On Friday, Evercore ISI adjusted its outlook on ZipRecruiter (NYSE:ZIP) shares, reducing the company's price target from $13.00 to $12.00 while maintaining an In Line rating.
The employment marketplace reported its first-quarter earnings, which revealed a year-over-year revenue drop of 33% to $122 million, aligning with Evercore ISI's expectations and slightly surpassing Wall Street's forecast by 1%.
Despite the revenue decline, ZipRecruiter's EBITDA of $20.8 million, representing a 17% margin, was significantly higher than both Evercore ISI and Street estimates, although it marked a 2-point decrease from the previous year.
The number of Quarterly Paid Employers (QPEs) saw a steep decline of 32% year-over-year, and Revenue Per Employer (RPE) also fell by 1%. Looking ahead to the second quarter, ZipRecruiter's guidance fell short of analyst expectations, with a projected revenue range of $114-120 million, indicating a 31% drop year-over-year. The EBITDA forecast of $12-18 million suggests a margin of 13%, which is also below the anticipated figures.
Evercore ISI's commentary on the results was clear: despite ZipRecruiter's ability to slightly outperform revenue expectations and deliver a strong EBITDA margin for the first quarter, the overall fundamentals remain challenging. The firm highlighted ongoing declines in revenue growth both quarterly and annually, as well as a year-over-year decrease in EBITDA margin.
With these results in hand and considering the broader economic climate, Evercore ISI expressed a cautious stance on ZipRecruiter. The firm noted that the company is likely to continue facing macroeconomic headwinds well into the fiscal year 2024.
Without any clear indications of a macroeconomic recovery or a return to a more normalized hiring environment, Evercore ISI has chosen to remain neutral on the stock.
InvestingPro Insights
In light of Evercore ISI's recent analysis of ZipRecruiter, incorporating real-time metrics and InvestingPro Tips can offer additional depth to the discussion. As of the last twelve months ending in Q4 2023, ZipRecruiter's market capitalization stands at $1.07 billion, with a notable gross profit margin of 90.04%, reflecting the company's ability to maintain high profitability on its sales. Despite a concerning revenue drop of 28.62% during the same period, the company's gross profit was a substantial $581.41 million.
An InvestingPro Tip highlights that management has been aggressively buying back shares, which could indicate confidence in the company’s future prospects. Furthermore, a high shareholder yield and impressive gross profit margins are key factors that could interest investors. However, it is essential to note that analysts have revised their earnings downwards for the upcoming period and anticipate a sales decline in the current year.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available that delve into the company's financial health and market performance. With the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to these insights. As of now, there are 11 more InvestingPro Tips listed for ZipRecruiter, which could be invaluable for making informed investment decisions.
Lastly, the recent price trend shows a significant drop over the past three months, with the stock currently trading at 56.04% of its 52-week high. This could be an opportune moment for value investors or could signal caution for those wary of continued volatility. The balance between the company's solid profit margins and the downward revisions in earnings forecasts presents a nuanced picture for potential investors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.