ZipRecruiter Shares Slide on FY Revenue Outlook Cut

By Scott Kanowsky 

Investing.com -- Shares in ZipRecruiter, Inc. (NYSE:ZIP) slumped in early Wall Street deals after the online job marketplace lowered its annual revenue outlook, citing a potential upcoming slowdown in the U.S labor market.

The company now expects sales for 2022 to come in at between $883M to $897M, or growth of around 20% versus the previous year. That is down from the prior estimate of $908M - $922M, representing an increase of 23-24%, and below the consensus estimate of $914.6M.

In the shorter term, third quarter revenue is also seen at $217M to $223M, also under analyst expectations for $233.6M.

However, ZipRecruiter still posted adjusted core earnings in the second quarter of $45.4M on record revenue of $239.9M, both beating guidance provided by the firm, thanks in particular to the red-hot U.S. job market.

"[D]espite the strength of the quarter as a whole, and the shortage of talent for currently-open job postings, we began to see employers pulling back on job postings during the final weeks of June," ZipRecuriter said. "We see signs of a cooling hiring environment, as companies respond to supply chain disruptions, inflation, rising interest rates and macroeconomic uncertainty."

The group said it is confident that it would hit its "strategic priorities" this year in the face of these economic headwinds, adding that annual adjusted core earnings midpoint estimate has been raised to $170M.

In a note, Barclays analysts said ZipRecruiter's guidance may point to a sharp "labor correction" in the U.S.

"We expect shares to remain under pressure near term as investors contemplate a steeper roll-off of quarterly paid employers, but would look to selectively add to positions on more material weakness as we see ZIP taking share even in a more challenging macro environment," Barclays analysts said.