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ZipRecruiter (NYSE:ZIP) shares are trading more than 15% lower in pre-market Wednesday after the company offered a worse-than-expected revenue forecast.
ZipRecruiter posted an EPS of $0.17 on revenue of $210.5 million, beating the average analyst consensus for earnings of $0.09 on sales of $204M. For this quarter, the company guided to an adjusted EBITDA of $25M (up or down $3M) on revenue of $179M (up or down $3M). Analysts were expecting FQ1 revenue of $207.1M.
For 2023, ZipRecruiter sees adjusted EBITDA of $185M (up or down $7M) on revenue of $780M (up or down $10M) while analysts were looking for $934.2M.
“2022 was a year of strong, profitable growth for ZipRecruiter. Even amidst a volatile jobs environment, we were able to deliver 22% revenue growth, net income margin of 7%, and adjusted EBITDA margin of 20%,” said Ian Siegel, CEO of ZipRecruiter.
“In the first few weeks of 2023, employers have moderated their hiring plans and reduced recruitment budgets in response to an increasingly uncertain macroeconomic backdrop. While our 2023 revenue guidance is based on the assumption that challenging macroeconomic conditions continue throughout the balance of the year, our 2023 Adjusted EBITDA margin guidance of 24% reflects our ability to navigate dynamic macroeconomic environments while also continuing to invest in our product and matching technology.”
Barclays analysts highlighted weak revenue guidance.
“FY EBITDA outlook holding up better as ZIP pulls back on marketing, and repurchases may mute downside from here. Secular tailwinds intact, but softening labor demand risks are rising,” the analysts commented in a note.
Raymond James analysts cut to Outperform from Strong Buy following a “softer 2023 revenue outlook.”
“We maintain our positive fundamental view on shares given: 1) A large recruitment TAM that is increasingly shifting online; 2) a leadership position with strong brand recognition driving a strength with SMBs and increasingly enterprises; 3) unique AI-powered matching technology; 4) our expectation for 10%-plus long term revenue growth and 30%-plus long-term EBITDA margins,” the analysts wrote in a downgrade note.
