Tim Boreham: Airtasker reaps benefits of ‘value ad-ing)

Seven Network and Airtasker had success with an ‘ads-for-equity’ deal. In fact, the latter is so sold on the concept that it’s repeating it in the UK, says Tim Boreham.

’Pause that! We need to get on to Airtasker’. Picture: iStock

The strife-prone Seven Network must look back fondly on its novel “ads-for-equity” deal with Airtasker (ASX:ART) that delivered a five-fold return on investment.

Seven’s parent, Seven West Media, exited its 18 per cent Airtasker stake via the odd jobs platform’s March 2021 IPO and listing, pocketing $45 million.

For Airtasker, the five-year tie-up resulted in a 20-times revenue increase and elevated it to household brand status.

“We were doing $1 million in 2016 and over that five-year period got to $20 million in 2020,” said Airtasker chief executive and co-founder Tim Fung.

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“We built up from 6 per cent brand awareness to more than 60 per cent.

“It’s a challenge to build these marketplaces to scale, but also a huge competitive advantage once you have done so.”

The deal also meant Airtasker avoided raising equity at a poor valuation – funds that mainly would be used for advertising anyway.

Now, Airtasker is seeking to replicate the success in the UK, where it has inked a similar deal with Channel 4.

Also for five years, the arrangement gives Airtasker an initial $6.7 million of advertising time to access the channel’s 47 million viewers – 78 per cent of the British populace.

In return, Channel 4 gets a 25 per cent stake in a newly-created UK vehicle (not the listed Airtasker).

Once again, the tie-up is reaping quick rewards.

Airtasker’s March quarter report, released on Monday, shows a 49 per cent surge in UK jobs posted, with Airtasker’s UK revenue rising 30.6 per cent to £574,000 ($1.1 million).

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Airtasker is also exploring partnering opportunities in the US, where it has a fledgling presence.

Meanwhile, Airtasker is a handy gauge of both local consumer confidence and tradie inflation, because it has full visibility on the actual payments (rather than just quoted amounts).

Fung said that after a seesawing pandemic period, conditions had softened in August 2022 and remained subdued last year.

“Thankfully it looks like consumer demand is picking up a little bit and while supply is still at an all-time high prices are picking up a bit as well,” he said.

Airtasker CEO Tim Fung

As with other market platforms, Airtasker faced the problem of jobs being cancelled – sometimes because the parties agreed to go “off platform” once introduced.

To address this “task leakage”, early this year the company introduced a cancellation fee, averaging $18 on a typical $250 job.

The impost has resulted in cancellations falling a “remarkable” 24 per cent in the March quarter.

While critics have accused Airtasker of building a business model on cancellations, Fung said the company would much rather the jobs go ahead because its service fee on completed jobs was much higher.

During the quarter, Airtasker’s clip of the ticket rose 12.8 per cent, to 20.5 per cent.

The company has also taken measures to encourage satisfied taskers and taskees to transact subsequent jobs over the platform, for a lower fee than the initial introductory task.

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The quarterly report shows revenue from Airtasker’s core local operation climbed 11.5 per cent, to $10.1 million.

The local arm generated earnings before interest tax depreciation and amortisation (ebitda) of $8.5 million, up 24 per cent.

But after global head office and innovation costs, group EBITDA was $600,000 compared with a $900,000 loss previously.

Broker Morgans forecasts a full-year net loss of $2.4 million, with “operating EBITDA“ of $4 million.

The firm values the stock at 54 cents, around double the prevailing value but well shy of the 65 cent listing price.

While Airtasker’s profitability is a work in progress, the company’s balance sheet is up to the task, with no debt and almost $20 million of cash.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision

Find more Tim Boreham wisdom at stockhead.com.au

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