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More tradies competing for fewer jobs has propelled online tradie marketplace Hipages Group Holdings (ASX: HPG) to a $3.7 million profit for the first half of FY24 amid a rising uncertainty for jobs in the building sector.
Hipages, the country’s largest platform connecting tradies with residential and commercial consumers, has revealed the result was driven by a 15 per cent increase in revenue to $36.91 million due to ‘a clear increase in demand from tradies’ using Hipages to access jobs posted by consumers.
“Consumers are benefiting from increased engagement and competition for those jobs,” says Hipages CEO and co-founder Roby Sharon-Zipser.
“This momentum in our marketplace demonstrates the high value to both consumers and tradies from our platform.
“Consumers are seeing a record 84 per cent connection rate to their jobs posted. Our tradies are increasing their engagement with the platform and showing a willingness to trade up or sign up to contracts at higher subscription rates to secure more lead credit firepower to access valuable jobs.”
The latest half-year result revealed a continuation of the momentum that emerged in the second half of FY23 for Hipages, which posted a net loss of $5.1 million for the full year but revealed that it was free cash flow positive in the second half.
While the surge in activity over the first half of FY24 is considered cyclical by the group, Sharon-Zipser says Hipages has been working to reduce the platform’s countercyclical nature by transforming the business from a marketplace to a platform powered by Tradiecore, the company’s end-to-end Software-as-a-Service (SaaS) solution that helps tradies run better businesses.
Hipages says the single tradie platform, which incorporates lead generation via the marketplace and job management via Tradiecore, will drive customer retention and provide a range of growth opportunities.
Highlights from latest half-year result include a 4 per cent increase in subscription tradies on the company’s platform to 35,400 over the 12 months to the end of December.
“We are also seeing new and returning tradies sign onto higher tiered packages allowing them to connect with more consumers on the marketplace,” says Sharon-Zipser.
“We remain extremely disciplined on both our operating expenses and our development spend that not only optimises our marketplace but also sets the foundations for growth in our single tradie platform.
“We are confident that the group has now reached the inflexion point where we deliver both sustainable operating leverage and positive free cash flow.”
The latest profit result was aided by lift in EBITDA margin to 22 per cent from 18 per cent, which the CEO says was supported by ‘prudent operating expense management’.
“Pleasingly, we demonstrated material improvement in our free cash flow during the half whilst continuing our investment in technology as well as funding our large brand campaign during Q2.
“We are on track to deliver positive free cash flow in H2 FY24 and for FY24 to be in line with our guidance.”
Hipages says tradie registration volumes currently sit around 35,700, which is back to the levels seen at the end of the FY23 full year and up from December’s seasonal low. This is matched by job volumes returning to year-on-year growth.
Hipages has reaffirmed its forecast for FY24 of revenue growth tracking in the low teens and an EBITDA margin of approximately 20 per cent.
Shares in the company were trading 12.5 per cent higher $1.035 at 11.03am (AEDT) after the first hour of trading on the ASX today.
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