Ignite Ltd. (IGN:ASX), a Sydney, Australia-based recruitment firm, reported revenue fell 8% year over year to AUD 25.7 million (USD 17.2 million) in its fiscal third quarter ended 31 March. Third-quarter gross profit fell 16% year over year to AUD 2.9 million (USD 2.0 million).

Gross profit margin was 11.4% in the third quarter, down from 12.6% in the same quarter a year ago, according to the company. The decrease was largely due to the decline in proportion of profit contribution of managed services. Contingent labour, which represents 76% of Ignite’s gross margin, was affected by continued federal government stand-downs in January 2023.

Ignite also reported specialist recruitment gross profit decreased by 13% year over year, reflecting a 12% decrease in contingent labour gross profit, with permanent placement revenue falling by 15% year over year.

The company also noted a reduction in active contractors. Ignite had 597 active contractors at the end of its third quarter, compared to 701 in the year-ago quarter. The company said the decrease follows the decision to move away from high-volume, low-margin placements. The reduction in active contractors was primarily in business support, which decreased by 94 contractors and resulted in a 3% increase in average gross margin per active contractor on a year-over-year basis.

Total employee headcount fell by 14 in the first quarter compared to the year-ago quarter largely due to the restructuring of on-demand IT service and the closure of Talent Solutions.

Ignite noted the upcoming Australian federal and state budgets will significantly influence its activity levels, as more than 80% of its specialist recruitment gross margin is generated from those entities. It anticipates on-demand IT services to continue to perform in line with the third quarter.

Cash receipts from customers were AUD 26.6 million (USD 17.8 million), and payments for contingent labour were AUD 21.0 million (USD 14.1 million).

Recently, the company appointed Cameron Judson as executive director until the release of full-year results following Tim Moran’s decision to step down as CEO.

Share price and market cap

Shares in Ignite closed at AUD 0.071 (USD 0.048) on Wednesday, 102.86% above their 52-week low, according to FT.com. The company had a market cap of AUD 6.36 million (USD 4.3 million).