Hipages Group Holdings Ltd (ASX: HPG) shares are on the rise today after the company released its first financial results since listing on the ASX late last year. At the time of writing, the Hipages share price has climbed 3.11% to $2.32.
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What's driving the Hipages share price?
The Hipages share price is on the move today after the company recorded a strong performance across all key metrics for its maiden report covering the period ending 31 December 2020 (1H FY21).
Hipages delivered monthly recurring revenue in December of $4.6 million, up 31% and overall recurring revenue of $25.3 million, up 26%.
It advised there had been no adverse impacts from COVID-19, with gross margins improving to 87% compared with 77% in 1H FY20. Margin expansion and increasing revenues translated into earnings before interest, tax, depreciation and amortisation (EBITDA) of $6.9 million compared to an EBITDA loss of $0.1 million in the prior corresponding period (pcp).
More surprisingly, with a market capitalisation of just $292 million, the company turned over an NPAT of $1.5 million, compared to the $5.3 million loss incurred during the pcp. Its strong financials were driven by a 12% increase in subscription tradies on the platform to 28,800 and a 14% increase in job volumes to 0.8 million.
What is Hipages?
Hipages is an Australian software-as-a-service provider with a platform designed to connect tradies and consumers. The company was formed with the goal of addressing the difficulties that arise out of organising home improvement projects.
According to Hipages, its platform "provides an efficient, technology-driven model to connect consumers with qualified tradies, and facilitates the management of other elements of the home improvement process, such as communication, payment and ratings and recommendations".
Macro trends driving growth
In other news boosting the Hipages share price today, the company highlighted a number of trends with the potential to drive further growth over the medium to long term. These include a growing addressable market of 9.9 million Australian households which spent around $80 billion on home improvement services in 2020 and around 257,000 trades businesses in Australia employing 1.1 million tradies.
The company also pointed to growth in tradie ad spend, with expected spend by tradies on advertising in 2020 to be approximately $976 million. Looking ahead, Hipages forecast tradie ad spend to grow by approximately 8.8% per annum.
Hipages share price snapshot
Hipages has experienced a strong start to the second half of FY21 with January revenue up 18% on the pcp. The company has advised this is ahead of expectations with, again, no adverse impact from COVID. Over the remainder of FY21, Hipages intends to reinvest cost savings into brand marketing, tradie acquisition, technology, and product development to accelerate growth.
As mentioned, the company is a relatively new addition to the ASX, having debuted on 12 November 2020 at an initial public offering (IPO) price of $2.45 per share. On its first day of listing, the Hipages share price ran as high as $2.85, or around 16% higher than the offer price. However, Hipages shares have since drifted lower and have been hovering around their current levels since the start of this calendar year.
