Shares of ZipRecruiter Inc. (ZIP, +1.93%) dropped over 8% in the aftermarket on Tuesday following the release of their quarterly earnings report. While the job-posting site exceeded expectations with its earnings, it revealed that employers are becoming more hesitant to pay for job ads and that the number of job openings has significantly decreased.
During the second quarter, ZipRecruiter earned $14.4 million, or 14 cents a share, compared to $13.1 million, or 11 cents a share, during the same period in 2022. However, the company’s revenue declined by 29% to $170.4 million.
Although the U.S. labor force maintains historically robust levels with over 160 million people employed and an unemployment rate of 3.6%, ZipRecruiter has observed a substantial reduction in the number of job openings and employers’ willingness to pay for those positions. This decline is a departure from the hiring patterns the company has previously witnessed.
Both small and medium businesses, as well as enterprise employers, are posting fewer jobs and spending less on advertising them. ZipRecruiter believes that this reduced demand for recruiting services is a reality faced by companies in the recruitment category at large.
The ongoing impact of the macroeconomic backdrop, which has persisted throughout the COVID and post-COVID period, continues to affect ZipRecruiter’s business. As a result, the company projects third-quarter revenue of $150 million, indicating a year-over-year decline of 34%. While ZipRecruiter did not provide yearly guidance due to atypical hiring patterns, they cautioned that the fourth quarter is typically a seasonally softer period for hiring, and it remains uncertain when employers’ confidence will recover.