{"id":9274,"date":"2024-05-03T08:00:20","date_gmt":"2024-05-03T08:00:20","guid":{"rendered":"https:\/\/economicherald.net\/?p=9274"},"modified":"2024-05-03T08:00:20","modified_gmt":"2024-05-03T08:00:20","slug":"criterion-airtasker-hits-repeat-on-lucrative-ads-for-equity-deal-as-uk-business-booms","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=9274","title":{"rendered":"CRITERION: Airtasker hits repeat on lucrative ads-for-equity deal as UK business booms"},"content":{"rendered":"

The strife-prone Seven Network must look back fondly on its novel \u2018ads-for-equity\u2019 deal with Airtasker (ASX:ART)<\/a> that delivered a five-fold return on investment.<\/p>\n

Seven\u2019s parent Seven West Media exited its 18 per cent Airtasker stake via the odd jobs platform\u2019s March 2021 IPO and listing, pocketing $45 million.<\/p>\n

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

\u201cWe were doing $1 million in 2016 and over that five-year period got to $20 million in 2020,\u201d says Airtasker chief executive and co-founder Tim Fung.<\/p>\n

\u201cWe built up from 6 per cent brand awareness to more than 60 per cent. It\u2019s a challenge to build these marketplaces to scale, but also a huge competitive advantage once you have done so.\u201d<\/p>\n

The deal also meant Airtasker avoided raising equity at a poor valuation \u2013 funds that mainly would be used for advertising anyway.<\/p>\n

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\u2019s 47 million viewers \u2013 78 per cent of the British populace.<\/p>\n

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

Once again, the tie-up is reaping quick rewards. Airtasker\u2019s March quarter report, released on Monday, shows a 49 per cent surge in UK jobs posted, with Airtasker\u2019s UK revenue rising 30.6 per cent to \u00a3574,000 ($1.1 million).<\/p>\n

Airtasker is also exploring partnering opportunities in the US, where it has a fledgling presence.<\/p>\n

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).<\/p>\n

\u00a0<\/p>\n

Post Pandemic Performance<\/h2>\n

Fung says that after a see-sawing pandemic period, conditions softened in August 2022 and remained subdued last year.<\/p>\n

\u201cThankfully 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.\u201d<\/p>\n

As with other market platforms, Airtasker faced the problem of jobs being cancelled \u2013 sometimes because the parties agreed to go \u2018off platform\u2019 once introduced.<\/p>\n

To address this \u201ctask leakage\u201d, early this year the company introduced a cancellation fee, averaging $18 on a typical $250 job.<\/p>\n

The impost has resulted in cancellations falling a \u201cremarkable\u201d 24 per cent in the March quarter.<\/p>\n

While critics have accused Airtasker of building a business model on cancellations, Fung says the company would much rather the jobs go ahead because its service fee on completed jobs is much higher.<\/p>\n

During the quarter, Airtasker\u2019s clip of the ticket rose 12.8 per cent, to 20.5 per cent.<\/p>\n

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.<\/p>\n

The quarterly report shows revenue from Airtasker\u2019s core local operation climbed 11.5 per cent, to $10.1 million.<\/p>\n

The local arm generated earnings before interest tax depreciation and amortisation (ebitda) of $8.5m, up 24 per cent. But after global head office and innovation costs, group EBITDA was $600,000 compared with a $900,000 loss previously.<\/p>\n

Broker Morgans forecasts a full-year net loss of $2.4m, with \u2018operating EBITDA\u2019 of $4m.
\nThe firm values the stock at 54 cents, around double the prevailing value but well shy of the 65 cent listing price.<\/p>\n

While Airtasker\u2019s profitability is a work in progress the company\u2019s balance sheet is up to the task, with no debt and almost $20m of cash.<\/p>\n

\u00a0<\/p>\n

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.<\/em><\/p>\n

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.<\/em><\/p>\n

<\/span><\/p>\n

The post CRITERION: Airtasker hits repeat on lucrative ads-for-equity deal as UK business booms<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

The strife-prone Seven Network must look back fondly on its novel \u2018ads-for-equity\u2019 deal with Airtasker (ASX:ART) that delivered a five-fold return on investment. 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