Airtasker CEO Tim Fung talks expansion plans after coming off strong full year results
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The gig economy is rapidly expanding into new areas of the workforce.
More and more, we’re relying on gig workers to take even the smallest of tasks. Gig work is no longer just a means to earn that extra income, but has instead become a chosen fulltime career path for many.
It’s estimated that in 2021, the global gig economy is worth US$347 billion.
Australia’s Airtasker (ASX:ART) is certainly one company that’s riding hard on that boom.
The gig work platform has just delivered its maiden full year results since becoming a public ASX company in March.
The results hit all key metrics including revenues of $26.6 million, which was 38% increase on last year and ahead of its prospectus forecast of $24.5m.
Stockhead caught up with Airtasker CEO Tim Fung, who told us the results were more than just revenues.
“More important is our gross profit, which was up significantly to $24.8m and 39 per cent higher than last year,” Fung told Stockhead.
That’s a whopping 93% profit margin.
“A lot of internet companies out there have pretty low margins. They can drive a lot of revenue, but it usually comes with a lot of costs as well.”
Fung said that Airtasker hasn’t really spent much on paid marketing over the last two years, but has instead focused on building up the technology and organic network effects which have kept its customer acquisition costs low.
These high margins are now shining through, and have started to flow to Airtasker’s operating cashflow, which came in at $5.5m, miles ahead of its prospectus forecast of $0.1m.
This in turn led to the company’s first bottom line breakeven EBITDA in FY21, compared to a $4m loss in FY20.
When asked that question, Fung agrees but says he’s more focused on growth and expansion.
“We’ve now proven our business model in the Australian market, so it is an inflection point because we’re starting to move into the US and UK markets,” he said.
Fung said he has plans to invest around $20m into the US and UK expansions.
“For marketplaces like ours, you do have to invest upfront to build out that initial liquidity, similar to building up an infrastructure.”
It’s only after a couple of years that you can start seeing the J-curve growth in gross marketplace activity, he said.
In Australia for example, it took Airtasker around five to six years to get to 50-70 million of gross marketplace volume, so it does take time.
“We invested around $25m into marketing just to get to that stage, and only after we’ve done that, we were able to produce this 93% gross margin and positive cash flow,” Fung explained.
Part of Airtarsker’s expansion plans includes the acquisition of US gig platform Zaarly back in May for US$2.6m, where it subsequently raised $20.7m of additional capital in order to fund the deal.
“But merger and acquisition isn’t the actual main strategy for us. Our strategy is centred on three pillars which are marketing, building out new marketplaces like our new SuperStore, and then international expansion,” Fung explained.
The US could indeed become a critical market for Airtasker, where the size of local services is estimated at $500 billion, 10 times that of Australia.
As the gig economy expands, the platform providers are starting to get the attention from regulators.
We’re seeing this take place around the world, where regulators are enforcing stricter labour laws to ensure that gig workers are getting the same benefits afforded to permanent employees.
So could future regulations impact Airtasker’s business model?
“Airtasker works very closely with regulators, and we have inbound calls from the government, unions, and industry bodies all the time,” Fung said.
But ultimately, Fung said the company wants the same outcome as what those groups want – which is to create more jobs and making sure people get paid fairly.
With regards to paying people fairly, Fung explained that fundamentally, Airtasker’s model is different from platforms like Uber or Deliveroo in one major way.
He said that platforms like Uber and Deliveroo set the prices for the gig workers, whereas Airtasker allows people to set their own.
“At Airtasker, we’ve made everything transparent in that we’ll earn a 17% fixed margin, so we actually want our Taskers to get paid as much as possible.”
The platform has also recently added a new feature where Taskers can advertise what they can offer, instead of customers telling the platform what tasks they need done.
“We’re basically enabling the Taskers to describe what they can do within our community guidelines, and then provide a price and availability for that.”
And what about competiton?
Fung believes that Airtasker’s offering is unique in that it provides jobs for Aussies as opposed to offshoring them away.
He explains that in a platform like Freelancer for example, the goal is to get a remote task done at the cheapest price – and that’s usually passing it to a worker overseas such as in India or Bangladesh where labour is cheaper.
“We’re creating jobs for Australians, and enabling people to do jobs in this country where you actually need local skills,” said Fung.
Airtasker made its debut on the ASX at 65c per share, and was up by as high as $1.96 before settling at 94c today.
Could this be a reason for concern?
Fung says that he rarely checks the share price, and is more focused on the long term strategy.
“Especially now that we’re capitalised with $45m on the balance sheet,” Fung said.
Over the longer term, Fung is confident that there is a lot of upside for the stock price, especially when you look at revenue multiples compared to peer companies.
And Fung’s upbeat demeanour suggests he’s enjoying himself since becoming a CEO of a public company.
“We’ve had a great experience since becoming a public company. It’s been awesome to have Taskers and our employees being able to own a part of the business and go on the journey with us.”