Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Airtasker Ltd (ASX:ART, Financial) achieved free cash flow of $1.2 million in FY24, marking a significant turnaround from the previous year.
- Revenue from the Airtasker marketplace increased by nearly 10% to approximately $38 million.
- The company saw a 76% revenue increase in the UK market during the fourth quarter, driven by a successful marketing campaign.
- Airtasker Ltd (ASX:ART) finished the year with $17.8 million in cash and term deposits, providing a strong financial position.
- The company has established valuable media partnerships, including $11 million in ad inventory from oOh!media and ARN Media, to be utilized over the next two years.
Negative Points
- The Gross Marketplace Volume (GMV) in Australia was down by about 4.5%, impacted by volume booked costs and a softening in average task prices.
- Despite revenue growth, the company faced challenging macroeconomic conditions, which affected overall performance.
- The US market, while showing some growth, remains in the early stages and has seen a cautious approach to marketing investment.
- The business is highly seasonal, with stronger performance in the second and third fiscal quarters, leading to variability in cash flows.
- There is still work to be done to address marketplace leakage and improve repeat booking rates, despite some progress in FY24.
Q & A Highlights
Q: James, can you talk to the marketing strategy deploying the $11 million in advertising. Can you utilize any of the spend already done on the UK campaign?
A: Absolutely, great question. So important to say that during FY24, we haven't utilized any of this $11 million immediate country yet. So we certainly haven't done that in FY24, and we're running a few experiments right now, but I think you'll really see that come through in the next quarter when we accelerate our brand investment into Australia. This strategy here is really around building up our brand salience. So where we really want to demonstrate the breadth of Airtasker's offering and doing it in a way, which creates a positive emotional connection with Airtasker. In terms of utilizing our brand assets, we've made incredible investments over the last two years into our creating great content and brand design, and we're absolutely going to be leveraging all of that into the Australian market. And I would go even further to say one of the big leverage points for Airtasker is, of course, the software they had operated -- head office operating costs, but it's also the brand, the more that we invest into this brand, the more that we can leverage it into each of our new markets. There isn't an incremental cost to doing that. Our powerful brand will resonate in many of these markets, and we're getting greater leverage out of that too. And really looking forward to extracting the benefit out of that.
Q: Does the Australian media capital deals include Oneflare? And the second part of your question was Oneflare ad spend was approximately 31% of revenue compared to Airtasker Australia of approximately 6.5%. Are you confident of getting a return for the spend?
A: Yeah. So it's all the different marketing strategies between Airtasker and Oneflare. So predominantly the media spend through oOh!media and ARN is going to be used to support the Airtasker brand. And that is because it because Airtasker drives a lot of direct traffic through its brand. And that is a primary way and through which we acquire customers and you can see that by how this all we spend on a paid marketing in Australia during FY24 to generate the kind of growth in volume that we delivered. And the ones where marketing strategies a little bit more about direct marketing. And so predominantly a lot of the leads come through our search marketing, which is Google performance marketing as well as our SEO, organic Google search. And so that's why you'll see a higher proportion of revenue going into marketing for the one-third business versus the Airtasker business.
Q: What share of Airtasker a GMV came through contacts, repeat transactions and how does this compare with full year '23? Do you feel like this functionality is moving the needle on marketplace leakage? Or is there still more work to be done?
A: So first, let me address the question specifically and then I'll provide a bit of context. So in terms of contracts, we saw growth through that product during FY24, which is great. And we've got a lot of momentum with that with our product, but we haven't actually disclosed the breakdown. So I'm going to refrain from sharing the metrics there. But we did see positive momentum through contracts. I would highlight there that is it's quite an MVP product at the moment. It's doing single digit millions of sort of transactions through that platform annually. So I think it's a really exciting opportunity, but we did find that during FY24, we really benefited from focusing on just one problem. The problem that we faced on in FY24 was to get reliability up and cancellations down. And I think that had a profound effect on how efficient our sales funnel was. There is another problem to be solved, which is this out repeat booking rate, which I think contacts can address. But we are staying very laser focused this year on improving marketplace trust, and that's really going to see the real outcomes happen. One thing I would note about marketplace leakage. Leakage effectively came down in FY24 because of the work that we did around reliability by charging an upfront connection fee, we're actually making sure that each of those jobs, whether they canceled or they go through the completion are monetized. But secondly, and that also is a massive disincentive for leakage. One of the bigger incentives for it was to avoid paying fees and we've actually structured the fees in a way which really discourages that. So I think there are multiple ways that we have to address marketplace leakage. And I think we've probably taken -- we took a huge chunk out of it this year, and I think there is more opportunity to do that.
Q: Just touching on the question, just sort of briefly mentioned around building trust. What's the work that's gone in there? And is that related to people adding more certification details in or what's the work that's been done there? And how do you think that's improving the business?
A: There are a couple of things that we've already rolled out this year to start improving marketplace trust. But maybe I can break it down into three things. There's this trust in the Airtasker brand, this trust between the customer booking at Tasker, and there's trust in the process of how Airtasker works, and we're addressing each of those. So if you look through our trust in the brand, of course, that's a lot of that is going to be solved through marketing and building up awareness of the product. If you look at our trust between the customer booking a Tasker, that isn't the question sort of alluded to a lot about doing things like ID verification, certifications like, trade license has been verified and things like that. And we have rolled out some changes there already, for example, right now, our Tasker actually go through like a facial recognition process, I mean, I'm actually at match that to a license or a standardized piece of ID in order to get a verified ID badge. And so we're doing a lot of things around ID verification and certification. And then the third is trust in the Airtasker process. And one of the things I think that has been very on marketed by Airtasker so far, is the power of a secure escrow payment system for all of the jobs that goes through the platform. Why that's so important. What it means is that customers actually pay their money into at Airtasker and Airtasker pay holds those funds until the job is complete. And that's a huge trust driver because our customers can then no that the Tasker have nothing to benefit from, saying they can do a job that they can do. And so we found that it's an incredible improvement when it comes to trust as well. So just to sum that up, we're going to invest in trust in Airtasker's brand through marketing, trust between customers and task is by improving our ID and verifications, and trust in our Airtasker as a process fire investment into awareness of our payment system and other features like that.
Q: When do you expect the UK revenue to be as big as revenue from Australia given the size of the UK market?
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
