Australia – Ignite revenue and gross margin improve in Q3

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October 29, 2021

Australian recruitment firm Ignite (IGN: ASX) provided an update for the third quarter ended September 30, 2021, reporting revenue of AUD 30.93 million ($ 23.3 million), an increase of 5% compared to the same period last year.

The group said that while the quarter saw Covid-19 lockdowns reestablished in New South Wales and Victoria states as well as temporary lockdowns in Australia’s Capital Territory, sentiment and confidence of businesses have remained strong with increasing vaccination rates in the Covid-19 community and an expectation of the economy to reopen in the December 2021 quarter.

The company’s gross profit (excluding other income) for the September 2021 quarter was AUD 3.37 million (USD 2.5 million), an increase of 1% over the same period year last. The smaller increase in gross profit compared to the increase in turnover is due to the reduced contribution to gross profit.

The gross profit margin (excluding other income) was 10.89%, compared to 11.40% for the comparative quarter of fiscal year 21 (excluding other income), due to the lower contribution to gross profit on-demand IT services and talent solutions.

During the September 2021 quarter, the Specialist Recruitment activity contributed to an 11% increase in gross margin compared to the previous comparative period, while salaries and other operating costs remained stable.

On-demand IT gross margin decreased 27% from the corresponding quarter of fiscal 21, while general operating expenses increased 11% due to increased headcount.

Talent Solutions (formerly known as People Services) recorded a significant decrease in gross margin compared to the comparative quarter of fiscal 21 and also compared to the June 2021 quarter. Quarter across government customer base federal enterprise in the IT and digital sector. Volumes in the business support and information management verticals are expected to increase as offices reopen and client sites become accessible.

Although permanent recruitment is still not at the pre-Covid-19 level, volumes started to increase in October 2021 and this momentum is expected to continue as companies look to invest for 2022.

The Specialist Recruitment division expects market conditions to remain strong.

The on-demand IT services division is expected to complete the replacement of its legacy client and project management systems during the December 2021 quarter. The division anticipates an improvement in gross margin during the December 2021 quarter following the slowdown of the September 2021 quarter due to public health orders related to Covid-19 and customer site closures.

The group said it will continue to focus on increasing the number of entrepreneurs active in the specialist recruiting activities of ACT, NSW and Victorian to drive gross margin growth. It will also continue to attract and engage high quality recruitment consultants and business leaders in key markets, with a particular focus on IT and digital.

Ignite shares hit a new 52 week high during today’s trading session when they hit AUD 0.13 ($ 0.098). Over this period, the share price is up 400.00%. The shares last traded at AUD 0.13 ($ 0.098), up 35.42% on the day. The company has a market capitalization of AUD 8.60 million (USD 6.48 million).


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