Recruiter.com combines artificial intelligence and job search technology with the world’s largest network of small and independent recruiters to help customers recruit new talent. It has a network of 26,000 recruiters and trades on the NASDAQ exchange under the symbol RCRT.
The company originally was a media company and destination site for recruiters, providing training and information. It had $4 million in organic traffic monthly. In March 2019, the company began monetizing its massive community of HR professionals and recruiters. CEO Evan Sohn sat down with Nathan Latka to discuss Recruiter and why he feels it is one of the most undervalued companies on the NASDAQ exchange.
- Founded in 2015, the company has 160 million profiles in its database
- ARR is $20 million
- ARPU is $4,000
How Recruiter.com Reaches an MRR of $1.75 million
Recruiter.com gains revenue through three streams. The first is its job boards, where companies such as Bloomberg, Dow Jones, and HBO post jobs. Recruiter.com receives about $200,000 per month in revenues from the job board.
The second revenue stream is its SaaS division, which provides video-enabled talent matching and screening that allows companies to fill positions much less expensively than through traditional means. The SaaS division accounts for another $200,000 per month in revenues.
The most significant revenue stream is from on-demand recruiting. Companies can hire a recruiter for a specified number of hours to recruit for a specific job. Payment is hourly rather than the traditional model of paying a percentage fee for finding the right candidate. The recruiters use the tools to find the right group of people and then run a marketing campaign to encourage them to apply for the job. Currently, the on-demand recruiting portion of the business generates more than $1 million per month but is growing at a rate of 25 percent quarter over quarter.
The on-demand aspect of the business was an idea of Sohn’s, who joined the company in March 2019 as chairman and June 2020 as CEO. “I saw an opportunity to reinvent the recruiting industry, which is a $120 billion industry,” says Sohn. “Before, there were two ways to hire. Either you did it yourself using Recruiter.com and Indeed, or you hired a headhunter to do it for you, which was quite expensive. With on-demand, we help companies of all sizes hire talent by giving them a recruiter paid on an hourly basis.”
Why On-Demand’s $1M MRR Isn’t Higher
Other companies in the space have higher monthly MRRs for on-demand services. Sohn explained, however, that because Recruiter.com trades on the NASDAQ exchange, it seeks to balance growth with profitability and plans to be profitable in 2022. “We invested $1 million last quarter but in talent delivery. That’s our throttle point right now,” Sohn says.
Why Competitors are Trading At 5 to 6 or 22 Times Revenue
Ziprecruiter has a marketplace similar to Recruiter.com’s and is valued at five to six times its revenue. Fiverr, which has similar software, is trading at 22 times revenue. Sohn believes Recruiter should be valued at least at $100 million or about five times its revenue; however, it is valued at considerably less at about 44 million. Latka places its value at $150 million.
Sohn believes the company is undervalued because of its journey to NASDAQ. The company first traded OTC. “The headwinds on an OTC company is that no one knows who you are,” he said. Also, the company is one of only a few startups on NASDAQ currently. “We have to demonstrate our maturity as a startup company first” to convince the market of the proper valuation, he says.
The company is not seeking to raise money through investors right now. “We don’t want to do anything dilutive.”
Will Sohn Increase His 4% Ownership?
An early investor in the company brought Sohn in to help the company grow, and over time Sohn became CEO. He owns 4 percent of the company. One personal wealth strategy might be to raise money, take the company private, and increase his ownership. Sohn admits he’s thought of it. But, he says, “Right now, I focus on running a great company and delivering great value. All the rest will come. All of our value will be realized, and we will have a great story as a public company. I am confident of our ability to do this,” he says. “I also like the liquidity of being a public company. We are all up for the challenge.”
He adds that the company’s investors — the Simon School Venture Fund, Thomas Zipp, and David Wieland — have been involved for a while and are not selling. The Simon School Venture Fund first invested in 2016. Zipp and Wieland invested in 2015.
How Recruiter.com Leverages Its Team of 75
Recruiter.com employs 75 people and also outsources some of its technology functions. Key leaders are Sohn and founders Miles Jennings, COO, and Ashley Saddul, CTO. Sohn has more than 25 years of experience in e-commerce in startups and Fortune 500 companies, including Crowdselling, Veea, and Verifone.
Jennings also has considerable experience, having been CEO of Truli Technologies, which merged with Recruitercom and VocaWorks. He has written articles on recruitment and entrepreneurship for the Wall Street Journal, Forbes, Entrepreneur, Mashable, and other business publications.
Before founding Recruiter.com, Saddul founded Impressive Domains and also worked as an IT manager for Bank of America. He enjoys the adrenaline rush of building companies from scratch and investing in new technologies.
The company has its work cut out to gain a NASDAQ valuation that equals its actual value. It also currently has an excellent opportunity to grow its on-demand business. In its report of 2020 results released in April, Sohn wrote, ” Our corporate mission aligns with our nation’s mission at this historic moment. As the country seeks to rebuild in the aftermath of the pandemic, we will drive the effort to rehire millions of people and provide new economic opportunities for the next generation. “
In his October interview with Latka, he says the need for companies to hire good employees will continue post-pandemic. “Companies of all sizes are waking up and realizing that they have an insatiable appetite for good candidates. We are in a new economy. The job hopper economy and talent acquisition are at the forefront of all this.”
