10-Q 1 zip-20240331.htm 10-Q zip-20240331
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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 March 31, 2024
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)
Delaware27-2976158
(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 classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.00001 par value per shareZIPNew 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 filerAccelerated 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 76,673,216 shares of Class A common stock outstanding and 22,633,316 shares of Class B common stock outstanding as of May 3, 2024.

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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 global business and macroeconomic factors that affect our business, the employment market, and the economy in general, including inflationary pressures, a volatile interest rate environment, increasing borrowing costs, actual or perceived instability in the global banking industry and the impacts, cybersecurity incidents, uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, and the impacts of the war in Ukraine and the Israel-Hamas war;
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

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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:
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.
We face intense competition and could lose market share to our competitors, which could adversely affect our business, operating results, and financial condition.
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.
If we fail to scale our business 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.

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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.

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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
ZipRecruiter, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par values)
(unaudited)

March 31,December 31,
20242023
Assets
Current assets
Cash and cash equivalents$282,500 $283,043 
Marketable securities230,481 237,074 
Accounts receivable, net of allowances of $3,316 and $3,859 at March 31, 2024 and December 31, 2023, respectively
26,255 27,247 
Prepaid expenses and other assets7,913 9,853 
Deferred commissions, current portion4,982 5,071 
Total current assets552,131 562,288 
Property and equipment, net5,755 6,213 
Operating lease right-of-use assets8,990 8,744 
Internal-use software, net18,359 18,609 
Deferred commissions, net of current portion3,901 4,114 
Goodwill1,724 1,724 
Deferred tax assets, net70,736 57,050 
Other assets848 758 
Total assets$662,444 $659,500 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$9,846 $11,839 
Accrued expenses34,982 41,741 
Accrued interest5,935 12,837 
Deferred revenue13,019 12,860 
Operating lease liabilities, current portion4,959 4,429 
Other current liabilities14,384 1,164 
Total current liabilities83,125 84,870 
Operating lease liabilities, net of current portion8,120 8,721 
Long-term borrowings, net542,840 542,577 
Other long-term liabilities15,709 14,967 
Total liabilities649,794 651,135 
Commitments and contingencies (Note 7)
Stockholders' equity
Preferred Stock, $0.00001 par value; 50,000 shares authorized as of March 31, 2024 and December 31, 2023; no shares issued and outstanding as of March 31, 2024 and December 31, 2023
  
Class A common stock, $0.00001 par value; 700,000 shares authorized as of March 31, 2024 and December 31, 2023; 76,647 and 76,173 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
1 1 
Class B common stock, $0.00001 par value; 700,000 shares authorized as of March 31, 2024 and December 31, 2023; 22,829 shares issued and 22,634 shares outstanding as of March 31, 2024 and December 31, 2023
  
Class B treasury stock, 195 shares outstanding as of March 31, 2024 and December 31, 2023
(644)(644)
Additional paid-in capital25,396 14,526 
Accumulated deficit
(12,036)(5,531)
Accumulated other comprehensive income (loss)
(67)13 
Total stockholders' equity
12,650 8,365 
Total liabilities and stockholders' equity
$662,444 $659,500 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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ZipRecruiter, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

Three Months Ended
March 31,
20242023
Revenue$122,239 $183,749 
Cost of revenue13,321 20,622 
Gross profit108,918 163,127 
Operating expenses
Sales and marketing54,693 88,352 
Research and development36,076 38,294 
General and administrative19,055 25,521 
Total operating expenses109,824 152,167 
Income (loss) from operations
(906)10,960 
Other income (expense)
Interest expense(7,356)(7,341)
Other income (expense), net4,879 5,022 
Total other income (expense), net(2,477)(2,319)
Income (loss) before income taxes
(3,383)8,641 
Income tax expense
3,122 3,630 
Net income (loss)
(6,505)5,011 
Net income (loss) per share:
Basic$(0.07)$0.05 
Diluted$(0.07)$0.05 
Weighted average shares used in computing net income (loss) per share:
Basic98,962 104,261 
Diluted98,962 109,984 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ZipRecruiter, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
Three Months Ended
March 31,
20242023
Net income (loss)
$(6,505)$5,011 
Other comprehensive income (loss), net of tax:
Change in unrealized gains (losses) on available-for-sale debt securities
(80)161 
Total other comprehensive income (loss)
(80)161 
Total comprehensive income (loss)
$(6,585)$5,172 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ZipRecruiter, Inc.
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)
(in thousands)
(unaudited)
Common StockClass B Treasury StockAdditional
Paid-in
Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Total
Stockholders' Equity (Deficit)
Class AClass B
SharesAmountSharesAmountSharesAmount
Balance as of December 31, 202376,173 $1 22,829 $ (195)$(644)$14,526 $(5,531)$13 $8,365 
Conversion of Class B common stock to Class A common stock
232— (232)— — — — — — 
Issuance of common stock upon exercise of options5— 165— — 309 — — 309 
Issuance of common stock upon the vesting and settlement of RSUs870— 118— — — — — — 
Stock-based compensation— — — 19,147 — — 19,147 
Shares withheld related to net share settlement(331)— (51)— — (4,795)— — (4,795)
Shares issued under employee stock purchase plan210— — — 2,582 — — 2,582 
Repurchase and retirement of common stock(512)— — — — (6,373)— — (6,373)
Net loss
— — — — (6,505)— (6,505)
Other comprehensive loss
— — — — — (80)(80)
Balance as of March 31, 202476,647$1 22,829$ (195)$(644)$25,396 $(12,036)$(67)$12,650 
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)
Common StockClass B Treasury StockAdditional
Paid-in
Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Total
Stockholders' Equity (Deficit)
Class AClass B
SharesAmountSharesAmountSharesAmount
Balance as of December 31, 202274,320 $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 options6— 658— — 1,298 — — 1,298 
Issuance of common stock upon the vesting and settlement of RSUs525— 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 plan237— — — 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, 202375,659$1 26,629$ (195)$(644)$ $(3,008)$(212)$(3,863)
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)

Three Months Ended
March 31,
20242023
Cash flows from operating activities
Net income (loss)
$(6,505)$5,011 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation expense18,576 21,571 
Depreciation and amortization3,110 2,731 
Provision for bad debts(558)912 
Deferred income taxes(13,686)(4,607)
Non-cash lease expense986 1,031 
Amortization and accretion of marketable securities(2,564)(3,020)
Other1,112 313 
Change in operating assets and liabilities:
Accounts receivable1,550 7,247 
Prepaid expenses and other assets1,978 2,429 
Deferred commissions, net302 70 
Other assets202 106 
Accounts payable(2,014)(5,019)
Accrued expenses and other liabilities7,613 (13,899)
Accrued interest(6,902)(6,902)
Deferred revenue 152 (95)
Operating lease liabilities(1,319)(1,509)
Net cash provided by operating activities
2,033 6,370 
Cash flows from investing activities
Purchases of property and equipment(126)(414)
Capitalized internal-use software costs(2,870)(3,068)
Purchases of marketable securities(142,717)(117,122)
Paydowns, maturities, and redemptions of marketable securities151,452 158,623 
Net cash provided by investing activities
5,739 38,019 
Cash flows from financing activities
Repurchase of common stock(6,373)(58,740)
Proceeds from exercise of stock options271 1,787 
Payments of tax withholdings on net settlement of equity awards(4,795)(4,511)
Proceeds from issuance of stock under employee stock purchase plan2,582 4,221 
Net cash used in financing activities
(8,315)(57,243)
Net decrease in cash and cash equivalents
(543)(12,854)
Cash and cash equivalents
Beginning of period283,043 227,380 
End of period$282,500 $214,526 
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, 2023 (the “2023 Form 10-K”). The condensed consolidated balance sheet as of December 31, 2023 has been derived from the Company’s audited consolidated financial statements. Certain reclassifications have been made to the presentation of the prior year to conform to the presentation of the current year.
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 2023 Form 10-K.
The operating results for the three months ended March 31, 2024 are not necessarily indicative of the results expected for the full year ending December 31, 2024 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 in accumulated other comprehensive income (loss). During the three months ended March 31, 2024 and 2023, in connection with its available-for-sale debt securities, the Company recorded
12

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
pre-tax unrealized losses of $0.1 million and pre-tax unrealized gains of $0.2 million in other comprehensive income (loss), respectively, with no associated tax expense.
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 months ended March 31, 2024 and 2023, 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 income (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 months ended March 31, 2024 and 2023. In addition, long-lived assets outside of the United States were not material as of March 31, 2024 and December 31, 2023.
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. The Company monitors the relative credit standing of the financial institutions with which it transacts and limits its credit exposure to any singular entity. 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 11% of the Company’s outstanding accounts receivable as of March 31, 2024, and a separate customer accounted for 10% of the Company’s outstanding accounts receivable as of December 31, 2023. The Company closely monitors the financial condition of the foregoing customers, which have been in good credit standing. No other customer individually accounted for 10% or more of the Company’s outstanding accounts receivable as of March 31, 2024 and December 31, 2023. The Company does not consider the concentration of its accounts receivable to be a material risk. For the three months ended March 31, 2024 and 2023, 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).
13

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company may repurchase shares of common stock through open market or privately negotiated 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.
Recent Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosure requirements about a public entity’s reportable segments and significant segment expenses. This update also expands the interim segment disclosure requirements. Public entities that have a single reportable segment will be required to provide on both an interim and annual basis all the disclosures required by Topic 280, including those added by the amendments in ASU 2023-07. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the effects of the adoption of this update on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which intends to enhance the transparency and decision usefulness of income tax disclosures, primarily through expanding disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the effects of the adoption of this update on its consolidated financial statements.
3.    Net Income (Loss) Per Share
The following table presents the Company’s basic net income (loss) per share (in thousands, except per share amounts):
Three Months Ended
March 31,
20242023
Net income (loss) per share, basic:
Net income (loss)
$(6,505)$5,011 
Weighted average shares of Class A and Class B common stock outstanding98,962 104,261 
Net income (loss) per share, basic
$(0.07)$0.05 
14

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The following table presents the Company’s diluted net income (loss) per share (in thousands, except per share amounts):
Three Months Ended
March 31,
20242023
Net income (loss) per share, diluted:
Numerator:
Net income (loss)
$(6,505)$5,011 
Denominator:
Weighted average shares of Class A and Class B common stock outstanding, basic98,962 104,261 
Effect of dilutive securities:
Options to purchase common stock 5,345 
Unvested restricted stock units 372 
Employee stock purchase plan 6 
Weighted average shares of Class A and Class B common stock outstanding, diluted98,962 109,984 
Net income (loss) per share, diluted
$(0.07)$0.05 
The weighted average number of potentially dilutive common stock equivalents of 12.6 million and 5.9 million were excluded from the computation of diluted net income (loss) per share during the three months ended March 31, 2024 and 2023, respectively, because their inclusion would have been anti-dilutive.
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 had been met as of March 31, 2023. Additionally, in December 2023, the Company entered into a Cancellation Agreement with the CEO, which provided for the cancellation of the 1.4 million RSUs included in the CEO Performance Award. For more information on the Cancellation Agreement, please see Note 10.
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
March 31,
20242023
Subscription$96,561 $143,101 
Performance-based25,678 40,648 
Total revenue$122,239 $183,749 
The Company recognized $12.1 million and $18.6 million of revenue during the three months ended March 31, 2024 and 2023, respectively, that was included in the deferred revenue balances as of December 31, 2023 and 2022, respectively.
As of March 31, 2024 and December 31, 2023, the Company had no contract assets.
15

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Performance Obligations
No revenue was recognized during the three months ended March 31, 2024 and 2023 from performance obligations satisfied in previous periods.
As of March 31, 2024, 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):
March 31,December 31,
20242023
Accrued compensation and benefits$9,100 $17,895 
Accrued marketing9,436 8,133 
Accrued commissions
4,479 3,740 
Accrued partner expenses
1,867 2,255 
Accrued refunds and customer liabilities
2,361 2,179 
Other accrued expenses7,739 7,539 
Total accrued expenses$34,982 $41,741 

6.    Debt
Credit Facility
The Company has a $250.0 million credit facility which matures in April 2026. The Company had no amounts outstanding under its credit facility and was in compliance with the financial covenants as of March 31, 2024. The amount available under the credit facility as of March 31, 2024 was $245.6 million, which is the credit limit less letters of credit outstanding of $4.4 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 March 31, 2024, the Company had a carrying amount of approximately $7.2 million of debt issuance costs related to the Notes.
For both the three months ended March 31, 2024 and 2023, the Company recognized $7.1 million in interest expense related to the Notes, with an effective interest rate of 5.4% for both quarters. Such
16

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
interest expense includes $0.3 million and $0.2 million related to the amortization of debt issuance costs for the three months ended March 31, 2024 and 2023, 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 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 March 31, 2024, 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.

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 March 31, 2024 (in thousands):
17

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Balance Sheet Classification
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueCash and Cash EquivalentsMarketable Securities
Level 1:
Cash$226,200 $— $— $226,200 $226,200 $— 
Money market mutual funds18,100 — — 18,100 18,100 — 
U.S. treasury securities143,368 1 (26)143,343 7,982 135,361 
Subtotal387,668 1 (26)387,643 252,282 135,361 
Level 2:
Commercial paper36,829 — 36,830 5,495 31,335 
Certificates of deposit3,243 — — 3,243  3,243 
Corporate notes and obligations76,847 3 (40)76,810 24,723 52,087 
Asset-backed securities8,461 1 (7)8,455 — 8,455 
Subtotal125,380 5 (47)125,338 30,218 95,120 
Total cash, cash equivalents, and marketable securities$513,048 $6 $(73)$512,981 $282,500 $230,481 
As of December 31, 2023, the Company’s financial assets consisted of the following (in thousands):
Balance Sheet Classification
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueCash and Cash EquivalentsMarketable Securities
Level 1:
Cash$237,104 $— $— $237,104 $237,104 $— 
Money market mutual funds23,762 — — 23,762 23,762 — 
U.S. treasury securities138,893 38 (8)138,923  138,923 
Subtotal399,759 38 (8)399,789 260,866 138,923 
Level 2:
Commercial paper25,899 — — 25,899 6,495 19,404 
Certificates of deposit7,768 — — 7,768 3,010 4,758 
Corporate notes and obligations71,545 12 (21)71,536 12,672 58,864 
Asset-backed securities7,319 7 (10)7,316 — 7,316 
U.S. agency securities7,814  (5)7,809  7,809 
Subtotal120,345 19 (36)120,328 22,177 98,151 
Total cash, cash equivalents, and marketable securities$520,104 $57 $(44)$520,117 $283,043 $237,074 
The Company’s money market mutual funds and treasury securities are measured at fair value using quoted prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. The fair values of the Company’s Level 2 commercial paper and certificates of deposit are determined using quoted prices in markets that are not active or using model-driven valuations employing significant inputs derived from observable market data. The fair values of the Company’s Level 2 corporate notes and obligations, asset-backed securities, and U.S. agency securities are determined using an evaluated price based on a compilation of reported market information, such as benchmark yield curves, credit spreads and estimated default rates.
18

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The carrying amounts of the Company’s remaining financial instruments not discussed in the above table, including accounts receivable and accounts payable, approximate fair value because of their short-term maturities, except for the Company’s senior unsecured notes which are valued on a quarterly basis for disclosure purposes only based on quoted prices for the Notes in less active markets and categorized accordingly as Level 2 in the fair value hierarchy. The aggregate fair value of the Notes was estimated to be approximately $486.1 million as of March 31, 2024 and approximately $478.5 million as of December 31, 2023.
Equity Securities
The Company’s investments in equity securities consist primarily of money market mutual funds. During the three months ended March 31, 2024 and 2023, the Company recorded no material unrealized gains or losses in connection with its money market mutual funds held as of March 31, 2024.
Available-for-sale Debt Securities
The following table summarizes the fair value of the Company’s available-for-sale debt securities by contractual maturity as of March 31, 2024 (in thousands):
Due within 1 year$265,286 
Due after 1 year through 5 years3,395 
Total available-for-sale debt securities$268,681 
Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.
The following table summarizes the available-for-sale debt securities which have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of March 31, 2024 (in thousands):
Less Than 12 Months12 Months or GreaterTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Asset-backed securities$3,363 $(3)$692 $(4)$4,055 $(7)
Corporate notes and obligations56,943 (40)  56,943 (40)
U.S. treasury securities106,634 (26)  106,634 (26)
Total available-for-sale debt securities$166,940 $(69)$692 $(4)$167,632 $(73)
The following table summarizes the available-for-sale debt securities which have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for more than 12 months as of December 31, 2023 (in thousands):
19

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Less Than 12 Months12 Months or GreaterTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Asset-backed securities$3,211 $(6)$1,027 $(4)$4,238 $(10)
Corporate notes and obligations40,527 (21)  40,527 (21)
U.S. treasury securities7,397 (8)  7,397 (8)
U.S. agency securities7,809 (5)  7,809 (5)
Total available-for-sale debt securities$58,944 $(40)$1,027 $(4)$59,971 $(44)
The Company did not recognize any credit losses for its available-for-sale debt securities during the three months ended March 31, 2024 and 2023. The Company had no ending allowance balances for credit losses as of March 31, 2024 or December 31, 2023.
During the three months ended March 31, 2024 and 2023, the Company had no sales of its available-for-sale debt securities.

9.    Share Repurchase Program
The Company’s board of directors authorized the Company to repurchase up to $550.0 million of outstanding shares of its common stock pursuant to a share repurchase program (the “Program”). Under the Program, the Company may repurchase shares of common stock through open market or privately negotiated transactions, block purchases, or pursuant to one or more Rule 10b5-1 plans. The Program does not obligate the Company to repurchase shares of common stock. There is no minimum or maximum number of shares to be repurchased under the Program.
During the three months ended March 31, 2024, the Company repurchased an aggregate 0.5 million shares of its Class A common stock for an aggregate purchase price of $6.4 million under the Program through open market purchases.
Approximately $57.0 million remains available for future repurchases of Class A common stock under the Program as of March 31, 2024.
All shares repurchased under the Program were immediately retired. Repurchased shares reduced the Company’s outstanding shares and its weighted average number of shares of common stock outstanding for purposes of calculating basic and diluted earnings per share.
10.    Stock-Based Compensation
20

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Total stock-based compensation expense is recorded in the condensed consolidated statements of operations as follows (in thousands):
Three Months Ended
March 31,
20242023
Cost of revenue$173 $227 
Sales and marketing2,832 3,618 
Research and development9,460 9,787 
General and administrative6,111 7,939 
Total stock-based compensation$18,576 $21,571 
Equity Incentive Plan and Employee Stock Purchase Plan
Under the Company’s 2021 Equity Incentive Plan, as of March 31, 2024, 30.8 million shares of Class A common stock were authorized, of which 17.3 million shares of Class A common stock were available for future issuance. The number of shares reserved for issuance was increased in January 2024 pursuant to the evergreen provisions set forth in the 2021 Equity Incentive Plan.
Under the Company’s 2021 Employee Stock Purchase Plan (the “ESPP”), as of March 31, 2024, 3.7 million shares of Class A common stock were authorized. The number of shares reserved for issuance was increased in January 2024 pursuant to the evergreen provisions set forth in the ESPP.
The ESPP provides for concurrent six-month offering and purchase periods beginning February 15 and August 15 of each year. During the three months ended March 31, 2024, 0.2 million shares of Class A common stock were purchased under the ESPP for an aggregate amount of $2.6 million. As of March 31, 2024, the Company recorded a liability of $0.7 million related to the accumulated payroll deductions, which are refundable to employees who withdraw from the ESPP. This amount is included within accrued expenses in the condensed consolidated balance sheets.
Stock Options
A summary of the Company’s stock option activity for the three months ended March 31, 2024 is as follows (in thousands, except weighted average information):
Number of Options OutstandingWeighted Average Exercise Price Per Share
Outstanding at December 31, 2023
5,159 $2.27 
Granted  
Exercised(170)1.82 
Forfeited/Canceled(3)2.00 
Outstanding at March 31, 2024
4,986 $2.29 
Exercisable at March 31, 2024
4,939 $2.29 
As of March 31, 2024, total remaining stock-based compensation expense for unvested stock options is $0.8 million, which is expected to be recognized over a weighted average period of 0.5 years.
Restricted Stock Units
On April 19, 2021, the Company granted the CEO Performance Award, which provided for a grant of 1.4 million RSUs consisting of five vesting tranches with a vesting schedule based upon achieving stock price targets as well as satisfying certain minimum service requirements. On December 21, 2023, the Company entered into the Cancellation Agreement with the CEO, which provided for the cancellation of
21

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
the 1.4 million market-based RSUs included in the CEO Performance Award. As of the date of the Cancellation Agreement, none of the stock price targets set forth in the CEO Performance Award had been met and all of the RSUs were unvested. The cancellation resulted in an acceleration of $7.5 million in unrecognized stock-based compensation expense from future periods into the fourth quarter of 2023. Accordingly, the Company recorded no stock-based compensation expense related to the CEO Performance Award during the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company recorded stock-based compensation expense of $1.5 million related to the CEO Performance Award.
For all RSUs, excluding the CEO Performance Award, the Company recorded stock-based compensation expense of $18.6 million and $19.2 million during the three months ended March 31, 2024 and 2023, respectively.
A summary of the Company’s RSU activity for the three months ended March 31, 2024 is as follows (in thousands, except weighted average information):
Number of SharesWeighted Average Grant Date Fair Value Per Share
Unvested at December 31, 2023
6,675 $20.36 
Granted3,395 12.61 
Vested(988)19.60 
Forfeited/Canceled(200)20.52 
Unvested at March 31, 2024
8,882 $17.47 
As of March 31, 2024, total unrecognized stock-based compensation expense for unvested RSUs was $149.1 million, which is expected to be recognized over a weighted average period of 1.5 years. The Company had no outstanding performance-based RSUs as of March 31, 2024.
11.    Income Taxes
The Company computes its provision for income taxes by applying the estimated annual effective tax rate to pretax income or loss and adjusts the provision for discrete tax items recorded in the period. The income tax expense, effective tax rates, and statutory federal income tax rates for the three months ended March 31, 2024 and 2023 were as follows (in thousands, except percentages):

Three Months Ended
March 31,
20242023
Income tax expense
$3,122 $3,630 
Effective tax rate(92.3)%42.0 %
Statutory federal income tax rate21 %21 %
The effective tax rate of (92.3)% for the three months ended March 31, 2024 differed from the U.S. federal statutory tax rate of 21% primarily due to state taxes, tax detriments relating to the settlement of RSUs, certain non-deductible expenses including limitations on the amount of deductible officer compensation, and net tax benefits from research and development tax credits. The effective tax rate of 42.0% for the three months ended March 31, 2023 differed from the U.S. federal statutory tax rate of 21% primarily due to tax detriments relating to the settlement of RSUs, certain non-deductible expenses, including limitations on the amount of deductible officer compensation, and net tax benefits from research and development tax credits.
22

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
During the three months ended March 31, 2024, the Company continued to record reserves for the current year uncertain tax positions recognized within the effective tax rate. The Company believes that any change to the unrecognized tax benefits in the next 12 months will not be material to the condensed consolidated financial statements.
23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and the related notes included in Item 1 “Financial Statements” in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should read the sections titled “Risk Factors” and “Note Regarding Forward-Looking Statements” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
OVERVIEW
Our Mission is to actively connect people to their next great opportunity.
ZipRecruiter is a two-sided marketplace for work. We generate substantially all of our revenue from fees paid by employers to post jobs and access other features in our marketplace. We offer our employers flat rate pricing on terms typically ranging from a day to a year, or performance-based pricing, such as cost-per-click, to align with each employer’s hiring needs.
ZipRecruiter is free to use for job seekers. Job seekers come to ZipRecruiter in search of their next opportunity. After establishing a profile, job seekers are able to apply to jobs with a single click. Our artificial intelligence-powered career advisor, Phil, curates jobs and proactively sends alerts for new opportunities where they are a Great Match, which is a designation assigned by ZipRecruiter’s technology to indicate a high potential fit between a job seeker and a job. As our matching technology learns more about job seekers’ preferences and attributes, our technology offers increasingly higher quality matches.
We plan to continue to invest aggressively in our marketplace to improve functionality and drive growth for the foreseeable future. We have made significant investments in our business to expand our employer and job seeker footprints, increase their engagement and enhance our datasets and machine learning.
For the three months ended March 31, 2024, our revenue was $122.2 million and we had a net loss of $6.5 million and Adjusted EBITDA of $20.8 million. For the three months ended March 31, 2023, our revenue was $183.7 million, and we generated net income of $5.0 million and Adjusted EBITDA of $35.3 million. Adjusted EBITDA is a financial measure not presented in accordance with GAAP. For a definition of Adjusted EBITDA, an explanation of our management’s use of this measure and a reconciliation of net income to Adjusted EBITDA, see the section titled “Key Operating Metrics and Non-GAAP Financial Measures.”
KEY OPERATING METRICS AND NON-GAAP FINANCIAL MEASURES
In addition to the measures presented in our consolidated financial statements, we use the following key operating metrics and non-GAAP financial measures to identify trends affecting our business, formulate business plans, and make strategic decisions:
March 31, 2023June 30,
2023
September 30,
2023
December 31,
2023
March 31,
2024
Quarterly Paid Employers105,948 101,634 89,668 70,712 71,572 
Revenue per Paid Employer$1,734 $1,677 $1,736 $1,922 $1,708 

24

Three Months Ended
March 31,
20242023
(in thousands, except percentages)
Adjusted EBITDA$20,780 $35,262 
Adjusted EBITDA margin17 %19 %
Quarterly Paid Employers
We quantify the revenue-generating customer base as the number of Paid Employers in our marketplace. The Quarterly Paid Employer metric includes all actively recruiting employers (or entities acting on behalf of employers) on a paying subscription plan or performance marketing campaign for at least one day in a given quarter. Paid Employers excludes employers from our third-party sites or other indirect channels, employers who are not actively recruiting, and employers on free-trials. This group of employers excluded from our Paid Employer count does not contribute a significant amount of revenue.
In the quarter ended March 31, 2024, Quarterly Paid Employers increased slightly when compared to the quarter ended December 31, 2023, marking the first quarter with sequential stability in Quarterly Paid Employers since 2022. However, the U.S. labor market continued to be impacted by high inflation and high interest rates, which posed challenges for many businesses, and we continued to observe employers moderating hiring plans and reducing recruitment budgets in response to economic uncertainty.
Revenue per Paid Employer
We evaluate Revenue per Paid Employer as a key indicator of our efforts to increase value provided to employers in our marketplace. We define Revenue per Paid Employer as total company revenue in a given period divided by Quarterly Paid Employers in the same period.
In the quarter ended March 31, 2024, Revenue per Paid Employer decreased when compared to the quarter ended December 31, 2023. While we believe our products and services continued to improve and offered more value for employers of all sizes including offering solutions with the best matching technology to help employers identify and recruit standout candidates, we saw employers decrease spend on products and services in our marketplace amidst the continued challenging economic climate during the quarter ended March 31, 2024.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as our net income (loss) before interest expense, other income (expense), net, income tax expense and depreciation and amortization, adjusted to eliminate stock-based compensation expense. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA for a period by revenue for the same period.
We believe Adjusted EBITDA and Adjusted EBITDA margin are helpful to investors, analysts and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition, these measures are frequently used by analysts, investors and other interested parties to evaluate and assess performance. Adjusted EBITDA is not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.
Our Adjusted EBITDA and Adjusted EBITDA margin fluctuate from quarter to quarter depending on a variety of factors including, but not limited to, our investments in research and development, sales and marketing, headcount and our ability to generate revenue.
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the periods indicated:
25

Three Months Ended
March 31,
20242023
(in thousands)
Net income (loss)
$(6,505)$5,011 
Stock-based compensation18,576 21,571 
Depreciation and amortization3,110 2,731 
Interest expense7,356 7,341 
Other (income) expense, net(4,879)(5,022)
Income tax expense 3,122 3,630 
Adjusted EBITDA$20,780 $35,262 
The following tables present net income (loss) margin and Adjusted EBITDA margin for each of the periods indicated:
Three Months Ended
March 31,
20242023
(in thousands, except percentages)
Revenue$122,239 $183,749 
Net income (loss)
(6,505)5,011 
Net income (loss) margin
(5)%%
Three Months Ended
March 31,
20242023
(in thousands, except percentages)
Revenue$122,239 $183,749 
Adjusted EBITDA20,780 35,262 
Adjusted EBITDA margin17 %19 %
Impact of Macroeconomic Conditions
We had a lower number of Quarterly Paid Employers in our marketplace in the three months ended March 31, 2024 compared to the prior year period. In the three months ended March 31, 2024, we delivered $122.2 million in revenue, a 33% decrease compared to the three months ended March 31, 2023. The record-setting levels of hiring activity we saw throughout the first half of 2022 started to show signs of softening near the end of June 2022 and proceeded to slow down significantly during the latter half of 2022. This trend continued throughout the year ended December 31, 2023, as the U.S. labor market continued to be impacted by high interest rates and high inflation, which posed challenges for many businesses. As employers continued to feel the impact of rising operating expenses and other macroeconomic headwinds, we continued to observe employers moderating hiring plans and reducing recruitment budgets in response to economic uncertainty. Also, while in 2021 and 2022, workers left jobs for higher wages, wage inflation has since abated and macroeconomic uncertainty is keeping people in their current roles, resulting in fewer job openings and lower employee turnover. This has resulted in atypical seasonal hiring patterns, with online hiring demand declining throughout 2023 and continuing to decline into the first quarter of 2024.

26

Components of Our Results of Operations
Revenue
We generate revenue primarily from fees paid by employers to post and distribute jobs in our marketplace, as well as multiple sites managed by Job Distribution Partners, which are third-party sites who have a relationship with us and advertise from our marketplace, and includes job boards, newspaper classifieds, search engines, social networks, talent communities and resume services.
Our subscription revenue consists of time-based job posting plans, upsells which complement or expand visibility and prominence to job posting plans, and resume database plans.
We offer job posting plans with terms typically ranging from a day to a year on a flat rate subscription basis to access our marketplace, where customers may create and manage job postings and review incoming candidate applications. We recognize revenue ratably over the subscription period beginning on the date the subscription service is made available to the customer. Our nonrefundable subscriptions are typically subject to renewal at the end of the subscription term.
Our upsell services complement or expand visibility to job posting plans and are typically sold on a subscription basis. Upsell services revenue is recognized ratably over the term of the agreement beginning on the date the upsell services are made available to the customer. Additionally, upsell services include job posting enhancements which are applied to individual job postings. Such services enhance job postings by providing customers with a temporary boost in the prominence of their job postings, expanding visibility to job postings by inviting strong fit potential candidates to apply to the job, or highlighting key attributes of job postings to make them stand out to job seekers. Revenue from job posting enhancements is recognized as the customer uses the enhancements on its job postings.
Resume database plans allow our customers to search and view resumes and revenue is recognized ratably over the subscription period.
Performance-based revenue is recognized when a candidate clicks on or applies to a job distributed by ZipRecruiter on behalf of a customer. For performance-based revenue, our customers pay an amount per click or per job application usually capped at a contractual maximum per job recruitment campaign.
For a description of our revenue accounting policies, see the section titled Critical Accounting Policies and Estimates” below.
Cost of Revenue and Gross Profit
Cost of Revenue
Cost of revenue consists of third-party hosting fees, credit card processing fees, personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for customer support employees, partner revenue share amounts, job distribution costs from performance-based revenue, and amortization of capitalized software costs associated with our marketplace technology to provide services for our customers. In addition, we allocate a portion of overhead costs, such as rent, IT costs, supplies, and depreciation and amortization, to cost of revenue based on headcount.
We expect cost of revenue to increase or decrease in absolute dollars in direct correlation to revenue in future periods due to payment processing fees, third-party hosting fees, personnel-related costs to support additional transaction volume, and amortization expense associated with our capitalized internal-use software and development cost. We expect our cost of revenue as a percentage of revenue to remain relatively flat from year to year but may vary from quarter to quarter as a percentage of our revenue due to the timing and extent of these expenses.
27

Gross Profit and Gross Margin
Our gross profit may fluctuate from period to period. Such fluctuations may be influenced by our revenue, timing and amount of investments to expand hosting capacity, our continued investments in our support teams, and the amortization expense associated with our capitalized internal-use software and development cost. We expect our gross margin to remain relatively flat from year to year but may vary from quarter to quarter as a percentage of our revenue due to the timing and extent of these expenses.
Costs and Operating Expenses
Sales and Marketing
Sales and marketing expense consists of personnel-related costs (including salaries, sales commissions, bonuses, benefits, and stock-based compensation) for our sales and marketing employees, marketing activities, and related allocated overhead costs. Marketing activities include advertising, online lead generation, customer and industry events, and candidate acquisition. We allocate a portion of overhead costs, such as rent, IT costs, supplies, and depreciation and amortization, to sales and marketing expense based on headcount. Sales and marketing costs are expensed as incurred.
We expect that sales and marketing expenses will increase or decrease on an absolute dollar basis as we adjust our highly variable sales and marketing spend budget throughout economic cycles to reallocate or conserve spend to where we see the greatest returns. Additionally, sales and marketing expenses may vary from period to period as a percentage of revenue for the foreseeable future as we constantly measure the expected returns of specific sales and marketing initiatives and adjust spend levels up or down accordingly. This discipline has been a key aspect of our strong financial performance through a wide range of macroeconomic conditions. We expect that these expenses will continue to be our largest operating expense category for the foreseeable future as we continue to expand on our sales and marketing efforts over time.
Research and Development
Research and development expense consists of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for our research and development employees, amortization of capitalized software costs associated with the development of internal databases, candidate insights, and reporting that support our marketplace technology and the cost of certain third-party service providers. We allocate a portion of overhead costs, such as rent, IT costs, supplies, and depreciation and amortization, to research and development expenses based on headcount. Research and development costs, other than software development costs qualifying for capitalization, are expensed as incurred.
We believe continued investments in research and development are important to attain our strategic objectives, and expect research and development expense to increase in absolute dollars. This expense may vary as a percentage of total revenue for the foreseeable future as we continue to invest in research and development activities related to ongoing improvements to, and maintenance of, our marketplace, expansion of our services, as well as other research and development programs, including the hiring of engineering, product development, and design employees to support these efforts.
General and Administrative
General and administrative expense consists of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees in our executive, finance, human resource and administrative departments, and fees for third-party professional services, including consulting, legal and accounting services. In addition, we allocate a portion of overhead costs, such as rent, IT costs, supplies, and depreciation and amortization, to general and administrative expense based on headcount.
We expect to continue to invest in corporate infrastructure and incur additional expenses associated with operating as a public company, including expenses related to compliance and reporting obligations
28

pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, and higher expenses for professional services.
Interest Expense
Interest expense consists of interest costs associated with our outstanding borrowings, undrawn fees associated with our credit facility, and amortization of issuance costs for our credit facility and senior unsecured notes.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income recognized on cash, cash equivalents and marketable securities, gains and losses from foreign currency exchange transactions, and realized gains and losses recognized on sales of available-for-sale debt securities. We have foreign currency exposure primarily related to personnel-related expenses that are denominated in currencies other than the U.S. Dollar, principally the Canadian Dollar, British Pound and the Israeli New Shekel. Other income (expense), net also includes sublease income which consists of income earned from noncancellable sublease agreements related to some of our office facilities.
Income Tax Expense
We are subject to federal and state income taxes in the United States, as well as several international jurisdictions. The effective tax rate of (92.3)% for the three months ended March 31, 2024 differed from the U.S. federal statutory rate of 21% primarily due to state taxes, tax detriments relating to the settlement of restricted stock units, or RSUs, certain non-deductible expenses including limitations on the amount of deductible executive compensation, and net tax benefits from research and development tax credits.
29

Results of Operations
The following table sets forth our consolidated results of operations for each of the periods presented:
Three Months Ended
March 31,
20242023
(in thousands)
Revenue(1)
$122,239 $183,749 
Cost of revenue(2)
13,321 20,622 
Gross profit108,918 163,127 
Operating expenses
Sales and marketing(2)
54,693 88,352 
Research and development(2)
36,076 38,294 
General and administrative(2)
19,055 25,521 
Total operating expenses109,824 152,167 
Income (loss) from operations
(906)10,960 
Other income (expense)
Interest expense(7,356)(7,341)
Other income (expense), net4,879 5,022 
Total other income (expense), net(2,477)(2,319)
Income (loss) before income taxes
(3,383)8,641 
Income tax expense
3,122 3,630 
Net income (loss)
$(6,505)$5,011 
____________
(1)Revenue was comprised as follows:
Three Months Ended
March 31,
20242023
(in thousands)
Subscription revenue$96,561 $143,101 
Performance-based revenue25,678 40,648 
Total revenue $122,239 $183,749 
(2)Includes stock-based compensation expense as follows:
Three Months Ended
March 31,
20242023
(in thousands)
Cost of revenue$173 $227 
Sales and marketing2,832 3,618 
Research and development9,460 9,787 
General and administrative6,111 7,939 
Total stock-based compensation$18,576 $21,571 

30

Comparison of the Three Months Ended March 31, 2024 and 2023
Revenue
Three Months Ended
March 31,
20242023$ Change% Change
(in thousands, except percentages)
Total revenue$122,239 $183,749 $(61,510)(33)%
Revenue decreased by $61.5 million, or 33%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, reflecting the lower number of Quarterly Paid Employers in our marketplace primarily due to the labor market continuing to be impacted by high inflation and high interest rates in the current period which posed challenges to many businesses. Subscription revenue decreased by $46.5 million, or 33%, and performance-based revenue decreased by $15.0 million, or 37%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Revenue per Paid Employer decreased slightly during the current period as we saw employers decrease spend on products and services in our marketplace amidst the continuing challenging macroeconomic conditions during the three months ended March 31, 2024.
Cost of Revenue and Gross Margin
Three Months Ended
March 31,
20242023$ Change% Change
(in thousands, except percentages)
Cost of revenue$13,321 $20,622 $(7,301)(35)%
Gross margin89 %89 %
Cost of revenue decreased by $7.3 million, or 35%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to a decrease in job distribution costs from performance-based revenue of $2.2 million, a decrease of $1.4 million in third-party hosting fees, and a decrease of $1.4 million in credit card processing fees. The gross margin was 89% in both the three months ended March 31, 2024 and March 31, 2023, reflecting our continued commitment to operational efficiencies and maintaining costs proportionate to revenue.
Sales and Marketing
Three Months Ended
March 31,
20242023$ Change% Change
(in thousands, except percentages)
Sales and marketing$54,693 $88,352 $(33,659)(38)%
Percentage of revenue45 %48 %
Sales and marketing expenses decreased by $33.7 million, or 38%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was primarily driven by a $25.0 million decrease in marketing and advertising compared to the prior-year period reflecting our discipline in proactively adjusting marketing spend levels in relation to the macroeconomic conditions. On May 31, 2023, we announced and committed to a restructuring plan to optimize our cost structure and drive long-term efficiency in response to the impact of macroeconomic conditions. This plan resulted in a reduction in our global workforce of approximately 20%. As a result of our May 2023 reduction in force, personnel-related costs for our sales and marketing employees decreased by $7.1 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
31

Research and Development
Three Months Ended
March 31,
20242023$ Change% Change
(in thousands, except percentages)
Research and development$36,076 $38,294 $(2,218)(6)%
Percentage of revenue30 %21 %
Research and development expenses decreased by $2.2 million, or 6%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was primarily driven by a $1.6 million decrease in personnel-related costs attributable to a decrease in headcount as a result of our May 2023 reduction in force. Research and development expenses as a percentage of revenue increased 9% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by lower revenue. We expect to continue to invest in research and development activities, and we expect this expense may vary as a percentage of total revenue for the foreseeable future.
General and Administrative
Three Months Ended
March 31,
20242023$ Change% Change
(in thousands, except percentages)
General and administrative$19,055 $25,521 $(6,466)(25)%
Percentage of revenue16 %14 %
General and administrative expenses decreased by $6.5 million, or 25%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by a decrease of $1.8 million in personnel-related costs for our general and administrative employees, attributable to a decrease in headcount as a result of our May 2023 reduction in force and a $1.8 million decrease in stock-based compensation expense.
Total Other Income (Expense), Net
Three Months Ended
March 31,
20242023$ Change% Change
(in thousands, except percentages)
Total other income (expense), net$(2,477)$(2,319)$(158)%
Total other income (expense), net, remained flat for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Income Tax Expense
Three Months Ended
March 31,
20242023$ Change% Change
(in thousands, except percentages)
Income tax expense
$3,122 $3,630 $(508)(14)%
Effective tax rate