Airtasker acquires Zaarly, gets foot inside the US$500 billion local services market

Gig economy jobs platform Airtasker’s (ASX:ART) share price has been on a downer lately, falling by almost 20 per cent over the past month.

Fears of inflation, and what it would do to the valuation of growth stocks, have played a major role in that fall.

And recently, investors have been looking for a reason to buy into the stock, after the company went public in March riding on a wave of fanfare and excitement.

That excitement has pushed Airtasker’s share price to as high as $1.96, after initially floating at 65c. But the momentum didn’t go far, and the share price is back today at $1.08, near its debut close.

That might be about to change.

Airtasker announced that it’s about to expand its footprint in the US, after acquiring San Francisco-based Zaarly, a popular local services marketplace for around $3.4 million.

This acquisition will give Airtasker immediate access to Zaarly’s 597,000 users and 900+ verified service providers.

More importantly, it will give the company an entry point into the huge $500 billion local services market in the US.

It has also announced a $20.7 million institutional capital raising at $1 a share, to further invest into an ambitious international growth plan, focusing in the US and UK markets.

Part of the proceeds will also be used to fund the Zaarly acquisition.

International expansion

Airtasker already has presence in the UK and US, with both experiencing modest organic growth in the past year despite COVID-19 restrictions.

But it’s the Zaarly acquisition that will catapult its position in the US market.

Founded in 2011, Zaarly ran a horizontal marketplace model that gained early traction and went viral that year.

But the platform pivoted to a curated model in 2013, and eventually focused on the home services market, such as painting and cleaning.

This curated model allowed Zaarly to develop a strong repeat customer base, with low customer acquisition costs.

By 2021, the platform has grown and acquired almost 600,000 users, where 80 per cent of sales are generated from repeat customers.

Airtasker plans to replicate the success of Zaarly into its own platform, with the Zaarly team now implementing the re-booking functionality into Airtasker platform. This will enable customers to contact Taskers they have previously worked with on Airtasker, potentially increasing its repeat business revenue.

The near term goal for Zaarly is to launch between 4-5 additional US city-level markets by end of FY22, and gain market share in the US$500 billion services market in the country.

Airtasker says its international investment in FY22 will lay the foundation for a significant growth opportunity in FY23 and beyond, with the $20.7m fresh funds to play a substantial role in both the US and UK expansion plans.

In April, Airtasker upgraded its full year guidance, lifting its GMV (gross merchandise value) to $148-$152m against a $143.7m estimate, after reporting a strong Q3 that was ahead of prospectus forecast.