ZipRecruiter Takes Off After Direct Listing

ZipRecruiter’s Public Debut

ZipRecruiter’s (ZIP) shares gained more than 17% in the firm’s debut as a public company earlier this week, boasting a $2.8 billion valuation at the end of its first trading day. The online recruiter is the fourth company to use a direct listing instead of pursuing a traditional IPO this year. The stock opened at $20 per share and ended its first trading session at $21.10 per share.

ZipRecruiter did not go the IPO route because it was not in need of funding. New shares are not issued with a direct listing. Instead, the shares come from existing investors. ZipRecruiter shareholders, including CEO Ian Siegel, offered about 86 million shares in the direct listing.

Other Startups Choosing the Direct Listing Route

ZipRecruiter is the latest in a string of startups opting to issue shares directly to investors. Squarespace (SQSP), Coinbase (COIN), and Roblox (RBLX
) are among other companies that favored a direct listing over a traditional IPO.

ZipRecruiter achieved profitability last year despite a slight decline in revenue. Net income in 2020 was $86 million. That compares to a net loss of $6.3 million in 2019. Since ZipRecruiter launched in 2010, about 2.8 million businesses and 110 million job seekers have used the platform. ZipRecruiter was valued at $1.5 billion in 2018, when it raised $156 million in venture funding.

ZipRecruiter Looks Ahead

ZipRecruiter’s CEO, company executives, and investors including Institutional Venture Partners and Wellington, will maintain control of the company through the Class B shares they were issued. Those shares have 20 votes each. Class A shares, which were sold to the public, carry one vote each.

Looking toward its future as a public company, ZipRecruiter is focused on using technology to reduce the time it takes for employers to hire workers. With schools reopening and people venturing out again, ZipRecruiter thinks it is in a strong position. After all, there are still 16 million people out of work and many more who may be looking to change jobs as the pandemic subsides.

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