Charting Airtasker's (ASX: ART) Ambitious Growth: CEO Tim Fung on International Expansion and Financial Strategy

Join the conversation with Tim Fung, the visionary CEO of Airtasker, and discover how this trailblazing platform is transforming the way we access local services. In this enthralling episode, Tim unveils the compelling origin story of Airtasker, delves into its core mission to create a trustworthy community, and shares the secrets behind the platform's financial triumph. We're not just discussing figures; we're revealing the strategic maneuvers that slashed cash burn and dramatically raised free cash flow. Plus, get an exclusive sneak peek into Airtasker's exciting international journey, with its remarkable growth in the UK market fueled by savvy partnerships, like their collaboration with Channel 4, all setting the scene for an even more promising future.

Fasten your seatbelts as we chart the course of Airtasker's upcoming brand reinvestment strategy, targeting a significant boost by 2025 with a laser focus on the burgeoning Australian market. Expect to be captivated by our projections of strong double-digit growth, stretching across Australia to the UK and US shores. Discover how Airtasker stands out in a market ripe with opportunity and minimal competition, setting the stage for a thriving business outlook. The episode wraps with an optimistic nod to the journey ahead, promising more updates as Airtasker continues its ascent. Don't miss out on this insightful conversation that will broaden your horizons on the gig economy and its boundless potential.

Transcript

Andrew Musgrave: 0:02

Welcome back to ASX Briefs. Today we have the pleasure of speaking with Tim Fung, the CEO of Airtasker, a platform that's redefining how local services are delivered across Australia and beyond. Airtasker has been making headlines just not for its user-friendly marketplace, but for its robust financial performance. Tim, welcome to the studio and welcome to the ASX Briefs podcast. Thanks for having me. All right, let's get started. I think a good place to start. Most people will know who Airtasker is. So if you want to give us a brief overview of the Airtasker journey from that initial thought bubble many, many years ago to where we are today and just the variety of services that you offer.

Tim Fung: 0:49

So Airtasker is a marketplace for local services and, in pretty simple terms, we connect people who need work done with people who want to work. The way the story got started is I was moving apartments back in 2011 so that's a long time ago now and I asked a friend to help me move because he's got a truck that he uses to do deliveries of his frozen chicken nuggets products, and so this just got us thinking is you know, why do we ask our friends and family to do all these kinds of jobs when there's so many people out there who you know they want to earn a living in this way? And what we worked out is that it's really hard to find and be able to trust people easily in your local community, and it really shouldn't be. And so we set out to create a marketplace that would make it really easy to build trusted relationships in your local community, and we thought if you could get that going, then you'd be able to unlock a lot of value, because really every single person's got unique skills, and to be able to monetize those skills and earn money through that. It's really enriching and something that we find really fulfilling to be able to do.

Andrew Musgrave: 1:48

Well, I think you've certainly hit the mark on that and I think with any sort of small growth company, the financial health of the company is really important. So you've recently reported a significant decrease in cash burn, but also an impressive increase in free cash flow. Can you just walk us through the strategies that have led to these improvements?

Tim Fung: 2:05

Yeah. So I think we set out this year to be a full year free cash flow positive and we're well on track to be doing that. We've delivered our free cash flow in operating cash flow in all three quarters this year, and free cash flow in the last two quarters generated 2.5 million free cash flow in the last quarter alone, and so that was definitely our goal for the year. We're committed to doing that.

Tim Fung: 2:32

I think one of the things that most people, I guess, haven't yet worked out about Airtasker, I think, is how high operating leverage the business model is, and what that means is we have um, a fixed investment that we need to make into building a world-class software platform and technology product.

Tim Fung: 2:52

But once that platform is built, the economics that sit on top of that in terms of the marketplace are really really, really attractive. So we have a monetization rate of a little over 20 percent. So for you know the average task value of about 250 dollars, we're earning about 50 dollars in in revenue um from that, and of that $50 of revenue we have a gross margin, a gross profit margin, of about 95%. So there's really not a lot of costs that goes with that. So I think what people didn't realize is we've built this piece of software. Now that we've built it and now that we're cashflow positive, every incremental dollar that you make from here, 95 cents of that essentially drops to the bottom line or can be reinvested into more and more growth, and so I think it's quite a big milestone for us to get to free, cash flow positive and really excited about what we can do from here.

Andrew Musgrave: 3:40

Yeah, it's certainly a nice position to be in, that's for sure. If we just head offshore for a moment, up to the UK Now, the expansion that you've had into the UK has shown remarkable results, with posted tasks increasing by over 49%. So can you just talk us through some of the key factors that's driven that success?

Tim Fung: 3:57

Yeah, one of the things that we looked back into how we, you know, essentially built a household brand name in Australia was that we partnered up with Seven West Media or Channel 7. And over five years, in partnership with Channel 7, we were able to invest into building brand awareness and we 20x'd our revenue from about a million dollars to about $20 million during that period. And then, when Channel 7, when we IPO'd the company, channel 7 walked away with 5x returns on their investment. So it was a great win-win all around. And so we went to the UK. We're like, hold on, we should do that again. And so we have, in our UK subsidiary, airtasker UK.

Tim Fung: 4:39

We have accepted a 20% investment from Channel 4, which is the Channel 7 of the UK, in exchange for $6.7 million in advertising media. And so, as we're building up our brand name in the UK, we're doing it in partnership with Channel 4. We've had a great start to that. We basically put the ad on TV. We saw a 30% pop straight away from that. But actually that's not really the exciting bit. The exciting bit is that over a couple of years, you're building a brand from sort of nothing nobody knows who you are to being well known in London and as we're going through that journey now, you can see the growth is coming through and yeah, last quarter we're up 49% and I'm excited about the momentum we're building.

Andrew Musgrave: 5:23

Yeah, and I think those strategic partnerships, particularly for smaller companies, are just crucial to get that growth. So with these partnerships, they're crucial to the overall growth strategy. But are there any new ones on the horizon?

Tim Fung: 5:37

Oh yeah. So I think if you look at Airtasker being a really high operating leverage business you have in Australia, you've built this software technology platform. We've got a marketplace that sits on top and spits out, generates a lot of cash. Now we're going to the UK and we don't actually have to replicate those fixed costs again. The software doesn't need to be replicated, we're just going to replicate the marketing. And so, you know, as we go to each country, it's really about working out how do we find a local partner who can invest in and turbocharge our growth in that market. So you know, in the UK we're, you know, going to be expanding our partnership strategy and then, of course, in the US, where we are right now is being super disciplined about staying cash flow. You know very disciplined in how we invest and you know we've been very open about looking for a media partner over in the US. And, you know, no news to share right now.

Andrew Musgrave: 6:30

All right, but with every expansion comes challenges, of course. So what are some of the biggest hurdles you've come across going into those new markets in the UK and the US, and how have you addressed them?

Tim Fung: 6:42

So I think the thing about launching into new countries for Airtasker is we don't actually have to replicate any operations, and I'm very thankful for that, because you know, if you compare it to, say, a company that's building data centers or building restaurants or something like that huge fixed costs, huge sort of one-way doors that you got to walk through, For AirTasker it's very much just a sales and marketing effort into each of those markets, and the great thing about that is that's predominantly variable cost. If you need to tune it down, you can tune it down, as we've done over the last two years. But when you're ready to tune it up, oh boy, you can really really start to go. And so the biggest hurdle I think that we found is that when you're building out a product that is built on network effects which AirTasker very much is, you know network effects you've got to be big to be able to offer value to your users so that they can find the tasker that suits them.

Tim Fung: 7:35

How do you quickly get from zero to that and how do you bridge that investment gap? Because it does require an investment in marketing. And so the big thing that we sort of worked out is we should do this with local investment partners rather than trying to, you know, raise all that capital ourselves and take all the risk ourselves. Why don't we share some of the upside with Channel 4 or another media partner? And by doing that we've worked a way to bridge that investment gap and really, really excited about that.

Andrew Musgrave: 8:02

Are there any other countries you're potentially looking at to move into as well?

Tim Fung: 8:13

Yeah, look, I think the great thing about a business model like Airtasker is that every country needs an Airtasker, and what I mean by that is that we don't offer the specific services we don't define that In Australia there's a bit more barbecue cleaning, In the US there's a little bit more snow shoveling, and in the UK I don't know there's probably tea drinking or something I don't know. But in every different country you might have slightly different use cases. But Airtask is kind of a platform and we are very much like hey, everyone needs a place where they can ask for something to be done, and everyone needs a place where you can earn money by doing stuff for people. And so I think literally we think that there should be an Airtasker in every single country, and that's why we're so excited about finding this model, which scales at a local level through local media partnerships.

Andrew Musgrave: 8:58

Are there any competitors in other countries to this sort of platform?

Tim Fung: 9:02

There are a lot of these folks that sort of started with the Yellow Pages and said oh, you know, to the local plumber you used to pay $100 to the yellow pages. Why don't you come up, pay $100 to me and I'll give you the digital version of the yellow pages? So in Australia you've got things like Hi Pages where you know you can pay a hundred bucks and you know be listed in Hi Pages. In the US you have a company called Thumbtack or Angie's List, which is q uite well known.

Tim Fung: 9:33

So there's a lot of these sort of like yellow pages 2.0 type models. But in terms of being an e-commerce platform where you pay through the marketplace platform like you do with, say, uber or Airbnb, there really isn't anyone who's sort of gone out there and built anything of much scale. So you know that's a two-sided problem. In one sense it's great because the ocean is so blue, that the field is so green and white, but there is a job in educating the market as well. So you know that's the flip side of that coin.

Andrew Musgrave: 9:58

Certainly plenty of opportunity. There's no doubt about that. So I think let's just wrap things up what are some of the key milestones you're looking to achieve in the next sort of 12 to 18 months? And just some final comments for the shareholders that might be listening.

Tim Fung: 10:12

So we're absolutely committed this year to reaching a full year free cash flow positive and that's really at a group level. Whilst we're investing overseas, we're still going to be free cash flow positive and we aim to continue that into FY25 and beyond. So this is a business that doesn't need to raise any further capital in order to grow and operate. We really, over the last year, moderated our investment into our brand and so we're going to be reinvesting into our brand in 2025. Really excited about that because the Australian market is far from mature. You know, we think that we can be growing this business at big double digit percentage growth numbers for the next 10 years and then into the UK and the US and we're really doubling down on our media partnerships and just going to get them to scale, you know, in a pretty turbo growth trajectory.

Andrew Musgrave: 11:06

Well, I think it's fair to say the sky's the limit at the moment. So there's little competition out there and plenty of opportunity, not only domestically but offshore. I'm sure it'll just grow from strength to strength. So thanks for joining us in the studio today. It's been great to chat and we look forward to further updates in the coming months. Thanks so much for having me. Great Thanks, Tim.