Hipages Group Holdings Ltd (ASX: HPG) reported its profits this week, and while the results were solid, the analyst team at Shaw and Partners think what they're doing with artificial intelligence is the real story going forward.
Firstly, let's have a look at the results.
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Profits solidly higher
Hipages, which runs an online marketplace where users can advertise trade jobs and tradies can bid on them, increased its first-half revenue by 11% to $44.9 million.
The company's EBITDA came in at $11.2 million, up 29% on the previous corresponding period, while net profit increased from $100,000 to $2.7 million.
Hipages Chief Executive Roby Sharon-Zipser said it was a solid result.
The first half of FY26 was a period of focused execution by the hipages team, as we navigated a volatile macroeconomic environment to deliver double-digit revenue growth … EBITDA margin expansion and a significant step-up in free cash flow generation to $4.3 million. We continued to execute our platform strategy, completing the migration of 100% of our tradie customer base to new pricing plans, which helped to drive double-digit ARPU (average revenue per user) growth. We also rebranded our tradie app as 'hipages for business' to target a wider universe of potential customers and expanded 'hipages Perks' to offer exclusive deals and benefits to both tradies and households. Both are showing encouraging early signs.
But what really piqued the interest of the Shaw team was what Mr Sharon-Zipser said around artificial intelligence.
As he said:
Up next in H2, we will further deploy AI workflows into our product to enhance the user experience on both sides of the marketplace, including an AI job posting assistant and tradie location tracker for households, and a voice plugin for even faster quoting, and workday route optimisation for tradies. These are only a few examples, with many further developments coming to drive user engagement and retention.
The company said it expected full-year revenues to come in at $90 to $91 million, generating free cash flow of $8 to $10 million and an EBITDA margin of 24% to 26%.
Hipages shares looking cheap
The Shaw team said the revenue guidance was a decline, which was unfortunate, "but the reasons were specific and don't change long term targets and haven't impacted operating leverage of free cash flow".
And they were particularly enamoured of the company's approach to AI.
As they said:
Hipages management provided a clear and confident message around AI, the opportunity it sees and the benefits it is already realising. At now 11x FY27 Cash EBITDA this category leader is too cheap.
Shaw and Partners has a $2.50 target price on Hipages shares, compared with 81 cents currently.
Hipages was valued at $110.9 million at Wednesday's close.
