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I'm ready. Let's do it. All right. Good afternoon, everyone. I'm Justin Patterson. I lead the internet research team at KeyBank. I'm excited to have Ian Siegel, the CEO of ZipRecruiter, here with us today. Welcome, Ian. Delighted to be here. Thank you. And I'm glad we just escaped the rain from outdoors with smooth sailing there. So, you know, to kick things off, for people who aren't familiar with Zip Recruiter I'd love for you to provide just a brief overview of the business. Sure. At ZipRecruiter, our mission is to actively connect people to their next great opportunity. We're one of the largest jobs marketplaces in the United States. We've been around for 15 years. We have the number one rated mobile app on both Android and iOS, and have had such for almost a decade. There's over a million reviews in there on that app. We have 80% brand awareness on both sides of our marketplace. And we span the entirety of the labor market. So we're in every geography, every job category, and we work with businesses of all sizes. Perfect. So there's going to be a lot to unpack there, but I want to start with the macro within there. You mentioned the labor marketing. That was certainly an atypical labor market even before AI came into play. So I'd love to hear just what you see within the labor market today and how you're helping companies really navigate the AI transition. Yeah, those are two very big questions. So first off, what are we seeing in the labor Market? Post-COVID, there was a run-up in the Labor Market that was historic. And then for the last four years, the Labor market has effectively been into a persistent decline. And so hiring in America has just been falling. Until 2026, when we came into our first period of extended stability, in 2026 I would call the labor market stable but subdued. And the reason I use the word subdues is because if you look at every third party data point, but most of us will go look at the BLS data that's available, you will see that both hires, absolute number of people who are getting higher in the US and quits, which is the thing that drives hires more than anything else, they're both hovering around the same low levels they were at all the way back in 2015. So while the decline has stabilized, we have not yet returned to either what I would call a normal healthy labor market or seeing the macro start to improve. Got it. And I think one of the interesting things around AI right now is this whole notion that we're going to vibe cut away some jobs, we're going to have massive layoffs across the board. Yet recently you published a report that's showing some opposite signals in there. So we'd love for you to unpack just what you're actually seeing from the labor demand, even in a subdued environment. Yeah, and we study this question from a number of different angles. But in reference to the survey you're talking about, we recently completed a survey of over 10,000 businesses, and roughly 70% of them were SMBs, and then the other 30% were in the enterprise category, or they had 5,000 or more employees, so they were of a larger size, and what we discovered was really interesting. So across all those businesses, over 90% of them said they are already using AI in some form or fashion inside of their business, so AI is permeating every size business in America. But the biggest surprise, at least for me, was that 35% of those businesses say as a direct result of using AI, they're actually planning to increase hiring and or have already begun to increase firing, which is counter to the narrative that AI is coming to destroy the labor market. And there are a bunch of other signals you can look at that support this premise that so far AI is not having a significant negative impact on the labor market. And the one I find most interesting, and I'll just call this one out, is everyone has predicted that engineering jobs were going to be the first to go and they were the most at risk from AI disruption. It was the thing that all of these large language model companies were focused on in terms of skills that they have hyper-optimized. And if you just go back to the beginning of when Cloud Code was released till now, engineering hiring is now up 10% from that period. So even though we have all marveled at what Cloud Code is capable of, it has not decimated at least the labor market for engineering. If anything, it actually seems like it's made the software engineer more accessible to the small business who might have been locked out of paying for that person before. I mean, this is, you know, I get paid to hype the labor market. So when I say things like this, people are like, where's your data? But what I would say is that if you go back in history and you look at every major technological breakthrough, it doesn't matter if you're talking about ATMs and what that did to bank tellers, which was to massively increase them, or if you talk about spreadsheet software and whatthat did to accountants, which, once again, massively increased the number of them. Every time you make something easier to do in our society, history tells us we will want to do more of it, not less of it. So yeah, it will change the nature of how those jobs are done. Bank tellers don't do normal standard transactions anymore. They basically upsell you to higher value products. The same thing is happening in engineering and across a wide variety of other categories where AI is making things so much easier to that more and more businesses find it accessible to do those things exactly it's an abstraction problem the nature of work changes but we still have people running around at the end of the day so yeah makes a lot of sense you know shifting gears toward just your financials and kind of bridging that macro side i thought this last quarter was really interesting where i believe the your end market was perhaps growing you know flattish call it yet you grew five percent what are you attributing to the the drivers for your outperformance? Yeah, last quarter was great for ZipRecruiter because in spite of this subdued but stable labor market, Ziprecruiter grew top line revenue 5% year over year. And that contrasts with Q2 a year ago when we fell 2% year-over-year. So there was a seven-point swing between the two. And what is very clear to us is that it was our product improvements that directly led to the increased growth in our business, we have spent a considerable amount of time and effort focused on one thing, which is driving conversations between employers and job seekers. This is not about increasing the number of clicks. This is about increasing number of applies. This is specifically about getting a human to talk to a human, and you may say, why did you do that? We have long seen a correlation in our business between humans talking to humans and increased everything. Revenue, engagement, applies, ongoing usage, reactivations. And so we have consciously been trying to drive up that engagement rate. And what you saw in Q2 was the stack of improvements that we have been launching the back half of last year and this year really coming together. And I'll just call out one of In particular, we foundationally launched this brand new search engine that was retrained to focus on delivering not just candidates, but quality candidates to employers. We were excited because it increased the percentage of quality candidates that got delivered in a step function style fashion by 34%, which is incredibly rare for something new like this to do. And you may say, what does that mean? And I say, that's a fair question. The real thing that you want to look at is if that's true, then you would expect the engagement rate where employers who receive candidates, you would to expect to reach out to those candidates at a higher frequency because they're getting more qualified candidates. That's exactly what you saw in Q2. The engagement rate through both the new search engine and a variety of other improvements has doubled year over year. When candidates apply, they are twice as likely to get a response from the employer. That's magic for a marketplace like ours. Got it. I want to touch on a point you said there, Ian, that it's rare to see that type of result from a new product like that. When you look at the product roadmap ahead and just the enhancements you can make on the search model, how do you think that changes the business over time? We're seeing it play out here where if you go all the way back to the S1 ZipRecruiter put out when we went public, we were talking about AI and being an AI-driven marketplace before there were LLMs, because back then we were really focused on machine learning and meta learning and deep learning. But with each new technique and tool that has come out, we have layered it into what we do to increase the rate of conversations. And what LLMS are very good at is not actually the matching component of what we do, but rather the assessment component so it takes the treasure trove of data we've built up over 15 years the billions of interactions between employers and job seekers to train algorithms to use both direct matching plus the wisdom of the crowd to create the pool of candidates that the algorithms believe would be qualified for a job but what LLMs have let us do is then put a layer of observation against that pool to assess it the way a human would of who would be most liked by the employer and that's just one example of that assessment because it actually goes both ways but that has been part of the secret sauce in massively increasing the rate at which qualified candidates apply and response rates from employers. In every way LLMs and their capabilities have been making ZipRecruiter better. And I certainly think that the future is not just going to be about matching, but it's going to about driving that engagement between the two sides. MR. Got it. And you mentioned consumer awareness in there, obviously, for helping more people find jobs in a tough environment. There's probably going to some word-of-mouth benefits from that. I know it's early with this new product, but are you starting to see more changes on the traffic composition, what's coming in organically versus paid from this new project? I think ZipRecruiter has tremendous brand awareness on both sides of our marketplace, both with employers and with job seekers. It bounces around 80% for both. And that is operating leverage for our business. We don't need to keep paying to bring large volumes of people to both sides. We are an answer to the question both sides ask. Where do I go to look for work? Where do go to post a job? without them needing to go through a third party service. However, a large portion of the population still does go through something like a Google or now, interestingly, LLMs, whether it be Claude or whether it'd be ChatGPT. We did a full integration with ChatGpT in Q1. We did an integration with Claude code in Q2, plus an upgrade to the original ChatGpt integration we did. And the traffic that's coming from there is still de minimis as a percentage of overall traffic, but it is growing rapidly, probably the fastest growing source of traffic we have. And the users are incredibly high on engagement scores, meaning they are active job seekers. They are applying to jobs. They are currently looking for work, which is what you would expect. But why it's so exciting is when you look at sort of the competitive landscape, This is a brand new channel that we are at just as it is emerging. And we are immediately integrating in one of the initial launch partners for both of these new channels, which means we're on equal footing with every would-be competitor, and we are harvesting our fair share and more from these sources. And so they are turning into a competitive advantage for us. Got it. And perhaps to pull that thread just a little bit further within there, when we talk to Google, It's very clear that LLMs and even just what's been in AI overviews, AI mode, is driving just much richer conversations. You're getting searches that didn't exist previously. It sounds like data is one of the many inputs into your business. When you look at kind of that initial sample in there, how does that corpus of information change your ability to match down the road? And how does even having these longer, more conversational interfaces change what you might put in front of job seekers? down the road yeah i mean i think of that i think of what the loms are doing not purely from the vantage point of how the search engines are changing and incorporating it into their interfaces because fundamentally they're just helping you skip a step there they're saying like you used to research what does the plumber get paid and then they'd show you a link you'd click on the link and then you go to a page that told you the answer and now they're just saying i'm going to put the answer directly in front of you what's more interesting to me about these llms are the capabilities they unlock to make things easier for businesses who historically have had to pay for either a person internally or an outside party to perform a task for them. And the most basic example in recruiting is leveraging a resume database to identify candidates and then do outreach to those candidates manually is a lot of work. And so a lot of people pay a third party recruiter to go do that work for them. And in Q2, ZipRecruiter launched what's called Smart Outreach on our resume database. And now one person can go identify the person, the type of person they're looking for, and the software is very smart and can say like, okay, I found a lot people who look like that. And more importantly, it can run an outreach campaign to those people so that that person doesn't have to be like a master of organization who's like, OK, I sent my first message this day. Did I ever get a response? No, I'm going to do a follow up on this next day. That whole campaign of follow through happens programmatically through the LLM. Sounds incredibly human. It's outreach from an employer to a job seeker, which is obviously job seekers' far preferred methodology of job seeking as opposed to going and proactively searching on their own. And it's leading to some concrete outcomes and is part of the overall improvement in response between employers and job seekers that we're seeing, those kind of capabilities are where the superpower of LLMs lie. Got it. And that sounds like something that could open up future pricing potential because you're saving the employer a lot of time spent in there. If the models are working as they should, you're delivering higher quality, more relevant matches, which means they fill that seat higher and can start getting a productive worker. And when I think about recruiter fees, those are very, very expensive in there. So when you look at your pricing today versus the broader industry, what type of pricing uplift could you see down the road? I mean, there is substantial headroom for pricing increases inside of what we are doing at ZipRecruiter. And I think unquestionably, that is a lever we will pull at some point. However, when you look at this current backdrop, we're in a market where hiring in America was in decline for 3 and 1 half years and has only now started to stabilize. And in that environment, we are growing our top line. We are growing customer count, which is extraordinary. And I think something that we plan to keep investing into from the standpoint of taking that market share, increasing the scope of our customer base, And we will defer maximizing pricing until we start to see a market where we aren't able to make those gains and or the macro starts to actually move in a positive direction. For now, though, I think that the pricing lever is very clearly available to us, in particular when you look at offline recruiters and what they are still charging in the majority of cases in order to secure you talent. And so I'm just highly confident that that will still be there as the market either continues to stabilize and or even reverts to what we would experience that we would expect as a more normal, healthy rate of hiring in America. Makes sense. And that seems like a natural segue to just talk about the marketplace growth itself in there. You have large enterprises on one side, small businesses on another area. Could you expand on just your go-to-market approaches toward both sets of customers? Yep. So ZipRecruiter started in the SMB category and then has moved upmarket into enterprise. You know, when we first started, we were 100% SMB, 0% enterprise. Today, we are 76% SMD, 24% enterprise, we run very different playbooks against those two segments, They require different strategies. We do a lot of marketing through a variety of channels to bring prospects to the website, where they largely self-convert. But we have an inside sales team that works against those leads. We also have a large outside sales team that goes and sells to those enterprises and tries to get them to come in and use ZipRecruiter and is having a lot success doing that, particularly with the advancements that we've been making in our products. Now, as you look at that mix over time, I think you said roughly 75-25 right now, I believe you've got a 50-50 target out there. What do you see as really the key steps to driving enterprise up to 50%? I mean, enterprise is a complicated animal relative to SMB in that most enterprise companies are using a third-party software called an applicant tracking system in order to be their canonical source of the jobs that they have open and they want to operate out of there so if you want to work with enterprises you have to do integrations with as many of these companies as you can we've been doing these integrations for over a decade we have something north of 180 ats integrations in place and then on top of that these are sophisticated buyers that are used to a pay-per-click google style performance marketing methodology in terms of buying and so there's a bunch of stuff you do there around campaign optimization or bid optimization you have to layer in there then you need an outside sales force to go work with these accounts the way they're used to being worked with all of that groundwork has been laid at ZipRecruiter we have a lot of momentum with the enterprise side of our business both sides of our businesses however are growing in this This period of stable but subdued labor market activity, every part of ZipRecruiter has started to show benefit from the product improvements that we have been making. And so that trajectory to a 50-50 split, which is reflective of how hiring works in America, half of hiring is done by enterprises, half is done SMBs, is continuing apace and is following its expected course. Makes sense. And I think another nice tale when you've had beyond just the product innovation is industry consolidation, where a lot of some of the companies have been taken private or taken over by a strategic seem to be facing some challenges right now. Could you talk through how you think that benefits market share going forward? Have you seen the bulk of that market share lift already? Or do you think there's more to come down the road? I mean there's there has been a very tough four-year period for the recruiting industry and a lot of change has happened over that period but if you look at the landscape there is a there there is large disaggregated high volume of job sites out there that work a wide variety of verticals and specific niches they tend to be on the smaller side there's a handful of larger players some of whose names you guys are familiar with in this room and all of them have suffered over the last four years and a shakeout has occurred where a significant amount of market share has moved from those smaller guys to the handful of larger players and amongst the high and fall of larger players there has also been a dogfight for market share but it's not limited to with each other it has also very much been with where the bulk of the dollars our category lie, which is the offline recruiting world. So the TAM on recruiting in the United States in particular is split between really three groups. You have the in-house recruiters who are paid by large companies in order to do their recruiting for them. You have the contract recruiters that are outsourced to and are usually paid something in the range of 25 percent of first year salary. And then you have the temp labor market where the recruiting firm acts as the employer of record and sends talent to a business. All of those have suffered along with the online companies during the downturn in recruiting. However, market share gains have been made as technology advances continue to improve and again you go back to that smart sourcing product that we recently launched against our resume database and you can see how the fundamental function of a recruiter has been largely replaced by software and And so that's creating a real opportunity for disruption against where the bulk of the dollars go and market share grabs. Got it. And I'd love to hear how you're thinking about allocating capital in this environment. You just paid down debt opportunistically, realized a lot of value for shareholders. As you look at, you know, a business that's free cash flow positive, intrinsically high gross margin, what do you see as the natural uses of incremental investment right now? Yeah. just to explain what you referenced we recently paid we had about a half a billion dollars of debt that was in the form of a bond and that bond was trading at a substantial discount and we made the decision to go try and buy back a large portion of that debt and harvest that discount delighted we were successful we took 295 million dollars of the debt and retired it we got a 65 million dollar discount on that repurchase as well as we will get north of 50 million dollars of interest savings over the next three and a half years it was a win by every measure it's a unique opportunity we took advantage of it we still have over 170 million dollars on our balance sheet more than enough to fully fund every one of our strategic objectives that we have and when i look at the use of capital and what we have used it for historically it you know our Our philosophy remains the same. It's organic growth first. What can we invest into that will accelerate the growth of our business? Inorganic growth, so opportunities to either make acquisitions or to make one-off single moves that would propel the business, top line growth, and or improve the bottom line margin. And then as a final use of capital, we would look at either defraying our debt further or potentially continuing to repurchase our stock we see it as being undervalued got it i think we have time for one more question here if i step back you know a few years back the business had peaked at about 900 million in revenue or so you're about half of that today as you think through just you know the the factors to get back to that prior high water mark how do you think about the role of both you know the current macro call it remaining stable-ish and what you can control on the product side to getting back to that level? Well I feel really confident that we are just at the beginning of the impact that the product improvements can have on our business and as a result of that that in a stable ongoing macro at this depressed level we can continue to grow and I also feel confident that if the macro were to continue to be the cycle it has always been and it were to actually start to improve as it has always done that our rate of growth would accelerate and that it would be much faster to return to the historic highs that we have previously reached and the 30 margin target that we continue to inform our investors is where we believe we will ultimately wind up Great to hear. With that, we are out of time. Ian, thank you so much for joining us.