Airtasker Limited

ART Details

Q1FY22 Operational Performance: Airtasker Limited (ASX: ART) is providing a technology-enabled online marketplace for local services.

• Gross Marketplace Volume (GMV): During the Q1FY22, GMV surged by 6.2% PcP and clocked $35.0 million despite headwinds from lockdown in key markets – Sydney and Melbourne. Receipts from customers were up by 2.3% PcP and clocked $6.5 million.
• Latest Weekly GMV: ART manifested a post-lockdown bounce back, as containment restrictions eased in key markets, with $3.6 million in the latest weekly GMV, equivalent to annualized run-rate of $185 million.
• International Market Growth: International GMV surged by over 100% PcP, primarily driven by resilient growth in the UK. The US expansion and Zaarly integration are progressing with city-level platforms launching in Kansas City, Dallas, and Miami.
• Financial Positioning: During the quarter, ART assumed a sequential increase in cash outflow as international marketing investment ramped up in line with expectations, one-off payroll tax payments associated with equity awards which culminated upon IPO, and annual bonuses triggered by revenue outperformance.
• Leadership Update: ART appointed Patrick Collins, a former Chief Technology and Product Officer in Zip Co, as Chief Product Officer. Patrick holds over 20 years of product leadership experience leading Australian technology companies and Silicon Vally.

Use of Funds from IPO, Analysis by Kalkine Group

Key Risks and Challenges: ART operates an online marketplace and is heavily dependent on technology and automation facilities, hence exposed to technical glitches in the system. ART is extensively involved in expansion via inorganic growth, resulting in high integration risk.

Outlook: ART remains on schedule to build up its marketing platforms and invest in customer acquisition and branding. For FY22 and FY23, ART focuses on investing circa $20 million to amplify city-level markets in the UK and the US, primarily focusing on identifying scalable growth opportunities whilst maintaining a sustainable cash burn rate.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock’s historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of ART gave a negative return of ~21.941% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.880 - $1.965. The stock has been valued using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price low double-digit (in percentage terms). The company might trade at a slight premium to its peers’ average EV/Sales multiple, considering revenue growth, global expansion, and surging GMV. For valuation, few peers like REA Group Ltd (ASX: REA), Seek Ltd (ASX: SEK), Domain Holdings Australia Ltd (ASX: DHG), and others have been considered. Considering improved top-line prospects, favourable acquisition strategies, growth in expected GMV for FY22, current trading level, upside indicated by valuation, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the market price of $0.910, as of 10 December 2021, 11:06 AM (GMT+10), Sydney, Eastern Australia.

ART Daily Technical Chart, Data Source: REFINITIV

Note: The purple line reflects the RSI (14-day period)

Note 1: The reference data in this report has been partly sourced from REFINITIV. 

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: - 

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest. 

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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