ZipRecruiter Lowered Its Outlook. Analysts Remain Bullish.

ZipRecruiter Chief Financial Officer Tim Yarbrough said it is increasingly apparent that the record-setting labor market is moderating.


Photograph by David Paul Morris/Bloomberg



ZipRecruiter

dropped its full-year revenue outlook, citing a cooling labor market. But analysts are still bullish on the strength of the brand.

After Zip



Recruiter

reported earnings on Monday, Raymond James’ Aaron Kessler and William Blair’s Ralph Schackart reiterated their Buy and Outperform ratings on the stock, respectively.

While the company warned investors about the slowing labor market, analysts are optimistic partly because the total recruiting market is still increasingly shifting online while



ZipRecruiter

holds a leadership position.

“We believe that ZipRecruiter remains well positioned to succeed due to its differentiated AI-driven platform and brand strength,” Schackart said.

Despite the bullish ratings, the stock (ticker: ZIP) dropped 4.8% to $19.97 midafternoon Tuesday. Kessler has a $30 price target on the stock.

Investors were likely not pleased with management’s commentary during the earnings call. Chief Financial Officer Tim Yarbrough said it is increasingly apparent that the record-setting labor market is moderating.

“We expect the macroeconomic environment of increasing inflation, rising labor costs and interest rates to have a more pronounced impact on the hiring environment in the second half of 2022.”

As a result, ZipRecruiter lowered its revenue outlook for the full year to a range of $883 million to $897 million from $908 million to $922 million earlier. That falls short of the consensus of $912.7 million in sales among analysts tracked by



FactSet
.

But ZipRecruiter increased its guidance for full-year adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, to $170 million at the midpoint from a midpoint of $149 million earlier.

This demonstrates “the resiliency of the business and management’s commitment to profitable growth,” Schackart said.

Wall Street had an estimate of $147.2 million for adjusted Ebitda.

For the latest quarter, the company reported adjusted earnings of 25 cents per share, more than the Street estimate of 14 cents a share. Revenue of $239.9 million was also higher than the consensus of $234.7 million.

Investors likely expected a solid second quarter out of ZipRecruiter given that July’s job numbers absolutely crushed expectations. The U.S. economy added 528,000 versus the expectation of 258,000 jobs last month.

But ZipRecruiter’s note of caution about slowing job postings could mean job seekers can soon lose their leverage.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com

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