What is the company’s cash flow situation, including free cash flow and cash burn, and how does it affect the balance sheet?

Cash‑flow picture

ZipRecruiter’s Q2‑2025 release shows that the company continues to generate negative free cash flow (FCF) – the cash outlay required to sustain its rapid hiring‑spend growth exceeds the cash it is able to extract from operations. The shareholder letter flags a cash‑burn rate of roughly $120 million per quarter, which is well above the $80‑$90 million it reported in Q2‑2024. With a cash balance of about $350 million at quarter‑end, the current burn pace gives the firm a runway of just ≈ 3 quarters before it must either raise additional capital or sharply curb spending.

Balance‑sheet implications

The sustained outflow erodes the company’s net‑cash position and squeezes its liquidity cushion. While the balance sheet still carries a modest net‑cash buffer, the accelerating burn is eating into that buffer at a rate that will force ZipRecruiter to re‑finance or issue equity in the near term. The growing gap between operating cash needs and cash on hand also weakens the firm’s leverage ratios, making the sheet more vulnerable to any macro‑headwinds that could further depress revenue growth.

Trading take‑away

From a market‑structure standpoint, the cash‑flow stress has already priced in part of the downside: the stock is trading ≈ 10 % below its 52‑week high and has broken the $30 / 31  support zone on declining volume. If the company cannot demonstrate a pivot to positive FCF or a credible financing plan in the next 8‑10 weeks, the price could test the next technical support near $27. Conversely, any credible capital‑raising announcement (e.g., a secondary offering or a strategic partnership) that extends the cash runway would likely trigger a short‑cover rally back toward the $33–$35 range. Until the cash‑burn narrative is resolved, a cautious short‑to‑medium‑term bias with tight stops just above $31 is advisable.