ZipRecruiter Stock

I think in the interest of time, we're going to get going. I think we're also going to close some of the doors in the back, but people are going to be, no doubt, milling about. It's great to have ZipRecruiter back at the conference again this year. Ian, thanks so much for taking the time and giving me the opportunity to have the conversation. You've been a very consistent guest for us over the years, and we always appreciate that.

Yes, thanks for having us again.

Always good to talk. And I always do like to start with a little bit of, for those who are either listening or in the room and don't know the story as well, you've been on a bit of a journey. I also think one of the most interesting things are, you're a company that was talking about AI before anybody was talking about AI, which I always like to give you some credit for. I think that's worthy of some credit because now talking about AI is certainly in vogue as opposed to forward-looking. But talk about the journey the company has been on. You've been through elements of macro cycles, product cycles, platform changes, bring us up to speed on the journey you've been on.

Yes, it's like telling the whole story feels like it's getting so long. I feel like I'm going to frame it just in the most recent period. After launching this startup at my kitchen table, and after many years of product evolutions where we ultimately got to using AI for the first time ever in the job category, I think we were sort of on the bleeding edge of doing that. The company experienced tremendous success, grew fantastically well.

We were delivering quality applicants who turned into hires at record rates for our industry. We were able to ride that momentum into taking the company public in 2021. Everything was going fantastically well until the last 3.5 years when a macro downturn hit the United States economy, hiring effectively went backwards every month for 3.5 years. That's bad if you're a recruiting business. Fortunately, hiring has stabilized in 2026, albeit at levels we haven't seen for over a decade. But in spite of that, the good news is ZipRecruiter is back on a growth trajectory that's coming from product improvements that we have deployed and that I'm sure you're going to ask me a question that gives me an opportunity to talk about.

I will, but let's start with that macro trend first, because obviously what you're seeing in the last most recent periods has been a nice change of pace relative to, as you talked about the last couple of years. How are you thinking about what the drivers could potentially be for a healthier end demand side of the equation for the labor market more broadly? Like what are you watching for to get increased confidence signal in an upward trend?

This is a great question, because we regularly survey both sides of our marketplace. And in the most recent survey where we talked to, I think it was 10,000 businesses, and that ranged in size from very large enterprises to SMBs. You know, what we learned was a bunch of things. We learned that, you know, AI is not a bogeyman coming for the labor market, that AI is more likely to be something that creates job opportunities than removes it. Happy to dive into that. But more importantly, what we learned is businesses are doing well.

Businesses are confident. Many of them are experiencing either record levels of top line performance or record levels of profitability, which is normally a recipe for businesses to expand and increase their hiring, but they're not doing it. And the reason they're not doing it and the overwhelming message that we're getting from our customer base is they have anxiety about the economy. They're worried about investing into an economy that may be soft sand underneath them. And so they're in a wait-and-see mode, which is part of the reason why they're experiencing these record profits, because they're not keeping the investment up with what you would consider the normal healthy rate in order to support the amount of business demand that they're experiencing.

So when does that reach a friction in your mind, where you could only stretch that equation so far in certain pockets of the economy, where you can only extract so much output per unit of labor that you see today as opposed to what it might look like 6 or 12 months from now.

You know, I'm not a full-time economist, so I may not be fully...

I kicked off this conference by interviewing our economists.

Let's get them in here.

And, I think he did sound that, look, there is a lot of productivity gains that have come out of the labor force, and that typically is not a long-duration narrative that you can underwrite.

So there are a combination of elements that are contributing to the very strong likelihood that we are going to either currently be at the bottom of the cycle or very soon we will be. Businesses' performance is very strong. There is a shortage of skilled talent in part because of people hugging the job that they have for fear of difficulty finding a new job. Also in part because of immigration policy where it's become much more difficult to bring talent in from other countries. And then there is this generational dynamic going on where every year the size of the population now that is moving out of the labor force, that is aging out of the workforce, is at the same size or larger than the incoming inbound youth who are matriculating and entering the labor force.

All of this is creating pressure for businesses where there's a need to hire and the amount of available talent has shrunk. So in a normal cycle, what you would expect to see at these moments is that you would start to see an increase in hiring and an increase in willingness to pay. And I think over the next 6 months, it should be very telling to see whether or not we have actually experienced some sort of fundamental structural change in the economy, and this was the last cycle, and we reached the bottom of it and it's just going to be the new normal. Or if, in fact, the cycle is a cycle, and [ it isn't ] going to start to climb again, which I would argue, based on history, is a much more likely scenario.

Okay. The other thing you said there that I think has become a little bit of a theme of this conference relative to when I've been in this pocket of the world 3, 6, 9 months ago, which is the fear of a jobs apocalypse seems to be moderating. I think that has become across a number of conversations I've had, sort of a theme that's been interesting to hear from leaders of organizations. How has your view evolved if it's even evolved or maybe you were there to begin with about how AI and the labor market might have a correlative effect on each other in the years ahead?

Well, certainly, and I like to go to the data in questions like this, there's been a lot of anxiety about whether AI is coming to eradicate large swaths of the jobs that currently are at play in the labor market. And from what we can see, again, both from surveying our customers and from third-party data sources, our surveys show that of the thousands of businesses that we talk to in them, the majority of them, the vast majority, over 90% of them have already adopted AI to some form or fashion. For them, AI is proving to be a productivity boost. And as a result of that productivity boost, they intend to increase their hiring. At least 35% of them do.

And then when you look at the sort of general data from third-party sources like the BLS, there was a lot of concern in particular about a couple of key job categories, being things like customer service and software developers, being jobs that would be the first to be eliminated. And let's just take engineers as a great example. At the end of last year, they were down roughly -- the postings for engineers were down about 10%, and if you go to this year in this quarter, they're up 7%. And so a lot of what the anxiety was creating in the labor market was a mirage, it wasn't real.

We are in fact seeing the same pattern play out right now that we have seen play out in every major technological breakthrough that made something easier to do, which is when something gets easier to do, the demand for it increases, and right now, engineers as well as customer service reps are still jobs that are in existence, and in fact demand is rising.

Okay, interesting. Let's turn more to your business specifically. In terms of the trends you're seeing, how would you characterize some of the dynamics of the way in which smaller and medium-sized businesses are interacting with your platform as opposed to larger enterprises are interacting with the company from a demand perspective?

I mean, every part of our business is growing now, but I've got to put a very important piece of context on that, which is this is not an endemic reality of the macro that is causing that growth. This is the direct impact of product improvements that we've been deploying over the last 9 months. But in particular, over the last 6 months, where the compounding effect of those improvements is leading to satisfaction and increased investment amongst our customer base. And that is what is driving the growth of those.

It is very clear from looking at this sort of organic macro data. Yes, we have seen stabilization of the macro. Instead of a 3.5 year decline, we started to see things flatten out. But the truth of that flattening out is it's flattened out at a level that is depressed so significantly. We haven't seen levels this low since 2015. It's been a decade since we've been at where we're at. And so businesses have not yet, of any size, in a material fashion, not SMBs or enterprise in any sort of distinct breakaway fashion, started to increase their hiring again.

Okay. When you think about targeting the larger enterprises, though, what kind of building blocks are you trying to put in place to capture more share in that part of the market and how should we be thinking about that as a market opportunity over the medium to long term?

I mean, there's two fundamental strategies at ZipRecruiter that are driving our revenue growth. One of them is we have an intense focus on driving the two sides of our marketplace to have a conversation. So conversation can be anything where an applicant applies to a job and then the employer responds to that application with some sort of message. It can be a scheduled pre-screen call. It can be a scheduled interview. There's a variety of things that qualify as a human talking to a human. That is fundamentally our roadmap. That is the most important strategy we execute against, and almost every product we've delivered over the last year has been explicitly focused on that. And that is what has been driving a lot of our current results. That's strategy number 1.

Strategy number 2 is we've been pushing for a mix shift in our customer base from being -- where we started, we were 100% SMB and then we moved into the enterprise market. We are now at 76% SMB, 24% enterprise that contrasts with the same time last year where we were 78% SMB and 22% enterprise. So there has been a steady march of increased penetration into the enterprise market. The U.S. economy has a 50-50 split between the two sides of the labor market between these two companies of different sizes, company classes of different sizes, and that is going to be a growth lever for many years for ZipRecruiter.

Okay, understood. You referenced a little bit earlier how AI can impact the landscape, but I want to go a little bit deeper in how it's impacting the company. Maybe just a couple going down this road. First, the deployment of AI inside your company. How is it changing the pace and cadence of product development, cost efficiencies, way in which you go to market. Talk a little bit about the way it works inside the company before we get into some of the elements of the broader landscape or user-facing AI.

I think ZipRecruiter is not unique in saying this, but AI has been an extraordinary boon to the productivity of ZipRecruiter. The quality and velocity of new features going out on our platform in the last 9 months is probably greater than the sum total of the previous 4 years. And we have been able to do that while simultaneously reducing our overall investment in R&D as a percentage of total. So we're getting incredible operating leverage out of AI as just a means by which to get our ideas into the product. Further, AI has permeated the product.

So, we're not big believers in the chatbot interface that partners with a user or a customer to try to help them do things like write better job descriptions or write better resumes. Anything that slows either side down doesn't tend to be a winner for us. But we are leveraging AI at multiple points in order to do things either with our algorithmic matching or what we call socially engineer the two sides to engage more quickly and a number of product features have gone out that capture this and epitomize what we are thinking of as our product philosophy, one of which is the new search platform we just brought out in Q2 has been transformational. And instead of optimizing and training our algorithms to go seek more clicks or more applications, because we're a closed-loop system, we had the data to train them on actual employer response to applications, quality applications, if you will, and using that as the training data set has increased the number of qualified candidates by 34% and increased the response rates by employers to applications by double.

So doubling the amount of conversations happening on our platform is transformational. Just one more example is we launched a product called Smart Outreach. This is just a mechanism to allow employers to better utilize our resume database, which has over 50 million people in it. They can use, they can basically create the job that they're interested in, and then AI will go do all of the sourcing for them, where it will reach out to the appropriate matches. It will have a cadence of messages to try and induce them to become an inbound warm lead for that employer. And satisfaction with this product has been tremendous. And so those are the ways in which we're using AI. It's not as a, I don't know, Microsoft Paperclip that runs along beside you and gives you advice along the way.

So something you're alluding to there that I want to go a little bit deeper on, which is, you know, traditional job queries were very search-oriented in nature. And is there a way in which you're thinking about -- it sounds like it is -- reordering the funnel to make it either more conversational in nature or to generally change the discovery process on both sides of your market?

I would say we're certainly open to that, and we're deeply thoughtful and experimental with that. But it's very interesting. The bulk of the users on ZipRecruiter are what we call active job seekers. These are people who are saying, I need to find a job. I'm actively engaged in search. Interestingly, the single fastest growing and new source of traffic for ZipRecruiter for job seekers is LLMs. So whether it's Claude or whether it's ChatGPT, we see an influx of job seeker traffic from these two sources. And not only do we see that influx, and not only is it growing rapidly, but these are the most engaged job seekers we've ever received, and it totally makes sense because the conversation is happening on those sites where someone says, like, I'm leaving the military and I'm trying to enter civilian life. What skills, how do my skills translate? What jobs should I be looking at?

The AIs are fantastic at answering questions like that. Once they know the type of job the person is interested in, though, they still send the query to us to get the set of jobs to show the individual. And once the individual clicks on one of those jobs, they are then sent to our site. So I think conversational UI is something that makes sense for LLMs, the expectation there. I think our particular site, jury's still out whether we want to move to conversational UI or not.

You know, one thing that's been coming up at the conference over the last couple of days has been the balance that companies are trying to strike in traffic that comes to them from these agents relative to direct traffic and trying to make once someone's landed on the site, more AI infused and less friction. How do you think about making sure you don't lose control of lead generation and you become more overbalanced to traffic that comes from LLM agents over time?

Well, first off, I mean, it's been a 1.5 decade of investment in building the brand for ZipRecruiter. We're at 80% brand awareness. We're the answer to the question that when people say in their head, where should I look for work? We're one of the top ideas that immediately pops in their head, circumventing the need for them to go to Google or an LLM, they know they can find jobs on our site. So that's number one.

Number two, what makes ZipRecruiter special fundamentally, it's not any specific feature, it's not any specific algorithm, it's the data that we've collected over those 15 years. All the billions of interactions between job seekers and employer jobs and then employers' reaction to those applications is what allows us to do the training on algorithms that creates this magical experience where seemingly the right jobs for you are put in front of you and when you apply to those jobs, you have high probability of getting a response or engagement from the employer. That data does not exist. That data cannot be taken by an LLM. So LLMs have recognized that and partnered with us. We have integrations with both Claude and OpenAI. And we were there at the beginning. And it's a really exciting opportunity for us. We have no fear of the sites taking our business away from us.

Okay. Understood. You've also done a number -- well, at least one in particular that I wanted to focus on. But when you've done acquisitions in the past, I'm always curious about how they change your go-to-market strategy or what you're offering to folks in your marketplace. Breakroom comes to mind in terms of the way we think about it, but talk to us a little bit about how you continue to make decisions about what you're going to build, what you might acquire, how it might speed up your time to market, how it can change your go-to-market strategy, your product strategy, just to go a little bit deeper on that as a topic.

Well, our product roadmap of driving conversations is derived from a very simple and intuitive insight, which is the more conversations an employer has with job seekers on our site, it's linear, the more they pay us. And the more conversations a job seeker has with employers, the inverse of that, the longer they stay active in their job search and the more jobs they apply to. This is why we decided we were going to target everything to this and try to make ourselves a marketplace of conversations.

And so the way I look at acquisitions and the performance of features that we have deployed is entirely around how much do they increase the rate of conversations. And so you look at something like Be Seen First, which is a feature we launched at the beginning of the year. This is a product that lets a job seeker say, I'm not only applying to your job, I'm going to raise my hand and show you how enthusiastic I am by telling you why I'm qualified and why I was excited to apply. And that message being included with their application doubles the probability that they're going to get a response from the employer, which makes sense.

Employers are beleaguered with resumes that look perfect because AI is very good at helping people write resumes that look perfect. So how do you differentiate between these candidates? One of the ways is by letting the human speak with their own voice. Another product we have is Breakroom. And in a similar lens, Breakroom allows customers to on their job listings, not only show the ratings and reviews, for those that don't know, Breakroom is kind of like Glassdoor but for frontline workers and instead of having ratings and reviews of employers and those workers about their bosses, it just lists a bunch of facts about what it's like. How long do you have to be on your feet? How long do you have your lunch breaks? What is their pay schedule? Things that people who work frontline worker jobs really care about. These jobs represent over 60% of the jobs in the economy.

But what's so interesting is when you buy Breakroom on our site, it lets you put onto your job postings information about your business that also has this third party, like people who've worked there before, data inside of it. And that tremendously increases engagement with jobs and it's the same thing where now the company is basically enabled to use their real voice to talk to customers and not their traditional job posting voice. And in a way it's almost like getting a pitch from the company and that drives tremendous interest from those job seekers.

Okay, understood. Wanted to double-click on competition. So as the online recruiting and overall hiring and recruiting landscape continues to evolve, how do you think about your current competitive positioning in that landscape, and what are the most sort of potential for building moat around competitive advantages you see playing out when you look against who you compete against today?

Well, I think we are the only company that has taken the particular strategy of not optimizing for clicks, not optimizing for applies, but actually optimizing for one-to-one conversations between the two sides of our marketplace. And that's because of, again, the strong correlation we saw with both the amount of money employers would pay us and the length and duration of engagement that we would get from job seekers. And it is working. Like the most important -- like if you look at us a year ago, our business top line went backwards 5% and our margins were 9%.

And if you look at the run rate that we're on this year and the scenario we've outlined, we're back to positive single digit growth and our margins are increasing at the same time to between 12% and 14% is the range we've given and that is being entirely driven by this product strategy where we are fundamentally increasing the foundational satisfaction with our service on both sides. That creates enduring growth. That's not a price increase where you get a one-time, one-year bump. That's a compounding benefit over time.

So we're really excited about the strategy, and I would say the biggest difference between us and our competition right now is ZipRecruiter is very much in a market share volume growth mode. And I think our competition is more in a yield optimization mode, where they're trying to figure out what the limits are on how much they can charge for their products. So we're -- I think this is like a moment where we can take a lot of market share as a result.

Okay. Maybe building on that, you know, you talked about what happened with growth and margins looking backwards, how you've guided going forwards. I think during a period where you faced headwinds, you took a lot of proactive moves with respect to the cost you could control and some of the incremental margins in the business. If the business returns to more steady-state growth, what's the messaging for investors about how much you'd want to invest behind signals of growth, how much you might build on your last answer about potentially being a share-taker, and how investors should think about the balance you might try to strike between capitalizing on a growth environment and still delivering on margin trajectory?

Well, I think a lot of evidence exists for investors of our philosophy about how we run the business. Since we've gone public, in spite of there being a 3.5 year period where the entire labor market was hiring less every month for those 3.5 years, we've never had a year where we weren't cash flow positive. And then further, you can also look at what we did with our bond debt earlier this year. We had $550 million of bond debt. We were able to retire over half of that for a $65 million discount. We saved ourselves [ $50 million ] plus in interest payments over the next 3.5 years. We're very thoughtful about the capital that we have available and how we run our business.

If you look at the growth that we're getting, it's product-generated growth. As I said, it's going to be enduring and compounding. That's our belief about the way that we're driving this growth. It doesn't require us to significantly change our cost structures in order to harvest and take advantage of that growth. But that said, we've been marketing across a multitude of channels for over a decade. We have highly sophisticated early signal when the markets are either increasing in demand or decreasing in demand, and we're able to adjust our spend rapidly. We will take advantage of opportunities where demand is rising, but that should translate into increased top line that is observable because the efficiency will be getting better in those scenarios.

Okay, perfect. You did talk about the decision you made on the debt repurchase. With that as a signal, how should investors think about what the right capital structure is for the business medium to long term and how that might feed into the scope to also continue to return capital to shareholders as you reach a capital structure that you feel is where you want to operate in more normalized environments?

I mean, I think our philosophy on what we think is the balance of where we want to invest our dollars has stayed consistent throughout, which is organic growth is always going to be our top priority, and then our secondary priority will be inorganic growth, and obviously we contemplate M&A. We have downside. I think we've moved from $400 million to $170 million of cash on hand, but that's pretty sizable war chest, so M&A is still on the table.

And then it would be return of capital to investors, which can happen either through the retirement of additional bond debt or through share repurchase. That is a tertiary priority. We've been highly opportunistic and I would argue very strategic about how we have tackled that capital return. But our priority certainly remains organic growth, and we continue to look for opportunities there.

Okay. We only got a few minutes left, but when you take a step back and if we're lucky enough or I'm lucky enough to have this conversation with you in a year's time, what are the biggest strategic priorities you're focused on? How are you aligning growth investments to accomplish those priorities? What's your sort of 12 to 18-month to-do list?

Well, number one, we've just gotten started increasing conversations and what's been so fantastic about it is like these were not empty calories. When we -- every tactic we have pursued here where we've moved that metric, revenue has continued to move with it. So it feels great to have a product-led growth strategy. And then number two, we need to penetrate enterprise. We know this. We want to move our marketplace to a 50-50 split, which is reflective of the U.S. economy. The opportunity there is sizable. Enterprises have persistent hiring needs and deep pockets. It's a community that we know we need to be working with more closely.

Okay. Well, I look forward to hopefully having the opportunity to check out on those, not only on the earnings, but in a year's time in person. Thanks so much for being part of the conference. Please join me in thanking ZipRecruiter.

Hello, everyone. Thank you for joining us, and welcome to the ZipRecruiter, Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Emilio Sartori, Head of Investor Relations. Emilio, please go ahead.

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 second quarter ended June 30, 2026, and our guidance for the third quarter of 2026.

Joining me on the call today are Ian Siegel, Co-Founder and CEO; and David Travers, President and Interim CFO. Before we begin, please be reminded that forward-looking statements made today are subject to risks and uncertainties relating to future events and/or the future financial performance of ZipRecruiter. Actual results could differ materially from those anticipated in these forward-looking statements. A discussion of some of the risk factors that could cause actual results to differ materially from any forward-looking statements can be found in ZipRecruiter's quarterly report on Form 10-Q for the quarter ended June 30, 2026, 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 obligations to update or revise them, whether as a result of new developments or otherwise. In addition, during today's call, we will discuss non-GAAP financial measures.

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

Thank you. Good afternoon to everyone joining us today. ZipRecruiter's momentum accelerated in the second quarter. We grew revenue by 5% year-over-year to $118.1 million, coming in $6 million above the midpoint of our guidance range.

Adjusted EBITDA came in at $14.6 million, representing a 12% margin, which was above the midpoint of our guidance range and above the adjusted EBITDA margin of 8% in Q2 of '25. Additionally, we repurchased $294.6 million of our 5% senior unsecured notes at a $65 million discount to par.

That transaction meaningfully reduced our debt burden while leaving our balance sheet strong. We closed the quarter with $174 million in cash and investments, giving us ample capital to fully fund our future growth initiatives.

Turning to our product momentum. Our marketplace continued to improve in Q2 with each innovation focused on the same goal, driving more conversations between employers and job seekers. We believe this real-world outcomes-based focus is what has been driving our growth.

First, the ongoing rollout of our next-generation search and matching engine to all parts of the ZipRecruiter platform increased qualified application volume in Q2 by 34% quarter-over-quarter. This lift in qualified applications, paired with our other product improvements, doubled the employer response rate per application year-over-year.

Second, we rolled out an option for candidates applying through our Be Seen First feature to record an audio message to accompany their resume, giving job seekers a powerful new way to highlight their personality and stand out. Early data shows that job seekers who record a message saw an 8% lift in response rates from the employer.

Third, we launched a new AI feature called Smart Outreach, which enables employers to instantly turn job descriptions into customized multistep message campaigns sent directly to candidates across our resume database. Smart Outreach automates that initial touch point to make hiring faster, easier and more personal.

The volume of conversations happening on ZipRecruiter is accelerating as we use cutting-edge technology to help the right people find one another, connect faster and achieve better outcomes. Each new interaction enriches our proprietary data set, making our technology more effective and creating a compounding advantage that improves the experience across both sides of our marketplace.

Finally, before I turn the call over to Dave, I want to touch on a major addition to our leadership team. We recently announced that Carmen Chan will be joining us as our new Chief Financial Officer, effective August 17. Carmen brings a wealth of experience from Barclays, Noom and Goldman Sachs, and she will be instrumental in driving our long-term financial strategy and operational excellence. Once Carmen assumes the role, Dave will be continuing in his role as President. We are absolutely thrilled to welcome her to the team. And with that, I'll turn the call over to Dave to share some additional business highlights, financial results and guidance.

Thanks, Ian, and good afternoon. Our marketplace gained momentum in the second quarter as the product improvements we've made over the past several quarters continue to compound. At our core, we are making it easier for employers and job seekers to find one another and start meaningful conversations.

I'm excited to share several highlights with you today. We launched our next-generation search and matching engine in Q1, which drove a 37% increase in qualified application volume. The ongoing rollout of our next-generation search and matching engine to all parts of the ZipRecruiter platform increased qualified application volume in Q2 by 34% quarter-over-quarter.

This lift in qualified applications paired with our other product improvements, doubled the employer response rate per application year-over-year. We believe increasing the quantity of qualified applications will lead to more meaningful connections between employers and job seekers.

In Q2, we expanded our Be Seen First feature. We gave applicants the option to record a message to employers, letting them showcase their personality and soft skills alongside their qualifications. Early data shows that job seekers who recorded a message saw an 8% lift in connection rates with the employer.

We also launched Smart Outreach, a new AI-driven feature for our resume database that helps hiring teams quickly find and connect with job seekers. We know from our data that over 80% of candidates are more interested in a role when an employer reaches out proactively. To capitalize on this, Smart Outreach uses AI to turn job descriptions into personalized, editable message campaigns.

With a single click, hiring teams can tap into our pool of over 50 million job seekers, minimizing the hours traditionally spent chasing replies and replacing administrative bottlenecks with active conversations. Our enterprise strategy continues to show strong momentum as our investments in programmatic bidding tools deliver tangible growth.

Just like last quarter, adoption of our automated campaign performance solutions grew over 50% year-over-year as large employers look for more efficient hiring solutions. Furthermore, these optimizations to our bidding algorithms also drove a 2x year-over-year improvement in our rate of meeting customers' campaign targets.

We believe this increased efficacy as well as other improvements, drove a 15% year-over-year increase in performance marketing revenue in Q2, proving that our technology investments are delivering for employers of every size. We continue to lean into conversational AI platforms to meet job seekers where they are.

Following our Q1 launch of the ZipRecruiter app for ChatGPT, we've now deepened that integration so job seekers can search for roles from ZipRecruiter directly within the ChatGPT chat field. Additionally, in Q2, we launched a new connector for Claude, Anthropic's AI Assistant. As job seekers increasingly turn to these AI tools earlier in their search, we view these expansions as a critical step in broadening our distribution footprint and we'll look to expand our integrations over time.

We believe that this is also a testament to our brand strength and quality of jobs in our marketplace. With that, I'll now discuss our financial results and guidance.

Our second quarter revenue of $118.1 million represents a 5% increase year-over-year and a 10% increase quarter-over-quarter. These increases were driven primarily by a higher number of paid employers and increased job posting activity alongside the successful rollout of key product improvements.

We ended the second quarter with over 70,000 quarterly paid employers, representing a 7% increase year-over-year and a 12% increase sequentially. We saw strong growth in both new and returning customers as our product improvements continue to resonate with employers of all sizes. Revenue per paid employer was $1,669, down 1% year-over-year and down 2% sequentially.

These decreases are primarily a function of the strong growth in quarterly paid employers. Because many of these new employers joined partway through the quarter, they only contributed revenue for a portion of Q2, which drove down the average.

Looking at operating expenses, we continue to gain operating leverage across the business as we scale revenue. Total operating expenses decreased to $101.3 million versus $106.9 million in the prior year period, primarily due to lower stock-based compensation and personnel-related expenses.

Turning to profitability. Net income in the second quarter was $43.4 million, representing a 37% net income margin. On a year-over-year and quarter-over-quarter basis, net income increased due to the gain on debt extinguishment from the June 2026 partial repurchase of our 5% unsecured notes due in 2030. Adjusted EBITDA was $14.6 million, equating to a 12% margin. This compares favorably to an adjusted EBITDA margin of 8% in Q2 of last year and 9% in Q1 of this year.

Increases in adjusted EBITDA and adjusted EBITDA margin, both on a year-over-year and quarter-over-quarter basis are a result of both higher revenue and our continued cost discipline.

In June, we repurchased $294.6 million of our 5% senior unsecured notes at a discounted par value of $229.4 million. This allowed us to retire over half our outstanding notes and meaningfully reduce our debt burden. Cash, cash equivalents and marketable securities totaled $173.8 million as of June 30, giving us ample flexibility to fully fund our future growth initiatives.

Moving on to quarterly guidance. We expect Q3 revenue of $121 million at the midpoint, representing 5% year-over-year growth and 2% sequential growth.

We also project Q3 adjusted EBITDA of $16 million at the midpoint, yielding a 13% margin, a significant expansion versus the 8% margin we delivered in the prior year period. We believe delivering growth and margin expansion in a stable hiring environment demonstrates that our differentiated hiring solutions are truly resonating with both employers and job seekers.

Looking to the second half of 2026, the labor market remains stable even as overall hires and quits rate remain near their lowest level since 2015. Given our strong execution, we believe low single-digit year-over-year revenue growth is a likely scenario, up from our prior expectation of flat revenue, which will result in a full year adjusted EBITDA margins of 12% to 14%, a meaningful margin expansion versus 9% in 2025.

This range gives us room to maintain our push into ROI-positive marketing opportunities on the employer side while upholding the cost discipline that drives our operating leverage across the rest of the business. We believe this balance, capturing incremental growth while preserving our commitment to profitability, positions ZipRecruiter to outperform the broader hiring category over the long term. With that, we can now open the line for questions. Operator?

[Operator Instructions] Your first question comes from the line of Josh Chan with UBS.

I guess, based on your commentary, it seems like the cadence of the quarter accelerated as you went through the 3 months. I mean, is that the right read? And could you just talk about, kind of, how things are kind of shaping on a monthly basis into July perhaps?

Sure, Josh, great question. This is Dave. So yes, we feel great about how things went in Q2. Obviously, a lot of product and other operational wins resulted in a great quarter for us. As we looked at what happened over the course of the quarter, we did see a nice acceleration over the course of the quarter. And obviously, that plays into showing 5% year-over-year growth, which is a nice acceleration while at the same time being able to expand margins year-over-year from 8% in the prior year period to 12% this quarter. And then as we look going forward based on what we saw in Q2 and thus far in Q3, that makes -- everything we see makes the guidance we're talking about very reasonable to continue at the midpoint at 5% year-over-year growth.

So we saw a very nice quarter across multiple product and other executional wins that drove job seekers and employers to come together with greater engagement, and we saw that translate through to the numbers.

That's great to hear. And then on the improvement in the hiring, I guess, are you attributing this to your success in improving the matching? Or is there any macro-related lift? And relatedly, are you seeing any trends across verticals, size of employers that's really, kind of growing in your platform?

Great question. This is Ian. I -- what we saw in Q2 was momentum created predominantly through product improvements as well as some additional marketing. But when you look at the product improvements we rolled out and whether you're looking at the improvements we made Be Seen First, which creates an 8% lift for candidates who record a message to try and better stand out to the employer, or you look at the next-gen search engine, which lifted quality candidates by 34%, really, all of those improvements are designed to do one thing, and that's to stoke conversation between the employer and the job seeker and sort of the metric that all of those improvements ladder up to is that response rate from the employer per application.

And when you look at that year-over-year in Q2, that response rate doubled. So a significant portion of our momentum comes from just the fact that there is a lot more activity, which creates satisfaction on both sides of our marketplace when the 2 sides engage. When you look at the macro, if you just look at the data that's out there, we're definitely still in what I'd call a subdued labor market.

It was stable with Q1, but you're looking at hires and quits that are near 15-year lows when you look back over the trajectory of those 2 metrics. So the macro was a nonfactor in Q2 as it relates to the momentum we created. It was all driven by our operational success.

Your next question comes from the line of Eric Sheridan with Goldman Sachs.

Thanks for all the prepared detail in the shareholder letter. Building on the themes you guys talked about around product and AI innovations and helpful to get those early data points around next-gen search and Smart Outreach. How should we be thinking about the momentum around those types of initiatives building over the next 6, 12, 18 months? And what are you watching for to get a sense of how those could impact the business over the medium to long term as they build in that momentum?

Thanks, Eric. Good question. Our product strategy is relatively simple. We are trying to drive up the rate at which employers and job seekers have real meaningful conversations. It defines all of the initiatives that we are focused on and the features that we are implementing into our site. And what we have seen and continue to see is that when we drive up the rate at which these 2 sides are engaging, satisfaction materially improves on both sides as does long-term engagement.

I think you should expect to hear us talking about increasing conversations for the next 12 months, the next 24 months and probably for a long time beyond that because that is the simple formula that we have discovered for both making our product better and driving our financial results. And when we look at the features that we have launched, so many of them have been enhanced by AI in one form or fashion.

But AI is just a tool, and it is one important tool, but it is certainly not the only tool that we have available. There is a component of all this, which is the extraordinary amount of data we have on the historical interactions between job seekers and employers, which is what we are using to train a lot of the features that we have been building and what made the next-gen search platform possible.

It's not just a straight technology advantage. It is a data advantage that we are leveraging and that is unique to our business after 15 years of operation.

Your next question comes from the line of Josh Beck with Raymond James.

This is Glenn Shell on for Josh. Just quickly, how should we be thinking about the progression from better matching to more employer conversations and ultimately stronger retention or monetization?

I mean, I think the high-level answer and the simple answer to that question is the more that employers engage with job seekers on our platform, the longer they stay with our service and the more they spend, that correlation has been in place for essentially all time at ZipRecruiter.

And vice versa, the more job seekers talk to employers, the longer they stay engaged, the more jobs they explore, the more jobs they apply to. So there's sort of a virtuous loop here that as you increase engagement, you get this strongly correlated benefit with longer-term engagement for both sides of our marketplace. And we are both operating against that principle and seeing the benefit of it play out as we have in both Q1 and Q2 now.

And then just one more. What have you learned from the deeper ChatGPT integration about traffic quality and conversion? And what gives you confidence to build a Claude Connector?

Well, we did the Claude Connector first, and then we recently announced the ChatGPT version of that. And it's really interesting because what we found is that the traffic that comes through those 2 channels, while still a small portion of our overall traffic mix is what we describe as high-intent traffic.

These are active job seekers who are in the process of actively looking for a job. And as a result, their engagement on our service is on the higher end of what we see from job seekers. If you think of it as a spectrum from the browser to the active job searcher, the traffic we're getting from these sources falls much more in the bucket of active job searcher. And the really exciting thing for us is we're there right from the beginning.

We are essentially at the launch of these 2 services with these 2 fundamental platforms, and both of them are growing at a healthy clip. So we'll continue to track and report back to you guys on like what we see in terms of overall traffic volume from them. But for right now, both services are growing, and it's fun to watch and be there from the beginning.

Just to add on to that in terms of how this fits into the history and product philosophy of Zip, Glenn, from the very first days when Ian started this business, we found job seekers at Web 1.0 job boards, and we found them then increasingly in search and then in social networks.

And increasingly, as job seekers' behavior has evolved and now we see the behavior evolving toward LLMs, we will be there, too, increasingly finding for that particular means of starting a job search, how are we best able to add value and then build brand resonance with the job seeker, provide value, bring them directly to ZipRecruiter or connect with them through a third party like ChatGPT or Claude, and make sure wherever the job seeker wants to start looking for work, we're going to be there to partner with them and add a bunch of value and build a long-term relationship.

So this is part of a playbook that we've done many times before. We see it playing out now with LLMs, and we anticipate it will play out again in the future as job seeker behavior continues to evolve.

Your next question comes from the line of Justin Patterson with KeyBanc.

Maybe I can build on some of the earlier themes in there. It sounds like the next-gen search and matching capability is a meaningful improvement versus what's existed previously. So as you step back and just consider what a macro recovery looks like, how would you think about the pace that the business can grow at with these new capabilities in hand versus what existed previously and how you might reinvest incrementally in marketing during a recovery scenario?

Great. Thanks, Justin. Yes, so great question. Obviously, we're thinking all the time about as we continue to improve the marketplace and improve the product experience for both job seekers and employers, a number of examples you just shared there being good examples of that.

How does that impact our willingness to invest? And how does that impact our ability to grow? We've been very pleased that this past quarter, hires were flat in the total economy, and we grew 5%. And I think as we execute, we feel very confident that we'll be able to continue taking share and outgrow the market in an environment like that. Obviously, as we've experienced over the past few years, and as you referenced, macro has an impact, but we're very pleased that product innovation like what we're talking about today gives us the ability to outperform in all parts of a macro cycle.

And so as we think ahead, makes us very excited about the momentum we feel and hence, the ability to grow 5% at the midpoint of guidance in Q3. And we'll see what the future brings. But as always, we will be ready for a wide range of scenarios that macro throws at us. But more importantly, we'll be ready to outperform because we can execute and we have an excellent product road map that will continue to prove and evolve.

I would just add to that the nature of our business is one where the happier our customers are, the longer they stay and the more they pay. And so these product improvements have definitely contributed to the satisfaction of our employer customers the side of our marketplace, which pays us. And that immediately unlocks more ROI-positive marketing increases the lead flow that we can bring through our service. And so what you're seeing right now is really the product -- of product improvements, unlocking ROI-positive marketing and then the -- I would say, the thoughtful increase in investment in marketing based on the trends that we're seeing.

But this is not yet a macro that is recovering, and we look forward to that scenario playing out and are excited about the potential that it represents.

We have reached the end of the Q&A session. This concludes today's call. Thank you for joining. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to the ZipRecruiter First Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Emilio Sartori, Head of Investor Relations. Emilio, please go ahead.

Thank you, operator, and good afternoon. Thank you for joining us for our earnings conference call, during which we will discuss ZipRecruiter's performance for the first quarter ended March 31, 2026, and our guidance for the second quarter of 2026.

Joining me on the call today are Ian Siegel, Co-Founder and CEO; and David Travers, President and Interim CFO.

Before we begin, please be reminded that forward-looking statements made today are subject to risks and uncertainties relating to future events and/or the future financial performance of ZipRecruiter. Actual results could differ materially from those anticipated in these forward-looking statements.

A discussion of some of the risk factors that could cause actual results to differ materially from any forward-looking statements can be found in ZipRecruiter's quarterly report on Form 10-Q for the quarter ended March 31, 2026, which is available on our Investor website and the SEC's website. The forward-looking statements in this conference call are based on the current expectations as of today, and ZipRecruiter assumes no obligation to update or revise them, whether as a result of new developments or otherwise.

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

And now I will turn the call over to Ian.

Thank you. Good afternoon to everyone joining us today. ZipRecruiter opened 2026 with a strong first quarter, delivering revenue of $107.5 million and beating the midpoint of our guidance. Net loss was $4.7 million, and adjusted EBITDA came in above the high end of our guidance range at $9.7 million. At ZipRecruiter, our mission is to actively connect people to their next great opportunity. We do that by playing the role of active matchmaker.

Increasing direct meaningful conversations between employers and job seekers is a central focus of our R&D. And in Q1, we saw engagement increase across multiple metrics. First, we launched our next-generation search and matching AI engine in Q1. This represents a massive leap forward in how we drive more conversations between employers and job seekers. This engine delivers 2 major upgrades: a step change in how we assess candidate qualifications; and a new level of precision in interpreting job seeker intent. The results were immediate. Application volume increased by 37% for job seekers using the new engine. While only live for a subset of job seekers, we expect a full rollout by the end of Q2.

We also created significant momentum with Be Seen First, a product that empowers qualified high-intent job seekers to stand out by highlighting exactly why they are a fit for a role. Adoption is scaling fast. Over half of our paid employers now receive Be Seen First responses on their postings. In Q1, 12% of all applicants chose to be seen first. Only qualified candidates for a role can utilize this feature, ensuring a high-quality experience for employers. Be Seen First candidates are nearly 2 times more likely to receive a message from an employer than those using traditional applications.

Over the past year, we've deployed multiple products and enhancements across both sides of our marketplace. From ZipIntro and our redesigned resume database to Be Seen First and our next-generation search and matching engine, each innovation is focused on the same goal, driving more conversations between employers and job seekers.

This momentum is reflected in both our data and job seeker app store reviews. With a 4.9 rating and over 1 million combined reviews, ZipRecruiter remains the #1 rated job search app on both iOS and Android. Over the course of Q1, we saw a notable increase in positive reviews, specifically mentioning getting a call from an employer or landing an interview compared to Q4.

We believe the most valuable thing we can do for job seekers is get them into conversations with employers. And the most valuable thing we can do for employers is deliver them candidates they want to engage with. The data is moving in the right direction. The app store reviews are one signal. The product data is another. Together, they tell a consistent story. The quality of connections happening on ZipRecruiter is meaningfully improving.

All of these improvements were delivered against what remains a sluggish hiring backdrop. In Q1, the quits rate and total hires stayed near their lowest levels since 2015, while job openings were down 3% year-over-year. In spite of this subdued hiring environment, ZipRecruiter outperformed our Q1 results, and we believe this is due to our product improvements and the efficacy of our marketplace.

The pace of innovation across our marketplace is accelerating. In a market where many companies are competing on the breadth of their AI capabilities, we believe the long-term winners will be those that translate technology into real outcomes. Employers finding the right person, job seekers landing the right role, that is the bet we are making. We believe the quality of our marketplace has never been stronger and that we are building a business that will capture disproportionate share as the hiring market normalizes. Q1 is evidence that we are moving in the right direction, and we look forward to showing you more.

And with that, I'll turn the call over to Dave to share some additional business highlights, financial results and guidance.

Thanks, Ian, and good afternoon. Our performance in the first quarter reflects the continued success of our product-led strategy. I'm excited to share several highlights with you. On the SEO front, we are seeing strong growth in high-intent traffic despite a year-over-year decline in total web traffic across the hiring category.

In Q1, our engaged job seekers, defined as those who applied to job postings, grew 26% year-over-year through organic search. At the same time, we are leaning into Generative AI. In March, we launched the ZipRecruiter app for ChatGPT, extending our reach directly into the AI tools job seekers are increasingly adopting. We see this as an early step in broadening our presence across Generative AI platforms, and we'll look to expand our integrations over time.

Taken together, our increased share of total traffic, 26% year-over-year growth in engaged job seekers through organic channels, and a new distribution footprint across Generative AI platforms, we believe ZipRecruiter is gaining share at a moment when cyclical hiring demand remains muted. That combination does not happen by accident and we believe it positions us to disproportionately capture volume when the hiring market normalizes.

After investing over $1 billion over the past 15 years to achieve over 80% aided brand awareness on both sides of our marketplace, we are now leveraging our branding expertise to empower our customers to tell their own stories with multimedia branding. In Q1, we rolled out integrated branded pages for our employer listings on ZipRecruiter, powered by Breakroom, a workplace rating and job marketplace platform, to increase visibility of employers' brands to job seekers. These pages allow employers to move beyond static text and use video, images and testimonials to showcase their true workplace culture. We look forward to scaling these multimedia capabilities across our entire marketplace.

Finally, our enterprise strategy continues to gain traction. Adoption of our automated campaign performance solutions grew over 50% year-over-year as large employers look for more efficient hiring solutions. Our go-to-market improvements drove a 5% year-over-year increase in performance marketing revenue, proving that our technology investments are delivering for employers of every size.

With that, I'll now discuss our financial results and guidance. Our first quarter revenue of $107.5 million came in ahead of our guidance midpoint, with a 2% decline year-over-year and a 4% decline quarter-over-quarter. The year-over-year decrease was driven by a soft hiring environment, while the sequential decline reflects post-holiday seasonality, where employers join or return to our platform over the course of the quarter.

We finished the first quarter with over 63,000 quarterly paid employers, which was flat year-over-year and represented a 7% increase sequentially. Quarterly paid employers remaining flat year-over-year in spite of macroeconomic volatility, demonstrates the stability of our employer base. The sequential growth is consistent with our historical seasonal patterns where quarterly paid employers typically grow over the course of Q1 after the holiday slowdown in Q4.

Revenue per paid employer was $1,698, down 2% year-over-year and down 10% sequentially. The year-over-year decrease reflects more muted hiring demand. The sequential decrease was primarily driven by seasonal growth in the number of quarterly paid employers as they ramped up their hiring campaigns over the course of Q1.

Our net loss in the first quarter was $4.7 million. Adjusted EBITDA in Q1 was $9.7 million, representing a 9% margin coming ahead of the high end of our guidance range. This compares to an adjusted EBITDA margin of 5% in Q1 of '25. Cash, cash equivalents and marketable securities totaled $393.5 million as of March 31. During the first quarter, we repurchased 3.5 million shares totaling $9.4 million.

Moving on to quarterly guidance. Our Q2 revenue guidance of $112 million at the midpoint represents a return to flat revenue year-over-year and 4% growth quarter-over-quarter, demonstrating the impact of our hiring solutions despite underlying macro headwinds. Our adjusted EBITDA guidance for Q2 is $13 million at the midpoint, representing a 12% margin.

Looking beyond Q2, we continue to expect hiring demand to follow a typical seasonal cadence throughout 2026, albeit at subdued levels. Under this scenario, we expect to achieve flat year-over-year revenue in 2026, which is a 5 percentage point improvement over the 5% decline in 2025. In this scenario, we also believe adjusted EBITDA margins can expand by 5 percentage points from 9% in 2025 to 14% in 2026. This margin expansion reflects our commitment to operational efficiency alongside targeted investments aimed at capturing growth.

The stabilization in the business and accelerating pace of innovation we've seen in our marketplace are encouraging. We remain confident that our focus on driving more meaningful conversations between employers and job seekers will position ZipRecruiter to outperform the broader hiring category over the long term.

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

[Operator Instructions] Your first question comes from Ralph Schackart with William Blair.

First question, maybe can you talk about the differences you might be observing between SMB and Enterprise segments? It sounds like you're making some good traction within Enterprise. And then as 2026 progresses, how would you expect perhaps the behavior within each of these segments to perhaps change? And then I have a follow-up.

Thanks, Ralph. This is Dave. So yes, we've been pleased with the execution we've seen on both sides of both customer segments, SMB and Enterprise. Enterprise mainly comprises performance marketing revenue, so it was up 5% year-over-year. That continues a long-term trend of expanding our percentage of revenue that comes from Enterprise. So 24% of revenue this quarter. If you did go all the way back to our S-1 pre-COVID, in Q1 of 2019, we were at 12% of revenue. So we've doubled our percentage of revenue and we expect to continue to expand revenue there over time. As it evolves over the course of the year, I think we expect to, as I said, continue to see that. And what we've seen in talking to the customer base from both sides is consistent with the macro data we've seen.

We're in a subdued but relatively stable environment and that captures the mood of employers on both sides of the marketplace. They're responding to conversations being driven and job seekers are responding to that, as we talked a lot about in the letter, and we expect to continue to see the benefits of that as we continue to execute. This year is consistent with our guidance when we're guiding to double our top line growth versus what we did Q2 over Q1 last year, showing $4.5 million of growth top line at the midpoint as opposed to just over $2 million in the same quarter last year.

Great. And then just a follow-up, maybe shifting gears a little bit. You talked about the Zip app for ChatGPT. Just curious what you're learning there? I think you talked about expanding potential integrations. Any more color you could add on the product front there would be great.

Well, the new app went live on ChatGPT and on a percentage basis, the growth of LLMs in general has been impressive as a new traffic source. Overall, LLMs still represent a -- they are still a tiny contributor in the overall mix of where traffic comes from to ZipRecruiter, but it's good to be there at the beginning and to enjoy the ride up with them as they become an ever more popular way for job seekers to look for work.

[Operator Instructions] The next question comes from Justin Patterson with KeyBanc.

I'd love to hear more about just the upcoming rollout of the next-generation AI engine. It sounds like you had some really strong returns so far. So how are you thinking about that as a potential market share driver in a market that's still a little bit subdued here? And then the second question, just as a quick follow-up. We've seen a lot of companies just trying to balance the productivity benefits against the rising token costs from Gen AI tools. So I would love to hear more about how you're thinking about that dynamic and what it might mean toward your longer term headcount needs?

Well, I'll take the second question first and then go to the first question last, which -- AI is permeating really every department within our company. It's driving extraordinary efficiencies across the board, which we haven't looked at as a cost-saving opportunity as much as we've looked at it as a mechanism by which we can realize and increase our ambitions. So if anything, it has accelerated our road map as opposed to saved us money. And you can see that -- output of that acceleration in Q1 where multiple large-scale initiatives, some of which have been worked on for over 1 year, we were able to deploy. The next-generation search engine is one of those. It increased applications by 37% for the job seekers who are exposed to it. We expect all job seekers to be on the next-gen search engine by the end of Q2.

It's really exciting. These -- This algorithm and the other components of this were -- they were retrained to prioritize more meaningful signals for job seekers in terms of the depth of their interest in roles. We can see that play out when we use those algorithms to deliver results and that they're applying at a far higher rate, and these are jobs that they are far more qualified for at the same time.

Further, when they do apply to those jobs and when they are qualified for those jobs, adoption of Be Seen First has been exciting. We saw 12% of total applicants choose to be seen first when they apply, and this is confirming an extraordinary advantage to them because employers who are looking at their list are seeing these very interested candidates who have now got a mechanism to show their enthusiasm. They're not just qualified, they're eager. And that is coming through and employers are engaging with those candidates at almost twice the rate that they're engaging with candidates to go through the normal apply process.

Overall, when we look at all the features that we've launched, not just in this quarter but really over the last 3 to 4 quarters, and it's including things like ZipIntro, it's things like our redesigned resume database, the acquisition and deployment of Breakroom, what you see is that the strategy we've built is working, and it's not me saying that or say it's not just me, it's the job seekers.

I've been really excited reading the reviews and seeing the spike in the specific language that those reviews contain. The job seekers are using the language that we use internally when we talk about our objectives. They are saying that they are getting more interviews and they're getting more phone calls from employers. They are saying, "ZipRecruiter works." That's exactly how we look at it internally and how we describe it. So it's really rewarding to see the strategy paying off both quantitatively and qualitatively here. There's so many more improvements to come. We're really excited about the momentum we have here, and AI is proving to be an incredible accelerator of our ability to rapidly deploy these improvements.

Your next question comes from Josh Chan with UBS.

This is [indiscernible] on for Josh. I wanted to ask on the margin, because the margin certainly came way above what we expected. So I was just wondering if you can provide more color on where -- what drove that upside against like maybe your internal expectations because it also came above the guide as well?

Thanks. This is Dave. Good question. So yes, the EBITDA margins this past quarter did come in above expectations and above the high end of the range we had said earlier. Obviously, when you look at it from a year-over-year basis, we've been driving efficiency across all 3 major categories of expense: G&A; sales and marketing; and R&D. However, versus our expectations and what we had last quarter, as we've said many times, we're scientists, not artists when it comes to sales and marketing investments. And this quarter, the team did an extraordinary job of looking for and finding high ROI marketing opportunities and areas to invest in our go-to-market. And so we saw that in the results and the results were that we came in above the high end of the range.

So obviously, that gives us increasing confidence in our ability to achieve the likely scenario we laid out for the whole year, which is top line being flat, which is 5 percentage points better than prior year, obviously, and at the same time, improving bottom line margins from 9% to 14% for the full year, which is also 5 percentage points improvement along the bottom line. And so that execution this quarter gave us even more confidence about our ability to do that, and we felt great about it.

That is the end of the Q&A session. This concludes today's call. You may now disconnect.

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to ZipRecruiter Q4 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Emilio Sartori, Head of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon. Thank you for joining us for our earnings conference call, during which we will discuss ZipRecruiter's performance for the fourth quarter and full year ended December 31, 2025, and our guidance for the first quarter of 2026.

Joining me on the call today are Ian Siegel, Co-Founder and CEO; David Travers, President; and Tim Yarbrough, CFO.

Before we begin, please be reminded that forward-looking statements made today are subject to risks and uncertainties related to future events and/or the future financial performance of ZipRecruiter. Actual results could differ materially from those anticipated in these forward-looking statements. A discussion of some of the risk factors that could cause actual results to differ materially from any forward-looking statements can be found in ZipRecruiter's annual report on Form 10-K for the year ended December 31, 2025, which is available on our investor website and the SEC's website.

The forward-looking statements in this conference call are based on the current expectations as of today, and ZipRecruiter assumes no obligation to update or revise them, whether as a result of new developments or otherwise. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in ZipRecruiter's shareholder letter and in our Form 10-K.

And now I will turn the call over to Ian.

Thank you. Good afternoon to everyone joining us today. 2025 was a year of stabilization and strategic execution for ZipRecruiter. After multiple quarters of sequential growth, I'm pleased to share that we achieved year-over-year revenue growth in Q4 '25, the first time a quarter has grown year-over-year since Q3 of 2022. Throughout 2025, we remain focused on our mission to actively connect people to their next great opportunity by delivering high-impact product enhancements.

We upgraded ZipIntro and our resume database to drive faster connections, deployed new AI-powered suggested screening questions to decrease the time it takes employers to vet the candidates they receive, and optimized our automated campaigns to deliver better performance for our enterprise clients.

In January of 2026, we took another leap forward with the launch of Be Seen First, a product which enables job seekers to jump to the top of an employer's candidate list. Job seekers earn this advantage when they tell the employer why they are excited about the role and what skills they bring to the table. The results are promising. Be Seen First candidates are nearly 2x more likely to have a conversation with an employer.

Following the sequential growth in Q2 and Q3 of 2025, Q4 '25 marked a return to year-over-year revenue growth. We achieved this milestone despite a challenging macroeconomic backdrop. That said, hiring demand in Q4 '25 was soft. Hiring demand dropped below what normal seasonality would have predicted and job openings declined 10% year-over-year. As a result, Q1 '26 started from a lower base of paid employers.

Our Q1 '26 revenue guidance of $106 million at the midpoint reflects this lower holiday baseline. However, in Q1 of '26, paid employer trends have rebounded year-to-date. Those trends are, in fact, stronger than the trends we called out as noteworthy in Q1 of '25. We are encouraged by the momentum we see in performance marketing revenue. Year-over-year performance marketing revenue increased 5% in Q3 of '25 and 9% in Q4 of '25.

Our go-to-market motion and product offerings continue to resonate with and drive value for our larger enterprise customers. This performance gives us confidence that our product improvements and technology investments are driving us forward in this environment with our underlying momentum intact. For the full year 2026, we expect hiring demand to follow a typical seasonal cadence, albeit at subdued levels given the lower starting point post holidays. We believe a likely result in this scenario is for us to achieve flat year-over-year revenue in 2026 compared to the 5% decline in 2025.

Further, in this scenario, we expect adjusted EBITDA margins to expand by 5 percentage points from 9% in 2025 to 14% in 2026. This improvement reflects our rigorous cost discipline alongside targeted investments aimed at capturing growth. In addition to addressing our business specifically, we have been receiving many questions about AI and its impact on the labor market. While some attribute the current hiring slowdown to AI displacement, ZipRecruiter employer survey data tells a different story.

According to ZipRecruiter customer responses in our Q4 2025 Annual Employer Survey, the current labor market trends are primarily driven by economic factors, such as lower customer spending or cost-cutting mandates rather than technology-driven automation. AI is currently having little to no impact on our customers' hiring plans. This matches the sentiment from a large number of economists on the topic.

Over the long term, we expect AI to be a substantial boon to the labor market. History shows that major technological shifts display specific roles, but ultimately unlock productivity and enhance labor demand. We believe AI will follow a similar trajectory. We further believe ZipRecruiter is uniquely positioned to lead this next wave of AI-driven acceleration. Since our inception, we have invested over $1 billion to build an enduring brand that resonates with both employers and job seekers.

Our proprietary AI matching technology trained on billions of interactions continuously learns to surface the right roles and deliver qualified candidates faster. Our team and our technology investments are laser-focused on continuously improving the process of finding a great job or a great employee.

ZipRecruiter remains committed to its mission of actively connecting people to the next great opportunity through every economic cycle. We believe we will continue to lead the shift in recruiting from offline to online, and we are prepared for this new wave of AI-driven innovation.

Before I turn the call over to Dave, as you read in our shareholder letter, our CFO, Tim Yarbrough, has decided to pursue a new opportunity and will be departing ZipRecruiter. On behalf of the Board and the entire ZipRecruiter team, I want to thank Tim for his over a decade of dedicated service. We wish him continued success in his next opportunity. Dave Travers, our current President and previous CFO of 6 years, is stepping in as Interim Chief Financial Officer effective February '26. Dave's deep familiarity with our business, financial operations and history will ensure a seamless transition during this interim period. We've also initiated a comprehensive search for a permanent CFO.

And with that, I'll turn the call over to Dave to share some business highlights.

Thanks, Ian, and good afternoon. Our performance in the fourth quarter reflects the continued success of our product-led strategy. Even in a complex hiring environment, our investments in matching technology and seamless integrations are delivering clear value to both employers and job seekers. I'm excited to share several highlights with you.

Q4 '25 revenue reached $112 million, representing 1% year-over-year growth. This is a significant milestone, marking our first quarter of year-over-year growth since the market decline began in Q3 of '22. This performance is consistent with the scenario we outlined over the course of 2025, and we believe our execution, brand resilience and strong market position overcame what continues to be a challenging macroeconomic backdrop. We finished the year with over 59,000 quarterly paid employers in Q4, up 2% year-over-year and down 12% sequentially, consistent with historical seasonal patterns.

This is our second consecutive quarter of year-over-year expansion, signaling the long-term health of our employer base. This January, we launched Be Seen First, a new product designed to help job seekers break through the application black hole and turn one-way applications into real 2-way conversations. By adding a short note to their application, job seekers moved to the top of an employer's applicant list, highlighting essential skills and enthusiasm that resumes often missed. This provides recruiters with critical context and surfaces the most engaged talent.

Employers are prioritizing these high-intent applicants and Be Seen First candidates are nearly 2x more likely to have a conversation with the employer. In response to the shifting SEO landscape, we optimized our marketplace for generative AI discovery. This drove a significant increase in engagement with site visits from AI engines more than doubling year-over-year in Q4.

Additionally, ZipRecruiter's job seeker traffic outperformed our largest competitors throughout 2025, validating our ongoing product improvements. By reaching job seekers regardless of where they begin their search, we believe we are uniquely positioned to capitalize on the eventual acceleration of U.S. hiring. Since its U.S. launch in 2025, Breakroom has published over 16,000 employer profiles, powered by 1.6 million employee ratings. We recently integrated these ratings directly into ZipRecruiter, enhancing 8.7 million job postings and over 9,000 company pages with transparent workplace insights, providing job seekers with transparency to better evaluate potential employers and increasing the likelihood of a strong long-term match.

In 2024, we launched ZipIntro, an AI-powered solution that speeds up hiring by rapidly connecting employers and job seekers for face-to-face conversations. Enterprise adoption of ZipIntro grew consistently throughout 2025. In Q4 alone, scheduled sessions increased 17% sequentially and expanded by more than 5x year-over-year. To further optimize the platform, we recently made a number of targeting improvements that drove a 32% increase in sessions that met or exceeded RSVP targets, delivering a more predictable candidate flow for employers.

We've enhanced our resume database to allow employers to filter by recent platform activity, such as whether they are new to the ZipRecruiter marketplace or if the candidate recently updated their profile. Employers are finding these real-time insights incredibly valuable. The resume unlock rate for candidates with these activity labels is 66% higher than those without. When thinking through specific questions to ask candidates, employers often struggle when starting from the blank page. In Q4, we launched an AI-driven tool that automatically generates tailored screening questions.

Employers have quickly embraced this upgrade with 93% of new employers using our AI recommended screening questions in Q4. By automating this key step, we drive higher quality connections faster. ZipRecruiter's enterprise-focused strategy is gaining significant traction, fueled by high demand for automated tools. In Q4, adoption of our automated campaign performance solution increased 32% year-over-year. This and other enterprise enhancements led to a 9% year-over-year increase in performance marketing revenue in Q4, an increase from 5% growth seen in Q3. Despite a complex hiring landscape, these results demonstrate that our programmatic tools are successfully delivering the efficiency and candidate quality that large employers prioritize.

For over a decade, ZipRecruiter has invested in building a network of over 180 ATS integrations to streamline the enterprise hiring process. This momentum continued in Q4 with the launch of an enhanced Workday integration and a new Bullhorn partnership. By connecting with these major ATS platforms, recruiters can now source talent from our resume database and export candidates to their preferred system with a single click, drastically reducing applicant friction and accelerating time to hire.

With that, I'll now turn the call over to Tim to run through the financial results. Tim?

Thank you, Dave, and good afternoon, everyone. Our fourth quarter revenue of $111.7 million represents 1% growth year-over-year and a 3% decline quarter-over-quarter. Our first year-over-year increase since Q3 of 2022 was primarily driven by higher performance-based revenue from enterprise employers, which grew to 25% of total revenue. The sequential decline is consistent with seasonal hiring patterns in the fourth quarter. We finished the year with over 59,000 quarterly paid employers, representing a 2% increase year-over-year and a 12% decrease sequentially. This marks our second consecutive quarter of year-over-year growth, demonstrating the stability of our employer base despite macroeconomic volatility.

The sequential decline is consistent with our historical seasonal patterns and reflects the typical slowdown of hiring during the holiday period. Revenue per paid employer was $1,889, down 2% year-over-year and up 10% sequentially. The year-over-year decrease reflects continued softness in hiring demand, particularly among SMB customers. The sequential increase is primarily driven by the seasonal reduction in the number of paid employers in the fourth quarter. Our net loss in the fourth quarter was $0.8 million. Adjusted EBITDA in Q4 '25 was $16.2 million, equating to a margin of 15%. This is higher compared to 13% in Q4 '24 and 8% in Q3 '25, with increases driven by a return to revenue growth and continued expense discipline.

Our full year adjusted EBITDA margin of 9% exceeded the mid-single-digit expectations we shared at the beginning of the last year. Cash, cash equivalents and marketable securities was $409.1 million as of December 31, 2025. During Q4 '25, we repurchased 1.8 million shares totaling $8 million.

As Ian mentioned, after more than 10 incredible years at ZipRecruiter, I'll be stepping down from my role as CFO to pursue a new opportunity. I'm deeply grateful for the growth and experiences that have shaped both my career and me personally. Thank you to our amazing employees for your dedication and partnership. It's been an honor to be a part of this team, and I'm excited to see how ZipRecruiter will continue to transform how hiring is done.

With that, I'll pass it back to Dave to discuss our guidance.

Thanks, Tim. I echo Ian's comments, and we wish you luck in your future endeavors.

Moving on to quarterly guidance. Our Q1 2026 revenue guidance of $106 million at the midpoint, down 4% year-over-year and 5% sequentially, reflects the lower baseline of paid employers as we started Q1. Our adjusted EBITDA guidance midpoint of $5 million represents a 5% margin, which is flat year-over-year and demonstrates our financial flexibility as we navigate the current labor market backdrop.

Looking beyond Q1, we expect hiring demand to follow a typical seasonal cadence over 2026, albeit at subdued levels given the lower starting point post holidays. We believe a likely result in this scenario is for us to achieve flat year-over-year revenue in 2026, which is a 5 percentage point improvement over last year. In this scenario, we expect adjusted EBITDA margins to expand by 5 percentage points from 9% in 2025 to 14% in 2026.

This improvement reflects our continued cost discipline alongside targeted investments to ensure ZipRecruiter emerges from this cycle in a position of strength. The stabilization in the business we've seen despite a weak hiring environment is encouraging, and we remain confident in our long-term growth opportunity. We believe our flexible operating model and healthy balance sheet position ZipRecruiter to take advantage of growth opportunities and position us to outperform the broader hiring category over time.

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

[Operator Instructions] Your first question comes from the line of Eric Sheridan from Goldman Sachs.

Tim, thanks for all the help over the years, wishing you the best of luck. Maybe 2, if I can. First, if you look at the demand environment you're facing right now, any different characterizations you would give on the employer side from what you're seeing from large enterprises relative to SMB? And any indications how that might change as we progress into Q1 and deeper into the year?

Eric, this is Dave. Great question. Yes. So what we saw last quarter was in the latter half of the quarter over the holiday period a -- after a strong start to the quarter was a slowdown in SMB demand, particularly. And we've been encouraged since the beginning of the year, as we said, that SMB demand looks as good or actually slightly better than last year and better than we've seen in several years.

So our expectation is that from a lower baseline, given the weak latter half of holiday period of last quarter, from that lower baseline, we'll see a stable overall macro environment and that our ongoing investments and continued operational improvements as we just detailed, ZipIntro, resume database and most importantly, perhaps our execution in enterprise, where we see a similarly -- forecasting as the most likely scenario, a similarly stable demand environment but where our execution and obsession with hitting customers' targets, defining clearly for them what their target is and what their definition of success is and then making sure we hit it and are having our -- both our product and our go-to-market teams work relentlessly to make sure that happens.

That's paying off, and we see it -- for the first time in 4 years, seeing slight sequential growth in performance marketing revenue in Q4 versus Q3. So what we foresee is -- we're ready for a wide range of scenarios as always, but the most likely scenario being the overall demand environment for both SMB and enterprise being flat from this lower start and that our investments allow us despite a weak starting point for -- to start the year in Q1 that we get to flat this year and are able to expand margins as we do it so that we're increasing revenue by 5 percentage points versus last year and increasing margin by 5 percentage points at the same time.

Your next question comes from the line of Ralph Schackart from William Blair.

Maybe just a follow-up on Eric's question. Just trying to square a little bit, I guess, some of the more soft conditions you saw in Q4 after a strong start compared with, I guess, a stronger rebound in Q1, particularly I think you called out SMB. Anything that you sort of call out there for the, I guess, the dramatic or pretty sharp rebound there?

And then two, just in terms of the traffic you're seeing from the LLMs, can you maybe sort of walk us through how that traffic is behaving, performing, perhaps converting? And then is it at a level perhaps in 2026 when it could start to impact the results? Just any other color on the LLM traffic would be great.

Thanks, Ralph. This is Dave. I'll take the first one and let Ian take the second one. So on the soft Q4, I think it very much -- what we saw in Q4 very much mapped to what the job openings numbers from the government look like where we saw that 10% decline. And each -- even when you seasonally adjust it, December is always the hardest month of the year to forecast and is always the seasonally weakest month. But even when you adjust for seasonality as the government does in their official data, there was a month-over-month decline each month in Q4 in terms of job openings, and that's very consistent with what we saw.

And as we look at it, as we always say, our employer base looks like the whole U.S. economy. But when we look at particular areas of weakness and strength, health care remained resilient as it has for several years now and demographic changes and other structural reasons for that in the U.S. economy. But on the flip side, retail, food service, education were all areas of weak spots during the quarter, and we saw those degrade.

And then to the point I said earlier, starting January 1, we saw a different story where we've seen a nice pickup in activity. And so that gives us the confidence to say the most likely scenario of those that we prepare for is that we will be flat from that lower baseline for the year.

And speaking to the LLM question, to give context, ZipRecruiter gets traffic from a wide array of different media sources and sites, and that includes everything from other job sites to organic traffic to SEM to response advertising and LLMs are just one part of the mix. What makes them interesting is they are the fastest growing in terms of both they themselves as a category as well as the traffic that we are getting from them.

However, in the overall mix of traffic that ZipRecruiter gets, overwhelmingly still traffic that is highly engaged and active on the site is still coming from the variety of traditional sources. The difference between LLM traffic and those sources is not much. They are active job seekers who are eager and engaged. They are still continuing to grow at a healthy pace, and we are excited about the momentum that we see with LLMs.

Your next question comes from the line of Trevor Young from Barclays.

First one, just as we think about the cadence of growth throughout the year, it would kind of suggest that 1Q is maybe the low point for the year and you would exit the year at low single-digit territory or something like that, such that you're flat overall even with tough compares. What kind of informs that view that growth will accelerate from here given that backdrop? Particularly because you are seeing EBITDA margin expansion, so that maybe suggests not leaning in on marketing meaningfully.

And then second one, just on capital allocation. You have about $200 million in cash on hand, Guide implies free cash flow maybe improves a bit here in '26. Clearly, a willingness to buy back stock in the last year. Should we expect opportunistic repurchases of the stock given a bit of an uptick in the outlook here? And then relatedly, any thoughts on the trade-off of stock versus debt repurchases because I know a lot of folks on the credit side also care on that.

Great. Thanks, Trevor. So in terms of the cadence throughout the year, I think what gives us confidence is, a, what we've seen year-to-date since January 1; and b, going back longer than year-to-date, the momentum we have with enterprise. And to the point you made, which is astute that margins going up while we see the cadence of improvement over the course of the year being the most likely scenario is consistent with enterprise continuing to outperform where we're not as -- the demand generation is much more sales-led and much less marketing led on the enterprise side of things. And so those teams are more -- the expense line on those teams is more stable and preexisting, and we see a lot of investments that we've made over the past couple of years starting to pay off and is less dependent on same quarter sales and marketing. Obviously, we remain flexible to and we'll adapt based on changing environments we see, but that's the most likely thing we see, and we see more than just dating back to January 1 in terms of momentum there with that part of the business.

And then to your question on capital allocation, so our sort of strategic framework remains the same. The top priority always is organic growth. We were not just EBITDA profitable last year, but free cash flow profitable as well and obviously talked about seeing expanding margins this year. So in terms of organic growth, we're well covered, but we'll always prioritize that first. The second priority is M&A opportunities. You saw us take action there in terms of Breakroom where there's a really strong value proposition to both job seekers and employers about how our entire marketplace gets stronger with better employer branding and giving job seekers the real straight dope on what it's like to work -- in frontline workers, in particular, what it's like to work at a particular employer.

The third priority is return of capital. And so as you pointed out, we've been a consistent returner of capital last quarter, about $8 million for about 1.8 million shares. And every single time we have an opportunity to allocate capital, we think about what are our resources. We currently have a very robust balance sheet and lots of liquidity, as you mentioned. And we look at the different opportunity set of different opportunities to repurchase shares or bonds or whatever, as you mentioned, and look at the ROI there, and we'll take action accordingly. You've seen us do that before. We will continue to evaluate that as we see opportunities to do so.

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

Good luck, Tim. I guess maybe just 2 questions. So I guess, first, what do you make of the Q4 slowdown and then Q1 recovery? And relatedly, why doesn't the Q1 recovery get you back to the same spot? Is it just like not enough of a recovery in magnitude?

And then the second question would be, are you seeing meaningful changes in terms of how employers are trying to find candidates as in moving away from the traditional resume? I mean you launched this Be Seen First feature, which allows people to feature different things other than their resume. So just curious if something like that is starting to happen in the environment?

Yes, go ahead.

So on the first one, your question is a good one. So the way we think about it in terms of the cadence in Q1, it is very typical in Q1, given the seasonality, as I mentioned or we mentioned before, that the holiday period is the weakest period of the year seasonally, then Q1 can look fairly flat to Q4 in a typical year, plus or minus a couple of points. But it's really a story of building throughout the quarter from a lower starting point given what happens, the slowdown over the holidays, especially in the SMB part of the business. And so what we see here is just a steeper climb. And the starting point was lower. The trend line within the quarter looks good, but we're just starting from a lower point where the SMB part of the business was a little bit weaker over the course of late November and December, which is what causes that cadence.

And then on Be Seen First, without question, the world of recruiting is experiencing a renaissance as it relates to both the way candidates are sourced and the way -- the opportunities they have to communicate with the employers and the hiring managers. Resumes are very much still in play. They are a necessary part of a comfortable expected process that employers are not willing to let go of. What Be Seen First is, it's really a mechanism for job seekers to show their enthusiasm, to stand out when they apply to a job in a novel way, and job seekers are using it exactly as we intended. They are not spamming employers with Be Seen First.

They're being selective about which jobs that they express their enthusiasm for and employers are responding as we would expect, which is in a sea of candidates, many of whom resumes look highly qualified for the role in which they are applying. They are looking for other signals that will allow certain candidates to stand out from the rest of the pack. A candidate participating in Be Seen First, showing their enthusiasm and getting pushed to the top is not only advantaging themselves, they're actually doing the employer a favor by giving them one more method from which to assess the pool of candidates they received to decide who were the very best that they want to bring in for an interview.

Your next question comes from the line of Kishan Patel from Raymond James.

This is Kishan Patel on for Josh Beck. You mentioned in the shareholder letter that you're optimizing the platform for Gen AI discovery. How do you think about optimizing the ZipRecruiter platform for agentic search or engagement by job seekers?

Well, this is certainly a topic that we are spending a lot of time thinking about. And we are excited about the potential and opportunities that is represented by AI. There are so many different directions we could choose to take this in. And certainly, already AI is permeating our site. I mean you can go all the way back to our S-1 when we first went public where we described ourselves as an AI-powered marketplace long before there was ever an LLM and everyone was talking about AI.

And when we talked about AI, we were really talking about the matching engines that we built that are powered by those billions and billions of interactions between employers and job seekers, which is what allows us to not only do an exceptional job of matching keywords and resumes to the keywords and job descriptions, but also to benefit from what's known as the wisdom of the crowd, where insights can be gleaned by the different AI methodologies that we were applying in order to find the very best jobs for job seekers and the very best candidates for employers.

As we look at our own service today, already, you can see AI making its way in. We talked about suggested screening questions in our shareholder letter. That is a product that has reached massive levels of adoption on our product. It's skyrocketed with the launch of suggested screening questions. The difference between putting a blank page in front of an employer and saying, come up with screening questions versus putting a set of AI-created pre-written screening questions in front of them, has been fundamentally night and day. It has been a sea change in how our product works and how applications are processed, and it's fantastic for employers because again, employers are always looking for signal, how can I differentiate between the seemingly equally qualified candidates who I have received, screening questions is a fantastic tool for that.

I would expect you will hear many more AI-driven features coming through the ZipRecruiter development team and entering into our platform over the coming years. And I think you will see that AI becomes a fundamental tool and a fundamental advantage for ZipRecruiter to enhance the marketplace that we have already created.

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

All right. I understand that we're live. Good afternoon, everybody. I'm Josh Chan, Business Services Analyst here at UBS. We're pleased today to have ZipRecruiter join us. They are an online marketplace that matches employers with job seekers. With us from the company today is Tim Yarbrough, CFO. If anybody has any questions, feel free to raise your hand. I will also pick up any questions from this iPad here. But Tim, great to have you here again.

Great to be here.

Thanks for joining us.

Absolutely. Thanks for having me.

I guess to level set the audience here, could you give us a brief background about ZipRecruiter and highlight some recent developments and then we can go into different topics from here.

Yes, absolutely. Like you said, ZipRecruiter is an online jobs marketplace that brings both job seekers and employers together. And we do that through technology using the best matching in the industry to form better matches between the two. ZipRecruiter was built out of the frustration of the process of finding a job and the process of finding good quality candidates. So in the earlier days, we call it version 1.0 era, ZipRecruiter made it possible for an employer to post their job in just one place and then distribute it all across the Internet and then aggregate all of those applications that flowed in into a single place where you can review your applications and rate them and respond accordingly.

So what that did was create a whole lot of applications for employers to sift through. So thus began version 2 of ZipRecruiter, where we migrated away from quantity and towards quality. And so now ZipRecruiter provides smarter matching so that rather than just supplying many, many applications to sift through, employers can have a light shine on the right ones so that they can figure out who they should respond to and engage with.

And likewise, with job seekers, rather than just showing them lots of jobs, we show them the right jobs. And we're able to do that because over the years, we've aggregated this massive data asset, which is just billions of interactions between job seekers and jobs that has driven -- that allows our AI algorithms to drive better matches over time.

Great. Could you talk about some of the features that you've introduced recently into the platform, what traction that they're having with job seekers and employers?

Yes, absolutely. There have been a couple of new features that we've rolled out over the last 12 months or so. One of them is ZipIntro. And you can think of this as speed dating for jobs. So in as little as a few hours, an employer can post the job and then begin speaking to live qualified candidates. And these candidates are drive by our -- informed by our AI algorithms. So when an employer posts a job and they say they want to have a ZipIntro session, we scour the marketplace and invite them to queue up at a certain time and then employers and job seekers can have introductory conversations. It's been a wild success.

90% of job seekers who engage in them said they would do it again happily. And enterprises, in particular, on the employer side, really enjoy this product. So the number of Zip intro sessions was up 90% in Q3 versus the prior quarter, and that's building on the success of 80% in the prior quarter as well. So I think we're really on to something big there. Another big product that we relaunched was our resume database. So resume database is a proactive sourcing tool that employers will use to search for candidates for specific jobs.

And so they can type in exactly what they're looking for. We redeployed this tool and made it much more user-friendly. We now uses natural language matching as well in modern technology so that we informed -- so it drives much better matches over time. And SMBs, in particular, really like this product, the number of unlocks or the number of resumes that were reviewed has been steadily increasing as well. So in last quarter, that number was up 12% quarter-over-quarter, and that's building on the progress of 9% to 10% of the prior quarter as well.

And then lastly, we made an acquisition last summer of Breakroom and -- a U.K. company, and that's been going very well right now. So we have over 10,000 employee -- employer pages that have been created that's fueled by over 1 million ratings from the currently employed folks that are looking at giving more information about their current employers.

Sure. So as you develop these new capabilities, how do you think about either monetization or viewing them as sort of an improvement in your platform in terms of what you offer to your customers? How do you think about that?

Yes. Our natural bias as a company is to find product market fit first, create lots of value and then look at extracting value. So when it comes to ZipIntro as an example, right now, it's free. So we're learning a lot from our employers that are using it right now. We're learning a lot from job seekers, and we're tweaking the product accordingly. Monetization can come later. And so that-- Breakroom is another example where we're in the process of building a corpus of products and monetization is in its earlier stages.

Okay. How do you navigate that kind of hurdle to something going from free to being monetized? From a customer perspective?

It will be -- I think it will be just fine because the amount of value that we're creating with ZipIntro in particular, it warrants a price premium. And with the feedback that we're receiving so far, the repeat customers that we're seeing, I think it will be well received.

Okay. Great. So when you look across sort of your competitors, how do your capabilities compare to competitors? How do you kind of differentiate yourself versus other marketplaces?

Yes. strictly within the online space, online marketplaces, there's really three larger players, LinkedIn, Indeed and ZipRecruiter and then a very long tail of other players in the space. And so in the longer tail, generally speaking, it's been losing share over time, I think, to the first three that I mentioned.

Our approach is fundamentally different in that instead of focusing on social media or being a verticalized search engine, we focus on providing individualized matches and driving actual connections that's, again, tailored to the individual job seekers' preferences and behaviors as well as what the employers are looking for.

Okay. And then beyond the online competitive set, there's also a whole slate of off-line recruitment market out there. I guess, how do you view that part of the market? Is it kind of considered addressable from your perspective?

Absolutely, over time. Yes. So that's one thing I think people don't fully appreciate. This is an area of the world where software has not yet eaten the world. So of the overall TAM in recruitment, is roughly $300 billion in the U.S. alone. And the online portion that I spoke of is only 5% and faster growing, which is intuitive, but still very small. So I think over time, those of us in the online space will eventually continue to gain share against that larger backdrop.

Okay. And then from an employer and job seeker perspective, what makes each of them choose ZipRecruiter as opposed to some other solution? What do you get right in their eyes?

Yes. It's different from employers and job seekers. I think employers ultimately want to make a good hire as fast as possible. And that involves eliminating a lot of toil from the process. So everything from creating the initial job description through talking to actual candidates, we're working at streamlining that approach. So for example, every employer hates creating a job description, and they're notoriously not so great at that.

So we help fix that with preset job templates that they can apply to their job and tweak accordingly. All the way through ZipIntro, like I mentioned before, we accelerate the time that it takes from a job to get posted to an employer to actually get the talk to real life candidates. So we're trying to streamline that process and actually have them talk to face-to-face with candidates that are highly qualified.

On the job seeker side, I think what is needed is a more individualized approach to solving otherwise painful process of looking for work. Nobody has ever said that they really like looking for a job. And I can't say that we've totally solved that yet, but that's our mission to make it much more enjoyable and individualized. And so we use the wisdom of the crowds to inform the matches that job seekers get.

So we build pattern recognition with the individual job seeker based on what they tell us they like and then also what they apply for, but then also use the same learnings that we've derived from other job seekers that are similarly situated and also extrapolate those results to that same job seeker as well so they get better matches over time.

Could you talk about how you bring the job seeker to your platform to begin with, I guess, like is that more of a branding, sales and marketing approach? How do you do that?

Yes, there's a bunch of different channels. But I think over time, we have earned 80% aided brand awareness on both sides of our marketplace. And so we get a lot of our job seeker traffic organically. But there have been other areas as well.

LLMs have become much more of a -- the way that job seekers are looking at finding work. And so we're experiencing a significant amount of growth from LLM-based traffic as well. It's up 140% last quarter on a quarter-over-quarter basis, and that's faster than the 60% or so in the prior quarter. So job seekers come to us from multiple channels. Again, more and more of that is becoming organic traffic.

Okay. Maybe switching to AI. Clearly, that's been your DNA since day 1. So as AI proliferates across the broader landscape, how is that impacting, if at all, the market that you're participating in?

Yes. So AI has been more and more of the topic of discussion and for good reason. I think what we've learned from talking with employers is that the level of interest is very high. The level of experimentation is high as well. But as far as true functional adoption, still in -- very much in the early stages. And so we have not seen any disruptive effects from AI in the job market overall to date.

Now when you zoom out, we're actually very optimistic about the impact of AI on the labor market overall. It has been true for all time that any large technological innovation eventually gives rise to many more jobs than it displaces in the short term. And so we're excited about it. We think it's going to be -- it's going to mean good things for the labor market overall.

All right. In terms of your own AI capabilities, I guess, how do you benchmark your own AI versus what's out there in the competitive set? How do you make sure that your algorithm, I guess, stays the best one.

Yes. It's something that we've constantly been chipping away and the enhancements that we make are iterative and are cumulative. So we have a significant data asset that I referred to before, which is getting bigger and bigger as our marketplace continues to expand. And we make enhancements in our algorithms to make sure that we're driving better matches.

And so we keep track of our progress in a couple of different ways, but our job seekers reward us by telling us that we have the #1 rated app in the app stores. And when we look at the number of applicants or the number of employers that receive five or more applicants within the first 24 hours of job posting, that number is up 24% on a year-over-year basis. So SMBs, in particular, but employers overall are receiving a much higher quality of product.

Okay. And then in terms of the pace of AI improving within your business, could you talk about what you can do with AI now that you couldn't have done like a year or two ago?

Yes. So a lot of the progress in AI lately has been specifically with LLMs. And so there are some pain points that we've been able to solve for employers and job seekers. I referred to one of them before, but the process of creating a job description is made much more -- it's made much easier because now we can have pre-populated job templates that employers can use.

And likewise, on the job seeker side, nobody likes creating a resume. And so we can help folks do that fairly quickly using LLMs. And even products like ZipIntro has made all that much more smarter because of advancements in AI. So now we can deliver a higher velocity of higher-quality candidates faster to employers so that they can be well situated for good productive conversations through our ZipIntro product.

So kind of same question, but looking forward, I guess, in the next 1 to 2 years, what kind of capabilities could come up that you can't do today?

It's very hard to predict where the AI technology is going to go. And so it's very hard to make that call. But one thing I do know is that any technology like AI needs data to work with. And that, again, is one of our most defensive moats around our business, the asset that we've built up over the years. And so any future developments of AI will be in service of driving better matches faster.

Okay. That makes sense. Any questions from the audience? Okay. Maybe switching to the macro environment. So the macro environment for employment has been challenged for the last several years. You did see year-over-year growth in paid employers for the first time in Q3. How would you frame where we are from a macro perspective relative to the environment that we're in?

Yes. It's been -- we're after 30 months of declines in the labor market. In 2025, things have been relatively stable with some softness that we and others in the space observed in Q3. So if we zoom out, I would still consider 2025 kind of a down year, but certainly less so than the prior two. But really, to your point, despite that, we've been performing really well.

So revenue has been growing sequentially from Q1 to Q3. Our paid employer numbers have been growing steadily from Q4 to Q3. And so -- and when you look at our enterprise business, in particular, the revenue growth was a strong 12% quarter-over-quarter increase, and that's again despite the relatively cloudy macro that we're in.

Okay. And you are guiding to a return to revenue growth in Q4, but it wasn't by a lot. So I guess, could you talk about the conviction level behind the guidance? What you're seeing from like a monthly build perspective to lead you to that kind of conclusion?

Yes. So guiding to Q4 growth has been a pretty consistent message of ours really all year long. So even back in our February call, we described the very scenario that we're guiding to now is a likely scenario, and our conviction in that has only increased. And again, that's despite the relatively chilly macro that we've been observing, especially towards the tail end of Q3.

So our conviction is the same as our philosophy with our guidance has never changed. So we have the same level of conviction that we've always had with our guidance philosophy. And I think it's informed by a couple of things. One would be a sequential step down going from Q3 to Q4, which is fairly typical.

SMBs, in particular, tend to slow down their hiring as we go into the holiday seasons. And then secondly, again, the macro has been a little chilly. And so that informs the sequential step down, but still putting us in a place of growing on a year-over-year basis in Q4.

Okay. And what kind of environment do we need to get to sustain this year-over-year growth through 2026?

Yes, good question. So to be super clear, in 2025, where the macro has been relatively unkind, we have stabilized revenue. And it's in that environment that we are growing on a year-over-year basis at the midpoint of our guidance in Q4. So 2026, there's a wide range of scenarios that we're prepared for. We are fond of saying that we do not have a crystal ball, but we are prepared for all occasions.

So to the extent that we see some kind of more -- a strong economic recovery, we will take advantage of that, invest into it, and we will benefit from a revenue perspective, even if that means that adjusted EBITDA margins come down in the shorter term because we're doing that with confidence that there's a significant return at the end of that investment.

And conversely, to the extent that we see the macro soften further, we would again respond in kind. We have a significant amount of flexibility, specifically in our sales and marketing. And so we can dial back our investment accordingly and protect margins if need be.

Okay. There's some discussion from a job market perspective that it's kind of frozen where companies are not hiring, but also not firing. So it really cools down the velocity of the whole market that you kind of need. So is that how you see the market? Why or why not? I guess, about the frozen market type of narrative?

That's exactly how I describe it. So what we've seen is that both hiring and quits, which are both metrics that the BLS publishes are at near decade lows. And so I think what folks are seeing is that with the increased amount of uncertainty in the market, the currently employed are less likely to leave their current jobs. And by the way, that quits rate, that is the most significant driver of hiring overall in the U.S.

It's not net new job creation. And so we have a lot of folks that are kind of hugging their jobs or frozen to them. And similarly, on the employer side, employers are less likely to make longer-term decisions such as increasing in hiring when you have a lot of uncertainty on the macro environment. So it's exactly how we would characterize it.

Okay. And then from a revenue per paid employer perspective, there's a little bit of pressure recently on that metric. What does it take from a macro perspective to get that to return to growth?

Yes. So there's no doubt that the macro weighs on that metric in particular. If you have overall hiring coming down in the U.S. as it has been over the last couple of years, that's going to show up in revenue per paid employer absolutely. But we still are very confident in that number growing steadily over time. There's a couple of things driving that.

One, there's a significant difference between the price point for those of us in the online space compared to those in the offline space. And to the extent that the market continues to shift more towards the -- into the offline world and offline gobbles up that market share, I think we'll have room to increase prices over time.

Secondly, enterprise is a very promising growth driver in our business. And right now, our enterprise revenue is roughly 25% or so of total, and we think the market is more like 50-50. So as we get more and more market share on enterprise, that will be a boon to the revenue per paid employer as well. Also, one thing we've observed consistently over time is that as employers mature with us, as their tenure extends, they tend to spend up over time.

So the paid employer growth that we've experienced in 2025, in particular, has been a little bit of a drag on our revenue per paid employer. But as that cohort matures over time, that will again move that number up. So zooming way out, revenue per employer is something that has reliably trended up and to the right. And we think the macro has certainly weighed on it over the last couple of years, but that trend will -- that long-standing trend will again revert to its normal course.

You mentioned enterprise. So I guess any new initiatives to drive more enterprise traction? And then maybe I'll throw in international too, to the extent that, that is an opportunity like...

Yes. So again, we're really encouraged by enterprise growth. So enterprise grew by 12% in Q3. And so we feel very good that we're taking market share there. And I think what we're seeing is the seeds that we've been selling over the years really starting to bear some fruit. So we've often talked about the number of ATS integrations that we've rolled out and have been improving upon over the years. And -- so that's one thing.

The second is that we've been improving the campaign automation that drives bid performance on the performance products, and that's been -- that take rate has been growing nicely. And all of that is resulting in better outcomes for employers, and that means that they're allocating more spend to us over time.

On the international front, so the vast, vast majority of our revenue is U.S.-based and international remains a growth lever for us in the future. We know the playbook on how to build marketplace liquidity. And so we can certainly do that again. Many of our employers have jobs that they're hiring for internationally as well. So that's not the issue. Really, what we see is a massive TAM here in the U.S., and we're much more focused on success within the U.S. alone, leaving international expansion for later on down the road.

Okay. That makes sense. Shifting over to margins. You're guiding for Q4 to have margins that are relatively similar to last year, but you did spend most of this year having steeper margin decline. So I guess what's causing the cadence to start improving in Q4?

Yes. So like I mentioned before, we have a lot of flexibility in our sales and marketing motion. And we make these decisions based on the data that we see. So as we were coming through Q4 '24 into Q1 '25, we saw relative strength from an employer perspective, and we wanted to lean into that. And so that's where we made the strategic decision to tolerate lower margins during that -- during the first half of 2025 and even going into Q3.

Now given the relative softness that I mentioned in Q3, the step-up in adjusted EBITDA margins is really more indicative of a typical seasonal pattern where going into Q4, like I said before, seasonally, SMBs, in particular, tend to wind down their hiring. And so we'll dial back our sales and marketing motion accordingly, and that will result in higher margins.

Okay. On that sales and marketing flexibility, how would you describe the current level of spend versus normalized, if you want to -- if there is even such a thing?

Yes. We don't make our decisions kind of on a top-down basis, but we do it on a bottoms-up basis, and I'll explain what I mean by that. So we look at our own data. We look at the returns that we're getting on a short-term basis and then extrapolate over a multiyear basis given the number of years that we've been at this. We know how our employer cohorts behave over time.

And so we're making decisions based on the returns that we're seeing in the moment. And then to the extent that, like I said before, if things materially improve, we're going to lean into that investment and margins come down. And if we see the opposite, we'll lighten up and then margins will creep up all other things equal.

So that's philosophically how we approach these types of decisions. The vast majority of our marketing spend is highly flexible because we don't contractually commit too many years out in advance, which allows us to dial things up or down as we need to.

Okay. So I guess looking into 2026, how would you frame the potential range of margins depending on what happens in the macro.

Yes. I think it would be the application of that same philosophy. I think one thing that we're very clear about is that our long-term adjusted margin profile looks like 30% margins. And so -- but the distance between the 9% for 2025 and that 30% will largely depend on the macro backdrop. So again, we're equipped and well prepared for that wide range, but the 30% is something we have increasing conviction on.

Okay. Okay. And then how do you think about the conversion of free cash flow from either EBITDA or net income? Should free cash flow improve with earnings in the coming years?

Yes. So free cash flow is not something we've guided on historically, but I wouldn't anticipate anything significantly different in terms of conversion from adjusted EBITDA to free cash flow.

Okay. And then could you talk about the -- how do you plan to deploy capital?

Yes. Yes. So our priorities haven't changed. We have -- in order of importance, we want to, one, continue to invest in our organic business. Secondly, preserve the flexibility in our balance sheet to take advantage of any opportunistic M&A that's strategic. And thirdly, would be shareholder returns, either in the form of share buybacks or debt retirement. But that's the strict order that we've always been marching against.

Okay. It seems like this year has been tilting more towards buybacks. So what's your philosophy around buying back the stock in terms of timing, amounts, things like that?

Yes. So we don't have any programmatic or systematic return of capital philosophy, but we approach it much more opportunistically. And so you're right, over 2025, in particular, we've been much more acquisitive of our own stock as we see the opportunities. But we're balancing the decision to buy back shares against the aforementioned priorities and also maintaining a flexible balance sheet so that we can -- weather -- any kind of storm or also be poised to invest in the business organically to the extent that we see an increase in opportunity.

Okay. And then debt doesn't mature for a while, so there's not much near-term urgency. But at what point would you think it's financially attractive to repurchase the public debt at a discount versus the par, I guess?

Yes. So debt retirement and shareholder returns kind of fall in that same third bucket priority, and that's a topic of discussion with our Board every single quarter. Historically, we're biased much more towards shareholder share repurchases with -- given where the market has been trading. So that seems to us to have a higher return, but that's something that we have a live discussion with every quarter with our Board.

Sure. I think there's two questions from the audience, maybe...

[indiscernible]

Sure. Yes. So the question is about just share price over time over the last couple of years with the decline, how do we approach that. I think the fact that the labor market has been in a steady decline is no secret. That's something that other players in the online space have experienced as well as those in the offline space. And so I think what we've done is manage the top line revenue pressure as well as possible and while protecting margins accordingly.

So the stock price is going to do what it's going to do. We're going to get -- we're going to stay focused on executing on the business as well as we possibly can.

[indiscernible]

Yes. So nothing right now. So we're very squarely focused on this large, large TAM that's in front of us. And so yes, it's been a hyper cycle that we've been in for quite some time right now. But I think the long-term potential hasn't changed. We're still very bullish on the U.S. economy. We think that this is a large and growing TAM.

We think that we have a lot of pent-up demand for our service, especially with the quits rate being as low as it has been. I think it's reasonable to expect a lot of churn within the currently employed, which will give rise to a lot of hiring, we're going to benefit from that.

[indiscernible]

Yes. So that's still a relatively small percent of overall job seeker traffic, but it's growing quickly. And so I think in the 140% growth that we've seen quarter-over-quarter, we're demonstrating that we're open to that for sure. And so there's changes that we can make internally within our own jobs corpus and modifications that we can make to -- make sure that we're being picked up appropriately and getting more than our fair share of that.

We'll see how the space evolves over time. I think it's still very early stages, but we're very much interested in reaching job seekers however they want to start their jobs -- job search.

There's a question in the back.

I just want to clarify [indiscernible]

Yes. So that was in reference to overall TAM in the U.S. So online recruitment, including those like us, $10 billion to $15 billion or so information is not perfect out there, but you can -- if you look at IBIS, that's what they're going to put out there with a much larger addressable market for the offline portion.

And I think one of the things that the off-line market is very good at is compelling action or engagement between both the recruiter and the candidate being recruited. And that's something that I think our technology has been very focused on to kind of stoke that engagement. I think inertia is a very real phenomenon, especially when it comes to larger employers' processes in hiring.

And so it's going to take some time, I think, for folks to kind of transition over. But things like AI really taking root in mainstream, I think, will help propel that transition from offline to online solutions like ours.

Great. I think with that, we're out of time. Please join me in thanking Tim for the presentation.

Thanks for having me.

Hello and thank you for standing by. My name is Bella and I will be your conference operator today. At this time, I would like to welcome everyone to ZipRecruiter Inc. Q3 2025 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Emilio Sartori, Head of Investor Relations. You may begin.

Thank you, operator, and good afternoon. Thank you for joining us for our earnings conference call during which we will discuss ZipRecruiter's performance for the quarter ended September 30, 2025 and our guidance for the fourth quarter 2025. 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. 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 September 30, 2025, 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. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to not as a substitute for or in isolation from GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in ZipRecruiter's shareholder letter and in our Form 10-Q.

And now I will turn the call over to Ian.

Thank you and good afternoon to everyone joining us today. Despite a persistently soft labor market, ZipRecruiter's momentum continued in Q3, which we believe is clear evidence that our strategy is working. From Q1 '25 to Q3 '25, we delivered consistent sequential revenue and quarterly paid employer growth and our Q4 '25 revenue guidance at the midpoint indicates our first year-over-year increase since Q3 of '22. This performance comes despite both hires and the quits rate in the U.S. remaining near their lowest levels since 2015.

ZipRecruiter is showing strength with enterprise employers in particular. Performance-based revenue grew 12% quarter-over-quarter, the most growth we've seen in the past 3 years. Multiple long-term product investments are now bearing fruit. We've made it easier for enterprises to start spending with ZipRecruiter thanks to our over 180 ATS integrations. We've improved the return on that spend through our programmatic campaign optimization tools. And we've greatly improved the job seeker application experience to enterprise jobs through the development and growing adoption of ZipApply.

On the job seeker side of our marketplace, we are focused on reaching people wherever they are no matter how they choose to find work. After consistently gaining market share with job seekers, we now see generative AI as a new and rapidly growing channel of job seeker traffic. In response to this emerging market reality, in Q3 we further optimized for AI-driven discovery driving a 140% sequential increase in visits from generative AI models. We credit our 2025 performance to the multiyear investments we have been making into tomorrow's hiring solutions. ZipRecruiter's strategic strengths continue to endure despite the macro.

\We remain the #1 rated job search mobile app in both app stores and the #1 rated recruiting site for employers. We maintain over 80% aided brand awareness among both the job seeker and employer sides of our marketplace. And we continue to use the billions of interactions in our marketplace to train our AI-powered matching algorithms, driving better outcomes for job seekers and employers. We believe ZipRecruiter is in a strong position to shape the future of work and lead the shift from offline to online recruiting enabling us to capture outsized market share when the market recovers.

I'll now hand the call over to Dave to share some business highlights. Dave?

Thanks, Ian, and good afternoon. We continue to focus our product and technology investments on driving better matching and engagement across our marketplace. Our strong results in Q3 demonstrate the value these investments are creating for both employers and job seekers. I'm excited to share a few highlights with you. Quarterly paid employers hit 67,000, increasing 1% sequentially and 3% year-over-year. This is our first time seeing year-over-year growth in quarterly paid employers since Q1 of 2022 demonstrating the value of our brand and product offerings despite the subdued hiring market.

Our enterprise strategy is delivering strong results. Enterprise customers who run sophisticated hiring campaigns rely on us to optimize their campaign performance by delivering high quality candidates. In Q3, we improved our automated campaign performance optimization solution to increase the efficiency of employer spend. As a result, enterprise customer adoption of this solution increased 19% quarter-over-quarter and drove stronger campaign performance, contributing to the 12% sequential increase in performance-based revenue in Q3.

This marks the largest sequential growth in performance-based revenue in over 3 years and signals that our enterprise partners are finding increasing value in our products and services. ZipIntro, an AI-powered solution that speeds up hiring by rapidly connecting employers and job seekers for face-to-face conversations, continues to build momentum. Enterprise customers are rapidly adopting the tool. In Q3, interviews and scheduled sessions for enterprise customers increased by 80% sequentially building on the sequential growth of 90% we delivered in Q2.

In Q3, we released upgrades to our next-generation resume database, including productivity tools designed to help recruiters review candidates faster, collaborate seamlessly and fill roles sooner. As a result of these enhancements, SMB employer resume unlocks increased 11% sequentially building on the 12% sequential growth in Q2. We believe that this consistent increase in employer adoption demonstrates the increasing value SMBs are finding in our resume database. Job seekers are increasingly using generative AI to search for job opportunities.

And in Q3, we optimized our marketplace to help these next-generation tools easily discover and surface employer jobs. This improvement drove a 140% sequential increase in site visits from generative AI. We believe that reaching job seekers no matter how they find work will allow us to capture market share over time. In 2024, we acquired Breakroom, a workplace rating platform purpose-built for workers in frontline industries. In August of 2025, we launched Breakroom in the U.S. and it is quickly gaining traction with employers and job seekers alike.

As of September, Breakroom has published over 10,000 employer profiles, up from 8,000 in the prior quarter. This is powered by over 1 million ratings from workers in the U.S. These ratings provide job seekers with crucial data on working conditions to make more informed and more confident decisions about their next great opportunity.

I'll now turn the call over to Tim to review our financial results and guidance. Tim?

Thank you, Dave, and good afternoon, everyone. Revenue in Q3 '25 was $115 million representing a 2% decline year-over-year and a 2% increase sequentially, exceeding the midpoint of our guidance. This sequential increase was primarily driven by the 12% quarter-over-quarter increase in performance-based revenue from our enterprise employers. Quarterly paid employers were 67,000 in Q3 '25. This is an increase of 3% year-over-year and 1% sequentially. This marks the third consecutive quarter of sequential quarterly paid employer growth and importantly, our first year-over-year increase in quarterly paid employers since Q1 2022.

Our continuing momentum with employers of all sizes is a strong indicator of our brand's resilience despite the macroeconomic volatility. Revenue per paid employer for Q3 '25 was $1,717, down 4% year-over-year, but up 1% sequentially driven mainly by the growth in performance-based revenue from enterprise employers. Performance-based revenue made up 24% of our total revenue in Q3 '25, up from 22% in the prior quarter. Our net loss in Q3 '25 was $9.8 million. Adjusted EBITDA in Q3 '25 was $9.2 million resulting in an adjusted EBITDA margin of 8%. This is flat compared to the 8% margin in Q2 2025 with higher revenue offset by higher expenses.

As of September 30, 2025, our cash, cash equivalents and marketable securities totaled $411 million. During Q3 '25, we repurchased 2.2 million shares for a total of $10 million. Looking ahead to our guidance for Q4 '25, we anticipate revenue to be between $109 million and $115 million. The midpoint of $112 million represents a 1% increase year-over-year, a return to year-over-year revenue growth for the first time since Q3 2022. The 3% sequential decline in revenue follows typical seasonality despite a subdued macroeconomic environment.

Our guidance assumes a continuation of the same stable, but subdued hiring environment observed in Q3 along with normal seasonal slowness during the holiday periods. Our adjusted EBITDA guidance midpoint of $14 million implies a full year 2025 adjusted EBITDA margin of 9%. This exceeds the mid-single-digit scenario we outlined earlier in the year. We continue to believe in disciplined capital deployment and sustained investment in high ROI product and marketing opportunities.

Despite the ongoing macroeconomic challenges, we've maintained adjusted EBITDA profitability while investing in our product and technology, which we believe sets us up to achieve our long-term goal of 30% adjusted EBITDA margins. We are successfully navigating this period, stabilizing revenue this year in a subdued macro environment while leaning into strategic long-term investments that we believe will drive future growth.

With that, we can now open the line up for questions. Operator?

[Operator Instructions] Your first question comes from the line of Justin Patterson with KeyBanc.

This is Sergio Segura on for Justin. Just the market reception for products like automated campaign optimization and ZipIntro seem to be strong. So just wondering how should we think about product innovation influencing growth against a still weak macro?

This is Ian. Thank you for your question. I think what you can see is there is clear evidence that our product strategy is working and that in spite of the macro, we have been able to grow both revenue and utilization of our product by both sides of the marketplace. And I think the only explanation for why that strategy is working is because we are taking market share. We are growing because our solutions are being embraced by the market. We have picked the right lanes in which to focus.

And in particular, as it relates to enterprise, we've been having tremendous success, which has been a labor of many years to put all the pieces in place as we discussed in the initial comments at the beginning of this call where it took a lot of work to get the 180 ATS integrations done, but that means that large buyers can more easily activate and start buying from ZipRecruiter. It took a lot of work to both deploy and optimize an automated campaign optimization tool and yet that's becoming a fundamental part of the value that these enterprise customers get from us because they get substantially better results when they use that tool, which is why you saw adoption of it grow by 19% in the past quarter.

I think when you look at our marketplace as a whole, for a long time we've talked about the split between SMB revenue and enterprise revenue, and what you're starting to see is the balance that we have predicted for a long time start to play out. As the innovations and optimizations to our product have been deployed, we're seeing the market respond positively to that. And even in this time of what we'll call like a subdued labor market, we are finding momentum.

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

I was wondering if you could share a little bit about sort of your macro view. It doesn't sound like that from your perspective much has changed from a macro perspective, but curious what you saw kind of cadence through the quarter and how that informs kind of the guidance for Q4 from a macro perspective.

Well, I think as we talked about coming into 2025, post election there seemed to be a really significant spike in optimism from businesses of all sizes in regards to their hiring plans. And then as we've gotten into 2025 for a variety of reasons, I think the overall picture is one of more of a continued modest decline in hiring is what we have observed. There have been brief periods of stability, but the overall bend has still been one of modest decline. The projections that we gave you are based on an expectation of a continuation of the market that we are in. We will continue to observe what is happening in the labor market as we give you future projections. But as far as our Q4 goes, our assumptions are fundamentally that the market continues on its current relative trend.

Great. And I guess from a margin perspective, what's enabling the Q4 margin strength versus sort of the mid-single-digit characterization from earlier in the year? And then obviously as we kind of return to growth, will there need to be another investment phase or are we kind of off to these relatively higher margin levels compared to the recent past?

Yes. This is Tim. Thanks for the question, Josh. So as far as margins go, what you see in Q4 is reflective of I think more of a typical seasonal pattern in our marketing investment. When we make these investments, we're doing so opportunistically based on the returns that we're seeing. And so over the course of Q4, typically we see a slight downturn in terms of hiring overall especially surrounding the holidays and oftentimes our marketing investments reflect that. Overall though we're still leaning into opportunities for high ROI opportunities as we see them, but that's generally going to result in a higher adjusted EBITDA margin in periods like Q4.

Your next question comes from the line of Trevor Young with Barclays.

Great. On the 12% sequential growth in the performance-based revs on the enterprise side, was there something that kind of changed this quarter that all of a sudden made it click? I know we've been talking for a lot of quarters and frankly, a number of years on the continual changes to the product, all the ATS system integrations, taking out the campaign optimization tools and so forth. But it just seems like that was really a strong pickup. Just wondering if there's any nuance there as to why this quarter it was particularly strong.

Trevor, this is Dave. It was really strong this quarter. I think it is the cumulative effect of a bunch of things we've been up to for a long time, but I would highlight 2. One, as we've talked about before, continuing to take market share and continuing to have the highest rated job seeker apps in the app stores of both Google and Apple. Fundamentally, enterprises want job seekers and increasingly, it's clear to them not only that job seekers are choosing ZipRecruiter, but why they're choosing ZipRecruiter. And so that is incredibly powerful for our enterprise customers and our continued momentum there.

And then secondly, the campaign performance tool that we've mentioned a couple of times already. Fundamentally, it takes less work now to get better results with our latest generation tool where you, as a customer, say what your goals are and the magic of our technology empowered by AI and a bunch of other underlying tech makes it increasingly likely that you're going to have your goals not just met but exceeded. And so that is fundamentally the 2 underlying things. We've been executing well against that and enterprises don't move on a dime. It takes several quarters of great execution for that to come to fruition and we feel really good about where we're at.

That's really helpful. And to that point that enterprises are maybe slow to move, but maybe once there's that inertia there, should we then assume that that performance-based revenue should be stronger sooner than the recovery on the subscription side of things? Is that a fair way of thinking about it for 4Q and then beyond?

I definitely think in Q3 we were taking share rather than riding an overall market trend and we feel very good about the indicators we see in terms of what the long-term potential is there. So I'm feeling good about it. And I think when I talk to customers all the time, it increases my confidence that we're doing all the right things to serve the high end of the market.

Your last question comes from the line of Kishan Patel with Raymond James.

This is Kishan on for Josh Beck. What is driving quarterly paid employer trends, which returned to growth this quarter? And are growth trends different across new employers on Zip versus reactivations?

Kishan, thanks for the question. This is Tim. The trends have been consistent all year long so showing quarterly paid employer growth sequentially in Q1, Q2 and now in Q3. And I think all of this is reflective of our forward-looking stance on customer acquisition and engagement. The strength that we're seeing is coming from both of those categories that you mentioned. So we are seeing a return of new paid -- an increase in new paid employers and a return of former employers that were at our marketplace before that are looking to reengage in hiring. So those 2 vectors have been driving the paid employer growth number throughout the course of the year.

And I would just add, this is Ian, that the level of engagement on our platform is achieving new heights and there's a combination of product improvements that have led to this. But on a year-over-year basis, 24% more of the SMBs that use our service for recruiting are getting 5-plus candidates within the first 24 hours and that is a direct testament to the algorithmic matching that we're doing, which is identifying messaging and inducing those candidates to apply. So I think just fundamentally, the service is getting better.

Got it. If I can ask a follow-up. You mentioned site visits from GenAI search engines are up 140% year-over-year. Can you share any surprises on conversion quality or downstream revenue from that uptick versus traditional traffic?

This is Ian again. Yes, I would say we're all watching generative AI very closely as a new source of job seeker traffic and a new pattern of job seeker behavior. It is still emergent. It is rapidly changing. The quality of traffic from that is on par with the quality of traffic we're seeing from other sources. I think it is definitely poised for continued growth and it's something we're putting a lot of attention on to. And we are quarter-by-quarter optimizing our site and the experience that we provide both to job seekers and to those engines to increase the probability that we are the answer that one of those engines get or that a job seeker that comes from one of those engines has a strong experience on ZipRecruiter.

This is Dave. The other thing I would add to that is that in addition to doing all the work to make ourselves visible, structure our data, et cetera so that generative AI becomes a powerful new growth channel for us with job seekers, that's the handoff to then create the great experience once they get there. So we talked about ZipIntro obviously earlier, but that's a pattern of job seeker behavior where they start out in generative AI having that conversation about where to look for a job and then end up on ZipRecruiter where they're quickly then talking to a real employer about a real job opportunity. And we see explosive growth in both the front end with generative AI and then in the subsequent conversation with a hiring manager and that's a powerful combination.

That concludes our Q&A session. Ladies and gentlemen, thank you all for joining and you may now disconnect. Everyone, have a great day.

All right. So we're going to keep the train moving down the tracks. We're going to go into our next fireside chat with the team from ZipRecruiter. We've got Ian Siegel, CEO; Tim Yarbrough, CFO. Ian, Tim, thanks so much for being part of the conference.

Thanks for having us.

Always a pleasure.

It's always a pleasure to talk to you guys. I always enjoy it. So I know this is going backwards when we go forward probably is not one of your favorite things, but let's talk about setting the stage for those who are either listening or in the audience who don't know the story as well. Can you talk a little bit about the journey you've been on in terms of building ZipRecruiter, what you're trying to accomplish, where we're going. Just set the stage for us a little bit before we get into all the nitty-gritty.

So my name is Ian. I am the CEO. I'm the founder of the company. I've been at this company for 15 years now. ZipRecruiter started with a very straightforward premise. It was designed to be a magic button you could push and you could send a job to all the jobs and all the social networks and all the aggregators across the Internet, effectively turning the Internet into one giant job board and then all the candidates from all those sources would come into one easy-to-review list. That was the original idea. It worked fantastically well.

And then it worked a little too well because it turns out that when you keep delivering more and more volume, what people really want at that point is quality after 100-plus applicants fatigue sets in and what employers are asking you to deliver is 5 great candidates that are ready to interview. We shifted our focus at that point from delivering more volume to using techniques like machine learning and deep learning and meta learning to drive quality applicants to employers. We have now entered a third era where we're delivering high-quality matches at rapid speed to employers who post jobs. But it's not enough to get them there. What's important is that we get a human talking to a human. And so now our focus is on engagement. What can we do to make sure that the 2 sides actually meet and find the time to speak and hopefully like each other so that a hire can actually happen.

That does set the table. Okay. Against that backdrop, why don't you talk a little bit about the competitive landscape that you find yourself in, in terms of the talent acquisition market and what you see as some of the key competitors that are trying to build around what you're trying to accomplish?

The recruiting category is interesting because it is heavily supported by online tools and yet the preponderance of the category's TAM exists in offline players. There's over $300 billion a year that is spent every year on online recruiting just in the U.S. alone. As I said, the majority of that is off-line. However, amongst the online players, there has been a wave of innovation, and it's everything that I just talked about. It's the ability to rapidly deliver high-quality applicants to employers and increasingly to do so with precision and providing tools that will enable those employers to engage with those candidates quickly.

When we look at the landscape, there are former blue-chip titans like Monster and CareerBuilder, which everybody is familiar with, which have waned significantly. There's a new big 3, which is LinkedIn, Indeed and ZipRecruiter. The 3 of us are vying for what is the hiring market as it exists today. It is a complex time in the labor market and has been for the last 3 years. And I think the reality of where we stand is what it takes to be a player goes well beyond technology and has moved into the necessity of building really strong brand to go along with that technology. And so I think what we're going to see is those 3 names playing a significant role on a go-forward basis.

Against that landscape of those 3 names, you being one of them, talk a little bit about how you see some of the differentiating factors playing out that you're leaning into on the investment side.

Sure. So if you look at the landscape of online, you have LinkedIn, which is a social network that's predominantly the place where the currently employed white-collar professionals with multiple years of experience hang out and try to find each other. They do not play as much in the active job-seeking space. That space is very much competed for by Indeed and ZipRecruiter. And when you look at the 2 of us, if you looked at the strategies that we are pursuing, I think the fairest way to say this is Indeed is a very large online job board, ZipRecruiter is attempting to be a matchmaker.

Our goal is to provide technology to employers that enable them to effectively go first to find job seekers they're interested, proactively reach out to those job seekers and drive engagement with them very quickly. We have a variety of tools that enable us to do this. This is things like our new resume database, which has that sort of messaging capability built directly into it and also the new product that we launched called ZipIntro, which you can just think of as speed dating for hiring where an employer says, here's a job I need to fill and our algorithmic matching goes and finds highly qualified candidates and brings them to them within 24 hours to have very fast fit checks over video so that these employers can hopefully find someone they're interested in and move on to a hire.

Maybe just sticking with this theme over the history of the company, you've built really interesting things internally. You've also acquired interesting things along the way. How do you think about against this theme of differentiation, sort of speeding up time to market and creating advantage relative to peers and what you can build versus what you can acquire. And I know we'll come back to a capital allocation question maybe later, but just sticking around the technology theme at large.

Yes, it's a great question. And I think it goes back to what I was saying when we were talking about the competitive landscape, which is if everyone in this room tried to come up with the name of 5 job boards in their head right now, many of you would struggle with a fifth. And there's over 10,000 job sites, but not many of them are well known, particularly during a downturn like the labor market has experienced over the last 3 years, being the answer to the question, where should I go to hire someone or where should I go to find work is an enormous inherent advantage and should probably be considered table stakes for anyone who is seriously trying to compete in the recruiting category. On top of that, what has come to define the category over the last few years is the ability to use modern algorithmic techniques to leverage the wisdom of the crowd when it comes to matching as opposed to traditional Boolean heuristics.

So instead of just saying the job title is marketing analyst and this person has marketing analyst on their resume, we should put them together. Instead, what the system can do is look for patterns in the data and say, employers who are hiring for this job title like candidates on the spectrum who have these characteristics, and it's not required that it be an explicit direct match keyword to keyword in order for that to happen. We've leaned in heavily there. We have all of the brand recognition. We have 80% plus brand recognition on both the employer and job seeker side. We have the required volume of data after 15 years being in business, literally billions of interactions between job seekers and employers to actually utilize these algorithmic matching techniques to find that wisdom from the crowd and apply it to who we introduce to whom.

And now we're really taking advantage of the newest form of AI, which is these large language models to really try and stoke more engagement faster once we have put these 2 parties together, and that's happening in everything from our resume database to our novel product, ZipIntro, which is again speed dating for hiring to the acquisition that we just made, which was Breakroom, which is the place where job seekers predominantly in frontline worker roles can find highly structured information about the employers that they are potentially going to apply to, and this is not Glassdoor. This is not reviews of said employers. This is very concrete and specific information that is pertinent to whether or not you want to work there. It's things like how many hours a day do I have to be on my feet? How much do I have to interact with the public? What is the pay schedule and its frequency? How many breaks do you get? These are relevant questions for 60% of the labor market.

Okay. Just building upon this theme and talking a little bit about AI, which you've sprinkled in some of your answers so far. And you guys were talking about AI before it was actually cool to talk about AI. We were talking about a number of years ago on earnings calls and during IPO processes. But talk a little bit about the impact of those AI investments against some of the scaled product initiatives you have today and how you're thinking about the availability of AI on the foundational level that's available to you to continue to sort of partner and scale projects you have for the long term.

Well, certainly, we've been playing with what was traditionally called AI, which is the algorithmic matching approaches and techniques for almost 10 years. And I still remember when we launched the first set algorithms because we were putting it heads up in an A/B test against 8 years of optimization -- 6 years, I guess, of optimization against Boolean techniques. So it was a hyperoptimized Boolean technique against this novel new technology. And it beat it by so much, it was sufficiently advanced, it felt like magic. It just absolutely transformed what was possible and what expectation we should have for matching inside of our category.

And that's amazing. That's an incredible evolutionary leap forward that AI made possible. But the truth is this, it doesn't matter if you get the right job seeker to apply to the right job, if the employer takes 2 weeks to then reach out to said job seeker and engage them. And it doesn't matter if you get the employer to engage rapidly with said job seeker who has just applied if the job seeker then takes 3 days to respond to that employer. So the next frontier, the major evolution that is theoretically possible leveraging AI techniques is using AI to stoke rapid engagement between the 2 sides. And that experience of actually driving outcomes is where we are highly focused at ZipRecruiter.

So the driving engagement and outcomes that would be externally faced, one of the recurring questions or themes that have come up as I've had conversations this week is how AI might also be developed and deployed internally into organizations. Any thoughts there about what some of the key initiatives you're working on and any key learnings so far and what it might do for your operating efficiency as a company separate from the impact it can have on your platform and with your users?

AI is a really -- particularly large language models have proven to be like a really interesting opportunity to improve efficiency within our business, and it's already permeating multiple parts of our business. It hasn't so far led to us replacing people inside of our business interestingly enough. But -- so in particular, the most obvious utilization of AI has been as a copilot to engineers who are producing code. Their ability to produce high-quality code that is unit tests that come along with it, which is for everyone here who may not be familiar, that's just the QA instructions that come with it is unparalleled. It is a dramatic improvement in the efficiency with which we can produce new things. That's amazing.

Any repetitive task, particularly one where a human is required to check something to make sure it's still good or still working is something that we've been examining utilizing AI for in lieu of requiring a human to go do the manual monitoring of it. But I would say that it is very clear. It will be a significant efficiency boost to our overall organization across multiple departments. Will it ultimately replace a bunch of people in our organization? Of that, I would say the jury is still out, and I remain dubious because for us, at least, who has so many relationships with tens of thousands of employers, having that human-to-human interaction and connection is pivotal to both delivering the product they expect and making them satisfied with our service.

Okay. Turning to the employer side of what you built and the platform. Obviously, there's a lot of different types of employers. When you think about the business model you're moving to over the longer term, characterize for us the journey for SMBs versus enterprises and what that might mean for either a transaction-based monetization versus subscription-based monetization over the longer term?

So the labor market in the United States effectively is split between SMBs and large enterprises. ZipRecruiter started on the SMB side of the equation and is now moving upmarket into enterprise. The split of our revenue is currently 80% SMB effectively and 20% enterprise. But we have been laying the groundwork for years to move upmarket in a substantial way into enterprise. And over time, we expect the mix of our revenue to shift to 50-50, which would be reflective of how the U.S. economy actually works. For SMBs, we have offered a subscription product, which you can either purchase on a per day basis or on a per month basis. For enterprises, we have offered a pay-per-click business that works very much like Google AdWords does. We are indifferent to the business model that a customer should potentially use.

What we like is giving them the options to buy the way they want to buy. Enterprise is going to be an important part of our long-term strategy here, and it has been a major investment for us. It has been a significant challenge to sell into enterprise because these are companies that use third-party applicant tracking systems like Workday and/or Taleo as their canonical source from which they do all of their recruiting and vetting of candidates. So you must integrate with all of these companies. We've done 180 of these integrations so far. And then many of these enterprises, the vast majority are now buying from agencies, which are third parties they give their budgets to who then distribute those budgets between the variety of vendors who will potentially be interesting as sources for recruitment of candidates. All of that work has been underway for years, and we have made tremendous progress in it. And so I remain confident in our ability to hit that 50-50 split over time.

Maybe just one follow-up there, and you did touch upon it a little bit. Just frame again sort of the elements of the enterprise big opportunity. What are the friction points or challenges that you most struggle with? Is it the onboarding process? Is it the education process, breaking old norms? It seems like it's some mixture of all of those. I just want to put a finer point on that.

The challenge with enterprise is it requires substantial technology integration with third-party vendors that the enterprises have chosen to use to even begin effectively selling into and delivering to them as customers. And then on top of that, the means by which they buy is not direct, but through an agent that they assign in many cases to distribute their budget. And so what you're fighting for is wallet share of their available budget from a third party after you have completed these technology integrations. I consider that a significant moat around would be competitors who want to enter the space and compete for enterprise dollars. And it's a reflection of the fact that it's already 20% of our revenue, how much we have been penetrating into that market, and I would expect that trend to continue.

Okay. Very clear. Tim, let's bring you into the conversation. During the last earnings call, you painted a narrative around where the environment sits today relative to 2015, but you also expressed some optimism in terms of starting to see maybe some elements of an improved environment out there clearly didn't want anyone to get too excited about it because you're like -- we've been on quite a journey, as Ian talked about over the last couple of years. But how are you navigating the current macro environment from an uncertainty standpoint? And as a team, what are you watching for to see more sustained signs of improvement in the labor market?

That's a great question. Yes. And I think to put 2025 into its proper context, again, you got to go back through the cycle that we've been in right now. So soon after COVID, obviously, top level numbers in hiring dropped off significantly. But then what we saw is that very quickly thereafter, hiring started picking up in the U.S. And what followed was a white hot hiring market through the middle of 2022. Around then, we -- that started a roughly 30-month decline in hiring across the U.S. This is validated by the Bureau of Labor Statistics, but of course, validated in our own information as well.

And as we came into 2025, we noticed something different. Throughout December and into January, we're paying close attention because it's an interesting seasonal period of time through the holidays that the number of reactivations from employers coming back into the marketplace as well as new employers engaging in our marketplace was a lot stronger than what we had seen in the past couple of years. And so when we got on the call in Q1, we presented some good results and talked about sequential growth in quarterly paid employers, which is a count of unique employers in our marketplace being up 10%. That's in stark contrast to the declines that we saw in the previous years. And so overall, it looked like we were seeing much more stability than we had seen in the prior couple of years.

And over the course of Q2, we saw that continue as well with paid employers being up sequentially, again, another 4%. So when we talk about 2025, given the relative stability that we're seeing right now, we think that being in a year-over-year growth position in Q4 is an increasingly likely scenario given the circumstances that we're seeing on the ground right now. The things that we're paying attention to most is really our own data. We're guided by the paid employer activity, the hiring activity that we see in our marketplace and make our decisions and plan accordingly. But we retain a tremendous amount of flexibility to be able to navigate any ups or downs in the marketplace that we see on a macro level. But given everything we're seeing right now, we're feeling good about that year-over-year growth position in Q4.

Okay. And just to clarify, you -- just so I have it right, you said modest year-on-year growth in Q4. That was the language you used on the last earning call, right?

That's correct. That's correct.

Okay. I just want to put a proper framing around that. Against that dynamic, Ian, maybe I could just get you to weigh in before turning back to Tim. When you think about that landscape you find yourself in and even beyond Q4, what are you watching for? What are you continuing to monitor for that slope to be either steeper or less steep in terms of a recovery dynamic? What could accelerate or decelerate the time line to a better set of outcomes on the top line of the business?

What we have just witnessed was an unprecedented downturn in the labor market that lasted for 32 months straight. For 32 months in a row, there was less hiring each month than the previous month. To put that in context for you guys, if you go back to the 2008 financial crisis, that downturn in hiring lasted 22 months, and everybody thought it was the worst that we had seen in our lifetime. So -- this is rare. This is particularly bad news if you're a recruiting business than the recruiting category. However, finally, for the last 2 quarters, we have started to see stabilization where the decline has leveled off, and that has led to a foundation from which many things have been revealed about both our business and the category overall.

It's not entirely macro. We did not sit idle for the last 2.5 years. Many, many improvements were introduced to our business. So I'd say there's a split of impact between the things that we are in control of and have been doing to improve the efficiency and the return that we're getting from customers in our business and then also a softening of the downturn in the labor market, not a recovery, a softening. And so when I look at the labor market to answer your bigger question, which is like what are we looking for? The #1 thing we're looking for is stability. We talk to thousands of businesses every month.

And what they're saying, the word we hear the most is uncertainty, uncertainty about the future, uncertainty about interest rates, uncertainty about the impact of tariffs. And so if we can get to a place where we are seeing stability again, that will potentially lead to businesses hiring and has in all cases in the past. And then the other thing is the headlines are scary. And what's true is that the currently employed are scared. And so the quits rate over that same 32-month period has also been declining. And the #1 thing that drives hiring in America is when an employee leaves their current company for a different job, and they are necessary to backfill by the company that they left. And that is happening at ever diminishing frequency in the United States. And so what we're really looking at is for the quits rate to go up and a period of overall stability to be reintroduced.

Yes. And it's interesting just to editorialize from my side for a minute. You guys have talked about this macro backdrop pretty consistently, but there's been a lot more volatility in some of the public stats. But then you wake up this morning and you get a reduction in the backward-looking stats that -- I guess what you talked about 4 quarters ago, look a little bit more what the dynamic was versus what the reported stats were against the way you were framing it a couple of quarters back.

I just want to characterize. I just want to be very clear. There's 3 stats you can look at. There is the jobs report, which is what you see on all the news channels. The jobs report is in, 75,000 new jobs created. That is the number of new jobs the economy either added or lost in a quarter, it is a de minimis percentage of overall hiring in America. Every month, roughly 5 million people are hired in this country. And so it's the hires number that really drives our business as is the quits number, which is also measured in millions. So like -- but the new jobs is a great example of where like data can be difficult to trust that you are seeing. Fortunately, all of the news about the recount and the adjustments, that was long ago baked into our business and has had a very small impact.

Yes. Understood. Tim, bringing it back to you. What we've talked about a lot across both of you, but Ian has been the main drive here has been growth investments. When you have to bring it back to the P&L and think about the balance between funding all the investments you want to make over the medium to long term, delivering to rooms like this to investors who want margin. How do you think about striking the right balance there?

Well, we have a couple of pillars of our investment strategy. One is our product. We're a product-led organization. Ian is a product guy in his DNA. And he talked already about a lot of our investments there along our job seeker experience. And because of all those investments, we have the #1 rated app in both app stores. And that's also showing a lot of fruit in growing our job seeker traffic over time. Over the last couple of years, we've been outpacing our competition in terms of job seeker traffic overall. So that's one of the big pillars of our investment that's showing a lot of fruit right now.

Even along our employers, resume database was redeployed over the last year, and that's bearing a lot of fruit as well. ZipIntro was a new product that Ian talked about as well. So our product investments are first and foremost and bearing fruit. Secondly, we have a strong go-to-market motion that we've been leaning into, especially over the last couple of quarters. So I mentioned this at the top of the discussion, but we retain a tremendous amount of flexibility in how we market to our end markets. So we strategically do not commit large amounts of marketing media to future periods. That gives us a lot of flexibility to manage our spend up and down. But between product and our go-to-market motion, that's what we want to continue to focus on.

Maybe this is a question for both of you, whoever wants to take it, but it's sort of a follow-up. And I've asked you guys this question on earnings calls, and I always find it interesting the way you frame it. You guys have remained a product-led company. You've continued to invest through the headwinds that you've articulated over the last almost 3 years. What does this company look like in a stable growing labor market scaling on top of the investments you've already made that can improve and reduce friction in the way hiring happens at a better run rate than we see today?

Yes. I think over the long term, we're confident in a 30% adjusted EBITDA margin business. And right now, in 2025, we've been delivering roughly mid-single-digit adjusted EBITDA margins. And that's because we're leaning into the relative stability that we've seen so far, not pulling back on the organic investments that we're making I just talked about. So the path from the 5% or mid-single digits to the 30% will vary based on how the economy improves or erodes overall over the course of cycles. But over time, we're going to continue to get scale over the marketing dollars that we're deploying as revenue continues to grow. So that's, I think, the rough size and shape of the trajectory from here there.

And I just want to add to that. If you look at our history, we spent our first 4.5 years as a bootstrapping business, got to north of $50 million in revenue with millions of free cash flow before we ever took $1 in. And then subsequent to that, we ran as a profitable entity for many years and all the years that we've been public and have demonstrated significant much higher adjusted EBITDA margins than we're currently delivering. And I like to think of what we do as running a sensible operating practice and like we consider the margin of our business part of the health of our business. And I think those 30% margins he quoted are absolutely attainable and a portion of that is going to be that shift mix from 80-20 to 50-50 between SMB and enterprise. And I think that the road map in front of us is well set for that kind of a strategy.

Okay. Understood. Tim, if I can ask you to bring us home, I always do like to ask about capital allocation. Your current priorities might shift those priorities. We've talked a little bit during this discussion about growth investments, maybe doing some tactical and strategic M&A. Level set the paradigm today for capital being deployed by the company and what might alter that in the years ahead?

Absolutely. So we're very fortunate to be in a very strong capital position with a strong balance sheet. So our order of priority has not changed since we've gone out in the public markets. And that's, first and foremost, investing in all of the initiatives that Ian and I have been talking about today. Organic investment is by far and away the thing we're leaning into the most. Secondly, we're interested in corp dev opportunities, looking at M&A. We talked about Breakroom, which is our last -- our most recent acquisition.

We're constantly looking at other opportunities as well to invest in. And then lastly would be looking into shareholder returns or returns of capital to either on the equity or debt side. So over the course of our history, we've been much more acquisitive on the equity side. And that's because we're opportunistic as we're approaching these decisions every quarter when we see a good opportunity for return on investment, and we see that in our own shares, we'll do -- we'll make that investment, taking into account the other priorities that we have that stack above that.

Okay. Maybe last one because we've got a few minutes, and I'll try to squeeze one in for you, Ian. If we're sitting here, hopefully, we are, we're having this conversation a year from now, talk to me about what the 2 or 3 things that you're most focused on executing over the next 12 months that we'll be reflecting on and discussing as backward-looking rather than forward-looking in a year's time?

I think the thing that made me most excited this year was the 10% quarter-over-quarter growth in new employers that we experienced Q1 over Q4. That compared to only 2% the prior year and a negative relationship between Q1 and Q4 the year prior. And why is that happening? It's happening because of product improvements. It's happening because people are getting results on our site.

And so I think we understand why they're getting results, and we're leveraging both the algorithm matching approach as well as the new opportunities presented by LLMs to enhance the things they like about our product, and that is manifesting itself in the proactive sourcing options they have in our resume database, that new product that Tim talked about, and it's manifesting in ZipIntro, which is very strong at finding the right candidates who are qualified and ready to talk to employers so that engagement can happen very quickly within a day of a job being posted.

And I think what we'll be talking about is not vanity metrics like the number of visitors, the number of applies, but rather about the level of engagement that we're generating through our site. And then the other big category is enterprise. I mean we have built a fantastic recruiting solution. It works for companies of all sizes. It's just merely getting it into the right shape and form so that these companies can take advantage of it. It has been a -- there are a lot of steps in order to effectively be a partner to these companies, and we are through the majority of those steps and building relationships at a rapid clip. So...

Okay. Why don't we leave it there? Please join me in thanking the team from ZipRecruiter being part of the conference.