Australian recruitment firm Ignite (IGN:ASX) provided an update for the third quarter ended 30 September 2021 reporting revenue of AUD 30.93 million (USD 23.3 million), an increase of 5% compared to the same period last year.

The group said that, although the quarter saw Covid-19 lockdowns reinstated in the states of New South Wales and Victoria as well as temporary lockdowns in the Australian Capital Territory, business sentiment and confidence remained strong with community Covid-19 vaccination rates increasing and an expectation that the economy would reopen in the December 2021 quarter.

The company’s gross profit (excluding other income) for the September 2021 quarter stood at AUD 3.37 million (USD 2.5 million), an increase of 1% against the same period last year. The lower increase in gross profit relative to the revenue increase was due to the reduced gross profit contribution.

Gross profit margin (excluding other income) was 10.89%, down from 11.40% for the comparative quarter in FY21 (excluding other income), due to the decrease in the gross profit contribution from On Demand IT Services and Talent Solutions.

During the September 2021 quarter the Specialist Recruitment business contributed a gross profit increase of 11% against the prior comparative period, while salary and other operating costs remained flat.

The On Demand IT Services gross profit was down 27% on the comparative quarter in FY21 while operating overheads increased 11% on the back of employee headcount increases.

Talent Solutions (formerly known as People Services) recorded a significant decline in gross profit against the comparative quarter in FY21 and also against the June 2021 quarter.In the Specialist Recruitment division, customer demand for contingent labour is expected to remain strong in the December 2021 quarter across the company’s federal government customer base in the IT & Digital vertical. Volumes in the business support and information management verticals are expected to increase as offices re-open and customer sites become accessible.

While permanent recruitment is still not at pre-Covid-19 levels, volumes have started to increase during October 2021 and this momentum is expected to continue as businesses look to invest for 2022.

The Specialist Recruitment division is expecting continued robust market conditions.

The On Demand IT Services division is expected to finalise the replacement of its legacy customer and project management systems during the December 2021 quarter. The division is anticipating an improvement in gross profit during the December 2021 quarter following the slowdown in the September 2021 quarter due to Covid-19 related public health orders and customer site closures.

The group said that it will continue to focus on increasing active contractor numbers across the ACT, NSW and Victorian Specialist Recruitment businesses to drive gross profit growth. It will also continue to attract and engage high-quality recruitment consultants and business leaders in key markets, with a particular focus on IT & Digital. 

Shares in Ignite set a new 52-week high during today's trading session when it reached AUD 0.13 (USD 0.098). Over this period, the share price is up 400.00%. Shares last traded at AUD 0.13 (USD 0.098), up 35.42% on the day. The company has a market cap of AUD 8.60 million (USD 6.48 million).