- ASX-listed HR tech firms had a front-row view to the COVID-19 disruption
- Stockhead spoke to three companies about market activity as the economy rebounds
ASX-listed HR tech firms have found strong demand in essential services sectors, as Australia’s economy recovers from the pandemic.
Other post-COVID tailwinds include increased compliance requirements around work-from-home solutions for client firms.
But three companies we spoke to in the space have also had to be nimble in their response to ensure business continuity, in what’s been a disruptive year for the sector.
Rearview mirror
Looking back on the year that was, the period from March through May was about battening down the hatches as customers put a hold on hiring.
But over that time, CV Check (ASX:CV1) CEO Rod Sherwood provided some good insight into how the employment sector began to change.
“The first shift was in healthcare, which started hiring in high volume,” he said.
“Next, it was clients who needed support with work-from-home solution – needed IT support. So ICT (Information and Communication Technology) doubled.”
Late May was the point at which Sherwood said policy assistance began to reach the real economy.
“From that point we saw things stabilise. Obviously hospitality and tourism were struggling, but everywhere else we saw that SME flow renew.”
It was a similar story for employee reference checking platform Xref (ASX:XF1), where CEO Lee-Martin Seymour said he had a good read on changes in the market.
“What really tells the story in the jobs market isn’t job ads, it’s the final task for a piece of recruitment which is referencing,” Seymour said.
“Our stats show those clients in non-essential sectors (travel, tourism) fell sharply, but in August and September they’ve bounced back. So we’ve seen a drive from some of our larger clients such as Qantas and Crown.”
“That’s a good sign for everybody but for those sectors deemed ‘essential’ – education, health and government – we saw record usage in the September quarter.”
“We’ve never seen that before. For us, those sectors form the backbone of our go-to market strategy into the future. So in that sense it’s been a really defining quarter.”
Another company in the space is people management platform IntelliHR (ASX:IHR).
Speaking with Stockhead, CEO Rob Bromage said that after the initial shock, the main areas of activity have been around work-from-home health & safety compliance, as well as mental health.
“I think for companies, there’s an increased understanding that we’re looking at a minimum of two years before what you’d call this disruption might be over,” Bromage said.
To help clients adjust the that “new normal”, IntelliHR launched a freemium service to help companies manage the transition to remote work.
“We’ve converted around 20 per cent of those into paying customers. And a lot of those were in our pipeline, so as a business when you see a downturn you want to protect that,” he said.
“So that strategy allowed us to add value at a time when clients couldn’t buy software and desperately needed the right tools to protect their business.”
The road ahead
Xref’s Seymour said the company had emerged from the pandemic with a leaner business model, with a lower cost base as revenue rebounds with the pick-up in hiring.
“I think the pandemic has given us a good focus on what markets and regions we’re going for,” he said.
“What we’re finding is people don’t necessarily want to return back to their previous industry, they want to return to a sector that’s pandemic proof.”
“So I think there’s a skills transfer taking place and that’s why we’re really focused on essential services globally, because that’s where candidates want to work now.”
With pre-2017 clients and new customers both contributing around 20 per cent of revenue in the September quarter, Seymour said the company has a “strong foundation for growth” in its core target markets.
For CV Check, the focus is also on “repeat business and new client wins” as the post-Covid turnaround gathers pace.
With “core tailwinds” behind its organic business model, Sherwood said CV Check is taking a partnership approach as it looks to expand to global markets.
On that front, it recently partnered with NetForce Global LLC, a US-based employment screening specialist, for the white label rollout of the CV Check service.
“We’ve been working on this concept to offer our service to larger international screening players who don’t have that presence in the Asia-Pacific market,” he said.
“It’s not so much a new product rollout, but opening up new portion of the market which is global.
“Rather than tackle the whole market, let’s go through the big wholesalers who can serve those market.
“They can sell it under their name but the service is powered by CV Check. So we’ve just landed our first big customer and we think there’ll be more to come from that.”
For IntelliHR, which took on a $2.5m investment from tech luminary Bevan Slattery in August, the focus is also global following the launch of its Toronto office in the September quarter.
“It’s only three months in but we’ve already closed one deal and we’re building a healthy pipeline,” Bromage said.
He said the company has had to spend time calibrating its model for buyers in the North American market, which are “poles apart” in terms of the process they go through.
“So there’s been some changing and testing we think we’ve hit the nail on the head,” he said.
“Factoring in the timeline we work with, I’d expect to see good results in this part of the market in the first half of next calendar year.”