Announcement PDF FY24 Financial Results 22 August 2024 hipages Group is ANZ’s #1 platform to connect homeowners and tradies, building better lives for everyone. Our Vision To be the most trusted partner in the trade industry. Agenda 1. FY24 results overview 2. Financial & operational update 3. Strategy update 4. FY25 outlook FY24 Results Overview R O B Y S H A R O N - Z I P S ER CEO & Co-Founder hipages Group | 5 Exceptional FY24 results delivering on targets • Record marketplace activity fuelling top-line growth: • Positive Free Cash Flow : • Strong balance sheet liquidity and no debt • Strategic evolution from marketplace to platform: +15% +11% Recurring Revenue ARPU FCF: $2.1m Up +$4.9m vs. pcp $21.3m cash balance Incl. funds on deposit hipages tradiecore launched in April 2024 with positive early engagement FY25 targets low-mid teens revenue growth and further margin expansion by 1-2 ppts hipages Group | 6 FY24 Performance JACO JONKER CFO & COO hipages Group | 7 FY24 Group Financial Highlights Revenue Profitability Key drivers $6.4m $72.1m $75.8m MRR excl. GST Recurring revenue Total revenue Up 13% Up 15% Up 13% $16.4m $0.1m $2.1m EBITDA1 NPAT1 Free Cash Flow EBITDA Margin 22% (up 4ppt) FY23: ($2.3m) FY23: ($2.8m) 36.7k $2,079 2.7m Subscription tradies ARPU Tradie-Homeowner Connections Up 3% Up 11% Up 3% Closing cash and funds on deposit of $21.3m and no debt See glossary on p.37 for definitions All variances on this page refer to the prior corresponding period (pcp) 1. EBITDA and NPAT before significant items. FY24 Statutory NPAT of $3.6m includes a one-off profit on disposal of equity interest in an associate and a reversal of deferred consideration relating to the acquisition of a subsidiary (Builderscrack). For FY23, NPAT refers to a statutory net loss after tax. hipages Group | 8 Delivering sustainable growth Total Revenue MRR excl. GST $75.8m $16.4m $6.4m $4.8m $19.3m $67.0m $5.7m $5.2m Operating Cash Flow EBITDA $61.9m $15.7m $55.8m $12.3m $11.7m $10.7m $46.9m $12.7m $12.6m $3.7m $9.2m $6.1m FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 hipages Group | 9 Further double-digit MRR growth reflecting proactive marketplace management hipages Group MRR (excl. GST) 7,000 ,000 50.0% NSW COVID lockdowns Post-COVID home improvement 6.0 5.7 boom 6,000 ,000 5,000 ,000 4.9 5.2 6.4 45.0% 40.0% 5.1 MRR growth driven by: • Strong Sales execution, with new tradies contracted at higher price points than existing average customer base 35.0% 30.0% 4,000 ,000 25.0% 3,000 ,000 15% 15% 17% 20.0% 13% 2,000 ,000 15.0% 10.0% 4% 1,000 ,000 5% • Existing customers ascending to higher price points driven by: - Dynamic pricing of job leads based on supply/demand dynamics in each trade category and geography – which in turn results in more tradies ascending to higher price tiers. 5.0% 0 0.0% H1 FY22 H2 FY22 H1 FY23 H2 FY23 MRR excl. GST ($m) H1 FY24 H2 FY24 - Continuous improvement of our account management operations to identify and convert ascension opportunities Growth vs. pcp (%) hipages Group | 10 Group operating leverage Group operating expenses1 as % of total revenue Sales 87% 11% 3% 39% 34% FY20 Short-term cost cutting amid COVID pandemic 80% 9% 4% 83% 10% 4% 32% 34% 35% 35% FY21 Operations and Administration 82% 12% 5% 27% 37% FY22 FY23 Marketing Technology Cost (P&L) • Sales employment costs +16% vs. pcp due to the filling of long-term vacancies to fuel: 78% - new business growth - existing customer yield increase from ascensions to higher price tiers 12% 6% 25% 35% FY24 Sales Marketing • Marketing investment increased by 6% vs. pcp with increased brand/PR investment and stable SEM/SEO to support jobs posted on the platforms in the context of subdued demand from homeowners Operations and Administration • Prudent cost management partly offset by increased subscription and licence costs Refer to Appendix for detailed P&L 1. Operating expenses after capitalisation of Technology Development spend. Before capitalisation, total Technology Development spend was 25% of Revenue in FY24 (26% in pcp) hipages Group | 11 Technology spend stabilised as % of revenue Group spend in Technology development1 (in $m) Technology spend to date 27% 25% 24% 18.1 16% Total Technology spend as a % of Revenue 18.8 14.8 14.4 8.9 14.2 75% capitalised 12.5 2.3 FY21 FY22 • Past Tech development increase was critical to the successful shift to the subscription model (FY20-FY22) and improvement of the job/tradie matching engine and lead pricing optimisation (FY23) • FY24 Tech development further optimised our marketplace while developing the single tradie platform 6.8 2.1 • Capitalisation approach based on detailed activity-based tracking by project (maintenance vs. development) and amortised over 3 years 3.7 4.6 FY23 FY24 25% expensed 1. Technology and software development spend based on profit and loss reporting (accrual based), not reflecting actual timing of cash flows Outlook • Future year investment to continue to support delivery of our roadmap and will reduce steadily as a % of revenue hipages Group | 12 Australian Operations High level of marketplace activity delivering value for homeowners and tradies Connection1 volume growth (off a record pcp) reflecting tradies’ strong engagement with the platform hipages Australia Homeowners getting exceptional outcome with record high % of jobs connected with tradies hipages Australia +2% 1,450 ,000 1 1 1,400 ,000 1 1 1,350 ,000 1 1,300 ,000 1 1,376 1,250 ,000 1,200 ,000 1,150 ,000 1,211 1,276 1,267 1,403 84% H2 FY23 H1 FY24 86% 78% 1 1,307 1 1 1 1 1,100 ,000 H1 FY22 H2 FY22 H1 FY23 H2 FY23 H1 FY24 H1 FY22 H2 FY24 • More connections result in tradies consuming their subscription credit faster, triggering upgrades to higher price tier subscription packages H2 FY22 H1 FY23 H2 FY24 % of total jobs connected with a tradie 2 # tradie-homeowner connections ('000) 1. 2. 71% 74% 84% • High connection rate supported by continued improvements to our job/tradie matching engine, and targeted SEO/SEM investment to optimise the volume of jobs posted by trade category • Economic environment (softened homeowner demand)highlighting the value of our marketplace services for tradies Connections occur when a tradie claims a job, triggering usage of their lead credits included in their subscription Connection rate defined as # jobs with at least 1 tradie-homeowner connection as a % of total # jobs posted on hipages (Australia) hipages Group | 14 ARPU growth reflecting enhanced value proposition for tradies hipages Australia ARPU ($) Key initiatives fueling ARPU growth: Post-COVID +11% home improvement boom NSW COVID lockdowns 2,500 $2,199 $1,985 2,000 $1,789 $1,536 • Dynamic job lead pricing driving increased credit usage by tradies, resulting in more of them ascending to higher price tiers, and/or purchasing more lead packs1 • AI powered improvement of the matching engine, also resulting into increased credit usage by tradies 1,500 $1,194 1,000 • Migration of long-term customers from legacy lower yield products to current version 500 0 FY20 1. FY21 FY22 FY23 FY24 • Since April, new customers joining on single tradie platform at higher price points ‘Lead Packs’ are a transactional product offering tradies extra credit on a one-off basis, as an alternative to ascending to a higher price point (subscription product with 12 months commitment) hipages Group | 15 Tradie subscription growth while passing price increases hipages Australia subscription tradie number (‘000) +2% 33,50 0 50% 33.1 33,00 0 40% 32.3 32,50 0 30% 31.8 32,00 0 31.3 31,50 0 31,00 0 30.9 20% 30.8 7% 10% 0% 30,50 0 0% 3% 3% 2% 0% • HY on HY volatility reflects normal seasonal pattern, with December a yearly low due to the summer holidays • Tradie number continued to grow consistently over the last 3 comparative halves while increasing subscription prices in H2FY23 and again in Q4FY24 with the move to the single tradie platform 30,00 0 29,50 0 -10% H1 FY22 H2 FY22 H1 FY23 H2 FY23 Subscription tradies ('000) H1 FY24 H2 FY24 Growth vs. pcp (%) hipages Group | 16 Strong Marketing efficiency, expanding our reach and brand awareness while reducing our Marketing spend as % of Revenue Media & PR presence amplified to boost job volumes in subdued economic environment • New TV sponsorship Dream Homes (Channel 7) complementing our 6-year strong partnership with The Block (Channel 9) • ~30% increase in reach: 8.8m people reached, of which 2.0m incremental1 • 71% brand awareness among tradies, 64% among homeowners (both up 3ppt vs. pcp)2 • “Always on”: hipages platform top-of-mind with The Block in H1 and Dream Homes in H2 • Multi-channel Tradie campaigns across radio, On-demand streaming platforms, Youtube, and TV • Complementary SEM/SEO investment maintained in line with FY23 to help manage marketplace balance hipages Group 1. 2. 6.9m The Block viewers and 4.5m Dream Homes viewers, of which 2.0m did not watch The Block. Source: Avenue C / eTAM data 2024 Thrive Insights research – Jul 2024; 30-65yo metro and regional | 17 New Zealand Operations NZ ARPU growth driven by transition to full subscription model by end of FY25 hipages New Zealand (Builderscrack) tradie mix FY24 Revenue up 28% vs. pcp fueled by yield: +21% vs. pcp $964 ARPU (in A$) $794 3,411 3,644 Total # paying tradies 22% Transactional tradies 78% Subscription tradies 44% 56% FY23 FY24 Note: hipages NZ (Builderscrack) total tradie number includes subscription tradies and tradies who generated at least one work invoice over the last 12 months FY23-24 tradie mix reflects our progressive shift to a full subscription model in NZ • Current hybrid subscription model based on a minimum 3-month subscription fee combined with a success fee on completed jobs. Further ARPU growth expected in FY25, with 100% of tradies on a full subscription model • Launched in June 2024 leveraging hipages learnings and best practices. • Full subscription model to drive enhanced value for tradies while reducing leakage experienced in the commission model. hipages Group | 19 Strategic evolution R O B Y S H A R O N - Z I P S ER CEO & Co-Founder hipages Group | 20 hipages focused on the largest Homeowner segment in the tradie economy Australian trades market size ($B) AUSTRALIA TRADES SERVICES VERTICALS $141.8 B Total Residential $112.4 B New Builds $41.3 B Homeowner $54.3 B Managed $16.8 B • The Residential segment is large (79% of the AUS Trades market) and projected to grow +7% p.a. over the next 3 years, in line with the L4Y CAGR • hipages is focused on the ‘Homeowner’ vertical, with limited to no exposure to the cyclicality of the ‘New Builds’ vertical • Spend $1.2B p.a. on marketing services Commercial $9.9 B Insurance $9.4 B Community & Government $9.4 B Retail $0.7 B * Paid channels refers to social media, search engine, paid lead generation, advertisement – in contrast with unpaid channels like word-of-mouth, referrals, repeat business Source: Publicis Sapient, ABS, mgmt. estimates hipages Group | 21 Significant growth potential, only capturing ~1/5th of the SAM to date hipages estimated Australian market size Tradie businesses playing in the ‘Total Residential’ segment Tradie businesses playing in the ‘Homeowner’ vertical and using marketing services Total Addressable Market (Trade Businesses) 11% 301k Serviceable Available Market hipages penetration rate 19% 175k hipages AUS 33k hipages Group Source: Publicis Sapient, ABS, mgmt. estimates | 22 Job Management solutions also have material growth potential Australian residential trades businesses – job management operations Only 14% of tradies use a specialised job management software Offline Basic software (MS Word, Excel…) Specialised software 28% 58% 14% Total trades market 28% 64% 8% Sole traders • Penetration rate even lower for sole traders, with only 8% using a specialised solution • 28% manage their operations ‘offline’ (i.e. pen & paper) HPG sees an opportunity for specialised software to gain share of wallet thanks to: • Demography: new generations of tradies more inclined to using technology • Product & UX: enhanced ease of use and sophistication of specialised software hipages Group Source: Publicis Sapient research – Aug 2024 | 23 Evolution of our 3+ year roadmap post hipages tradiecore go-live FY24-FY27+ roadmap evolution Tradie Platform Homeowner Platform ● Maintain marketplace balance ● Source most relevant and needed job leads ● Optimise value exchange ● Strengthen & Build Partnerships ● Evolve our Homeowner platform ● Develop expanded product features to provide all-in-one tools for tradies hipages Group | 24 Successful launch of end-to-end platform to win the whole tradie ecosystem Lead Invites Accept Lead Call, Text, SMS, Email Schedule Site Visit Send Quote Approved Hire Schedule to Start Send Invoice Tradie Paid Accounting integration Repeat Job Future services Procurement Insurance Finance hipages Group | 25 Product Evolution hipages tradiecore Single app for tradies to find jobs and manage their business end-to-end Desktop version to be launched in FY25 H1 Omni-channel experience (syncing with phone app) for users and larger businesses managing their operations from larger screens hipages Group | 26 hipages tradiecore launched in Q4, with additional functionalities in FY25 H2 FY24 2 Apps H1 FY25 H2 FY25 Single Tradie Platform Launched single tradie platform (hipages tradiecore) Desktop user enablement Team Management capability Introduce new package for hipages tradiecore and directory listings only Multi-user capability Introduce tiered bundled package Bundled pricing update for new tradies Migration of existing customers onto hipages tradiecore Migration of customers onto tiered packages hipages Group | 27 Product Vision Watch video Watch video hipages Group | 28 FY25 Targets R O B Y S H A R O N - Z I P S ER CEO & Co-Founder hipages Group | 29 Operating leverage underpins margin expansion FY25 targets 1. 2. • Revenue growth : Continued strong growth1 • EBITDA margin2 Further expansion • Free Cash Flow ~$4m - $6m Assuming no material deterioration in macroeconomic conditions impacting the Group's key markets under the existing strategy EBITDA before significant items hipages Group | 30 Questions & Answers hipages Group | 31 Appendices Financial Summary FY24 Financial Summary ● Recurring revenue 95% of total revenue ● 89% gross margin ● Continued investment for growth, with: ○ Increased investment in the sales team to support revenue growth ○ Increased investment in product development & technology team (mostly capitalised) ○ Increased marketing investment to optimise marketplace balance and support continued growth in brand awareness ● EBITDA margin2 expansion of 4ppt to 22% (FY23: 18%) 1. 2. Operating revenue refers to total revenue from ordinary activities. EBITDA before significant items. hipages Group | 33 FY24 Cash Flow ● Positive operating cash flow of $19.3m as the business benefits from margin expansion and strong business momentum ● Net Cash outflow from investing activities of $5.2m comprising: o Proceeds of $8.4m received from the disposal of hipages’ stake in PropTech Labs o Continued investment in technology ($14.5m) o Funds received from the release of a $1.0m bank guarantee associated sublease arrangement that expired in Nov’23 ● Positive net cash flow of $11.6m in FY24 bolstering total cash & funds on deposit to $21.3m hipages Group | 34 FY24 Statutory Balance Sheet ● Enhanced balance sheet liquidity with $21.3m cash and funds on deposit ● Total equity position of $38.8m, increasing by $4.6m since June 2023. Key movements included: o Increased net cash and funds on deposit balance of $10.5m o Disposal of hipages' stake in PropTech Labs for $8.4m, representing a 30% return on the initial investment o Decrease in ROU lease asset of ($1.8m) o Reduction in total liabilities of $3.0m primarily driven by reduced lease liabilities and Trade & Other Payables. hipages Group | 35 Profit reconciliation hipages Group | 36 Glossary and definitions Annual Revenue Per User (ARPU) The annual operating revenue divided by the average of the opening and closing number of total hipages Australia and hipages NZ (Builderscrack) tradies for the period. For FY24, hipages Group ARPU of $2,079 is the blended result of hipages' ARPU of $2,199 and Builderscrack's ARPU of $964. Gross profit margin Includes total revenue less cost of sales (homeowner and tradie SEM spend and merchant fees). Free cash flow Operating cash flow less lease repayment, less payments for intangible assets and PPE. Cash flows related to M&A and bank guarantee release are not considered part of free cash flow calculations. MRR Monthly Recurring Revenue refers to the committed monthly subscription revenue from tradies (excluding GST) at the end of the period (i.e. June 2024 for FY24). It is calculated as the number of tradie accounts multiplied by their monthly subscription price excluding GST. Paid connections Paid connections occur when a tradie claims a lead on a job posted on the hipages platform, resulting in lead credit usage. Every job posted is connected with up to 3 tradies. Subscription tradies Refers to hipages tradies committed to a monthly subscription product, and Builderscrack tradies who generated at least one work invoice over the last 12 months. Tradie-homeowner connection Jobs posted by homeowners on the hipages marketplace appear as leads to relevant tradies (according to our job-matching algorithm). Up to 3 tradies can successfully claim a lead: this result in a tradie-homeowner connection. Connections are the trigger for lead credit consumption. hipages Group | 37 Disclaimer Important notice The material in this presentation has been prepared by hipages Group Holdings Limited (ASX: HPG) ABN 67 644 430 839 (“hipages” or the Company") and is general background information about hipages’ activities current as at the date of this presentation. The information is given in summary form and does not purport to be complete in every aspect. In particular you are cautioned not to place undue reliance on any forward looking statements regarding our belief, intent or expectations with respect to hipages’ businesses, market conditions and/or results of operations, as although due care has been used in the preparation of such statements, actual results may vary in a material manner. Information in this presentation or subsequently provided to the recipient of this information, whether orally or in writing, including forecast financial information, should not be considered advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities in the Company. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, you should seek independent financial advice. The financial information should be read in conjunction with the basis of preparation set out in the Company’s accounts. Forward-looking statements This presentation may contain forward-looking statements which are statements that may be identified by words such as “may”, “will”, “would”, “could”, “expects”, “intends”, “anticipates”, “targets” and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions and on a number of best estimate assumptions regarding future events and actions that, at the date of this document, are expected to take place. No person who has made any forward-looking statements in this document has any intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this document, other than to the extent required by law. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company. This presentation also contains references to certain intentions, expectations, targets and plans of the Company. These intentions, expectations and plans may or may not be achieved. They are based on certain assumptions which may not be met or on which views may differ. To the maximum extent permitted by law none of hipages, its subsidiaries, or its respective officers, employees, agents or consultants nor any other person accepts any liability, including, without limitation, any liability arising out of negligence, for any loss arising from the use of the information. hipages Group | 38