The Hipages Group Holdings Ltd (ASX: HPG) share price is rocketing on the back of the company's financial year 2021 (FY21) earnings.
Right now, the Hipages share price is $3.21, 5.94% higher than its closing price yesterday.
Hipages share price jumps on $55 million revenue
Here's how the online platform connecting tradies to customers performed in FY21:
- $55 million in revenue, up 19% on that of FY20.
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $11.7 million, 91% higher
- Net profits after tax of $1.2 million, 128% more than that of FY20
- Pro forma operating cash flow of $12.7 million
Hipages achieved its previously upgraded forecasts for FY21, a feat it says is a testament to its operating model.
After the company began transitioning to a subscription-based model, 94% of its revenue now comes from reoccurring sources.
Monthly reoccurring revenue also increased to $5.2 million in June.
The company provided tradies with 1.5 million jobs over FY21, 12% more jobs than it provided in FY20.
Hipages' operating expenses grew by 9% in FY21 due to greater investment in marketing and technology in the second half.
What happened in FY21 for Hipages?
Here's what drove the Hipages share price in FY21:
Perhaps the most exciting news from Hipages in FY21 was its debut on the ASX.
Hipages' Initial Public Offering (IPO) occurred in November 2020, with its share price finishing its first day on the ASX at $2.46.
The company also launched Tradiecore, a service software platform that helps tradies manage their businesses. Hipages says the launch was an important step in the company's evolution to a full-service software-as-a-service model.
Hipages conducted a successful brand campaign across radio and digital channels in the fourth quarter. The campaign boosted Hipages' tradie customer brand awareness from 35% to 49%.
Finally, Hipages commissioned market research to find the size of its addressable market within the tradie ecosystem. The research confirmed the addressable market to be worth more than $110 million across residential and commercial sectors.
What did management say?
Hipages' CEO and co-founder, Roby Sharon-Zipser, commented on the results driving the company's share price today, saying:
It has been a milestone year for hipages, our first as a listed company. I am proud of the strong performance we delivered to exceed our upgraded prospectus forecasts for revenue, EBITDA and [net profit after tax], the way we executed our strategy and our team's commitment to supporting our customers through ongoing challenges from COVID-19…
Our ongoing investment in brand, product and platform continues to attract customers on both sides of our marketplace, driving the flywheel effect and delivering strong growth in jobs coming from repeat consumers and unpaid channels…
We will keep investing in our technology to continue to improve the experience for consumers and tradies to ensure we remain the number one online marketplace for trade services in Australia.
What's next for Hipages?
Investors will be keeping an eye on the Hipages share price in FY22 as the company works towards a number of goals.
First off, it's planning to migrate its remaining transactional tradie base to the company's subscription product by the end of FY22.
Additionally, Hipages is working to assist its tradie customers during the current COVID-19-induced lockdowns in Sydney and Melbourne.
The lockdowns are expected to have a moderate effect on Hipages' revenue's growth rate.
However, Hipages' subscription model has been resilient through previous lockdowns. The company expects a strong rebound in activity on its platform when restrictions ease, as has occurred in the past.
Looking past COVID-19, Hipages says the Australian home improvement market is buoyant and underpinned by low interest rates and household liquidity.
Hipages share price snapshot
The Hipages share price has gained 30% since it listed on the ASX. Its shares are also trading for 31% more than Hipages' prospectus' offer price of $2.45 apiece.
