll turn it over to Dave to talk through some of our progress against the three pillars of our marketplace strategy.
Now I'll turn it over to Dave to talk through some of our progress against the three pillars of our marketplace strategy.
Speaker 4: Thank you, and good afternoon. We continue to make advancements on our three growth strategies in Q3 of 20.
Thank you and good afternoon.
We continued to make advancements on our three growth strategies in Q3 of 'twenty three.
Speaker 4: We believe we are still in the early stages of using smart matching technology to transform employers and job seekers.
We believe we are still in the early stages with using smart matching technology to transform our <unk>.
<unk> lawyers and job seekers can be done.
Speaker 4: Our first strategic pillar is increasing the number of employers and revenue for paid employer in our market.
Our first strategic pillar is increasingly the number of employees and revenue per paid employer in our marketplace.
Speaker 4: Growing revenue from large enterprise customers remains a priority and a significant long-term opportunity. And we continue to make incremental product improvements to enhance the value of the Zippo Creator platform and meet our customers needs.
Growing revenue from large enterprise customers remains a priority and a significant long term opportunity and we continue to make incremental product improvements to enhance the value of digital creator platform and meet our customers' needs.
Speaker 4: We continue to enhance and further deploy our campaign optimization solution we deployed in the first quarter.
We continue to enhance and further deploy our campaign optimization solution, we deployed in the first quarter.
Speaker 4: The solution is showing consistent improvements in hitting campaign targets, and more customers continue to migrate onto the platform. In Q3, campaigns using our solution were 40% more likely to achieve their targets than those that were mean really made.
The solution is showing consistent improvements and hitting campaign targets and more customers continue to migrate onto the platform in Q3 campaigns using our solution with 40% more likely to achieve their targets and those that were mean really managed.
Speaker 4: We also continue to make improvements that focus on eliminating friction in the hiring.
We also continue to make improvements that focused on eliminating friction in the hiring process or invite to apply feature shifted the mix of the hiring process by enabling employers to take the initial step of reaching out to potential candidates.
Speaker 4: Our invite to apply feature shifted the dynamics of the hiring process by enabling employers to take the initial step of reaching out to potential candidates.
Speaker 4: To further enhance the effectiveness of invite to apply for employers, we've started sending text messages to eligible candidates when employers believe they would be a great fit.
To further enhance the effectiveness of invite to apply for employers. We've started sending text messages to eligible candidates when employers believes that it would be a great fit.
Speaker 4: Moving on to our second pillar, increasing the numbers of job seekers in our marketplace. Labor market downturns present an opportunity to build the job seeker side of the market.
Moving onto our second pillar, increasing the numbers of job seekers in a marketplace labor market downturn presents and the opportunity to build the job seeker side of the marketplace. We believe serving more job seekers, many of whom are using different credit for the first time, we'll build brand loyalty that will continue to endure for years to come.
Speaker 4: We believe serving more job seekers, many of whom are using difficult proof of the first time, will build brand loyalty that will continue to endure for years.
Speaker 4: We continue to see increased activity from job seekers, not only due to ease in labor market conditions, but also from our investments in job seeker brand awareness and search optimization.
We continue to see increased activity from job seekers, not only due to either the labor market conditions, but also from our investments in job seeker brand awareness and search optimization in.
Speaker 4: In Q3, organic visits from job seekers grew 46% year over year, making this our third consecutive quarter with 40% plus year over year.
In Q3 organic was it some job seekers grew 46% year over year, making this our third consecutive quarter with 40% plus year over year growth.
Speaker 4: Whether it is a job seeker who is using the recruiter for the first time or someone who has used it in the past, our products such as our AI driven career advisor named Phil have never been better equipped to assist them in the job search process.
It is a job seeker who's using the procedure for the first time, where someone who used it in the past.
Our products such as our AI driven career advisor named Phil have never been better equipped to assist them in the job search process.
Speaker 4: In Q3, we rolled out several features to help job seekers see more company details when searching for jobs. We introduced company pages, a single one-stop shop where job seekers can see company specific information such as company description, salaries, open job postings, and more. We also further contextualize jobs by adding more company information to aid discovery for applicants such as industry and companies.
In Q3, we rolled out several features to help job seekers to more company details when searching for jobs reintroduce company pages, a single one stop shop, where job seekers can see company specific information.
Accompanying description salaries open job postings and more.
We also further contextualize jobs by adding more company intervention to a discovery for applicants such as industry and company size.
Speaker 4: We also continue to make product improvements so that key job information is easily viewable to job.
We also continue to make product improvements so the key job information easily renewable to job seekers understanding benefits packages, such as health insurance paid time off or retirement benefits.
Speaker 4: Understanding benefits packages, but just health insurance paid time off or retirement.
Speaker 4: emerged among the most important considerations when a job seeker decides which opportunities to
Merged among the most important considerations with the job seeker decides which opportunities to apply to <unk>.
Speaker 4: In Q3, we started parsing jobs for benefits and presenting them on job listings, making them easier to reveal. This helped save job seekers' time when deciding which jobs may be good.
In Q3, we started parsing jobs, the benefits and presenting them on job listings, making them easier to reveal this helps save job seekers time, when deciding which jobs may be a good fit.
Speaker 4: I'll conclude with our third pillar, making our matching technology smarter.
I'll conclude with our third pillar, making our matching technology smarter over time.
Speaker 4: Machine learning and AI have been a central focus of our technology efforts for many years.
Machine learning.
Central focus of our technology efforts for many years, our specialized AI powered matching algorithms get smarter over time by learning from observe behavior across billions of interactions between job seekers and employers in our marketplace.
Speaker 4: Our specialized AI powered matching algorithms get smarter over time by learning from the Europe behavior across billions of interactions between job seekers and employers.
Speaker 4: We believe our vast and proprietary gave us that gives us a distinct advantage as we make the hiring process more efficient and provide better experiences to both employers and jobs.
We believe our vast and proprietary data set gives us a distinct advantage as we make the hiring process more efficient and provide better experiences to both employers and job seekers.
Speaker 4: In 2.3, ZipRecruiter improved its resume parsing capabilities to further advance their algorithms, leveraging artificial intelligence and machine learning techniques.
In Q3 Zip recruiter.
Roland may person capabilities further advanced our algorithms leveraging artificial intelligence and machine learning techniques.
Speaker 4: and our proprietary data from directly observing job seeker and employer behavior, our improvements have led to better accuracy in extracting information from millions of resumes to match job seekers to employees.
And our proprietary data from directly observable job securing employer behavior, our improvements have led to better accuracy and extracting information from millions of resumes to match jobseekers to employers.
Speaker 4: Impregnance to our residency partially directly enhance the quality of candidate. Previous in products like invite to.
Improvements to our revenue partially directly enhance the quality of candidate previews in products like and by two o'clock.
Speaker 4: Now, I'll turn it over to Tim to talk through the financial results and our guidance. Tim?
Now I'll turn it over to Ken to talk through the financial results and our guidance Tim. Thank.
Speaker 1: Thank you, Dave, and good afternoon, everyone. Our third quarter revenue of $155.6 million represents a 31% decline year-by-year and is reflective of a continued, soft, hiring environment.
Thank you, Dave and good afternoon, everyone. Our third quarter revenue of $155 6 million represents a 31% decline year over year and is reflective of the continued docked hiring environment.
Speaker 5: Quarterly paid employers for 90,000 representing a 34% decrease versus Q322, a 12% decrease versus Q223.
Quarterly paid employers for 90000, representing a 34% decrease versus Q3 dollars, 22% to 12% decrease versus Q2 'twenty three.
Speaker 5: This is primarily reflective of weakness among small and medium sized businesses, which make up the vast majority of our paid employees.
This is primarily reflective of weakness amongst small and medium sized businesses, which make up the vast majority of our paid employers revenue per paid employer was $1736 an increase of 4% both year over year and sequentially.
Speaker 5: Revenue per paid employer was $1,736, an increase of 4% both year over year and sequentially.
Speaker 5: The increase quarter over quarter and year over year is consistent with our long-term cohort trends where employers' willingness to pay increases as a product continues to impact their business.
The increase quarter over quarter and year over year is consistent with our long term cohort trends, where employers willingness to pay increases as our product continues to improve.
Speaker 5: Net income was $24.1 million in Q323 compared to $20.6 million in Q322 and $14.4 million in Q223.
Net income was $24 1 million in Q3, 23 compared to $20 $6 million in Q3, 'twenty, two and $14 $4 million in Q2 'twenty three.
Q3 23.
Speaker 5: Q323 adjusted the evidda was $54.4 million equating to a margin of 35% compared to $51.7 million. A margin of 23% in the prior year period at $43.3 million with a margin of 25% in Q220.
Adjusted EBITDA was $54 4 million equating to a margin of 35% compared to $51 7 million a margin of 23% in the prior year period at $43 $3 million with a margin of 25% in Q2 'twenty three.
Net income and adjusted EBITDA, both grew year over year and quarter over quarter, driven by a larger reduction in operating expenses, both personnel and marketing related.
Speaker 5: Net income and adjusted EBITDA both grew year over year and quarter over quarter, driven by a larger reduction in operating expenses, both personnel and marketing.
Speaker 5: Q3, 23 adjusted EBITDA at $54.4 million and adjusted EBITDA margin of 35%. We're both the highest in our company's history, showcasing the financial strength of our business model.
Q3, 23, adjusted EBITDA at $54 4 million and adjusted EBITDA margin of 35% for both the highest in our company's history showcasing the financial strength of our business model.
Speaker 5: Cash, cash equivalents and marketable securities was $497 million as of September 30th, 2023, compared to $497.2 million as of June 30th, 2020.
Cash cash equivalents in marketable securities was $497 million as of September 32023, compared to $497 2 million as of June 32023, cash cash equivalents and marketable securities remained stable quarter over quarter as cash used for repurchases of class a common stock.
Speaker 5: Cash equivalents and marketable securities remain stable quarter over quarter as cash used for repurchases Class A comm stock under our share report purchase program was largely offset by cash provided from operating
Under our share repurchase purchase program was largely offset by cash provided from operating activities.
Speaker 5: In Q323, we repurchased 1.9 million shares totaling $28.2 million. Given our long-term growth outlook, our capital allocation strategy prioritizes organic growth investments in M&A over returning capital to shareholders. However, given the strength of our balance sheet and our free cash flow, we continue to opportunistically purchase shares when we believe there's an attract of ROI and potential dislocations in the stock price.
In Q3, 'twenty, three we repurchased one 9 million shares totaling $28 2 million given our long term growth outlook, our capital allocation strategy prioritizes organic growth investments and M&A or returning capital to shareholders. However, given the strength of our balance sheet and our free cash flow we continue to opportunistically.
<unk> shares when we believe there's an attractive ROI and potential dislocations in the stock price.
Moving onto guidance, our Q4, 'twenty three revenue guidance of $128 million at the midpoint represents a 39% declined year over year.
Speaker 5: Moving on to guidance, our Q423 revenue guidance of 128 million dollars at the midpoint represents a 39 percent decline year-to-year.
Speaker 5: The softness and hiring patterns has not yet been evaded, and we are heading into a seasonally soft Q4. Our Adjustment EvidDud guidance is $34 million at the midpoint, or 27% at just the evidDud margin. This guidance implies an adjusted evidDud margin of approximately 25% to 27% for the full year 2023, an increase of 5% to 7% points year-rear, and compares favorably to the low to mid 20% range provided in August .
Softness in hiring patterns has not yet abated and we're heading into a seasonally soft Q4, our adjusted EBITDA guidance is $34 million at the midpoint or 27% adjusted EBITDA margin. This guidance implies an adjusted EBITDA margin of approximately 25% to 27% for the full year 2023, an increase of five.
Five to seven percentage points year over year and compares favorably to the low to mid 20% range provided in August.
Speaker 5: We continue to demonstrate financial discipline and conserve capital during this unprecedented slowdown, while also continuing to invest in technology drivers of our long-term growth.
We continue to demonstrate financial discipline and conserve capital during this unprecedented slowdown while also continuing to invest in technology drivers of our long term growth.
Speaker 5: Navigating the ups and downs of the labor market is a reality of the industry. And as a result, we built a flexible business model structure to respond to a variety of markets.
Navigating the ups and downs of the labor market is a reality of the industry and as a result, we built a flexible business model structure to respond to a variety of market conditions. We are focused on what we can control approaching all cycles with the same ROI focused orientation nimble mindset and speed to action, while the current environment calls for.
Speaker 5: We are focused on what we can control, approaching all cycles with the same ROI-focused orientation, nimble mindset and speed to action.
Speaker 5: While the current environment calls for cost optimization, we continue to press our technology's vantage, positioning Zip Recrear well for growth in the economic cycles that come. With that, we can now open up the line for questions.
Cost optimization, we continue to press, our technology advantage positioning <unk> well for growth in the economic cycles to go.
With that we can now open up the line for questions operator.
Thank you Les.
Speaker 1: Ladies and gentlemen, at this time, if you would like to ask a question today, remember you need to hit star plus the number one on your touch tone phone.
Ladies and gentlemen at this time, if you would like to ask a question today remember you'd need to hit Star plus the number one on your Touchtone phone.
Speaker 1: To withdraw your question, hit star plus the number one once again. We will pause for just a moment to compile the Q&A.
To withdraw your question hit Star plus the number one once again, we will pause for just a moment to compile the Q&A roster.
Speaker 1: And our first question is from the line of Trevor Young with Barclays.
And our first question is from the line of Trevor Young with Barclays.
Your line is live.
Great. Thanks, I guess first one can you guys talk about the cadence of revenue growth throughout the quarter. There was obviously a little bit of a b versus guide so that implies August or September a little bit better than expected and how things trended. So far in October and November obviously, implying some worsening in trends there.
Speaker 6: Great, thanks. I guess first one, can you guys talk about the cadence of revenue growth throughout the quarter? There's obviously a little bit of a B versus guide. So that implies August or September a little bit better than expected. And how things trended so far in October and November , obviously, implying some, you know, worsening and trends there.
Speaker 6: And then second question on the campaign optimization solution, some encouraging data points on that. Is that now widely available to all enterprise customers? And just any stats on how many enterprise customers or how much of enterprise spend is going through that managed solution would be helpful.
And then second question on the campaign optimization solution. Some encouraging data points on that is that now widely available to all enterprise customers and just any stats on how many enterprise customers or how much of enterprise spend is going through that managed solution would be helpful.
Yes, Thanks, Robert Hi, Trevor This is Tim on revenue trends for Q3, and what we're seeing so far so Q3.
Speaker 5: Yeah, thanks, Trevor. Trevor. This is Tim on revenue transfer Q3 and what we're seeing so far so
Follow the same kind of trends that we that we suggested when we issued guidance with one.
Speaker 5: issued guidance with month 1 being what it was at the time. The revenue trended roughly in line to a little bit down towards the end of the quarter. Despite that, we came up within a couple of million dollars better than our guidance overall. As far as what we're seeing so far, the guide that we're showing right now reflects current conditions. Basically, we have not seen any return to normal seasonality that we've seen in the past, hence the sequential decline that would be a little bit steeper than what we've seen in previous Q4s.
One month, one one being what it was at the time the revenue trended roughly in line to a little bit down towards the end of the quarter.
Despite that we keep.
Within a couple of million dollars better than our guidance overall as far as what we're seeing so far.
The guy that we're showing right now kind of reflects current conditions basically we have not seen any kind of return to normal seasonality that we've seen in the past, hence the sequential decline that would be a little bit steeper than what we've seen in previous.
Speaker 5: Q4s, but generally in line with OrbSing right now.
Q4s.
Generally in line with what we're seeing right now.
Speaker 4: Thanks, Trevor, and then yes, on the campaign optimization, yeah, so it's not relevant to the vast majority of our customers who are small businesses, but to larger
Thanks, Robert and then yes on the campaign optimization.
So it's not relevant to the vast majority of our customers who are small businesses, but the larger.
Speaker 7: Sophisticated enterprises, it is largely available and really depends on.
Just vacated the enterprises.
It is largely available and really depends on our ability to agree with them on a set of goals for the campaign that we can then drive toward in different employers have different goals whether there.
Speaker 7: Our ability to agree with them on a set of goals for the campaign that we can then drive toward and different employers have different goals whether they're, you know, methods like cost per click or cost per hire things like that or a number of hires they're looking for. So that's really critical and understanding so we can get that solution up and running but the result there early on as we spoke to are extremely.
Metrics like cost per click or cost per hire or things like that or a number of hires there looking forward.
It's really critical in understanding so we can get the.
Solution up and running but the.
Results there early on as we spoke to our extremely proud.
Speaker 7: Promising in how increasing number of employers are hitting their goals and we expect to that rule and that optimization to continue to improve as it rolls out to more and more customers.
I am missing.
No.
The number of employers who are hitting their goals and we expect to that pool and that optimization to continue to improve as it rolls out to more and more customers.
Okay, great. Thank you both.
Thanks for your question.
Okay.
Speaker 1: Our next question is from the line of Ralph Shockart with William Blair.
Our next question is from the line of Ralph Schuchardt with William Blair.
Your line is live.
Speaker 8: Good afternoon, thanks for taking the question too, if I could. First just sort of, obviously, there's a tough cycle in the market environment right now, but philosophically on margins, is there a certain level that you would look to optimize the business? As we sort of wait through the cycle to return back to some growth phase.
Good afternoon. Thanks for taking the question two if I could.
First just sort of in the obviously the tough cycle and the market environment right now, but philosophically on margins is there a certain level that you would look to optimize the business as we sort of wait through the cycle. The return back to some some growth phase and then maybe just as a side. During this cycle also youre, obviously getting a lot of jobs.
Speaker 8: And then maybe just as a side, you know, during this cycle, also you're obviously getting a lot of job seekers, maybe speak to when the cycle does turn what that does for the platform as, you know, people are introduced to the brand and you're acquiring more, you know, job seekers on the advanced cycle. Thank you.
Seekers, maybe speak to when the cycle does turn what that does for the platform as people are introduced to the brand and you're acquiring more.
Job seekers on the demand side. Thank you.
Speaker 9: Hey, Ralph, this is Tim. Thanks for the question on the margin philosophy.
Hey, Rob This is Tim Thanks for the question on the margin philosophy. So we approach all of our go to market decisions from the bottom up. So we don't have a target margin that where we're looking at at any point within the cycle Q3 was very strong at 35% and Thats a function of the investment opportunities that we saw within the period.
Speaker 10: So we don't have a target margin that we're looking at at any point within the cycle. Q3 was very strong at 35 percent and that's a function of the investment opportunities that we saw within the period. Q4 very well looked different, especially based on our guidance. But as the EBITDA margins could come upward down based on what we see in our response to it, we still are very confident in our long-term just EBITDA margins of 30 percent as the company continues to grow in scale. Yes, this is Ian and I.
Q4.
Well look different especially based on our guidance.
As the the EBIT margins could come up or down based on what we see in our response to it we still are very confident in our long term adjusted EBITDA margins of 30% as the company continues to grow and scale.
Speaker 2: Yeah, and this is Ian, and I am really excited about the growth in job seekers. We just had our third consecutive quarter of organic job-seeker growth.
Yes. This is Ian and I am really excited about the growth and job seekers. We just had our third consecutive quarter of organic job seeker graph and the reality is it isn't the work that we have done in the current quarter that drives that growth. It's all of the work that we have been doing over the last couple.
Speaker 10: And the reality is, it isn't the work that we have done in the current quarter that drives that growth.
Speaker 10: It's all the work that we have been doing over the last couple years, which is now paying dividends in the midterm and the long term. And similar to that over this past year where the macro has driven a swoon in the recruiting industry.
The years, which is now paying dividends in the mid term and the long term and similar to that over this past year, where the macro has driven a swoon in the recruiting industry. We have continued to invest for the mid and long term and I would anticipate that these investments will pay off similar to the investments that we made.
Speaker 10: We have continued to invest for the mid and long term, and I would anticipate that these investments will pay off similar to the investments that we made in building job seeker brand awareness to 80% on a needed basis.
Building job seeker brand awareness to 80% on a needed basis as well as things like Phil our AI personal assistance as well as our ongoing investment in things like our number one rated iOS and Android mobile App.
Speaker 10: as well as things like SIL, our AI personal assistant, as well as our ongoing investment in things like our number one rated iOS and Android mobile app.
Speaker 10: The payoff for these investments and in particular from job seekers is fundamentally our product gets better the larger and more liquid our marketplace becomes and so as far as the long term You know what we're seeing right now is a validation of the strategy We've been pursuing and we remain focused on our long-term product roadmap
The payoff for these investments and in particular from job seekers is fundamentally.
Our product gets better the larger and more liquid our marketplace becomes and so as far as the long term.
We're seeing right now is validation of the strategy, we've been pursuing and we remain focused on our long term product roadmap.
Great. Thank you both.
Thank you for your call and your questions.
Speaker 1: Our next question comes from the line of Doug Anmuth with JP Morgan.
Our next question comes from the line of Doug Anmuth with JP Morgan.
Your line is live.
Speaker 11: Great, this is Dale for that. Thanks for giving the questions to. So the first one, here's one kind of messaging you got here in front of businesses in terms of plans going into 2024. And I'm looking at it's talent-like, fed rate easing.
Great.
Thanks for taking the questions. So first of all.
First of all kind of the messaging you guys are caring for our businesses in turn.
A plan going into 2024.
Looking at it.
Sounds like a great evening.
Speaker 11: is what's needed for employers to get more confidence in getting their higher-end funds back up and growing again. Is that the right way to think about it or during the other time that they might be looking for to get more confidence? Thank you.
Nida for employers to get more.
And getting their hiring plans.
Growing again is that the right way to think about are there any other filings that they might be looking forward to get more confidence. Thank you.
Speaker 7: Thanks, Dave. Yeah, so obviously we talked to businesses all the time about their hiring needs and what is so clear at this time is that their level of uncertainty about the outlook.
Thanks, Dave.
Yes, so so.
Obviously, we talked to businesses all the time about their hiring needs and what is so clear at this time is the third level of uncertainty about the outlook.
Speaker 7: is profound. And so, what we hear from them over and over again, which is different in other downturns like COVID, for example, where we heard about their businesses, falling dramatically, is less about dramatic downturns in their business and more about their uncertainty in wanting to invest.
Is profound and so what we hear from them over and over again, which is which is different than other downturns like Covid for example, where we heard about their businesses.
<unk> dramatically is less about dramatic downturns in their business.
More about uncertainty in wanting to invest.
Speaker 7: for the long term in more and more people, even though in many cases the results of their businesses deserve it, their reading headlines, they're talking to other business people and feeling uncertain.
For the long term in more and more people, even though in many cases the results of their businesses deserve. It theyre reading headlines, we're talking to other business people and feeling uncertain and so it's that.
Speaker 7: And so it's that, you know, whether it's through the mechanism of cost of capital from the Fed or other animal spirits that cause an increased level of confidence from headlines and, you know, talking to other business people or whatever the case may be. You know, that increased confidence in duration of outlook and strength that were through whatever the next twist and turn of this unprecedented macro cycle is is what employers are waiting.
It's through the mechanism of cost of capital from the fed or other animal spirits that cause an increased level of confidence from headlines in.
Talking to other business people or whatever the case may be.
That increased confidence in duration of outlook and strength that we're through whatever the next twist and turn of this unprecedented macro cycle is what employers.
We are waiting to hear.
Speaker 7: more of the good news is the Ian's point earlier we have more organic job seekers.
Moreover, the good news is the <unk> point earlier, we have more organic job seekers.
Speaker 7: coming in every single quarter who are experiencing what an amazing product Zippercruder is, better either for the first time or a better product than when they last needed it a couple of years ago, as we continue to relentlessly improve it, make it more human, make the technology smarter.
Coming in every single quarter, who are experiencing what an amazing product ZIP recruiter is better either for the first time or a better product and when the last couple of years ago as.
As we continue to relentlessly improve it make it more human make the technology smarter and so we're confident that as we continue to deliver better and better for these employers by delivering better and better for job seekers that when the market turns and it is not if it's when when the market turns as it has.
Speaker 7: And so we're confident that as we continue to do the verb better and better for these employers, by delivering better and better.
Speaker 7: for job seekers that win the market terms, and that's not if it's when, when the market turns as it has over and over again throughout many macro cycles in US history, it's a very safe bet that we will be there for them bigger and better than ever.
Over and over again throughout many macro cycles in U S history, It's a very safe bet that we will be there for them bigger and better than ever.
Speaker 10: And I would just add to that in addition to sort of capital markets, availability of funds for investment and or perceived outlook on the market, another factor that drives a lot of recruiting within businesses is of course turnover. And what we're seeing right now is...
Just add to that in addition to.
Capital markets, the availability of finance for investment <unk> perceived outlook on the market. Another factor that drives a lot of recruiting within businesses is of course turnover and what we're seeing right now is a significant reduction in quit rate amongst jobs take sorry. The currently employed.
Speaker 10: significant reduction in the quit rate amongst job seekers, sorry, the currently
Speaker 10: compared to where we were a year ago and we said the great resignation is over and it's become not only apparent, but I think it's changing the posture and confidence of business owners as they have longer 10 year employee who are fully on ramped and trained. And so their urgency around tires is definitely being impacted by that.
Compared to where we were a year ago and we set the great resignation is over and it has become not only apparent but I think it's changing the posture and confidence of business owners as they have longer tenured employee who are fully on ramped and trained and so their urgency around hires is definitely being impacted by that.
Understood. Thank you.
Thank you for your question.
Speaker 1: Ladies and gentlemen, once again, if you would like to ask a question today, remember it's star plus the number one on your touch tone.
Ladies and gentlemen, once again, if you would like to ask a question today remember at Star plus the number one on your Touchtone phone.
Speaker 1: Our next question comes from the line of Kunal Madhukar.
Our next question comes from the line of Kunal, Matt Hooker.
With UBS your line is flat.
Hi, Thanks, a lot. This is Jason on for Kumar from UBS, a couple of questions from me as well. The first one is on Opex as analogy.
Speaker 12: Hi, thanks a lot. This is Jason on for Kuno from UVX. A couple of questions for me as well. The first one is on Optics' Eternality. Can you guys give us a refresher on the typical Eternality of different Optics line items? It's been pretty lumpy, but...
Can you guys give us a refresher on the typical seasonality of <unk>.
Line items, it's been pretty lumpy, but.
Speaker 12: What kind of seasonality can we expect going forward in this environment? And also, you mentioned in the letter that Q3 already expense came in a lot lower because of lower personnel related charges. Could you please explain what that really means? And separately, on capital return, you guys have been running cash level pretty consistently at $250 million.
What kind of seasonality can we expect going forward in this environment and also you mentioned in the letter that Q3 R&D expense came in a lot lower because of lower personnel related charges could you. Please explain what that really means and separately on capital return.
Guys been running cash level pretty consistently at $215 million I understand that share repo is done more opportunistically, but given the current stock levels would it be reasonable to assume that anything well above 250 cash level right now and you guys will be returning back to investors. Thank you.
Speaker 12: I understand that shared repo is done more opportunistically, but given the current stock levels, would it be reasonable to assume that anything well about 250 cash level right now, because it would be returning back to the last.
Speaker 5: Thanks Jason, this is Tim, I'll take these. So as far as off-ex seasonality, one thing else we have to bad is that it's been a while since we've seen more typical seasonality. So you have to go back to 2019 and before that to kind of understand that picture. But in broad strokes.
Thanks, Jason This is Tim I'll take these so as far as Opex seasonality.
The thing I'll say off the bad is that it's been a while since we've seen more typical seasonality so.
You have to go back to 2019 and before that to kind of understand that picture, but in broad strokes.
Speaker 9: The hiring market really comes back to life after a holiday roll in January and then a fairly steady ramp in the Q2 and then relatively flat through the balance of Q3 picking up into September , October and then back down during the holidays. And oftentimes the
The hiring market really comes.
Comes back to life after a holiday lull in January and then a fairly steady ramp into Q2 and then Rob.
Relatively flat through the balance of Q3 picking up into September October and then back down during the holidays and oftentimes the.
Speaker 5: the very flexible operating expenses that we have specifically in our go-to-market motion in sales and marketing that will kind of follow a very similar pattern.
They're very flexible operating expenses that we have specifically in our go to market motion and sales and marketing that will kind of follow a very similar pattern and that's just basically because we're very responsive to the demand environment that we find ourselves, but like I said at the top of the question, we haven't seen that typical seasonality for quite a while and so.
Speaker 5: And that's just basically because we're very responsive to the demand environment that we find ourselves.
Speaker 5: But like I said at the top of the question, we haven't seen that typical seasonality for quite a while. And so to your no operating expenses have bumped around a little bit and that is because we are doing the very thing. So we're responding to the demand environment that we see.
No.
Operating expenses have bumped around a little bit and that is because we are doing the very things that we're responding to the demand environment that we see.
Speaker 5: Your second question, R&D expenses coming down a little bit. We did a reduction in force back in Q2. And so what you're seeing in Q3 is the full impact of that rolling through the P&L. And so you see something similar as well in G-Nale, though to a lesser extent, I'm just to some other interest, other expenses increasing a tiny bit. And then sales marketing came down primarily again, because of our marketing efforts to
To your second question R&D expenses coming down a little bit we did a reduction in force back in Q2, and so what youre seeing in Q3 as the full impact of that rolling through the P&L.
So you can see something similar as well in G&A, although to a lesser extent.
Yes.
Some other.
Other expenses, increasing a tiny bit and then sales and marketing came down primarily again because of our marketing efforts to invest where we see opportunities and then to your last question.
Speaker 9: invest where we see opportunities. And then, to your last question.
Speaker 5: about our capital allocation strategy in general. Our philosophy hasn't changed during all parts of the cycle. So when we look at organic investments, that is by far and away our first priority and we feel feel very good, we're a cash flow positive. So clearly we're well funded there.
About our capital allocation strategy in general our philosophy Hasnt changed.
During all parts of the cycle.
So when we look at organic investments that is by far and away our first priority and we still feel very good we're cash flow positive. So clearly were well funded there.
Speaker 9: Secondly, we are scarring the world for interesting acquisition targets.
Secondly, we.
Are scouring the world for interesting acquisition targets.
Speaker 5: So we're staying diligent there. And then to your point on capital returns, we've been actively repursicing shares over the years.
Staying diligent there and then to your point.
Capital returns, we've been actively repurchasing shares over the years.
Speaker 5: And so, you know, we, the philosophy there is the same when we see a dislocation of the stock price. You know, we're happy to invest.
And so we the possibly there is the same when we see a dislocation in the stock price we are happy to invest in our in our own shares and we approach that with the same mindset as we do with organic investments I E with a longer term mindset.
Speaker 5: in our inner own shares and we approach that with the same mindset as we do with organic investments, i.e. with a longer-term mindset, you know, spending years. So, all the say, you know, we're still, you know, participating in share repurchases and we'll be doing it opportunistically with a priority being on organic investments and inorganic investments. So, we'll be doing it opportunistically with a priority being on organic investments and inorganic investments.
Spending years et cetera.
I'll just say.
We're still.
<unk> in share repurchases and we do it opportunistically.
With the priority being on organic investments and inorganic investments.
Thank you very much.
Thank you for your question.
Speaker 1: Our next question comes from the line of Justin Patterson with Keybank Capital Markets. Your line is live. I hope you had a pleasant time.
Our next question comes from the line of Justin Patterson with Keybanc capital markets. Your line is live.
Great. Thank you.
Jacob on for Justin.
Speaker 13: How are you thinking about the dynamics between pay employers and regular pay employer into 4Q? Is there anything specific you're seeing so far that would cause 4Qs of DVA from typical seasonality and revenue of paid employer? And in paid employers, how should we approach the pace of potential clients? We left the big decline, you saw in 4 Q2 2.
How are you thinking about the dynamics between paid employers in revenue paid employer into <unk> is there anything specific youre seeing so far that would cause <unk> deviate from typical seasonality and revenue paid employer and in paint employers how should we approach pace essentially the clients we lap the big decline you saw in 2022.
Sure.
Speaker 9: Thanks, Jacob. This is Tim again. So for 2-4, what we would typically see is paid employers take down more material even in other quarters.
Thanks, Jacob this is Tim again, so for Q4, what we would typically see is paid employers ticked down more materially than in other quarters and that is due to the fact that the vast majority of our paid employers are comprised of small medium sized businesses and they tend to hire quite a bit less as they go into the holiday season.
Speaker 5: And that is due to the fact that the vast majority of our paid employers are comprised of small, medium-sized businesses and they tend to hire quite a bit less as they go into the holiday season. Whereas larger enterprise employers, they also reduce spending a little bit typically, but not nearly to the same degree.
And whereas larger enterprise employers they also reduced spending a little bit typically but not nearly to the same degree and so that also means that revenue per paid employer going into Q4 will typically go up in a lot of that is largely due to the mix shift from smbs towards enterprise during that period, So I said to an earlier.
Speaker 5: And so that also means that revenue per pay employer, going into Q4 will typically go up. And a lot of that is largely due to the mixtip.
Speaker 5: from SMBs towards enterprise during that period. So I've said to an earlier question that we've not seen typical seasonality for a while, but that trend for paid employers sequentially taking down in Q4 with revenue per paid employer taking up in Q4 for those very reasons seems like a pretty reasonable expectation this time around.
A question that we have not seen typical seasonality.
For a while but that trend for paid employers sequentially ticking down in Q4 with revenue per paid employer, taking up in Q4 for those very reasons seems like a pretty reasonable expectation this time around.
Yes.
Thanks.
Thank you for your question.
Speaker 1: We have a follow up question from the line of Trevor Young with Barclays.
We have a follow up question from the line of Trevor Young with Barclays. Your.
Your line is live.
Hey, guys.
Speaker 6: Hey guys, just more bigger picture away from the near-term trends, you've flagged the significant growth in job seekers. Any color you can share on where those job seekers are engaging in terms of which surfaces? Is it mobile app, mobile web, or desktop? Any noticeable differentiation between like frequency of visits, time spent in the app or on the website, likelihood of applying across those different surfaces? Just curious on that.
And just more bigger picture.
From the near term trends, you've flagged the significant growth in job seekers any color you can share on where those job seekers are engaging in terms of which surfaces is that mobile app mobile web or desktop any noticeable differentiation between like frequency of visits time spent in the app or on the website likelihood of applying across those.
Different surfaces, just curious on that.
Speaker 7: Yeah, thanks, Trevor. It's the growth in jobs, organic job seekers, obviously, the very exciting part of our business and such a strong long-term indicator of the strength of the marketplace. So to your question on where they're inter-thing, first of all, obviously when they join, they have to onboard and sort of build a profile and give us...
Yeah. Thanks Trevor.
The growth in jobs organic Jobseekers is obviously, a very exciting part of our business in such a strong long term indicator of the strength of the marketplace.
So to your question on where their interim thing.
First of all obviously when they when they joined they have to onboard and sort of build the profile and give us.
Speaker 7: something to go on so we can start matching the right jobs and right away Phil plays a central role. So they're in a dialogue rather than filling out a form and making that process as we continue to iterate and get smarter and better, continuing to make that process of getting the process started, which is often the most difficult part of the process for job seekers and the scariest of making that as easy and as human and as natural as possible. And so we just keep getting better at that. Two is that the brand being so much more well known so that going from over a decade, 0% brand awareness to over 80% brand awareness.
Something to go on so we can start matching the right jobs and right away fill plays a central role so they're in a dialogue rather than filling out a form and making that process as we continue to iterate and get smarter and better continuing to make that process of getting the process started which is often the most difficult part.
The process for job seekers, and the scariest of making that as easy and as human and as natural as possible and so we just keep getting better at that.
Two is the brand being so much more well known so going from over a decade zero percent brand awareness to over 80% brand awareness job seekers are leaning in from the moment they get started.
Speaker 7: Job seekers are leaning in from the moment they get started and have a level of trust coming in that you can just see. In terms of where they do it, you know, job seeking is a dominantly mobile activity. Desktop really is a major factor. So that's both mobile web and mobile app in terms of sort of access points.
And have a level of trust coming in that you can just see in terms of where they do it.
Job seeking is a dominantly mobile activity desktop really isn't a major factor. So that's both mobile web and mobile app.
In terms of sort of access points into our marketplace, but regardless of how you come and find us on which mobile platform, which app.
Speaker 7: indoor marketplace, but regardless of how you come and find us on which mobile platform, which app store, which browser you're using, etc. The fundamental experience of feeling like
The App store, which.
Browser, you're using et cetera.
Fundamental experience of feeling like there's a real human being being rooting you on in the form of Phil and that this is a real place where you get very quick feedback where you immediately started.
Speaker 7: There's a real human beating, being rooting you on in the form of Phil, and that this is a real place where you get very quick feedback, where you immediately started getting invited.
Getting invited to apply to jobs that are great fit for you et cetera, that's what's really working for us.
Speaker 7: to apply to jobs that are great fit for you, et cetera. That's what's really working for us.
Thank you.
Thank you for your question, ladies and gentlemen that will conclude today's ZIP recruiter Q3 2023 earnings call. Thank you for joining you may now all disconnect have a great evening.
Speaker 1: Thank you for your question. Ladies and gentlemen, that will conclude today's recruiter, Q3 2023 earnings call. Thank you for joining. You may now all disconnect.
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