Hipages counting on ‘Do It For Me’ Millennials driving home improvement buoyancy

High household cash flow has created ‘buoyant’ conditions for the home improvement market, says online tradie marketplace Hipages.

Hipages chief executive Roby Sharon-Zipser.

Low rates and high household liquidity are creating “very buoyant” conditions for the home improvement market despite temporary lockdown volatility, says online tradie marketplace Hipages.

The “unprecedented levels of activity” resulted in a 12 per cent surge to 1.53 million jobs booked through the Hipages platform.

Hipages connects tradies with residential and commercial customers through its online platform and also offers tradies new tools including accounting, budgeting and business intelligence functionality.

Hipages co-founder and chief executive Roby Sharon-Zipser said longer term themes were continuing to emerge through the “rollercoaster” dips and peaks of lockdowns.

“People are spending more time at home, so work on that annoying creaky door or the deck is getting done,” he said.

“There’s not much travel to spend on and people are seeing an increase in cash flow, which they (think) might as well spend at home.”

Tradies are seeing high demand.

Psychological responses to the pandemic were also evident with the start of restrictions triggering a greater demand for security, lighting and home safety projects, followed by fixes and maintenance jobs as time at home increased with requests of major renovations and changes coming in later in the cycle.

“It has been interesting to see that cycle of fear, concern leading to demand for more security-based works followed by fixes for little annoying things and then the inspiration jobs around ‘how to make my life better’”, he said.

A total of $2.87bn was spent on property alterations and additions in the year to June, up 24.5 per cent on the year prior, according to Australian Bureau of Statistics figures.

In South Australia, renovations, extensions, new homes and even backyard swimming pools have fuelled a construction boom across the state.

Hipages had seen a rebound in activity post multiple lockdowns in Victoria and was expecting a similar response once restrictions ease across states against the backdrop of 60-70 per cent vaccine coverage.

“I anticipate it will be a similar story despite the difference in Covid-19 support allocations to people,” Mr Sharon-Zipser said.

He was expecting higher demand from the digital-savvy “Do it For Me market”, the Millennials (25-40 year olds), who “just want work done and delivered”.

“The long-term opportunity for Hipages remains as attractive as ever and the company will continue to invest to drive growth and further strengthen its position as the market leader in the on-demand tradie economy,” Hipages told investors.

“The pandemic has created some trends of its own and accelerated others, as we spend more time working from home and increasingly adopt digital technology,” Hipages co-founder and chief executive Roby Sharon-Zipser said.

“We believe these trends are structural and here to stay.”

The lockdowns currently impacting most Australian states are creating uncertainty for many of

Hipages’ tradie customers, the group said.

Hipages has introduced a range of initiatives to assist its tradie customers during this challenging time.

“The combined impact of these initiatives and the uncertainty of the current lockdowns for tradie customers is expected to have a moderate impact on Hipages’ revenue growth rate compared to the marginal impact in Q4 FY21, for as long as the lockdowns are in force.

“Hipages’ subscription model has been resilient in previous lockdown periods and the company expects a similarly strong rebound in activity on its platform when lockdown measures ease, as has occurred in the past.”

Pro forma earnings before interest, taxes, depreciation and amortisation (EBITDA), excluding costs related to the IPO, was up 91 per cent to $11.7m, while pro forma net profit after tax was $1.2m.

Recurring revenues made up 94 per cent of the $55.8m total pie in the 12 months to June.

Number of subscription tradies increased by 12 per cent to 31,200 while total average annual revenue per tradie was 29 per cent stronger at $1534.

Jobs from repeat consumers increased by 22 per cent and represented 64 per cent of total jobs compared to 59 per cent in the past financial year.

Shares in Hipages, which has identified acquisitions as core to its success, closed up nearly 14 per cent at $3.45.

Hipages, which listed on the Australian sharemarket in November last year, is part-owned by News Corporation, publisher of The Australian.

Revenue: $55.8m, up 19 per cent

Net loss: $6.2m, including IPO costs (2020: $4.2m loss)

Earnings: $5.6m, down 27 per cent