ZipRecruiter(ZIP) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information This section details ZipRecruiter, Inc.'s Form 10-Q filing, including its classification, registered securities, and outstanding common stock - ZipRecruiter, Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] - The registrant is a large accelerated filer and is not a shell company[4][5] - As of August 4, 2025, 74,088,830 shares of Class A common stock and 13,029,486 shares of Class B common stock were outstanding[5] Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |---|---|---| | Class A common stock, $0.00001 par value per share | ZIP | New York Stock Exchange | Note Regarding Forward-Looking Statements This section clarifies that the report contains forward-looking statements subject to risks and uncertainties, with no obligation for future updates - The Quarterly Report on Form 10-Q contains forward-looking statements regarding future operating results, financial position, business strategy, market growth, and objectives[9] - These statements are based on current expectations and projections but are subject to numerous risks, uncertainties, and assumptions, including those detailed in the 'Risk Factors' section, which could cause actual results to differ materially[11][12] - The company undertakes no obligation to update these forward-looking statements after the filing date, except as required by law[13] Summary of Risk Factors This section summarizes key risks including economic fluctuations, intense competition, reliance on employer subscriptions, talent retention, and stock market volatility - The business is significantly affected by fluctuations in general economic conditions, with potential for delayed, short-lived, or uneven economic recovery impacting demand for services[16] - Intense competition could lead to market share loss, adversely affecting business, operating results, and financial condition[16] - Future success depends on employers purchasing and renewing or upgrading subscriptions and performance-based services; any decline could harm future operating results[16] - The company's success relies heavily on its ability to attract and retain talented employees, including senior management and key personnel[16] - Market volatility may affect the value of Class A common stock and could subject the company to litigation[17] Part I - Financial Information This part presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures - Part I includes the unaudited condensed consolidated financial statements for the periods ended June 30, 2025 and 2024[18] - It also covers Management's Discussion and Analysis of Financial Condition and Results of Operations, Quantitative and Qualitative Disclosures About Market Risk, and Controls and Procedures[6] Item 1. Unaudited Condensed Consolidated Financial Statements This section presents ZipRecruiter, Inc.'s unaudited condensed consolidated financial statements, encompassing balance sheets, statements of operations, comprehensive income, equity changes, and cash flows, along with explanatory notes on accounting policies and financial instruments Condensed Consolidated Balance Sheets This section presents the company's financial position, highlighting changes in assets, liabilities, and stockholders' equity between December 2024 and June 2025 - Total assets decreased from $664.1 million at December 31, 2024, to $592.4 million at June 30, 2025[19] - Total stockholders' equity shifted from a positive $13.4 million at December 31, 2024, to a deficit of $(65.9) million at June 30, 2025[19] Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | |---|---|---| | Assets | | | | Cash and cash equivalents | $203,456 | $218,432 | | Marketable securities | $217,711 | $287,449 | | Total current assets | $459,679 | $543,673 | | Total assets | $592,398 | $664,060 | | Liabilities and Stockholders' Equity (Deficit) | | | | Total current liabilities | $83,746 | $81,594 | | Long-term borrowings, net | $544,207 | $543,649 | | Total liabilities | $658,266 | $650,630 | | Total stockholders' equity (deficit) | $(65,868) | $13,430 | | Total liabilities and stockholders' equity (deficit) | $592,398 | $664,060 | Condensed Consolidated Statements of Operations This section details the company's financial performance, showing revenue, gross profit, and net income (loss) for the three and six months ended June 30, 2025 and 2024 - Revenue decreased by 9% for the three months ended June 30, 2025, and by 10% for the six months ended June 30, 2025, compared to the prior year periods[21] - The company reported a net loss of $(9.5) million for Q2 2025 and $(22.3) million for H1 2025, compared to net income of $7.0 million and $0.5 million in the respective prior year periods[21] Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Revenue | $112,232 | $123,658 | $222,297 | $245,897 | | Gross profit | $100,269 | $110,715 | $198,679 | $219,633 | | Income (loss) from operations | $(6,662) | $9,423 | $(18,331) | $8,517 | | Net income (loss) | $(9,506) | $7,014 | $(22,337) | $509 | | Net income (loss) per share (Basic) | $(0.10) | $0.07 | $(0.24) | $0.01 | | Net income (loss) per share (Diluted) | $(0.10) | $0.07 | $(0.24) | $0.00 | Condensed Consolidated Statements of Comprehensive Income (Loss) This section presents the company's comprehensive income (loss), including net income (loss) and other comprehensive income (loss), for the three and six months ended June 30, 2025 and 2024 - Total comprehensive income (loss) for the three months ended June 30, 2025, was $(9.5) million, a decrease from $7.0 million in the prior-year period[22] - For the six months ended June 30, 2025, total comprehensive loss was $(22.4) million, compared to comprehensive income of $0.4 million in the prior-year period[22] Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net income (loss) | $(9,506) | $7,014 | $(22,337) | $509 | | Other comprehensive income (loss), net of tax | $25 | $16 | $(47) | $(64) | | Total comprehensive income (loss) | $(9,481) | $7,030 | $(22,384) | $445 | Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) This section outlines changes in stockholders' equity (deficit), reflecting the impact of net loss, stock repurchases, and stock-based compensation for the periods presented - Total stockholders' equity (deficit) decreased from $13.4 million at December 31, 2024, to a deficit of $(65.9) million at June 30, 2025[24] - Repurchase and retirement of common stock amounted to $(27.5) million for the three months ended March 31, 2025, and $(32.6) million for the three months ended June 30, 2025[24] - Stock-based compensation contributed $14.8 million and $13.0 million to additional paid-in capital for the two quarters of 2025, respectively[24] Condensed Consolidated Statements of Cash Flows This section presents the company's cash flow activities, detailing changes in operating, investing, and financing cash flows for the six months ended June 30, 2025 and 2024 - Net cash provided by operating activities significantly decreased from $23.9 million in H1 2024 to $0.6 million in H1 2025[29] - Net cash provided by investing activities shifted from a use of $(15.4) million in H1 2024 to a provision of $68.5 million in H1 2025, primarily due to marketable securities activities[29] - Net cash used in financing activities increased from $(19.9) million in H1 2024 to $(84.1) million in H1 2025, driven by higher common stock repurchases[29] Condensed Consolidated Statements of Cash Flows (in thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---| | Net cash provided by operating activities | $634 | $23,897 | | Net cash provided by (used in) investing activities | $68,491 | $(15,361) | | Net cash used in financing activities | $(84,101) | $(19,891) | | Net decrease in cash and cash equivalents | $(14,976) | $(11,355) | | Cash and cash equivalents, End of period | $203,456 | $271,688 | Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering the company's organization, accounting policies, net income per share, recent acquisition, revenue recognition, financial instruments, accrued expenses, debt, commitments, share repurchase program, stock-based compensation, income taxes, and subsequent events 1. Organization and Description of Business This note describes ZipRecruiter, Inc.'s incorporation, business model as a two-sided marketplace, and its wholly owned subsidiaries - ZipRecruiter, Inc. was incorporated in Delaware on June 29, 2010, operating as a two-sided marketplace connecting employers and job seekers[32] - The Company includes its wholly owned subsidiaries: ZipRecruiter Israel Ltd., ZipRecruiter UK Ltd., ZipRecruiter Canada Ltd., and Poplar Technologies Ltd[32] 2. Basis of Presentation, Principles of Consolidation, and Summary of Significant Accounting Policies This note details the basis of financial statement presentation, consolidation principles, significant accounting policies, and the impact of new accounting pronouncements - Unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP for interim financial information, with certain disclosures condensed or omitted[33] - The Company operates as a single operating segment, with the CEO reviewing consolidated financial information for performance assessment and resource allocation[43][44] - Foreign countries accounted for less than 2% of revenue for the three and six months ended June 30, 2025 and 2024[47] - In October 2024, the Company entered into a lease agreement for its new corporate headquarters, commencing in Q2 2025, resulting in $6.4 million in non-cash operating lease liabilities and right-of-use assets[52] - New accounting pronouncements (ASU 2023-09 and ASU 2024-03) related to income tax and expense disaggregation disclosures are being evaluated for future impact[55][57][58] 3. Net Income (Loss) Per Share This note provides the calculation of basic and diluted net income (loss) per share, including the treatment of potentially dilutive common stock equivalents - Potentially dilutive common stock equivalents of 10.8 million (Q2 2025) and 11.2 million (H1 2025) were excluded from diluted EPS computation due to their anti-dilutive effect[61] Net Income (Loss) Per Share (Basic and Diluted, in thousands, except per share amounts) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net income (loss) | $(9,506) | $7,014 | $(22,337) | $509 | | Basic EPS | $(0.10) | $0.07 | $(0.24) | $0.01 | | Diluted EPS | $(0.10) | $0.07 | $(0.24) | $0.00 | | Basic Weighted Average Shares | 90,569 | 99,171 | 94,297 | 99,066 | | Diluted Weighted Average Shares | 90,569 | 103,045 | 94,297 | 103,208 | 4. Acquisitions This note details the acquisition of Breakroom in July 2024, including the purchase price, recognized goodwill, intangible assets, and related amortization expense - On July 23, 2024, ZipRecruiter acquired 100% of Breakroom, a UK-based employee review platform, for $13.3 million ($12.4 million cash, $0.9 million liability)[62] - The acquisition resulted in $6.8 million in goodwill and $6.2 million in identifiable intangible assets (developed technology $5.8 million, trade names $0.4 million)[63] - Amortization expense for these finite-lived intangible assets was $0.5 million for the three months ended June 30, 2025, and $1.0 million for the six months ended June 30, 2025[63] 5. Revenue Information This note disaggregates revenue by stream, showing subscription and performance-based revenue, and notes a change in the estimated customer life for deferred commissions - Subscription revenue decreased by 9% for Q2 2025 and 10% for H1 2025 YoY[65] - Performance-based revenue decreased by 10% for Q2 2025 and 7% for H1 2025 YoY[65] - In April 2025, the estimated expected customer life for deferred commissions was adjusted from three years to four years, with an immaterial financial impact[67] Revenue Streams (in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Subscription revenue | $87,803 | $96,427 | $173,168 | $192,988 | | Performance-based revenue | $24,429 | $27,231 | $49,129 | $52,909 | | Total revenue | $112,232 | $123,658 | $222,297 | $245,897 | 6. Financial Instruments This note provides fair value measurements for financial assets, details the fair value of senior unsecured notes, and outlines the maturity profile of available-for-sale debt securities - The aggregate fair value of senior unsecured notes due 2030 was approximately $459.3 million as of June 30, 2025, and $496.4 million as of December 31, 2024[76] - As of June 30, 2025, $214.4 million of available-for-sale debt securities are due within 1 year, and $19.6 million are due after 1 year through 5 years[78] Fair Value Measurements of Financial Assets (as of June 30, 2025, in thousands) | | Amortized Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Balance Sheet Classification | |---|---|---|---|---|---| | Level 1: | | | | | | | Cash | $170,417 | $— | $— | $170,417 | Cash and Cash Equivalents | | Money market mutual funds | $16,769 | $— | $— | $16,769 | Cash and Cash Equivalents | | U.S. treasury securities | $106,090 | $1 | $(12) | $106,079 | Marketable Securities | | Level 2: | | | | | | | Commercial paper | $39,277 | $— | $— | $39,277 | Cash and Cash Equivalents / Marketable Securities | | Certificates of deposit | $112 | $— | $— | $112 | Marketable Securities | | Corporate notes and obligations | $64,617 | $12 | $(13) | $64,616 | Cash and Cash Equivalents / Marketable Securities | | Asset-backed securities | $23,876 | $24 | $(3) | $23,897 | Marketable Securities | | Total | $421,158 | $37 | $(28) | $421,167 | $203,456 (Cash), $217,711 (Marketable Securities) | 7. Accrued Expenses This note details the composition of accrued expenses, showing a slight decrease in total accrued expenses and shifts between compensation and marketing accruals - Total accrued expenses remained relatively stable, decreasing slightly from $43.5 million at December 31, 2024, to $43.1 million at June 30, 2025[83] - Accrued marketing increased by $3.4 million, while accrued compensation and benefits decreased by $3.4 million[83] Accrued Expenses (in thousands) | | June 30, 2025 | December 31, 2024 | |---|---|---| | Accrued compensation and benefits | $14,991 | $18,415 | | Accrued marketing | $14,341 | $10,956 | | Accrued commissions | $4,031 | $3,913 | | Accrued partner expenses | $1,109 | $1,204 | | Accrued refunds and customer liabilities | $2,133 | $1,982 | | Other accrued expenses | $6,481 | $7,023 | | Total accrued expenses | $43,086 | $43,493 | 8. Debt This note describes the company's debt structure, including the increased credit facility, outstanding senior unsecured notes, and related interest expense - The credit facility was increased from $250.0 million to $290.0 million in July 2024, with a maturity date of April 30, 2026[85] - As of June 30, 2025, the Company had no amounts outstanding under its credit facility and $286.6 million available[85] - Senior unsecured Notes of $550.0 million principal amount were issued in January 2022, maturing January 15, 2030, with a 5% annual interest rate[86] - Interest expense related to the Notes was $7.2 million for Q2 2025 and $14.3 million for H1 2025, with an effective interest rate of 5.4%[88] 9. Commitments and Contingencies This note addresses the company's legal proceedings and claims arising in the ordinary course of business, and its indemnification arrangements - The Company is subject to various legal proceedings and claims that arise in the ordinary course of business[89] - No liability has been accrued for indemnification arrangements as the likelihood of incurring a payment obligation is neither probable nor reasonably estimable[92] 10. Share Repurchase Program This note details the share repurchase program, including the authorized amount, shares repurchased, remaining availability, and subsequent additional authorization - The board of directors authorized the Company to repurchase up to $650.0 million of outstanding common stock[93] - During the six months ended June 30, 2025, the Company repurchased 14.9 million shares of Class A common stock for $83.9 million[94] - Approximately $39.2 million remained available for future repurchases under the Program as of June 30, 2025[95] - In August 2025, the board authorized an additional $100.0 million, increasing the total authorization to $750.0 million[110] 11. Stock-Based Compensation This note presents stock-based compensation expense by functional area, details the decrease in total compensation, and mentions the suspension of the Employee Stock Purchase Plan - Total stock-based compensation decreased by $3.0 million (19%) for Q2 2025 and $6.9 million (20%) for H1 2025 YoY[96] - As of June 30, 2025, total unrecognized stock-based compensation expense for unvested RSUs was $84.4 million, expected to be recognized over a weighted average period of 1.3 years[104] - The Employee Stock Purchase Plan (ESPP) was suspended following the completion of the purchase of shares for the offering period that ended February 14, 2025[100] Stock-Based Compensation Expense (in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Cost of revenue | $112 | $161 | $240 | $334 | | Sales and marketing | $2,186 | $2,595 | $4,615 | $5,427 | | Research and development | $5,950 | $8,447 | $13,398 | $17,907 | | General and administrative | $4,364 | $4,386 | $8,986 | $10,497 | | Total stock-based compensation | $12,612 | $15,589 | $27,239 | $34,165 | 12. Income Taxes This note details income tax expense (benefit) and effective tax rates, explaining deviations from the statutory rate and the anticipated impact of the One Big Beautiful Bill Act - The effective tax rate for H1 2025 was 2.1%, significantly lower than 88.1% in H1 2024, primarily due to a decrease in income before income taxes[105][160] - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is anticipated to reduce income taxes payable and change deferred tax assets, but its impacts are not included in the current financial statements[108] Income Tax Expense (Benefit) and Effective Tax Rate | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Income tax expense (benefit) | $396 | $647 | $(479) | $3,769 | | Effective tax rate | (4.3)% | 8.4% | 2.1% | 88.1% | | Statutory federal income tax rate | 21% | 21% | 21% | 21% | 13. Subsequent Events This note discloses subsequent events, specifically the board's authorization of an additional $100.0 million for the share repurchase program in August 2025 - In August 2025, the Company's board of directors authorized an additional $100.0 million for the share repurchase program, increasing the aggregate authorization to $750.0 million[110] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on ZipRecruiter's financial condition and results of operations, discussing key operating metrics, macroeconomic impacts, revenue and expense components, and a detailed comparison of financial performance, liquidity, capital resources, and critical accounting policies Overview This overview describes ZipRecruiter's business model as a two-sided marketplace, its strategic investments in functionality, and key financial highlights for the reporting periods - ZipRecruiter operates as a two-sided marketplace connecting employers and job seekers, generating revenue primarily from employer fees for job postings and other features[112] - The company plans to continue aggressive investment in its marketplace to improve functionality and drive growth, focusing on expanding employer/job seeker footprints, increasing engagement, and enhancing datasets and machine learning[114] Financial Highlights (in millions) | Period | Revenue | Net Income (Loss) | Adjusted EBITDA | |---|---|---|---| | Three Months Ended June 30, 2025 | $112.2 | $(9.5) | $9.3 | | Three Months Ended June 30, 2024 | $123.7 | $7.0 | $27.8 | | Six Months Ended June 30, 2025 | $222.3 | $(22.3) | $15.3 | | Six Months Ended June 30, 2024 | $245.9 | $0.5 | $48.6 | Key Operating Metrics and Non-GAAP Financial Measures This section presents key operating metrics such as Quarterly Paid Employers and Revenue per Paid Employer, along with non-GAAP financial measures like Adjusted EBITDA and its margin - Quarterly Paid Employers increased 4% sequentially in Q2 2025, while Revenue per Paid Employer decreased sequentially[119][121] - Adjusted EBITDA and margin decreased significantly YoY for both the three and six months ended June 30, 2025[117][125] Key Operating Metrics | Metric | March 31, 2024 | June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | |---|---|---|---|---|---|---| | Quarterly Paid Employers | 71,572 | 70,458 | 65,222 | 57,833 | 63,466 | 66,302 | | Revenue per Paid Employer | $1,708 | $1,755 | $1,795 | $1,920 | $1,734 | $1,693 | Adjusted EBITDA and Margin (in thousands, except percentages) | Period | Adjusted EBITDA | Adjusted EBITDA Margin | |---|---|---| | Three Months Ended June 30, 2025 | $9,343 | 8% | | Three Months Ended June 30, 2024 | $27,849 | 23% | | Six Months Ended June 30, 2025 | $15,277 | 7% | | Six Months Ended June 30, 2024 | $48,629 | 20% | Impact of Macroeconomic Conditions This section discusses how macroeconomic conditions, including reduced hiring demand and labor market uncertainty, impacted Quarterly Paid Employers and revenue in Q2 2025 - Lower Quarterly Paid Employers and Revenue per Paid Employer in Q2 2025 compared to the prior-year period were primarily due to reduced demand for hiring and continued uncertainty in the labor market[126] - Revenue for Q2 2025 decreased 9% YoY, reflecting lower hiring levels due to economic uncertainty and volatile trade policies[126] Components of Our Results of Operations This section breaks down the components of the company's results of operations, including revenue, cost of revenue, operating expenses, interest, other income, and income tax expense Revenue Revenue is primarily generated from employer fees for job postings, with subscription revenue recognized ratably and performance-based revenue recognized upon candidate engagement - Revenue is generated primarily from fees paid by employers to post and distribute jobs in the marketplace, as well as through Job Distribution Partners[127] - Subscription revenue includes time-based job posting plans, upsells, and resume database plans, recognized ratably over the subscription period[128][129][130][131] - Performance-based revenue is recognized when a candidate clicks on or applies to a job, typically capped at a contractual maximum per job recruitment campaign[131] Cost of Revenue and Gross Profit Cost of revenue comprises hosting fees, processing fees, personnel, partner share, and amortization, with both cost of revenue and gross margin expected to remain relatively flat as a percentage of revenue - Cost of revenue consists of third-party hosting fees, credit card processing fees, personnel-related costs for customer support, partner revenue share, job distribution costs, and amortization of capitalized software[133] - Cost of revenue is expected to increase or decrease in absolute dollars in direct correlation to revenue, while cost of revenue as a percentage of revenue is expected to remain relatively flat year-over-year[134] - Gross margin is expected to remain relatively flat year-over-year but may vary from quarter to quarter due to the timing and extent of expenses[135] Costs and Operating Expenses This section details the company's operating expenses, including sales and marketing, research and development, and general and administrative costs Sales and Marketing Sales and marketing expenses, comprising personnel, advertising, and overhead, are highly variable and represent the largest operating expense category - Sales and marketing expense includes personnel-related costs, marketing activities (advertising, online lead generation, events, candidate acquisition), and allocated overhead costs[136] - These expenses are highly variable and adjusted throughout economic cycles to optimize spend, and are expected to remain the largest operating expense category[137] Research and Development Research and development expenses, including personnel and software amortization, are crucial for marketplace improvements, service expansion, and talent acquisition - Research and development expense consists of personnel-related costs for R&D employees, amortization of capitalized software, and third-party service provider costs[138] - Continued investments in R&D are important for strategic objectives, including ongoing improvements to the marketplace, expansion of services, and hiring engineering/product talent[139] General and Administrative General and administrative expenses cover personnel, professional services, and overhead, with continued investment expected in corporate infrastructure as a public company - General and administrative expense includes personnel-related costs for executive, finance, human resource, and administrative departments, fees for third-party professional services, and allocated overhead[140] - The company expects to continue investing in corporate infrastructure and incur additional expenses associated with operating as a public company[141] Interest Expense Interest expense includes costs from outstanding borrowings, credit facility fees, and amortization of issuance costs for debt instruments - Interest expense consists of interest costs associated with outstanding borrowings, undrawn fees for the credit facility, and amortization of issuance costs for the credit facility and senior unsecured notes[142] Other Income (Expense), Net Other income (expense), net primarily includes interest income, foreign currency gains/losses, and realized gains/losses on debt securities, with foreign currency exposure mainly from international personnel expenses - Other income (expense), net primarily includes interest income from cash, cash equivalents, and marketable securities, gains and losses from foreign currency exchange transactions, and realized gains and losses on sales of available-for-sale debt securities[143] - Foreign currency exposure is primarily related to personnel-related expenses denominated in Canadian Dollar, British Pound, and Israeli New Shekel[143] Income Tax Expense (Benefit) The effective tax rate deviates from the U.S. federal statutory rate due to factors such as RSU settlements, non-deductible expenses, state taxes, and R&D tax credits - The effective tax rate for the three and six months ended June 30, 2025 and 2024, differed from the U.S. federal statutory rate of 21% primarily due to tax detriments from RSU settlements, non-deductible expenses, state taxes, and net tax benefits from research and development tax credits[144] Results of Operations (Comparison) This section provides a comparative analysis of the company's financial performance, detailing changes in revenue, cost of revenue, operating expenses, other income, and income tax for the periods presented Revenue (Comparison) Revenue decreased due to fewer Quarterly Paid Employers and lower Revenue per Paid Employer, reflecting reduced hiring demand and labor market uncertainty - Revenue decreased primarily due to a lower number of Quarterly Paid Employers and lower Revenue per Paid Employer, reflecting reduced demand for hiring and continued uncertainty in the labor market[147][148] - Subscription revenue decreased by 9% for the three months and 10% for the six months ended June 30, 2025, while performance-based revenue decreased by 10% and 7% respectively[147][148] Revenue Comparison (in thousands, except percentages) | Period | 2025 Revenue | 2024 Revenue | $ Change | % Change | |---|---|---|---|---| | Three Months Ended June 30 | $112,232 | $123,658 | $(11,426) | (9)% | | Six Months Ended June 30 | $222,297 | $245,897 | $(23,600) | (10)% | Cost of Revenue and Gross Margin (Comparison) Cost of revenue decreased due to lower partner revenue share and hosting fees, while gross margin remained stable at 89% for the six months ended June 30, 2025 - Cost of revenue decreased primarily due to a $0.7 million decrease in partner revenue share for Q2 2025 and a $1.2 million decrease in partner revenue share and $0.8 million in third-party hosting fees for H1 2025[150][151] - Gross margin remained stable at 89% for the six months ended June 30, 2025, reflecting continued commitment to operational efficiencies[151] Cost of Revenue and Gross Margin Comparison (in thousands, except percentages) | Period | 2025 Cost of Revenue | 2024 Cost of Revenue | $ Change | % Change | 2025 Gross Margin | 2024 Gross Margin | |---|---|---|---|---|---|---| | Three Months Ended June 30 | $11,963 | $12,943 | $(980) | (8)% | 89% | 90% | | Six Months Ended June 30 | $23,618 | $26,264 | $(2,646) | (10)% | 89% | 89% | Sales and Marketing (Comparison) Sales and marketing expenses increased due to higher advertising spend, partially offset by lower personnel-related costs and stock-based compensation - Sales and marketing expenses increased due to higher marketing and advertising spend ($7.5 million for Q2, $13.4 million for H1), partially offset by lower personnel-related costs and stock-based compensation[153][154] Sales and Marketing Expense Comparison (in thousands, except percentages) | Period | 2025 Expense | 2024 Expense | $ Change | % Change | 2025 % of Revenue | 2024 % of Revenue | |---|---|---|---|---|---|---| | Three Months Ended June 30 | $58,065 | $51,464 | $6,601 | 13% | 52% | 42% | | Six Months Ended June 30 | $116,533 | $106,157 | $10,376 | 10% | 52% | 43% | Research and Development (Comparison) Research and development expenses decreased primarily due to lower stock-based compensation from reduced headcount, partially offset by increased amortization from the Breakroom acquisition - R&D expenses decreased primarily due to lower stock-based compensation ($2.5 million for Q2, $4.5 million for H1) from reduced headcount, partially offset by increased amortization from the Breakroom acquisition[155][156] Research and Development Expense Comparison (in thousands, except percentages) | Period | 2025 Expense | 2024 Expense | $ Change | % Change | 2025 % of Revenue | 2024 % of Revenue | |---|---|---|---|---|---|---| | Three Months Ended June 30 | $32,095 | $33,310 | $(1,215) | (4)% | 29% | 27% | | Six Months Ended June 30 | $65,361 | $69,386 | $(4,025) | (6)% | 29% | 28% | General and Administrative (Comparison) General and administrative expenses showed immaterial fluctuations for both the three and six months ended June 30, 2025, compared to the prior year periods - General and administrative expenses showed immaterial fluctuations for both the three and six months ended June 30, 2025, compared to the prior year periods[157] General and Administrative Expense Comparison (in thousands, except percentages) | Period | 2025 Expense | 2024 Expense | $ Change | % Change | 2025 % of Revenue | 2024 % of Revenue | |---|---|---|---|---|---|---| | Three Months Ended June 30 | $16,771 | $16,518 | $253 | 2% | 15% | 13% | | Six Months Ended June 30 | $35,116 | $35,573 | $(457) | (1)% | 16% | 14% | Total Other Income (Expense), Net (Comparison) Total other income (expense), net showed immaterial fluctuations for both the three and six months ended June 30, 2025, compared to the prior year periods - Immaterial fluctuations were observed in total other income (expense), net for both the three and six months ended June 30, 2025, compared to the prior year periods[158] Total Other Income (Expense), Net Comparison (in thousands, except percentages) | Period | 2025 Amount | 2024 Amount | $ Change | % Change | |---|---|---|---|---| | Three Months Ended June 30 | $(2,448) | $(1,762) | $(686) | 39% | | Six Months Ended June 30 | $(4,485) | $(4,239) | $(246) | 6% | Income Tax Expense (Benefit) (Comparison) Income tax expense (benefit) decreased significantly, primarily attributable to a decrease in income before income taxes for the periods presented - Income tax expense (benefit) decreased significantly, primarily attributable to a decrease in income before income taxes[159][160] Income Tax Expense (Benefit) Comparison (in thousands, except percentages) | Period | 2025 Amount | 2024 Amount | $ Change | % Change | |---|---|---|---|---| | Three Months Ended June 30 | $396 | $647 | $(251) | (39)% | | Six Months Ended June 30 | $(479) | $3,769 | $(4,248) | (113)% | Liquidity and Capital Resources This section assesses the company's liquidity and capital resources, including cash, credit facility availability, and the sufficiency of funds to meet working capital requirements - As of June 30, 2025, the company had $421.2 million in cash, cash equivalents, and marketable securities, with $286.6 million available in unused borrowing capacity under its credit facility[161] - Existing cash, cash equivalents, marketable securities, and cash flow from operations are believed sufficient to meet working capital requirements for at least the next 12 months[162] - The company may need to raise additional funds through equity or debt financings, which could dilute existing stockholders or impose restrictive covenants[162] Credit Facility This section details the increased credit facility, its availability, compliance with covenants, and the collateralization of the company's assets - The credit facility agreement was increased from $250.0 million to $290.0 million in July 2024, with a maturity date of April 30, 2026[163] - As of June 30, 2025, the Company had no amounts outstanding under its credit facility and was in compliance with financial covenants, with $286.6 million available[166] - The credit facility is collateralized by substantially all of the company's assets and includes customary events of default and restrictive covenants[164][165] Senior Unsecured Notes This section describes the $550.0 million senior unsecured notes issued in January 2022, their maturity, interest rate, governing covenants, and redemption provisions - The company issued $550.0 million aggregate principal amount of senior unsecured notes in January 2022, maturing January 15, 2030, bearing interest at 5% per year[167] - The indenture governing the notes contains certain customary negative covenants and events of default[168] - The company has the option to redeem the notes early and must offer to repurchase them upon a change of control triggering event[169] Share Repurchase Program This section details the share repurchase program, including the authorized amount, shares repurchased, remaining availability, and subsequent additional authorization - As of June 30, 2025, the board of directors authorized repurchases up to $650.0 million of common stock, with approximately $39.2 million remaining available[171][172] - During the six months ended June 30, 2025, the company repurchased 14.9 million shares of Class A common stock for $83.9 million[171] - In August 2025, the board authorized an additional $100.0 million for the program, increasing the aggregate authorization to $750.0 million[172] Investments The company invests excess cash in highly rated debt securities and money market funds to preserve capital, provide liquidity, and obtain reasonable returns, totaling $250.8 million as of June 30, 2025 - The company invests excess cash reserves primarily in highly rated debt securities and money market mutual funds, with objectives to preserve capital, provide liquidity, and obtain reasonable returns[173] - As of June 30, 2025, total investments were $250.8 million, consisting of money market mutual funds and available-for-sale debt securities, classified within current assets[174] Cash Flows This section summarizes the company's cash flow activities, detailing net cash provided by (used in) operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Summary of Cash Flows (in thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---| | Net cash provided by operating activities | $634 | $23,897 | | Net cash provided by (used in) investing activities | $68,491 | $(15,361) | | Net cash used in financing activities | $(84,101) | $(19,891) | | Net decrease in cash and cash equivalents | $(14,976) | $(11,355) | Operating Activities Net cash provided by operating activities significantly decreased to $0.6 million in H1 2025, primarily due to a net loss adjusted by non-cash charges and changes in operating assets and liabilities - Net cash provided by operating activities was $0.6 million for the six months ended June 30, 2025, a significant decrease from $23.9 million in the prior-year period[178][179] - The H1 2025 operating cash flow resulted from a net loss of $22.3 million, adjusted by $24.0 million in non-cash charges (stock-based compensation, D&A, non-cash lease expense) and a $1.0 million net decrease in operating assets and liabilities[178] Investing Activities Net cash provided by investing activities shifted to $68.5 million in H1 2025, driven by marketable securities paydowns, maturities, and redemptions, partially offset by purchases and capitalized software costs - Net cash provided by investing activities was $68.5 million for the six months ended June 30, 2025, a shift from $(15.4) million used in the prior-year period[180][181] - This change was driven by $342.2 million from marketable securities paydowns/maturities/redemptions and $1.0 million from sales, partially offset by $270.1 million in purchases and $4.0 million capitalized for software development costs[180] Financing Activities Net cash used in financing activities increased to $84.1 million in H1 2025, primarily due to higher common stock repurchases and tax withholdings on equity awards - Net cash used in financing activities increased to $84.1 million for the six months ended June 30, 2025, from $19.9 million in the prior-year period[182][183] - The increase was primarily due to $84.1 million used for common stock repurchases and $4.1 million for tax withholdings on net settlement of equity awards, partially offset by proceeds from stock option exercises and the employee stock purchase plan[182] Obligations and Other Commitments The company reported no relationships with unconsolidated organizations or financial partnerships for off-balance sheet arrangements through June 30, 2025 - The company did not have any relationships with unconsolidated organizations or financial partnerships for off-balance sheet arrangements through June 30, 2025[184] Critical Accounting Policies and Estimates The preparation of financial statements involves management estimates and assumptions, with no changes to critical accounting policies and estimates reported since the 2024 Form 10-K - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, including revenue recognition, stock-based compensation, and income taxes[185] - There have been no changes to critical accounting policies and estimates compared to those discussed in the 2024 Form 10-K[186] Recent Accounting Pronouncements Information regarding recent accounting pronouncements is provided in Note 2 to the condensed consolidated financial statements - Information on recent accounting pronouncements is provided in Note 2 to the condensed consolidated financial statements[187] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses ZipRecruiter's exposure to market risks, primarily focusing on changes in interest rates and foreign currency exchange rates, and assesses their potential impact on financial statements Interest Rate Risk The company is exposed to interest rate risk from its floating-rate credit facility and investments, though a hypothetical 10% change would not materially impact financial statements - The company is subject to interest rate risk from its credit facility (floating rate) and investments, but a hypothetical 10% change in interest rates would not materially impact financial statements[189] - Senior unsecured notes are carried at amortized cost, so interest rate fluctuations do not impact financial statements, though their fair value will generally fluctuate with interest rates[190] - A hypothetical increase of 100 basis points in interest rates would result in a $0.4 million decrease in the fair value of the investment portfolio as of June 30, 2025[191] Foreign Currency Risk The company is exposed to foreign currency risk primarily from expenses denominated in Canadian Dollar, British Pound, and Israeli New Shekel, with a hypothetical 10% change having an immaterial impact - The company is exposed to fluctuations in foreign exchange risk primarily related to expenses denominated in Canadian Dollar, British Pound, and Israeli New Shekel[192] - A hypothetical 10% change in foreign currency exchange rates would not have a material impact on the condensed consolidated financial statements[192] Item 4. Controls and Procedures This section details management's evaluation of the effectiveness of ZipRecruiter's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025 - Management, with the participation of the principal executive and financial officers, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[193] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2025 - There were no changes in internal control over financial reporting identified during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[194] Part II - Other Information This part includes disclosures on legal proceedings, comprehensive risk factors, unregistered sales of equity securities, defaults, mine safety, other information, and a list of exhibits - Part II includes disclosures on legal proceedings, comprehensive risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, other information, and a list of exhibits[6] Item 1. Legal Proceedings This section refers to disclosures in Note 9 regarding legal matters, indicating the company is subject to various legal proceedings and claims in the ordinary course of business - The company is subject to various legal proceedings and claims that arise in the ordinary course of business[196] - Refer to the disclosure under the heading 'Legal Matters' in Note 9 – Commitments and Contingencies for details on legal proceedings[196] Item 1A. Risk Factors This section details comprehensive risks and uncertainties that could materially affect ZipRecruiter's business, financial condition, operating results, and future prospects, categorized into operational, legal, regulatory, and stock ownership risks - Investing in Class A common stock involves a high degree of risk, and investors should carefully consider all risks described in this section[197] - Risks include those related to business operations (e.g., economic conditions, competition, software performance), legal and regulatory compliance (e.g., data privacy, AI regulation), and ownership of Class A common stock (e.g., market volatility, dual class structure)[198][204][208][258][329][330] Risk Related to Our Business This section outlines business-related risks, including impacts from economic conditions, intense competition, and the critical importance of software performance - The business is significantly affected by fluctuations in general economic conditions, with potential for adverse impacts from economic downturns or volatility[198][201] - Intense competition from established and emerging technology companies (including AI-driven solutions) poses a risk to market share and profitability[204][205] - Reliance on complex software means proper performance is critical; failures could harm reputation, market share, and lead to liability claims[208] Operational Risks Operational risks include vulnerability to economic conditions, intense competition, software failures, dependence on employer renewals, talent retention, search engine reliance, quarterly fluctuations, brand reputation, scaling challenges, new product development, partner relationships, seasonality, AWS reliance, and geopolitical risks from Israeli operations - The business is significantly affected by fluctuations in general economic conditions, including inflation, interest rates, and global conflicts, which can reduce demand for hiring services[198][200] - Intense competition from well-established online job sites and newer entrants utilizing emerging technologies like AI could lead to market share loss[204][205] - The marketplace functions on highly technical and complex software; failures, errors, or inability to scale technical infrastructure could adversely affect reputation, market share, and user experience[208][209] - Future success depends on employers purchasing and renewing or upgrading subscriptions and performance-based services; any decline could harm future operating results[214][215] - The business depends largely on the ability to attract and retain talented employees, including senior management and key personnel, for executing business strategy[220] - Reliance on internet search engines and other channels for traffic means modifications to their methodologies or declining search result page rankings could reduce user growth[223] - Quarterly results may fluctuate significantly due to various factors, including economic conditions, competition, and seasonal variations, making future results difficult to predict[225][226] - The company's success depends on its ability to maintain the value and reputation of the ZipRecruiter brand, which can be harmed by negative publicity or ineffective marketing[227] - Failure to effectively scale the business or manage workforce realignments (e.g., layoffs) could adversely affect business, operating results, and financial condition[228][230] - Inability to provide successful enhancements, new products, services, and features that keep pace with technological change and market demands could adversely affect the business[232] - The growth of the marketplace depends in part on strategic relationships with Job Distribution Partners and Job Acquisition Partners; loss of these relationships could impair competitiveness[235][236] - The business is seasonal, with hiring activity tending to decelerate in the fourth quarter, which can make forecasting difficult[240] - The company relies on Amazon Web Services (AWS) and other service providers; any disruption of service or material change to arrangements could adversely affect the business[248] - Risks associated with having operations and employees located in Israel, including political, economic, and military conditions, could materially and adversely affect business and operations[253] Legal and Regulatory Risks Legal and regulatory risks encompass security breaches, evolving data privacy laws (GDPR, CCPA), new AI regulations, potential impacts from the Chevron doctrine reversal, payment fraud, international expansion challenges, intellectual property protection, and adverse tax laws - Security breaches, hacking, phishing attacks, or other data privacy/security incidents could harm reputation, reduce demand, disrupt operations, and incur significant legal costs or liabilities[254][255] - Changes in laws or regulations relating to data privacy, protection, collection, storage, processing, transfer, or use of personal data, the use of AI, or consumer protection, or non-compliance, could adversely affect the business[258][259] - The EU GDPR, UK GDPR, DPA, CCPA, and CPRA impose stringent data protection requirements and significant penalties for noncompliance[260][261] - New regulations on AI Technologies (e.g., New York City, Utah, Colorado, Texas, California, EU AI Act) could increase compliance costs and impact operations[262][264] - The U.S. Supreme Court's reversal of the Chevron doctrine could lead to increased challenges to existing agency regulations, potentially impacting consumer protection, advertising, privacy, and AI regulatory regimes[282] - Payment and fraud risks, including bad actors using the marketplace for unlawful conduct or unauthorized use of payment information, could harm reputation and lead to liability[286] - Expansion of international operations could subject the company to additional costs and risks, including compliance with foreign laws, currency fluctuations, and political instability[288] - Failure or inability to protect intellectual property rights, or claims by others of infringement, could diminish brand value, weaken competitive position, and adversely affect the business[296][298] - Adverse tax laws or regulations, including the Inflation Reduction Act's excise tax on stock repurchases, could be enacted or applied, increasing service costs and adversely impacting the business[303][306] Other Risks Related to Our Business Other business risks include catastrophic events, substantial indebtedness and restrictive debt covenants, challenges from M&A activities, the need for additional capital, public company compliance burdens, and adverse impacts from currency exchange rate fluctuations - The business is subject to the risk of earthquakes, fire, power outages, floods, public health crises, and other catastrophic events, as well as man-made problems like terrorism, which could cause damage or interruption[307] - Indebtedness of $550.0 million could adversely affect liquidity, limit additional financing, and increase vulnerability to adverse economic, industry, and competitive conditions[308] - Covenants in debt agreements may restrict operations, and failure to comply could result in an event of default and acceleration of substantially all indebtedness[315][316] - Merger and acquisition activities could require significant management attention, disrupt the business, dilute stockholder value, consume resources, and adversely affect operating results[317][318] - Additional capital may be required to support business growth and objectives, and if unavailable on reasonable terms, could result in stockholder dilution or restrictive covenants[320] - The requirements of being a public company, including maintaining adequate internal control over financial and management systems, may strain resources and divert management's attention[321] - Fluctuations in currency exchange rates could harm operating results and financial condition, as the company does not engage in currency hedging activities[328] Risks Related to the Ownership of Our Class A Common Stock Risks related to Class A common stock ownership include market volatility, concentrated voting control due to the dual-class structure, potential impacts from the share repurchase program, the absence of future dividends, and anti-takeover provisions - Market volatility, influenced by economic conditions, industry performance, and company-specific factors, may affect the value of Class A common stock and could subject the company to litigation[329] - The dual class structure of common stock (Class B has twenty votes per share) concentrates voting control with pre-listing stockholders, limiting other stockholders' ability to influence corporate matters[330][332] - The dual class structure may adversely affect the trading market for Class A common stock due to opposition from stockholder advisory firms and large institutional investors[334] - The share repurchase program could affect the price of Class A common stock and increase volatility, and may be suspended or terminated at any time, potentially resulting in a decrease in trading price[335][336] - The company does not intend to pay dividends for the foreseeable future, requiring investors to rely on sales of their Class A common stock after price appreciation as the only way to realize future gains[339] - Provisions in charter documents and under Delaware law could make an acquisition of the company more difficult and may limit attempts by stockholders to replace or remove current management[340][341](index=341&type=