zip-20230930000161755312-312023Q3FALSE49448047347647647000016175532023-01-012023-09-300001617553us-gaap:CommonClassAMember2023-11-01xbrli:shares0001617553us-gaap:CommonClassBMember2023-11-0100016175532023-09-30iso4217:USD00016175532022-12-31iso4217:USDxbrli:shares0001617553us-gaap:CommonClassAMember2023-09-300001617553us-gaap:CommonClassAMember2022-12-310001617553us-gaap:CommonClassBMember2022-12-310001617553us-gaap:CommonClassBMember2023-09-3000016175532023-07-012023-09-3000016175532022-07-012022-09-3000016175532022-01-012022-09-300001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-12-310001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-12-310001617553us-gaap:TreasuryStockCommonMemberus-gaap:CommonClassBMember2022-12-310001617553us-gaap:AdditionalPaidInCapitalMember2022-12-310001617553us-gaap:RetainedEarningsMember2022-12-310001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-01-012023-03-310001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-01-012023-03-310001617553us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-3100016175532023-01-012023-03-310001617553us-gaap:RetainedEarningsMember2023-01-012023-03-310001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-03-310001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-03-310001617553us-gaap:TreasuryStockCommonMemberus-gaap:CommonClassBMember2023-03-310001617553us-gaap:AdditionalPaidInCapitalMember2023-03-310001617553us-gaap:RetainedEarningsMember2023-03-310001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-3100016175532023-03-310001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-04-012023-06-300001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-04-012023-06-300001617553us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-3000016175532023-04-012023-06-300001617553us-gaap:RetainedEarningsMember2023-04-012023-06-300001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-06-300001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-06-300001617553us-gaap:TreasuryStockCommonMemberus-gaap:CommonClassBMember2023-06-300001617553us-gaap:AdditionalPaidInCapitalMember2023-06-300001617553us-gaap:RetainedEarningsMember2023-06-300001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-3000016175532023-06-300001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-07-012023-09-300001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-07-012023-09-300001617553us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001617553us-gaap:RetainedEarningsMember2023-07-012023-09-300001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-09-300001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2023-09-300001617553us-gaap:TreasuryStockCommonMemberus-gaap:CommonClassBMember2023-09-300001617553us-gaap:AdditionalPaidInCapitalMember2023-09-300001617553us-gaap:RetainedEarningsMember2023-09-300001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-12-310001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2021-12-310001617553us-gaap:TreasuryStockCommonMemberus-gaap:CommonClassBMember2021-12-310001617553us-gaap:AdditionalPaidInCapitalMember2021-12-310001617553us-gaap:RetainedEarningsMember2021-12-310001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-3100016175532021-12-310001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-01-012022-03-310001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-01-012022-03-310001617553us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100016175532022-01-012022-03-310001617553us-gaap:RetainedEarningsMember2022-01-012022-03-310001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-03-310001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-03-310001617553us-gaap:TreasuryStockCommonMemberus-gaap:CommonClassBMember2022-03-310001617553us-gaap:AdditionalPaidInCapitalMember2022-03-310001617553us-gaap:RetainedEarningsMember2022-03-310001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100016175532022-03-310001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-04-012022-06-300001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-04-012022-06-300001617553us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000016175532022-04-012022-06-300001617553us-gaap:RetainedEarningsMember2022-04-012022-06-300001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-06-300001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-06-300001617553us-gaap:TreasuryStockCommonMemberus-gaap:CommonClassBMember2022-06-300001617553us-gaap:AdditionalPaidInCapitalMember2022-06-300001617553us-gaap:RetainedEarningsMember2022-06-300001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-3000016175532022-06-300001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-07-012022-09-300001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-07-012022-09-300001617553us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001617553us-gaap:RetainedEarningsMember2022-07-012022-09-300001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001617553us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-09-300001617553us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-09-300001617553us-gaap:TreasuryStockCommonMemberus-gaap:CommonClassBMember2022-09-300001617553us-gaap:AdditionalPaidInCapitalMember2022-09-300001617553us-gaap:RetainedEarningsMember2022-09-300001617553us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-3000016175532022-09-300001617553us-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-30xbrli:pure0001617553us-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2022-07-012022-09-300001617553us-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2022-01-012022-09-300001617553us-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001617553us-gaap:CustomerConcentrationRiskMemberzip:CustomerOneMemberus-gaap:AccountsReceivableMember2023-01-012023-09-300001617553us-gaap:CustomerConcentrationRiskMemberzip:CustomerOneMemberus-gaap:AccountsReceivableMember2022-01-012022-12-310001617553us-gaap:EmployeeStockOptionMember2023-07-012023-09-300001617553us-gaap:EmployeeStockOptionMember2022-07-012022-09-300001617553us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001617553us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2023-07-012023-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001617553us-gaap:EmployeeStockMember2023-07-012023-09-300001617553us-gaap:EmployeeStockMember2022-07-012022-09-300001617553us-gaap:EmployeeStockMember2023-01-012023-09-300001617553us-gaap:EmployeeStockMember2022-01-012022-09-300001617553us-gaap:EmployeeStockOptionMember2023-07-012023-09-300001617553us-gaap:EmployeeStockOptionMember2022-07-012022-09-300001617553us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001617553us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2023-07-012023-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001617553zip:EmployeeStockPurchasePlansMember2023-07-012023-09-300001617553zip:EmployeeStockPurchasePlansMember2022-07-012022-09-300001617553zip:EmployeeStockPurchasePlansMember2023-01-012023-09-300001617553zip:EmployeeStockPurchasePlansMember2022-01-012022-09-30zip:revenueStream0001617553us-gaap:LicenseMember2023-07-012023-09-300001617553us-gaap:LicenseMember2022-07-012022-09-300001617553us-gaap:LicenseMember2023-01-012023-09-300001617553us-gaap:LicenseMember2022-01-012022-09-300001617553us-gaap:ServiceMember2023-07-012023-09-300001617553us-gaap:ServiceMember2022-07-012022-09-300001617553us-gaap:ServiceMember2023-01-012023-09-300001617553us-gaap:ServiceMember2022-01-012022-09-300001617553us-gaap:LineOfCreditMember2023-09-300001617553us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2023-09-300001617553us-gaap:LetterOfCreditMemberus-gaap:LineOfCreditMember2023-09-300001617553zip:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2022-01-120001617553us-gaap:SeniorNotesMember2023-09-300001617553zip:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2023-07-012023-09-300001617553zip:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2022-07-012022-09-300001617553zip:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2023-01-012023-09-300001617553zip:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2022-01-012022-09-300001617553zip:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2023-09-300001617553zip:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2022-09-3000016175532023-05-312023-05-310001617553us-gaap:SellingAndMarketingExpenseMember2023-04-012023-06-300001617553us-gaap:ResearchAndDevelopmentExpenseMember2023-04-012023-06-300001617553us-gaap:GeneralAndAdministrativeExpenseMember2023-04-012023-06-300001617553us-gaap:FairValueInputsLevel1Memberus-gaap:CashMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553us-gaap:CashMember2023-09-300001617553us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-09-300001617553us-gaap:MoneyMarketFundsMember2023-09-300001617553us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553us-gaap:USTreasurySecuritiesMember2023-09-300001617553us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553us-gaap:FairValueInputsLevel1Member2023-09-300001617553us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553us-gaap:CommercialPaperMember2023-09-300001617553us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2023-09-300001617553us-gaap:CertificatesOfDepositMember2023-09-300001617553zip:CorporateNotesAndObligationsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553zip:CorporateNotesAndObligationsMember2023-09-300001617553us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553us-gaap:AssetBackedSecuritiesMember2023-09-300001617553us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-09-300001617553us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553us-gaap:FairValueInputsLevel2Member2023-09-300001617553us-gaap:FairValueMeasurementsRecurringMember2023-09-300001617553us-gaap:FairValueInputsLevel1Memberus-gaap:CashMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001617553us-gaap:CashMember2022-12-310001617553us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2022-12-310001617553us-gaap:MoneyMarketFundsMember2022-12-310001617553us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001617553us-gaap:USTreasurySecuritiesMember2022-12-310001617553us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001617553us-gaap:FairValueInputsLevel1Member2022-12-310001617553us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001617553us-gaap:CommercialPaperMember2022-12-310001617553us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2022-12-310001617553us-gaap:CertificatesOfDepositMember2022-12-310001617553zip:CorporateNotesAndObligationsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001617553zip:CorporateNotesAndObligationsMember2022-12-310001617553us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001617553us-gaap:AssetBackedSecuritiesMember2022-12-310001617553us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001617553us-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-12-310001617553us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001617553us-gaap:FairValueInputsLevel2Member2022-12-310001617553us-gaap:FairValueMeasurementsRecurringMember2022-12-3100016175532023-05-310001617553us-gaap:CommonClassAMember2023-01-012023-09-300001617553us-gaap:CommonClassAMemberzip:ShareRepurchasedUnderRule10b51PlanMember2023-01-012023-09-300001617553us-gaap:CommonClassAMemberzip:CommonStockPurchasedOpenMarketMember2023-01-012023-09-300001617553us-gaap:CommonClassAMemberzip:AcceleratedShareRepurchaseAgreementMember2023-01-012023-09-300001617553us-gaap:CostOfSalesMember2023-07-012023-09-300001617553us-gaap:CostOfSalesMember2022-07-012022-09-300001617553us-gaap:CostOfSalesMember2023-01-012023-09-300001617553us-gaap:CostOfSalesMember2022-01-012022-09-300001617553us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-300001617553us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-300001617553us-gaap:SellingAndMarketingExpenseMember2023-01-012023-09-300001617553us-gaap:SellingAndMarketingExpenseMember2022-01-012022-09-300001617553us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001617553us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001617553us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001617553us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001617553us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001617553us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001617553us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001617553us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001617553zip:EquityIncentivePlan2021Member2023-09-300001617553us-gaap:CommonClassAMember2023-07-012023-09-300001617553zip:EmployeeStockPurchasePlanMember2023-07-012023-09-300001617553zip:EmployeeStockPurchasePlanMember2023-01-012023-09-300001617553zip:EmployeeStockPurchasePlanMember2022-07-012022-09-300001617553zip:EmployeeStockPurchasePlanMember2022-01-012022-09-300001617553zip:EmployeeStockPurchasePlanMember2023-09-300001617553zip:EquityIncentivePlans201220142021Member2022-12-310001617553zip:EquityIncentivePlans201220142021Member2023-01-012023-09-300001617553zip:EquityIncentivePlans201220142021Member2023-09-300001617553us-gaap:RestrictedStockUnitsRSUMembersrt:ChiefExecutiveOfficerMember2023-01-012023-09-300001617553us-gaap:RestrictedStockUnitsRSUMembersrt:ChiefExecutiveOfficerMember2023-09-30zip:tranche0001617553us-gaap:RestrictedStockUnitsRSUMembersrt:ChiefExecutiveOfficerMember2023-07-012023-09-300001617553us-gaap:RestrictedStockUnitsRSUMembersrt:ChiefExecutiveOfficerMember2022-07-012022-09-300001617553us-gaap:RestrictedStockUnitsRSUMembersrt:ChiefExecutiveOfficerMember2022-01-012022-09-300001617553us-gaap:RestrictedStockUnitsRSUMember2022-12-310001617553us-gaap:RestrictedStockUnitsRSUMember2023-09-300001617553zip:RyanSakamotoMember2023-01-012023-09-300001617553zip:RyanSakamotoMember2023-07-012023-09-300001617553zip:RyanSakamotoMember2023-09-300001617553zip:QasimSaifeeMember2023-01-012023-09-300001617553zip:QasimSaifeeMember2023-07-012023-09-300001617553zip:QasimSaifeeMember2023-09-300001617553zip:IanSiegelMember2023-01-012023-09-300001617553zip:IanSiegelMember2023-07-012023-09-300001617553zip:IanSiegelMember2023-09-300001617553zip:AmyGarefisMember2023-01-012023-09-300001617553zip:AmyGarefisMember2023-07-012023-09-300001617553zip:AmyGarefisMember2023-09-300001617553zip:TimothyYarbroughMember2023-01-012023-09-300001617553zip:TimothyYarbroughMember2023-07-012023-09-300001617553zip:TimothyYarbroughMember2023-09-300001617553zip:DavidTraversMember2023-01-012023-09-300001617553zip:DavidTraversMember2023-07-012023-09-300001617553zip:DavidTraversMember2023-09-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| | | | | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2023
OR | | | | | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 001-40406
ZIPRECRUITER, INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| Delaware | | 27-2976158 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
ZipRecruiter, Inc.
604 Arizona Avenue
Santa Monica, CA 90401
(Address of principal executive office, including zip code)
(877) 252-1062
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Class A common stock, $0.00001 par value per share | ZIP | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |
| | Emerging growth company | ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The registrant had 76,199,866 shares of Class A common stock outstanding and 22,633,316 shares of Class B common stock outstanding as of November 1, 2023.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, operating expenses including changes in research and development, sales and marketing, and general and administrative expenses (including any components of the foregoing), and our ability to achieve and/or maintain future profitability;
•effects of a variety of macroeconomic factors that affect our business, the employment market, and the economy in general, including inflationary pressures, a higher interest rate environment, and increasing borrowing costs;
•our business plan and our ability to effectively manage our growth;
•our ability to compete with well-established competitors and new entrants;
•our ability to enhance our marketplace and introduce new and improved offerings;
•our ability to increase the number of employers and job seekers in our marketplace;
•our ability to strengthen our technology that underpins our marketplace;
•our ability to attract and retain qualified employees and key personnel;
•our ability to execute our strategy;
•beliefs and objectives for future operations;
•the effects of seasonal trends on our results of operations;
•our ability to expand to new markets;
•our ability to maintain, protect, and enhance our brand and intellectual property;
•our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business;
•economic and industry trends, projected growth, or trend analysis; and
•increased expenses associated with being a public company.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management
to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations, except as required by law.
You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
As used herein, “ZipRecruiter,” “the Company,” “we,” “us,” “our,” and similar terms include ZipRecruiter, Inc. and its subsidiaries, unless the context indicates otherwise.
SUMMARY OF RISK FACTORS
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” later in this Quarterly Report on Form 10-Q. These risks include, but are not limited to, the following:
•We face intense competition and could lose market share to our competitors, which could adversely affect our business, operating results, and financial condition.
•Our business is significantly affected by fluctuations in general economic conditions. There is risk that any economic recovery may be delayed, short-lived and/or uneven, and may not result in increased demand for our services.
•Our marketplace functions on software that is highly technical and complex and if it fails to perform properly, our reputation could be adversely affected, our market share could decline and we could be subject to liability claims.
•Our future success depends in part on employers purchasing and renewing or upgrading subscriptions and performance-based services from us. Any decline in our user renewals or upgrades or performance-based services could harm our future operating results.
•We have experienced growth in recent periods and expect to continue to invest in our growth for the foreseeable future. If we cannot manage our growth effectively, our business, operating results, and financial condition could be adversely affected.
•Significant segments of the market for job advertisement services may have hiring needs and service preferences that are subject to greater volatility than the overall economy.
•Our efforts and ability to sell to a broad mix of businesses could adversely affect our operating results in a given period.
•Our business depends largely on our ability to attract and retain talented employees, including senior management and key personnel. If we lose the services of Ian Siegel, our Chief Executive Officer, or other members of our senior management team, we may not be able to execute on our business strategy.
•If internet search engines’ methodologies or other channels that we use to direct traffic to our website are modified to our disadvantage, or our search result page rankings decline for other reasons, our user growth could decline.
•Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business, which makes our future results difficult to predict.
•Our success depends on our ability to maintain the value and reputation of the ZipRecruiter brand.
•Our indebtedness could adversely affect our liquidity and financial condition.
•Market volatility may affect the value of an investment in our Class A common stock and could subject us to litigation.
•The dual class structure of our common stock concentrates voting control with those stockholders who held our capital stock prior to our listing, including our directors, executive officers, and 5% stockholders. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
ZipRecruiter, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par values)
(unaudited)
| | | | | | | | | | | |
| September 30, | | December 31, |
| 2023 | | 2022 |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | $ | 243,339 | | | $ | 227,380 | |
| Marketable securities | 253,665 | | | 342,975 | |
Accounts receivable, net of allowances of $5,171 and $3,693 at September 30, 2023 and December 31, 2022, respectively | 32,990 | | | 44,421 | |
| Prepaid expenses and other assets | 11,031 | | | 12,648 | |
| Deferred commissions, current portion | 5,090 | | | 4,870 | |
| Total current assets | 546,115 | | | 632,294 | |
| Property and equipment, net | 6,746 | | | 8,103 | |
| Operating lease right-of-use assets | 9,766 | | | 12,179 | |
| Internal-use software, net | 18,186 | | | 15,758 | |
| Deferred commissions, net of current portion | 4,383 | | | 4,813 | |
| Goodwill | 1,724 | | | 1,724 | |
| Deferred tax assets, net | 55,487 | | | 38,653 | |
| Other assets | 823 | | | 1,039 | |
| Total assets | $ | 643,230 | | | $ | 714,563 | |
| | | |
| Liabilities and Stockholders' Equity (Deficit) | | | |
| Current liabilities | | | |
| Accounts payable | $ | 8,614 | | | $ | 21,175 | |
| Accrued expenses | 41,406 | | | 69,115 | |
| Accrued interest | 5,964 | | | 12,837 | |
| Deferred revenue | 16,224 | | | 19,580 | |
| Operating lease liabilities, current portion | 4,464 | | | 5,429 | |
| Other current liabilities | 14,148 | | | 1,527 | |
| Total current liabilities | 90,820 | | | 129,663 | |
| Operating lease liabilities, net of current portion | 9,935 | | | 13,018 | |
| Long-term borrowings | 542,317 | | | 541,559 | |
| Other long-term liabilities | 12,090 | | | 1,703 | |
| Total liabilities | 655,162 | | | 685,943 | |
Commitments and contingencies (Note 7) | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Stockholders' equity (deficit) | | | |
Preferred Stock, $0.00001 par value; 50,000 shares authorized as of September 30, 2023 and December 31, 2022; no shares issued and outstanding as of September 30, 2023 and December 31, 2022 | — | | | — | |
Class A common stock, $0.00001 par value; 700,000 shares authorized as of September 30, 2023 and December 31, 2022; 76,199 and 74,320 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 1 | | | 1 | |
Class B common stock, $0.00001 par value; 700,000 shares authorized as of September 30, 2023 and December 31, 2022; 22,829 and 30,379 shares issued and 22,634 and 30,184 shares outstanding as of September 30, 2023 and December 31, 2022, respectively | — | | | — | |
Class B treasury stock, 195 shares outstanding as of September 30, 2023 and December 31, 2022 | (644) | | | (644) | |
| Additional paid-in capital | — | | | 35,926 | |
| Accumulated deficit | (11,162) | | | (6,290) | |
| Accumulated other comprehensive loss | (127) | | | (373) | |
| Total stockholders' equity (deficit) | (11,932) | | | 28,620 | |
| Total liabilities and stockholders' equity (deficit) | $ | 643,230 | | | $ | 714,563 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
ZipRecruiter, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Revenue | $ | 155,630 | | | $ | 226,968 | | | $ | 509,800 | | | $ | 694,171 | |
| Cost of revenue | 14,533 | | | 21,839 | | | 50,831 | | | 65,202 | |
| Gross profit | 141,097 | | | 205,129 | | | 458,969 | | | 628,969 | |
| Operating expenses | | | | | | | |
| Sales and marketing | 55,648 | | | 112,574 | | | 216,171 | | | 386,795 | |
| Research and development | 32,136 | | | 33,008 | | | 109,047 | | | 93,577 | |
| General and administrative | 20,647 | | | 30,076 | | | 67,601 | | | 79,805 | |
| Total operating expenses | 108,431 | | | 175,658 | | | 392,819 | | | 560,177 | |
| Income from operations | 32,666 | | | 29,471 | | | 66,150 | | | 68,792 | |
| Other income (expense) | | | | | | | |
| Interest expense | (7,351) | | | (7,361) | | | (22,038) | | | (21,157) | |
| | | | | | | |
| Other income (expense), net | 4,695 | | | 321 | | | 14,731 | | | 332 | |
| Total other income (expense), net | (2,656) | | | (7,040) | | | (7,307) | | | (20,825) | |
| Income before income taxes | 30,010 | | | 22,431 | | | 58,843 | | | 47,967 | |
| Income tax expense | 5,934 | | | 1,875 | | | 15,376 | | | 5,884 | |
| Net income | 24,076 | | | 20,556 | | | 43,467 | | | 42,083 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Net income per share: | | | | | | | |
| Basic | $ | 0.24 | | | $ | 0.18 | | | $ | 0.43 | | | $ | 0.36 | |
| Diluted | $ | 0.23 | | | $ | 0.17 | | | $ | 0.41 | | | $ | 0.34 | |
| Weighted average shares used in computing net income per share: | | | | | | | |
| Basic | 99,800 | | | 113,059 | | | 101,409 | | | 116,184 | |
| Diluted | 104,707 | | | 119,810 | | | 106,688 | | | 123,616 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
ZipRecruiter, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Net income | $ | 24,076 | | | $ | 20,556 | | | $ | 43,467 | | | $ | 42,083 | |
| Other comprehensive income (loss), net of tax | | | | | | | |
| Unrealized gains (losses) on available-for-sale debt securities | 149 | | | (146) | | | 246 | | | (146) | |
| Total other comprehensive income (loss) | 149 | | | (146) | | | 246 | | | (146) | |
| Total comprehensive income | $ | 24,225 | | | $ | 20,410 | | | $ | 43,713 | | | $ | 41,937 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
ZipRecruiter, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Three and Nine Months Ended September 30, 2023 |
| | | | Common Stock | | Class B Treasury Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated Other Comprehensive Loss | | Total
Stockholders'
Equity (Deficit) |
| | | | | | Class A | | Class B | | | | | |
| | | | | | | | | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | | |
| Balance as of December 31, 2022 | | | | | | | | | | 74,320 | | | $ | 1 | | | 30,379 | | | $ | — | | | (195) | | | $ | (644) | | | $ | 35,926 | | | $ | (6,290) | | | $ | (373) | | | $ | 28,620 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Class B common stock to Class A common stock | | | | | | | | | | 4,568 | | | — | | | (4,568) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Issuance of common stock upon exercise of options | | | | | | | | | | 6 | | | — | | | 658 | | | — | | | — | | | — | | | 1,298 | | | — | | | — | | | 1,298 | |
| Issuance of common stock upon the vesting and settlement of RSUs | | | | | | | | | | 525 | | | — | | | 269 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Stock-based compensation | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 22,088 | | | — | | | — | | | 22,088 | |
| Shares withheld related to net share settlement | | | | | | | | | | (191) | | | — | | | (109) | | | — | | | — | | | — | | | (4,511) | | | — | | | — | | | (4,511) | |
| Shares issued under employee stock purchase plan | | | | | | | | | | 237 | | | — | | | — | | | — | | | — | | | — | | | 4,221 | | | — | | | — | | | 4,221 | |
| Repurchase and retirement of common stock | | | | | | | | | | (3,806) | | | — | | | — | | | — | | | — | | | — | | | (59,022) | | | (1,270) | | | — | | | (60,292) | |
| Share repurchase excise tax | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (459) | | | — | | | (459) | |
| Net income | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,011 | | | — | | | 5,011 | |
| Other comprehensive income | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 161 | | | 161 | |
| Balance as of March 31, 2023 | | | | | | | | | | 75,659 | | | $ | 1 | | | 26,629 | | | $ | — | | | (195) | | | $ | (644) | | | $ | — | | | $ | (3,008) | | | $ | (212) | | | $ | (3,863) | |
Conversion of Class B common stock to Class A common stock | | | | | | | | | | 558 | | | — | | | (558) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Issuance of common stock upon exercise of options | | | | | | | | | | 6 | | | — | | | 449 | | | — | | | — | | | — | | | 1,224 | | | — | | | — | | | 1,224 | |
| Issuance of common stock upon the vesting and settlement of RSUs | | | | | | | | | | 570 | | | — | | | 198 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Stock-based compensation | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 18,040 | | | — | | | — | | | 18,040 | |
| Shares withheld related to net share settlement | | | | | | | | | | (187) | | | — | | | (89) | | | — | | | — | | | — | | | (4,585) | | | — | | | — | | | (4,585) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Repurchase and retirement of common stock | | | | | | | | | | (3,188) | | | — | | | — | | | — | | | — | | | — | | | (14,679) | | | (35,913) | | | — | | | (50,592) | |
| Share repurchase excise tax | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (392) | | | — | | | (392) | |
| Net income | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 14,380 | | | — | | | 14,380 | |
| Other comprehensive loss | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (64) | | | (64) | |
| Balance as of June 30, 2023 | | | | | | | | | | 73,418 | | | $ | 1 | | | 26,629 | | | $ | — | | | (195) | | | $ | (644) | | | $ | — | | | $ | (24,933) | | | $ | (276) | | | $ | (25,852) | |
Conversion of Class B common stock to Class A common stock | | | | | | | | | | 4,161 | | | — | | | (4,161) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Issuance of common stock upon exercise of options | | | | | | | | | | 5 | | | — | | | 268 | | | — | | | — | | | — | | | 965 | | | — | | | — | | | 965 | |
| Issuance of common stock upon the vesting and settlement of RSUs | | | | | | | | | | 603 | | | — | | | 169 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Stock-based compensation | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 19,331 | | | — | | | — | | | 19,331 | |
| Shares withheld related to net share settlement | | | | | | | | | | (209) | | | — | | | (76) | | | — | | | — | | | — | | | (4,321) | | | — | | | — | | | (4,321) | |
| Shares issued under employee stock purchase plan | | | | | | | | | | 153 | | | — | | | — | | | — | | | — | | | — | | | 2,175 | | | — | | | — | | | 2,175 | |
| Repurchase and retirement of common stock | | | | | | | | | | (1,932) | | | — | | | — | | | — | | | — | | | — | | | (18,150) | | | (10,119) | | | — | | | (28,269) | |
| Share repurchase excise tax | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (186) | | | — | | | (186) | |
| Net income | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 24,076 | | | — | | | 24,076 | |
| Other comprehensive income | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 149 | | | 149 | |
| Balance as of September 30, 2023 | | | | | | | | | | 76,199 | | | $ | 1 | | | 22,829 | | | $ | — | | | (195) | | | $ | (644) | | | $ | — | | | $ | (11,162) | | | $ | (127) | | | $ | (11,932) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
ZipRecruiter, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Three and Nine Months Ended September 30, 2022 | |
| | | | Common Stock | | Class B Treasury Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated Other Comprehensive Loss | | Total
Stockholders'
Equity | |
| | | | | | Class A | | Class B | | | | | | |
| | | | | | | | | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | | | |
| Balance as of December 31, 2021 | | | | | | | | | | 87,843 | | | $ | 1 | | | 30,571 | | | $ | — | | | (195) | | | $ | (644) | | | $ | 303,395 | | | $ | (67,784) | | | $ | — | | | $ | 234,968 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Class B common stock to Class A common stock | | | | | | | | | | 1,446 | | | — | | | (1,446) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
| Issuance of common stock upon exercise of options | | | | | | | | | | — | | | — | | | 1,180 | | | — | | | — | | | — | | | 2,078 | | | — | | | — | | | 2,078 | | |
| Issuance of common stock upon the vesting and settlement of RSUs | | | | | | | | | | 354 | | | — | | | 433 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
| Stock-based compensation | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 21,112 | | | — | | | — | | | 21,112 | | |
| Shares withheld related to net share settlement | | | | | | | | | | (133) | | | — | | | (181) | | | — | | | — | | | — | | | (5,902) | | | — | | | — | | | (5,902) | | |
| Shares issued under employee stock purchase plan | | | | | | | | | | 290 | | | — | | | — | | | — | | | — | | | — | | | 5,293 | | | — | | | — | | | 5,293 | | |
| Repurchase and retirement of common stock | | | | | | | | | | (2,420) | | | — | | | — | | | — | | | — | | | — | | | (62,349) | | | — | | | — | | | (62,349) | | |
| Net income | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,417 | | | — | | | 8,417 | | |
| Balance as of March 31, 2022 | | | | | | | | | | 87,380 | | | $ | 1 | | | 30,557 | | | $ | — | | | (195) | | | $ | (644) | | | $ | 263,627 | | | $ | (59,367) | | | $ | — | | | $ | 203,617 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of Class B common stock to Class A common stock | | | | | | | | | | 663 | | | — | | | (663) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
| Issuance of common stock upon exercise of options | | | | | | | | | | 5 | | | — | | | 460 | | | — | | | — | | | — | | | 1,099 | | | — | | | — | | | 1,099 | | |
| Issuance of common stock upon the vesting and settlement of RSUs | | | | | | | | | | 275 | | | — | | | 348 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
| Vesting of early exercised options | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 97 | | | — | | | — | | | 97 | | |
| Stock-based compensation | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 18,200 | | | — | | | — | | | 18,200 | | |
| Shares withheld related to net share settlement | | | | | | | | | | (94) | | | — | | | (145) | | | — | | | — | | | — | | | (3,665) | | | — | | | — | | | (3,665) | | |
| Repurchase and retirement of common stock | | | | | | | | | | (4,807) | | | — | | | — | | | — | | | — | | | — | | | (82,878) | | | — | | | — | | | (82,878) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 13,110 | | | — | | | 13,110 | | |
| Balance as of June 30, 2022 | | | | | | | | | | 83,422 | | | $ | 1 | | | 30,557 | | | $ | — | | | (195) | | | $ | (644) | | | $ | 196,480 | | | $ | (46,257) | | | $ | — | | | $ | 149,580 | | |
Conversion of Class B common stock to Class A common stock | | | | | | | | | | 619 | | | — | | | (619) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
| Issuance of common stock upon exercise of options | | | | | | | | | | — | | | — | | | 421 | | | — | | | — | | | — | | | 646 | | | — | | | — | | | 646 | | |
| Vesting of early exercised stock options | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
| Issuance of common stock upon the vesting and settlement of RSUs | | | | | | | | | | 380 | | | — | | | 341 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
| Stock-based compensation | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 19,844 | | | — | | | — | | | 19,844 | | |
| Shares withheld related to net share settlement | | | | | | | | | | (127) | | | — | | | (143) | | | — | | | — | | | — | | | (5,168) | | | — | | | — | | | (5,168) | | |
| Shares issued under employee stock purchase plan | | | | | | | | | | 159 | | | — | | | — | | | — | | | — | | | — | | | 2,836 | | | — | | | — | | | 2,836 | | |
| Repurchase and retirement of common stock | | | | | | | | | | (3,363) | | | — | | | — | | | — | | | — | | | — | | | (54,886) | | | — | | | — | | | (54,886) | | |
| Net income | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 20,556 | | | — | | | 20,556 | | |
| Other comprehensive loss | | | | | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (146) | | | (146) | | |
| Balance as of September 30, 2022 | | | | | | | | | | 81,090 | | | $ | 1 | | | 30,557 | | | $ | — | | | (195) | | | $ | (644) | | | $ | 159,752 | | | $ | (25,701) | | | $ | (146) | | | $ | 133,262 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
10
ZipRecruiter, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | | | | | | | | | | |
| Nine Months Ended
September 30, |
| 2023 | | 2022 |
| Cash flows from operating activities | | | |
| Net income | $ | 43,467 | | | $ | 42,083 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Stock-based compensation expense | 58,305 | | | 57,478 | |
| Depreciation and amortization | 8,459 | | | 7,989 | |
| Provision for bad debts | 2,495 | | | 2,203 | |
| Deferred income taxes | (16,834) | | | (2,547) | |
| Non-cash lease expense | 3,190 | | | 3,467 | |
| Amortization and accretion of marketable securities | (8,573) | | | (156) | |
| Other | 1,197 | | | 2,838 | |
| Change in operating assets and liabilities: | | | |
| Accounts receivable | 8,936 | | | (8,186) | |
| Prepaid expenses and other current assets | 1,083 | | | (1,740) | |
| Deferred commissions, net | 209 | | | (611) | |
| Other assets | 426 | | | 2,090 | |
| Accounts payable | (12,591) | | | (11,008) | |
| Accrued expenses and other liabilities | (5,996) | | | (11,163) | |
| Accrued interest | (6,873) | | | 5,938 | |
| Deferred revenue | (3,355) | | | 805 | |
| Operating lease liabilities | (4,792) | | | (5,132) | |
| Net cash provided by operating activities | 68,753 | | | 84,348 | |
| Cash flows from investing activities | | | |
| Purchases of property and equipment | (809) | | | (2,224) | |
| Capitalized internal-use software costs | (7,531) | | | (6,336) | |
| Purchases of marketable securities | (323,791) | | | (186,719) | |
| Paydowns, maturities, and redemptions of marketable securities | 421,522 | | | — | |
| | | |
| Net cash provided by (used in) investing activities | 89,391 | | | (195,279) | |
| Cash flows from financing activities | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Proceeds from issuance of senior unsecured notes | — | | | 550,000 | |
| Payment of senior unsecured notes’ issuance fees | — | | | (9,378) | |
| Payments of tax withholdings on net settlement of equity awards | (13,417) | | | (14,735) | |
| Repurchase of common stock | (139,153) | | | (198,678) | |
| Proceeds from exercise of stock options | 3,989 | | | 3,950 | |
| Proceeds from issuance of stock under employee stock purchase plan | 6,396 | | | 8,129 | |
| Net cash provided by (used in) financing activities | (142,185) | | | 339,288 | |
| Net increase in cash and cash equivalents | 15,959 | | | 228,357 | |
| Cash and cash equivalents | | | |
| Beginning of period | 227,380 | | | 254,621 | |
| End of period | $ | 243,339 | | | $ | 482,978 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
11
ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Organization and Description of Business
ZipRecruiter, Inc. was incorporated in the state of Delaware on June 29, 2010. Hereinafter, ZipRecruiter, Inc. and its wholly owned subsidiaries ZipRecruiter Israel Ltd., ZipRecruiter UK Ltd., and ZipRecruiter Canada Ltd. are collectively referred to as “ZipRecruiter” or the “Company.” The Company is a two-sided marketplace that enables employers and job seekers to connect with one another online to fill job opportunities.
2. Basis of Presentation, Principles of Consolidation, and Summary of Significant Accounting Policies
The unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, certain information and disclosures normally included in consolidated financial statements presented in accordance with U.S. GAAP have been condensed or omitted.
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 Form 10-K”). The condensed consolidated balance sheet as of December 31, 2022 has been derived from the Company’s audited consolidated financial statements.
In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary for the fair statement of the condensed consolidated financial statements.
There have been no changes in the Company’s accounting policies from those disclosed in the Company’s audited consolidated financial statements and the related notes included in the 2022 Form 10-K.
The operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results expected for the full year ending December 31, 2023 or any future period.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes thereto. Actual results could differ from those estimates.
Investments
The Company classifies and accounts for its money market mutual funds which have readily determinable fair values as equity securities, and it carries such securities at fair value with unrealized gains and losses reported in other income (expense), net in its condensed consolidated statements of operations.
The Company classifies and accounts for its debt securities as available-for-sale, and it carries such securities at fair value with unrealized gains and losses reported net of tax as a separate component of stockholders’ equity (deficit) in accumulated other comprehensive loss. During the three and nine months ended September 30, 2023, in connection with its available-for-sale debt securities, the Company recorded pre-tax unrealized gains of $0.1 million and $0.2 million, respectively, in other comprehensive income (loss), with no associated tax benefit. The Company recorded pre-tax unrealized losses in other
ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
comprehensive income (loss) of $0.2 million with an associated tax benefit of $0.1 million in available-for-sale debt securities during both the three and nine months ended September 30, 2022.
The Company determines any realized gains and losses on the sale of its available-for-sale debt securities using a specific identification method, and it records such gains and losses through other income (expense), net in its condensed consolidated statements of operations. During the three and nine months ended September 30, 2023 and 2022, the Company did not have any sales of its available-for-sale debt securities and consequently, did not reclassify any amounts out of accumulated other comprehensive loss into other income (expense), net in the condensed consolidated statements of operations.
Segments and Geographic Information
The Company operates as a single operating segment. The Company’s Chief Operating Decision Maker, the CEO, regularly reviews financial information presented on a consolidated basis for purposes of assessing financial performance and allocating resources. Revenue is attributed to geographic regions based on locations where services are provided to the Company’s customers. Foreign countries outside of the United States, in aggregate, accounted for less than 2% of the Company’s revenue for the three and nine months ended September 30, 2023 and 2022. In addition, property and equipment and operating lease right-of-use (“ROU”) assets outside of the United States were not material as of September 30, 2023 and December 31, 2022.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, marketable securities, and accounts receivable. The Company maintains its cash accounts with large financial institutions and at times, the cash accounts may exceed Federal Deposit Insurance Corporation limits. The Company has not experienced any losses in such accounts.
As of September 30, 2023, the Company maintains its cash accounts with several large financial institutions which the Company believes are financially sound. Accordingly, the Company believes minimal credit risk exists with respect to these cash balances.
The Company invests only in highly rated debt and equity securities. The Company believes the financial institutions that hold its investments are financially sound, and accordingly, are subject to minimal credit risk.
One customer accounted for 13% and 12% of the Company’s outstanding accounts receivable as of September 30, 2023 and December 31, 2022, respectively. The Company does not consider the concentration of its accounts receivable to be a material risk. For the three and nine months ended September 30, 2023 and 2022, there were no customers that individually represented 10% or more of revenue.
The Company uses third parties to collect its credit card receivables and believes risk related to its credit card processors is minimal.
Share Repurchase Program
All shares repurchased under the Company’s share repurchase program are purchased for immediate retirement. Repurchased shares reduce the Company’s outstanding shares and its weighted average number of common shares outstanding for purposes of calculating basic and diluted earnings per share. All excess of repurchase price over par value for shares repurchased is allocated to retained earnings to the extent the Company has retained earnings. If the Company has an accumulated deficit, all excess of repurchase price over par value for shares repurchased is allocated first to additional paid-in capital, to the extent the Company has additional paid-in capital, until depleted, and then to accumulated deficit in the Company’s condensed consolidated statements of changes in stockholders’ equity (deficit). The Company may repurchase shares of common stock through open market or privately negotiated
ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
transactions, block purchases, or pursuant to one or more Rule 10b5-1 plans. For more information on the Company’s share repurchase program, please see Note 9.
Excise Tax Imposed by Inflation Reduction Act
The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. The net value is determined by the fair market value of the stock repurchased during the tax year, reduced by the fair market value of stock issued during the tax year, including stock issued to employees. As of September 30, 2023, the Company reflected $1.0 million of excise tax as part of the cost basis of the stock repurchased during the nine months ended September 30, 2023, and recorded a corresponding liability for the excise taxes payable in accrued expenses on its condensed consolidated balance sheet.
Recent Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
The Company reviewed all recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on the Company’s condensed consolidated financial statements.
3. Net Income Per Share
The following table presents the Company’s basic net income per share (in thousands, except per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Net income per share, basic: | | | | | | | |
| Net income | $ | 24,076 | | | $ | 20,556 | | | $ | 43,467 | | | $ | 42,083 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Weighted average shares of Class A and Class B common stock outstanding | 99,800 | | | 113,059 | | | 101,409 | | | 116,184 | |
| Net income per share, basic | $ | 0.24 | | | $ | 0.18 | | | $ | 0.43 | | | $ | 0.36 | |
ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The following table presents the Company’s diluted net income per share (in thousands, except per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Net income per share, diluted: | | | | | | | |
| Numerator: | | | | | | | |
| Net income | $ | 24,076 | | | $ | 20,556 | | | $ | 43,467 | | | $ | 42,083 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Denominator: | | | | | | | |
| Weighted average shares of Class A and Class B common stock outstanding, basic | 99,800 | | | 113,059 | | | 101,409 | | | 116,184 | |
| Effect of dilutive securities: | | | | | | | |
| Options to purchase common stock | 4,608 | | | 6,640 | | | 4,943 | | | 7,255 | |
| | | | | | | |
| Unvested restricted stock units | 273 | | | 111 | | | 325 | | | 177 | |
| Employee stock purchase plan | 26 | | | — | | | 11 | | | — | |
| | | | | | | |
| Weighted average shares of Class A and Class B common stock outstanding, diluted | 104,707 | | | 119,810 | | | 106,688 | | | 123,616 | |
| Net income per share, diluted | $ | 0.23 | | | $ | 0.17 | | | $ | 0.41 | | | $ | 0.34 | |
The following table presents the weighted average number of potentially dilutive common stock equivalents excluded from the computation of diluted net income per share because their inclusion would have been anti-dilutive (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Options to purchase common stock | 5 | | | 102 | | | 3 | | | 77 | |
| Unvested restricted stock units | 5,770 | | | 6,197 | | | 6,032 | | | 5,777 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Employee stock purchase plan | 126 | | | 245 | | | 136 | | | 213 | |
| Total shares excluded from diluted net income per share | 5,901 | | | 6,544 | | | 6,171 | | | 6,067 | |
In April 2021, the Company granted a restricted stock unit (“RSU”) award (the “CEO Performance Award”), which included service, market, and performance based vesting conditions. The CEO Performance Award is excluded from the above table because none of the market conditions have been met as of September 30, 2023.
ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
4. Revenue Information
The Company disaggregates revenue into two streams: subscription revenue and performance-based revenue. The following table presents the Company’s revenue streams (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Subscription | $ | 122,431 | | | $ | 175,129 | | | $ | 402,599 | | | $ | 537,290 | |
| Performance-based | 33,199 | | | 51,839 | | | 107,201 | | | 156,881 | |
| Total revenue | $ | 155,630 | | | $ | 226,968 | | | $ | 509,800 | | | $ | 694,171 | |
The Company recognized $16.9 million and $24.1 million of revenue during the three months ended September 30, 2023 and 2022, respectively, that was included in the deferred revenue balances as of June 30, 2023 and 2022, respectively.
The Company recognized $19.4 million and $23.1 million of revenue during the nine months ended September 30, 2023 and 2022, respectively, that was included in the deferred revenue balances as of December 31, 2022 and 2021, respectively.
As of September 30, 2023 and December 31, 2022, the Company had no contract assets.
Performance Obligations
No revenue was recognized during the three and nine months ended September 30, 2023 and 2022 from performance obligations satisfied in previous periods.
As of September 30, 2023, the Company did not have any material remaining performance obligations expected to be recognized in the future. Generally, any remaining performance obligations relate primarily to subscription services such as time-based job posting plans, upsell services, and resume database plans that will be invoiced in future periods, and exclude (i) contracts with an original expected term of one year or less and (ii) contracts for which the Company only recognizes revenue at the amount to which it has the right to invoice for services performed.
5. Accrued Expenses
Accrued expenses consist of the following (in thousands):
| | | | | | | | | | | |
| September 30, | | December 31, |
| 2023 | | 2022 |
| Accrued compensation and benefits | $ | 14,126 | | | $ | 31,791 | |
| Accrued marketing | 9,562 | | | 10,937 | |
| Accrued commissions | 4,331 | | | 5,716 | |
| Accrued refunds and customer liabilities | 2,376 | | | 2,863 | |
| Accrued partner expenses | 2,202 | | | 7,465 | |
| Accrued non-income taxes | 1,739 | | | 3,605 | |
| Other accrued expenses | 7,070 | | | 6,738 | |
| Total accrued expenses | $ | 41,406 | | | $ | 69,115 | |
ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
6. Debt
Credit Facility
The Company has a $250.0 million credit facility which matures in April 2026. On March 28, 2023, the Company entered into a Fourth Amendment to the Credit Agreement with the administrative agent to replace the London Interbank Offered Rate (“LIBOR”) reference rate with the Secured Overnight Financing Rate (“SOFR”) reference rate (as defined therein). No other terms or conditions of the Credit Agreement were changed as a result of this amendment.
The Company had no amounts outstanding under its credit facility and was in compliance with the financial covenants as of September 30, 2023. The amount available under the credit facility as of September 30, 2023 was $245.2 million, which is the credit limit less letters of credit outstanding of $4.8 million.
Senior Unsecured Notes
On January 12, 2022, the Company issued an aggregate principal amount of $550.0 million senior unsecured notes (the “Notes”) in a private placement. The Notes will mature on January 15, 2030 and bear interest at a rate of 5% per year. Interest on the Notes is payable semi-annually in arrears on January 15 and July 15 of each year. Unpaid interest amounts are included within accrued interest in the Company’s condensed consolidated balance sheets. At its sole discretion, the Company has the option to redeem the Notes at any time in whole or in part at specified redemption prices.
The Company includes its Notes, net of debt issuance costs, within long-term borrowings in its condensed consolidated balance sheets. As of September 30, 2023, the Company had a carrying amount of approximately $7.7 million of debt issuance costs related to the Notes.
For both the three months ended September 30, 2023 and 2022, the Company recognized $7.1 million in interest expense related to the Notes, and for the nine months ended September 30, 2023 and 2022, the Company recognized $21.4 million and $20.5 million, respectively, in interest expense related to the Notes, with an effective interest rate of 5.4%. Such interest expense includes $0.3 million and $0.2 million related to the amortization of debt issuance costs for the three months ended September 30, 2023 and 2022, respectively, and $0.8 million and $0.7 million related to the amortization of debt issuance costs for the nine months ended September 30, 2023 and 2022, respectively.
7. Commitments and Contingencies
Legal Matters
The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. If the Company determines that it is probable that a loss has been incurred and the amount is reasonably estimable, the Company will record a liability. However, if the Company determines that a contingent loss is reasonably possible and the loss or range of loss can be estimated, the Company will disclose the possible loss in the condensed consolidated financial statements. Legal costs relating to loss contingencies are expensed as incurred.
Indemnification
In the ordinary course of business, the Company may provide indemnification of varying scopes and terms to customers, investors, directors and officers with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from certain claims made by third parties. These indemnification provisions may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments the Company could be
ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
required to make under these indemnification provisions is indeterminable. The Company has never paid a material claim, nor has the Company been sued in connection with these indemnification arrangements. As of September 30, 2023, the Company has not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements is neither probable nor reasonably estimable.
Non-income Taxes
The Company collects and remits sales, use, and other taxes (“non-income taxes”) relating to the sale of the Company’s services in various jurisdictions. The Company accrues non-income taxes that may result from examinations by, or any anticipated negotiated agreements with, these tax authorities when a loss is probable and reasonably estimable. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, then the reasonably possible loss is disclosed. Due to the inherent complexity and uncertainty of these matters and judicial process in certain jurisdictions, the final outcome may be materially different from the Company’s expectations.
Restructuring
On May 31, 2023, the Company announced and committed to a restructuring plan to optimize its cost structure and drive long-term efficiency in response to the impact of macroeconomic conditions. This plan resulted in a reduction in the Company’s global workforce of approximately 20%. The Company recorded restructuring costs of $8.3 million during the three months ended June 30, 2023 primarily related to employee severance and continuation of health benefits. Included in the $8.3 million of restructuring costs were non-cash charges of $0.3 million pertaining to fixed asset disposals incurred in conjunction with the restructuring plan. Restructuring costs were presented as $3.9 million in sales and marketing, $3.4 million in research and development, and $1.0 million in general and administrative expenses within the condensed consolidated statements of operations.
During the three months ended September 30, 2023, the Company reversed $0.7 million associated with the restructuring costs liability that existed at June 30, 2023 when it was determined such costs would not need to be paid and recorded additional restructuring costs of $0.3 million related to employee severance and continuation of health benefits. Of the restructuring costs liability outstanding as of September 30, 2023, the Company expects the remaining costs to be paid by the end of 2023.
The following table presents the restructuring costs liability for the nine months ended September 30, 2023, which is included in accrued expenses in the Company’s condensed consolidated balance sheets:
| | | | | |
| Nine Months Ended |
| September 30, 2023 |
Accrual, at December 31, 2022 | $ | — | |
| Expense | 8,336 | |
| Cash payments | (7,189) | |
| Non-cash adjustments | (650) | |
Accrual, at September 30, 2023 | $ | 497 | |
8. Financial Instruments
Fair Value Measurements
The following table presents the Company’s financial assets measured at fair value on a recurring basis, as well as the amortized cost basis and gross unrealized gains and losses of those assets as of September 30, 2023 (in thousands):
ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance Sheet Classification |
| | Amortized Cost Basis | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | | Cash and Cash Equivalents | | Marketable Securities |
| Level 1: | | | | | | | | | | | | |
| Cash | | $ | 217,930 | | | $ | — | | | $ | — | | | $ | 217,930 | | | $ | 217,930 | | | $ | — | |
| Money market mutual funds | | 17,308 | | | — | | | — | | | 17,308 | | | 17,308 | | | — | |
| U.S. treasury securities | | 160,817 | | | 4 | | | (46) | | | 160,775 | | | 2,500 | | | 158,275 | |
| Subtotal | | 396,055 | | | 4 | | | (46) | | | 396,013 | | | 237,738 | | | 158,275 | |
| Level 2: | | | | | | | | | | | | |
| Commercial paper | | 21,316 | | | — | | | — | | | 21,316 | | | — | | | 21,316 | |
| Certificates of deposit | | 5,518 | | | — | | | — | | | 5,518 | | | — | | | 5,518 | |
| Corporate notes and obligations | | 41,397 | | | 3 | | | (42) | | | 41,358 | | | 5,601 | | | 35,757 | |
| Asset-backed securities | | 9,958 | | | 2 | | | (22) | | | 9,938 | | | — | | | 9,938 | |
| U.S. agency securities | | 22,886 | | | — | | | (25) | | | 22,861 | | | — | | | 22,861 | |
| Subtotal | | 101,075 | | | 5 | | | (89) | | | 100,991 | | | 5,601 | | | 95,390 | |
| Total cash, cash equivalents, and marketable securities | | $ | 497,130 | | | $ | 9 | | | $ | (135) | | | $ | 497,004 | | | $ | 243,339 | | | $ | 253,665 | |
As of December 31, 2022, the Company’s financial assets consisted of the following (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance Sheet Classification |
| | Amortized Cost Basis | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | | Cash and Cash Equivalents | | Marketable Securities |
| Level 1: | | | | | | | | | | | | |
| Cash | | $ | 166,341 | | | $ | — | | | $ | — | | | $ | 166,341 | | | $ | 166,341 | | | $ | — | |
| Money market mutual funds | | 49,545 | | | — | | | — | | | 49,545 | | | 49,545 | | | — | |
| U.S. treasury securities | | 204,580 | | | 9 | | | (180) | | | 204,409 | | | 2,995 | | | 201,414 | |
| Subtotal | | 420,466 | | | 9 | | | (180) | | | 420,295 | | | 218,881 | | | 201,414 | |
| Level 2: | | | | | | | | | | | | |
| Commercial paper | | 41,348 | | | — | | | — | | | 41,348 | | | — | | | 41,348 | |
| Certificates of deposit | | 6,116 | | | — | | | — | | | 6,116 | | | — | | | 6,116 | |
| Corporate notes and obligations | | 63,912 | | | 10 | | | (202) | | | 63,720 | | | 1,519 | | | 62,201 | |
| Asset-backed securities | | 15,150 | | | 17 | | | (29) | | | 15,138 | | | — | | | 15,138 | |
| U.S. agency securities | | 23,736 | | | 5 | | | (3) | | | 23,738 | | |