Airtasker Limited (ART) Earnings Call Transcript & Summary

Welcome to the RAAS Research Group inaugural Stock Take webinar where we will dive deep into the analysis of a promising ASX-listed stock. Today, we're focusing on our attention on Airtasker Limited, ASX code ART, Australia's leading online marketplace for local services. Our session will begin with a comprehensive analysis presented by RAAS Research Group's senior analyst,  John Burgess, who has recently released research on the company. John will cover all the main themes, financial models, potential upside and risks every investor should consider before making an investment decision. Following John's analysis, we will have the privilege of hearing directly from Airtasker's CEO, Tim Fung and CFO, Mahendra Tharmarajah, Apologies. They will provide an in-depth presentation about the company, its vision and future prospects. After the presentation, we will have a live Q&A session. Please feel free to submit your questions using the Q&A function on your screen at any point throughout the webinar. I will be collecting these questions and putting them directly to our presenters during the Q&A session. As I said, thank you for joining us. And without further ado, let's get started. Please join me in welcoming RAAS Research Group's senior analyst,  John Burgess. John, over to you.

Thank you, David. If we go to the agenda for today, I'm just going to run through some of the key issues in the recently released initiation. Having looked at recent trading, the media deals that have been announced by Airtasker over the last couple of months, how we've selected our peers to sort of value Airtasker, our valuation approach and some key sensitivities and risks in our assumptions. Just before we flick over -- for those who don't know, Airtasker is an online marketplace, connecting people who need things done with taskers who will do the tasks. And it's a pretty simple earnings revenue model, although management probably would disagree. Where basically Airtasker could take a fee for connecting those 2 players. In terms of FY '24, revenues are roughly 80% Airtasker Australia, 18% Oneflare , which is a trading connection online marketplace and 2% international whether trade in the U.K. and the U.S. So if we go to the next slide, One of the things that interested me when we first had to look at this company was its correlation in recent quarters of their growth in gross market at volumes versus discretionary spending. And the chart on this slide shows that pretty clearly. As we know, discretionary spending has been very weak in Australia over the last 5 quarters. And as an ex retail analyst, I really I've never seen sort of like store sales declines across discretionary retail like we have seen in the last 5 quarters as much as 15% to 20% in some of these discretionary retailers like DASCAN [unintelligible] guys. So the -- while 70%, the company is sort of pretty confident at 70% of the of the trade that goes through the marketplace is nondiscretionary. Clearly, the 30% that is quite discretionary. So I think one of the key themes we're looking at Airtasker is a recovery in discretionary spending over -- at some stage, cycling the sort of negative comps over the next 12 months. They're very well positioned to leverage from that. And you've already seen some improvement, again, in line with the lot discretionary retails listed in the recent fourth quarter. We estimate a 2% increase in GMV. But it's been as negative as sort of 12% to sort of double digits over the last 5 quarters. We're looking at Airtasker Australia here. We exclude Oneflare, Oneflare has been fairly weak over the last 3 quarters, which management might discuss later on the presentation. What has held the revenues up. So with this decline in GMV, revenues have still been growing, and that's really been a driver from monetization which has increased from roughly 17% to 22% for our estimates on Airtasker Australia. And so that's bringing in cancellation policies and things like this have really helped improve that rate. And so when we get the leverage from the discretionary recovery, it will be even greater with a high motivation rate. But should they can keep that rate where it is, it will be higher. So I think the key takeaway from recent trading has been weak, it seems to be stabilizing. And if we get a discretionary recovery, Airtasker approval rate to leverage off that. If we go to the next slide. Over and above potential leverage in discretionary spending is these recent media deals that Airtasker has done. What we've tried to do in this state is part of our initiation is just sort of, I guess, get an understanding of what sort of leverage is possible for a potential new customer growth or GMV growth? Could we expect from $11 million in retail advertising spending in Australia over the next couple of years. And so what we've done is just assumed we've just taken the $11 million in media spend, divided it by an estimated customer acquisition cost of about $80, which seems to be around sort of where a lot of peers sit in terms of their expectations. And doing that gets us additional GMV of about $59 million. And if we acquire 22% monetization rate to that, that's about $13 million and potential revenue of 140,000 new customers over the next 2 years. So that gives us a feel for what's possible. And we're seeing -- obviously, they also did a deal with Channel 4 in U.K. last year, and we're seeing some benefits from that spend already. The U.K. revenue was up 76% in the fourth quarter FY '24. So media spend for these types of companies, media spend does you wouldn't spend on media if you don't get a return from new customers. And so you would expect that $11 million spend over the next 2 years to drive additional revenues over and above any natural discretionary recovery. Next slide. So the -- in terms of sort of how we look at this company, we looked at small caps. We don't compare it to large caps and marketplace operators in Australia. So we've sort of looked at campifying the (unintelligible) the high pages, these sort of companies as the right peers to try and get a valuation lead. You could add the online retailers like (unintelligible), the whole inventory, whereas Airtasker doesn't. But nonetheless, they're sort of online, and they have a lot of media spend to drive volumes. Interestingly, those 2 businesses are trading at much higher than multiples than the multiples that we've arrived at to look Airtasker Australian business. But yes, we're very happy with the peers that are selected. And that's what we use the multiples from those peers to evaluate Australian business. If we move to the next slide. So when we look at Airtasker and how we value it -- the Australian business is profitable at the EBITDA line and the international business is losing money at the EBITDA line. We don't think it's appropriate to capitalize those international losses because there are obviously -- there's a lot of spending that goes on to establish those positions. So what we've done is from the Australian business, we've taken the estimated EBITDA for FY '24 and modified by the average peer multiple, EBITDA multiple of 11x from those multiples. So the peers were just discussed. For international, Airtasker has been in the market for in the U.K., I think, since 2018 in the U.S. 2021. And over that time, there's been a substantial investment -- and what we've done is just try to add up that investment, and we've just taken 50% of that investment to date as a starting value for what we think the international business should be worth. So if we add the 2 together and then take off the minerals that add net cash, which was sitting around certainly at the end of the financial year, we run at a valuation of $0.54. And for what it's worth on DCF, which obviously has a moral assumptions, it comes out at about 52%. So we're pretty happy with the check from the DCF and final parts. Next slide. In terms of, I guess, how -- when we look at our valuation earnings assumptions, where we feel the key assumptions are, clearly, international is on them. It's losing substantial money in the EBITDA line currently. There's obviously -- and to really cover that loss, they need substantial revenue growth over the next 3 or 4 years. And it's going to come in year 1 or year 2, that certainly that's the recall rates improved for the business. How quickly they can narrow that gap between revenue and cost is a key assumption. Given the Channel 4 deal in U.K., we have that business growing at somewhere between 50% and 100% per annum over the next 3 or 4 years, which I don't think is unreasonable, but that's a key assumption in narrowing that. And clearly, the assumption on the Australian media deal are important. Once again, I don't think our assumptions on the $11 million spend is unreasonable. And remembering that there will be media spend over and above that $11 million ongoing from the company side in cash bed. So the combination of existing cash spend plus the initial media deals is clearly earnings and the assumptions that drive the uplift in revenue over the next 2 years. And then speaking, all these companies spend a lot of money on media. And obviously, a lot of them are still in that sort of scaling up mode. And so we're sustaining media spend relative to revenue ultimately sits. This is like a 3- or 5-year assumption is key to valuation. We have it sitting at about 15% long term. It will be as high as 38% to 35% next year. I guess the other issue with Airtasker is that they are used for sort of a lot of one-off tasks. It's difficult to keep that -- it's difficult for them to tap into that sort of regular recurring plan every 2 weeks. So the ability to somehow tap into that sort of regular user function is probably upsell. We haven't got really -- have not been really penetrating the huge market as much as they can from that because of that issue. And then I guess the final thing in terms of the DCF, obviously, all these companies where they're loss-making, we do have a higher beta than the market for the loss-making and the sort of start-up measure. So the more they can prove sustainable profit in Australia and narrow that internationally the more we can cut that business out rate and improve up the value. So yes, I think that's the -- my summary would be that I think Airtasker in FY '25, '26, particularly, are very leveraged to a discretionary spending recovery. They'll have a significant media spend over and above normal to be able to drive that number. And coupled with the U.K. media deal and the narrowing of that international loss, they're pretty well positioned to a net cash balance sheet and operating profit cash flow to build on what they have to date. That's it for me, David.

Thanks, John, for that detailed analysis. I think really sets the scene for the presentation to come. And remember, for those watching, there is a copy of the research that can be found on the RAAS Research Group website, so you can access that. And we will bring John back a little bit later in the Q&A session to answer any questions you may have into in terms of his research and what he's found. Now it's time to hear directly from Airtasker's CEO and CFO. Please join me in welcoming Tim and Mahendra, who will now present the Airtasker story. Tim, Mahendra, over to you.

Thanks, David. So I'm Tim cofounder and the CEO here at Airtasker and keen to take you through what we've been working on over the past 12 years. So if we can skip forward a couple of slides. And starting with Airtasker's mission. So at Airtasker, we believe that every single person has unique skills. And our mission here is to empower people to be able to realize the full value of those skills to got to earn an income by sharing those skills in the community. As a consequence of this, printing jobs isn't a byproduct of a marketplace that we've created. It's actually the core purpose of the business. You can see on the right-hand side here, we have a whole range of takers who earn money through our platform. Everything from people who are using Airtasker full-time to pay rent and to be able to pay their bills all the way through to people who are doing a couple of jobs a month as a way to earn just a little bit of extra money. I'll skip forward a slide, the way that we are progressing towards this mission to enable people and to empower them to be able to make money from their skills is to build the world's most trusted marketplace to buy and sell local services. We've actually got a really, really simple business model. We connect people who need work done with people who want to work. And on the next slide, we go through how we are doing this in a unique way. And what Airtasker is doing is unique on a global basis. The first thing about Airtasker that makes us unique as a marketplace for services is that it's an open community model. What we mean by that is we don't micromanage the services. We don't own the service providers. What we do is we've built a system, a platform, which creates transparency and accountability and allow us to be able to work directly together. That means that we have a very light touch business model and then also results in us having very strong gross margins because we don't have a lot of ops of like managing these individual tasks. In fact, our gross margin is over 95% because of that reason. We just have small amounts of our cost of goods sold in the form of credit card, fees and some insurances. The second thing that makes our Airtasker unique is that we are infinitely horizontal. That means that we don't just focus on one kind of service like say, cleaning and nor do we focus on like a category of services like say, home services. What we've created is a system in which customers can opt for almost anything to be done within our guidelines. And this is 2 really important consequences. The first is that it enables us to create these new industries to enter a new market rather than competing against people who are local cleaners or local gardeners, we can actually enable people to do these jobs that they literally can't get done anywhere else, and that attracts them to Airtasker. The second thing that I think is very unique about this business model and why it's advantageous to have this horizontal model is that the way mostly we hear about Airtasker is from these like crazy stories, it's like, hey, I needed someone to line up for Taylor Swift concert tickets or I needed somebody to pretend to be my partner for the evening because my parents are on my back about me or finding a spouse. And so this is the way we will hear about Airtasker. And what that translates into is a whole bunch of earned media, whether it's through PR or whether through content integrations, Airtasker appearing in an Amazon Prime show and things like that. All of that is earned media, which gives us a significant advantage when it comes to customer acquisition. If we move to the next slide, just a summary of how Airtasker makes money. So what's really important about the business model and the revenue model that Airtasker has built is that it aligns both the customers, the tasks and Airtasker to all want the same thing, which is more jobs are being done. And so one measure of marketplace growth on Airtasker is what we call GMV or gross marketplace volume. And that's the total of all the jobs going through our platform. When you look at the GMV, basically, a little bit comes out in terms of VAT in the U.K. or GST in Australia. And the large proportion of that is paid out to our taskers, about 78% in this case. And Airtasker is making a monetization rate or a revenue rate of about 20% of that GMV -- if you didn't take that revenue, and that's what appears that's the top of our P&L statement, you can see what comes out of that. It's about 0.9%, which goes to public liability insurance, which makes sure that we can cover our taskers of the third-party property damage or personal injury. And then about 3.7% in merchant fees that goes up to credit card costs. So this is really a win-win business model. What it represents is that it's a low risk for taskers to do. They don't like pay upfront fees to give Airtasker a go. They can just come in and they can try. What that means then is that customers get the widest range of possible service providers. So it's not just the few people that choose to join that platform and pay a subscription fee or pay an advertising fee. It's a genuine representation of all the people who could do your job. And lastly, we have really, really strong gross margin. So because of that light touch operating model, Airtasker can retain a huge amount of that revenue that we generate and that falls to gross profit and gross margin. Skipping forward a slide 2, the competitive landscape. So as I mentioned before, Airtasker's really doing something quite unique on a global scale. And I think a good way of sort of framing the market is that there are some folks that names that you would have heard like Fiverr and Upwork that work in the remote outsourcing marketplaces. So these platforms typically are connecting people in Australia and the U.K. and the U.S. with workers who are in, say, India or Bangladesh or other lower-cost countries. And so similar business multi Airtasker , but a completely different market. So Fiverr and Upwork with this in that remote side, Airtasker is focused on the local services space. If you then have a look at the bottom quadrant of the local services space, there are a lot of these advertising models that exist. So for example, in Australia, Hipage is an advertising model, you can -- if you're a plumber, you can sort of pay to be part of their directory or there are platforms like our Facebook Marketplace, where you can sort of put up a post and pay to promote that post. In the U.S. and the U.K., there are other replicates of Hipages as well. But they're all based on this idea that it's the seller in the marketplace, who is paying to advertise themselves on that platform. What Airtasker is doing is an e-commerce model. And within the e-commerce local services space, that's really to our players as Taskrabbit and Airtasker . And how does Taskrabbit and Airtasker, Airtasker has this open community model. And for that reason, we have a much lower operational cost. It's free to join the platform. And I think maybe a good analogy is comparing Airtasker to Taskrabbit, is Airtasker is sort of like YouTube. Anyone can post a video and the job of the platform is to make sure that you get to find the right video that you want to watch, whereas Taskrabbit is probably a little bit more like Netflix. They sort of curate the best videos. And so we think these are the 1,000 best videos to watch. And so you can imagine quite different sort of like operating margins and different kind of business model. So Airtasker is quite uniquely positioned in this e-commerce or legal services space, both in Australia and across the world. And with that, I'm going to pass it on to our CFO, Mahendra, who'll take you through the financials.

Great. Thanks, Tim. Afternoon, everyone. I'm Mahendra Tharmarajah CFO of Airtasker . Next slide, please, David. I'm going to start with a quick review of our financial highlights and operational highlights for FY '24, noting that we are still subject to audit on our FY '24 results, which will be released to the market in probably about 3 weeks' time. So at the start of FY '24, we communicated quite clearly to the market that we were aiming to be cash effective positive over the course of FY '20. We actually achieved that on a full year basis of $1.2 million positive free cash flow. We actually achieved that in semi the half year, just about $100,000, and that's a significant turnaround on the previous year. Our core marketplaces revenue, Airtasker Marketplaces revenue is up just under year-on-year. And as David mentioned earlier, in the U.K., we're seeing really strong traction in the fourth quarter, which is seasonally quite strong, up about 76%. We finished the year with just under $18 million in cash and TDs on our balance sheet. And we, of course, closed deals with oOh!media and ARN at the end of June and the beginning of July, which gives us about $11 million of advertising firepower which Tim will talk to it later on. Next slide, please, David. So looking at our fourth quarter first, Group revenue, up just about 3%. So as David mentioned earlier, we've got 2 marketplaces, Airtasker and Oneflare, -- and then if we turn to the Airtasker Marketplaces, we're up around just under 7% on the quarter-on-quarter. One of the things to understand, I think, and it's important we point out to everyone is that the business is quite cyclical at the moment. So we see strong performance demand, performance customer demand in the spring and summer seasons. So in Australia, that's basically fiscal Q2 and fiscal Q3. And what that means is that when you look at our numbers, you can't simply take 1 quarter and multiply by 4 because you might pick the wrong quarter. So what we've done here is we've highlighted the fourth quarter, and you can see that the fourth quarter has continued to improve quarter-on-quarter over the last 3 fourth quarters -- and you can also see that Q2 and Q3 are quite strong. Now one of the things that one of the benefits we'll have is once we expand internationally and get into the Northern Hemisphere in the U.K. and the U.S., we'll have a much more countercyclical model where the U.K. and the U.S. will be strong in their summer months, spring and summer months and then Australia is weaker during those same periods and then the inverse is true as well. our nontractor free cash flow for the quarter was negative just under $2 million. One of the things you can see here is that, again, looking at the quarterly cycle is that the fourth quarter for 2 reasons was down. One is the cyclical nature, but we also took the opportunity that we were carrying, I guess, a little bit more cash than we wanted to finish the year with. And we took the opportunity to upgrade our marketing in the U.S. and the U.K. in the fourth quarter. And so while that was negative in the fourth quarter, the full year result was positive, as I mentioned earlier. You can also see that we were positive in the second and third quarters and pretty much breakeven in the first quarter. Turning to our operating cash flow. We had 3 consecutive quarters of positive operating cash flow in the fiscal year. So the first quarter through the third quarter were all positive and then the cyclical nature of the business caught up with us in the fourth quarter. Next slide, please, David. So looking at our full year results, we finished the year group revenue just over $46.5 million just on the 6% growth in the prior year. Our compound annual growth rate is actually pretty good at the moment. It's about 25% for the last 4 years. So we listed in March '21. So there's the year before that and then the year subsequent to that period of time. The Airtasker Marketplace's revenue as John mentioned, is still the lion's share of our business, sitting around 80%, 82%, grew just under 10% year-on-year, and we're tracking about 19% CAGR for the last 4 years. And our positive free cash flow for full year was $1.2 million, a significant turnaround in the year. You can see that a lot of that happened really in the last year. And we've also noted there that we haven't raised any money any new capital in FY '23 or FY '24. I think that's important to understand in the current capital markets environment, capital both scarce and expensive, and we've made a point of not having to go to the market and raise capital that would be expensive or dilutive to our existing shareholders. And then looking at our operating cash flow, as I mentioned, we have a positive operating cash flow of $3 million for the full year. And again, a significant turnaround in the previous 2 years, we were quite negative. And a lot of that was related to the fact that we -- this year, we've had, I guess, steady revenue growth, but we also got cost out of the business at the end of FY '23. We had a restructure where we reduced the headcount by about 20%, 45 roles, and that we've been able to sustain that going into FY '24. Next slide, please, David. Looking at our international markets. So the 2 markets we're principally activin on the U.K. and to a lesser extent, the U.S. So the U.K., as John mentioned earlier, we struck a partnership with Channel 4, which Tim will talk about our media partnerships a bit further on last year, and we went to market with the television campaign in October 23. And we're obviously now in the peak season, Q4 and Q1 of the peak seasons in the Northern Hemisphere. And so we had pretty strong revenue performance in the fourth quarter in the U.K. So GMV was up 35%, and revenue, as we mentioned, was up 76%. And on a full year basis, our marketplace was up 20%, but even more pleasingly, our revenue is up 41%. The market -- the business is still small, but I think it's promising in terms of the performance after less than a year in market with our television campaign. And in the U.S., -- the market is still quite small. It's tracking quite well. We've been quite disciplined in how much money we're investing into the market. We continue to have discussions with various parties of our potential media partnerships similar to what we've done in the U.K. and in Australia. And I think our approach to investing in markets or investing cash anyway in markets is to combine it with media partnerships you get the turbocharge effect of one impacting the other. I'm now going to hand back to Tim to talk about strategy.

Thanks, Mahendra and then perhaps we can move to the next slide. So if you look at the sum of parts that David talked about earlier -- John talked about earlier, sorry, in terms of in terms of Airtasker. If you really look on the left-hand side here, you've got Airtasker's are holding about $17.8 million of cash and term deposits. And then Airtasker Australia is actually generating significant cash flow now. So when you look at how much it cost to operate the Australian marketplace, incredibly lucrative in terms of cash generation. And what we're doing is we're now taking that cash flow generation. And whilst remaining group cash flow positive, investing into new marketplaces in -- primarily in the U.K. and the U.S. If we go to the next slide, one of the things that we did to grow the marketplace into the cash-generative and lucrative market base in Australia was a media partnership with Seven West Media, one of Australia's leading television networks. And during the period from FY '16 to FY '21 of Australian partnership with Channel 7, we have a really incredible success whereby we were able to increase our brand awareness from about 6% to 60% with 20x or revenue growth during that time. And when we gave Channel 7 the opportunity to get a liquidity event in our IPO, they generated a 5x investment return on that investment. So it's a really, really a massive, massive success. If you have a look on the right-hand side here, what we've charted is how much we had to invest into advertising marketing spend to build that network effect in Australia, which generates the cash flows versus the GMV that we built it up to. And so what you can see is FY '16 was before we partnered with Channel 7. We then had these 2 years, we're investing between $8 million to $10 million a year into marketing. And I must say during that period, it looked like a crazy move. It was like, wow, these guys are investing ahead of the curve. But what we could see was really the volume starting to build out. We knew that if you have this network effect that you would really -- that would pay massive dividends. And so you could see during those periods, we were able to grow the marketplace of about $12 million GMV run rate to $36 million to $68 million. Once we got it up to that level of scale, we're actually able to start fine-tuning the marketing down. And you can see there in FY '19 year 4, we spent about a little under $7 million in marketing. And in FY '20, we really don't want to demonstrate the profitability of the model and the fact that we weren't reliant on spending this much on marketing once you reach that scale. And you can see that the GMV continued to grow to over $100 million in GMV, whilst we were spending a little over $1 million a year in marketing. So with a 20% monetization rate, you can see that's a pre lucrative model to get to. So if we move forward to the next slide, as we mentioned before, in June 2023, we struck our partnership deal with Channel 4, Channel 4 is, I guess, equivalent to the total all 7 of the U.K., and it gives us access to something like $78 million -- 78%, sorry, of the U.K. population and a huge access to streaming where Channel 4 does something like 1.2 billion streaming views a year. So a massive distribution network. And in October 2023, we launched with our campaign, 'Airtasker Yeahtasker', which has been a huge success in the U.K. we flip forward to the next slide there. What we're really doing is replicating the success that we saw in Australia with Channel 7 and growing where we are in the U.K. now, which is if you look at that little red while off the bottom of the chart there. And then you look at the trajectory that we're able to get in Australia together with Seven West Media, doing that in the U.K. with Channel 4 is an even bigger total addressable market. It's about $41 billion of term there, which is multiples of the opportunity size in Australia. So a massive opportunity ahead. Skipping forward to the next slide, not only are we doing this model together with Channel 4 in the U.K. We also came back home and we thought, "Hey, there's a huge opportunity to turbocharge our investment into marketplace growth in a smart way for us to access more media and more capital to invest into marketing. And so recently, we've struck 2 really, really exciting partnerships. One is with oOh!media , which is Australia's leading outdoor media player, they have about 43% of the outdoor market. So absolutely our #1 position there for billboards, for digital display at the airport, in shopping centers, all of these opportunities to create relevant brand awareness and brand savings across Australia and New Zealand as well potentially in the future. We've also struck a deal with ARN. So ARN owns WSFM, KIIS FM, Kyle and Jackie O, all the leading audio properties and also as a partnership with a very large U.S. media company call iHeartMedia, whereby they syndicate all of the podcast and everything coming out of the U.S. into Australia. I think audio and outdoor have a massive release in terms of media firepower as the digital space like Google Ads and Meta-ad just gets so crowded with content. So we believe strongly that there's going to be a big renaissance into these forms of media. The way that we struck those deals are a little bit different. So let me start with how we struck the deal in the U.K. What we did is we passed it up with Channel 4 with an equity investment in our U.K. business. And what that effectively means is that the investment is ring-fenced to the U.K. And in 5 years' time, we've agreed with Channel 4 that we will acquire back their equity in Airtasker U.K. And the way that we're going to value Airtasker U.K. and how much we buy them back for is how much revenue is Airtasker U.K. doing multiplied by what is Airtasker Limited, our group's revenue multiple. And what that means is that both parties are completely aligned to where they can deliver success and it's also a great risk management from Airtasker. In other words, if it goes incredibly well, that's fantastic Channel 4 is going to make bank and be very, very successful, but Airtasker wil own the other 80% of that business. So that's a great win for us. On the other hand, if things go only moderately well, we have a very low reacquisition price for that. So it's ring-fenced and it's risk managed, but it provides access to the upside. We did say different deal with oOh! and ARN in Australia. The way that we've structured those deals is as a convertible note. Each of them is a $5 million unsecured convertible note issued by Airtasker Limited, the company. And we have a 5.8% coupon rate or interest rate on those over 2 years. And at the end of the 2 years, we can choose to do 1 or 2 things. One on is we can choose to convert it into equity at a 10% discount to the price into used time, which we are very, very optimistic and hopeful will be higher than the price it is today. So a cheaper cost of capital in that sense. Or we can also choose to simply repay those notes. And so $5 million turned to with 5% interest is something like $11 million in 2 years' time. And Airtasker actually is holding the funds on balance sheet of about $17.8 million. So that's also an option for us as well. So these deals provided with a lot of flexibility, a very, very low cost of capital and ultimately align Airtasker with these media partners. And I must say there's a huge advantage from that alignment, whereby there's clearly incentives for ARN and ROH to give us bonus media, to talk about Airtasker, when there's opportunities to do that and to integrate us into opportunities to that they see. So moving on to the next slide. Overall, look, FY '24, I think, challenging economic conditions, and we've really set ourselves solid foundations to accelerate our growth and going into the current financial year of FY '25. And we have positive free cash flow. That was our promise to the market, and we absolutely delivered on that promise. Whilst doing this and being very disciplined the cost, we generated solid revenue growth with Airtasker growing at about 9.8% in FY '24. We've got $17.8 million on cash in terms of deposits on our balance sheet, plus another $11 million of these media advertising inventory with oOh! and ARN and also a small amount of Channel 4 as well. Going to FY '25, we're going to start in a disciplined way investing back into group growth. We're going to do that in a way in which we remain full year. Our group positive free cash flow, but we are investing into -- we are going to be investing into growth, which I think is exciting, and that's what we're here to do and to fulfill Airtasker's mission. So thank you, everyone, for your time today. And back to you, David, if there's any questions.

Thanks, Tim and Mahendra for the insightful presentation and comprehensive overview of the Airtasker business. Now as I said at the beginning, there is an opportunity to ask questions of Mahendra, Tim, and John, and we will do that via the Q&A button that is on the bottom of the screen. We do have a number of questions come through, so we might just jump straight into it, if that's okay. In terms of your plans for cash flow in full year '25, can you elaborate a little bit further on what they look like?

Yes. Mahendra, do you want to jump in on that one or?

Yes. I can talk to that. Thanks, Tim. So I think our view is that it was important to the market that we could demonstrate that the business was on a sustainable footing as far as cash is concerned, right? I think we've got a lot of feedback through FY '23 that we're either going to run out of cash and we're going to have to raise money in an expensive capital market environment. We made a very conscious decision last year -- at the end of last year that we were going to prove out that the business could be operated on a positive free cash flow basis sustainably and still grow as well. I think we've done that this year. So that's a high watermark for us. I think we intend to maintain that going into FY '25. We've obviously gone to market and put in place a couple of partnerships with media partners, and we continue to have discussions with other media partners. So I think the combination of the free cash we're generating in Australia plus the in-kind media from other partners will enable us to still continue to grow while preserving our balance sheet position that we're starting to the year with.

And just touching on the media deals you've done with that you say, oOh!media and ARM. How do you expect that to be used?

So we've got a 2-year period in which we can invest that media capital. In terms of how it's going to be used, I would say there are a couple of different mediums through which we can go. There's obviously traditional spots and dots, which is like basically advertising inventory, and we have secured top-tier rates to be able to be able to utilize that medium and frankly, scores the hell out of every opportunity that we've got. So we've got an incredible media agency UM and a really, really strong media planning team that extracts everything out of that. But I think just on top of that, you've also got a lot of opportunities for integrations and editorial that can come with these media deals. So whilst the media deals represent a great financial deal, they also represent a great brand and marketing operational deal, too. Having these -- having Kyle and Jackie O and people like that behind the brand is really, very powerful. In terms of how we deploy it quantitatively, I would say that we've got 2 years to do that and will lay bring a large amount of it up forward in FY '25, probably not 100%, but certainly, we're not out here to wait around where we're going to invest in a way to build the future.

And do you think, a good question here. You've obviously done some really innovative media deals. Do you think there's an opportunity to do more in Australia?

I think -- well, the way we're looking at these media deals is that they are -- one of the big considerations when you're investing into marketplace growth is what is the cost of capital to do that. And obviously, over the last 2.5 years or so, the cost of capital has been very, very, very high. Certainly, in terms of share price and raising capital, but in general, the environment has been high cost of capital, which is why we've been very disappointed with investment into growth. These media deals give us access to much, much, much lower cost of capital inventory. And I think it's actually quite an innovative model more broadly in the sense that why go and raise money from investors and then take that money and then go and give it to a media firm, who then earns a margin on that and is treating you like a cash customer. That's an inefficient -- need to have almost like to sort of remove that layer of inefficiency. And the aim there is to lower the cost of capital. That means that where we can do these deals within reason, I think there's opportunity for acceleration.

And sort of taking a step further, how will the media strategy play out in Australia, and and U.S. with current and future partnerships?

Well, I think the media strategy is very interesting. One of the big advantages that you get from scaling distribution of our platform is that, in other words, doing more marketing, doing more distribution is that you can actually invest in a higher-quality content. The quality of that ad, the quality of that integration, the quality of an endorsement, et cetera, because you're spreading it out and amortizing that over a much, much more media distribution. And so I think there is a big sort of compounding advantage from widening the distribution in this way. And I think one thing that I do want to call out here on the inside is -- the great thing about these deals that we're doing in the U.S. and the U.K. is that they are ring-fenced to that market. And the U.K. deal that we've done is ring-fenced to that market, which means we've got this massive exposure to the upside, but we're also not betting the house every time that we're going to do one of these deals. It's always commensurate with the performance of that market. And I think that is a really, really important call out, which I think is sort of different if you're sort of rolling out into the property leases or buying a bunch of inventory, something like that, you're almost sort of like betting the house every time you do that. No, these are very much ring-fenced symmetric beds.

And a good question here. Does the media, sorry, oOh!media and ARN deals mean you will spend less on marketing outside of these deals in Australia?

The way I would look at that, it is a smart way for us to finance the proportion of our marketing budget. So short answer, yes, we're certainly -- all things being equal, we've acquired some really low cost of capital media inventory. We don't need to also buy that with cash. So yes, I think it's a smart way of us managing our overall marketing by (unintelligible) doing it in an efficient way.

Question here, what, if anything, would make you reevaluate the international expansion or maybe the speed of international expansion?

Well, I think we're evaluating that sort of weekly, monthly, quarterly is we're sort of evaluating what is the investment that we're making into that. I would say that, again, one of the big advantages to a model like Airtasker, which is essentially a software business in which we're scaling the distribution of that software business. One of the big advantages of that is we're not going in and making these long-term commitments to these countries. So we're not sort of like going over and entering a property lease or hiring lots of people, which requires you to sort of make a -- come up with a 5-year plan and then be locked into that 5-year plan. Actually, what we're -- I think a more relevant way of thinking is we built a piece of software -- the cost of that software is largely fixed. The product team, engineering teams, all of these things to make that is software. And what we're scaling is just the sales and marketing of that said software platform. And that's almost entirely a variable cost. If we want to put a bit more into marketing for a week to drive more sales, we can do that, we're going to do a little bit less. We can do that, too, and we can really, really moderate that. That's even more flexible and moderatable as we look to do these media deals, which are not even cash, they're a lower form cost of capital. So in short, I would say that we're essentially evaluating how much we invest into these markets weekly, monthly, quarterly.

John, a good question has just come through for you. What are you looking for to help you reevaluate or readjust your thinking in terms of Airtasker. What are some of the milestones you're going to be focused on from an analytical point of view over the next sort of 3, 6, 12 months?

Well, I guess, I think as we called out in the sensitivity, it's really probably 2 key things is, obviously, you want to see a revenue uplift from the ad spend. And you want to see the loss of international narrow, you want to see the revenue continue to grow at that sort of 50% to 100% level and costs are the same. So the loss of the international business called loss narrows. So they're the 2 things that I've been looking for. Yes. And probably maintain that cash balance about where it is because obviously, there's potential liabilities in the media deals 2 years away. So we want to make sure we can take them.

Tim, very knowledgeable group here as submitting all their questions. So I'll just keep firing them at guys, if that's okay. Are you happy with the trends for U.K. GMV in the current September quarter as this is another U.K. summer quarter, which hopefully builds on the June U.K. summer quarter.

Yes. So just take that question, we kind of saying like how is it going post the Q4 FY '24? Or how is it sort of trending into the... 25?

Yes.

Okay. Welcome. Yes, really happy. I think that we -- up until now, we've been investing a pretty skinny budget. And because of that, we used to see it kind of go up in spring and summer, and then start to come down a little bit post that. This year, we're seeing continued momentum and we're seeing some really, really strong results. And I think the reason for that, I would say, is that the investments that we make into brand and effectively by these media deals, investments in the brand and above-the-line awareness is they paid dividends over a longer period of time because someone sees that ad on television. They kind of need to see that ad 5, 6, 7x over a long period and then have that need for Airtasker, then that translates through to revenue growth. And so I do think that you'll see a longer tail on these kind of investments, it's not sort of like whether ad on TV, you expect to get all the value from that immediately. You'll see a pop for sure, but then you'll see a much longer tail. And I think we're starting to see some of the dividends of that, which is good.

And in terms of the U.S., there's a couple of questions here, so I'm just going to grow them together. What sort of media deal are you looking for? And does it look similar to the Channel 4 deal or something completely different?

So I would say the trial media that we're really happy with the structure. It really does ring-fenced risk, and it really aligns Channel 4 to doing what they do well, which is get the local revenue up whilst mitigating our risk by saying that the outcome for them is aligned to our group revenue multiple. So really, really happy with that deal. And if we could replicate that deal again, that would be really, really great. That said, the deal we did in Australia in terms of a convertible note structure is potentially even more, it's potentially even more advantageous for Airtasker because it means that we get all the same benefits that we did in the Channel 4 deal, but we would have a -- we're pushing out the valuation. We're not valuing the company today, we're valuing it at some point in the future. I'm certain that, that will certainly be advantageous to us. I would say the U.S. market is absolutely (unintelligible). There are so many different types of media that we can go after. And there are some really, really interesting niches in the U.S., everything from like a huge Hispanic market. You've got a lot of these streaming platforms, which are really, really enormous. Audio is super interesting in the United States market. It's a massively a consolidated industry versus television, which is highly fragmented in the U.S. So there's a lot of different opportunities over there. And yes, right now, we're just, yes, focused on exploration and hopefully have an announcement at some point in the future.

Okay. Conscious of time. One last question. What is the strategy for Oneflare and how is the integration of the Airtasker going?

Oneflare is super interesting in this model. So if you sort of break apart some of the financials that we shared, we've really stabilized the Oneflare platform and seeing some of the robust results from that business. Oneflare is a slightly different business to a task because, one, it is predominantly monetized through a subscription model, whether the seller or the service provider is paying a subscription. That enables us then to target a slightly different audience of sellers. And that is predominantly these like small businesses rather than individual taskers that an Airtasker, the small businesses that are Oneflare. And I think one of the great things about this acquisition has been, we've certainly done a lot of synergy extraction out of it. So we've done a lot of work to consolidate and deduplicate the back office of Oneflare. And when it comes to the front office and the branding, we're actually discovered there is a cohort -- there's a huge desire in the market for a product like Oneflare. And so rather than just sort of taking the Airtasker brand and slapping it onto Oneflare, and replacing all of those features, we're actually extracting out what customers really love about the Oneflare business model. And so we're planning to run 2 brands into the next financial year for sure. So back-office synergy, yes, front office, you'll continue to see the Oneflare brand, and we're actually going to be making some significant investments into that brand from a product and from a product perspective.

Well, that does bring us to the end of the Q&A session. The stack of questions, and you've answered them all and better them all beautifully. So I appreciate that. There are some additional questions, which we will take offline, so they can be answered at a later date. Thank you, everyone, for your participation. Great questions. Thank you, John, Tim and Mahendra for presenting today. I'd also like to thank each of the attendees for participating in the webinar and engaging in such great questions. We hope you found the webinar informative and valuable, and we look forward to seeing you at our future events, where we'll once again dive deep into the analysis of another promising ASX listed stock. Tim Mahendra, John, thanks for your time.

Thanks so much David.

And thanks, everybody, and we'll see you again. Have a great day.Â