July 29, 2022
Australian recruitment firm Ignite (IGN:ASX) reported that its revenue fell 4% in the second quarter ended June 30, 2022 to 28.49 million AUD (19.9 million USD).
The company’s gross margin for the quarter was AUD 3.8 million (USD 2.6 million), an increase of 1% compared to the comparative quarter of 2021. The increase in gross margin compared to the decline in revenue is due to the higher contribution of gross margin to high margin. permanent placements and managed services versus casual labor.
Ignite’s business activities continued to be affected by Covid-19 during the quarter, but with less intensity than in the previous three quarters. Despite this, within the Recruitment of specialists division, the activity of the federal government maintained its performance, although tempered by the election of the federal government. In addition, the On-demand IT Services business and the Technology & Talent Solutions business both reported strong double-digit gross profit growth compared to the comparative quarter of 2021.
Customer collections were AUD 32.1 million for the June 2022 quarter (USD 22.4 million), down 4% from the prior year and up 11% from the prior quarter .
Across all divisions, active contractors as of June 30, 2022 were 843 compared to 826 as of March 31, 2022 and 906 as of June 30, 2021.
During the June 2022 quarter, the total headcount of employees increased by ten compared to the comparative quarter of fiscal 2021 (a 15% increase in total headcount) and by three compared to the prior quarter.
Within the Specialist Recruitment business, the group contributed to a gross margin decline of 5% compared to the comparative quarter in 2021. The gross margin decline reflects a 45% increase in permanent investment income and a 4% decrease in casual labor gross margin compared to the comparative quarter. in 2021, clients choosing to hire candidates on a permanent rather than conditional basis.
On-demand IT services gross margin improved 28% compared to the comparative quarter of 2021, reflecting the post-Covid-19 lockdown recovery in New South Wales and Victoria.
At the end of the June 2022 quarter, Talent Solutions was rebranded as “Technology & Talent Solutions” to better reflect its service focus. The division recorded an 80% improvement in gross margin compared to the comparative quarter of 2021.
Going forward, in the Specialist Recruitment division, customer demand for contingent labor is expected to strengthen from current levels in the September 2022 quarter across government and commercial customers across the region. ‘company.
The on-demand IT services division is expected to finalize the replacement of its legacy customer and contractor management system in July 2022. The restructuring of the division during the June 2022 quarter that reduced fixed operations, as well as post-lockdown recovery from Covid-19 in New South Wales and Victoria should drive stronger financial performance in the September 2022 quarter, the group said.
“Customer demand for contingent labor and permanent resources is currently strong across all functional geographies and verticals,” the group said. “Furthermore, with the June 2022 seasonally adjusted unemployment rate at 3.5%, the reduction in Australian immigration and the June 2022 annual consumer price index at 6.1%, there is a combination a shortage of qualified applicants and contractors and upward pressure on wages.”
“These factors underscore the important role the company’s recruitment consultants play and should drive strong gross margin growth in FY23,” the group said.
Finally, given the company’s investment in developing a national resource center in FY22 and its ongoing focus on attracting and retaining high-quality talent, directors and Management are optimistic that the strong financial performance achieved in fiscal 2022 will continue in fiscal 2023.
Shares of Ignite closed at 0.105 AUD (0.073 USD), no change on the day and 52.17% above the 52-week low of 0.069 AUD set on July 30, 2021. The company has a market capitalization of 9.41 million AUD (6.5 million USD).