Employment Hero, a human resources software platform for small and medium-sized businesses, is shifting gears after a decade of fast growth, moving from an all-out expansion strategy to a more measured path that prioritises making money. The company, which last raised money in late 2023 at just under a $2 billion valuation, has long relied on backing from major venture capital firms to fund product development and expansion into markets beyond Australia and New Zealand. Now, with more mature tech companies under pressure to prove they can stand on their own, Employment Hero appears to be adjusting to a new reality where profitability matters as much as growth.
In the year to 30 June, Employment Hero lifted revenue by 47% to $243.5 million and narrowed its net loss from $44.7 million to $35.2 million, according to filings with the corporate regulator. Its annual recurring revenue moved past $300 million in September, a metric many software businesses use to show how their subscription income would look over a full year if recent trends continued. A spokesperson for the business indicates it expects to keep annual revenue growth above 30% this year but that is a step down from previous years as it reins in spending to reach positive earnings before interest, tax, depreciation and amortisation by 30 June next year. At the same time the company is managing a legal dispute with a major job board over access to that platform, which adds an extra layer of risk to its recruitment offering and affects a service that allows customers to post roles across multiple online job sites in a single process.
Regionally, the company’s performance looks uneven but encouraging. Revenue from Australia and New Zealand climbed 42% to $205.5 million over the past financial year and its core markets remain the main growth engine. In the United Kingdom revenue increased from $14.8 million to $20.6 million and other international revenue almost tripled to $17.5 million, helped significantly by Canadian start-up Humi, which now contributes close to half that total. Employment Hero paid $145 million to acquire Humi earlier this year, including about $138.9 million in goodwill, which highlights how much value it sees in adding scale and capabilities through acquisitions rather than building everything from scratch. Investors and industry observers appear to view these numbers as signs of a business that is still growing strongly but learning to operate with tighter financial discipline.
When viewed in a broader context, Employment Hero’s new approach reflects a wider shift in the tech sector where late-stage start-ups are moving away from “growth at all costs” and towards break-even or better in order to avoid fresh dilutive capital raisings and to prepare for potential stock market listings. Maintaining growth of more than 30% while cutting losses indicates the company is trying to strike a balance and remain attractive as a high-growth software business but also prove it can eventually generate sustainable profits. How well it balances those goals, manages its legal dispute with a major jobs platform and integrates acquisitions such as Humi is likely to shape its long-term prospects, particularly if market conditions or investor sentiment become less forgiving.
