Airtasker: So far proving up to the task
About the author:
- Author name:
- By Anthony Porto
- Job title:
- Senior Analyst
- Date posted:
- 20 August 2021, 7:00 AM
- Sectors Covered:
- Online, Emerging Tech
- With Airtasker (ASX:ART) having pre-released key line items such as GMV ($153.1m, +35% on pcp, +39% in Q4) and provided the Q4 (and FY21) cashflow statement, marginal financial information included a slightly higher takerate and Adj EBITDA beat.
- ART has reiterated guidance provided in May at the time of the Zaarly acquisition for GMV >$200m and Revenue >$35m. This affirmation of guidance, despite lockdowns along the eastern seaboard, provides evidence of domestic marketplace momentum, comfort in the adaptability of the marketplace, and ability to bounceback upon easing of restrictions.
- We increase our valuation/target price (login to view target price), maintaining the Add rating.
FY21 comes in ahead of expectations, largely pre-announced
ART has seen 35% GMV growth in FY21 (39% in Q4) despite the impact of Melbourne lockdowns in the 1H. This result was 6.5% ahead of prospectus and 2% ahead of May’s guidance midpoint.
ART has shown the ability to run the domestic business in a FCF positive manner (+$370k FCF, although benefitting from $2.4m contra media from SWM). With this dynamic likely to persist, and a balance sheet containing ~$46m cash, ART is well placed to attack the international opportunity that presents itself (UK, US combined TAM 11x domestic and growing)
Expected resiliency domestically paves the way for international push
ART has re-affirmed guidance provided in May despite the worsening lockdown situation (particularly relevant for a local services marketplace). ART remains confident in the marketplace’s ability to adapt the service offering, and the quick snapback (evident in Melbourne last year) post the easing of restrictions. ART continues to reference the ~12% reduction in GMV from June (pre-lockdowns) as being reflective of current trading.
FY22/23 will see a large step-up in spend, as ART commits ~$20m over the period (mainly in increased marketing) to begin their assault (in earnest) on these international markets. Having been in the UK for the past 3 years, we see this market as likely to become the initial driver of international traction, with Q4 GMV +232% on pcp (+93% QoQ) and continued strong weekly GMV growth evident.
ART continues to expand their product offering, with the recently launched listings product unlocking new service categories and now beginning to see material bookings increases (24% weekly compound growth rate) and 25k listings created to date. ART is likely to continue to innovate to increase penetration of the TAM.
Forecast and valuation update
We make minor changes to our forecasts, again lifting our expected marketing investment (mainly international but some domestic as well). We have reduced FY22 domestic GMV 1%, with a larger skew to the 2H than previously.
A 4% increase in the DCF portion of our valuation (slightly higher assumed LT international growth) is partially offset by a 1% reduction in our multiples valuation component, resulting in a 1.5% lift in valuation to $1.30.
We remain attracted to Airtasker’s product fit with current consumer dynamics (move to e-commerce) attractive unit economics and large TAM potential, seeing signs of success internationally as a material re-rating catalyst.
Having proven an ability to derive significant topline growth with limited increased investment once the marketplace is established, we believe the market will continue to support ART during this period of heavy investment internationally.
1Q22 update expected late Oct/early Nov. Indications of traction internationally, including launching in new cities and evidence of increased consumer and tasker awareness.
International expansion and the risk of investment in these markets not generating expected ROI or marketplace dynamics, competitive risk (especially relevant given the fledging nature of the market) potential legislative changes impacting ART.
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