ZIPRECRUITER INC
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 25, 2025
ZIP$3.76+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-28.
0001617553-24-000011
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-25.
0001617553-25-000011
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 196 previous paragraphs and 171 current paragraphs.
119 unchanged; 42 reworded; 9 added; 34 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
In the fourth quarter of the year ended December 31, 2024, Quarterly Paid Employers decreased when compared to the fourth quarter of the year ended December 31, 2023. Employers continued to moderate hiring plans given the uncertainty in the economy, in part driven by high interest rates. With those currently employed leaving their jobs at a low rate, the reduced churn among employees further drove down hiring levels.
Current report
We had a lower number of Quarterly Paid Employers in our marketplace in the fourth quarter of the year ended December 31, 2024 compared to the fourth quarter of the year ended December 31, 2023. In the year ended December 31, 2024, we delivered $474.0 million in revenue, a 27% decrease compared to the year ended December 31, 2023. The challenging macroeconomic conditions observed in 2023 continued throughout 2024, driven by high interest rates and other macroeconomic headwinds. Employers continued to moderate hiring plans given the uncertainty in the economy. With those currently employed leaving their jobs at a low rate, the reduced churn among employees further drove down hiring levels.
Current report
Results of Operations
Current report
Research and development expenses decreased by $7.0 million, or 5%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by one-time restructuring costs of $3.2 million related to our May 2023 reduction in force incurred during the year ended December 31, 2023, as well as a $2.3 million decrease in personnel-related costs and a $1.7 million decrease in stock-based compensation expense for our research and development employees corresponding with lower headcount in the current-year period. Research and development expenses as a percentage of revenue increased 6 percentage points for the year ended December 31, 2024 compared to the year ended December 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.
Current report
General and administrative expenses decreased by $23.0 million, or 24%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by a $13.3 million decrease in stock-based compensation expense due to the CEO Performance Award related expense recorded during the year ended December 31, 2023, inclusive of a $7.5 million one-time charge resulting from the cancellation of the CEO Performance Award, which resulted in an acceleration of unrecognized stock-based compensation expense from future periods into the fourth quarter of 2023. In addition, personnel-related costs decreased by $3.5 million and stock-based compensation expense decreased by $2.8 million corresponding with lower general and administrative headcount in the current-year period. Further, the decrease was also driven by $1.0 million one-time restructuring costs related to our May 2023 reduction in force incurred during the year ended December 31, 2023.
Current report
Income Tax Expense (Benefit)
Current report
Business Combinations
Current report
The results of businesses acquired in a business combination are included in our consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed in a business combination are recorded at their estimated fair values on the acquisition date. The excess of purchase price over the fair values of net identifiable assets acquired and liabilities assumed is recorded as goodwill.
Current report
Determining the fair values of assets acquired and liabilities assumed may require management to use significant judgment which includes the selection of valuation methodologies. We have determined the fair values of certain intangible assets acquired in a business combination using the replacement cost and relief-from-royalty methods. These methods require estimates surrounding, but not limited to, the time and resources required to replace technology, estimated profit margins and opportunity costs, estimates of future revenue and cash flows, discount and royalty rates, and selection of comparable companies. Our estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Removed paragraphs (34)
Previous report
In the last quarter of the year ended December 31, 2023, Quarterly Paid Employers decreased when compared to the prior-year period. 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. This has resulted in atypical seasonal hiring patterns, with online hiring demand declining throughout 2023.
Previous report
We had a lower number of Quarterly Paid Employers in our marketplace in the last quarter of the year ended December 31, 2023 compared to the prior year period. In the year ended December 31, 2023, we delivered $645.7 million in revenue, a 29% decrease compared to the year ended December 31, 2022. 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 abated and macroeconomic uncertainty keeps 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.
Previous report
Research and development expenses increased by $14.1 million, or 11%, for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to a $7.9 million increase in our personnel-related expenses for our research and development employees attributable to an increase in headcount, an increase of $4.4 million in stock-based compensation expense, and one-time restructuring costs of $3.2 million related to our May 2023 reduction in force.
Previous report
General and administrative expenses decreased by $14.0 million, or 13%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by a $10.3 million decrease in personnel-related costs, a $6.1 million decrease in stock-based compensation expense related to awards with only service-based vesting conditions for our general and administrative employees, attributable to a decrease in headcount as a result of our reduction in force, and a $1.3 million decrease in our director and officer liability insurance expenses. These decreases were partially offset by a one-time charge of $7.5 million in stock-based compensation expense attributable to an acceleration of unrecognized stock-based compensation expense from future periods into the fourth quarter of 2023 resulting from the cancellation of the market-based RSUs in connection with the CEO Performance Award, and one-time restructuring costs of $1.0 million related to our reduction in force.
Previous report
Income Tax Expense
Previous report
Issuance of Senior Unsecured Notes
Previous report
Institutional Insured Liquid Deposit
Previous report
In March 2023, we entered into a cash management program called Institutional Insured Liquid Deposit, or IILD, with Wells Fargo & Company, which acts as our agent and the custodian of our funds. With the IILD, our funds are placed into interest-bearing FDIC-insured accounts at participating network banks in increments of slightly less than the FDIC insurance limit of $250,000. Both principal and interest earned are eligible for FDIC insurance under our IILD program. As of December 31, 2023, we had $120.6 million in the IILD program.
Previous report
Fair Value of our Common Stock. See the section titled “Determination of the Fair Value of Common Stock on Grant Dates” below.
Previous report
Expected Term. Given that we do not have sufficient exercise history to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior, we determine the expected term for our “plain vanilla” stock options using the simplified method, which is calculated as the midpoint of the stock option vesting term and the expiration date of the stock option.
Previous report
Expected Volatility. Because our common stock has limited trading history, we estimate the expected volatility of the awards from the historical volatility of selected public companies that represent similar but alternative investment opportunities to an investment in us. Characteristics considered in identifying guideline public companies include similarity in size, lines of business, market capitalization, revenue and financial leverage. We determined the expected volatility assumption using the frequency of daily historical prices of comparable public company common stock for a period equal to the expected term of the option. We assess the comparable companies and other relevant factors used to measure expected volatility for stock option grants on an as-needed basis.
Previous report
Risk-free Rate. The risk-free interest rate assumption is based upon observed interest rates on the U.S. government securities appropriate for the expected term of our employee stock options.
Previous report
Dividend Yield. The dividend yield assumption is based on our history and expectation of dividend payouts. We have never declared nor paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.
Previous report
Determination of the Fair Value of Common Stock on Grant Dates
Previous report
Prior to the completion of our Direct Listing on May 26, 2021, our common stock was not publicly traded, and therefore, our board of directors exercised significant judgment in determining the fair value of our common stock on the date of each stock-based grant, with input from management and the assistance from an independent third-party valuation firm based on several objective and subjective factors. The valuations of our common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. In determining the fair market value of our common stock prior to the Direct Listing, the board of directors considered the following:
Previous report
•the prices of our redeemable convertible preferred stock sold to outside investors in arms-length transactions;
Previous report
•the rights, preferences and privileges of our redeemable convertible preferred stock relative to our common stock;
Previous report
•our operating and financial performance;
Previous report
•the present value of our anticipated future cash flows;
Previous report
•our stage of development and current business conditions and projections affecting our business, including the introduction of new products and services;
Previous report
•the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, in light of prevailing market conditions;
Previous report
•any adjustment necessary to recognize a lack of a liquid trading market for our common stock;
Previous report
•the market performance of comparable publicly traded companies; and
Previous report
•the overall U.S. economic, regulatory and capital market conditions.
Previous report
In valuing our common stock, our board of directors determined the equity value of our business using various valuation methods including market and income approaches with input from management.
Previous report
The market approaches we used prior to the Direct Listing were the Guideline Public Company Method and the Guideline Transaction Method. The Guideline Public Company Method estimated our equity value by applying a representative market value multiple from comparable companies to our financial forecasts. The Guideline Transaction Method estimated our equity value by using pricing multiples derived from sales of companies with similar characteristics to us. Under the income approach, a Discounted Cash Flow, or DCF, model was used, where net cash flows attributable to our business and an assumed terminal value were discounted to present value using a discount rate, based on our estimated weighted average cost of capital that reflected the risks inherent in the cash flows.
Previous report
After determining our equity value, we then allocated the equity value to our classes of stock using either an Option Pricing Method, or OPM, or a hybrid of OPM and Probability Weighted Expected Return Method, or PWERM.
Previous report
The OPM allocated values to each equity class by creating a series of call options on our equity value, with exercise prices based on the liquidation preferences, participation rights, and strike prices of the equity instruments. In determining the estimated fair value of our common stock, we considered the fact that our stockholders could not freely trade our common stock in the public markets. Accordingly, we also applied a discount for lack of marketability to the equity value.
Previous report
Under the hybrid OPM and PWERM, the allocation was based on the likelihood of a near-term liquidity exit or an alternative exit scenario. For a near-term liquidity scenario, the allocation was based on the expected pricing and timing of the liquidity event. For the alternative exit scenario, an OPM with an appropriate time to liquidity was used to estimate the fair value of the share classes assuming the near-term liquidity scenario does not occur, with the resulting share values under each scenario weighted by management’s estimate of their respective probabilities. We also applied a discount for lack of marketability.
Previous report
In valuing our common stock at various dates in 2019 through September 30, 2020, our board of directors determined the equity value of our business using the Guideline Public Company Method and the equity value was then allocated to our classes of stock using an OPM given the uncertainty with regards to the timing and type of future exit scenario.
Previous report
In valuing our common stock as of December 31, 2020 and March 31, 2021, our board of directors determined the equity value of our business using the Guideline Public Company Method, the Guideline Transaction Method, and a DCF. The equity value was then allocated to our classes of stock using the hybrid OPM and PWERM based on management’s estimate of the likelihood of a near-term liquidity event or an alternative exit scenario.
Previous report
Application of these approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue and costs, future cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of possible future exit events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the valuation of our common stock.
Previous report
For stock awards granted after the completion of our Direct Listing on May 26, 2021, our board of directors determined the fair value of each share of underlying common stock based on the New York Stock Exchange, or NYSE, closing price on the date prior to the date of grant.
Previous report
We have granted RSUs to certain of our employees and directors. RSUs granted prior to our Direct Listing vest upon the satisfaction of both a time-based service condition and a liquidity event requirement. The time-based service condition for these awards is generally satisfied over four years. The liquidity event requirement is satisfied upon the earliest to occur of a qualifying event, defined as a change of control transaction or after a set period of time following the effective date of our initial public offering pursuant to an effective registration statement under the Securities Act for the offer and sale of shares by ZipRecruiter. A direct listing in which we did not sell our equity securities would not have satisfied the liquidity event performance condition; however, on April 19, 2021, our board of directors waived the liquidity event performance condition for the 6.9 million RSUs then outstanding so those that had satisfied the service condition would vest upon the earlier of the first day of trading of our common stock on the NYSE, or March 15, 2022. As the satisfaction of the performance condition was not probable for accounting purposes prior to the waiver, the waiver of the liquidity event-based performance condition resulted in the remeasurement of the modified awards at fair value on the date of the waiver, which management estimated to be $25.04 per share or approximately $172.6 million.
Reworded paragraphs (42)
Previous wording
For the year ended December 31, 2023, our revenue was $645.7 million and we generated net income of $49.1 million and Adjusted EBITDA of $175.3 million. For the year ended December 31, 2022, our revenue was $904.6 million and we generated net income of $61.5 million and Adjusted EBITDA of $184.9 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.”
Current wording
For the year ended December 31, 2024, our revenue was $474.0 million and we had a net loss of $12.9 million and Adjusted EBITDA of $78.0 million. For the year ended December 31, 2023, our revenue was $645.7 million and we generated net income of $49.1 million and Adjusted EBITDA of $175.3 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 (loss) to Adjusted EBITDA, see the section titled “Key Operating Metrics and Non-GAAP Financial Measures.”
Previous wording
In the last quarter of the year ended December 31, 2023, Revenue per Paid Employer decreased slightly when compared to the prior-year period. While we believe our products and services continued to improve, providing more value for employers of all sizes by offering solutions with the best matching technology to help employers identify and recruit standout candidates, we saw a decline in employer spending on our marketplace products and services during the quarter ended December 31, 2023. We believe the decline reflects the prevailing softness in hiring demand amidst the challenging economic conditions.
Current wording
In the fourth quarter of the year ended December 31, 2024, Revenue per Paid Employer remained flat when compared to the fourth quarter of the year ended December 31, 2023. Despite the current softness in hiring demand amidst the challenging economic climate, we believe our products and services continued to improve and offered more value for employers of all sizes year-over-year.
Previous wording
The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated:
Current wording
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the periods indicated:
Previous wording
(1)Net income includes one-time charges resulting from our restructuring plan announced on May 31, 2023 to reduce our global workforce by approximately 20%. Restructuring activity for the year ended December 31, 2023 reflects $7.6 million net costs primarily related to employee severance and continuation of health benefits.
Current wording
(1)Net income (loss) includes one-time charges resulting from our restructuring plan announced on May 31, 2023 to reduce our global workforce by approximately 20%. Restructuring activity for the year ended December 31, 2023 reflects $7.6 million net costs primarily related to employee severance and continuation of health benefits. No restructuring costs were recorded during the year ended December 31, 2024.
Previous wording
(2)Includes a one-time charge of $7.5 million due to an acceleration of unrecognized stock-based compensation expense from future periods into the fourth quarter of 2023 resulting from the cancellation of the market-based RSUs in connection with the CEO Performance Award (as defined below).
Current wording
(2)Includes a one-time charge of $7.5 million due to an acceleration of unrecognized stock-based compensation expense from future periods into the fourth quarter of 2023 resulting from the cancellation of the market-based RSUs in connection with the CEO Performance Award (as defined in Note 2 — Basis of Presentation, Principles of Consolidation, and Summary of Significant Accounting Policies to the audited financial statements included in this report).
Previous wording
The following tables present net income margin and Adjusted EBITDA margin for each of the periods indicated:
Current wording
The following tables present net income (loss) margin and Adjusted EBITDA margin for each of the periods indicated:
Previous wording
We believe that the growth and future success of our business depends on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth, improve our results of operations and maintain or increase profitability.
Current wording
We believe that the growth and future success of our business depends on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to grow and improve our results of operations and profitability.
Previous wording
While our marketplace serves a wide variety of employers, all employers benefit from finding the right candidate quickly. We bring employers and job seekers together using industry-leading matching technology. This technology benefits from the billions of data points we gather as job seekers and employers interact, leading to better matches over time. As a result of our advancements with matching, we delivered nearly 40 million Great Match candidates in 2023, an increase of 24% over the prior year.
Current wording
While our marketplace serves a wide variety of employers, all employers benefit from finding the right candidate quickly. We bring employers and job seekers together using industry-leading matching technology. This technology benefits from the billions of data points we gather as job seekers and employers interact, leading to better matches over time. As a result of our advancements with matching, we delivered over 40 million Great Match candidates in 2024, an increase of 6% over the prior year.
Previous wording
Despite the impact on employer hiring demand, our cohort trends remained intact: employers across annual cohorts continue to spend more over time. However, the more difficult hiring environment in 2023 did slow down the rate of growth in Average Monthly Revenue per Paid Employer among prior cohorts. We see these disruptions to the long term cohort dynamics as temporary, driven by the unique slowdown in hiring particularly among larger customers. Over the long-term, we continue to believe that there is meaningful opportunity to grow revenue from large customers.
Current wording
Despite the impact on employer hiring demand, our cohort trends remained intact: employers across annual cohorts continue to spend more, on average, over time. However, the more difficult hiring environment in 2024 continued to slow down the rate of growth in Average Monthly Revenue per Paid Employer among prior cohorts. We see these disruptions to the long term cohort dynamics as temporary, driven by the unique slowdown in hiring particularly among larger customers. Over the long-term, we continue to believe that there is meaningful opportunity to grow revenue from large customers.
Previous wording
For job seekers, we operate like a personal recruiter, presenting strong fit potential candidates to employers before they have applied. Phil, our AI-powered career advisor, engages job seekers on their journey and provides technology that makes their job search and application process more efficient. Our ability to cost effectively grow the number of job seekers and increase their engagement in our marketplace is critical to strengthen our marketplace. We compete for job seekers on many fronts, including our ability to surface unique and attractive jobs, our ability to simplify the hiring process, the transparent feedback job seekers receive on the status of their applications and our trusted brand. We believe our offering to job seekers compares favorably versus alternatives due to the combination of our large and unique set of jobs to choose from, plus our proven matching technology that continues to get smarter over time. Historically, we have largely focused our marketing spend on employers, and despite being the highest rated job seeker app on iOS and Android, we are not yet the most well-known. Starting in 2021 and continuing in 2022 and 2023, we have made significant investments in media campaigns focused on job seeker acquisition and engagement. In 2023, organic visits from job seekers grew by more than 40% over 2022, and installs for our #1 rated job search app of iOS & Android grew app installs by over 20% year-over-year. We believe that this is a testament to our high aided brand awareness and superior job seeker products.
Current wording
For job seekers, we operate like a personal recruiter, presenting strong fit potential candidates to employers before they have applied. Phil, our AI-powered career advisor, engages job seekers on their journey and provides technology that makes their job search and application process more efficient. Our ability to cost effectively grow the number of job seekers and increase their engagement in our marketplace is critical to strengthen our marketplace. We compete for job seekers on many fronts, including our ability to surface unique and attractive jobs, our ability to simplify the hiring process, the transparent feedback job seekers receive on the status of their applications and our trusted brand. We believe our offering to job seekers compares favorably versus alternatives due to the combination of our large and unique set of jobs to choose from, plus our proven matching technology that continues to get smarter over time. We believe that our unique product offering and investments in media campaigns focused on job seeker acquisition engagement are why we have the highest rated job seeker app on iOS and Android, and why we have seen increased momentum in organic traffic from job seekers. In 2024, installs for our #1 rated job seeker app for iOS and Android grew by more than 25% year-over-year, and organic visits from job seekers grew by 30% over 2023. We believe that this is a testament to our high aided brand awareness and superior job seeker products.
Previous wording
We have invested in research and development to improve our matching technology and deliver a high-quality experience to employers and job seekers. In 2023 and 2022, we spent $141.8 million and $127.7 million, or 22% and 14% of total revenue, respectively, on research and development. We believe the return on these investments will create operating leverage over time while continuing to drive top-line growth.
Current wording
We have invested in research and development to improve our matching technology and deliver a high-quality experience to employers and job seekers. In 2024 and 2023, we spent $134.8 million and $141.8 million, or 28% and 22% of total revenue, respectively, on research and development. We believe the return on these investments will create operating leverage over time while continuing to drive top-line growth.
Previous wording
Our business is seasonal, reflecting typical behavior in hiring markets. Hiring activity tends to decelerate in the fourth quarter. The COVID-19 pandemic interrupted the patterns we typically see in our quarterly seasonality. In 2020, we experienced a decrease in sequential revenue of 23% in the quarter ended June 30, 2020 as a result of the pandemic, but saw consecutive quarters of revenue growth of 17% and 11% in the third and fourth quarters of 2020, respectively, as employers started to return to and join our marketplace. In 2021, we saw sequential revenue growth in each quarter. However, growth from third to fourth quarter of 2021 decelerated to 4%, reflecting more typical seasonal patterns. While sequential growth during the first half of 2022 was more reflective of our typical seasonality, we saw consecutive quarters of revenue decline of 5% and 7% in the third and fourth quarters, respectively. We believe this decline was primarily driven by a macroeconomic cooling in the hiring market. This trend continued throughout 2023, as we continued to observe employers moderating hiring plans and reducing recruitment budgets in response to economic uncertainty. This has resulted in atypical seasonal hiring patterns, with online hiring demand declining throughout 2023.
Current wording
Our business is seasonal, reflecting typical behavior in hiring markets. Hiring activity tends to decelerate in the fourth quarter. During the second half of 2022, we saw revenue declines of 5% and 7% in the third and fourth quarters, respectively. We believe this decline was primarily driven by a macroeconomic cooling in the hiring market. This trend continued throughout 2023 and 2024, as we continued to observe employers moderating hiring plans and reducing recruitment budgets in response to economic uncertainty. Additionally, with those currently employed leaving their jobs at a low rate, the reduced churn among employees further drove down hiring levels. This has resulted in atypical seasonal hiring patterns, with online hiring demand declining throughout 2023 and 2024.
Previous wording
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 include job boards, newspaper classifieds, search engines, social networks, talent communities and resume services.
Current wording
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.
Previous wording
Cost of revenue consists of third-party hosting, 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.
Current wording
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.
Previous wording
We expect cost of revenue to increase in absolute dollars 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.
Current wording
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.
Previous wording
We expect that sales and marketing expenses will increase on an absolute dollar basis as we plan to continue to invest in sales and marketing to attract both employers and job seekers to our marketplace and to increase our brand awareness. However, 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.
Current wording
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 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.
Previous wording
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 expense based on headcount. Research and development costs, other than software development costs qualifying for capitalization, are expensed as incurred.
Current wording
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 supports 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.
Previous wording
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.
Current wording
We believe continued investments in research and development are important to attain our strategic objectives. 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.
Previous wording
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 pursuant to the rules and regulations of the SEC, and higher expenses for investor relations costs, professional services, and director and officer liability insurance.
Current wording
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 pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, and higher expenses for professional services.
Previous wording
We are subject to federal and state income taxes in the United States, as well as several international jurisdictions. The effective tax rate for the year ended December 31, 2023 differed from the U.S. federal statutory rate of 21% primarily due to state taxes, state valuation allowances on certain tax credit carryforwards, and non-deductible expenses such as limitations on the amount of deductible executive compensation partially offset by research and development tax credits and a reduction in our Israeli subsidiary’s statutory tax rate for years 2020 through 2023.
Current wording
We are subject to federal and state income taxes in the United States, as well as several international jurisdictions. The effective tax rate for the year ended December 31, 2024 differed from the U.S. federal statutory rate of 21% primarily due to research and development tax credits, partially offset by state taxes, valuation allowances on certain tax credit and loss carryforwards, and non-deductible expenses such as limitations on the amount of deductible executive compensation and certain stock based compensation expenses.
Previous wording
(3)Includes one-time charges resulting from our restructuring plan announced on May 31, 2023 to reduce our global workforce by approximately 20%. Restructuring activity for the year ended December 31, 2023 reflects $7.6 million net costs primarily related to employee severance and continuation of health benefits, presented as $3.4 million in sales and marketing, $3.2 million in research and development, and $1.0 million in general and administrative expenses.
Current wording
(3)Includes one-time charges resulting from our restructuring plan announced on May 31, 2023 to reduce our global workforce by approximately 20%. Restructuring activity for the year ended December 31, 2023 reflects $7.6 million net costs primarily related to employee severance and continuation of health benefits, presented as $3.4 million in sales and marketing, $3.2 million in research and development, and $1.0 million in general and administrative expenses. No restructuring costs were recorded during the year ended December 31, 2024.
Previous wording
Revenue decreased by $258.9 million, or 29%, for the year ended December 31, 2023 compared to the year ended December 31, 2022 reflecting the lower number of Quarterly Paid Employers in our marketplace primarily due to the labor market continuing to be impacted by high interest rates and high inflation in the current period which posed challenges to many businesses. Subscription revenue decreased by $188.0 million, or 27%, and performance-based revenue decreased by $71.0 million, or 34%, for the same period. While we believe our products and services continued to improve, providing more value for employers of all sizes by offering solutions with the best matching technology to help employers identify and recruit standout candidates, we saw a decline in employer spending on our marketplace products and services during the year ended December 31, 2023. We believe the decline reflects the prevailing softness in hiring demand amidst the challenging macroeconomic conditions.
Current wording
Revenue decreased by $171.7 million, or 27%, for the year ended December 31, 2024 compared to the year ended December 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 interest rates in the current period which posed challenges to many businesses. Subscription revenue decreased by $138.6 million, or 27%, and performance-based revenue decreased by $33.2 million, or 24%, for the same period. While we believe our products and services continued to improve, providing more value for employers of all sizes by offering solutions with the best matching technology to help employers identify and recruit standout candidates, we saw a decline in employer spending on our marketplace products and services during the year ended December 31, 2024. We believe the decline reflects the prevailing softness in hiring demand amidst the challenging macroeconomic conditions.
Previous wording
Cost of revenue decreased by $22.0 million, or 25%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to a decrease of $9.3 million in job distribution costs from performance-based revenue, a decrease of $5.8 million in credit card processing fees, and a decrease of $5.7 million in partner revenue share. Total gross margins remained flat at 90% in the years ended December 31, 2023 and December 31, 2022, reflecting our continued commitment to operational efficiencies and maintaining costs proportionate to revenue.
Current wording
Cost of revenue decreased by $14.2 million, or 22%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to a decrease of $4.0 million in credit card processing fees, a decrease of $3.5 million in job distribution costs from performance-based revenue, a decrease of $2.8 million in third-party hosting fees, and a decrease of $2.7 million in partner revenue share. Gross margin was 89% and 90% for the years ended December 31, 2024 and December 31, 2023, respectively, reflecting our continued commitment to operational efficiencies and maintaining costs proportionate to revenue.
Previous wording
Sales and marketing expenses decreased by $219.2 million, or 45%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to a $207.2 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. Personnel-related costs for our sales and marketing employees decreased by $17.2 million, primarily due to a decrease in headcount as a result of our May 2023 reduction in force. These decreases were partially offset by one-time restructuring costs of $3.4 million related to our reduction in force and an increase of $1.7 million in stock-based compensation expense.
Current wording
Sales and marketing expenses decreased by $49.4 million, or 19%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to a $25.5 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. The decrease was also driven by a decrease of $18.7 million in personnel-related costs and a decrease of $1.9 million in stock-based compensation for our sales and marketing employees corresponding with lower headcount in the current-year period. The decrease was further driven by one-time restructuring costs of $3.4 million related to our May 2023 reduction in force incurred during the year ended December 31, 2023.
Previous wording
Total other income (expense), net, decreased by $14.3 million, or 62%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by a $9.1 million increase related to income accretion for our marketable securities purchased at a discount, as well as a $5.9 million increase in interest income earned on both our marketable securities and cash equivalents. During the three months ended September 30, 2022, we began investing in our investment portfolio to manage our excess cash reserves.
Current wording
Total other income (expense), net, decreased by $1.1 million, or 13%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by a $2.8 million increase in interest income earned on both our marketable securities and cash equivalents, partially offset by a $0.8 million increase in losses from foreign currency exchange transactions and a $0.5 million decrease related to sublease income recognized during the year ended December 31, 2023 with no corresponding income recognized during the year ended December 31, 2024.
Previous wording
Income tax expense increased by $8.9 million, or 70%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in income tax expense is primarily due to an increase in state taxes and a decrease in taxable benefits from both stock-based compensation and research and development tax credits, net of valuation allowance.
Current wording
Income tax expense decreased by $15.1 million, or 70%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in income tax expense is primarily due to the impact of a decrease in pre-tax income on federal and state taxes and a reduction in executive compensation limitations partly offset by a decrease in tax benefits from operating losses and research and development tax credits, net of valuation allowances, and a decrease in benefits from foreign taxes related to a reduction in our Israeli subsidiary’s statutory tax rate for years 2020 through 2023.
Previous wording
Our effective tax rate in the years ended December 31, 2023 and 2022 was 30.4% and 17.0%, respectively. Our effective tax rate for the year ended December 31, 2023 differed from the U.S. federal statutory rate of 21% primarily due to state taxes, state valuation allowances on certain tax credit carryforwards, and non-deductible expenses such as limitations on the amount of deductible executive compensation, partially offset by research and development tax credits and a reduction in our Israeli subsidiary’s statutory tax rate for years 2020 through 2023. Our effective tax rate for the year ended December 31, 2022 differed from the U.S. federal statutory rate of 21% primarily due to net favorable adjustments related to prior years and research and development tax credits, partially offset by state taxes, state valuation allowances on certain tax credit carryforwards, and non-deductible expenses such as limitations on the amount of deductible executive compensation.
Current wording
Our effective tax rate in the years ended December 31, 2024 and 2023 was (97.8)% and 30.4%, respectively. Our effective tax rate for the year ended December 31, 2024 differed from the U.S. federal statutory rate of 21% primarily due to research and development tax credits, partially offset by state taxes, valuation allowances on certain tax credit and loss carryforwards, and non-deductible expenses such as limitations on the amount of deductible executive compensation and certain stock-based compensation expenses. Our effective tax rate for the year ended December 31, 2023 differed from the U.S. federal statutory rate of 21% primarily due to state taxes, state valuation allowances on certain tax credit carryforwards, and non-deductible expenses such as limitations on the amount of deductible executive compensation partially offset by research and development tax credits and a reduction in our Israeli subsidiary’s statutory tax rate for years 2020 through 2023.
Previous wording
As of December 31, 2023, we had cash, cash equivalents, and marketable securities totaling $520.1 million and $245.7 million available in unused borrowing capacity under our current credit facility. We have financed our operations and capital expenditures primarily through cash generated from operations, sales of shares of common and preferred stock and from our senior unsecured notes, bank loans, and convertible notes. As of December 31, 2023, we had no amounts outstanding under our credit facility.
Current wording
As of December 31, 2024, we had cash, cash equivalents, and marketable securities totaling $505.9 million and $286.6 million available in unused borrowing capacity under our current credit facility. We have financed our operations and capital expenditures primarily through cash generated from operations, sales of shares of common and preferred stock and from our senior unsecured notes, bank loans, and convertible notes. As of December 31, 2024, we had no amounts outstanding under our credit facility.
Previous wording
In April 2021, we entered into a $250.0 million credit facility agreement with a syndicate of banks. The credit facility has a maturity date of April 30, 2026 and bears interest at a rate based upon our Net Leverage Ratio. Our Net Leverage Ratio is defined as total debt less total cash and permitted investments outstanding at period end, with a maximum total cash and permitted investments adjustment of $550.0 million, divided by the trailing 12 months of earnings, adjusted for items such as non-cash expenses and other nonrecurring transactions. We are also obligated to pay other customary fees including a commitment fee on a quarterly basis based on amounts committed but unused under the credit facility at a rate between 0.25% to 0.35%, depending on our Net Leverage Ratio. The amount available under the credit facility is reduced by letters of credit outstanding, which totaled $4.3 million as of December 31, 2023. The letters of credit outstanding relate to various leased office spaces.
Current wording
In April 2021, we entered into a $250.0 million credit facility agreement with a syndicate of banks. In July 2024, we entered into a supplement to the credit facility agreement, which increased the aggregate revolving commitments available under the credit facility from $250.0 million to $290.0 million. The credit facility has a maturity date of April 30, 2026 and bears interest at a rate based upon our Net Leverage Ratio. Our Net Leverage Ratio is defined as total debt less total cash and permitted investments outstanding at period end, with a maximum total cash and permitted investments adjustment of $550.0 million, divided by the trailing 12 months of earnings, adjusted for items such as non-cash expenses and other nonrecurring transactions. We are also obligated to pay other customary fees including a commitment fee on a quarterly basis based on amounts committed but unused under the credit facility at a rate between 0.25% to 0.35%, depending on our Net Leverage Ratio. The amount available under the credit facility is reduced by letters of credit outstanding, which totaled $3.4 million as of December 31, 2024. The letters of credit outstanding relate to various leased office spaces.
Previous wording
During the year ended December 31, 2022, our board of directors authorized us to repurchase up to $450.0 million of our outstanding common stock, with no fixed expiration. In May 2023, our board of directors authorized an increase to the share repurchase program of $100.0 million. During the year ended December 31, 2023, we repurchased 9.6 million shares of our Class A common stock for $147.3 million under our share repurchase program, including 6.9 million shares of our Class A common stock delivered under a Rule 10b5-1 plan totaling $110.7 million, 2.6 million shares of our Class A common stock purchased in the open market totaling $36.6 million, and 0.1 million shares of our Class A common stock delivered upon the final settlement of an accelerated share repurchase agreement that we entered into in December 2022 with a major financial institution for which the payment was made in December 2022.
Current wording
Our board of directors has authorized us to repurchase up to $650.0 million of our outstanding common stock, with no fixed expiration. During the year ended December 31, 2024, we repurchased 4.2 million shares of our Class A common stock for an aggregate purchase price of $40.3 million through open market purchases under our share repurchase program.
Previous wording
Approximately $63.4 million remains available for future repurchases of our Class A common stock under our share repurchase program as of December 31, 2023. For more information, see Note 14 – Share Repurchase Program to the audited financial statements included in this report.
Current wording
Approximately $123.1 million remains available for future repurchases of our common stock under our share repurchase program as of December 31, 2024. For more information, see Note 15 – Share Repurchase Program to the audited financial statements included in this report.
Previous wording
As of December 31, 2023, we held $283.0 million in total investments, consisting of money market mutual funds and available-for-sale debt securities. These investments are included within cash and cash equivalents and marketable securities within our Consolidated Balance Sheets. For more information, see Note 11 – Financial Instruments to the audited financial statements included in this report.
Current wording
As of December 31, 2024, we held $328.9 million in total investments, consisting of money market mutual funds and available-for-sale debt securities. These investments are included within cash and cash equivalents and marketable securities within our Consolidated Balance Sheets. For more information, see Note 7 – Financial Instruments to the audited financial statements included in this report.
Previous wording
For the year ended December 31, 2022, cash provided by operating activities was $128.8 million resulting from our net income of $61.5 million, adjusted by non-cash charges of $96.2 million and a net decrease of $28.9 million in our operating assets and liabilities. The non-cash charges primarily resulted from $77.0 million for stock-based compensation expense, $10.7 million pertaining to amortization of intangible assets and depreciation, and $4.4 million pertaining to non-cash lease expense. The decrease of $28.9 million related to changes in our operating assets and liabilities was primarily driven by a $22.7 million decrease in our accrued expenses and other liabilities and accounts payable, a $6.7 million increase in our accounts receivable, a $6.7 million decrease in operating lease liabilities, and a $3.7 million decrease in deferred revenue, partially offset by an increase of $12.7 million in accrued interest associated with our senior unsecured notes.
Current wording
For the year ended December 31, 2024, cash provided by operating activities was $45.7 million resulting from our net loss of $12.9 million, adjusted by non-cash charges of $58.3 million and a net increase of $0.3 million in our operating assets and liabilities. The non-cash charges primarily resulted from $64.4 million for stock-based compensation expense, $12.3 million pertaining to amortization of intangible assets and depreciation, and $4.0 million pertaining to non-cash lease expense, partially offset by $15.5 million related to the change in our deferred tax assets primarily driven by an increase to our current year capitalization of software and research costs from a tax perspective, net of valuation allowances, and $10.6 million in amortization and accretion of marketable securities. The increase of $0.3 million related to changes in our operating assets and liabilities was primarily driven by a $3.7 million decrease in our accounts receivable, a $2.0 million decrease in deferred commissions, net, and a $1.4 million increase in our accrued expenses and other liabilities and accounts payable, partially offset by a $5.3 million decrease in operating lease liabilities and a $2.1 million decrease in deferred revenue.
Previous wording
For the year ended December 31, 2022, cash used in investing activities was $351.1 million resulting from purchases of marketable securities of $367.1 million, capitalized software development costs of $7.9 million, and capital expenditures of $2.7 million primarily related to purchases of computer supplies and equipment, partially offset by $25.6 million received from paydowns, maturities, and redemptions of marketable securities and $0.9 million received from sales of marketable securities.
Current wording
For the year ended December 31, 2024, cash used in investing activities was $62.0 million resulting from $632.6 million used in purchases of marketable securities, $12.0 million paid for the Breakroom acquisition, net of cash acquired, and $8.6 million capitalized for software development costs, partially offset by $592.2 million received from paydowns, maturities and redemptions of marketable securities.
Previous wording
For the year ended December 31, 2022, cash provided by financing activities was $195.1 million which consisted of $550.0 million of proceeds from the issuance of our senior unsecured notes, $8.1 million of proceeds from the issuance of stock under the employee stock purchase plan, and $4.7 million of proceeds from the exercise of stock options, partially offset by $339.3 million for the repurchase of common stock, $19.2 million for the net settlement of taxes on RSUs, and $9.4 million for the payment of the issuance costs related to the issuance of our senior unsecured notes.
Current wording
For the year ended December 31, 2024, cash used in financing activities was $48.4 million which consisted of $40.3 million used for the repurchase of common stock and $13.6 million for the net settlement of taxes on equity awards, partially offset by $3.6 million of proceeds from the issuance of stock under the employee stock purchase plan, and $1.9 million of proceeds from the exercise of stock options.
Previous wording
Compensation expense related to stock-based awards is measured and recognized in the financial statements based on the fair value of the awards granted. We estimate the fair value of employee stock-based compensation awards on the grant date and recognize forfeitures as they occur. The fair value of restricted stock units, or RSUs, is estimated based on the fair value of our common stock. The fair value of each option awardand employee stock purchase right associated with our Employee Stock Purchase Planis estimated on the grant date using the Black-Scholes option-pricing model. We have elected to treat stock-based awards with graded vesting schedules and only time-based service conditions as a single award and recognize stock-based compensation expense on a straight-line basis over the requisite service period.
Current wording
Compensation expense related to stock-based awards is measured and recognized in the financial statements based on the fair value of the awards granted. We estimate the fair value of employee stock-based compensation awards on the grant date and recognize forfeitures as they occur. The fair value of restricted stock units, or RSUs, is estimated based on the fair value of our common stock. The fair value of our common stock is determined based on the New York Stock Exchange closing price on the date prior to the date of grant. The fair value of each option awardand employee stock purchase right associated with our Employee Stock Purchase Planis estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires us to make certain assumptions including the fair value of the underlying common stock, the expected term, the expected volatility, the risk-free interest rate, and the dividend yield.
Previous wording
For awards that contain both market or performance conditions and service conditions, the grant date fair value is recognized as stock-based compensation expense using a graded vesting attribution model. No expense is recognized for awards with performance conditions until the performance condition is probable of being met.
Current wording
We have elected to treat stock-based awards with graded vesting schedules and only time-based service conditions as a single award and recognize stock-based compensation expense on a straight-line basis over the requisite service period. For awards that contain both market or performance conditions and service conditions, the grant date fair value is recognized as stock-based compensation expense using a graded vesting attribution model. No expense is recognized for awards with performance conditions until the performance condition is probable of being met.
Previous wording
In April 2021, we granted an RSU award to Ian Siegel, our Chief Executive Officer, or the CEO, and such award, the CEO Performance Award, which included service, market, and performance-based vesting conditions. The fair value of the award is determined using a Monte Carlo simulation model. The associated stock-based compensation expense is recorded over the requisite service period, using a graded attribution method. The requisite service period is the longer of the service period derived from the Monte Carlo simulation model and the explicit service period the CEO is required to remain employed to vest in the award. The market condition is satisfied upon achieving certain stock price targets for a period following the completion of our Direct Listing. The CEO Performance Award also contains an implied performance-based vesting condition as the CEO’s ability to earn the award was contingent upon the completion of the Direct Listing. Accordingly, no expense was recognized prior to the completion of our Direct Listing on May 26, 2021, as vesting was not considered probable for accounting purposes until the Direct Listing occurred. Provided that Ian Siegel continues to be the CEO of ZipRecruiter, stock-based compensation expense is recognized over the requisite service period, regardless of whether the stock price targets are achieved. If the stock price targets are met sooner than the derived service period, we will accelerate the recognition of stock-based compensation expense to reflect the cumulative expense associated with the vested shares. In December 2023, we cancelled the CEO Performance Award and incurred a one-time charge of $7.5 million resulting from an acceleration of unrecognized stock-based compensation expenses from future periods into the fourth quarter of 2023.
Current wording
In April 2021, we granted an RSU award to Ian Siegel, our Chief Executive Officer, or the CEO, and such award, the CEO Performance Award, included service, market, and performance-based vesting conditions. The fair value of the award is determined using a Monte Carlo simulation model. The associated stock-based compensation expense is recorded over the requisite service period, using a graded attribution method. The requisite service period is the longer of the service period derived from the Monte Carlo simulation model and the explicit service period the CEO is required to remain employed to vest in the award. The market condition is satisfied upon achieving certain stock price targets for a period following the completion of our Direct Listing. The CEO Performance Award also contains an implied performance-based vesting condition as the CEO’s ability to earn the award was contingent upon the completion of the Direct Listing. Accordingly, no expense was recognized prior to the completion of our Direct Listing on May 26, 2021, as vesting was not considered probable for accounting purposes until the Direct Listing occurred. Provided that Ian Siegel continues to be the CEO of ZipRecruiter, stock-based compensation expense is recognized over the requisite service period, regardless of whether the stock price targets are achieved. If the stock price targets are met sooner than the derived service period, we will accelerate the recognition of stock-based compensation expense to reflect the cumulative expense associated with the vested shares. In December 2023, we cancelled the CEO Performance Award and incurred a one-time charge of $7.5 million resulting from an acceleration of unrecognized stock-based compensation expenses from future periods into the fourth quarter of 2023.
Previous wording
We record valuation allowances against our deferred tax assets, when necessary. Realization of deferred tax assets is dependent upon future taxable earnings and is therefore uncertain. At least quarterly, we assess the likelihood that our deferred tax asset balance will be realized against future taxable income. To the extent we believe that realization is not likely, we establish a valuation allowance against our net deferred tax asset, which increases our income tax expense in the period when such determination is made. Although we incurred a current year pretax profit and maintain a recent history of cumulative earnings, during the year ended December 31, 2023, we recorded an incremental valuation allowance of $2.3 million against the deferred tax asset associated with carried forward California Research and Development Credits as we believe that it is more likely than not that we will not generate sufficient California sourced taxable income in future years to utilize that deferred tax asset.
Current wording
We record valuation allowances against our deferred tax assets, when necessary. Realization of deferred tax assets is dependent upon future taxable earnings and is therefore uncertain. At least quarterly, we assess the likelihood that our deferred tax asset balance will be realized against future taxable income. To the extent we believe that realization is not likely, we establish a valuation allowance against our net deferred tax asset, which increases our income tax expense in the period when such determination is made. During the year ended December 31, 2024, we recorded an incremental valuation allowance of $3.9 million against the deferred tax assets associated with carried forward California Research and Development Credits as we believe that it is more likely than not that we will not generate sufficient California sourced taxable income in future years to utilize that deferred tax asset and additionally established a valuation allowance against certain historic operating losses of foreign entities.
Previous wording
We classify and account for our money market mutual funds which have readily determinable fair values as equity securities, and we carry such securities at fair value with unrealized gains and losses reported in other income (expense), net in our Consolidated Statement of Operations. We classify and account for our debt securities as available-for-sale, and we carry such securities at fair value with unrealized gains and losses excluded from earnings and reported net of tax as a separate component of stockholders’ equity in accumulated other comprehensive income (loss) until the security is sold or matures.
Current wording
We classify and account for our money market mutual funds which have readily determinable fair values as equity securities, and we carry such securities at fair value with unrealized gains and losses reported in other income (expense), net in our Consolidated Statements of Operations. We classify and account for our debt securities as available-for-sale, and we carry such securities at fair value with unrealized gains and losses excluded from earnings and reported net of tax as a separate component of stockholders’ equity in accumulated other comprehensive income until the security is sold or matures.
Showing the first 40 of 42 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The Black-Scholes option pricing model requires us to make certain assumptions including: