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Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the

Thank you, operator, and good afternoon. Thank you for joining us in our earnings conference call, during which we will discuss

Thank you, Drew. Good afternoon to everyone joining us today. Q1 revenue of $183.7 million was down 19% year-over-year, but above the high end of the range of our guidance. Q1 '23 adjusted EBITDA of $35.3 million and adjusted EBITDA margin of 19% exceeded the high point of our guidance. This strong profitability in the face of both deteriorating macro conditions and persistent interest rate increases is a testament to the flexibility of our business model and our ability to rapidly adjust expenses. In our last call, we highlighted the atypically slow start to the year, which informed our guidance for the rest of the year. January normally marks the beginning of the hiring season as employers kick off annual hiring plans and operate with refreshed recruiting budgets. Q1 '23 showed a sharp deviation from what those seasonal trends would have predicted. The softening observed at the outset of Q1 has only accelerated and we see demand for recruiting services continue to decline. This slowdown has been broad-based across both SMBs and enterprise as well as across the majority of industries. From conversations with our customers, we see employers paring back their hiring in response to the uncertain economic backdrop we now face. Because of these trends, which are unlike anything we've seen in our 13 years of doing business, we are not providing full year revenue guidance. However, while there is a wide range of possible top line outcomes, we remain focused on delivering against our guidance of $185 million of adjusted EBITDA at the midpoint. One of our key strategic advantages of

Thank you, Ian. There is no doubt that headwinds in the macroeconomic environment are impacting our customers' hiring plans. Regardless of the shape or duration of this current labor market cycle, we firmly believe that

Thank you, Dave, and good afternoon, everyone. Our first quarter revenue of $183.7 million exceeded the high end of the guidance we provided in February. This represents a 19% decline year-over-year and is primarily reflective of continued and accelerating softening in the hiring market. Additionally, we faced particularly challenging comparisons against Q1 '22 when we grew 81% year-over-year. Quarterly paid employers were 106,000, representing a 29% decrease versus Q1 '22 and a 2% decrease versus Q4 '22. This is primarily reflective of weakness among small- and medium-sized businesses, which make up the vast majority of our paid employers. Revenue per paid employer was $1,734, an increase of 15% year-over-year but a sequential decrease of 11%. In prior years, enterprise-driven strength in Q4 has resulted in lower sequential growth in Q1. In Q1 '23, this trend was exacerbated by reduced hiring demand from both enterprises and SMBs. However, we remain confident that the growth trends we've seen in all of our cohorts over the years will continue in the long term. GAAP net income was $5 million in the first quarter of 2023 compared to $8.4 million in Q1 of 2022. Q1 '23 adjusted EBITDA was $35.3 million, equating to a margin of 19% compared to $37.2 million, a margin of 16% in Q1 '22. The adjusted EBITDA margin expansion year-over-year primarily reflects lower sales and marketing expenses, which we reduced in response to the changing macroeconomic landscape, and partially offset by increases in research and development expenses. Cash, cash equivalents and marketable securities was $519.1 million as of March 31, 2023, compared to $570.4 million as of December 31, 2022. The decrease quarter-over-quarter was primarily due to $60.2 million of share repurchases. Additionally, we announced that our Board of Directors has authorized a $100 million increase to the Company's share repurchase program. This is in addition to the previous authorizations of $450 million in total. We note that this authorization is not a commitment. We will remain diligent allocators of capital as we continue generating free cash flow, while also recognizing the uncertain macroeconomic environment. Moving on to guidance. The atypical softness we noted during our last call has increased in recent weeks. While Q1 '23 revenue was down 19% year-over-year, revenue in April was down 27% year-over-year. This is reflective of a contraction in demand with both SMBs and enterprises continuing to reduce the number of jobs they post and the amount they spend for job advertising. If these trends, which inform our guidance, considerable macroeconomic uncertainty remains and changes, both positive and negative can continue to have an impact on our 2023 revenue. Our Q2 '23 revenue guidance of $170 million at the midpoint represents a 29% decline year-over-year. Given the increasingly uncertain macroeconomic environment, we are not providing annual revenue guidance. We will continue to take advantage of opportunities to win the business with new employers and deepen our relationships with existing employers, but recognize that further macroeconomic fluctuations that are impacting our customers will have a direct impact on our top line performance. Our adjusted EBITDA guidance of $38 million at the midpoint or 22% adjusted EBITDA margin for the quarter reflects our continued fully funded investments into new solutions for the labor market, while simultaneously moderating our sales and marketing investments during the slowdown. Finally, we reiterate our ability in the majority of scenarios we can reasonably foresee to generate 2023 adjusted EBITDA between 178 and $192 million. While there are a wide range of top line possibilities, the flexibility of our business model allows for many paths to this adjusted EBITDA range. As always, we will respond to our environment quickly, which means conserving capital and an increased focus on profitability during times of decreased demand from employers. This further demonstrates the flexibility of our business model and our continued commitment to delivering value to shareholders over the long term across a broad range of economic environments. With that, we can now open the line for questions. Operator?

[Operator Instructions] We will take our first question from Ralph Schackart with William Blair.

Just first question on, I guess, the acceleration downwards for revenue, talking about being down 19% year-over-year for the quarter. I think April is down 27% and the guide for next quarter is down 29%. Maybe just kind of speak to, was that acceleration more pronounced and then -- or is it continuing, obviously, through Q2 here? Just any color on that? And then last, just the confidence in the full year of the leverage that you have to sort of maintain that EBITDA guidance range, that's be helpful as well.

Thanks for the question. This is Ian. And I think you have accurately summarized what we shared today, which is that there has been an acceleration of the deceleration in the demand for recruiting services. We have clearly left behind what had historically been a standardized and highly predictable seasonal hiring pattern. And so our ability to predict with accuracy where the decline will stop is somewhat impaired by the fact that there is no historical precedence in our company history for what we're seeing right now. But in spite of that, and thanks in large part to the nimbleness of our financial model as well as our ongoing focus on product improvements, we remain both confident that in the short term, we can deliver on the EBITDA, which is why we have reasserted the range and, with specificity, said that we still think we can hit the target we set for the year. And further, over the long term, thanks to those ongoing product improvements, we remain confident and optimistic about our ability to grow our market share. This is very clearly a macroeconomic phenomenon. This downturn is affecting a multitude of players in our industry. And just last week, we had an enterprise summit, where I spoke to 30 of the largest hirers in America. These are companies that hire between thousands and tens of thousands of employers per year. Across the board, all of them have reduced their hiring plans in the face of the economic uncertainty their businesses face.

Yes. And Ralph, it's Tim. I'll answer the question on OpEx levers. So we have several different levers that we can pull on, the largest and most variable by far being the sales and marketing line item. So in Q1, we spent over [$88] million in sales and marketing. A very large portion of that spend is highly variable and not committed into future periods. But that's not our only lever. We also have already pulled back on additional hiring, focusing just on the highest-impact tech positions. We've taken a look at many of our more discretionary expenses like travel, entertainment, professional services, et cetera. So we're -- we have many different levers that we can pull in order to achieve that $185 million in adjusted EBITDA under a wide range of revenue scenarios.

This is Dave, Ralph. One other thing I would add is that, that 40% growth in job seeker organic traffic is exactly what we would expect to see in a scenario like we're seeing right now. This is an opportunity for us over the long term to prove value to job seekers at the moment they need us more than they needed us for years. And we're meeting that challenge and this will pay dividends for us for years to come as job seekers will be able to experience that our product just continues to get better. And so those that haven't needed us for a couple of years are now going to experience what Phil can do for them, the power of our great matches, what it's like to be invited to apply to a job, most of the time within one week. And so all those investments we've been making in both brand and product on that side of the marketplace is what's going to power us through when employers come back.

And we will take our next question from Mark Mahaney with Evercore.

Two questions, please. You talked about seeing that accelerated deceleration kind of equal across SMBs and enterprises. Could you give us a little color on the verticals of extra weakness or the verticals that are still showing some resilience like nursing, I assume? And then secondly, we've kind of gone out and then we're coming back in, in terms of work from home. Is that having any impact on your business as a whole? I thought that the kind of increasing complexity of work from home may make some of the matching algorithms more valuable, but maybe they're less so now that we're going back to kind of more normal work environments, but maybe that's not that material. Just comment on that, please.

Well, I'll take the second question first, which is on work from home. So less than 10% of our listings advertise the opportunity to work remotely or in a hybrid format. Interestingly, those jobs are runaway winners in terms of the number of applicants that they receive. However, it is a de minimis portion of the overall hiring market. So it doesn't have a major impact on our business. We have tuned our algorithms such that we are experts at delivering candidates from anywhere to those jobs. So theoretically, as the market shifts, that will continue to be an advantage, but the market overall has not tipped that way in spite of still having more than 60% of job seekers looking for remote or fully or some form of hybrid work as their first choice.

Yes. Thanks, Mark. This is Dave. And then in terms of verticals, as you indicated, healthcare is an example of an industry that continues to show less cyclicality and seems to be less impacted by the slowdown. On the flip side -- yes, and for that matter, travel and leisure still seems to be holding up reasonably well. On the flip side, technology, as you might imagine, does seem to be more impacted. That's not -- we don't particularly overindex to any of these categories. We look more like the economy as a whole. But the one that sticks out is maybe a little surprising, based on recent headlines, is that finance has not been particularly impacted yet despite headlines about banks and other things. But overall, the main -- those stick out a little bit, but the main trend is that it's fairly broad-based across the economy, both from a geographic and from an industry standpoint, and we see patterns here and there. But the broad theme is that -- we talked to you starting about June last year about how we started to see slowdown among SMBs. And as you noted, this quarter, whether that had to do with the evolution of the slowdown or annual budget cycles, we saw enterprises also impacted by the slowdown now. And as we talk to customers, large and small, their businesses tend to remain pretty strong, but they feel cautious based on what they're seeing and hearing out there. So they're pulling back in the short term. Their long-term ambitions remain intact and we'll be a big part of those ambitions as they need to build their teams, but it's certainly impacting short-term hiring needs.

We'll take our next question from Doug Anmuth with JPMorgan.

It's Wes on for Doug. I think just kind of with a lot of what's going on in the macro and broader layoffs, what you're seeing, job seeker tailwinds, but openings declining. Just to get updated thoughts on competition more broadly with the two larger players as well as some of the smaller ones and how things maybe have evolved. And secondly, I think you guys have been getting nice traction on the enterprise side. I think that stepped back a little bit this quarter, at least in terms of revenue share for that segment. How are you thinking about the progress of that towards that 50% marker throughout this year kind of given the macro backdrop?

Yes. Great question. So one, on the competition front, as we've talked about before, we work with over 1,000 different job sites, many of the big offline players are customers of ours. What we're clearly seeing is economy-wide not just

[Operator Instructions] We will take our next question from Justin Patterson with KeyBanc.

Just thinking about kind of the puts and takes of the different drivers, employers and revenue per paid employer, how should we think about just the ability to sustain the revenue per paid employer growth as job postings come in a bit more, and we just don't have that same scarcity of labor as we had previously?

Justin, this is Tim. Yes. So on the two KPIs, paid employers and revenue per paid employer, in Q1, as we've already noted, we saw both KPIs come in softer than what would typically be expected but particularly on the revenue per paid employer side and that in April continued that trend as well. The big drivers in Q1 were for paid employers primarily from SMBs because they make up the vast majority of our paid employer numbers. So decreased demand from them will disproportionately affect that KPI, whereas revenue per paid employer was affected by both SMBs and enterprise. SMBs tend to reduce -- if they do not drop hiring altogether, they reduce the number of jobs that they have posted within the marketplace, which reduces revenue per employer. And then the broad-based pullback in enterprise hiring that Ian and Dave has already spoken about, that will obviously directly impact revenue per paid employer. I think what we see with revenue per paid employer will -- it was muted in Q1. I think we have a lot of confidence that the long-term trends that we've seen in that metric borne out over many years of cohort data that we have will continue to play out over time, even if that's temporarily disrupted by these macro economically driven reduction in demand that we're seeing. And the same thing will be true for paid employers over the long run as well. That will -- that number has dipped up and down a little bit more based on kind of the macroeconomic winds. But from peak to peak and trough to trough, we think that the number is going to continue to climb as well.

We will take our final question from Eric Sheridan with Goldman Sachs.

I want to ask a big picture one. You talked earlier to Ralph's question about investments and another question about competition. But you guys were very early investors in AI on the platform and positioning the platform for where technology was going over the medium to long term. And leaving aside sort of some of the things that are outside of your control in the short to medium term, how do you think about some of the investments you've made and continuing to make as competitive differentiators coming out of the macro dynamic looking out to '24 and '25? And whether you think even as some folks try to play catch-up on that, that could be an area where you're back to a position of share taker and how we should be thinking or quantifying that?

Yes, thanks, Eric. This is Ian. And this is exactly the question I spend the most time thinking about because in my mind, the job industry has really gone through three eras. The first one was on volume and then the second era was about quality of candidates and now the third one is we have awesome matching algorithms that can tell us which two parties should be talking to each other. But can we generate enthusiasm and engagement between them? Can we get them to rapidly converse with each other and hopefully, actually sort of make a hire and get hired? And so in my mind, the real future competition lies in the experience that we provide more so than in the matching technology explicitly, but make no mistake, having a strong brand and a large marketplace where you can then deploy awesome matching algorithms to then even begin the experimentation with improving the experience, those are all the prerequisites in order to becoming a major competitive player in this space. Not only do we have all those things in place, but we are laser-focused on the quality of the experience that we give both employers and job seekers. It's why we continue to be so highly rated, and it's where so much of our focus of R&D is going right now as opposed to looking at things and optimizing them that you can't see, the future innovations of

Eric, this is Dave. Just to add on to that. The thing I often think about is that job seekers over the past decade or two have been trained to expect a series of search results in response to a search query. And what technology is increasingly allowing us to do is getting them to expect to hear from a great employer in response to who they are as a whole person. And so we bring an incredible set of data to that, that is -- even if you have great algorithms, it's hard to replicate that amazing data set we have built over years, and then we apply incredible technology to that to connect employers and job seekers and that's what the power of AI is for us as we focus deeply on this one major part of people's lives, which is how they connect to opportunity as opposed to using AI for some broad general set of preview questions. We're really thinking deeply about exactly this problem and how we can impact people's lives. There's a lot you're going to see from us over the coming years.