Hipages Group (ASX: HPG) reported a 66% surge in free cash flow to $9.4 million for the fiscal year ended June 30, 2026, as its AI-driven platform strategy delivered higher revenue conversion and operational efficiency. The home improvement connector, which links Australian and New Zealand tradespeople with homeowners, posted revenue of $90.6 million, up 9% year-over-year, while EBITDA climbed 17% to $22.9 million.
EBITDA margins expanded to 25.3%, a record for the company, reflecting disciplined cost management and a shift toward higher-value subscriptions. Net profit after tax reached $15.0 million, compared with $2.4 million in FY25, though the latter included an $8.9 million tax benefit from deferred tax assets. Pro-forma NPAT, excluding one-off items, rose 156% to $6.1 million. The company closed the year with $34.2 million in cash and funds on deposit, up from $26.9 million a year earlier.
The group’s annual recurring revenue grew 8% to $95.6 million, accounting for 98% of total revenue, while monthly recurring revenue hit $8.0 million. Subscription business count rose 10% to 60.4k, including 4.5k from the acquisition of VIZ Insurance, a digital-first platform serving tradespeople. Hipages acquired a 51% stake in VIZ with an option to increase ownership to 100%. Monthly active users of the group’s job management tools reached 7.2k by June 2026, representing 22% of subscription customers.
AI tools introduced over the past year were cited as a key driver of performance. Features such as Smart Quotes, which generates professional quotes from voice notes, and Estimates, which provides instant SMS pricing for smaller jobs, were highlighted for improving conversion rates. The company noted that 20% of new users move to higher price tiers within six months, while power users—defined as those completing four or more actions per month—grew 82% year-over-year. Retention rates improved by 6-8 percentage points, with MRR retention at 58% in Australia and 46% in New Zealand.
Management offset a 3% decline in Australian job volumes through pricing optimization and customer migration to higher-value services amid a subdued macroeconomic backdrop. Operating expenses fell to 75% of revenue from 76% in FY25, with marketing costs declining to 24% of revenue. Technology spending totaled $20.7 million, or 23% of revenue, with 70% of development costs capitalized.
Looking ahead, Hipages guided for FY27 revenue growth of 9-11%, including a 1 percentage point contribution from VIZ Insurance consolidation. EBITDA margins are expected to reach 25-27%, while free cash flow is targeted at $11-13 million. The company reiterated its long-term model of 30% management cash EBIT margins and 40-50% cash conversion on incremental revenue.
