Airtasker Limited

ART Details

Airtasker Limited (ASX: ART) is an Australia-based online outsourcing service provider. Its community marketplace offers an array of services in the areas of home cleaning, computer, and information technology support, pickup and delivery, furniture assembly, amongst others. ART was listed in ASX on March 23, 2021.

H1FY22 Trading Update: ART showcased encouraging Q2FY22 and H1FY22 results as outlined below:

• Gross Merchandise Volume (GMV) posted an astonishing 39% growth QoQ to $48.6 million in Q2FY22. The easing of lockdowns saw a surge in unique paying customers and an auptick in average task value that helped to pile up topline growth of 37.5% to $8.1 million.
• On the international front, upon launching in the US, ART witnessed a strong offtake in the first six months in four key markets – Atlanta, Kansas City, Dallas, and Miami. Backing the seasonal demand, ART plans to ramp up marketing investments in the US in H2FY22.
• UK GMV grew by 121% YoY fuelled by marketing campaign and surge in a number of tasks posted on the platform.
• The launch of Smart Tasker Alerts saw a 34% increase in Tasker engagement.
• New product listings have led to 3,500 plus bookings per week. The company is investing in product innovation with several new features lined up like the contacts feature to launch in February 2022.
• It had posted $9.21 million receipts from customers during the quarter ending December 31, 2021. Due to high cash outgo towards advertising and staff expenses, it had incurred an operating cash outflow of $4.6 million.
• ART closed the period with a cash balance of $33.97 million as of December 31, 2021, as compared to the $40.18 million posted in the preceding quarter.

Key Risks: ART competes with a large number of players in a fragmented online marketplace for outsourcing services market. Higher incentives and retention bonuses paid to Taskers may increase cash burn.

Outlook:

• ART has upgraded its H2FY22 GMV guidance to reach $107-110 million and full-year GMV is now expected at $191-194 million.
• The total addressable market for outsourcing online marketplace is expected to reach over $600 billion covering Australia, the US, and the UK.
• ART also intends to grow in non-core cities in the US. It plans to ramp up its media marketing investment with an H1/H2 split of 20/80%.
• It had made a number of additions in key management to spreadhead the growth like Patrick Collins as Chief Product Officer.
• The company will release its full H2 results on February 24, 2022.

GMV Trend and Projection (Analysis by Kalkine Group)

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 has been corrected by ~31.68% in the past six months. The stock is currently trading lower than the average of its 52-weeks’ low-high range of $0.605-1.965. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers, considering the mobility challenges in performing tasks due to the pandemic. For this purpose of valuation, a few peers like Seek Ltd. (ASX: SEK), Domain Holdings Australia Ltd. (ASX: DHG), REA Group Ltd. (ASX: REA), and others have been considered. Considering the strong GMV growth in H1FY22, international growth plans, modest outlook, upwardly revised GMV for H2FY22, indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.690, down ~2.13% as of 17 February 2022.

ART Daily Technical Chart, Data Source: REFINITIV 

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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