Australian recruitment firm Ignite (IGN:ASX) reported revenue fell 9% in the second quarter ended 30 June 2023 to AUD 25.90 million (USD 17.5 million).

The group's unaudited Quarterly Activity Report said Q2 revenue fell due to previously moving away from high volume, low margin assignments.

Ignite also reported gross profit of AUD 2.9 million (USD 1.9 million), down 23% on the comparative quarter in FY22.

Within Specialist Recruitment, contingent labour hire gross margin decreased by 7% due to the continued focus on lower volume. These high-margin engagements have seen a 10% increase in average gross margin per contractor versus the comparative FY22 quarter. Compared to Q3 2023, contingent labour hire gross margin increased by 11%.

Within Managed Services, gross margin decreased by 67% due to the expiration of several high-margin projects in the comparative quarter of FY 2022; and the closure of the Talent Solutions business in Q3 2023.

Gross profit margin was 11.3%, down from 13.5% for the comparative quarter in FY 2022, mainly due to the decline in profit contribution of higher margin Managed Services and Permanent Revenue. Contingent labour hire represented 83% of the group's gross margin in the current quarter, compared to 70% in the comparative quarter in FY 2022.

Ignite also reported cash receipts from customers totalled AUD 29.9 million (USD 20.2 million), which decreased by 7% compared to the comparative quarter in FY 2022 and increased by 12% compared to Q3 FY23.

Meanwhile, payments for contingent labour of AUD 24.49 million (USD 16.5 million) decreased by 4% relative to the comparative quarter and increased by 17% compared to Q3 FY 2023. Cash payments for staff costs were AUD 2.23 million (USD 1.5 million), which decreased by 18% compared to the comparative quarter in FY 2022 and 4% compared to Q3 FY 2023.

In March, Ignite announced that Tim Moran resigned as CEO. Following Moran's decision to step down, the group appointed Cameron Judson as Executive Director to lead the business until at least August 2023, when Ignite's full-year results are released.

Ignite shares last traded at AUD 0.043 (USD 0.029), no change on the day and 22.86% above the 52-week low of AUD 0.035 (USD 0.024) set on 27 March 2023. The company has a market cap of AUD 3.85 million (USD 2.60 million).