• Earnings: Stable at 19.3 million.
• Charge Rates: Increased by 9% year-over-year and 3% from FY23.
• Overheads Reduction: Decreased by 3.8 million, totaling over 15 million in reductions over two years.
• Net Revenue Margin: Exceeded internal target with over 25% margin.
• Net Debt Ratio: Reduced from 2.1% to 1.68 times.
• Total Revenue: Down 5% compared to December 2023.
• Builded Hours: Decreased by 12% year-over-year and 4.7% from the second half of last year.
• Bill Rates: Increased by 9.1% against December 2023.
• Cost Reduction: Costs down 5.3% from last year.
• Normalized EBITDA: Q2 result of 10.2 million, a 12% uplift on Q1.
• Cash Collection: 117% of normalized EBITDA.
• Net Debt: Reduced by 17.4 million to 61.9 million.
• Community Care Growth: Hours up over 9% and rates increased by 9.9%.
• Regional Workforce Management Rates: Increased by 18.3% on the prior year.
• Techforce Growth: Hours up 10% and rates up 7%.
• Vision Growth: Extensive growth expected to continue.

• Warning! GuruFocus has detected 7 Warning Signs with ASX:PPE.

Release Date: February 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Peoplein Ltd (ASX:PPE) maintained stable earnings of 19.3 million despite challenging economic conditions.
• Charge rates increased by 9% compared to the previous year, indicating improved profitability.
• Overheads were reduced by 3.8 million, contributing to a total cost reduction of over 15 million in the past two years.
• The company exceeded its internal net revenue target with a margin of over 25%, outperforming industry peers.
• Strong cash collection at 117% of normalized EBITDA led to a reduction in net debt ratio from 2.1% to 1.68 times.

Negative Points

• Total revenue decreased by 5% compared to the December 2023 period, reflecting a tight business market.
• Billed hours were down 12% from the previous year, impacting overall revenue.
• The hospitality sector experienced weakness, affecting the company's performance in that area.
• Permanent recruitment volumes softened late in the second quarter, indicating potential challenges in sustaining growth.
• The company paused interim dividends to maintain capacity and flexibility, which may disappoint some investors.

Q & A Highlights

Q: Was the change in client mix related to the entry into aged care or the food sector? A: Ross Thompson, Group CEO: It was more related to clients in the food sector. While we are in aged care, it will take time to build up those numbers due to the size of our meat processing sector.

Q: Can you confirm the details of the earn-out payment for IWM? A: Adam Leake, CFO: Yes, there was a late adjustment post-year-end, making them eligible for the payment. The final payment will be $3 million in cash and $3 million in shares.

Q: What gives you confidence that permanent volumes will improve in FY26? A: Ross Thompson, Group CEO: We expect more market confidence post-federal election, leading clients to invest in permanent roles. Additionally, our tech space is stabilizing, and we anticipate a pickup in the new financial year.

Q: Can you discuss the strategic client adjustment and its impact on margins? A: Ross Thompson, Group CEO: Improved visibility from our systems allows better commercial decisions, enhancing rates and margins. We've done significant work to improve our net revenue margin, which is now industry-leading.

Q: How is PeopleIn's market share in the Palm scheme, and what are the broader conditions for permanent recruitment? A: Ross Thompson, Group CEO: We maintain our position as the largest provider of specific labor, with incremental margin improvements expected. Post-election, we anticipate continued commitment to the scheme, supporting our operations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.