A 248-page filing by ZipRecruiter for a direct-registration initial public offering offers a window into the company’s profitable year in 2020, beyond the obvious statistics.

ZipRecruiter filed its paperwork Friday with the U.S. Securities and Exchange Commission. The job search company did not disclose a planned date or pricing for the IPO, which would be a listing on the New York Stock Exchange under the ticker symbol ZIP.

The IPO plans were no surprise; the AIM Group covered them in December and the company confirmed them off-the-record. The “direct listing” would not raise additional capital for the company, but would allow public trading of stock and allow other investors to sell some of their shares.

The obvious

  • The company, which was founded in 2010, was profitable in 2020 – presumably for the first time in its history, although the statement didn’t say so.
  • Total revenue in 2020: $418.1 million; net profit, $86 million. The 2019 numbers: $429.6 million revenue, net loss $6.3 million.
  • It took a remarkably small revenue hit in 2020 of just 3%, $11.4 million, from 2019, while many recruitment marketplaces worldwide saw revenue drop 30% to 40%. (Revenue bounced back well at many companies globally in the second half of 2020, as it did at ZipRecruiter.)
  • The company was valued at $1.5 billion in a 2018 funding round.

The not-so-obvious

  • Programmatic and other performance-based advertising grew 28% year-over-year in 2020, from $55.7 million to $71.4 million; subscription revenue dropped 8% from $373.9 million to $346.8 million, “primarily due to the adverse economic impact of Covid-19.”
    • Performance-based revenue grew “primarily due to a 24% increase in the number of paid engagements (paid clicks and paid applications) attributable to the onboarding of new customers who run sophisticated recruitment marketing campaigns with consistent budgets through the year.”
    • “The corresponding revenue per paid engagement was 42 cents and 44 cents in 2019 and 2020, respectively.”
  • Sales and marketing expenses plummeted 31% in 2020, from 64% of revenue to 46% of revenue – $276.2 million in 2019, $191.1 million in 2020. While one might attribute those cuts to Covid-19, the company cut nearly 40% of its staff two-and-a-half weeks into the pandemic, a decision that predated the pandemic.
    • Most of those personnel cuts targeted the sales and marketing teams.
    • CEO Ian Siegel and three co-founders took a 50% pandemic pay cut in March. Siegel’s total 2020 compensation was $626,635, including $458,000 in salary. CTO Boris Shimanovsky, who joined the company in June 2020, received total compensation of $2.9 million for the half year, most of it in stock awards; chief people officer Renata Dionello, who joined in September 2020, received $2.4 million in total compensation for that four-month period, again, most of it in stock awards.
  • ZipRecruiter said the sales and marketing cuts included “a decrease of $71.4 million in advertising, online lead generation, customer and industry events, and candidate acquisition expenses, a decrease of $10 million in personnel-related costs for our sales and marketing employees, and a decrease of $4.5 million in non-essential travel and entertainment expenses.” The company booked one-time costs of $3.7 million related to the “reduction in force.”

In October, ZipRecruiter reported it had more than 800 employees in the U.S., Canada, the U.K. and Israel – down from a pre-pandemic peak of 1,260. However, the company said in October that it had more than 100 job openings and was recruiting IT employees.

The AIM Group ranked ZipRecruiter as the No. 8 recruitment marketplace in the world by revenue in 2020, behind Zhaopin of China. Its $418 million in revenue is dwarfed by the $3.8 billion in revenue for Indeed.com and Glassdoor, the two primary recruitment marketplaces owned by Recruit Holdings Co. Ltd.

ZipRecruiter was also ranked as the No. 8 recruitment marketplace globally by traffic, according to AIM Group stats based on SimilarWeb data. The company averaged 38.3 million visits per month.

Originally launched as a cost-per-click job listing aggregator, the company has added revenue in recent years through its job skills marketplace, which offers courses from providers EdX, Coursera, Skillshare and more.

Founder and CEO Siegel and other executives, along with several institutional investors, will maintain control over the company with Class B shares, which will have 20 votes each compared to the Class A shares available to the public.

The company said more than 2.8 million businesses and 110 million job-seekers have used ZipRecruiter since it was founded.

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