The Seek Ltd (ASX: SEK) share price is under pressure on Tuesday.
In morning trade, the job listings giant's shares are down 7% to $22.58.
Why is the Seek share price sinking?
Investors have been selling down the Seek share price today after the company released a trading and guidance update this morning.
According to the release, the company expects to fall short of its revenue guidance for continuing operations in FY 2023. This is due to continued moderation of job ad volumes.
Based on trading momentum for the third quarter, management revealed that it expects its revenue for FY 2023 to be approximately $15 million lower than the guidance provided with its half-year results in February.
It is now forecasting revenue of approximately $1,245 million for the 12 months.
However, the good news is that the company's costs are expected to be lower than forecast and help offset this lower revenue.
As a result, Seek has been able to reaffirm its earnings guidance for FY 2023 (excluding significant items).
It continues to guide to earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately $560 million and net profit after tax of $250 million. This implies year on year earnings growth of 10% and 1.8%, respectively.
Longer term targets
Seek may have disappointed with its FY 2023 revenue guidance update, but its longer term aspirations could raise some eyebrows.
Management revealed that it is targeting $2 billion in revenue by FY 2028, which is 60% greater than FY 2023's guidance and implies a compound annual growth rate of 10% per annum. Goldman Sachs notes that this is meaningfully higher than its estimate ($1.83bn) and consensus estimates ($1.73bn).
However, it hasn't been enough to stop the Seek share price from falling today.
