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

Thank you, and good afternoon to everyone joining us today. While the broader labor market remains soft,

Thanks, Ian, and good afternoon. We continue to focus on product and technology investments that drive better matching and engagement between employers and job seekers. These efforts are what we believe will drive growth in paid employers and revenue per paid employer over time. Our 2024 acquisition of Breakroom continues to gain momentum. Since the start of its U.S. rollout in Q4 of 2024, Breakroom has increased the number of employer pages published using aggregated data from frontline workers. As of Q2, Breakroom has published over 8,000 employer pages powered by over 1 million ratings. These pages aim to provide job seekers with a rich data-driven understanding of working conditions at specific companies to make more informed decisions about their next great opportunity, and we are excited to continue its growth. In 2023, we launched our AI-powered campaign performance optimization solution for enterprise customers, which is designed to provide employers with greater certainty of hitting their campaign targets. In Q2, we further enhanced our bidding model, leading to more efficient spend allocation for employers. Our automated campaign optimization solution was nearly 20% more effective at achieving campaign targets in Q2 compared to the prior quarter. One of our key priorities is to accelerate engagement between employers and job seekers.

Thank you, Dave, and good afternoon, everyone. Our second quarter revenue of $112.2 million came in above the midpoint of our guidance and represents a 2% increase quarter-over-quarter. This sequential increase is driven by the continued growth in our quarterly paid employers, which reached 66,300 in Q2, representing a 4% sequential increase in our first Q1 to Q2 sequential increase since 2022. Revenue per paid employer for Q2 was $1,693, down 4% year-over-year and down 2% sequentially. The sequential decrease is primarily a result of the increase in the number of paid employers on the platform with new and returning paid employers ramping up their hiring campaigns over the course of the quarter. Net loss in the second quarter was $9.5 million compared to a net income of $7 million in Q2 '24 and a net loss of $12.8 million in Q1 '25. Adjusted EBITDA was $9.3 million, resulting in a margin of 8%. This compares to an adjusted EBITDA margin of 23% in Q2 of 2024 and 5% in Q1 of 2025. The year-over-year decline in adjusted EBITDA margin is primarily a result of sales and marketing investments. As of June 30, 2025, our cash, cash equivalents and marketable securities totaled $421.2 million. In Q2, we purchased 10.2 million shares of our Class A common stock for a total of $56.5 million. Moving on to guidance. We expect Q3 2025 revenue to be between $110 million and $116 million. The guidance midpoint would represent a 1% increase quarter-over- quarter and notably the first time our revenue has grown from Q2 to Q3 since 2021. Our guidance assumes that current trends will continue within a tempered hiring market and dynamic macroeconomic environment. Our adjusted EBITDA guidance for Q3 '25 is $6 million at the midpoint or a 5% adjusted EBITDA margin. We will continue to be disciplined in our capital deployment and invest in innovative product initiatives and high ROI marketing campaigns. Based on the trends we've observed year-to-date, we continue to believe that a return to modest year-over-year revenue growth in the fourth quarter with full year adjusted EBITDA margins in the mid-single digits is a likely scenario. Despite persistent and ongoing macroeconomic challenges, we've maintained adjusted EBITDA profitability while investing in our product and technology, remaining confident in achieving our long-term goal of 30% adjusted EBITDA margins. Our marketing spend is delivering strong returns, contributing to sequential employer growth year-to-date. Our flexible business model allows us to strategically scale investments up or down in response to changes in the hiring environment. Regardless of the state of the labor market, we find it prudent to continue investing in our product and technology to create value on both sides of our marketplace. We remain confident in our ability to navigate the current hiring environment and believe we are well equipped to capitalize on the eventual labor market recovery. With that, we can now open the line up for questions. Operator?

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

Good to see stabilization in the model. Just a couple, if I could, please. Maybe to start off, can you maybe talk to any differences you might be seeing between SMBs and enterprise. And just kind of curious, the stabilization you're talking about and return to growth. Is that fairly broad-based or maybe focused within a particular sector? And I have a follow-up.

It's Ian. And here's what I would say about what we're seeing in the business that hiring definitely remains muted, but we are seeing a lot of evidence of both, not just, I guess, stabilization, but also of momentum. And that spans SMB and enterprise. And when you look at it, if you look over the last 3 quarters in terms of revenue performance, 1 month was interesting, 2 months was very interesting, 3 months becomes much more compelling as we look at what's happened with our sequential revenue growth if we were to hit the projections that we gave you for Q3 in terms of revenue. And the same pattern is playing out with quarterly paid employers. So Q1 was particularly strong this year, it's particularly relative to the last 2 years in terms of the growth of Q1 over Q4. And then that growth continued sequentially into Q2. That's got us feeling really confident and feeling like this is a broad-based recovery and that it is spanning businesses of all sizes. That is not to say that the labor market is rebounding, that is to say that it is stabilizing. Certainly, the quit rate remains very low at the low point. It's trending at the low point it's been at for the past decade. And so we're watching all of these metrics closely, but it is encouraging to see that the stabilization that we gave you a scenario for and projected was possible back as early as Q1 has proven to be a pattern that is now manifesting. And should it continue, then it's very likely that in Q4,

Great. And then maybe just one more on that. Maybe just sequentially compared to last quarter on this call, maybe you could kind of sort of frame the tenor of the conversations you're having with employers about future hiring needs. And then obviously, AI is in every conversation. Is AI impacting any of their future hiring needs as well.

Thanks, Ralph. This is Dave. Yes. So we have definitely noticed over the past 90 days that anxiety around tariffs has abated a little bit. And as we talk to both SMBs and enterprises, we hear a little bit less about that. Despite that, they remain uncertain and the overall hiring market remains soft with signs of stabilization as Ian just described. And as we think about different sectors versus this time last year, as an example, health care continues to be a big category that continues to grow in terms of overall demand for new labor. And on the flip side, education, which we see a normal seasonal pattern of picking up in Q2 as schools prepare for the following year, it's actually weak compared to the prior year, where there was a real catch-up effort at open teacher roles and other educational jobs. So it's down significantly in education year-over-year despite it being up sequentially in the quarter. So those are the big trends. Most of the other sectors sort of net out to down a handful of points year-over-year. And so that's sort of the main trends we see.

This is Ian, again. I think you asked about -- did you ask about AI at the end there.

Yes, I think you did.

I just want to say that yes. Since we're talking about it. I mean if you look at the category that would be most likely impacted by AI, you would look at technology. It's the one that's had the most headlines. It's the one that's had the most discussion, and that was down 5% quarter-over-quarter on a job postings basis -- sorry, that was year-over-year, it was down 5%. And if you look at that down 5%, that puts it squarely in the category of ordinary, meaning that if you look at the broad spectrum of job categories, what you see is that makes it a very average decline, putting it nearly at -- effectively the median, which means so far, both quantitatively and qualitatively, we're not seeing significant disruption and/or impact from AI in terms of the number of jobs being posted.

Your next question comes from Eric Sheridan with Goldman Sachs.

Maybe just one in 2 parts. I think during the prepared remarks, you mentioned some of the generative AI agents and making more of your content available to them and possibly driving traffic and maybe even high-yielding traffic from those sources. I wanted to talk a little bit about the decision behind that and how you think about those potential AI agents as opposed to maybe more traditional marketing channels becoming sources of traffic and sources of conversion and how you think about free versus paid contribution from those going forward?

Yes. I mean, this is Ian again. It seems apparent that the use of various AI answer interfaces, whether it be ChatGPT or Google's, I mean, the usage of that is increasing dramatically, particularly for research-oriented questions. So those would be questions where job seekers were looking for anything from like what are the skills required to work in a particular job category to what are the salaries paid for said job category or even like what are the ratings or reviews that -- what do people say about working at a particular company. And so they're in higher and higher volumes, we're seeing the various AI large language model interfaces start to play a bigger role. As far as the growth that we are experiencing, yes, we have always made our site as friendly as possible for the variety of methods job seekers might use to find us. So that track was already long laid. And then what makes it particularly effective is the fact that when we do come up as an answer to the question, we are a brand that is strong enough to be recognized already carry enough credibility through that recognition to be a destination from that answer for the job seeker to then go visit. And I think a large part of the explosion in traffic that we saw was coming from the fact that we are being included in these answers and people are using these methods more. That said, I just want to reiterate that while that growth is large on a percentage basis, as a measure of the overall traffic that comes to our site, it is still small. It is a rapidly growing channel that we will continue to watch closely, but it is still an emerging channel.

Your next question comes from Trevor Young with Barclays.

Actually, just dovetailing on that prior question. How is AI overviews impacting paid and organic traffic to

So Ian again. AI overviews are effectively answers to questions that job seekers type in that appear above blue links and they are being used in increasing volume for those research type questions that job seekers have when they're performing a job search. So it's certainly impacting job seeker traffic in terms of those that are doing research. In terms of active or engaged job seekers who are actively looking for work, it is having a very small impact. And in fact, when we look internally at that population, not only is it extremely healthy on the job seeker side, continuing the trends and momentum that we've been talking about for the last 18 months. But further, the traffic that's being delivered is highly engaged and very active in their job searches on

Great. And as a follow-up, on implementing AI features to help more employers streamline the whole hiring process, how do you think about guardrails on that to ensure compliance with all hiring regulations? There are some notable lawsuits getting headlines in the last few months around some other AI recruiting tools in market. And I'm sure you're looking to steer as far clear of those types of issues as you can.

Well,

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

This is Miles Jakubiak on for Justin. I would like to ask about

Yes. This is Ian again. I will take the

Miles, this is Tim, I'll address the second part of your question on paid employer growth. So like you said, we've had some healthy paid employer growth over the course of the year, so up 10% sequentially in Q1 and then another 4% in Q2. And like we've mentioned before, our customer base largely reflects the U.S. economy. So Dave mentioned that health care has been sequentially strong and even strong on a year-over-year basis, and that's largely reflected in our paid employer base as well. And we saw, again, relative strength in areas such as education, which is up sequentially and then even in transportation storage, along with those verticals have been particularly interesting to us, but largely reflective of the overall economy.

Our next question comes from Josh Chan with UBS.

So I appreciate the comment about stabilization not being a rebound. I guess at the same time, when you're talking about paid employers growing and expecting them to ramp in their hiring, that sounds a bit more like recovery than a stabilization. So could you just kind of like reconcile how you think about the end market and where you think we are at the labor cycle, if you will?

Josh, this is Dave. Thanks. Great question. Yes. So we see the labor market still being frozen based on quits rate and soft hiring rate versus sort of pre-COVID normal and the trends of significant cooling over the past 3 years or so. As we discussed at length on this call and previously. And to your point, exactly, we feel great about growing paid employers by 15% over the past 2 quarters, 10% last quarter, 4% this quarter. That feels really positive and is what we would expect during the stabilization period of performance for us despite the challenging and uncertain backdrop. So what we see going forward is we are increasingly optimistic about the scenario where we get back to year-over-year growth in Q4, and that is only one of the data points that makes us optimistic about that.

Okay. That makes a lot of sense. And I guess when you do get back to year-over-year growth in Q4, I appreciate that the guidance is for mid-single-digit margins for the year. How quickly do you think margins can lever any improved revenue trends as you see them kind of in the ensuing quarters?

Josh, this is Tim. I think a lot of that will depend on the shape of 2026 macroeconomically and then the progress that we see against some of the initiatives that we've been outlining during the last couple of calls. Just as a reminder, when we're making our decisions on significant investing in sales and marketing, in particular, we're doing so from a bottoms-up perspective. So responding to the environment that we're testing into areas of opportunity as they materialize and then doing so with a high degree of confidence because we have a lot of track record now of seeing how different employer cohorts mature over time and come back to us when they have hiring needs if they are more intermittent. And so that results in the margins that we're signaling as a likely scenario for this year's mid-single-digit margins. Now to the extent that we see a considerable amount of strength, then that means we'll invest into that strength, and we'll see revenue growth and then EBITDA margins follow over time. But as historical context, we saw margins in the 20% range when we were at the height of the hiring market back in '22. And so the difference between where we're at today and our long-term margins of 30% will largely be a function of the opportunities that we see between here and then.

Your next question comes from Doug Anmuth from JPMorgan.

This is Neeraj on for Doug. I just had a question on just the pricing and monetization. So I know the job openings in the U.S. have continued to remain weak. But could you talk about the ability to improve pricing and monetization over time as you continue to provide better quality candidates to employers?

This is Ian. I think when you look at a 32-month decline year-over-year in the number of hires that are going on that, that is not the optimal time to try to raise prices on our customers, but we have not been sitting idle. We've made numerous investments in just straightforward optimizations. We have announced multiple significant innovations that we've rolled out to both better inform job seekers as well as get them talking face-to-face with employers faster. Both sides of our marketplace are growing and thriving and appreciating the service we deliver. Certainly, monetization remains available to us, particularly as we start to not just see stabilization, but we start to see a recovery. Our philosophy internally is one where we deliver value first, get people to adopt the solutions that we provide and then extract value from them. I feel really good about where our strategy is out right now, not just in terms of the health of the marketplace, but also the adoption of the novel innovations that we're bringing to market and the speed with which they are growing. Definitely in the future, increasing monetization is a tool that is available to us and one we are focused on, but we will not do it while we were in this period of protracted decline in demand for recruiting services and protracted decline in the quit rate in the U.S.

Your final question comes from Glenn Shell with Raymond James.

Just one from us. I'm on for Josh Beck. With Breakroom rolling out in the U.S. and now with over 1 million ratings, where do you see this headed in the years ahead? And where could the impact show up across your traditional KPIs.

Thanks, Glenn. This is Dave. Yes, we're very excited about Breakroom based on getting past the 1 million. Job seekers are already giving us ratings and thousands of really major companies that now have a very meaningful rating there, et cetera, et cetera. But we're early on in our journey. And so there, I think there's exciting opportunities for us from an employer branding perspective and helping employers with that. The other area where we're excited about that is from a job seeker perspective, which is we see job seekers more confident, and that confidence comes through in their behavior when they are more educated about the job and about what a workplace is like before they go to work there. So if you think about a frontline worker who goes into an interview knowing that they are going to be in a workplace that has loud vehicles or knowing that they have to stand up for several hours at a time or something like that, you want to know that going in and not have that be a surprise and there are some jobs where that's a nonnegotiable item and many, many others. And so we're going to see that in terms of the number of job seekers that are attracted to us because we give them better information about what it's really like to work somewhere. We're going to see that in terms of their engagement once they come here to find out information like that and subsequently apply and accept the position. And we're going to see it with employers because it's another way to provide value for them that we believe they will pay for over time. As Ian said, as we first prove value and then think about how we capitalize on the value that we've created that employers will -- that will be part of the monetization overall, and we look forward to updating you more on that as the quarters and years come.