Australian recruitment firm Ignite (IGN:ASX) reported revenue from continuing operations fell by 9.1% in the six months ended 31 December 2023 to AUD 50.2 million (USD 32.80 million).

The gross profit margin decreased modestly from 11.88% to 11.84%. The decrease in gross profit relative to revenue was due to the lower gross profit contribution from permanent recruitment and Managed Services compared to the prior comparative period.

Ignite also noted that contingent labour hire now represents 87.0% of the group’s gross margin from continuing operations.

Specialist Recruitment accounted for 98.1% of revenue from continuing operations (31 December 2022: 95.2%), with the Managed Services business making up the balance.

Revenue by segment

The group is organised around two operating segments across two geographic regions, which are all labour related. These segments are Specialist Recruitment and On Demand IT Services in both Australia and New Zealand. Segment information for continuing operations for the half year ended 31 December 2023 is as follows.

Within Specialist Recruitment, the 6.3% decrease in consolidated revenue results from the decrease in contingent labour revenue of 5.8% due to a significant reduction in the number of low margin contractors in Business Support, as well as the 34.6% decrease in permanent placement revenue on the prior comparative period.

Ignite has a significantly lower total headcount and overall cost base than FY23.

For the Managed Services business, following the news in June 2023 that the group’s largest gross margin customer contract would not be renewed, its relative contribution to the group will be significantly lower in FY24.

Furthermore, the seasonally adjusted unemployment rate of 3.9% for December 2023 continues to point to a shortage of appropriate candidates in the market. Management expects to deliver a significant improvement in full year profit for the group’s shareholders.

Executive director, Cameron Judson said, “Our focus has been on understanding, measuring, and rewarding our people for their productivity, performance, and contribution to profit. We are working closely with our clients, our candidates and contractors, and developing one way of working regarding our processes, systems, and technology to help our people to make more placements.”

“We have made positive progress in H1 FY24, and we intend to deliver a significant improvement in full year profit for our shareholders,” Judson said.

Ignite Ltd (IGN:ASX) shares closed at AUD 0.06 (USD 0.039), up 11.11% on the day and 16.26% below its 52-week high of AUD 0.0717 (USD 0.047), set on 22 February 2023. The company has a market cap of AUD 8.18 million (USD 5.34 million).