S&P: ZipRecruiter ratings lowered to 'B-' from 'B' on limited scale; outlook revised to stable from negative

S&P Global Ratings has revised ZipRecruiter Inc.’s credit rating to 'B-' from 'B', citing limited scale as a key factor, while the outlook has been upgraded to stable from negative. The downgrade from 'B' to 'B-' reflects concerns over the company’s size and capacity to compete effectively in a highly competitive market dominated by Indeed and LinkedIn. However, the stable outlook indicates that S&P now sees a path for ZipRecruiter to maintain its credit profile, provided certain financial metrics improve.

The company’s revenue has declined significantly in recent years, with a 26.6% drop in 2024 and a 28.6% contraction in 2023, driven by weak demand for online recruiting services amid soft hiring trends. While revenue is projected to fall further by approximately 6% in 2025, the rate of decline has been moderating. S&P anticipates modest revenue growth in the fourth quarter of 2025, with the potential for sustained growth through 2026 as hiring trends stabilize.

ZipRecruiter’s liquidity position remains strong, with $505.9 million in cash and marketable securities as of December 31, 2024, and an undrawn $290 million revolver. The company is expected to use some of its cash reserves for share repurchases while maintaining a cautious capital allocation strategy. S&P has also noted that ZipRecruiter’s flexible cost structure, particularly in sales and marketing, allows it to adjust expenses in response to market conditions.

For the outlook to remain stable, S&P expects free operating cash flow to debt to remain above 3%, EBITDA interest coverage above 1.5x, and sufficient liquidity to buffer against potential downturns. The revised outlook reflects improved visibility on ZipRecruiter’s financial trajectory and a more balanced approach to managing its capital and operations.