The Hipages Group Holdings Ltd (ASX: HPG) share price slumped today after the company released its half-year results.
At the close of trading, Hipages shares were swapping hands at $2.45 apiece, a 5.77% drop. In comparison, the S&P/ASX 200 Index (ASX: XJO) closed down 2.99%.
Let's take a look at what the online tradie platform and software-as-a-service (SaaS) provider reported today.
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Hipages share price slips as profits slip
Highlights of the company's H1 FY22 results include:
- 153% drop in net profit after tax (NPAT) compared to prior corresponding period (pcp) to record an $0.8 million loss
- 39% fall in EBITDA before significant items to $4.2 million
- EBITDA margin of 14%, a 12% drop on the pcp
- 12% boost in total revenue to $30.1 million
- 14% boost in recurring revenue to $28.8 million
- No dividend declared
What else happened in the half?
Hipages said the trade industry's recovery has been delayed by the COVID-19 Omicron outbreak. The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 14% was in line with expectations due to greater investment.
The company supported tradie customers throughout COVID-19 restrictions and disruptions during the half.
Job volumes for the half jumped by 4% on the previous quarter, including record job volumes in the second quarter.
Hipages reported a robust balance sheet and positive operating cash flow with net cash of $15.4 million.
Tradie subscriptions improved by 19% on the pcp to 34,300.
Hipages acquired 100% of New Zealand tradie marketplace Builderscrack and gained a 25% stake in Australian property management technology platform Bricks and Agent.
Further, Hipages rolled out hew scheduling features on the Tradiecore platform, with a new payments product also on the way. The company management see this platform as important to the future of the company.
Management commentary
Commenting on the results which have seen the Hipages share price plunge today, chief executive officer Roby Sharon-Zipser said:
In a challenging period for the trade industry, we have continued to deliver growth in our key metrics, showing the power of our subscription model and strategy.
In the second half we expect revenues and margins to continue to improve, and we are seeing strong inbound demand from tradies, with registrations and yields increasing.
What's next for Hipages?
Hipages is expecting a further moderate impact to FY22 revenue with slower growth in quarter three. In quarter four, it predicts a return to double-digit growth provided market conditions improve.
The company is already starting to see a rebound in the second half of the financial year. New tradie registrations are surging by 48% compared to the second quarter.
In FY22, Hipage is accelerating its investment to improve its market leadership position.
Commenting on this future outlook, Sharon-Zipser added:
We will continue to invest in our brand, product and people to strengthen our market leadership position in Australia and New Zealand, while exploring other opportunities to increase our TAM.
I look forward to updating the market on the next evolution of our product strategy later in the year, as we look to provide even more flexibility and value for our tradie customers
Hipages share price summary
The Hipages share price has climbed 4% in the past 12 months but it is down 36% year to date.
For perspective, the benchmark ASX 200 index has returned around 3% over the past year.
Hipages has a market capitalisation of about $319 million.
