Q2 2024 ZipRecruiter Inc Earnings Call

August 7, 2024

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Yeah.

Jeanne: Thank you for standing by. My name is Jeanne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ziprecruiter Inc. Q2 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Jamie: Thank you for standing by my name is Jamie and I will be your conference operator today.

Speaker Change: At this time I would like to welcome everyone to the ZIP Rakuten, Inc. Q2, 'twenty 'twenty four earnings conference call.

Jamie: All lines have been placed on mute to prevent any background noise.

Jeanne: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the conference over to Drew Haroldson, Investor Relations.

Speaker Change: After the Speakers' remarks, there will be a question and answer session.

Jamie: If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad if.

If you would like to withdraw your question Press Star one again, thank you.

Jamie: I will now like to turn the conference over to drew Haroldson Investor Relations.

Drew Haroldson: Thank you, operator, and good afternoon. Thank you for joining us on our earnings conference call, during which we will discuss Ziprecruiter's performance for the quarter ending June 30th, 2024, and guidance for the third quarter of 2024. Joining me on the call today are Ian Siegel, co-founder and CEO, David Travers, president, and Tim Yarbrough, CFO. Before we begin, please be reminded that forward-looking statements made today are subject to risks and uncertainties relating to future events and or the future financial performance of Ziprecruiter.

Drew Haroldson: 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 ended June 32024 and guidance for the third quarter 2020 for joining me on the call today are co founder and CEO, David travelers, President and Dan Yarbrough CFO before we begin please.

Drew Haroldson: Actual results could differ materially from those anticipated in these forward-looking statements. A discussion of some of the risk factors that could cause actual results to differ materially from any forward-looking statements can be found in Ziprecruiter's quarterly report on Form 10-Q for the quarter ended June 30, 2024, which is available on our investor website and the SEC's website. The forward-looking statements in this conference call are based on current expectations as of today, and Ziprecruiter assumes no obligation to update or revise them, whether as a result of new developments or otherwise.

Drew Haroldson: In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in Ziprecruiter's shareholder letter and in our Form 10-Q. Now, I will turn the call over to Ian.

Drew Haroldson: And in addition, during today's call, we will discuss non-GAAP financial... These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in Ziprecruiter's shareholder letter and in our Form 10-Q. Now, I will turn the call over to Ian.

Speaker Change: We remind you that forward looking statements made today are subject to risks and uncertainties relating to future events <unk> the future financial performance of ZIP recruiters actual results could differ materially from those anticipated in these forward looking statements.

Jamie: 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 ZIP recruiters quarterly report and Form 10-Q for the quarter ended June 32024, which is available on our investor website and the Sec's website.

Jamie: The forward looking statements in this conference call are based on the current expectations as of today and is it recruiter assumes no obligation to update or revise them, whether as a result of new developments or otherwise.

Jamie: In addition, during today's call, we will discuss non-GAAP financial measures.

Jamie: These non-GAAP financial measures should be considered in addition to not as a substitute for or in isolation from GAAP results reconciliations of the non-GAAP metrics. The nearest GAAP metrics are included in <unk> shareholder letter and in our Form 10-Q.

Speaker Change: Now I will turn the call over to you.

Speaker Change: Thank you and good afternoon to everyone joining us today.

Speaker Change: It's day, one different figure had been focused on eliminating friction in the job search process.

Speaker Change: While we are proud of the progress we have made many pain points still exists for both sides of the marketplace. We believe different triggers brand proprietary data and technology uniquely position us to further disrupt the industry over the long term and accelerate the shift from offline to online recruitment.

Ian Siegel: Despite the short-term challenges of navigating the post-COVID macroeconomic cycle, we believe that the advancements we are making towards transforming how the job search process works position us to thrive through many macroeconomic cycles to come. In Q2 2024, revenue of $124 million was down 27% year over year. Net income in Q2 2024 was $7 million, while adjusted EBITDA was $28 million, according to a net income margin of 6% and an adjusted EBITDA margin of 23%.

Ian Siegel: Despite the short-term challenges of navigating the post-COVID macroeconomic cycle, we believe that the advancements we are making toward transforming how the job search process works position us to thrive through many macroeconomic cycles to come. In Q2 2024, revenue of $124 million was down 27% year over year. Net income in Q2 2024 was $7 million, while adjusted EBITDA was $28 million, according to a net income margin of 6% and an adjusted EBITDA margin of 23%.

Speaker Change: The short term challenges navigating the post COVID-19 macroeconomic cycle, we believe that the advancements we are making towards transforming how the job search process works positions us to thrive through many macroeconomic cycles to come.

Speaker Change: In Q2 2020 for revenue of $124 million was down 27% year over year net.

Speaker Change: Net income in Q2, 2024, with 7 million, while adjusted EBITDA was $28 million equating to a net income margin of 6% and an adjusted EBITDA margin of 23% both revenue and adjusted EBITDA. In Q2 2024 came in above the high end of guidance.

Ian Siegel: Both revenue and adjusted EBITDA in Q2 2024 came in above the high end of guidance. As we look toward the second half of 2024, we continue to navigate challenging labor market conditions, per the Bureau of Labor Statistics. Seasonally adjusted hires have declined every month on a year-over-year basis since August of 2022.

Speaker Change: Yeah.

Speaker Change: As we look toward the second half of 2024, we continue to navigate challenging labor market condition.

Speaker Change: The Bureau of Labor statistics seasonally adjusted hires have declined every month on a year over year basis. Since August 2022, the quit rate has fallen 9% below the average rates in 2019.

Ian Siegel: The quit rate has fallen 9% below the average rate in 2019. Despite the fact that hiring is down and employees aren't quitting, our disciplined investment strategy allows us to build on our product momentum and technology leadership. In Q2 2024, these investments contributed to another quarter of job seeker growth. Total Ziprecruiter web traffic in the U.S. grew by 22% year over year, which is 12 percentage points more than any of our largest competitors.

Ian Siegel: Despite the fact that hiring is down and employees aren't quitting, our disciplined investment strategy allows us to build on our product momentum and technology leadership. In Q2 2024, these investments contributed to another quarter of job seeker growth. Total Ziprecruiter web traffic in the U.S. grew by 22% year over year, which is 12 percentage points more than any of our largest competitors. Ongoing investments in product brand awareness, paired with a number of product improvements, contributed to a 30% year-over-year increase in organic job seeker traffic.

Speaker Change: Despite the fact that hiring is down and employees aren't quitting our disciplined investment strategy allows us to build on our product momentum and technology leadership.

Speaker Change: In Q2 2020 for these investments contributed to another quarter of job seeker growth.

Speaker Change: Total different trigger web traffic in the U S grew by 22% year over year, which is 12 percentage points more than any of our largest competitors.

Ian Siegel: Ongoing investments in product brand awareness paired with a number of product improvements contributed to a 30% year-over-year increase in organic job seeker traffic. Over time, we believe growing job seeker traffic will lead to meaningful revenue dollar shifts from both offline and online competitors. In Q2, we began the rollout of Zipintro. Zipintro enables the acceleration of face-to-face connections, delivering strong results so far, with over 90% of job seekers saying they are likely to use Zipintro again.

Speaker Change: Ongoing investments in product brand awareness paired with a number of product improvements contributed to a 30% year over year increase in organic jobseeker traffic.

Ian Siegel: Over time, we believe growing job seeker traffic will lead to meaningful revenue dollar shifts from both offline and online competitors. In Q2, we began the rollout of Zipintro. Zipintro enables the acceleration of face-to-face connections, delivering strong results so far, with over 90% of job seekers saying they are likely to use Zipintro again, and employers who have tried it receive over three times more quality applications per job utilizing Zipintro. In July, we acquired Break Room, a UK-based employer review site focused on frontline workers.

Speaker Change: <unk>, we believe growing job seeker traffic will lead to meaningful revenue dollar shift from both offline and online competitors.

Speaker Change: In Q2, we began the rollout of debenture out ZIP intro enables the acceleration of face to face connections delivering strong results so far with over 90% of job seeker, saying they are likely to use that been show again and employers who have tried it receive over three times more quality applications per job utilizing debenture out.

Ian Siegel: And employers who have tried it receive over three times more quality applications per job utilizing Zipintro. In July, we acquired Break Room, a UK-based employer review site focused on frontline workers. In the coming months, we anticipate launching Break Room in the U.S., where approximately 70% of the workforce is concentrated in frontline roles. Our innovation is enabled by our flexible financial model and robust balance sheet, which gives us the ability to continue to build our brand and enhance our user experience throughout economic cycles.

Speaker Change: In July we acquired breakthrough a UK based employer review site focused on frontline workers in the coming months, we anticipate launching break room in the U S where approximately 70% of the workforce is concentrated in frontline role.

Ian Siegel: In the coming months, we anticipate launching Break Room in the U.S., where approximately 70% of the workforce is concentrated in frontline roles. Our innovation is enabled by our flexible financial model and robust balance sheet, which gives us the ability to continue to build our brand and enhance our user experience throughout the economic cycle. As we continue to navigate this current cycle, we are confident that our disciplined investment strategy will put us in a strong position to take advantage of the inevitable recovery in the labor market to come. With that, I will now turn the call over to Dave to review progress on our growth strategy.

Speaker Change: Our innovation is enabled by our flexible financial model and robust balance sheet, which gives us the ability to continue to build our brand and enhance our user experience throughout economic cycles.

Ian Siegel: As we continue to navigate this current cycle, we are confident that our disciplined investment strategy will put us in a strong position to take advantage of the inevitable recovery in the labor market to come. With that, I will now turn the call over to Dave to review progress on our growth strategy.

Speaker Change: As we continue to navigate this current cycle, we are confident that our disciplined investment strategy will put us in a strong position to take advantage of the inevitable recovery in the labor market to come.

Speaker Change: With that I will now turn the call over to Dave to review progress on our growth strategy.

Speaker Change: Dave.

David Travers: Thank you, Ian, and good afternoon. Q2 was another strong quarter of execution toward building out each of our three strategic pillars. Our first strategic pillar is to increase the number of employers and the revenue per paid employer in our market. We believe that Ziprecruiter is at the forefront of a shift in online recruitment, characterized by a focus on interactive candidate experiences, increased communication, and reduced time to hire. Our initial rollout of ZipIntro is an early example of a product that epitomizes this shift.

David Travers: Thank you, Ian, and good afternoon. Q2 was another strong quarter of execution toward building out each of our three strategic pillars. Our first strategic pillar is to increase the number of employers and the revenue per paid employer in our marketplace. We believe that Ziprecruiter is at the forefront of a shift in online recruitment, characterized by a focus on interactive candidate experiences, increased communication, and reduced time to hire. Our initial rollout of ZipIntro is an early example of a product that epitomizes this shift.

Dave: Thank you Ian and good afternoon Q.

Dave: Q2 was another strong quarter of execution towards building out each of our three strategic pillars.

Dave: Our first strategic pillar is to increase the number of employers and the revenue per paid employer in our marketplace.

Speaker Change: We believe the ZIP recruiters at the forefront of a shift in online recruitment characterized by a focus on interactive experiences increased communication and <unk>.

Speaker Change: Reduced time to hire.

Speaker Change: Our initial rollout of <unk> is an early example of a product that epitomize the shifts.

David Travers: Zipintro enables job seekers to connect with employers face-to-face by inviting top candidates to RSVP for a video interview with employers at a specific time. After the employer reviews the candidate RSVPs, they are connected for the video interview.

Dave: Has it been through enables job seekers to connect with employers face to face by inviting top candidates to RSVP for our video interview with employers at a specific time.

Speaker Change: After the employer reviews cumulative rsvp's, they're connected for video interview.

David Travers: Employers are having a great experience with ZipIntro, as employers that use ZipIntro for a job receive over three times more quality applications for that job. Job seekers are loving ZipIntro, too, with over 90% of job seekers who connect with an employer saying they are likely to use ZipIntro again. Our goal is to invest in product initiatives like ZipIntro to facilitate more one-on-one interactions between employers and job seekers earlier in the search process, creating more value for both sides of our market.

Speaker Change: Employers are having a great experience with ZIP intro as employers that use <unk> for a job received over three times more quality applications for that job.

Speaker Change: <unk> figures are loving zip intro to with over 90% of job seekers, who connect with an employer, saying they are likely to use zip intro again.

Speaker Change: Our goal is to invest in product initiatives like <unk> been true to facilitate more one on one interactions between employers and job seekers earlier in the search process, creating more value for both sides of our marketplace.

David Travers: Our second pillar is increasing the number of job seekers in our market. As we have observed over and over again in our category, market share shifts in job seeker activity have been followed by market share shifts in employer revenue dollars. We believe this pattern will continue, namely that shifts in employer spending will be preceded by shifts in job seeker behavior. In Q2, our momentum in both total and organic job seeker traffic continues.

Speaker Change: Our second pillar is increasing the number of job seekers in our marketplace.

Speaker Change: As we have observed over and over again in our category market share shifts in job seeker activity have been followed by market share shifts and employer revenue dollars.

Speaker Change: We believe this pattern will continue namely that shipped with employer spending will be preceded by shifts in job seeker behavior.

Speaker Change: In Q2, our momentum in both total and organic Jobseeker traffic continued.

David Travers: As Ian mentioned, according to SimilarWeb, total Ziprecruiter web traffic in the U.S. grew by 22% year-over-year, from Q2 of 23 to Q2 of 24, which is at least 12 percentage points more than any of our largest competitors.

Speaker Change: As Ian mentioned according to similar web total ZIP recruiter web traffic in the U S grew by 22% year over year from Q2 of 'twenty three that Q2 'twenty four.

Ian: Which is at least 12 percentage points more than any of our largest competitors.

David Travers: This was driven by year-over-year organic job seeker traffic growth of 30%. We believe this success is a testament to not only our enduring brand awareness but also the strength of our offering and continued product improvement. As we think about expanding our value proposition to job seekers, we are excited to announce our acquisition of Break Room, a UK-based review site focused on frontline workers in industries like retail and hospitality. Break Room collects data from workers on pay, hours, flexibility, work conditions, culture, and more to provide community-powered ratings for companies.

David Travers: This was driven by year-over-year organic job seeker traffic growth of 30%. We believe this success is a testament to not only our enduring brand awareness but also the strength of our offering and continued product improvement. As we think about expanding our value proposition to job seekers, we are excited to announce our acquisition of BreakRoom, a UK-based review site focused on frontline workers in industries like retail and hospitality. BreakRoom collects data from workers on pay, hours, flexibility, work conditions, culture, and more to provide community-powered ratings for companies.

Ian: This was driven by year over year organic jobseeker traffic growth of 30%.

Speaker Change: We believe this success is a testament to not only our enduring brand awareness, but also the strength of our offering and continued product improvements.

Speaker Change: We think about expanding our value proposition the job seekers, we're excited to announce our acquisition of breakthrough a UK based review site focused on frontline workers in industries like retail and hospitality.

Speaker Change: <unk> collects data from workers on PE hours flexibility work conditions culture, and more to provide community powered ratings for companies. These ratings, given our fintech and transparent view of what it's like to work for different employers, which in turn helps job seekers apply for the right jobs for their individual.

David Travers: These ratings give an authentic and transparent view of what it's like to work for different employers, which in turn helps job seekers apply for the right jobs for their individual needs. In line with our mission to actively connect job seekers with their next great opportunity, we plan to launch Break Room in the United States to empower workers with the job insights they need to apply with confidence. Additionally, in the quarter, we made several incremental improvements to the job search experience.

Speaker Change: Thanks.

Speaker Change: In line with our mission to actively connect job seekers with their next great opportunity, we plan to launch break room in the United States to empower workers with the job insights they need to apply with confidence.

Speaker Change: Additionally, in the quarter, we made several incremental improvements to the job search experience.

David Travers: First, we enhanced our job navigation experience on the homepage of our iOS and Android apps, allowing job seekers to immediately browse jobs by categories such as remote jobs, job recommendations based on their most recent application, jobs requiring no prior experience, and others. This resulted in a 10% increase in home screen engagement.

Speaker Change: First we enhanced our job navigation experience on the homepage of our iOS and Android apps, allowing job seekers to immediately browse jobs by categories, such as remote jobs job recommendations based on their most recent application jobs, requiring no prior experience and others.

Speaker Change: This resulted in a 10% increase in home screen engagement.

David Travers: Additionally, we revamped our search experience, allowing job seekers to more easily see both key job highlights and the full job description directly from the search results page, making it easier than ever to see the most important information about a job opening without clicking out to a new page. This enhancement increased job seeker engagement with job postings by over 30% while simultaneously improving the quality of applications by giving job seekers more information and, therefore, more certainty about jobs before they apply.

Speaker Change: Additionally, we revamped our search experience, allowing job seekers to more easily see both key job highlights and the whole job description directly from the search results page, making it easier than ever to see the most important information about the job openings without clicking out to a new page.

Speaker Change: This enhancement increased job seeker engagement with job postings by over 30%, while simultaneously improving the quality of applications by giving job seekers more information and therefore more certainty about jobs before they apply.

David Travers: I'll conclude with our third pillar, making our matching technology smarter over time. In Q2, our team made several improvements to our matching app. A redesigned matching job index enables Ziprecruiter to more efficiently serve recommendations to job seekers, improving their engagement with Ziprecruiter's market. Our team also made improvements to how we make recommendations to job seekers with relatively light activities, increasing engagement by up to 6% and affording us the opportunity to better understand what the job seeker is interested in and qualified for.

David Travers: I'll conclude with our third pillar, making our matching technology smarter over time. In Q2, our team made several improvements to our matching engine. A redesigned matching job index enables Ziprecruiter to more efficiently serve recommendations to job seekers, improving their engagement with Ziprecruiter's market. Our team also made improvements to how we make recommendations to job seekers with relatively light activities, increasing engagement by up to 6% and affording us the opportunity to better understand what the job seeker is interested in and qualified for.

Speaker Change: Conclude with our third pillar, making our matching technology smarter over time.

Speaker Change: In Q2, our team made several improvements to our matching algorithms are redesigned matching job index enabled zip recruiter to more efficiently serve recommendations to job seekers, improving their engagement with Zip recruiters marketplace.

Speaker Change: Our team also made improvements to how we make recommendations to job seekers with relatively light activities, increasing engagement by up to 6% and affording us the opportunity to better understand what the job seekers interested in and qualified for.

David Travers: We believe our relentless focus on improving our matching technology leads to compounding improvements in our algorithm, quarter after quarter, and this quarter was no different. These compounding improvements increase our conviction in continued investment, further our advantage in matching technology for employers and job seekers, and will better enable us to achieve our mission of actively connecting people to their next great opportunity. I'll now turn the call over to Tim to review financial results and guidance. Tim, thank you.

David Travers: We believe our relentless focus on improving our matching technology leads to compounding improvements in our algorithm, quarter after quarter, and this quarter was no different. These compounding improvements increase our conviction in continued investment to further our advantage in matching technology for employers and job seekers and will better enable us to achieve our mission of actively connecting people to their next great opportunity. I'll now turn the call over to Tim to review financial results and guidance. Tim?

Speaker Change: We believe our relentless focus on improving our matching technology leads the compounding improvements in our algorithms.

Speaker Change: After quarter and this quarter was no different these compounding improvements increased our conviction in continued investments to further our advantage of matching technology for employers and job seekers and will better enable us to achieve our mission of actively connecting people to their next great opportunity.

Speaker Change: I'll now turn the call over to Tim to review financial results and guidance Tim.

Tim Yarbrough: Thank you, Dave, and good afternoon, everyone. Our second quarter revenue of $124 million represents a 27% decline year-over-year, primarily due to continued softness in hiring demand. However, revenue increased 1% quarter-over-quarter, our first sequential increase since Q2 2022. Quarterly paid employers were 70,000, representing a 31% decrease versus Q2-23, and a 2% decrease sequentially. The year-over-year decrease in quarterly paid employers is primarily reflective of reduced demand from SMBs. The slight decline quarter-over-quarter reflects the continued uncertainty and volatility in the labor market. Revenue per paid employer was $1,755, up 5% year-over-year and up 3% sequentially.

Tim Yarbrough: Thank you, Dave, and good afternoon, everyone. Our second quarter revenue of $124 million represents a 27% decline year-over-year, primarily due to continued softness in hiring demand. However, revenue increased 1% quarter-over-quarter, our first sequential increase since Q2 2022. Quarterly paid employers were 70,000, representing a 31% decrease versus Q2-23, and a 2% decrease sequentially. The year-over-year decrease in quarterly paid employers is primarily reflective of reduced demand from S&Bs. The slight decline quarter-over-quarter reflects the continued uncertainty and volatility in the labor market. Revenue per paid employer was $1,755, up 5% year-over-year and up 3% sequentially.

Tim: Thank you, Dave and good afternoon, everyone. Our second quarter revenue of $124 million represents a 27% decline year over year, primarily due to continued softness in hiring demand. However, revenue increased 1% quarter over quarter, our first sequential increase since Q2 2022.

Speaker Change: Quarterly paid employers were 70000, representing 31% decrease versus Q2, 23, and a 2% decrease sequentially the year over year decrease in quarterly paid employers is primarily reflective of reduced demand from smbs.

Speaker Change: A slight decline quarter over quarter reflects the continued uncertainty and volatility at the labor market.

Speaker Change: Revenue per paid employer was $1755 up 5% year over year and up 3% sequentially the increases year over year and quarter over quarter are primarily due to the slight mix shift from subscription revenue to performance revenue.

Tim Yarbrough: The increases year-over-year and quarter-over-quarter are primarily due to the slight mixed shift from subscription revenue to performance revenue. Net income was $7 million in Q2-24 compared to net income of $14 million in Q2-23 and a net loss of $7 million in Q1-24. Q2-24 adjusted EBITDA was $28 million, equating to a margin of 23%, compared to $43 million, a margin of 25% in Q2-23, and $21 million, with a margin of 17% in Q1-24.

Tim Yarbrough: The increases year-over-year and quarter-over-quarter are primarily due to the slight mixed shift from subscription revenue to performance revenue. Net income was $7 million in Q2'24 compared to net income of $14 million in Q2'23 and a net loss of $7 million in Q1'24. Q2-24 adjusted EBITDA was $28 million, equating to a margin of 23%, compared to $43 million, a margin of 25% in Q2-23, and $21 million, with a margin of 17% in Q1-24.

Speaker Change: Net income was $7 million in Q2 24 compared to net income of $14 million in Q2, 23, and a net loss of $7 million in Q1 24.

Speaker Change: Q2, 24, adjusted EBITDA was $28 million equating to a margin of 23% compared to $43 million a margin of 25% in Q2, 23 and $21 million with a margin of 17% in Q1 24 net income and adjusted EBITDA decreases year over year were primarily related to revenue declines.

Tim Yarbrough: Net income and adjusted EBITDA decreases year-over-year were primarily related to revenue declines, while quarter-over-quarter increases were driven by higher revenue and lower operating expenses. Cash, Cash Equivalents, and Marketable Securities was $523 million as of June 30, 2024.

Speaker Change: While quarter over quarter increases were driven by higher revenue and lower operating expenses.

Speaker Change: Cash cash equivalents in marketable securities was $523 million as of June 32024.

Tim Yarbrough: Moving on to guidance, our Q3-24 revenue guidance of $112 million at the midpoint represents a 28% decline year-over-year and a 9% decline quarter-over-quarter. Our adjusted EBITDA guidance for Q3-24 is $10 million at the midpoint, or a 9% adjusted EBITDA margin. While we saw signs that we were potentially approaching a trough for much of Q2, trends in the last few weeks of June and through July make us more cautious in our expectations for Q3.

Tim Yarbrough: Moving on to guidance, our Q3-24 revenue guidance of $112 million at the midpoint represents a 28% decline year-over-year and a 9% decline quarter-per-quarter. Our adjusted EBITDA guidance for Q3-24 is $10 million at the midpoint, or a 9% adjusted EBITDA margin. While we saw signs that we were potentially approaching a trough for much of Q2, trends in the last few weeks of June and through July make us more cautious in our expectations for Q3.

Speaker Change: Moving onto guidance, our Q3 24 revenue guidance of $112 million at the midpoint represented 28% decline year over year, and a 9% decline quarter per quarter. Our adjusted EBITDA guidance for Q3, 'twenty four is $10 million at the midpoint or a 9% adjusted EBITDA margin, while we saw signs that we were potentially approaching it.

Speaker Change: For much of Q2 trends in the last few weeks of June and through July and make us more cautious in our expectations for Q3.

Tim Yarbrough: We believe it remains prudent to continue long-term product, technology, and marketing investments in our market. Our operating plans continue to call for low to mid-teens adjusted EBITDA margins in 2024. We are constantly assessing the state of the labor market, letting data lead our decisions. We are poised to increase investment as opportunities arise, and, alternatively, are always prepared to show further cost discipline if conditions deteriorate. The timing and shape of the recovery remain uncertain, and while there are encouraging signs that the labor market downturn is bottoming out, there continues to be a high degree of uncertainty and volatility.

Speaker Change: We believe it remains prudent to continue long term product technology and marketing investments in our marketplace. Our operating plans continue to call for low to mid teens adjusted EBITDA margins. In 2024, we are constantly assessing the state of the labor market, leading data lead our decision, making we are poised to increase investments as opportunities arise.

Speaker Change: And Alternatively are always prepared to show further cost discipline if conditions deteriorate.

Speaker Change: The timing and shape of recovery remain uncertain and while there are encouraging signs that the labor market downturn is bottoming out there continues to be a high degree of uncertainty and volatility we continue to lean into investments that we believe we will capture market share over time and are well positioned to emerge from this current industry slowdown as a stronger company.

Tim Yarbrough: We continue to lean into investments that we believe will capture market share over time and are well positioned to emerge from this current industry slowdown as a stronger company. Operator?

Tim Yarbrough: We continue to lean into investments that we believe will capture market share over time and are well-positioned to emerge from this current industry slowdown as a stronger company. Operator?

Jeanne: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loud speaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 on your telephone keypad to join the queue. And your first question comes from the line of Doug Anmuth with J.P. Morgan. Please go ahead.

Speaker Change: With that we can now open the line for questions operator.

Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 on your telephone keypad to join the queue. And your first question comes from the line of Doug Anmuth with J.P. Morgan. Please go ahead.

Speaker Change: Thank you the floor is now open for questions. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.

Speaker Change: If you are called upon to ask your question and our listening via loud speaker, a new device. Please pickup your handset and ensure that your phone is not on mute when asking a question.

Speaker Change: Again press Star one on your telephone keypad to join the queue.

Speaker Change: And your first question comes from the line of Doug Anmuth with J P. Morgan. Please go ahead.

Doug Anmuth: Great, thanks for taking the questions. You know, last quarter, Tim, you kind of hit this toward the end of your comments, but last quarter, you expressed some optimism just around the labor market potentially troughing. I think that was largely based on the flattish, sequential paid employer numbers. But maybe you can elaborate just a little bit on the trends that you saw in late June and July that are making you more cautious and kind of shifting your view relative to three months ago.

Doug Anmuth: Great, thanks for taking the questions. You know, last quarter, Tim, you kind of hit this toward the end of your comments, but last quarter, you expressed some optimism just around the labor market potentially troughing. I think that was largely based on the flattish sequential paid employer numbers. But maybe you can elaborate just a little bit on the trends that you saw in late June and July that are making you more cautious and kind of shifting your view relative to three months ago.

Doug Anmuth: Great. Thanks for taking the questions.

Doug Anmuth: Last quarter, Tim you kind of hit this towards the end of your comments, but last quarter you expressed some optimism just around the labor market potentially trough ing I think that was largely based on the flattish sequential paid employer numbers, but.

Speaker Change: Maybe you can elaborate just a little bit on the trends that you saw in late June and July they're making you more cautious and kind of shifting your your view relative to three months ago and I know that was an early kind of early potential optimism as well and then separately organic traffic grew 30%.

Doug Anmuth: And I know that was an early, you know, kind of early potential optimism as well. And then separately, organic traffic grew 30 percent year over year. I think it was 65 percent last quarter. Can you just talk about that? Is that more comp dynamics or something that you're particularly seeing in the activity levels there? Thanks.

Speaker Change: Year over year I think it was 65% last quarter can you just talk about that is that more complex dynamics or something that you're particularly seeing and the activity levels. There. Thanks.

Tim Yarbrough: Yeah, thanks, Doug. This is Tim.

Speaker Change: Yes. Thanks, Doug This is Tim as far as the trends go yes.

Speaker Change: Yes.

Speaker Change: What we saw over the course of the quarter was <unk>.

Speaker Change: Basically in line with the same signs of stabilization that we noted in prior calls.

Speaker Change: Through the first part of the quarter, so, but as we approached June and into July we saw general softening trends you can kind of see that show up in the lighter.

Tim Yarbrough: As far as the trends go, what we saw over the course of the quarter was basically in line with the same signs of stabilization that we noted in the prior calls through the first part of the quarter. But as we approached June and into July, we saw general softening trends. You can kind of see that show up in the lighter, you know, sequential, like sequential decrease in paid employers over the course of Q2. And our guidance that we're giving is assuming that the same softness that we've noted in June and July continues throughout the quarter.

Speaker Change: The sequential sequential decrease in paid employers over the course of Q2.

Speaker Change: Our guidance that we're giving is assuming that that same softness that we noted in June and July continues throughout the quarter.

Speaker Change: Yes.

Dave: Hey, Doug, this is Dave. On organic traffic growth, to your point, not only this quarter and last quarter, but for well over a year now, every single quarter, we've been calling out our organic traffic growth, really outpacing the market. And so 30% this quarter is the result of painstaking work on product and on building a brand and investments that have been paying off for over many years in terms of how they vary over time.

Dave: Hey, Doug, this is Dave. On organic traffic growth, to your point, not only this quarter and last quarter, but for well over a year now, every single quarter, we've been calling out our organic traffic growth, really outpacing the market. And so 30% this quarter is the result of painstaking work on the product and on building the brand, and investments that have been paying out for over many years in terms of how they vary over time.

Speaker Change: Hey, Doug This is Dave on the organic traffic growth to your point not only this quarter and last quarter book for well over a year now every single quarter, we've been calling out our organic traffic growth.

Doug Anmuth: Really outpacing.

Doug Anmuth: The market and so 30% this quarter.

Speaker Change: The result of painstaking work on product and on building brand and investments that have been paying off for us over many years.

Speaker Change: In terms of how they vary over time.

Dave: You know, organic traffic growth doesn't come from super straightforward, sequential actions taken in any given quarter. So the long-term trend line, as we look out back over many quarters, is very clear that we're taking traffic much faster. And the mixed shift of our traffic is much more driven such that our total traffic, as we indicated, is up 22%, powered by the 30% growth in organic traffic, and that's over 12% faster than any of our largest competitors.

Dave: You know, organic traffic growth doesn't come from super straightforward sequential actions taken in any given quarter. So the long-term trend line, as we look out back over many quarters, is very clear that we're taking traffic much faster, and the mixed shift of our traffic is much more driven such that our total traffic, as we indicated, is up 22%, powered by the 30% growth in organic traffic. And that's over 12% faster than any of our largest competitors.

Speaker Change: Organic traffic growth doesn't come from.

Speaker Change: Super straightforward sequential actions taken in any given quarter. So the long term trend line as we look out back over many quarters is very clear that we're taking traffic much faster and the mix shift of our traffic is much more driven such that our total traffic as we indicated.

Speaker Change: It is up 22%.

Speaker Change: Powered by the 30% growth in organic and thats over 12% faster than any of our largest competitors. So we feel very good about the sort of investments we've been making we're making new and more investments in that category that you saw which we're talking about today, some of which you'll hear about in coming quarters, but the momentum there has been long in.

Dave: So we feel very good about the sort of investments we've been making. We're making new and more investments in that category, some of which we're talking about today, some of which you'll hear about in the coming quarters, but the momentum there has been long and sustained, and we feel great about it.

Speaker Change: Sustained and we feel great about it.

Ian Siegel: Yeah, I just want to say... I just want to say real quick, Doug, that the sequential growth in organic traffic is one way to look at it. But I think looking at total traffic is probably the best way to look at it, because that's the summation of all our efforts. And we keep saying this, which is that we're not trying to anticipate where the market is going. We try to be very rapid in our reactions.

Ian Siegel: Yeah, I should say. I just want to say real quick, Doug, that the sequential growth in organic traffic is one way to look at it. But I think looking at total traffic is probably the best way to look at it, because that's the summation of all our efforts. And we keep saying this, which is that we're not trying to anticipate where the market is going. We try to be very rapid in our reactions.

Speaker Change: Yes.

Speaker Change: Yeah, I just want to say real quick.

Speaker Change: Sure.

Speaker Change: The sequential growth in organic traffic is one way to look at it but I think looking at total traffic is probably the best way to look at it because that's the summation of all our efforts and we keep saying that switches, we're not trying to anticipate where the market is going we tried to be very rapid and our reactions.

Ian Siegel: So once again, you're seeing us rapidly react where we got an early read on a downward trend in the way the labor market was heading. But what is true is that regardless of which part of the cycle we're in, we have been relentlessly investing in improving our product. And you can see the two big examples of that this quarter being the acquisition break room, as well as the initial rollout of ZipIntro.

Speaker Change: Once again youre seeing us rapidly react where we got an early read on a downward trend in the way the labor market was heading but what is true is that regardless of which part of the cycle. We're in we have been persistently investing and improving our product and you can see the tiered examples of that this quarter being the acquisition right.

Speaker Change: As long as the initial rollout of <unk> and those kinds of persistent product improvements have been ongoing for the last.

Ian Siegel: And those kinds of persistent product improvements have been ongoing for the last many years, and what you're seeing now is the harvest from all of that investment, where every part of our job seeker traffic, organic and non-organic, has been growing. And we think that seeing that side of our marketplace grow during this downturn is what optimally positions us to take market share as what we believe is an inevitable recovery will eventually begin here. Thank you all.

Speaker Change: Many years and what Youre seeing now is the harvest from all of that investment were.

Speaker Change: Part of our job seeker traffic organic and Nonorganic has been growing and we think that seeing that side of our marketplace grow. During this downturn is would optimally positions us to take market share as well. We believe there is an inevitable recovery will eventually begin here.

Doug Anmuth: Thank you all. I appreciate it.

Operator: Thank you all. I appreciate it.

Speaker Change: Thank you I appreciate it.

Speaker Change: Okay.

Jeanne: Your next question comes from the line David Yu with Evercore. Please go ahead.

David Yueh: Your next question comes from the line David Yueh with Evercore. Please go ahead.

David <unk>: Your next question comes from the line of David <unk> with Evercore. Please go ahead.

David Yu: Hi, thank you. This is David from Mark. You called out QPEs being lowered and demand from F&B. Are there any specific verticals where you're seeing lower demand versus others?

David Yueh: Hi, thank you. This is David from Mark. You called out QPEs being lowered and demand from F&B. Are there any specific verticals where you're seeing lower demand versus others?

Speaker Change: Alright. Thank you this is David for Mark <unk>.

David: Called out Q P. He's being lower due to reduced demand from Smbs are there any specific verticals, where youre seeing lower demand versus others. Thank you.

Dave: Thank you. Thank you. Thanks, David. This is Dave. Yeah, great question.

Dave: Yeah, great question. So as we look at the year-over-year trends, we continue to see areas like retail and government sort of outperforming. But obviously, in a market like this, there are more verticals that are underperforming. And so interestingly, verticals like finance and technology remain weak as they have been, and verticals like education, which was strong for a long time as there was a catch-up in the number of teachers that needed to be hired after the pandemic, have started to weaken on a year-over-year basis now.

Dave: Thanks, David. This is Dave.

Dave: Thank you. Thank you. Thanks, David. This is Dave. Yeah, great question.

Dave: Thanks, David. This is Dave.

Speaker Change: Thanks, David This is Dave Yeah, Great question. So as we as we look at the year over year trends, we continue to see.

Operator: Thank you for standing by. My name is Jeanine and I will be your conference operator today.

Operator: At this time, I would like to welcome everyone to the Ziprecruiter Inc. Q2 2024 earnings conference 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.

Speaker Change: Areas like retail and government sort of outperforming but obviously in a market like this there are more verticals that are underperforming.

Dave: Yeah, great question. So as we look at the year over year trends, we continue to see areas like retail and government sort of outperforming. But obviously, in a market like this, there are more verticals that are underperforming. And so interestingly, verticals like finance and technology remain weak as they have been, and verticals like education, which was strong for a long time as there was a catch-up in the number of teachers that needed to be hired after the pandemic, have started to weaken on a year over year basis now.

Speaker Change: And so interestingly verticals like finance and technology remain.

Speaker Change: We can say have been in verticals like education, which was strong for a long time is there was a catch up in the number of teachers that needed to be hired after the pandemic started to weaken on a on a year over year basis now.

Drew Haroldson: I will now like to turn the conference over to Drew Haroldson investor relations. Thank you operator and good afternoon. Thank you for joining us in our earnings conference call during which we will discuss Ziprecruiter's performance for the quarter end of June 30th, 2024 and guidance for the third quarter of 2024. Joining me on the call today are Ian Siegel, co-founder and CEO David Travers, president and Tim Yarbrough, CFO. Before we begin, please be reminded that forward-looking statements made today are subject to risks and uncertainties relating to future events and or the future financial performance of Ziprecruiter.

Dave: And so, you know, that's what we see. But obviously, the balance, you know, as you look across all sectors and geographies of the economy, the balance continues to be difficult, as recent government data show that we are now, six or 8% below the number of hires last month that we averaged per month in pre-COVID-19. And so zooming out on even the, you know, sort of overall shape and mix of the economy, you know, we're in a pretty abnormal period currently.

Dave: And so, you know, that's what we see. But obviously, the balance, you know, as you look across all sectors and geographies of the economy, the balance continues to be difficult, as recent government data show, where, you know, now, six or 8% below the number of hires last month that we averaged per month pre-COVID-19. And so zooming out on even the, you know, sort of overall shape and mix of the economy, you know, we're in a pretty abnormal period currently.

Speaker Change: And so that's what we see but obviously the balance as you look across all sectors and geographies of the economy. The balance continues to be difficult as recent government data show we're now.

Speaker Change: Six or 8% below the number of hires last month that we average per month in pre Covid 2019.

Speaker Change: So zooming out for even the sort of overall shape and mix.

Drew Haroldson: Actual results could differ materially from those anticipated and these forward-looking statements. The discussion of some of the risk factors that could cause actual results differ materially from any forward-looking statements to be found in Ziprecruiter's quarterly report informed NQ for the quarter end of June 30th, 2024, which is available on our investor website and the SEC's website. The forward-looking statements in this conference call are based on the current expectations as of today and Ziprecruiter assumes no obligation to update or revise them whether as a result of new developments or otherwise. In addition, during today's call, we will discuss non-gap financial measures. These non-gap financial measures should be considered in addition to not as in such two or an isolation crown gap results.

Speaker Change: The economy.

Speaker Change: We're in a pretty pretty abnormal.

Speaker Change: <unk> period currently.

Speaker Change: Thank you.

Speaker Change: Yeah.

Operator: There are no further questions at this time. That concludes our Q&A session. Thank you for attending. This concludes today's conference call. You may now disconnect.

Operator: There are no further questions at this time. That concludes our Q&A session. Thank you for attending.

Speaker Change: There are no further questions at this time that concludes our Q&A session. Thank you for attending this concludes today's conference call you may now disconnect.

Speaker Change: [music].

Drew Haroldson: Reconciliation of the non-gap metrics, the nearest gap metrics are included in Ziprecruiter shareholder letter in an R form 10Q.

Drew Haroldson: And now I will turn the call over to you.

Speaker Change: Sure.

Ian Siegel: Thank you and good afternoon to everyone joining us today. Since day one, Ziprecruiter has been focused on eliminating friction in the job search process. While we are proud of the progress we have made, many pain points still exist for both sides of the marketplace. We believe Ziprecruiter's brand for proprietary data and technology uniquely positioned us to further disrupt the industry over the long term and accelerate the shift from offline to online recruitment. Despite the short-term challenges of navigating the post-COVID macroeconomic cycle, we believe that the advancements we are making towards transforming how the job search process works, positions us to thrive through many macroeconomic cycles to come.

Speaker Change: [music].

Ian Siegel: In Q2 2024, revenue of $124 million was down 27% year over year. Net income in Q2 2024 was $7 million, while adjusted EBITDA was $28 million, equating to a net income margin of 6% and an adjusted EBITDA margin of 23%. Both revenue and adjusted EBITDA and Q2 2024 came in above the high end of guidance. As we look toward the second half of 2024, we continue to navigate challenging labor market conditions.

Ian Siegel: Anderson, Per the Bureau of Labor Statistics, seasonally adjusted hires of declined every month on a year-over-year basis in August of 2022. The quit rate has fallen 9% below the average rate in 2019. Despite the fact that hiring is down and employees aren't quitting, our Disciplined Investment Strategy allows us to build on our product momentum and technology leadership. In Q2 2024, these investments contributed to another quarter of job-seeker growth. Total Ziprecruiter web traffic in the US grew by 22% year-over-year, which is 12 percentage points more than any of our largest competitors.

Ian Siegel: Ongoing investments in product brand awareness paired with a number of product improvements contributed to a 30% year-over-year increase in organic job-seeker traffic. Over time, we believe growing job-seeker traffic will lead to meaningful revenue dollarships from both offline and online competitors.

Ian Siegel: In Q2, we began the rollout of Zip Intro. Zip Intro enables the acceleration of face-to-face connections delivering strong results so far, with over 90% of job-seekers saying they are likely to use Zip Intro again, and employers who have tried it receive over three times more quality applications per job utilizing Zip Intro.

Ian Siegel: In July, we acquired Breakroom, a UK-based employer review site focused on frontline workers. In the coming months, we anticipate launching Breakroom in the US where approximately 70% of the workforce is concentrated in frontline roles. Our innovation is enabled by our flexible financial model and robust balance sheet, which gives us the ability to continue to build our brand and enhance our user experience throughout economic cycles.

David Travers: With that, I will now turn the call over to Dave to review progress on our growth strategy. Dave? Thank you, Ian, and good afternoon.

David Travers: Q2 was another strong quarter of execution toward building out each of our three strategic pillars. Our first strategic pillar is to increase the number of employers and the revenue per paid employer in our marketplace. We believe that Zip Recruiters at the forefront of a shift in online recruitment characterized by a focus on interactive candidate experiences, increase communication, and reduce time to higher. Our initial rollout of Zip Intro is an early example of a product that epitomizes this shift.

David Travers: Zip Intro enables job seekers to connect with employers face to face by inviting top candidates to RSVP for a video interview with employers at a specific time. After the employer reviews candidate RSVP, they are connected for a video interview. Employers are having a great experience with Zip Intro as employers that use Zip Intro for a job receive over three times more quality applications for that job. Job seekers are loving Zip Intro 2 with over 90% of job seekers who connect with an employer saying they are likely to use Zip Intro again.

David Travers: Our goal is to invest in product initiatives like Zipintro to facilitate more one-on-one interactions between employers and job seekers, earlier in the search process, creating more value for both sides of our marketplace.

David Travers: Our second pillar is increasing the number of job seekers in our marketplace. As we have observed over and over again in our category, market share shifts in job-seeker activity have been followed by market share shifts in employer revenue dollars. We believe this pattern will continue, namely that shift in employer spending will be preceded by shifts in job-seeker behavior. In Q2, our momentum in both total and organic job-seeker traffic continued. As Ian mentioned, according to similar web, total Ziprecruiter web traffic in the US grew by 22% year-over-year, from Q2 of 23 to Q2 of 24, which is at least 12% is more than any of our largest competitors. This was driven by year-over-year organic job-seeker traffic growth of 30%.

David Travers: We believe this success is a testament to not only our enduring brand awareness, but also the strength of our offering and continued product improvements.

David Travers: As we think about expanding our value proposition to job seekers, we are excited to announce our acquisition of break room, a UK-based review site focused on frontline workers in industries like retail and hospitality. Break room collects data from workers on pay, hours, flexibility, work conditions, culture, and more to provide community-powered ratings for companies. These ratings give an authentic and transparent view of what it's like to work for different employers, which in turn helps job-seekers apply for the right jobs for their individual needs. In line with our mission to actively connect job-seekers with their next great opportunity, we plan to launch break room in the United States to empower workers with the job insights they need to apply with confidence.

David Travers: Additionally, in the quarter, we made several incremental improvements to the job search experience. First, we enhanced our job navigation experience on the homepage of our iOS and Android apps, allowing job-seekers to immediately browse jobs by categories such as remote jobs, job recommendations based on their most recent application, jobs requiring no prior experience and others. This resulted in a 10% increase in home screen engagement. Additionally, we revamped our search experience, allowing job-seekers to more easily see both key job highlights and the full job description directly from the search results page, making it easier than ever to see the most important information about a job opening without clicking out to a new page.

David Travers: This enhancement increased job-seeker engagement with job postings by over 30% while simultaneously improving the quality of applications by giving job-seekers more information and therefore more certainty about jobs before they apply.

David Travers: I'll conclude with our third pillar, making our matching technology smarter over time. In Q2, our team made several improvements to our matching algorithms. Our redesigned matching job index enables Zipper Cruder to more efficiently serve recommendations to jobs, and Ziprecruiter's Marketplace. Our team also made improvements to how we make recommendations to job seekers with relatively light activity, increasing engagement by up to 6% in affording us the opportunity to better understand what the job seekers interested in and qualified for.

David Travers: We believe our relentless focus on improving our matching technology leads to compounding improvements in our algorithms, quarter after quarter, and and this quarter was no different. These compounding improvements increase our conviction in continued investments to further our advantage in matching technology for employers and job seekers and will better enable us to achieve our mission of actively connecting people to their next great opportunity.

Timothy Yarbrough: I'll now turn the call over to Tim to review financial results and guides. Tim? Thank you, Dave, and good afternoon, everyone.

Timothy Yarbrough: Our second court revenue of $124 million represents a 27% decline year-over-year, primarily due to continued softness and hiring demand. However, revenue increased 1% quarter over quarter. Our first sequential increase since Q2 2022. Quarterly paid employers were 70,000, representing a 31% decrease versus Q2 23 and a 2% decrease sequentially. The year-over-year decrease in quarterly paid employers is primarily reflective of reduced demand from SMBs. The slight decline quarter of record reflects the continued uncertainty and volatility of the labor market.

Timothy Yarbrough: Revenue-prepaid employer was $1,755 of 5% year-over-year and up 3% sequentially. The increases year-over-year and quarter over quarter are primarily due to the slight mix shift from subscription revenue to performance revenue. That income was $7 million in Q2 24 compared to net income of $14 million in Q2 23 and a net loss of $7 million in Q1 24. Q2 24 adjusted EBITDA was $28 million equating to a margin of 23%, compared to $43 million, a margin of 25% in Q2 23, and $21 million with a margin of 17% in Q1 24.

Timothy Yarbrough: Net income and a just EBITDA decreases year-over-year were primarily related to revenue declines while quarter-over-quarter increases were driven by higher revenue in lower operating expenses. Cash equivalents and marketable securities was $523 million as of June 30, 2024.

Timothy Yarbrough: Moving on to guidance, our Q3 24 revenue guidance of $112 million at the midpoint represents a 28% decline year-over-year and a 9% decline quarter per quarter. Our adjusted EBITDA guidance for Q3 24 is $10 million at the midpoint or a 9% adjusted EBITDA margin. While we saw signs that we were potentially approaching a trough for much of Q2 trends in the last few weeks of June and through July make us more cautious in our expectations for Q3.

Timothy Yarbrough: We believe it remains prudent to continue long-term product technology and marketing investments in our marketplace. Our operating plans continue to call for low-to-mid-teens adjusted EBITDA margins in 2024. We are constantly assessing the state of the labor market, letting data lead our decision-making. We are poised to increase investment as opportunities arise and alternatively are always prepared to show further costs. Discipline, if conditions deteriorate.

Timothy Yarbrough: The timing and shape of recovery remain uncertain, and while there are encouraging signs that the labor market downturn is bottoming out, there continues to be a high degree of uncertainty and volatility. We continue to lean into investments that we believe will capture market share over time and are well positioned to emerge from this current industry slowdown as a stronger company.

Operator: With that, we can now open the line for questions. Operator? Thank you.

Operator: The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not a mute when asking your question. Again, press star one on your telephone keypad to join the queue.

Timothy Yarbrough: Your first question comes from the line of Doug and with JP Morgan. Please go ahead. Thanks for taking the questions. Last quarter, Tim, you hit this toward the end of your comments, but last quarter you expressed some optimism just around the labor market, potentially trapping. I think that was largely based on the flatish sequential paid employer numbers, but maybe you can elaborate just a little bit on the trends that you saw in late June and July.

Timothy Yarbrough: They're making you more cautious and shifting your view relative to three months ago. I know that was an early potential optimism as well. Then separately organic traffic grew 30% year-over-year. I think it was 65% last quarter. Can you just talk about that? Is that more complex dynamics or something that you're particularly seeing in the activity levels there? Thanks. Thanks, Doug. This is Tim. As far as the trends go, what we saw over the course of the quarter was basically in line with the same signs of stabilization that we noted in prior calls through the first part of the quarter.

Timothy Yarbrough: But as we approached June and into July, we saw general softening trends. You can kind of see that show up in the lighter sequential sequential decrease in paid employers over the course of Q2. And our guidance that we're giving is assuming that the same softness that we've noted in June and July continues throughout the quarter. Hey, Doug. This is David on the organic traffic growth to your point, not only this quarter and last quarter, but for well over a year now every single quarter we've been calling out our organic traffic growth.

Timothy Yarbrough: Really outpacing the market. And so 30% this quarter is the result of painstaking work on product and on building brand and investments that have been paying off for over the over many years in terms of how they vary over time. The organic traffic growth doesn't come from super straightforward sequential actions taken in any given quarter. So the long term trend line as we look out back over many quarters is very clear that we're taking traffic much faster and the mixed shift of our traffic is much more driven such that our total traffic as we indicated is up 22%.

Timothy Yarbrough: It's powered by the 30% growth in organic and that's over 12% faster than any of our largest competitors. So we feel very good about the sort of investments we've been making. We're making new and more investments in that category that some of which we're talking about today, some of which you'll hear about incoming quarters, but the momentum there has been long and sustained and we feel great about it. The sequential growth in organic traffic is one way to look at it.

Timothy Yarbrough: But I think looking with total traffic is probably the best way to look at it because that's the summation of all our efforts. And we keep saying this, which is we're not trying to anticipate where the market is going. We try to be very rapid in our reaction. So once again, you're seeing us rapidly react where we got an early read on a downward trend in the way the labor market was heading.

Timothy Yarbrough: But what is true is that, regardless of which part of the cycle we're in, we have been persistently investing in improving our product. And you can see the two big examples of that this quarter being the acquisition break room, as well as the initial rollout of Zipintrao. And those kinds of persistent product improvements have been ongoing for the last many years. And what you're seeing now is the harvest from all of that investment, where every part of our job-shaker traffic, organic and non-organic has been growing.

Timothy Yarbrough: And we think that seeing that side of our marketplace grow during this downturn is what optimally positions us to take market share as what we believe is an inevitable recovery will eventually begin here. Thank you all. I appreciate it.

David Travers: Your next question comes from the line of David, you with Evercore, please go ahead. Thank you. This is David from Mark. You called out QPEs being lowered to reduce demand from SMBs. Are there any specific verticals where you're seeing lower demand versus others? Thank you. Thanks, David. This is Dave.

David Travers: Yeah, great question. So as we as we look at the year over year trends, we continue to see areas like retail and government sort of outperforming, but obviously in a market like this, there are more verticals that are underperforming. And so interestingly, verticals like finance and technology remain weak as they have been in verticals like education, which was strong for a long time as there was a catch up in the number of teachers that needed to be hired after the pandemic has started to weaken on a year over your basis now.

David Travers: And so, you know, that's what we see, but obviously the balance, you know, as you look across all sectors and geographies of the economy, the balance continues to be difficult as recent government data show where, you know, now, six or 8% below the number of hires last month that we averaged per month in pre-COVID 2019.

David Travers: And so zooming out for even the, you know, sort of overall shape and mix of the economy, you know, we're in a pretty, we're in a pretty abnormal period currently. Thank you. There are no further questions at this time. That concludes our Q&A session. Thank you for attending. This concludes today's conference call. You may now disconnect. Jack, Jack, Jack.

Q2 2024 ZipRecruiter Inc Earnings Call

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