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Thank you for standing by. My name is Aaron, and I will be your conference operator for 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. Before we get started, I wanted to say a few words about

Thank you, and good afternoon. We continue to make advancements on our three growth strategies in Q3 of 2023. We believe we are still in the early stages of using smart matching technology to transform our employers and jobseekers come together. Our first strategic pillar is increasing the number of employers and revenue per paid employer in our marketplace. Growing revenue from large enterprise customers remains a priority and a significant long-term opportunity and we continue to make incremental product improvements to enhance the value of the

Thank you, Dave, and good afternoon, everyone. Our third quarter revenue of $155.6 million represents a 31% decline year-over-year and is reflective of a continued soft hiring environment. Quarterly paid employers were 90,000, representing a 34% decrease versus Q3 2022 and a 12% decrease versus Q2 2023. This is primarily reflective of weakness amongst small and medium-sized businesses which make up the vast majority of our paid employers. Revenue per paid employer was $1,736, an increase of 4% both year-over-year and sequentially. The increase quarter-over-quarter and year-over-year is consistent with our long-term cohort trends where employers willingness to pay increases as our product continues to improve. Net income was $24.1 million in Q3 2023 compared to $20.6 million in Q3 2022 and $14.4 million in Q2 2023. Q3 2023 adjusted EBITDA was $54.4 million, equating to a margin of 35% compared to $51.7 million, a margin of 23% in the prior year period at $43.3 million with a margin of 25% in Q2 2023. Net income and adjusted EBITDA both grew year-over-year and quarter-over-quarter, driven by a larger reduction in operating expenses, both personnel and marketing-related. Q3 2023 adjusted EBITDA of $54.4 million and adjusted EBITDA margin of 35% were both the highest in our company's history, showcasing the financial strength of our business model. Cash, cash equivalents and marketable securities was $497 million as of September 30, 2023, compared to $497.2 million as of June 30, 2023. Cash, cash equivalents and marketable securities remain stable quarter-over-quarter as cash used for repurchases of Class A common stock under our share repurchase program was largely offset by cash provided from operating activities. In Q3 2023, we repurchased 1.9 million shares totaling $28.2 million. Given our long-term growth outlook, our capital allocation strategy prioritizes organic growth investments in M&A over returning capital to shareholders. However, given the strength of our balance sheet and our free cash flow, we continue to opportunistically repurchase shares when we believe there's an attractive ROI and potential dislocations in the stock price. Moving on to guidance. Our Q4 2023 revenue guidance of $128 million at the midpoint represents a 39% decline year-over-year. The softness in hiring patterns has not yet abated, and we are heading into a seasonally soft Q4. Our adjusted EBITDA guidance is $34 million at the midpoint or 27% adjusted EBITDA margin. This guidance implies an adjusted EBITDA margin of approximately 25% to 27% for the full-year 2023, an increase of 5 to 7 percentage points year-over-year and compares favorably to the low to mid-20% range provided in August. We continue to demonstrate financial discipline and conserve capital during this unprecedented slowdown while also continuing to invest in technology drivers of our long-term growth. Navigating the ups and downs of the labor market is the reality of the industry. And as a result, we built a flexible business model structured to respond to a variety of market conditions. We are focused on what we can control, approaching all cycles with the same ROI-focused orientation, nimble mindset and speed to action. While the current environment calls for cost optimization, we continue to press our technology advantage, positioning

Thank you. [Operator Instructions] And our first question is from the line of Trevor Young with Barclays. Your line is live.

Great. Thanks. I guess first one, can you guys talk about the cadence of revenue growth throughout the quarter? There's obviously a little bit of a B versus guide. So that implies August or September a little bit better than expected. And how have things trended so far in October and November, obviously implying some worsening in trends there. And then second question on the campaign optimization solution, some encouraging data points on that. Is that now widely available to all enterprise customers? And just any stats on how many enterprise customers or how much of enterprise spend is going through that managed solution would be helpful.

Yes. Thanks, Trevor. This is Tim. On revenue trends for Q3 and what we're seeing so far. So Q3 follow the same kind of trends that we suggested when we issued guidance with month one being what it was at the time. The revenue trended roughly in line to a little bit down towards the end of the quarter. Despite that, we came up within a couple of million dollars better than our guidance overall. As far as what we're seeing so far, the guide that we're showing right now kind of reflects current conditions. Basically, we have not seen any kind of return to normal seasonality that we've seen in the past. Hence, the sequential decline, that would be a little bit steeper than what we've seen in previous Q4s, but generally in line with what we're seeing right now.

Thanks, Trevor. And then yes, on the campaign optimization, yes, so it's not relevant to the vast majority of our customers who are small businesses, but to larger sophisticated enterprises it is largely available and really depends on our ability to agree with them on a set of goals for the campaign that we can then drive toward and different employers have different goals, whether they're metrics like cost per click or cost per hire or things like that or a number of hires they're looking for. So that's really critical in understanding so we can get that solution up and running. But the results there early on, as we spoke to, are extremely promising and increasing number of employers are hitting their goals, and we expect that tool and that optimization to continue to improve as it rolls out to more and more customers.

Okay, great. Thank you both.

Thanks for your question. Our next question is from the line of Ralph Schackart with William Blair. Your line is live.

Good afternoon. Thanks for taking the question. Two, if I could. First, just sort of – obviously, it's a tough cycle in the market environment right now, but philosophically, on margins, is there a certain level that you would look to optimize the business as we sort of wait through the cycle to return back to some growth phase. And then maybe just as a side, during this cycle also, you're obviously getting a lot of jobseekers, maybe speak to when the cycle does turn, what that does for the platform, as people are introduced to the brand and you're acquiring more jobseekers on the demand side. Thank you.

Hey, Ralph, this is Tim. Thanks for the question. On the margin philosophy. So we approach all of our go-to-market decisions from the bottom up. So we don't have a target margin that we're looking at, at any point within the cycle. Q3 was very strong at 35%, and that's a function of the investment opportunities that we saw within the period. Q4 very well look different, especially based on our guidance. But as the EBITDA margins could come up or down based on what we see in our response to it, we still are very confident in our long-term adjusted EBITDA margins of 30% as the company continues to grow in scale.

Yes. This is Ian. And I am really excited about the growth in jobseekers. We just had our third consecutive quarter of organic jobseeker growth. And the reality is, it isn't the work that we have done in the current quarter that drives that growth. It's all the work that we have been doing over the last couple of years, which is now paying dividends in the mid-term and the long-term, and similar to that, over this past year where the macro has driven a swoon in the recruiting industry, we have continued to invest for the mid and long-term. And I would anticipate that these investments will pay off similar to the investments that we made in building jobseeker brand awareness to 80% on an aided basis, as well as things like Phil, our AI personal assistant as well as our ongoing investment in things like our number one rated iOS and Android mobile app. The payoff for these investments, and in particular, from jobseeker is fundamentally, our product gets better, the larger and more liquid our marketplace becomes and so as far as the long term, what we're seeing right now is a validation of the strategy we've been pursuing, and we remain focused on our long-term product road map.

Great. Thank you both.

Thank you for your call and your question. The next question comes from the line of Doug Anmuth with JPMorgan. Your line is live.

Great. This is Dave on for Doug. Thanks for taking the questions too. So the first one, curious what kind of the messaging you guys are hearing from businesses in terms of plans going into 2024. And looking at it, it sounds like Fed rate easing is what's needed for employers to get more confidence in getting their hiring plans back up and growing again. Is that the right way to think about it? And are there any other signs that you might be looking for to get more confidence? Thank you.

Thanks, Dave. Yes. So obviously, we talk to businesses all the time about their hiring needs and what is so clear at this time is that their level of uncertainty about the outlook is profound. And so what we hear from them over and over again, which is different in other downturns like COVID, for example, where we heard about their businesses falling dramatically is less about dramatic downturns in their business and more about their uncertainty in wanting to invest for the long-term in more and more people. Even though in many cases, the results of their businesses deserve it, they're reading headlines. They're talking to other business people and feeling uncertain. And so it's that – whether it's through the mechanism of cost of capital from the Fed or other animal spirits that cause an increased level of confidence from headlines and talking to other business people, or whatever the case maybe that increased confidence in duration of outlook and strength that we're through whatever the next twist and turn of this unprecedented macro cycle is, is what employers are waiting to hear more of. The good news is, to Ian's point earlier, we have more organic jobseekers coming in every single quarter who are experiencing what an amazing product

And I would just add to that, in addition to sort of capital markets availability of funds for investment and/or perceived outlook on the market. Another factor that drives a lot of recruiting within businesses is, of course, turnover. And what we're seeing right now is a significant reduction in the quit rate amongst job – sorry, the currently employed compared to where we were a year ago. We sense that great resignation is over and it's become not only apparent, but I think it's changing the posture and confidence of business owners as they have longer tenured employees who are fully on ramped and trained, and so their urgency around hires is definitely being impacted by that.

Understood. Thank you.

Thank you for your question. [Operator Instructions] Our next question comes from the line of Kunal Madhukar with UBS. Kunal, your line is live.

Hi, thanks a lot. This is Jason on for Kunal from UBS. A couple of questions for me as well. The first one is on OpEx seasonality. Can you guys give us a refresher on the typical seasonality of different OpEx line items? It's been pretty lumpy, but what kind of seasonality can we expect going forward in this environment? And also you mentioned in the letter that Q3 R&D expense came in a lot lower because of lower personnel-related charges. Could you please explain what that really means? And separately, on capital return, you guys have been running cash level pretty consistently at $250 million. I understand that share repo is done more opportunistically. But given the current stock levels, would it be reasonable to assume that anything well above $250 million cash level right now, you guys will be returning back to investors? Thank you.

Thanks, Jason. This is Tim. I'll take these. So as far as OpEx seasonality, one thing I'll say off the bat is that it's been a while since we've seen more typical seasonality. So we have to go back to the 2019 and before that to kind of understand that picture. But in broad strokes, the hiring market really comes back to life after a holiday lull in January and then a fairly steady ramp into Q2 and then relatively flat through the balance of Q3, picking up into September, October and then back down during the holidays. And oftentimes, the very flexible operating expenses that we have, specifically in our go-to-market motion and sales and marketing, that will kind of follow a very similar pattern. And that's just basically because we're very responsive to the demand environment that we find ourselves. But like I said, at the top of the question, we haven't seen that typical seasonality for quite a while. And so, no operating expenses have bumped around a little bit, and that is because we are doing the very thing. So we're responding to the demand environment that we see. To your second question, R&D expense is coming down a little bit. We did a reduction in force back in Q2. And so what you're seeing in Q3 is the full impact of that rolling through the P&L. And so you see something similar as well in G&A, although to a lesser extent, to some other interest – other expenses increasing a tiny bit. And then sales and marketing came down primarily again because of our marketing efforts to invest where we see opportunities. And then to your last question, about our capital allocation strategy in general, our philosophy hasn't changed during all parts of the cycle. So when we look at organic investments, that is, by far and away, our first priority, and we still feel very good. We're cash flow positive. So clearly, we're well funded there. Secondly, we are scouring the world for interesting acquisition targets. So we're staying diligent there. And then to your point, on capital returns, we've been actively repurchasing shares over the years. And so we – the philosophy there is the same when we see a dislocation in the stock price. We're happy to invest in our own shares, and we approach that with the same mindset as we do with organic investments, i.e. with a longer-term mindset spanning years. So I'll just say we're still participating in share repurchases, but we do it opportunistically with priority being on organic investments and inorganic investments.

Thank you very much.

Thank you for your question. Our next question comes from the line of Justin Patterson with KeyBanc Capital Markets. Your line is live.

Great. Thank you. This is Jacob on for Justin. How are you thinking about the dynamics between paid employers and revenue paid employer into 4Q? Is there anything specific you're seeing so far that would cause 4Q to deviate from typical seasonality in revenue per paid employer? And in paid employers, how should we approach the pace of substantial decline if we lap the big decline you saw in 4Q 2022? Thanks.

Thanks, Jacob. This is Tim, again. So for Q4, what we would typically see is paid employers ticked down more materially than in other quarters. And that is due to the fact that the vast majority of our paid employers are comprised of small and medium-sized businesses, and they tend to hire quite a bit less as they go into the holiday season, whereas larger enterprise employers, they also reduce spending a little bit typically, but not nearly to the same degree. And so that also means that revenue per paid employer going into Q4 will typically go up, and a lot of that is largely due to the mix shift from SMBs towards enterprise during that period. So I've said to an earlier question that we've not seen typical seasonality for a while, but that trend for paid employers sequentially ticking down in Q4 with revenue per paid employer ticking up in Q4 for those very reasons seems like a pretty reasonable expectation this time around.

Thanks.

Thank you for your question. We have a follow-up question from the line of Trevor Young with Barclays. Your line is live.

Hey, guys. Just more bigger picture away from the near-term trends. You flagged the significant growth in jobseekers, any color you can share on where those jobseekers are engaging in terms of which services? Is it mobile app, mobile web or desktop any noticeable differentiation between like frequency of visits, time spent in the app or on the website, likelihood of applying across those different surfaces. Just curious on that.

Yes. Thanks, Trevor. The growth in jobs – organic jobseekers is obviously a very exciting part of our business and such a strong long-term indicator of the strength of the marketplace. So to your question on where they're interrupting, First of all, obviously, when they join, they have to onboard and sort of build a profile and give us something to go on so we can start matching the right jobs. And right away, Phil plays a central role. So they're in a dialogue rather than filling out a form and making that process as we continue to iterate and get smarter and better, continuing to make that process of getting the process started, which is often the most difficult part of the process for jobseekers and the scariest of making that as easy and as human and as natural as possible. And so we just keep getting better at that. Two is that the brand being so much more well known, so they're going from over a decade 0% brand awareness to over 80% brand awareness. Jobseekers are leaning in from the moment they get started and have a level of trust coming in that you can just see. In terms of where they do it, job seeking is a dominantly mobile activity. Desktop really isn't a major factor. So that's both mobile web and mobile app in terms of sort of access points into our marketplace. But regardless of how you come and find us on which mobile platform which app store, which browser you're using, et cetera, the fundamental experience of feeling like there's a real human being rooting you on in the form of Phil and that this is a real place where you get very quick feedback where you immediately started getting invited to apply to jobs that are a great fit for you, et cetera. That's what's really working for us.

Thank you.

Thank you for your question. Ladies and gentlemen, that will conclude today's