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Thank you for standing by. My name is Regina, 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, and good afternoon to everyone joining us today. At

Thank you, Ian, and good afternoon. As Ian touched on, we've made substantial improvements in our marketplace despite a historic labor market downturn. I'll highlight just a few. First, we are encouraged by the share gains in job seeker traffic, a proof point that our strategy is working. In 2024,

Thank you, Dave, and good afternoon, everyone. Our fourth quarter revenue of $111 million, represents an 18% decline year-over-year and is down 5% quarter-over-quarter. The decrease year-over-year is primarily due to continued softness in hiring demand, while the quarter-over-quarter decrease is consistent with seasonal hiring patterns in the fourth quarter. Quarterly paid employers were 58,000, representing an 18% decrease versus Q4 2023 and an 11% decrease sequentially. The year-over-year and quarter-over-quarter decreases are primarily reflected by reduced demand from SMBs, which comprise the majority of our quarterly paid employers and the continued uncertainty and volatility of the labor market. Revenue per paid employer was $1,920, roughly flat year-over-year and up 7% sequentially. The quarter-over-quarter increase is primarily due to the slight mix shift from subscription revenue to performance revenue. Net loss in the fourth quarter was $10.8 million compared to net income of $5.6 million in Q4 2023 and a net loss of $2.6 million in Q3 2024. Q4 adjusted EBITDA was $14.4 million, equating to a margin of 13%, compared to $42.4 million, a margin of 31% in Q4 2023 and $15 million with a margin of 13% in Q3 2024. Net income and adjusted EBITDA decreases both year-over-year and quarter-over-quarter were driven by revenue declines. To reiterate a prior point, our full year adjusted EBITDA margin of 16% was towards the high end of the low to mid-teens adjusted EBITDA margin range we shared at the beginning of the year. Cash, cash equivalents and marketable securities was $506 million as of December 31, 2024. Moving on to guidance. Our Q1 2025 revenue guidance of $109 million at the midpoint, represents an 11% decline year-over-year and a 2% decline quarter-over-quarter. The year-over-year decline represents a continuation of the prolonged labor market downturn. The quarter-over-quarter trend, however, is reflective of a more typical seasonal pattern and would represent our strongest change in sequential revenue from Q4 to Q1 since 2022. Additionally, we have seen favorable underlying trends in the business quarter-to-date, leaving us cautiously optimistic as we begin 2025. Our adjusted EBITDA guidance for Q1 2025 is $5 million at the midpoint or a 5% adjusted EBITDA margin. Embedded in this guidance is the year-over-year and sequential increase in sales and marketing dollars as we lean to the favorable trends we have seen year-to-date. Looking beyond Q1, qualitative improvement in sentiment from both employers in our marketplace and indicators from external data sources make us cautiously optimistic about the outlook for 2025 after the 28-month consecutive decline in US hiring activity. While we remain ready for a wide range of macroeconomic scenarios, current trends suggest employer sentiment may result in the beginning of the recovery in hiring activity over the coming year. If these trends hold, we believe a likely scenario would be achieving year-over-year quarterly revenue growth by Q4 2025, driven by the advances in our products and technology and increased opportunities for investment in ROI positive sales and marketing initiatives. In this scenario, we would expect to generate adjusted EBITDA margins in the mid-single-digits for 2025. Conversely, if hiring demand further erodes in contrast to the positive sentiment we've discussed earlier, we would adjust our operating expenses and generate higher adjusted EBITDA margins, consistent with our long-standing and disciplined approach to managing the business through economic cycles. The positive initial signs we've seen in 2025 are encouraging and we remain confident in our long-term growth opportunity, but the shape and timing of the eventual labor market recovery remains uncertain. We believe our flexible operating model and healthy balance sheet position us to take advantage of the growth opportunities while ensuring we're resilient in the face of uncertainty. With that, we can now open up the line for questions. Operator?

[Operator Instructions] Well take our first question from the line of Ralph Schackart with William Blair. Please go ahead.

Good afternoon, and thanks for taking the question. It sounds like you're seeing some positive trends that you talked about quarter-to-date. Maybe if you could just provide a little bit more color on that? Is it certain verticals you're seeing? Is it geographically based? Is it broader based? Just anything you could add on the reactivations. And I have a follow-up, please.

Yes. Hey Ralph. This is Tim. I'll give a little color there. So, positive trends that we've seen so far really started towards the back end of Q4. So revenue came in better than guidance with the holiday season in particular, doing a little bit better than expectations. And then, really since then, we've seen paid employers in general, including the number of employers reactivating their accounts picking up pretty meaningfully. And that benefit or that trend has been really fairly widespread. And all of these trends right now translate to our Q1 revenue guidance of 2% down at the midpoint. And again, like we pointed out on the call, that's in stark contrast to the negative 10% and negative 13% trends that we've seen in 2024 and 2023, respectively. So what we're seeing right now is more in line with normal seasonality rather than the trends that we've seen over the last two years.

Yes. This is Ian. And I would just add that from external sources like the NFIB where we're seeing an optimism index, that's posting its highest reading since October of 2018 to internal sources, whether it's our sales team or account management team, who talk to customers every day and who have had a number of interactions with the sentiment that we're getting from businesses is particularly strong relative to what we were experiencing throughout the year. And in particular, for a Q4, our business is historically seasonal and the lowest point in demand for hiring services is Q4, because everybody is effectively on holiday. So to see strength during this period is particularly noteworthy.

Great. And if I could just add one more. On the guide for Q1 that reflects the margins coming down, should we interpret that as you're investing in front of some of the trends that you're seeing on the more optimistic side and the feedback that you're hearing from your employers?

That's exactly right. Yes. So we let the data guide our decision making on where we're making our sales and marketing investments in particular. And so given the trends that we've seen, it makes the most sense to us to lean into that.

Our next question comes from the line of Josh Chan with UBS. Please go ahead.

Hi. Good afternoon. Thanks for taking my questions. I was wondering on the more positive quarter-to-date trends, are you able to see the difference between sentiment improvement, which does seem to be a very wide spread to kind of actionable behavior changes? Like I guess I'm wondering whether reactivations mean that customers are preparing to hire or whether you're actually seeing hiring activity actually increase as we're going through the quarter here?

Hey, Josh, this is Tim. So when we know the reactivations, yes, these are high intent employers that are reactivating in order to post a job. And so our Q1 guidance embeds the actual behaviors that we're seeing today. But we've also been noting that positive sentiments over and above the actual behaviors that we're seeing today.

Okay. Great. And then I guess on your commentary about the trajectory of revenue from here, Am I right in interpreting that you're kind of ruling out a return to revenue growth prior to Q4, even in a recovery scenario. I just wanted to be clear what you're kind of signaling there with that shape? Thank you.

Yes. We think if the positive sentiment that we're seeing right now is a precursor to an overall recovery in hiring. We think year-over-year growth achieved by Q4 would be a likely scenario. But I think achieving it before Q4, I think there's less of a chance of that.

Our next question will come from the line of Trevor Young with Barclays. Please go ahead.

Great. Thanks. First one, just on kind of the more downside scenario for the full year. If there were a further deterioration and your commentary about adjusting OpEx accordingly, would that imply EBITDA margins above that kind of mid-single-digit number that you were talking about in the recovery scenario. Just want to clarify on that. And then second question, on a category basis, can you quantify how much exposure, if any, you have directly to government hiring or indirectly through contractors and the like?

Yeah. So in the downside scenario, yes, we would expect to generate higher adjusted EBITDA margins than we would in the upside scenario, and that's pretty consistent with our operating approach where when we see opportunities to invest in. We do that, and that means margins will be a little bit lower in the near and midterm. But where we see softness if we pull back on expenses and generate higher margins.

And then to your question about government and contractor hiring, if you look at the entirety of the US labor force about $3 million of the $160 million or so in the total labor force or federal government employees. So our -- as we said before, our marketplace generally reflects the entirety of the US economy. The one place where we notably have SKU is toward SMBs as opposed to enterprises and large federal agencies would be more like enterprises in our -- in the way we think about the business. So the difference in hiring in federal workforce plans really isn't an outsized driver of our business.

Our next question comes from the line of Doug Anmuth with JPMorgan.

Great. Thanks. It's Bryan Smilek on for Doug. Could you just talk about the early traction with

This is Ian. Hey. The -- so

Our next question will come from the line of Josh Beck at Raymond James. Please go ahead.

Thanks for taking my question. I just wanted to go back to some of the macro data and you talked a little bit about quit rates. It seems like they certainly have come down, but are somewhat stabilizing. I don't know how much it's a top-down versus maybe bottoms-up forecast. But is that the right way to think about the macro backdrop for this year is kind of things don't really get that much worse and maybe stabilize to some degree on metrics like quit rate and higher rate?

Hi Josh, this is Dave. So first of all, I think stabilization among quit rates and higher rates and things like that would be a big improvement over the past couple of years. And so exactly to what you're saying, I think that's a very reasonable scenario and one we're cautiously optimistic about. In terms of quite rate specifically, the way we think about hiring on a gross basis, all the hires $6 million or whatever per month on average that happened in the U.S. economy, 90%-plus off and 95%, 97% of those hires are to backfill somebody who quit or left. And so that's the driving engine. Obviously, we see in the headlines a lot of coverage for good reason about net job growth of a few hundred thousand being a big deal in the economy. And obviously, over the long-term, those net add up. But in any given month, 90%-plus of the hiring activity out there is driven by people leaving their job, and that's primarily because people are quitting. So, going from the Great Resignation a few years ago to the Great Stay has had a big impact on overall hiring activity. And if we saw a stabilization this year, which we're cautiously optimistic about, that would make a big difference versus the precipitous declines we've seen over the past couple of years.

Okay. Super helpful. And then I know you already mentioned that the biggest SKU is probably SMB versus enterprise. But any call out around the technology vertical. Obviously, that was one where at least probably in the enterprise land, there was a big rightsizing the last couple of years. It generally seems like there's more hiring happening in the tech sector. There's obviously some maybe exceptions around coding and that kind of thing. But just any broad-based observations that are notable within tech?

Sure. Yes. So, as we look across verticals, we're not over-indexed to tax, so it's one of the top 10 verticals, but by no means a big disproportionate driver for us. But as we look out, we see all the jobs in the economy effectively, we're down a bit, but nothing crazy over the past year. But in Q4 versus prior quarter, Q3, sequentially, it was pretty stable in tech. What we've not seen is the AI hiring boom within tech take over the entire category as we think of the definition to tech a little bit beyond Silicon Valley. And so what we see is some recent signs of stability in tech, which is given news versus what we've seen over the past few years.

Okay, super helpful. Thank you.

Our next question comes from the line of Mark Mahaney with Evercore. Please go ahead.

Okay. Thanks. I want to ask two questions. But first, thanks for the guidance commentary for the full year in terms of revenue recovery and EBITDA margins. That's super helpful. I want to ask first about the cost structure and they are under a variety of most scenarios. Is the cost structure one that can be held or just how much room if things -- if we get a negative surprise, how much buffer do you think you have in your current cost structure to have -- to handle a negative surprise? I'm sorry, that's how I wanted to phrase that. And then the question I want to ask to Ian is eventually, we'll come out of this, and we'll get back to a healthy job spark. I wonder if you think that there is going to be something if there's -- I don't know if there's a cultural change or a social change or a technological change that will make this recovery different than the last couple of cycles that you've gone through and that we've gone through? Is there something that tells you that that the job recreation cycle will be different somehow this time around? Thanks a lot.

Hey Mark, this is Tim. I'll take the first part of the question. So, as far as levers in the business that we can control. The first bucket of spend that we talked about a lot in the past, that's highly variable are sales and marketing spend. And even in Q4, we spent north of $50 million with lots of flexibility to go within that bucket. And as you know, we spend that up and spend that down based on the return on investment that we see in front of us. So in a downside scenario, we'd be able to pull back because strategically, we have a very small percentage of that's been committed to future periods. So we can flex that down accordingly. And then beyond that, we have a number of other measures that we can use to control costs, and this would be an ordinary course of any business managing through any kind of prolonged downturn. We've shown that we can do that in the past. And so we would do that future if needed as well.

Hey, Mark, it's Ian. I – such a great question. I think the -- I've been at this job for almost 15 years, and I have seen many different market conditions. I've seen extraordinarily high unemployment. I have seen low unemployment. I have seen long lulls [ph] roles in specific categories. And now we are seeing a two-year lull across every category effectively. And what I will tell you is this, every time things turn south, people think it's forever and it has never been forever. And every time a new technology has entered the market, there has been predictions of widespread impact to jobs. And I have yet to see the technology that destroyed more jobs than it created. So I remain confident from all of my past experience that there will be a recovery, and it will not be different from past recoveries. We will see a rebalancing of the labor market back to something that is stable and more predictable than what we have experienced in these past extraordinary couple of years. I think extraordinary times, deliver extraordinary outcomes. And these were some extraordinary times. I think we're hopefully coming through the other end of it now. We will see. We've given you our best opinion based on known data, and we will see where the data takes us in ensuing quarters.

Yes. One other thing I'd add there, Mark, is that as we see what the next wave of jobs is likely to be. I think one of the things that is possible that we'll see is that a lot of the skills and experience that were required to get jobs now requires new skills and new experiences. So that has the ability to potentially devalue some longtime skills that have been highly valued, but at the same time, level the playing field for people who have fewer skills, less experience, less education, et cetera. And we've seen that in prior technological cycles as well, where -- one technology replaces another, but I think that could have significant implications for what sort of jobs and what sort of skills like the ability to learn a new skill that no one yet has today because that job doesn't exist yet. It may be necessary two years from now.

Okay. Thanks, David. Thanks, Ian. Thanks, Tim.

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

Thanks so much for taking the question. Maybe two, if I could. How would you characterize the current competitive landscape? We've talked a lot about the end demand or the macro landscape that you're facing coming out of 2024 and some of what you're seeing to start this year. But how would you characterize what you see broadly on the competitive landscape and what you're sort of penciling in for that dynamic as we get deeper into 2025? And second question, you guys were clearly early on AI broadly as a theme and running AI through your platform, what are your key initiatives to extend some of the AI dynamics around the business through 2025? And how do those inform some of your key priorities? Thanks so much.

Great question. So this is Ian. The way we are looking at competition right now is when the market tilts as much as it has away from employers having demand for recruiting, what it does is it increases demand amongst job seekers to find work, makes it harder for them to find a new job. It makes it take longer for them to find a new job. And so the lens we have been using in the last couple of years is really who is gaining market share with job seekers. To us, that is the fight right now. There is less and less over the last two years, demand for recruiting services, but there is increasing demand amongst job seekers. So who is winning there? Because to me and to the team here, that is predictive of who is going to be the mid- and long-term winner within the category, which is why I'm so satisfied with the results that we have been delivering, not just in the last quarter, but over the last couple of years with growing our job seeker base. As to how AI is impacting the category and how we have used it traditionally and how we're using it now, so much of what we have done with AI is around matching, trying to find the right person to talk to the right employer at the right time. as we go forward and with the evolution and I say, revolution in what is happening with the AI technology, what it is enabling is an improvement in the post- matching experience where you have to prompt and induce the two sides to actually engage with each other. So what we're seeing is whether it's something that helps the employer look better to the job seeker and the content they put in their job description or the job seeker having a better resume to show to the employer or even the preparation for job seekers as they get ready to go -- have that conversation and get ready to interview, AI is permeating every part of the experience, and it's not just going to be about matching. And I think it's going to be the leveraging of our proprietary data the way we've always used it. to train the algorithms to create the best possible matches. And then it's going to be the UX components that AI can impact in terms of the engineering of the 2 sides to not just see each other and like each other, but actually engage with each other.

Thank you so much.

[Operator Instructions] And our next question will come from the line of Justin Patterson with KeyBanc Capital Markets. Please go ahead.

Hi. Thanks for taking my questions. This is Jacob on for Justin. With some more encouraging signals on the trajectory of the US job market going to 2025 that you shared, can you discuss how you're viewing return on marketing spend and how this may vary across different her market scenarios?

Sure. Hey, Jacob, this is Dave. So yeah, we have a very consistent philosophy that guides us and guided us in being a little bit more aggressive in Q4, and you saw the results and is consistent with how we're guiding in Q1 in terms of marketing. We are extremely ROI focused. So -- but we think about ROI in a few different ways. One is what's the five-year or longer return -- total return on investment. One is what's the brand impact of the advertising and another is what's the cash-on-cash return? How long does it take to get the investment back, so we can recycle it and invest it again? And so, that's our philosophy. When you see a spend up, that's because we see the return across those 3 metrics getting better. And you see a spend down is because we're responding to what we see. In some cases, it takes a few hours to adjust up or down depending on the type of media or advertising or sales and marketing that we're considering. In some cases, it takes a few weeks, but very little of our marketing spend is committed months and months in advance. And so that's sort of the philosophy. And so we were -- when you compare it to the sort of sequential seasonal patterns that we saw in prior years, we were encouraged by what we saw in Q4 and Ian mentioned earlier, reactivations being one of the ways in which those returns on investment manifest themselves.