Paul Sanger: I'm Paul Sanger for the Finance News Network, and today I'm talking to Hiremii. Hiremii, trading under the ASX code HMI, with a market capitalization around 6 million is a technology-driven, full-service recruitment company with two core business components: Hiremii Technology, a cloud-based platform, which uses machine learning and artificial intelligence to automate and enhance recruitment and onboarding processes, pre-vetting and shortlisting candidates based on employee-specific requirements, and Inverse Group, a growing recruitment business providing specialist white-collar recruitment services to the energy resources and technology sectors. Joining me today is Hiremii CEO Andrew Hornby. Welcome, Andrew.
Andrew Hornby: Thank you, Paul. Great to be here on the network.
Paul Sanger: Good to have you. Now, Andrew, as it's the first time that we've had Hiremii on the network, can you give us a quick snapshot of your business?
Andrew Hornby: Absolutely. I'll be delighted to you. Hiremii listed in May 2021. I came into the business, actually, through the acquisition of Inverse, which is a traditional recruitment business, real high-quality focus. Based in WA. Focuses on the energy and resources industry. What we've tried to do to date is actually embed that recruitment business into the Hiremii technology development part of the company.
Hiremii listed as an AI development technology company. So effectively what they were trying to do, and we were trying to do it early as well, we were spending quite a bit of time and capability on understanding AI, how that will help organizations in the future to hire more productively, more efficiently. It's obviously a very emerging space at the moment and has been for some time. The goal for our organization now is to take what we know about AI and machine learning, help funnel that through the Inverse business, and really help our clients become real experts at recruiting and retaining their people.
Paul Sanger: And Andrew, I've had a lot of CEOs in here in different industries using AI MedTech in the resource space. I think you're the first recruitment company. Is any other recruitment company using AI in their business models?
Andrew Hornby: It's really interesting because we are a recruitment business that's heavily invested in AI, and you tend to find the two are quite separate. So you find a traditional recruitment business employing lots of people and providing a very traditional service. Then you find AI technology businesses that are really developing technology can assist either end users or recruitment companies.
Typically, a lot of that AI technology has gone into what we call in the industry an ATS, an applicant tracking system. So we are quite unique. We don't see organizations out there, particularly organizations in that very specific energy resources WA market, trying to embark on such a big journey that we're trying to embark on.
Paul Sanger: Let's talk a bit more of the company. Your recent results have shown some real strong revenue growth in the first half this year. What's been the driver of this growth?
Andrew Hornby: It's interesting because we didn't focus on revenue growth in the past year. What was important for us over that particular time was two things in the recruitment business. One was client acquisition. So we carefully decided the markets that we wanted to operate in. That was providing white collar recruitment services to energy and resources. Being exposed to both gives you a nice, moderated flat line so you've not got the same up and downs as sometimes you get just being in resources or just being in energy.
So we focused on those two markets. We identified the types of organizations that we would like to work with. Those organizations, who are large, sometimes multinational, low-risk, financially sound. Ones that we could work with and really partner with. When we selected those organizations, we went through a period of going and working closely with them to identify if we're the right fit for those guys. Now, great relationships we've developed from that. And through that we then went on our own sort of hiring journey of bringing good people into our business to service those clients.
So right now we've got a great team and we've got a great set of clients. And I think when you're delivering a really good service, just by virtue of that, the revenue takes care of itself to some degree. So the focus recently has really been how do we increase that GP? How do we increase those gross margins for our business? Because that's obviously key to us being sustainable as a business. The second aspect to that, which we're really excited about and I think we'll obviously touch on, is the AI component and how we bring that through the business as well to both provide an even better service to our customers and help us grow as a business as well.
Paul Sanger: And you mentioned gross margins. Your results have shown a strong increase to gross margins. So how did you deliver this?
Andrew Hornby: We had an adaption to our strategy around trying to deliver increased permanent recruitment solutions. So the energy and resources market, because it's quite transitory, I guess you could say projects ramp up and then they ramp down again. So usually organizations have a core corporate office, and then they might develop a mine site, for example, and need to ramp up a whole heap of people. So you tend to find that you have have two camps, you have contracts and you have permanent staff. Now, contract in our markets is fairly low margin because it's high volume. On permanent, that's where you get paid a clip, you could say, on somebody being hired into an organization. And with that, it's 100% gross margin.
So we put a focus on trying to build more of that into the business. And just touching on that, we launched a technology division of Inverse as well, because that's predominantly a permanent hire-based industry. So we've got a little bit more diversity. The focus on permanent means that our split of margin improves over time. So we're just on that journey. So I'm pleased that you've picked up on the increased GP. I'm really hoping we can continue to do that more so going forward.
Paul Sanger: Good idea. We touched on this earlier, so how does Hiremii's technology compare to its peers and what makes Hiremii's technology better?
Andrew Hornby: Great question. I think, as we touched on in earlier conversation, Paul, AI has been fascinating. It's a great journey to be involved in. And as a business with a recruitment history, looking at the ways that AI can really enable improvements to our everyday. So sometimes I look out of my office and I see the team scrolling LinkedIn or reading CVs. You can see them sometimes working away during the day and you just want to say, "Hey, let's go for a run up in King's Park or let's go and have a sandwich or something." But what AI is there to do is to enable more efficiency. It's to give people the opportunity to do more meaningful work. So we're looking to enable people to be able to do their jobs more effectively. We're not trying to take away jobs.
Where we are different and I think what makes us great, is that a ChatGPT can assist everybody. Everybody in different industries, it can assist. So there's a generic transactional level of improvement. What we are doing is we are recruitment experts. We have a domain expertise in that space. And we're trying to build our AI in a recruitment sector with recruitment experts. And I think that's something that's different. We're harnessing AI, but we're harnessing it for the benefit of organizations attracting, hiring and retaining people. So it's really our domain expertise, I think, that makes us a bit different.
Paul Sanger: Andrew, could you just explain in a little more detail how the AI actually works within your business model?
Andrew Hornby: So the AI that we've developed to date, there's really four core products that we've built: AdWriter, which was built to enable people to write adverts faster. So we're using ChatGPT. Actually, we started with GPT 3.5. Advert writing is interesting because inherently, I think, people are a little bit lazy. And every time you need to write a unique advert, it's quite difficult. People get brain fog, they forget what they're doing. So AdWriter enabled people to write coherent, articulate adverts.
The big piece of technology that we have was a proprietary built for us, for Hiremii, with some real boffing data scientists. It's a short-listing tool. So it's very complex. It's a knowledge graph, has 3,000 lines of code. Invariably what it does is it enables you to put a high volume of CVs into our platform and through semantic matching, semantic searching, it will provide you with an articulate, accurate short list of the best candidates.
Now, there's a couple of advantages of this. If you think about the person on the other end of an application where they've received 100 CVs for a job, and you find what you feel is the best person in the first 10 people, I think inherently what happens in the industry is you put those 10 people to the client or to your hiring person, or if you are the hiring person, you just choose based on that. What Shortlist does, it actually goes through the whole hundred. So it's taken out a little bit of that bias, you could say, maybe a little bit of our human nature to cut corners a wee bit. So Shortlist is fantastic. Where we are at the moment is we're just building a little piece of technology that will enable us to make sure that we've got structured data that can go into Shortlist and back out again to our customers. It's quite an exciting phase. I think the market's waiting for us to be able to do that. So we're pretty excited about that.
The two other tools, one was Videofy, so that's where, using a couple of different AI tools, we actually take a CV, summarize it using ChatGPT, and using one of our partners to create an avatar video summary of that person's CV. Now, it is really cool. It's probably a little bit far advanced at this stage, so we're just sort of seeing how that tracks. And lastly, we built Sourcd copilot, and Sourcd was there to help people to write personalized communication tools.
So look, great tool. It's probably the Real Madrid of the writing tools that's in the marketplace. Again, our focus at the moment is linking Shortlist, which we think is the most powerful tool that we have. So hopefully that gives a little bit of an overview of our AI.
Paul Sanger: Absolutely fascinating. And who are your major contributors and how does the market share picture look in that space?
Andrew Hornby: It's interesting because I've said before, the main focus was is energy and resources in WA. And we've launched our technology business, which is going to give us an opportunity to expand across the country. It's difficult to take what we do in WA into Sydney, for example, because it's not an energy resources hub. You could say that from an energy perspective, there's some challenges around New South Wales and there is pockets of opportunity. But we're very energy and resources focused, so if you look at our market in the areas that we specifically compete with from a recruitment perspective, it's probably somewhere between 1.5 and 2 billion. And I think we are continuously brought to the table with the major players in that space that probably account for about 40 to 45% of that. And that's maybe between three and four companies. So we've got less than 1% market share in that space.
We're a $30 million business. That's what we're tracking towards at the moment. And you look at our competitors and some of them are about 10 times the size. Now, what I'm really pleased to see is that consistently, the feedback that we're getting from our clients, who usually have two, three or four agencies working with them, the feedback is fantastic. We are getting continuously number one and number two for service quality, for responsiveness, for accuracy of CVs, and for ultimately placements, which make us our money.
So where the industry in the past, they used to rely on mostly acquisition to grow, this is where our investment in AI, we believe, is going to be able to take us to the next level. We believe that through enabling our business through technology, we can 10 X where we are today over a medium term, let's say five years for example, to get to that 10 X level. So really excited about that. We can see the journey. We have a great suite of clients. We have a wonderful team of people. And with the enablement of AI, I wouldn't be surprised to see us knocking some of those big guys off the perch in the next few years.
Paul Sanger: We'll keep a close eye. And I noticed you've been focusing on the resource and energy vertical. I know it's an obvious question: why?
Andrew Hornby: There's lots and lots of factors there, isn't there? It's big. It's a big, meaty sector. Obviously contributes massively to Australian GDP. And if you look at the energy and resources sector, just take COVID, for example, the government, society, community, everyone tried to keep daily operations going. It was really important that we keep shipping the iron ore to parts of Asia. It was important that we keep shipping our LNG to parts of Japan, for example, to keep the lights on there. And that was really during a really difficult time. So if you think about being a small business or a person, that really gave us a lifeline. So it's a great sector to be in. We understand it, we understand the people, we understand the companies, we understand the projects. Now, where it gets really quite exciting for me is you're working with large, complex organizations and they're very innovative. A BHP, it's innovative. A Shell, in the oil and gas space, it's innovative.
But their innovation usually goes into things like developing FLNG, floating LNG, for example, with Shell or BHP goes into optimizing a mine site. And ultimately they're looking to lower the lift cost of a barrel of oil or reduce the cost of lifting a ton of iron ore out of the ground. They don't innovate that well when it comes to people and the hiring of people and the retaining of people. And that, for me, is where a small but mighty company like ours, who understands the recruitment sector, through the use of AI, machine learning and advancements in that space, can really add value to those big organizations.
They've got tons of people. Their people are usually based in all sorts of strange, weird and wonderful places. Quite often regional Australia, which is amazing. And they collect lots of data. So all the hallmarks for a great AI-driven service is there in the energy resources sector. The great thing with AI is it provides an opportunity to be agnostic to industry, but at least now we have a big pie in the energy resources space to go at, and we understand it. And quite frankly, we enjoy working in that space as well.
Paul Sanger: And it's not going away.
Andrew Hornby: It's not going away anytime soon, is it? If you look at obviously how much some of the big organizations have invested in LNG and they're starting to invest in that energy transition space as well, saying, we're mine sites. And we touched on this earlier. You're looking at potentially bringing a bit more supply chain back to Perth as well, which I think is really interesting. Looking at battery manufacturing and things like that. And we've seen a little bit of that in the lithium space, where we've looked at processing facilities in places like Kemerton in WA, in the Kwinana industrial zone in WA. And you can start to see some of that innovation, more job opportunities, more people. We just need more houses in WA as well.
Paul Sanger: And hopefully you're watching the uranium space. I know it's a bit of a taboo subject that can't be mined in WA. But if ever that changes, there's going to be a demand for people in those sectors.
Andrew Hornby: It's a really interesting space. And I do keep an eye on it, although obviously we're not exposed too much to working it. We have had a little bit of exposure to some of the small caps we've assisted through by some of their early employees. But it is a fascinating space, because the big topic now is about energy transition. How do we become more sustainable as a society? And I'm not an expert so I can't comment too much, but it seems to be nuclear provides some aspect of the ability at scale to be a clean energy solution. So yeah, we shall see. We'll keep watching.
Paul Sanger: Better be proactive than reactive!
Andrew Hornby: Absolutely.
Paul Sanger: And just to finish off, last question, what are your plans? How will you drive growth going forward?
Andrew Hornby: As I said earlier, we've really invested in great companies to work with. We're very proud about some of those large multinationals that are very well-known around Australia. We've got a great team of people, they're very entrepreneurial and we are as a business as well. I think we have a huge opportunity in front of us to leverage the AI development, our understanding of that, into the recruitment process. We're going to focus on more of what we've been doing. So I think as a small business we've achieved quite a bit.
If you look since the time that I came on board, I think my first quarter, we did 3.3 million, and I think the last quarter we announced was 7.4. So we've been achieving some good growth. What we really would like to do is demonstrate to the market that that understanding that we have of AI and machine learning, that we can put that into a real strong proposition that's going to help us to grow and deliver. So we're all pointing in the same direction as a company. I've got a very supportive board. Great team of people around us. And we don't see the market slowing down, so good things ahead
Paul Sanger: Andrew, many thanks for your time. It's been an absolute pleasure.
Andrew Hornby: Thank you, Paul. Really appreciate it.
Ends.
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