Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ZipRecruiter Inc (ZIP, Financial) reported Q2 2024 revenue of $124 million, which was above the high end of guidance.
- Net income for Q2 2024 was $7 million, with an adjusted EBITDA of $28 million, equating to a 23% margin.
- Total ZipRecruiter web traffic in the U.S. grew by 22% year-over-year, outperforming competitors by 12 percentage points.
- The introduction of ZipIntro has shown strong results, with over 90% of job seekers likely to use it again and employers receiving over three times more quality applications.
- ZipRecruiter Inc (ZIP) acquired Breakroom, a U.K.-based employer review site, and plans to launch it in the U.S. to enhance its value proposition for job seekers.
Negative Points
- Revenue for Q2 2024 was down 27% year-over-year, reflecting continued softness in hiring demand.
- Quarterly paid employers decreased by 31% year-over-year and 2% sequentially, primarily due to reduced demand from SMBs.
- Net income decreased from $14 million in Q2 2023 to $7 million in Q2 2024.
- Guidance for Q3 2024 indicates a further revenue decline of 28% year-over-year and 9% quarter-over-quarter.
- The labor market remains uncertain and volatile, with recent trends showing a general softening, making the outlook for Q3 more cautious.
Q & A Highlights
Q: Last quarter, you expressed some optimism around the labor market potentially troughing. Can you elaborate on the trends you saw in late June and July that are making you more cautious now?
A: (Timothy Yarbrough, CFO) Over the course of the quarter, we saw signs of stabilization, but as we approached June and into July, we observed a general softening trend. This is reflected in the sequential decrease in paid employers and our cautious guidance assumes this softness continues throughout the quarter.
Q: Organic traffic grew 30% year-over-year, down from 65% last quarter. Is this due to comp dynamics or something specific in activity levels?
A: (David Travers, President) The 30% growth in organic traffic is the result of long-term investments in product and brand. While the growth rate can vary, the long-term trend shows we are outpacing the market. Our total traffic grew 22%, driven by the 30% organic growth, which is significantly faster than our largest competitors.
Q: You mentioned reduced demand from SMBs affecting quarterly paid employers (QPEs). Are there specific verticals where you're seeing lower demand?
A: (David Travers, President) Yes, verticals like finance and technology remain weak, and education, which was strong post-pandemic, has started to weaken. Retail and government sectors are outperforming, but overall, the balance across sectors remains challenging.
Q: Can you provide more details on the performance of ZipIntro and its impact on job seeker and employer engagement?
A: (Ian Siegel, CEO) ZipIntro has been well-received, with over 90% of job seekers likely to use it again and employers receiving over three times more quality applications per job. This product facilitates early face-to-face interactions, creating more value for both job seekers and employers.
Q: What are the strategic benefits of acquiring Breakroom, and how do you plan to integrate it into your U.S. operations?
A: (David Travers, President) Breakroom provides community-powered ratings for employers, offering authentic insights into work conditions. We plan to launch Breakroom in the U.S. to empower frontline workers with the information they need to apply confidently, enhancing our value proposition to job seekers.
Q: How are you planning to navigate the current labor market conditions and what are your expectations for recovery?
A: (Timothy Yarbrough, CFO) We continue to invest in long-term product, technology, and marketing initiatives. While the timing and shape of recovery remain uncertain, we are prepared to adjust our investments based on market conditions. We believe our disciplined strategy positions us well for the eventual recovery.
Q: Can you elaborate on the improvements made to your matching technology and their impact on user engagement?
A: (David Travers, President) We made several enhancements to our matching algorithm, including a redesigned matching job index and improved recommendations for job seekers with light activity. These changes have increased engagement by up to 6%, leading to better understanding of job seeker interests and qualifications.
Q: What are your expectations for Q3 2024 revenue and adjusted EBITDA, and what factors are influencing this guidance?
A: (Timothy Yarbrough, CFO) Our Q3 2024 revenue guidance is $112 million at the midpoint, representing a 28% decline year-over-year and a 9% decline quarter-over-quarter. Adjusted EBITDA guidance is $10 million at the midpoint. The guidance reflects the continued softness in the labor market and our cautious outlook based on recent trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
