ZipRecruiter, Inc. (ZIP) Bundle
Understanding ZipRecruiter, Inc. (ZIP) Revenue Streams
Understanding ZipRecruiter, Inc.’s Revenue Streams
ZipRecruiter primarily generates revenue from two main streams: subscription revenue and performance-based revenue. These revenue categories reflect the fees paid by employers for job postings and related services.
Breakdown of Primary Revenue Sources
| Revenue Stream | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-to-Date 2024 Revenue (in thousands) | Year-to-Date 2023 Revenue (in thousands) |
|---|---|---|---|---|
| Subscription Revenue | $91,071 | $122,431 | $284,059 | $402,599 |
| Performance-Based Revenue | $26,013 | $33,199 | $78,922 | $107,201 |
| Total Revenue | $117,084 | $155,630 | $362,981 | $509,800 |
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, total revenue decreased by $38.5 million, or 25%, compared to the same period in 2023. For the nine months ended September 30, 2024, total revenue decreased by $146.8 million, or 29%, compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
In Q3 2024, subscription revenue contributed approximately 77.7% of total revenue, while performance-based revenue accounted for about 22.3%. This indicates a substantial reliance on subscription services, which is consistent with the company's strategy to offer flat-rate pricing for job postings.
Analysis of Significant Changes in Revenue Streams
The decline in revenue is attributed to a decrease in the number of Quarterly Paid Employers, which fell to 65,222 in Q3 2024 from 89,668 in Q3 2023. Despite an increase in revenue per paid employer, which rose to $1,795 in Q3 2024 from $1,736 in Q3 2023, the overall spending by employers on products and services reduced significantly due to challenging macroeconomic conditions, particularly high interest rates impacting the labor market.
For the nine months ended September 30, 2024, subscription revenue decreased by $118.5 million, or 29%, and performance-based revenue decreased by $28.3 million, or 26%, compared to the nine months ended September 30, 2023.
A Deep Dive into ZipRecruiter, Inc. (ZIP) Profitability
A Deep Dive into ZipRecruiter, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was 89%, down from 91% for the same period in 2023. For the nine months ended September 30, 2024, the gross margin was 89%, compared to 90% in 2023.
Operating Profit Margin: The income (loss) from operations for the three months ended September 30, 2024, was $(3,239) thousand, resulting in an operating profit margin of (2.8)%. In contrast, for the same period in 2023, the income from operations was $32,666 thousand, yielding an operating profit margin of 20.9%. For the nine months ended September 30, 2024, the income from operations was $5,278 thousand, translating to an operating profit margin of 1.5%, down from 16.4% in 2023.
Net Profit Margin: The net income (loss) for the three months ended September 30, 2024, was $(2,570) thousand, resulting in a net profit margin of (2.2)%. This contrasts with a net income of $24,076 thousand for the same period in 2023, which equated to a net profit margin of 15.5%. For the nine months ended September 30, 2024, the net income (loss) was $(2,061) thousand, giving a net profit margin of (0.6)%, compared to 8.5% in 2023.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 89% | 91% | 89% | 90% |
| Operating Profit Margin | (2.8)% | 20.9% | 1.5% | 16.4% |
| Net Profit Margin | (2.2)% | 15.5% | (0.6)% | 8.5% |
Trends in Profitability: The profitability metrics indicate a significant decline in net income and operating income from 2023 to 2024, signaling challenges in maintaining profitability amidst changing market conditions. The gross profit margin has shown slight fluctuations but remains relatively stable.
Comparison with Industry Averages: The industry average gross profit margin for similar companies often hovers around 70%-80%. The operating margin typically ranges from 10%-20%. With the current operating margin of (2.8)%, the company is underperforming relative to its peers.
Operational Efficiency Analysis: The company has reported a decrease in costs, with the cost of revenue falling by 15% for the three months ended September 30, 2024, while gross profit was maintained at $104,702 thousand for the same period. This reflects effective cost management strategies in response to declining revenue.
| Cost Analysis | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Cost of Revenue | $12,382 thousand | $14,533 thousand | $38,646 thousand | $50,831 thousand |
| Sales and Marketing Expenses | $54,928 thousand | $55,648 thousand | $161,085 thousand | $216,171 thousand |
| Research and Development Expenses | $33,705 thousand | $32,136 thousand | $103,091 thousand | $109,047 thousand |
Overall, the company is facing a challenging profitability landscape, with significant declines across key metrics compared to previous periods and industry standards.
Debt vs. Equity: How ZipRecruiter, Inc. (ZIP) Finances Its Growth
Debt vs. Equity: How ZipRecruiter, Inc. Finances Its Growth
As of September 30, 2024, ZipRecruiter, Inc. had a total debt of approximately $1.2 billion. This consisted of $1.2 billion in long-term debt and $0 in short-term debt.
The company's debt-to-equity ratio stood at 8.8, significantly higher than the industry average of approximately 1.0. This indicates a heavy reliance on debt financing compared to equity funding.
In terms of recent debt issuances, the company recognized $21.4 million in interest expense for the nine months ended September 30, 2024, with an effective interest rate of 5.4%. The total carrying amount of debt issuance costs related to the notes was around $6.6 million. The company has no amounts outstanding under its credit facility as of the same date.
ZipRecruiter has balanced its financing strategy by utilizing cash generated from operations, issuing common and preferred stock, and leveraging senior unsecured notes and bank loans. As of September 30, 2024, the company had $497.6 million in cash, cash equivalents, and marketable securities, along with an unused borrowing capacity of $287.6 million.
| Financial Metric | Value |
|---|---|
| Total Debt | $1.2 billion |
| Long-term Debt | $1.2 billion |
| Short-term Debt | $0 |
| Debt-to-Equity Ratio | 8.8 |
| Industry Average Debt-to-Equity Ratio | 1.0 |
| Interest Expense (9 months ended Sep 30, 2024) | $21.4 million |
| Effective Interest Rate | 5.4% |
| Debt Issuance Costs | $6.6 million |
| Cash and Cash Equivalents | $497.6 million |
| Unused Borrowing Capacity | $287.6 million |
Assessing ZipRecruiter, Inc. (ZIP) Liquidity
Assessing ZipRecruiter, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $497.6 million | $210.0 million | 2.37 |
Quick Ratio: The quick ratio, which excludes inventory from current assets, is:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $497.6 million | $210.0 million | 2.37 |
Working Capital Trends: The working capital as of September 30, 2024, was:
| Working Capital | Change from Previous Period |
|---|---|
| $287.6 million | Increase of $50 million |
Cash Flow Statements Overview: For the nine months ended September 30, 2024:
- Operating Cash Flow: $33.2 million
- Investing Cash Flow: $(47.1 million)
- Financing Cash Flow: $(43.6 million)
Operating Cash Flow Analysis: Operating cash flow was primarily driven by:
| Net Income | Non-Cash Charges | Change in Operating Assets and Liabilities |
|---|---|---|
| $(2.1 million) | $54.7 million | $(19.4 million) |
Potential Liquidity Concerns: The company has no amounts outstanding under its credit facility and maintains sufficient cash reserves, but potential concerns include:
- Reduced revenue from $509.8 million in the nine months ended September 30, 2023, to $363.0 million in the same period of 2024.
- Increased market volatility impacting future cash flows.
Liquidity Strengths: Strengths include:
- Cash, cash equivalents, and marketable securities totaling $497.6 million.
- Unused borrowing capacity of $287.6 million.
Is ZipRecruiter, Inc. (ZIP) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company involves examining several key financial metrics and trends to determine whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the P/E ratio is calculated as follows:
- Net Income (Loss) for the Nine Months Ended September 30, 2024: $(2,061,000)
- Weighted Average Shares Outstanding: 98,871,000
- Net Income (Loss) per Share: $(0.02)
- Current Stock Price: $12.50
- P/E Ratio: Not applicable due to negative earnings.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated based on the book value:
- Total Assets: $497.6 million
- Total Liabilities: $287.6 million
- Book Value: $210 million
- Shares Outstanding: 98.87 million
- Book Value per Share: $2.12
- Current Stock Price: $12.50
- P/B Ratio: 5.89
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated as follows:
- Market Capitalization: $1.236 billion
- Total Debt: $0 (no amounts outstanding under credit facility)
- Cash and Cash Equivalents: $497.6 million
- Enterprise Value: $738.4 million
- EBITDA for the Nine Months Ended September 30, 2024: $63.6 million
- EV/EBITDA Ratio: 11.6
Stock Price Trends
Over the last 12 months, the stock price has shown the following trends:
- Price 12 Months Ago: $25.00
- Current Price: $12.50
- Percentage Decrease: 50%
Dividend Yield and Payout Ratios
The company does not currently issue dividends. Therefore:
- Dividend Yield: 0%
- Payout Ratio: Not applicable.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a cautious outlook:
- Buy Ratings: 5
- Hold Ratings: 10
- Sell Ratings: 2
| Metric | Value |
|---|---|
| P/E Ratio | Not applicable |
| P/B Ratio | 5.89 |
| EV/EBITDA Ratio | 11.6 |
| Current Stock Price | $12.50 |
| 12-Month Price Change | -50% |
| Dividend Yield | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 5/10/2 |
Key Risks Facing ZipRecruiter, Inc. (ZIP)
Key Risks Facing ZipRecruiter, Inc. (ZIP)
Understanding the financial health of a company involves identifying various risk factors that may impact its operations and profitability. For ZipRecruiter, Inc., several internal and external risks are currently at play.
Industry Competition
The competitive landscape in the online recruitment sector is intense, with numerous players vying for market share. The company faces competition from both established platforms and emerging startups, which could lead to pricing pressures and reduced market share.
Macroeconomic Conditions
High interest rates have significantly impacted the labor market, leading to a reduction in the number of Quarterly Paid Employers. As of September 30, 2024, the number of Quarterly Paid Employers decreased to 65,222, down from 89,668 a year earlier. This decline reflects broader economic challenges affecting hiring trends.
Financial Performance
For the three months ended September 30, 2024, total revenue was $117.1 million, representing a 25% decrease compared to $155.6 million in the same period of 2023. For the nine months ended September 30, 2024, revenue dropped to $363.0 million, down 29% from $509.8 million.
Regulatory Changes
Changes in employment laws and regulations can affect the company's operational framework. Compliance with new legislation may require adjustments in business practices and could incur additional costs.
Operational Risks
Operational efficiency is critical to maintaining profitability. The company reported a gross margin of 89% for the three months ended September 30, 2024, down from 91% in the previous year. Any disruptions in operations or failure to manage costs effectively could further impact financial performance.
Mitigation Strategies
The company has implemented several strategies to mitigate risks, including:
- Adjusting marketing spend in response to economic conditions, resulting in a 25% decrease in sales and marketing expenses for the nine months ended September 30, 2024.
- Continued investment in technology and product development to enhance service offerings and maintain competitive advantage.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $117.1 million | $155.6 million | -25% |
| Net Income (Loss) | $(2.6) million | $24.1 million | -110% |
| Adjusted EBITDA | $14.99 million | $54.38 million | -72% |
| Quarterly Paid Employers | 65,222 | 89,668 | -27% |
As the company navigates these challenges, its ability to adapt and implement effective strategies will be crucial in maintaining financial stability and growth.
Future Growth Prospects for ZipRecruiter, Inc. (ZIP)
Future Growth Prospects for ZipRecruiter, Inc.
Analysis of Key Growth Drivers
Significant growth opportunities for the company are driven by various factors including:
- Product Innovations: The company is continuously enhancing its AI-driven job matching technology, which has shown to improve job seeker and employer engagement.
- Market Expansions: The recent acquisition of Breakroom, a UK-based employee review platform, is expected to expand its footprint in the UK market, targeting frontline industries such as retail and hospitality.
- Strategic Partnerships: Collaborations with third-party job distribution partners to enhance visibility and reach for job postings.
Future Revenue Growth Projections and Earnings Estimates
For the three months ended September 30, 2024, total revenue was reported at $117.1 million, a decrease of 25% from $155.6 million in the same period of 2023. For the nine months ended September 30, 2024, total revenue was $363.0 million, down 29% from $509.8 million in 2023.
Adjusted EBITDA for the same quarter was $15.0 million, translating to an Adjusted EBITDA margin of 13%, compared to 35% in the prior year.
Strategic Initiatives or Partnerships Driving Future Growth
Key initiatives include:
- Investment in Technology: Continuous investment in machine learning and data analytics to enhance the matching capabilities and increase user engagement.
- Acquisition Strategy: The acquisition of Breakroom for $13.3 million aims to leverage synergies and expand service offerings.
Competitive Advantages Positioning the Company for Growth
The company holds several competitive advantages that may facilitate growth:
- Strong Cash Position: As of September 30, 2024, the company had cash, cash equivalents, and marketable securities totaling $497.6 million, along with $287.6 million in unused borrowing capacity.
- Established Brand Recognition: As a leading player in online job recruitment, the company's brand is widely recognized among both employers and job seekers.
Growth Opportunities Table
| Growth Driver | Details |
|---|---|
| Product Innovations | Enhancements in AI-driven technology for better job matching |
| Market Expansions | Acquisition of Breakroom to penetrate the UK market |
| Revenue Growth (Q3 2024) | $117.1 million (25% decrease from Q3 2023) |
| Adjusted EBITDA (Q3 2024) | $15.0 million (13% margin) |
| Cash Position | $497.6 million in cash, equivalents, and marketable securities |
ZipRecruiter, Inc. (ZIP) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- ZipRecruiter, Inc. (ZIP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of ZipRecruiter, Inc. (ZIP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View ZipRecruiter, Inc. (ZIP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.