Hipages (ASX: HPG): Pimp my home

Great run since listing

It’s been a good year for the Sydney-based Hipages (ASX: HPG), whose platform allows Australian consumers to connect with specialists in the home improvement trade. In late 2020 the company raised $100m in its ASX IPO at $2.45 per share. The stock closed its first day of listed life at only $2.46, but by 7 September 2021 it had made it to $4.11.

Pimp my home

Anyone who has ever had anxiety about retaining the services of a tradesperson, not knowing how bad the bill is going to be and not knowing whether you’re getting a reliable tradie, will quickly understand why Hipages has become a half-a-billion-dollar market cap company. With the Hipages app you can connect with up to three tradies, view their profiles and recommendations, communicate with them directly and then select the right person for the job. In the backend of the app are some proprietary algorithms that allow the most appropriate people to be sent your way based on their distance to you, their recent activity, the kind of customer you are and how long the tradie has been in the business.

EBITDA growth through the roof

The customers are really liking the Hipages app. In FY21 Hipages’s revenue was $55.8m, up 19%, and EBITDA at $11.7 was 92% better. And there’s likely more growth where FY21’s came from. Australians spend $110bn a year on home improvement services and the gross merchandise value currently going through Hipages’s platform suggests it has a mere 2% market share.

An important growth driver has been tradies who subscribe to the Hipages service. These rose 12% in FY21, to around 31,200. Meanwhile the tradies who are there are spending more – Hipages’ ARPU from tradies went up 29% in FY21, to $1,536. And no wonder. A little extra spend is likely increasing the number of jobs coming tradies’ way by a significant amount, i.e. more than what they spend.

Top of mind

Ask your friends or family and they’ll likely know about Hipages. Around 3.5 million unique users have posted a job on Hipages since the platform got started, which is a significant portion of the population. And Hipages is doing a good job of getting top of mind for new or existing users, with its own research showing that this happens in one out of five cases. Throw in sponsorships on home improvement TV shows, like The Block and Better Homes and Gardens, and that market leadership is likely to increase.

Still a landgrab

Hipages just acquired 25% of Bricks + Agent, a property management platform that allows tenants to post maintenance requests online. These are automatically allocated to tradies and paid for on the platform as well. The market for this kind of service is probably worth $21bn and is wide open to the platform that can address this market most efficiently. It looks like the high growth at Hipages is about to get a little higher.

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