Welcome to the hipages Group 1H FY 2024 results webcast. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask a Question box. I would now like to hand the conference over to Mr. Roby Sharon-Zipser, CEO and Co-Founder. Please go ahead.
Thank you, operator. Good morning. We appreciate you joining us on this busy morning. I'm Roby Sharon-Zipser, CEO and Co-Founder of hipages Group. With me on this call is Jaco Jonker, our Chief Financial and Operations Officer. We are pleased to present the hipages Group's financial results for the first half of FY 2024. Before we kick off, I will provide a short recap of our business. I will then head into the highlights before handing to Jaco for the financial and operational overview, and then I'll address strategy and outlook before handing over for questions. hipages Group is Australia and New Zealand's largest online trading marketplace and software-as-a-service platform. We connect tradies with residential and commercial consumers through our hipages platform in Australia and in New Zealand through our Builderscrack platform.
More than 4.5 million Australians and New Zealanders have used hipages Group to change the way they find, hire, and manage trusted trades, providing work to over 35,400 subscribed trade businesses. Our proprietary job management SaaS platform, Tradiecore, is key to our strategic evolution from marketplace to platform. Tradiecore helps tradies build better businesses by managing their entire workflow from lead generation through to completion and payment for work. Our vision is to be the most trusted partner in the trade industry, and we strive to deliver on our purpose to transform the trade industry, building better lives for everyone. Turning to first half FY 2024 highlights on Slide 6, I'm extremely pleased with our results this half. They show that we are performing exceptionally well, with all our operating and financial metrics heading in the right direction.
We have demonstrated ongoing momentum in our marketplace in what has been a challenging macroeconomic environment, where we have seen a clear increase in demand from tradies using the hipages platform to connect to jobs posted by consumers. Our consumers are benefiting from this increased engagement and competition for the jobs they are posting, as evidenced by the 84% connection rate to all jobs posted. We have also continued our disciplined approach to business as we focus on maximizing the financial performance of the platform while maintaining tight operating and investment spending controls. This is part of our DNA. This has driven strong operating leverage and has seen us reach that critical inflection point where we almost reach positive free cash flow in the half. As you know, our first half is where we incur our seasonally higher marketing activation spend, so this is an excellent result.
This sets us up to deliver on our guidance to deliver positive free cash flow in FY 2024. This is a significant milestone for hipages, and we are set up from here to be a consistent generator of free cash flow into the future. The current half has seen us grow recurring revenue by 15% to AUD 35.2 million, MRR by 17% to AUD 6.6 million, and ARPU by 11% to AUD 2,075, as we proactively managed our marketplace to drive enhanced value exchange. We have optimized our lead pricing and driven continuous improvement in our sales and account management efforts. We have identified and converted ascension opportunities for our existing subscriber tradies as well as assisting new and returning tradies to maximize the value they capture from the platform. Higher tier packages equip tradies with more lead credit firepower and improves our metrics.
hipages is well capitalized with our balance sheet bolstered by the proceeds from the exit of PropTech Labs . We have AUD 19.1 million of liquidity in cash and funds on deposit. We continue to make material progress in our strategic evolution from marketplace to platform, and we are excited to launch our new single tradie platform solution in the fourth quarter. After the typical seasonal slowdown through December, we have seen January return strongly with new business and marketplace activity. Current subscription tradies are back to about 35,700, and job volumes have returned to year-on-year growth. I am happy to confirm that we are on track to deliver our growth, margin, and cash flow targets for FY 2024. With that, I will hand over to Jaco to run through our financial and operational performance.
Thanks, Roby. I'll step straight into the details of what has been a very pleasing half on Slide 8. As Roby said, we experienced strong marketplace momentum in the half, driving improvement across our key metrics for H1 FY 2024. Monthly recurring revenue, or MRR, grew by 17% on the prior corresponding period, or PCP, to AUD 6.6 million at the end of December, and this drove a 15% increase in recurring revenue to AUD 35.2 million for the half. Operating revenue, which excludes lease income, was up 15% to AUD 36.9 million, and total revenue increased by 15% to AUD 37.4 million. Recurring revenue was 94% of total revenue. Our disciplined operating cost management saw a 45% increase in EBITDA before significant items to AUD 8.4 million, and we delivered a margin of 22%, up four points on the PCP.
The only significant item to call out is a AUD 370,000 write-back of the third consideration earnout related to the Builderscrack acquisition. Statutory net profit after tax of AUD 3.7 million includes a AUD 3.1 million gain on disposal of the equity accounted PropTech Labs as well as the Builderscrack third consideration write-back. Net profit after tax before significant items was AUD 0.3 million, a turnaround from the AUD 1.4 million loss in the PCP. Roby called out how close we were to achieving positive free cash flow in the half, and you can see the material turnaround versus PCP, where free cash flow was negative AUD 3.3 million. For clarity, we define free cash flow as cash flow from operating activities, less payments for intangible assets, that is, capitalised development spend , other CapEx, and lease payments. Looking at our key drivers, subscription tradies increased 4% on the PCP to 35,400.
This is slightly down on the 36,000 that Roby called out at the AGM, reflecting the typical seasonal pattern of some tradies turning off in December. As mentioned, there has been a very good bounce back in trading numbers in January. ARPU continued to grow strongly, up 11% to AUD 2,075, with the core hipages Australia business growing ARPU by 11% to AUD 2,195. Job volumes declined by 9% on the PCP, reflecting the tighter economic conditions, but tradie consumer connections of 1.3 million were up 3%, noting that a connection occurs when a tradie accepts a job lead and uses lead credits. 84% of jobs posted were connected to a tradie, and this is a great metric for consumers, recalling that it was low 70% range not so long ago. Slide 9 demonstrates our progress in delivering growth in our key metrics.
As you are aware, we are very focused on operational and financial execution and cost discipline to drive our results. Slide 10 highlights the continued progression of our MRR, which now stands at AUD 6.6 million. hipages is a recurring revenue business, and we work hard to attract and retain tradies and to drive the value exchange of our marketplace, thereby driving ARPU growth. We have worked to further optimize the value of lead pricing based on the demand and supply dynamics in the marketplace. The 11% increase in ARPU for hipages Australia to AUD 2,195 reflects this progress, as our account management and sales teams identify and convert existing, new, and returning users to higher price points to give them the best opportunity to capture job leads in what is a softer market.
We believe that there is further opportunity to optimize our job lead pricing and to work with existing tradies and new prospects to improve their bidding firepower while also increasing our yields. Growth in subscription tradies and increasing ARPU augurs well for continued growth in recurring revenue, which is currently 94% of our total revenues. Slide 11 illustrates the development of operating leverage in our business. Operating expenses continue to decline as a percentage of revenue, driving our 22% EBITDA margin. More detail on operating costs can be found on Slide 31 in the appendix. While we continue to invest to drive growth and returns, we maintain strict cost control. Sales expense remains at 12% of revenue as we have bolstered our account management and sales capability that has driven ARPU and MRR growth.
Our marketing spend has reduced to 25% of revenue, reflecting the effectiveness of our brand investment to unlock efficiency in driving jobs growth and tradie acquisition. Technology expense has grown to 6% of revenue as we increased the development of our technology stack to drive our growth. We expensed 23% of our overall technology investment in the half, which remained in line with the rate expensed in FY 2023. Operations and administration costs reduced to 35% of revenue, down two percentage points versus PCP, reflecting our prudent approach to cost management. Slide 12 is a new slide, which we have included to provide more detail on our technology investment spend, which is critical to build and optimize our marketplace and support our evolution to the single tradie platform. Roby will provide more detail on this topic later in the presentation.
I want to stress that hipages adopts a very strict approach to our technology spend. We have high levels of accountability and return hurdles to ensure that we are maximizing the value of every dollar spent. Our technology investment spend as a percentage of revenue has grown over the last several years as we developed our subscription model and as we continued to improve our matching engine and lead price optimization. We believe that we are through the peak level of technology spend as a percentage of revenue and expect it to be in the order of 25% this year and to reduce as a percentage of revenue in future years. We adopt a consistent approach to capitalization based on detailed activity-based tracking by project type and amortized capitalized development costs over three years. You will notice that the percentage of capitalization has been largely consistent over time.
We now turn to an overview of hipages Australia. Slide 14 illustrates our key job connection metrics. As we have discussed, the current uncertain economic environment has seen a reduction in available work for tradies and we have seen a decline in jobs posted on hipages by 9% versus the PCP. We believe that this decline is actually worse in the broader economy, so our job postings are actually quite resilient. Consequently, the demand for work by our tradies is growing. Tradie consumer connections increased by 3% over the PCP to just over 1.3 million. While we did see typical seasonality with the December holiday period, it is still a record for a first half. As a reminder, a connection is made when a tradie claims a job, which triggers the usage of lead credits included in the subscription.
More connections mean more lead credits are used and provides greater opportunity for us to encourage tradies to ascend to higher price tier packages to access more job lead credits. The record connection rate of 84% is a statistic we are very proud of since it's a measure of how our consumers are attracting engagement from our subscription tradies to connect to their jobs. We continue to improve our matching engine as well as our continued investment in brand building, SEO, and SEM to optimize the volume of jobs posted in each trade category. Slide 15 shows the development of our Australian ARPU. The 11% growth is a strong result, and we see continued opportunity to optimize both sides of the marketplace to drive ARPU higher.
We strongly believe in the value of the service we bring and note that the percentage cost of our monthly subscription versus the job value it generates is still relatively small. Slide 16 illustrates our tradie subscription growth, showing steady improvement during the period, reaching a record level at 31,800 versus prior H1 closing balances. As you are aware, there is the usual seasonality to tradie subscription numbers. Subscription growth is building as tradies are registering to gain access to our attractive pipeline of jobs in the current environment. As noted earlier, many are signing up on higher tier packages, which is driving our yield and ARPU growth. Slide 17 provides a snapshot of our brand positioning, which is critical to deliver results on both sides of the marketplace. We are the preferred platform for homeowners with 62% brand awareness, and our tradie brand awareness currently stands at 68%.
Jobs from unpaid channels accounted for 80% of total jobs, and pleasingly, 73% of jobs are posted by returning customers. We continue to evolve our marketing activities to increase our already high brand awareness, and we are trialing several initiatives to broaden our marketing activities into new channels where we can achieve an attractive ROI. Turning to our New Zealand operations on Slide 19, we highlight the evolution from the legacy commission-based model to the subscription model we successfully implemented in Australia. We launched the current hybrid model late in FY 2023 by introducing a right-to-play subscription fee and a minimum three-month subscription tenure. 68% of our 3,600 tradies are now on a subscription, up from 25% in the PCP. We will continue to leverage our learnings, which we believe will drive enhanced value for tradies while reducing leakage experience in the commission model.
I will now hand it back to Roby to discuss our strategic evolution and outlook.
Thanks, Jaco. Slide 21 should be familiar. It maps the strategic pillars supporting our evolution from marketplace to platform over the next three years and beyond, with the objective of reducing our exposure to the economic cycle, increasing tradie retention rates, and opening new growth opportunities. Pillar one is optimizing our core marketplace business with lead price optimization, increased uptake of existing services, and enhanced tradie core functionality to drive higher ARPUs and revenue growth. Pillar two is our tradie platform evolution, where we are developing tradie core into an end-to-end SaaS platform for tradies to run better businesses. This will enable us to expand the range of products and services we provide to our tradies and underpins our future growth through new platform pricing and packaging, as well as improved retention.
The third pillar is our future state, where we develop a consumer platform providing our consumers with more relevant products and services. While it is early days, we've started to create an environment that allows us to deliver solutions more rapidly by creating a consumer app that is upgraded to React Native. While this won't provide an immediate benefit, it will enable us to deliver solutions to our consumers more rapidly in the future. You've seen Slide 22 before as well, but it is important to highlight that our retention rate has remained stable while we have increased ARPU under our subscription model. I am sure there'll be many questions on how far we can continue to drive ARPU while maintaining and improving retention, which is the key value driver into the future.
We remain very confident in our ability to improve ARPU through various measures we've outlined in today's presentation, optimizing lead pricing and driving existing and new subscribers to higher tier packages to utilize provided credits. As we evolve to our single tradie platform, tradie core, which includes lead generation, the marketplace, and job management, we absolutely see the long-term benefits by making customers stickier. We know that tradies who use multiple services deliver 1.8 times the average customer lifetime of the total hipages tradie base. Slide 23 illustrates the entire workflow capability on our platform. During the half, many new features and functionalities were rolled out in preparation for the single tradie app release, which is scheduled during the fourth quarter of this financial year. These features included the ability to claim leads within tradie core and the release of a single bundle package for new customers.
Once this is in place, tradies will be able to complete an entire job flow within a single app interface, removing friction and becoming a business-critical system. Over time, data from tradie core will provide powerful insights to enable the group to develop new products and services for tradies and consumers to drive even further future growth. Picking up on the topic of our technology investment spend, Slide 24 provides more color on how we are investing. Again, I want to stress that we apply a very disciplined project management system to ensure that spending is optimized and drives returns. You can see that the majority of FY 2023 spend was on marketplace optimization. The improvements to ARPU, connections, and MRR reflect the positive impact of this investment. During this half, our marketplace spend has embraced AI and machine learning to further optimize our lead pricing.
We've also significantly increased investment into the evolution of our tradie platform, integrating features like lead generation and credit usage, as well as adding and improving job management features. Just to reiterate, our technology spend will be around 25% of revenue this year, and that as a percentage of revenue will decline in the future. We've also called out here that some of our future spend will be directed towards projects to build our consumer platform, the third pillar of our strategic evolution. As I said before, we will keep you updated on our progress. Slide 25 sets out the milestones for tradie core highlighting the launch of the single tradie platform app for new customers in the fourth quarter of this year. We will commence migration of existing tradies to the platform as their contracts renew in FY 2025.
This is an exciting step in our business, and I'm looking forward to reporting on our progress as we reach and deliver on these important strategic milestones. Turning to our outlook on Slide 27, the momentum from the first half continues into the current period. The initiatives we have implemented, the rebound in tradie volumes, continued strong marketplace activity, and our ongoing cost control gives us real confidence in the sustainability of this momentum. We are seeing that momentum continue as we progress through February. It's an exciting time for hipages as we launch the single tradie platform later this half. We got close to cashflow break-even in the first half, even with our continued level of technology spend and the larger consumer brand activation spend in Q2. We are on track to deliver positive free cash in the second half and for the full year.
As I have said several times, this is a massive milestone for our business, and it comes after many years of hard work and operating discipline. As I said in my opening comments, we have hit the inflection point where we are driving both operating leverage and positive free cashflow generation. We reaffirm our targets for revenue growth and EBITDA margin. We expect our growth to continue and note that our second-half growth rates will be slightly lower compared to the first half as we cycle over a dynamic second half in FY 2023. We will continue our product evolution and pricing optimization and maintain our unrelenting focus to drive the performance of our business while holding cost discipline. With that, I will hand over to the operator, and Jaco and I will be happy to take questions.
Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type it into the Ask a Question box. We'll pause a moment for any questions to register. Once again, to ask a question via the phones, please press star one. Thank you. There are no phone questions at this time. I'll now hand the conference back to Mr. Sharon-Zipser.
Thank you, operator. Thanks again to all who joined us today. We are really excited about what is ahead at hipages. We have a huge opportunity to grow our business, and our entire team continue to work tirelessly to achieve our ambition. We look forward to seeing many of you in the coming days. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.