ZipRecruiter Earnings Update: Analysts Cut Price Target Amid Concerns Over Losses

ZipRecruiter's second-quarter results exceeded expectations, with revenues of $112m in line with predictions and statutory losses of $0.10 per share, smaller than expected. Despite this, analysts cut their target price by 19% to $5.80, citing concerns about ongoing losses despite unchanged forecasts for 2025. The consensus price target fell, with the most bullish analyst valuing the company at $10.00 and the most bearish at $4.00.

ZipRecruiter Inc. (ZIP) reported its second-quarter 2025 earnings on August 11, showcasing a revenue beat but a significant drop in stock price during after-hours trading. The company reported revenue of $112.2 million, slightly surpassing the forecast of $111.74 million. Despite this, the stock fell by 12.91%, closing at $3.99, near its 52-week low of $3.46. According to InvestingPro analysis, the company is currently trading slightly below its Fair Value, with a market capitalization of $313.76 million. InvestingPro subscribers have access to 10+ additional key insights about ZIP’s valuation and financial health.

Key Takeaways

- Revenue exceeded expectations at $112.2 million, a 0.41% surprise.
- Stock price declined by 12.91% in after-hours trading.
- Net loss of $9.5 million contrasts with $7 million net income in Q2 2024.
- Quarterly Paid Employers increased by 4% to 66,300.
- New AI innovations, including ZipIntro, are driving user engagement.

Company Performance

ZipRecruiter showed resilience in Q2 2025 with a revenue increase of 2% quarter-over-quarter, reaching $112.2 million. The company experienced a rise in Quarterly Paid Employers (QPEs) to 66,300, marking a 4% sequential increase. However, the net loss of $9.5 million is a stark contrast to the $7 million net income reported in the same quarter last year. The company attributes its performance to strategic investments in technology and product development amidst a challenging labor market.

Financial Highlights

- Revenue: $112.2 million, up 2% quarter-over-quarter.
- Net Loss: $9.5 million, compared to $7 million net income in Q2 2024.
- Adjusted EBITDA: $9.3 million, with an 8% margin.
- Cash and Equivalents: $421.2 million.
- Share Repurchase: $56.5 million for 10.2 million shares.

Earnings vs. Forecast

ZipRecruiter reported a slight revenue beat with $112.2 million against the $111.74 million forecast, resulting in a 0.41% positive surprise. However, this minor beat did not prevent a negative market reaction, as investors seemed concerned about the overall financial health and future profitability.

Market Reaction

Despite the revenue beat, ZipRecruiter’s stock fell by 12.91% to $3.99 in after-hours trading. This decline brings the stock close to its 52-week low of $3.46, reflecting investor concerns over the company’s net loss and future growth prospects. The market’s reaction suggests skepticism about ZipRecruiter’s ability to navigate the current soft labor market effectively.

Outlook & Guidance

Looking ahead, ZipRecruiter projects Q3 2025 revenue between $110 million and $160 million, anticipating the first Q2 to Q3 revenue growth since 2021. The company is cautiously optimistic about achieving modest year-over-year revenue growth in Q4, despite a challenging 20.95% revenue decline in the last twelve months. Full-year adjusted EBITDA margins are expected to remain in the mid-single digits, reflecting ongoing investments in technology and innovation. InvestingPro analysis shows the company maintains moderate debt levels and strong liquidity, with analysts predicting a return to profitability this year.

Executive Commentary

CEO Ian Siegel expressed confidence in the company’s strategic direction, stating, "We believe we are well positioned to emerge from this period as a stronger company." CFO Tim Yarborough highlighted the company’s flexible business model, noting, "Our flexible business model allows us to strategically scale investments." President David Travers shared optimism about future growth, saying, "We are increasingly optimistic about the scenario where we get back to year-over-year growth in Q4."

Risks and Challenges

Soft labor market conditions may continue to impact growth. Technology job postings are down 5% year-over-year. The education sector remains weak compared to the previous year. Competitive pressures from other job platforms could intensify. Macroeconomic uncertainties may affect employer hiring decisions.

Q&A

During the earnings call, analysts inquired about the impact of AI on the job market, with executives noting minimal effects so far. Questions also focused on the growth potential of ZipIntro and its ability to drive higher employer engagement. Executives expressed caution regarding pricing strategies in the current weak hiring market, emphasizing the importance of maintaining competitive advantages through innovation and strategic investments.

References

[1] https://www.investing.com/news/transcripts/earnings-call-transcript-ziprecruiter-q2-2025-reveals-revenue-beat-stock-drops-93CH-4183985