Ignite Ltd. (IGN:ASX), a Sydney, Australia-based recruitment firm, reported revenue fell 5% year over year to AUD 27,217,000 (USD 18.5 million) in the quarter ended 31 December as the company focused on higher margin placements. Gross profit margin improved to 12.5% in the quarter from 11.8% in the year-ago quarter.

The company also reported it had 767 active contractors across all divisions on 31 December, down from 882 at the end of the previous quarter.

Ignite said gross profit rose 7% year over year in its specialist recruitment business. Customers opted for engaging candidates on a contingent basis rather than a permanent basis, particularly within the federal government. Ignite also noted its federal government business in this division improved sequentially.

In addition, the company’s on-demand IT services business was restructured at the end of the last fiscal year, and gross profit was up 19% in the December quarter.

Meanwhile, Ignite’s technology and talent solutions business recorded a 39% reduction in gross profit on a year-over-year basis as short-term nonrecurring projects with government agencies and consulting firms secured in the year-ago quarter did not have equivalents in the most recent quarter.

Guidance

Customer sentiment in the company’s specialist recruitment division is cautious going into the March 2023 quarter, according to Ignite. The federal government’s stated aim of reducing its use of external labour may impact the group’s ability to grow this segment, especially within the Australian Capital Territory, it said.

Ignite’s on-demand IT services division is expected to continue in line with the December 2022 quarter.

Share price and market cap

As of last trade on Tuesday, Ignite shares were 21.31% above their 52-week low; the company had a market cap of AUD 6.27 million (USD 4.4 million), according to FT.com.