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Form 10-Q ZIPRECRUITER, INC. For: Jun 30

August 15, 2022 5:39 PM EDT

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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 June 30, 2022
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)
604 Arizona Avenue
Santa Monica, CA 90401
(877) 252-1062
(Address, including zip code, and telephone number, including area code, of principal executive offices)
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 83,522,734 shares of Class A common stock outstanding and 30,361,349 shares of Class B common stock outstanding as of August 8, 2022.

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Page

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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 macroeconomic factors that affect our business, the employment market, and the economy in general, including inflationary pressures, increasing borrowing costs and the ongoing impacts of the COVID-19 pandemic;
our business plan and our ability to effectively manage our growth;
our ability to compete with well-established competitors and new entrants;
our ability to enhance our marketplace and introduce new and improved offerings;
our ability to increase the number of employers and job seekers in our marketplace;
our ability to strengthen our technology that underpins our marketplace;
our ability to attract and retain qualified employees and key personnel;
our ability to execute our strategy;
beliefs and objectives for future operations;
the effects of seasonal trends on our results of operations;
our ability to expand to new markets;
our ability to maintain, protect, and enhance our brand and intellectual property;
our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business;
economic and industry trends, projected growth, or trend analysis; and
increased expenses associated with being a public company.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management

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to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations, except as required by law.
You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
As used herein, “ZipRecruiter,” “the Company,” “we,” “us,” “our,” and similar terms include ZipRecruiter, Inc. and its subsidiaries, unless the context indicates otherwise.
SUMMARY OF RISK FACTORS
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” later in this Quarterly Report on Form 10-Q. These risks include, but are not limited to, the following:
We face intense competition and could lose market share to our competitors, which could adversely affect our business, operating results, and financial condition.
Our business is significantly affected by fluctuations in general economic conditions. There is risk that any economic recovery may be short-lived and uneven, and may not result in increased demand for our services.
COVID-19 and the related health policy measures and macroeconomic impacts have caused significant uncertainty and disruption in our business operations. The ongoing effects of the COVID-19 pandemic continue to be unpredictable, and may have an adverse effect on our business, results of operations, 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.
We have experienced growth in recent periods and expect to continue to invest in our growth for the foreseeable future. If we cannot manage our growth effectively, our business, operating results, and financial condition could be adversely affected.
Significant segments of the market for job advertisement services may have hiring needs and service preferences that are subject to greater volatility than the overall economy.
Our efforts and ability to sell to a broad mix of businesses could adversely affect our operating results in a given period.

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Our business depends largely on our ability to attract and retain talented employees, including senior management and key personnel. If we lose the services of Ian Siegel, our Chief Executive Officer, or other members of our senior management team, we may not be able to execute on our business strategy.
If internet search engines’ methodologies or other channels that we use to direct traffic to our website are modified to our disadvantage, or our search result page rankings decline for other reasons, our user growth could decline.
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business, which makes our future results difficult to predict.
Our success depends on our ability to maintain the value and reputation of the ZipRecruiter brand.
Our indebtedness could adversely affect our liquidity and financial condition.
Market volatility may affect the value of an investment in our Class A common stock and could subject us to litigation.
The dual class structure of our common stock concentrates voting control with those stockholders who held our capital stock prior to our listing, including our directors, executive officers, and 5% stockholders. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.

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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
ZipRecruiter, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par values)
(unaudited)
June 30,December 31,
20222021
Assets
Current assets
Cash$699,923 $254,621 
Accounts receivable, net of allowances of $3,191 and $3,325 at June 30, 2022 and December 31, 2021, respectively
51,996 41,657 
Prepaid expenses and other assets13,102 9,721 
Deferred commissions, current portion4,652 4,640 
Total current assets769,673 310,639 
Property and equipment, net8,884 8,702 
Operating lease right-of-use assets14,220 18,515 
Internal use software, net15,017 13,657 
Deferred commissions, net of current portion4,135 4,011 
Goodwill1,724 1,724 
Deferred tax assets, net43,385 38,029 
Other assets1,091 3,342 
Total assets$858,129 $398,619 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$25,302 $24,862 
Accrued expenses71,000 86,213 
Accrued interest13,040  
Deferred revenue25,173 23,253 
Operating lease liabilities, current portion6,051 6,109 
Other current liabilities7,756 2,457 
Total current liabilities148,322 142,894 
Operating lease liabilities, net of current portion15,934 19,179 
Long-term borrowings541,070  
Other long-term liabilities3,223 1,578 
Total liabilities708,549 163,651 
Commitments and contingencies (Note 7)
Stockholders' equity
Preferred Stock, $0.00001 par value; 50,000 shares authorized as of June 30, 2022 and December 31, 2021; no shares issued and outstanding as of June 30, 2022 and December 31, 2021
  
Class A common stock, $0.00001 par value; 700,000 shares authorized as of June 30, 2022 and December 31, 2021; 83,422 and 87,843 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
1 1 
Class B common stock, $0.00001 par value; 700,000 shares authorized as of June 30, 2022 and December 31, 2021; 30,557 and 30,571 shares issued and 30,362 and 30,376 shares outstanding as of June 30, 2022 and December 31, 2021, respectively
  
Class B treasury stock, 195 shares outstanding as of June 30, 2022 and December 31, 2021
(644)(644)
Additional paid-in capital196,480 303,395 
Accumulated deficit(46,257)(67,784)
Total stockholders' equity149,580 234,968 
Total liabilities and stockholders' equity$858,129 $398,619 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

ZipRecruiter, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Revenue$239,943 $182,960 $467,203 $308,332 
Cost of revenue21,757 21,600 43,363 37,561 
Gross profit218,186 161,360 423,840 270,771 
Operating expenses
Sales and marketing136,631 114,171 274,221 177,647 
Research and development30,925 37,909 60,569 54,924 
General and administrative25,533 77,597 49,729 90,051 
Total operating expenses193,089 229,677 384,519 322,622 
Income (loss) from operations25,097 (68,317)39,321 (51,851)
Other income (expense)
Interest expense(7,511)(266)(13,796)(475)
Other income (expense), net36 (181)11 205 
Total other expense, net(7,475)(447)(13,785)(270)
Income (loss) before income taxes17,622 (68,764)25,536 (52,121)
Income tax expense (benefit)4,512 (15,917)4,009 (12,672)
Net income (loss)13,110 (52,847)21,527 (39,449)
Less: Accretion of redeemable convertible preferred stock (483) (1,480)
Net income (loss) attributable to Class A and Class B common stockholders$13,110 $(53,330)$21,527 $(40,929)
Net income (loss) per share attributable to Class A and Class B common stockholders:
Basic$0.11 $(0.55)$0.18 $(0.47)
Diluted$0.11 $(0.55)$0.17 $(0.47)
Weighted average shares used in computing net income per share attributable to Class A and Class B common stockholders:
Basic116,791 96,726 117,774 87,829 
Diluted124,091 96,726 125,547 87,829 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

ZipRecruiter, Inc.
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)

Three and Six Months Ended June 30, 2022
Redeemable Convertible Preferred StockCommon StockClass B Treasury StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total
Stockholders'
Equity
Series ASeries BClass AClass B
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance as of December 31, 2021 $  $ 87,843 $1 30,571 $ (195)$(644)$303,395 $(67,784)$234,968 
Conversion of Class B stock to Class A stock— — — 1,446 — (1,446)— — —  —  
Issuance of common stock upon exercise of options— — — — — 1,180 — — — 2,078 — 2,078 
Issuance of common stock upon the vesting and settlement of restricted stock units— — — 354 — 433 — — — — — — 
Stock-based compensation— — — — — — — — — 21,112 — 21,112 
Shares withheld related to net share settlement— — — (133)— (181)— — — (5,902)— (5,902)
Shares issued under employee stock purchase plan— — — 290 — — — — — 5,293 — 5,293 
Repurchase and retirement of common stock— — — (2,420)—  — — — (62,349)— (62,349)
Net income— — — — — — — — — — 8,417 8,417 
Balance as of March 31, 2022 $ $ 87,380 $1 30,557 $ (195)$(644)$263,627 $(59,367)$203,617 
Conversion of Class B stock to Class A stock— — — 663 — (663)— — —  —  
Issuance of common stock upon exercise of options— — — 5 — 460 — — — 1,099 — 1,099 
Issuance of common stock upon the vesting and settlement of restricted stock units— — — 275 — 348 — — — — — — 
Vesting of early exercised options— — — — — — — — — 97 — 97 
Stock-based compensation— — — — — — — — — 18,200 — 18,200 
Shares withheld related to net share settlement— — — (94)— (145)— — — (3,665)— (3,665)
Repurchase and retirement of common stock— — — (4,807)—  — — — (82,878)— (82,878)
Net income— — — — — — — — — — 13,110 13,110 
Balance as of June 30, 2022 $ $ 83,422 $1 30,557 $ (195)$(644)$196,480 $(46,257)$149,580 





The accompanying notes are an integral part of these condensed consolidated financial statements.
8

ZipRecruiter, Inc.
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)

Three and Six Months Ended June 30, 2021
Redeemable Convertible Preferred StockCommon StockClass B Treasury StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total
Stockholders' Equity (Deficit)
Series ASeries BClass AClass B
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance as of December 31, 20202,271 $87,118 6,031 $49,738  $ 78,283 $ (195)$(644)$21,732 $(71,384)$(50,296)
Accretion of redeemable convertible preferred stock— 961 36 — — — — 0— — (997)— (997)
Issuance of common stock upon exercise of options— — — — — 1,965 — — — 3,660 — 3,660 
Repurchase and retirement of common stock— — — — — (50)— — — (450)— (450)
Stock-based compensation— — — — — — — — — 1,290 — 1,290 
Net income— — — — — — — — — — 13,398 13,398 
Balance as of March 31, 20212,271 $88,079 6,031$49,774  $ 80,198 $ (195)$(644)$25,235 $(57,986)$(33,395)
Accretion of redeemable convertible preferred stock— 466 17— — — — — — (483)— (483)
Conversion of redeemable convertible preferred stock to common stock(2,271)(88,545)(6,031)(49,791)— — 24,202 1 — — 138,335 — 138,336 
Conversion of convertible notes with related parties to common stock— — — — — 3,085 — — — 25,653 — 25,653 
Conversion of Class B stock to Class A stock— — — 82,714 1 (82,714)(1)— —  —  
Issuance of common stock upon exercise of options— — — — — 5,282 — — — 8,720 — 8,720 
Repurchase and retirement of common stock— — — — — (100)— — — (2,300)— (2,300)
Vesting of early exercised options— — — — — — — — — 97 — 97 
Issuance of common stock upon the vesting and settlement of restricted stock units— — — — — 2,278 — — — — — — 
Stock-based compensation— — — — — — — — — 65,121 — 65,121 
Net loss— — — — — — — — — — (52,847)(52,847)
Balance as of June 30, 2021 $ $ 82,714 $1 32,231 $ (195)$(644)$260,378 $(110,833)$148,902 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9

ZipRecruiter, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 30,
20222021
Cash flows from operating activities
Net income (loss)$21,527 $(39,449)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation expense38,154 65,592 
Depreciation and amortization5,122 4,535 
Provision for bad debts1,230 679 
Deferred income taxes(5,356)(13,443)
Non-cash lease expense2,453 2,791 
Other2,568 57 
Change in operating assets and liabilities:
Accounts receivable(11,569)(15,955)
Prepaid expenses and other current assets(3,504)(8,196)
Deferred commissions, net(136)(138)
Other assets2,126 39 
Accounts payable417 18,480 
Accrued expenses and other liabilities(9,578)14,919 
Accrued interest13,040  
Deferred revenue 1,907 7,987 
Operating lease liabilities(3,304)(183)
Net cash provided by operating activities55,097 37,715 
Cash flows from investing activities
Purchases of property and equipment(1,664)(4,429)
Capitalized internal use software costs(2,649)(3,786)
Net cash used in investing activities(4,313)(8,215)
Cash flows from financing activities
Payment of issuance costs for credit facility— (1,270)
Proceeds from issuance of senior unsecured notes550,000  
Payment of senior unsecured notes’ issuance fees(9,378)— 
Payment for net settlement of taxes on restricted stock units(9,567) 
Repurchase of common stock(145,227)(2,750)
Proceeds from exercise of stock options3,397 13,323 
Proceeds from issuance of stock under employee stock purchase plan5,293  
Net cash provided by financing activities394,518 9,303 
Net increase in cash445,302 38,803 
Cash
Beginning of period254,621 114,539 
End of period$699,923 $153,342 
Supplemental disclosure of non-cash activities
Capitalized assets included in accounts payable and accrued expenses$2,851 $1,535 
Stock-based compensation capitalized for software1,158 819 
Accretion of redeemable convertible preferred stock 1,480 
Conversion of redeemable convertible preferred stock 138,336 
Conversion of convertible notes and accrued interest with related parties 25,653 
The accompanying notes are an integral part of these condensed consolidated financial statements.
10

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 accompanying 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 accompanying 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, 2021 (the “2021 Form 10-K”). The condensed consolidated balance sheet as of December 31, 2021 has been derived from the Company’s audited consolidated financial statements. Certain reclassifications have been made to prior year presentation to conform to current year presentation.
In the opinion of the Company’s management, the accompanying 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 2021 Form 10-K, except for the recently adopted accounting pronouncement and the accounting policies related to the senior unsecured notes and the accelerated share repurchases, as further discussed in Note 6 and Note 9, respectively.
The operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results expected for the full year ending December 31, 2022 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 reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates include revenue recognition, estimates relating to the measurement of operating lease right-of-use (“ROU”) assets and operating lease liabilities, determination of the fair value of stock-based awards, valuation of common stock in periods prior to becoming a public company, collectability of accounts receivable, impairment of long-lived assets, including goodwill, carrying value and useful lives of property and equipment and internal-use software, the amortization period for deferred commission costs, and income taxes. By their nature, estimates are subject to an inherent degree of uncertainty and actual results could differ from those estimates.
The impact of the Coronavirus pandemic (“COVID-19”) continues to evolve. As a result, many of the Company’s estimates and assumptions require increased judgment and carry a higher degree of variability and volatility.
11

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
As of the date these condensed consolidated financial statements are issued, the Company is not aware of any specific event or circumstance that would require an update to the Company’s estimates or judgments, or change to the carrying value of the Company’s assets or liabilities. However, these estimates and judgments may change as new events occur and additional information is obtained, which may result in changes being recognized in the consolidated financial statements in future periods. Actual results could differ from those estimates and any such differences may have a material impact on the financial statements.
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Accounting standards describe a fair value hierarchy based on the following three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:
- Level 1 — Quoted prices in active markets for identical assets, liabilities, or funds.
- Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
- Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of the Company’s financial instruments, including accounts receivable, accounts payable, and accrued expenses, approximate fair value because of their short-term maturities, except for the Company’s senior unsecured notes which are valued based on quoted prices for the notes in an inactive market. The value of the notes represents a Level 2 input in the fair value hierarchy.
Certain assets, including goodwill and operating leases, are also subject to measurement at fair value on a non-recurring basis using Level 3 or Level 2 inputs, but only when they are deemed to be impaired. As of June 30, 2022 and December 31, 2021, no material impairments were identified on those assets required to be measured at fair value on a non-recurring basis.
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. During the three and six months ended June 30, 2022 and 2021, revenue from countries outside of the United States was not material. In addition, property and equipment and operating lease ROU assets outside of the United States were not material as of June 30, 2022 and December 31, 2021.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash 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.
One customer accounted for 17% and 16% of the Company's outstanding accounts receivable as of June 30, 2022 and December 31, 2021, respectively. The Company closely monitors the financial
12

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
condition of the foregoing customer, which has been in good credit standing. No other customer individually accounted for 10% or more of the Company's outstanding accounts receivable as of June 30, 2022 and December 31, 2021, respectively. As such, the Company does not consider the concentration of its accounts receivable to be a material risk. For the three and six months ended June 30, 2022 and 2021, 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.
Recent Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
As an emerging growth company (“EGC”), the Company is allowed by the Jumpstart Our Business Startups Act to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use the adoption dates applicable to private companies. The adoption dates discussed below reflect this election. As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies. The Company expects to become a large accelerated filer and will no longer qualify as an EGC at the conclusion of the fiscal year ending December 31, 2022. The adoption dates discussed below reflect the updated transition periods for complying with accounting pronouncements not yet adopted.
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the existing model for measuring the allowance for credit losses for financial assets measured at amortized cost (including accounts receivable) to a model that is based on the expected losses rather than incurred losses. Under the new credit loss model, lifetime expected credit losses on such financial assets are measured and recognized at each reporting date based on historical, current, and forecasted information. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, and in April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. These ASUs provide supplemental guidance and clarification to ASU 2016-13 and must be adopted concurrently with the adoption of ASU 2016-13, cumulatively referred to as “Topic 326.” Topic 326 is effective for the Company as of December 31, 2022, and the adoption, including the impact and required disclosures, will be included in its Annual Report on Form 10-K for the year ending December 31, 2022. The Company is currently evaluating the effects of the adoption of this update on its condensed consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of income tax accounting guidance. ASU 2019-12 is effective for the Company as of December 31, 2022, and the adoption, including the impact and required disclosures, will be included in its Annual Report on Form 10-K for the year ending December 31, 2022. The Company is currently evaluating the effects of the adoption of this update on its condensed consolidated financial statements.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and which removes certain conditions that should be considered in the derivative scope exception evaluation under Subtopic 815-40. The Company early adopted ASU 2020-06 on January 1, 2022 and applied the changes
13

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
using the modified retrospective approach. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.
3.    Net Income (Loss) Per Share
Basic and diluted net income (loss) per share are computed using the two-class method as required when there are participating securities and multiple classes of common stock. Basic net income (loss) per share is computed using the weighted-average number of shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period.
Prior to May 14, 2021, when the Company’s Series A preferred stock and Series B preferred stock converted into shares of Class B common stock, the Company’s redeemable convertible preferred stock were participating securities as the holders of the redeemable convertible preferred stock were entitled to participate in dividends with common stock. In periods of net income, net income after deducting the accretion of redeemable convertible preferred stock was attributed to common stockholders and participating securities based on their participation rights. Net losses after deducting the accretion of redeemable convertible preferred stock are not allocated to the participating securities as the participating securities do not have a contractual obligation to share in any losses.
In April 2021, the Company filed its amended and restated certificate of incorporation, which resulted in the creation of Class A common stock and Class B common stock. As the liquidation and dividend rights are identical for Class A and Class B common stock (see Note 8), the undistributed earnings under the two-class method are allocated on a proportional basis and the resulting net income (loss) per share attributable to common stockholders is, therefore, the same for both Class A and Class B common stock on an individual or combined basis.
The following table presents the Company’s basic net income (loss) per share (in thousands, except per share amounts):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net income (loss) per share, basic:
Net income (loss) $13,110 $(52,847)$21,527 $(39,449)
Less: Accretion of redeemable convertible preferred stock (483) (1,480)
Net income (loss) attributable to Class A and Class B common stockholders$13,110 $(53,330)$21,527 $(40,929)
Weighted average shares of Class A and Class B common stock outstanding116,791 96,726 117,774 87,829 
Net income (loss) per share attributable to Class A and Class B common stockholders, basic$0.11 $(0.55)$0.18 $(0.47)
The Company computes diluted net income (loss) per share under the two-class method where income is reallocated between common stock, potential common stock and participating securities. Potential common stock includes stock options and restricted stock units (“RSUs”) computed using the treasury stock method and the conversion of the convertible notes and accrued interest using the if converted method.
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
June 30,
Six Months Ended
June 30,
2022202120222021
Net income (loss) per share, diluted:
Numerator:
Net income (loss) attributable to Class A and Class B common stockholders$13,110 $(53,330)$21,527 $(40,929)
Denominator:
Weighted average shares of Class A and Class B common stock outstanding, basic116,791 96,726 117,774 87,829 
Effect of dilutive securities:
Options to purchase common stock7,165  7,563  
Restricted stock units135  210  
Weighted average shares of Class A and Class B common stock outstanding, diluted124,091 96,726 125,547 87,829 
Net income (loss) per share attributable to Class A and Class B common stockholders, diluted$0.11 $(0.55)$0.17 $(0.47)
The following table presents the weighted average number of potentially dilutive common stock equivalents excluded from the computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Options to purchase common stock66 15,521 64 17,065 
Restricted stock units6,276 6,078 5,567 5,820 
Redeemable convertible preferred stock, if converted basis 11,436  17,784 
Convertible notes with related parties, if converted basis 1,860  2,457 
Unvested early exercise common stock 61  31 
Employee stock purchase plan170  197  
Total shares excluded from diluted net income (loss) per share6,512 34,956 5,828 43,157 
In April 2021, the Company granted an 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 June 30, 2022.
15

ZipRecruiter, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
4.    Revenue Information
The Company disaggregates revenue into two streams: subscription revenue and performance-based revenue. The following table presents the Company’s revenue streams (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Subscription$187,338 $151,292 $362,161 $251,796 
Performance-based52,605 31,668 105,042 56,536 
Total revenue$239,943 $182,960 $467,203 $308,332 
The Company recognized $24.4 million and $15.5 million of revenue during the three months ended June 30, 2022 and 2021, respectively, that was included in the deferred revenue balances as of March 31, 2022 and 2021, respectively.
The Company recognized $22.6 million and $11.4 million of revenue during the six months ended June 30, 2022 and 2021, respectively, that was included in the deferred revenue balances as of December 31, 2021 and 2020, respectively.
As of June 30, 2022 and December 31, 2021, the Company had no contract assets.
Performance Obligations
No revenue was recognized during the three and six months ended June 30, 2022 and 2021 from performance obligations satisfied in previous periods.
As of June 30, 2022, the Company did not have any material remaining performance obligations expected to be recognized in the future. The Company’s remaining performance obligations primarily relate 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):
June 30,December 31,
20222021
Accrued marketing$26,006 $22,493 
Accrued compensation and benefits17,038 26,621 
Accrued partner expenses8,978 8,457 
Accrued commissions6,020 5,790 
Accrued refunds and customer liabilities3,602 3,646 
Accrued non-income taxes2,755 11,250 
Other accrued expenses6,601 7,956 
Total accrued expenses$71,000 $86,213 
6.    Debt