ZipRecruiter, Inc. (NYSE:ZIP) Q1 2024 Earnings Call Transcript

ZipRecruiter, Inc. (NYSE:ZIP) Q1 2024 Earnings Call Transcript May 11, 2024

ZipRecruiter, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Thank you for standing by. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the ZipRecruiter, Inc. Q1 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Drew Haroldson with Investor Relations. Please begin.

Drew Haroldson: Thank you, Operator, and good afternoon. Thank you for joining us in our earnings conference call, during which we will discuss ZipRecruiter performance for the quarter ended March 31, 2024, and guidance for the second quarter 2024. Joining me on the call today are Ian Siegel, Co-Founder and CEO; David Travers, President; and Tim Yarbrough, CFO. Before we begin, please be reminded that forward-looking statements made today are subject to risks and uncertainties relating to future events and or the future financial performance of ZipRecruiters. Actual results could differ materially from those anticipated in these forward-looking statements. A discussion of some of these risk factors that could cause actual results to differ materially from any forward-looking statements can be found in ZipRecruiter’s quarterly report on Form 10-Q for the quarter ended March 31, 2024, which is available on our Investor website and the SEC’s website.

The forward-looking statements in this conference call are based on the current expectations as of today and ZipRecruiter assumes no obligation to update or revise them, whether as a result of new developments or otherwise. In addition, during today’s call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from GAAP results. Reconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in ZipRecruiter’s shareholder letter and in our Form 10-Q. And now, I will turn the call over to Ian.

Ian Siegel: Thank you and good afternoon to everyone joining us today. Q1 2024 revenue of $122 million was down 33% year-over-year, though it exceeded the midpoint of our guidance range. We generated $2 million in operating cash flow and $21 million in adjusted EBITDA, equating to an adjusted EBITDA margin of 17%. Though results were above expectations discussed in our last earnings call, the labor market industry backdrop has remained challenging through the first few months of 2024. Hiring levels continue to be subdued and the number of people quitting their jobs also remains low as the Big Stay persisted into Q1. However, there are also positive signs emerging as we begin the year. Q1 2024 is the first quarter with a sequential increase in quarterly paid employers since 2022 and is a potential indicator of stabilization in the hiring market.

While not yet a return to normal seasonality, where revenue ramps from Q1 to Q2, we see this as an early sign that the labor market downturn is potentially reaching a trough. Our balance sheet remains robust with over $510 million on hand, we are well positioned to weather this industry-wide downturn and enter an eventual recovery from a position of strength. Therefore, we continue to lean into investments in product, technology and marketing that we expect to drive a significant long term ROI. While we remain prepared for a wide range of scenarios as 2024 plays out, we are poised to increase investment as opportunities arise and alternatively are always prepared to show further cost discipline if conditions deteriorate. We have strong conviction that technology will fundamentally change how employers and job seekers connect to one another, and ZipRecruiter will be at the forefront of that change.

Why are we so confident in our long-term outlook? There are several strategic advantages that — us well positioned for long term growth. We have built an enduring brand as demonstrated by the 65% year-over-year organic job seeker traffic growth in Q1 of 2024, our matching technology is persistently getting better by utilizing the high volume of proprietary data points we gather from interactions between job seekers and employers in our marketplace. Phil, our AI-driven career advisor who introduced many job seekers to what it’s like to have an ally in the job search process, continues to expand his presence throughout the ZipRecruiter experience. And finally, our 150 plus integrations with applicant tracking systems are nearly a decade in the making, making it easier for large enterprises to activate our solution.

While there are many reasons we believe ZipRecruiter will win, what will drive market share gains over time are advancements in product and technology, which are the center of our investments today. There is no doubt that the post-COVID, labor market backdrop has made the past few quarters challenging on the topline for us and throughout the recruitment industry. But we remain dedicated to and incredibly energized by our mission of actively connecting people to their next great opportunity. With that, I will now turn the call over to Dave to review progress on our growth strategies. Dave?

David Travers: Thank you, Ian, and good Afternoon. As Ian mentioned, we are leaning into product and technology investments to capture the massive opportunity to transform how employers and job seekers come together. I will detail the continued progress we are making against our three strategic pillars to improve outcomes for employers and job seekers. Our first strategic pillar is increasing the number of employers and the revenue per paid employer in our marketplace. Growing revenue from enterprise employers is a massive opportunity for ZipRecruiter. Our ongoing effort to introduce new ATS integrations and improve upon existing ones is an investment years in the making and a key strategy to growing enterprise revenue over time.

These ATS integrations create value across our marketplace, with job seekers and our ATS partners benefiting from a smoother application experience and employers receiving a higher volume of applications. In Q1, we completed one of our newest ATS integrations with iCIMS. With this integration, employers will be able to seamlessly tap into ZipRecruiter’s marketplace and unleash our matching technology to drive talented applicants to their job openings. Job seekers can use ZipApply, our frictionless application process to apply to jobs in the iCIMS ATS without ever leaving the ZipRecruiter marketplace. Click-to-apply conversion increases by more than 4 times when customers move from external apply to ZipApply. Our automated campaign optimization solution, launched in 2023, continues to get better at improving employers efficacy in hitting their desired campaign targets.

In Q1, it was 17% more effective at achieving campaign targets than the prior quarter and nearly 40% more effective compared to the prior year period. We believe that increasing the efficiency by which we achieve customer targets will lead to growth in enterprise revenue over time. I will now move to our second pillar, increasing the number of job seekers in our marketplace. We continue to see strong organic job seeker activity driven by multiyear brand investments. In Q1, organic visitors from job seekers grew 30% sequentially and over 65% year-over-year. Strong organic job seeker activity is a primary reason why we have been able to significantly reduce marketing expenses as we balance our two sided marketplace during this period of subdued hiring activity.

Additionally, downloads for our industry-leading mobile app for iOS and Android grew 23% year-over-year, and engagement has remained strong as job clicks from our mobile apps increased 19% year-over-year. Additionally, in Q1, we streamlined the user experience for job seekers who prefer to hear about jobs via text messaging, which resulted in nearly 7 times more opt ins than the prior process flow. As our matching technology continues to improve, we send job seekers a text faster about a fresh relevant job when our technology is confident in the potential match, rather than waiting to only send a text when job seekers are invited to apply to a job by an employer. As a result, applications driven by text messaging grew over 3 times in Q1 compared to the prior quarter.

I will conclude with our third pillar, making our matching technology smarter over time. In Q1, we rolled out an algorithm improvement for some job postings to drive more job seekers toward jobs with fewer applicants. These are great jobs for job seekers because there’s less competition from other applicants to get the job. This also benefits employers by optimizing application volume for their jobs. These algorithmic improvements are the result of long-term technology investments and these investments are bearing fruit. For example, these jobs saw a year-over-year increase of 19% in applications per job in Q1. Now, I will turn it over to Tim to talk through the financial results and our guidance. Tim?

Tim Yarbrough: Thank you, Dave, and good afternoon, everyone. Our first quarter revenue of $122 million represents a 33% decline year-over-year, primarily due to continued softness in hiring demand. Quarterly paid employers were 72,000, representing a 32% decrease versus Q1 2023, but a 1% increase sequentially. Notably, Q1 2024 is the first quarter with a sequential increase in quarterly paid employers since 2022, which is a potential sign of stabilization in the hiring market. Net loss was $7 million in Q1 2024, compared to net income of $5 million in Q1 2023 and $6 million in Q4 2023. Q1 2024 adjusted EBITDA was $21 million, equating to a margin of 17%, compared to $35 million, a margin of 19% in the prior year period and $42 million with a margin of 31% in Q4 2023.

Net income and adjusted EBITDA decreases both year-over-year and quarter-for-quarter are primarily related to revenue declines. Cash, cash equivalents and marketable securities was $513 million as of March 31, 2024, compared to $520 million as of December 31, 2023. Moving on to guidance, our Q2 2024 revenue guidance of $117 million at the midpoint represents a 31% decline year-over-year and a 4% decline quarter-over-quarter. Our adjusted EBITDA guidance for Q2 2024 is $15 million at the midpoint or a 13% adjusted EBITDA margin. While this is not a return to normal seasonality, where revenue would ramp from Q1 to Q2, the midpoint of our revenue guidance would represent the lowest sequential decline we have seen since 2022. Our adjusted EBITDA guidance reflects a modest increase in operating expenses as we continue to hire top talent to invest in product and technology.

Assuming continued signs of stabilization of the hiring market referenced above, we believe it remains prudent to continue long-term product, technology and marketing investments in our marketplace, yielding low- to mid-teens adjusted EBITDA margins in 2024. We are constantly assessing the state of the labor market, letting data lead our decision making. We are poised to increase investment as opportunities arise and alternatively are prepared to show further cost discipline if conditions deteriorate. ZipRecruiter is well positioned to take advantage of an eventual labor market recovery and emerge from this challenging period for the industry from a position of strength. With that, we can now open the line for questions. Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] And your first question comes from the line of Trevor Young with Barclays. Please go ahead.

Trevor Young: Great. Thanks. First one, can you just talk about the cadence of growth throughout the quarter? I think you would normally be expecting momentum to kind of build each month throughout the quarter and into 2Q. I don’t think we saw that last year, given some of the softness at that point, but I am just wondering kind of in light of that implied sequential decline in revs, is that same softness playing out this year as well?

Tim Yarbrough: Yeah, Trevor. This is Tim. Thanks for the question. So, yeah, last quarter we talked about signs of labor market stabilization and what we saw throughout the course of Q1 largely reflected that. So our guidance right now sequentially is roughly flat down just a tiny bit, but it’s reflective of that kind of ongoing signs of stabilization that we saw in Q1 continuing through this quarter as well. So we are encouraged by those signs.

Trevor Young: Okay. And kind of relatedly, QPEs firming up first time quarter-on-quarter in more than a year that’s obviously pretty encouraging. Is that kind of a good level to model off of for the rest of the year or is it still just a fairly uncertain outlook from here on the QPEs front?

Tim Yarbrough: Yeah. I would say, it could play out in a couple of different ways. So the lift that we saw modestly Q4 to Q1 was, again pretty encouraging and that’s largely driven by SMBs coming back and you see kind of the opposite effect on revenue per paid employer with that ticking down a little bit and that’s more of a seasonal trend. So for the rest of the year, it really does depend on to the extent that this flattening that we have been seeing continues out to the extent that it does, then I would expect that number to remain fairly flat throughout the course of the year.

David Travers: Hey, Trevor. This is Dave. Just to add on to that. You are exactly right that the flatness of a quarterly paid employer number is a really encouraging sign. And what we have seen — as we have discussed in the past, what we have seen when there’s a change in the macro environment, usually small businesses respond faster than large enterprises and that quarterly paid employer number is really driven by small businesses. So we remain prepared for a wide range of scenarios, as we have said, but if that continues to be the case, that we see signs of flattening, that SMB driven quarterly paid employee number is a good barometer for this.

Trevor Young: Okay. Great. Thanks both. Hopefully that positive momentum continues.

Operator: Your next question comes from the line of Ralph Schackart with William Blair. Please go ahead.

Ralph Schackart: Good afternoon. Thanks for taking the question. Maybe just a bolt-on to the prior question, just curious what the trend line has been, I guess, post-Q1, if you observed any sort of change in pattern or if it’s sort of consistent with what you observed in Q1? That’s the first question. I have a follow up.

Ian Siegel: Yeah. I think the pattern is largely consistent with what we saw in Q1. So definitely not a return to the seasonality that we would normally expect where Q2 would be sequentially higher than Q1 so we haven’t seen that. So our guidance being down very modestly is basically showing that same signs of stabilization.

Ralph Schackart: Great. Maybe just to follow up, I know it’s really early and tough to know whether you are dropping right now or if you see any further downturns, but just curious, is this a little bit more broad based or is it vertical specific, but just any color you could provide on some of the stabilization trends that you are seeing in the paid employer number? Thank you.

David Travers: Sure. Ralph, this is Dave. So, yeah, we — what we see is that, there’s definitely strength in government and education, which we see largely as a catch-up from being industries that struggle to keep pace with wage increases during the post-COVID boom period, but what the year-over-year trends we see broadly based are encouraging as we see signs of flattening, clearly not looking across the broad scope of it, calling a bottom, but also seeing very encouraging signs.

Ralph Schackart: Great. Maybe if I could just ask one more, Dave. Just curious — just in terms of technology vertical, what you have observed within technology? Thank you.

David Travers: Yeah. Technology continues to be one of the hardest hit areas of job posting and hiring activity when we look on a year-over-year basis, continues to be extremely impacted and is sort of an outlier on the negative end to the same extent that or in a similar way that government and education are on the positive end of the spectrum.

Ralph Schackart: Okay. That’s helpful. Thank you.

David Travers: Yeah.

Operator: Your next question comes from the line of Doug Anmuth with JPMorgan. Please go ahead.

Doug Anmuth: Thanks so much for taking the questions. Guys, if you play out the scenario that things have troughed and maybe start to turn a bit here, can you just talk more about how that informs your investment approach and what are some of the immediate steps you take as you lean back in more? And then, maybe just also on the product side, can you provide an update on just how your AI matching technology is evolving and improving, and perhaps, what kind of lift you are seeing through different versions of the product? Thanks.

Ian Siegel: Hey. This is Ian and I will take this question. I think one of the advantages that we have at ZipRecruiter is that we have been doing sales and marketing for such an extended period of time that we have sensitive instruments for measuring whichever way the appetite for recruiting services is going. And what you will see from us is that we will aggressively invest into any sort of return to normal or the end of the trough and the beginning of a climb. That said, and as excited as we are about the metrics that we are seeing right now, it is not a certainty and it is definitely too early to call. So, this could go either way and I think the great thing about the position we are in is we are well prepared for either scenario.

So if things go well, we will be investing into that rapidly and we will be talking to you about that investment with great detail. If things continue as they are, we will continue as they are and then, of course, if things were to get worse, we would make appropriate austerity cost cuts in order to address that. As far as our AI goes, we are just excited about what’s happening with our AI across a wide variety of areas within our business. First of all, Phil, our AI personal recruiter, has been truly transformational to the job seeker experience and that’s measured quantitatively through the multiple engagement metric improvements that we have seen in a variety of different areas of the site that’s everything from onboarding to suggested jobs to Phil pitching these candidates to employers.

I mean, one of the really telling metrics and impressive things that Phil was able to achieve is, we now for new job seekers that come to the site, as we reported a couple quarters ago, over half of them are getting direct outreach from an employer within 24 hours of first signing up on ZipRecruiter and a lot of that is being driven by this AI matchmaker role that Phil is playing for us. So, that’s just indicative of the kind of power that this technology has. But then further, you can just see the persistent drumbeat of improvement across so many of the different algorithms that we use and we are continuing to update you guys and report on these various improvements, which individually, each of them has a small impact, but because of the cadence with which they are being delivered, our service is just getting better and better, both for small customers and for large customers.

And it was really highlighted by this last quarter where we see a 19% improvement in the average number of applicants that SMB jobs are getting, which is a truly fantastic improvement when you consider the fact that the price did not change for these SMBs and they are just getting 19% more value. It’s not just value for them, it’s also value for the job seekers who are being directed to jobs that are in need of talent, where they have a higher probability of getting hired and it’s just a win-win for our marketplace.

David Travers: And this is Dave, just to add on to that, to link the two parts to your question. We have talked many times about the flexibility of our cost structure and our business model, and we flexed up and down as market sort of backdrop has changed. AI has really been the consistent area of ongoing investment throughout the cycle. And you can see how R&D has been the most resilient and stable part of our cost structure over the past many quarters and that’s because of the investments we have been making and continue to make, like Ian just discussed. So that’s an area where we are going to continue to press our advantage and we feel very good about the results we have generated so far and we think we are just getting started.

Doug Anmuth: Great. Thank you Ian and Dave.

Operator: Your next question comes from the line of Josh Beck with Raymond James. Please go ahead.

Josh Beck: Yeah. Thank you so much for taking the question. Maybe just, wanted to kind of start off with the margins, obviously, you came in kind of ahead of that, kind of qualitative, low- to mid-teens guidance and in the high-teens and you kind of left that in place, the low- to mid-teens, just given the backdrop. So I guess what investments are kind of rising to the top and what would you need to see, I guess, kind of one way or the other, in terms of the macro to kind of adjust that framework?

Tim Yarbrough: Thanks for the question Josh. This is Tim. Yeah. So the margin structure came in at the 17%. So, like you said, a bit better than the low- to mid-teens. We still feel very good about that for the rest of the year. There might be some puts and takes as we go through Q3 and Q4 towards the back end of the year, but overall that all assumes, again a relatively consistent flattening across the Board. But to the extent that we see the market softening or deteriorating a little bit more than we will take action to address that in terms of cost reductions. But on the other hand, if things improve substantially, then we can ramp up that investment too. And the form of that investment in the near-term would most likely be sales and marketing spend just as we see demand on the employer side opening up, we have a highly metric view of how we pursue those employers and so we would be happy to deploy capital with a long=term mindset.

David Travers: Yeah. Josh, this is Dave. Our go-to-market teams are exceptionally good at this. So, as we read very rapidly what the results of go-to-market investments are as an example, we then adjust. And so in Q1 you saw that level of investment appropriate to what we were seeing in the market and to the extent things change, we will not be hesitant to change our level of investment based on the returns we see. And those returns, we measure those in three different ways. We think about the cash-on-cash returns. We think about the long term ROI or LTV to CAC kind of returns. And we also think about the brand value we built over time. And so there, it’s been an investment of hundreds of millions of dollars or over a $1 billion over a decade, that has led us to have 80% brand awareness on both sides of the marketplace.

And we see, even as we pull back over the past few quarters on that investment, that brand investment remains enduring and so we are measuring all those things and calibrating our level of investment based on that.

Ian Siegel: I will just add to that. This is Ian. That where we will persistently invest is in R&D because much like we think of our brand as one of our assets, the quality of the experience we are delivering is a huge part of the reason for the incredible surge in traffic that we are experiencing year-over-year this year. Our traffic is up 60%. Yes, because we do a lot of advertising, but also because the experience is fundamentally improving and I can’t say enough about, Phil, who has become a conversational UI that’s guiding job seekers through their entire search experience. He’s really an ally for these individuals as they try to find work and I think we are feeling really excited about the future. So, R&D is going to continue to be an area of focused investment. And then on top of that, if we see a market turn, we will, of course, invest into it with our sales and marketing knowhow.

Josh Beck: Okay. That’s all super helpful. Maybe a follow up just around enterprise. This iCIMS partnership seems pretty substantial I was looking up, it seems like they facilitated over 5 million hires last year and they are a leader in the ATS space. So, could that move the needle and then just maybe more broadly, like, how should we be thinking about just the pacing in terms of enterprise mixing up? Thank you.

David Travers: Thanks Josh. This is Dave. Great question. Yeah. iCIMS is a significant player in the applicant tracking system space, well into the top 10 of a very fragmented market. So they are very significant, we want to have some very large Fortune 500 clients, as well as a lot of more mid-market enterprise clients and so it’s an important one for us. It’s part of our overall strategy, where we have 150 and growing ATS integrations, where these software systems that are really the dashboard and the starting point every day for recruiters at these large enterprises to manage their entire workflow and for hiring managers to manage their workflow. Having our candidates seamlessly show up in their workflow without ever having to leave the ZipRecruiter marketplace, which we call ZipApply, is a huge part of that integration effort and having their jobs appear in our organic search results so that when we knock on the door of a new enterprise prospect for the first time, we are already delivering candidates to them and showing, we have already showed them value before we show up to talk to them for the first time, is a really powerful model.

So that’s a significant investment in these 150 integrations. iCIMS is a big one and allows us to really seamlessly, in a way that’s better than you can get from other marketplaces, be able to integrate and also gives us an incredible amount of data that we can then use where we see how our candidates perform over time via these integrations and then our AI tunes the algorithm and tunes the results to drive better and better candidates. So the more you work with ZipRecruiter, the more you invest with us, the better our results will get over time and we see that happening. The enterprise part of the market, which we view to be half of the market overall in the United States on a dollar basis is an area where we are under penetrated and given our rapidly growing scale in the job seeker side of the marketplace, were increasingly compelling given that 65% organic traffic growth is a place that we are really increasingly bullish, the more we learn, the more excited we are.

But we also know that enterprises are slower to react to macro changes than SMBs. So as we see the macro backdrop change, we are very confident that enterprise demand will change as well, but it will probably be a little bit slower if past is prologue, it will be a little bit slower to react in the SMB part of the market.

Josh Beck: Thanks so much.

Operator: Your next question comes from the line of Brian Fitzgerald with Wells Fargo. Please go ahead.

Stan Velikov: Hi. This is Stan Velikov for Brian. Thanks for taking our questions. I guess on focusing the question on one of the growth pillars in the marketplace, the job seeker. So can you share more about the level of job seeker activity that you are seeing on the platform, any trends like incremental profiles created, resumes added or updated visits, engagement? And has the job seeker activity increased in the past few months given the incremental changes in the most recent job market reports?

Ian Siegel: Hi. This is Ian. And what I would say is, first, broadly top of funnel job seeker traffic coming in, which is the 65% growth year-over-year that we talked to you about is just way up and there are a variety of contributing factors to that. But what I am very excited about is not just the top of funnel traffic, it’s the down funnel metrics. It’s the number of job seekers who are being actively propositioned by an employer without having to go reach out to them first. It’s the number of applications per job that we are delivering to jobs in the SMB space. It’s the number of times job seekers are shown jobs that they actually have interest in and should they apply, they will in fact be a top candidate for that job because the algorithmic matching just continues to improve.

So really it’s the engagement metrics in addition to the top of funnel metrics, which have all been climbing and there’s a variety of inputs that have been driving these metrics up. Some of it is Phil and the process of having a human voice guiding the job seeker through the experience, it’s been a force multiplier everywhere that we have put them, some of it is just straight technological algorithmic improvements and some of it is just site experience which we also continue to improve, but across the board, it’s not just top of funnel traffic, it’s also the engagement metrics on our site. And you can see that in a variety of different places that we have reported on, but also it’s interesting to see that the number of downloads of our mobile app, which is the preferred method of search for the really serious job seeker has also been going up pretty significantly.

So just generally it’s been a very good season for job seekers.

David Travers: I just want to add on, to double click on what Ian said about the 65% organic job seeker growth and how we think about that. So over that same year-over-year period, we have seen our sales and marketing investment come down by 38% and so when you add up organic and paid according to third-party data, we have in March, our total U.S. visits was up 13%, despite that reduction by 38% in sales and marketing. So that’s the power of those products investments and improvements that Ian was just talking about and those brand investments we — that are over the long-term that we referenced earlier and the net impact of that is that we are growing over 10 — in March over 10 percentage points faster than any of our largest competitors on the job seeker front in the U.S.

Stan Velikov: I got it. Thank you.

Operator: Your next question comes from the line of Mark Mahaney with Evercore. Please go ahead.

Unidentified Analyst: Hey. This is Luke [ph] on for Mark. What are some key data points suggesting just general market share shifts or any evidence you can offer that you are successfully gaining share versus your competitors? And then just a kind of second question, in the peak of the cycle, how high can revenue per paid employer go like, what are some opportunities out there to grow revenue per paid employer over time? Thanks.

David Travers: Great. This is Dave. I will take the first part of that. So it’s a two-sided marketplace and so I would think about market share in two different ways. One, I just referenced, which is growing the job seeker side in terms of visits year-over-year by 10 percentage points faster than any other major player in our space. So clearly there and we have seen over time a good historical correlation that when there’s a major move in job seeker market share, employer dollars will follow and we have seen that over multiple players, over multiple years. And then on the employer side of things, we have seen large public staffing firms release, we don’t have any pure play online comps, but large public staffing firms have released quarterly performance for Q1 and we saw U.S. permanent placement revenue as low as 40% down year-over-year, which we think as we look across the market and our partners’ data and our scope of the entire U.S. labor market, that’s a pretty good indicator of what’s going on out there.

And so, just stepping back about where we are in the macro and how to make sense of that, the U.S. Bureau of Labor Statistics released that in March, the total hires in the U.S. was 5.5 million, seasonally adjusted. And so, if you look back over the last couple of recessions in 2007, right before the GFC, we were actually above $5.5 million in 2007 and then back the previous recession, before the dotcom crash in early January 2001, we were also above $5.5 million. So if you think back over the past 23 years, the GDP of the U.S., adjusted for inflation in real terms, has grown 61%. The labor force or the number of employed people has grown 19%, but over that same time period, the number of hires last month was down 4%. And so that’s an extremely unusual set of backdrop conditions and so when we think about how we are doing in the broad scope of that and our gains with the 65% growth in organic job seeker growth, we feel very good about how we are doing against the market.

Tim Yarbrough: Luke, this is Tim. I will take the second part of the question about revenue per paid employer, where we see that going. So one of the long-term trends that we have seen in this business is that, the revenue per paid employer has reliably trended up over time and so that’s true when you look at it on a consolidated quarterly basis and that’s also true, perhaps more interestingly, when you look at it on an employer cohort basis. So we have disclosed this a couple of times in the past in our annual filings, but if you look at the monthly revenue per employer per annual cohort reliably, those numbers trend up and to the right as each cohort ages. And what we have seen in this last super cycle and the downside is that there have been just a few exceptions, but the larger trends, I think, still hold to be very clearly true.

Now, where do you see this number going? We have a lot of confidence that there’s a lot of headroom in revenue per paid employer and to that we can look at the offline solutions out there right now that are often charging anywhere from 15% to even 30% of first year salary. We are not in the same ballpark as that. And so as our technology gets better and as this overall addressable market of $250 billion start shifting more towards the online solutions, we feel like we have much more pricing power as our technology gets better and better, as we continue to win share away from the offline competition.

Unidentified Analyst: Great. Thank you so much.

Operator: Your last question comes from the line of Justin Patterson with KeyBanc Capital Markets. Please go ahead.

Miles Jakubiak: Hi, there. Thanks for taking the question. This is Miles Jakubiak on for Justin. First, just would love to know or hear your thoughts around visibility, currently compared to the beginning of the year? And then second, just would love to hear more about the efforts to improve application rights or application rates now that you are seeing strong job seeker trends and the impact that can have to the business? Thank you.

Tim Yarbrough: Yeah. This is Tim. I will take the first part of the question. So on visibility, I would say, the future is still pretty murky because we haven’t seen that return to seasonality that we would normally see in a year much more like 2019, for example. So while we are encouraged by these signs of stabilization and by paid employers being up modestly on a quarter-for-quarter basis. I wouldn’t say that we are calling a trough or anything like that so I would say our level of visibility still remains fairly low, which is why we are still guiding one quarter out but again there’s more optimism around the trends that we have seen.

Ian Siegel: And this is Ian, who will — I will take the back half of your question. And when — so when we look at our marketplace, we are very keen to understand what drives good connections between employers and job seekers. That is where a lot of our science goes and that manifests itself in a number of the product decisions we make, whether it’s driving employers to outreach to job seekers, so that it’s the employer going first, which job seekers love or it’s explaining to employers in such clear terms and making it so easy to display that they have salary on their job descriptions, because that materially increases the number of applicants who will actually apply to said job. And so in our marketplace, we are always looking for the different levers that we can take advantage of in order to increase that application rate.

Over the last several quarters. I mean, we have launched a number of improvements that have been driving up this application rate, which has consequently been driving up job seeker satisfaction, which is now manifesting in the surge in traffic that you are seeing today. This is not just about advertising, this is also about actually delivering and we feel really confident that we are delivering already an exceptional experience. But we are particularly excited about where this will go over time, and like I said, it’s not just top of funnel traffic its engagement metrics that are up and we believe that, that is a trend that we can persistently drive up and to the right, as just as Tim was talking about, revenue per paid employer, we think satisfaction is something where we still have headroom to grow.

Miles Jakubiak: Thank you. Helpful.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.