Airtasker Limited (ART) Earnings Call Transcript & Summary

Hi, everyone, and welcome today to the latest RaaS Research Stock Take Webinar, where we will focus on the full year '24 results for Airtasker, Australia's leading online marketplace for local services. Don't forget the code, ASX:ART. Soon I'll introduce RaaS Research Group's senior analyst, John Burgess, who recently initiated on the company, who will today provide his view on the company's results and outline his expectations for the group in full year '25. He will reference his detailed financial analysis, which was recently published on the RaaS Research Group website. So if you'd like to download a copy of that, then please go to the RaaS Research Group website. This presentation will be followed by Airtasker's CEO, Tim Fung; and CFO, Mahendra Tharmarajah who will provide a detailed presentation on the company's recent results. At the completion of the presentation, Tim and Mahendra will then participate in a live Q&A session. So please feel free to submit your questions using the Q&A function on your screen throughout the webinar. I will be collecting these questions and putting them directly to our presenters during the Q&A session. Thank you for joining us. And without further ado, let's get started. Please join me in welcoming RaaS Research Group senior analyst, John Burgess. John, over to you.

Thanks, [ David ]. I just might go over the agenda slide. So before we have a quick chat on the results, I guess the key points that came out from my point of view, bearing in mind that we initiated about a month ago, most of the results were pretty much flagged through the various quarterlies over the years, so there wasn't too many surprises. We'll look at the media deals again in the light of the U.S. deal that was announced and then just update you on our sort of analysis of the potential for discretionary spending recovery, the way we approached the valuation for Airtasker and some of the risks and sensitivities. So if we go to the next slide. So from my point of view, the result was more or less in line with expectations, as I say, given that most of the key metrics were flagged through the year. Probably key to just go over again is the decline in the gross marketplace value, about 3%, and that was really mainly driven by the discretionary environment in Australia, where both task bookings and average task price declined on FY '23. But that was more than offset by an improvement in the monetization rate over the year. And so revenue grew 6%. So obviously, 9% was the impact of that, simplistically that improved monetization rate. And that was only for part of the year really, so we expect some continued improvements in that rate over a full year in FY '25. One of the keys that was disclosed, that was new information to me, was the advertising spend in-house divided between Airtasker Australia, Oneflare and international. And the interesting point from my point of view was that only about $2.3 million or 6.5% of revenue was spent on Airtasker Australia in advertising in FY '24. And I guess why that's important is, if we fast forward to FY '25, we're going to see somewhere upwards of $7 million, potentially $6 million to $7 million, spent in Australia in advertising. So that's a pretty big rocket to have under the Australian business. So it just gives you a feel for the potential to add some customers and more interest in the product. Yes. So the other interesting point, I guess, was the focus on trust, which is sort of in line with improving the platform efficiency and integrity. And I think Tim is probably best placed to go into that. That's certainly an interesting focus for '25. The next slide, David. So we did this chart in the initiation slide, and we'll just remind you of, I guess, the leverage that -- and the correlation that Airtasker Australia has to discretionary spending. Here, we chart Airtasker's gross marketplace volume against the Australian discretionary retail index provided by the ADS, and they correlate very well. And so you've seen Airtasker's GMV follow discretionary index pretty well. We're seeing a bottom out. We're seeing this across a lot of discretionary retailers. At the moment, we have comps in terms of like-for-like sales are improving quarter-on-quarter as we enter FY '25 and Airtasker is no different. So should we see a rate cut, should we see real wages growth in '25, certainly Airtasker has as much leverage to that spend recovery as a lot of other discretionary retailers. Next slide, David. Obviously, again, we just reiterated the way we approach for the potential to fast track that recovery with media spend. And I won't go into all the analysis, but over the next 2 years in Australia, about $11 million is going to be spent in advertising for Airtasker with oOh!media and ARN, outdoor and radio. And if we compare that with just $2 million spent FY '24, you get a feel for the potential upside of new customers, higher GMV and higher revenue growth. So that's the key point there, really. And as I said, the higher monetization rate increases the leverage to that recovery. But you can read that in your own time as we go to the next slide. We've talked about the U.K., and it's well known that a deal was signed in October 2023. And we're seeing the revenue growth come in the U.K. from that accelerated spend in the U.K. And we'll see another $2.3 million spent in the first half of '25 to follow on that program. As Tim and Mahendra will go into, only a couple of days ago, there was an additional -- there was the first U.S. media deal announced. So both these deals are very cleverly structured, both financially and regionally. The U.S. deal, obviously, my understanding is that it's predominantly focused on Los Angeles, and it's a focus of local media and also static media, given the population in L.A. And they're very well structured financially in terms of the requirement really for these media players to be successful for them to be -- to recoup from their spend. We don't do the same analysis in the U.K. and the U.S. as we do for Australia in terms of getting a feel for the upside in terms of new customers because these are start-up markets. It's a bit hard to do that. But the size of the spend, you would certainly think, as we've said in the U.K., gets a return in terms of revenue growth for many quarters, halves to come. Our numbers on the initiation had -- we have forecast significant growth in the U.K. over the next 3 or 4 years, somewhere between 50% and 100% revenue growth. And we'd only been forecasting about 8% in the U.S., and that's post this deal we've now increased that -- those forecasts to be more in line with the U.K. in terms of growth rates. That's to be expected given sort of the spend that's going to be thrown out in the U.S. So in our numbers, you'll see that the actual headline numbers come down, that's because the media spend is treated as a noncash charge and P&L. But in 2 or 3 years' time, you'll see our numbers actually increased because obviously, we think that the U.S. and the U.K. will be much bigger businesses. That media spend will drop off, and the net result is an improvement longer term, but a short-term decline in headline numbers near term, albeit a lot of expense, noncash in nature. So it shouldn't affect the cash flow. Next slide, David. So just a reminder, an updated valuation approach for Airtasker, we look at it 2 ways for an Australian business, which is profitable. We take our implied forecast FY '25 EBITDA and multiply it by the average peer multiple that we have selected. We've got 5 property peers that we average out, and that gives us the Australian value. For international, we don't think it's fair to be capitalizing losses, so we just take 50% of the spend to date to establish those markets as a valuation for the international business. And we come up with a valuation of $0.51 a share on that basis and our DCF is [ $0.55 ], which has had increased slightly that some of the price has gone down a few cents and the DCF has gone got up a few cents because of the long-term benefits of U.S. and U.K. media spend that we've now incorporated into the numbers. If we go to the next slide. Just to remind of the sensitivities, obviously, we think we've got some pretty big numbers for U.K. and U.S. revenue growth. That's supported by the media spend. So we're not uncomfortable with those, but it's obviously still a risk that the revenue doesn't follow the spend. Although the way the deals are structured, there's less risk for Airtasker the most, same in Australia, significant spend, but need to see the leverage. We forecast the leverage. I don't think our approach is unreasonable in terms of expected customer uplift and what it does to revenue, still a risk. Long term, the sustained media spend, so the sort of media spend that's been over the next sort of past year and the next couple of years is very high. So the assumption about where media spend settles maybe into '28, '29 is obviously a key assumption and just the normal discount rate factors that you have in the DCF. So as a summary, the result was in line. I thought the media spend in Australia was very interesting, and it just gives you a feel for the type of leverage that we could see in that business if we have 3x to spend in Australia in a better discretionary environment. We've now got 2, 3 -- we've got somewhere in the order of $24 million of media spend over the next 2 years across the U.S. and Australia, and we've struck the first media spend here in the U.S. So there's a lot going on. And it certainly paints a good picture for the medium term. And with that, David, I'll hand it over.

Thanks, John. A great overview and a great insight into the full year results for Airtasker. We'll bring you back in a little while to answer any questions that may come through from any of the attendees. But now I'd like to introduce Tim and Mahendra, who will go through the results presentation proper and then be on hand to answer any questions you may have. So gents, without further ado, I'd like to pass it over to you guys. Thanks.

Thanks, David, and thanks, John, for the update. So yes, I'm Tim, I'm the Founder and the CEO here at Airtasker.

I'm Mahendra, I'm the CFO at Airtasker.

So I'll take you through a quick spin through the background to the business and then pass it over to Mahendra to go through the results and then give you a bit of an update on the media partnerships and our growth strategy. As we move to the next couple of slides. As Airtasker, we're building the world's most trusted marketplace to buy and sell local services. Simple terms, we connect people who need work done with people who want to work. On the next slide, our mission is to empower people to realize the full value of their skills. We're creating Australian jobs, and we're creating jobs in the U.K. now and in the U.S. An important part of this is it aligns us with government and regulation. So we're not going up against the community like some of the ridesharing apps and the food delivery apps are doing. We're actually working with the community and doing something that everyone wants, just creating local learning opportunities. And we put more than $600 million into the pockets of Australian taskers because that after all, all of our revenue and of all the business stuff, but we're doing a good thing by putting money into the pockets of others. If we go to the next slide, unique business model. We're doing things with Airtasker a little bit differently to how they've been done, our local service marketplaces have been done before. One is that it's an open community model. So super light touch operations, no manual operations of people having to operate the business per se. What we've done is we built a platform which creates transparency and accountability. That means we have very light touch operations and very high gross margins, over 95% of gross margins. Effectively, we're an Internet software business. On the second point there is that we're infinitely horizontal. And what that means is that Airtasker can service a lot of these service categories or service needs that customers have, which they can't get done anywhere else. So for example, if you need someone to wait at home for the Telstra guy because they needed to be at home before hours and you need someone to be there, Airtasker's like the only place that you can go for that kind of a job. And although each of those jobs individually sound very, very niche, in aggregate, all of the jobs that don't fit into one specific category. It's actually enormous. The second reason why being infinitely horizontal is important is because it gives us a marketing edge. Airtasker is interesting. People use it for interesting use cases. That creates interesting stories. Those stories drive earned PR. They drive the ability to have interesting things to talk about with people. That reduces our cost of customer acquisition, and that makes it a very efficient business model. If we move to the next slide. Our revenue model is simple. We charge -- all of the transactions on Airtasker go through our platform. So as differentiated from advertising platforms, like, say, Hipages or the Yellow Pages, on Airtasker, all the transactions run through our system. That's really important because it gives us an end-to-end view on what's happening at each step of the way. And it means that we can continually optimize the customer experience. If a plumber doesn't do such a good job, we want to make sure that they're demoted on the platform. If a plumber does an incredibly good job, we want to make sure they're promoted on the platform because we have a vested interest in making sure the deal is successful. So all the transactions go through us, we call that GMV. 20% of that is our monetization rate and that forms our revenue. If you look at that second bar there, as mentioned, we have very high gross margins, over 95%. The other costs that come out of our revenue are insurance premiums, which are less than 1% and credit card payment fees, or merchant fees, which are less than 4%. So we end up with a very -- most of that revenue is falling to the bottom line. And with that, I'm going to pass it on to Mahendra to take us through the results.

Thanks, Tim. If we could go to the next slide, please, David. I might start with a quick overview of our highlights for FY '24. So the headline result was really our positive free cash flow. So we flagged at the start of FY '24 that we intended to be free cash flow positive. And we achieved that $1.2 million over the full year, a turnaround of about $9 million on the prior period. At the same time, our core Airtasker marketplaces revenue grew just under 10%, $38 million. And then as mentioned earlier, our U.K. revenue in the fourth quarter was up about 76% on the prior period on the back of the TV advertising and the peak season in the U.K. We finished the year with just under $18 million in cash on the balance sheet and, obviously, closed the deals with oOh! and ARN for advertising inventory use over FY '25 and FY '26. Next slide, please, David. If we unpack the result a bit, so for those of you not familiar with the business, we have 2 marketplaces in the group. We have the Airtasker marketplace, which operates in Australia, the U.K. and the U.S. predominantly, and we have the Oneflare marketplace that operates in Australia only. So the group revenue was $46.6 million, up just over 5.5% on the prior year. And as I mentioned, the Airtasker marketplace was $38 million, up just 10%. Positive free cash flow, 115% turnaround on the prior period. And then our operating cash flow was $3 million. So we had 3 consecutive quarters of positive operating cash flow. The first 3 quarters of the fiscal were all positive. And then as I talk about a bit further on, we have quite a cyclical business, so the fourth quarter is down. We turned that around about $14 million on the prior period. Next slide, please, David. So if we look at the marketplace individually for the Airtasker marketplaces, so the Australian marketplace really faced some top of funnel headwinds. As John mentioned earlier, our GMV, which is a function of our booked tasks and average task price, so GMV was down about 4.5% on the prior period, so we saw some softening in booked task numbers. And then the average task price was down a little bit as well, so that contributed to GMV dropping. But at the same time, we improved our monetization rate by about 14% to 20% and hence, improved our revenue. And that was on the back of a couple of things we were doing internally. So we didn't really raise prices during the year to improve our monetization. We improved the funnel, the sales funnel optimization. So there are a number of product initiatives that help to do that. As well as that, we also introduced a new cancellation policy and cancellation fee structure that helped address the cancellation rate. And so we saw more tasks going through to completion, which obviously is beneficial for both us and the customer and the taskers and helps to monetize better. So we're also now monetizing all transactions through the platform. So previously, you could cancel a transaction on the platform without any consequence and we didn't monetize those transactions. Now we've changed the model. So the platform really is about providing connections between taskers and customers initially and then a service fee if the tasker earns income off the platform. If we go to the next slide, please, David. So looking at our 2 key markets, the U.K. and the U.S. So the U.K. is obviously at a more advanced stage than the U.S. As John mentioned, we completed a deal with Channel 4 in the U.K. last year and launched that TV advertising in October '23. And we've been ramping that up over the course of the fiscal year. The fourth quarter in the U.K. and the first quarter in the U.K., the fiscal quarters, are the peak season for the U.K., so that's spring and summer in the Northern Hemisphere. And so you can see that our revenues were ramping up over the course of the year. So our revenue growth was about 41% over the full year, with GMV growing about half that at 20%. Turning to the U.S., much, much smaller market, a very nascent market. So the deal we've done this week, which we'll talk about this further on with the U.S. media partners, is really interesting because I think it will really ramp up the growth rate in that market where we've got quite significant marketing dollars to spend. So we didn't spend a lot of cash marketing during the course of the year. We were quite disciplined about how much cash we want to burn and where we want to invest it. So we probably overweighted our cash investment into the U.K. and held back a little bit in the U.S. until we had the media partners in place. If we go to the next slide, please, David. We wanted to talk a little bit about the seasonality that we see in the business. So we see the seasonality really on the revenue side and cash receipt side flow with the spring and summer seasons in the Southern Hemisphere and similarly in the Northern Hemisphere. So our business currently is heavily weighted towards the 2 Australian platforms. They're the more established platforms. And so you can see Q2 and Q3 over the last 2 years have always been stronger than Q1 and Q4. The benefit of that also is that the 2 halves are about equal, right? We have one strong quarter and one weaker quarter in each half and so the 2 halves tend to kind of balance each other out. In the U.K. and the U.S., it's less -- that trend is less apparent, but you can still see that the quarterly performance in Q4 and Q1, which is their spring and summer, is better than the autumn and winter seasons. The U.K. has got a nice little hockey stick going. Obviously, growth -- good growth rate. We're seeing good strong booked task growth and recorded completed tasks and our monetization rate continues to improve in those markets. If we go to the next slide, please, David. Two of the key metrics we tend to monitor and track: our booked task and our monetization rate. So as I mentioned, the book task have been a little bit softer in Australia over the course of FY '24. They were down about just under about 2.7%. It was more pronounced in the first half, which was down about 5% on pcp. And then the second half was actually flat on the prior period. However, the first -- the second half was actually up a touch on the first half. So we're optimistic that that's an indicator that we're going to have an improving trend as we go into H1 FY '25. And as I mentioned, the overall monetization rate has improved in the group. If we just turn to the next slide, please, David. The other thing as I mentioned is the seasonality in the business, and so both from an accounting perspective as well as from a cash flow perspective. So if we look at the first chart with the revenue, we see stronger revenue and hence, cash receipts. We don't really have the concept of debtors given that everything is paid for on a credit card and instant collection. Revenue and cash receipts tend to flow together. And so we see stronger revenue and cash receipts in the second and third quarters given the weighting of the Australian business in the group and then weaker in the other 2 quarters. On the expense profile, most of our -- our 2 largest line items, our expense line items, are people costs and our sales and marketing lines. So the people costs and our G&A costs tend to be relatively stable over the course of the year. What does ebb and flow is the marketing cost. So we tend to spend more money in marketing during the peak seasons, whether that's the Northern Hemisphere or the Southern Hemisphere. And so that will obviously change the expense profile and hence, our cash flow profile as well. From an operating cash flow, you can see that the cash receipts are stronger in the second and third quarters but then weaker in the fourth and first quarter. And we also tend to have a lot of outflows in the first and fourth quarters. So you can see in this profile looking at FY '24, we had quite a few negative cash flow in the fourth quarter, and that was due to the fact that we had a number of renewals that come through in the fourth quarter, so our annual reinsurance payment payments, for example, or subscription software payments. We also upgraded our marketing expenditures. So we did some additional marketing campaigns in the U.K. and the U.S. that impacted that fourth quarter cash flow number. If we go to the next slide, please, David. So where does that place us going into FY '25? So our intention is to continue to operate on a free cash flow basis, a positive free cash flow basis. We've achieved that high water mark in FY '24, and that's the intention going into FY '25. Our plan has been developed around that basis. The Australian marketplace as we expect to deliver double-digit revenue growth. They're still the lion's share of the group, even though we're investing into the new marketplaces in the U.S. and the U.K. The Australian marketplace will still be a disproportionate amount of our revenue. And so we expect that to deliver double-digit revenue growth, obviously, for Australia and the group. We finished the year with $18 million. And there will be times, I think, through the course of the year, depending on the seasonality of cash flow, that we may dip into that. But over a full year, we intend to be cash positive in June '25. We started the year with $11 million advertising inventory from oOh!media and ARN, which hasn't been drawn down in FY '24 and will be utilized in FY '25. We've got the balance 1/3 or so of advertising inventory from Channel 4. And as of Monday, we've now got an additional USD 9.75 million from 2 partners in the U.S. TelevisaUnivision and iHeartMedia. And I will turn it back to Tim, who will talk about the growth.

Awesome. Thanks, Mahendra. If we may forward a slide, so in FY '25, we're really going to focus on, of course, investing into our core product experience. So we look at each of these 3 areas. The first is that, in Australia, one of the things that's really important to note is, as John mentioned in his analysis, that we only spent about $2 million on marketing in FY '24. And that was predominantly performance-based marketing like Google Search Ads and the like. We actually haven't done any sort of above-the-line marketing for coming on 3 years. And so we think this is a big opportunity to increase the brand awareness of -- the unprompted brand awareness of Airtasker. So despite not having spent anything above-the-line marketing in the last 2.5 years, our prompted brand awareness has stayed very high, about 65%. But what we can really start to scale is our unprompted brand awareness. So that's basically when you ask somebody, "Hey, when you think of a handyman or a cleaner or a gardener, who do you think of?" We only have about 10% of people right now, so immediately Airtasker. We need that number to be much higher. So together with oOh! and ARN, we're really going to invest in to drive that unprompted brand awareness, which we call brand salience. So we're going to be increasing our brand salience. The second thing we're going to do is start to invest again into Oneflare. Oneflare is a great product for us. It gives us bigger network effects. It allows us to address the small business market, and there were some great synergies in acquiring this business. So we acquired this business for less than $10 million in FY '22. And over the last 2 years, we've constructed synergies out of the business. So we've merged all of the back-end operations of the business and got it to be in a much sharper financial state. We've also cut off all of the noncore platforms of Oneflare. So when we acquired the business, they were doing a couple of different strategies, which had a few different business models. We've got all of those after we just focused on Oneflare. In FY '25 of that solid platform, we're now going to really start simplifying the pricing, and we're going to improve the sales funnel efficiency, so make it simpler to understand and therefore, make it much faster and easier to sell the product. And I think that's going to be a massive differentiator against other sort of copycat platforms, which run a similar model, like Hipages and things like that. The third thing we're going to do is marketplace trust. One of the things that we had a great success through in FY '24 is concentrating on one problem in the sales funnel, getting a good result out of that sales funnel and then seeing that every job that goes through the platform has a higher efficiency. And that's how we improved our monetization rate by 13.7%, even though the macro was very, very challenging. In FY '25, that's going to be all about improving customer confidence to book a tasker, focusing on all those trust signals that customers rely on to be able to find the tasker that's right for them. So you can see here in this image, focusing on things like presenting ID verification, police checks, working with children's checks, licenses and verifications, all of that is going to be done through our platform, and we believe that, that can help customers have the confidence to book the right tasker and therefore, increase our final conversion. If we move to the next slide, if you look at the big picture, though, of Airtasker, we really got sort of 2 sides to the business now. So one is that we've got this pile of cash, about $18 million on the balance sheet. And we've got Airtasker Australia, which is generating around about $31 million of cash per year. So it's a very, very profitable and liquid marketplace. We can take that cash and invest it into our trading marketplace in the U.K., the U.S. to replicate the economics that we've created in Australia. And we're going to do that in a smart way, we're charging it with media investment. So if we move to the next slide, so just looking at the Australian marketplace in FY '24, we generated about $45 million of revenue. We had about $14 million of marketplace expenses. That left us generating about $31 million in our Australian business. How did we get to building such a profitable and lucrative marketplace for such high margins? If you look at the right-hand side here, back in FY '16, we're spending about $2 million a year in marketing and doing about $12 million of GMV. We then partnered up with Seven West Media, did a media partnership, which enabled us to spend about $8 million in FY '17 and about $9 million in marketing in FY '18. And during that time, we were able to 3x and then double our GMV from $12 million to $36 million to close to $70 million in GMV. Once we're at that level of flywheel, where the momentum was in the marketplace, we built the brand, we built the network effect, we're able to actually start dialing down our marketing investment. You can see in FY '19 and '20, we went from close to $10 million in marketing down to about $1 million a year in marketing. And at the same time, because of that momentum, we went from $68 million GMV to $91 million to over $100 million GMV. And now in FY '24, we spend $2 million a year in marketing, we're doing over $190 million in GMV. So we've got a proven model to get to that level of scale and build a profitable marketplace. If you move to the next slide. You can see here, what's very interesting is, in FY '24, we invested about $18 million into our platform. So the software, all of the head office infrastructure, the CEO, the CFO, the HR team, all of that cost us about $18 million. But what's great is that Airtasker's Australian marketplace was generating enough capital to cover all of those costs. And so now what we have is we've got this software platform, which is being paid for by the Australian business and we can basically take that software platform and use it again in the U.K., the U.S.A. and other new markets. And in this sense, I think the actual -- I got analogy here from a financial perspective is it's kind of like a software company. If you have a piece of software and you designed that, it makes sense to get as much leverage out of that software platform as you can, i.e., you don't want to create Google for [indiscernible]. You don't want to like create a pizza software and they say "We only going to sell it in this really small market." You want to be taking it to more people so that you can get more leverage on that software investment that you've already made. If we move to the next slide. So in Australia, as we mentioned, you can see on the left-hand side, they were generating cash, that's great. In the U.K., we invested about GBP 2.5 million of cash and we supplemented that with about GBP 3.5 million pounds of [indiscernible] coming from Channel 4. So in Airtasker U.K., we now an 80% of that business, and we've got a great partner in Channel 4, who is providing a large chunk of capital to turbocharge our cash investment. As mentioned earlier on, we are also really excited to say that we've done a similar deal in the United States, where we've been committed about $5 million into Airtasker USA. We owned about 83% of that business. And we've now got USD 9.75 million coming in, in the form of media investment from Televisa Univision, the biggest Spanish-speaking network in the U.S., which is about 48% of Los Angeles. And then iHeartMedia, which is basically hitting about 90% of U.S. citizens every single month through their network. So a really, really exciting strategy where we take a small amount of cash, we turbo it with a lot of media to get even more leverage on that growth opportunity. If we move to the next slide. So the investment structure that we developed is very, very good because it gives us this massive exposure to the upside. If we built an enormous business through this media and it really, really scales, of course, we own 80% to 83% of each of those businesses. But that remaining 17% built into each deal is at the end of 5 to 7 years, we go and buy that equity back. How do we value the company, the local Airtasker USA or Airtasker Task U.K. company is the local revenue that it's generating, let's call up $20 million, $30 million in a few years' time, and we multiply it by Airtasker's revenue multiple. That could be 3x, 6x, 10x. And that's how we derive the valuation of that entity. We then buy back the piece that we've shared with those media partners. What that really means is that we're really aligned to the upside. And so we really all want to make it a big business together and everyone shares, if the media partner makes the business big, they're going to get a big payout, but that's okay because we own the other 83% of our business, that's fine. What's also really important is on the downside, each of these deals is done within each of those local entities. So the downside is also protected. We're not risking or betting Airtasker Australia each time we expand out the business. But what's really good as well is this is a great deal for the media partners. One, they get to invest in a proven model. So rather than monetizing by investing into a start-up, which is taking a big product market risk, Airtasker has done this before and we've done it before with media for equity. So that's a proven model. The second thing is we've already paid for the software. So we've already got this platform. We're simply taking that software and using it in a new market. So you don't have this repetition of the fixed cost base each time you go ad, you only replicate the variable economics. And then the third thing from a media investor point of view is they get a guaranteed exit. So as much as it's awesome for us to make sure that we can acquire back all the equity. That's also a really great thing for our partners who want to have a fixed investment period and then move on. So we move to the next slide. The announcement that we made on Monday this week is that this $9.75 million deal with Televisa and iHeart both are coming in to Airtasker on the same day. It's $4.75 million with Televisa and $5 million from iHeart. And I'll just go through each of those. So on the next slide, as I mentioned, Televisa is getting 17% of Airtasker USA. Airtasker is going to own the other 83%. And iHeartMedia has done other investment as a convertible note. That convertible note structure really works well for us because what it means is we're going to value the business in 4 years' time instead of today, if there's an equity conversion. Also, what it means is that if things are going really well in Airtasker USA, we can simply, at our option, choose to repay that note in cash. And so that's a really, really powerful mechanism for us because it means that we may not actually see any dilution into Airtasker USA by that structure. If we move to the next page, iHeart is an enormous network, 276 million audio listeners in the U.S.A. They own 860 broadcast radio stations. I think that's really powerful, especially in Los Angeles, where you're sitting in your car all day in traffic. And so radio is still a really, really powerful thing. But they have also very entrepreneurial and they're also leading the charge on podcasting. So they have 252 million podcast downloads a month in the U.S. So that's a really, really engaged audience in this new digital media. Most importantly, though, I think that it's not just the advertising opportunities, it's also the fact that iHeartMedia owns the iHeartMedia Music Awards. They own the iHeartRadio Music Festival. These are really big cultural events where you got Dua Lipa playing, you've got Taylor Swift playing. These are all opportunities for Airtasker's brand to find people at the right time and place. If we move to the next slide, similar story with Televisa, an absolutely massive network, about 100 million daily users through Televisa. They own cable television networks all across the country. They have an enormous streaming service with about 50 million monthly active users on that. And they also have a huge amount of properties and content which allows us to get close to their communities in a trusted and relevant way. That map on the screen is really, really small. But if you zoom in on that, basically, what it shows is each of the large U.S. cities and what proportion of those cities are actually Hispanic so part of the addressable market of Televisa Univision. And I think this is one of the biggest distribution network that you can imagine in America because in the L.A. market, 48% of people are in the Hispanic community. So it's an inverted commerce niche, but it's kind of like a huge portion of the population. In some of the Texas cities, you're talking about more than 50% of the population being in the Hispanic community, same with Miami. And then in New York, you've got about 1/4 of the population is Hispanic. So it's an enormous part of the U.S. market. If we move to the next slide, you can see here we're growing out our suite of media partnerships. This is a really powerful strategy that allows us to get massive leverage on our cash investment. It allows us to bridge that period to building up brand and network effects in new markets, but it's also managing downside risk. As I mentioned, each of these deals is done at the local entity level. And that means that if things go incredibly well, we've shown the upside together but we've also managed that risk on the downside. So thanks a lot for hearing us up this morning and I'm keen to see if there's any questions.

Thanks, Tim. Thanks, Mahendra. Great presentation. We do have a number of questions that have come through, so we might just jump straight into those. [Operator Instructions] Now Tim, you touched a bit before on the above-the-line marketing and really reducing spend in that area over the last few years. Why is the reducing of the spend in above-the-line marketing sort of possible now? And do you think that will change in the marketing spend change as the market matures?

So first of all, I think that we've got a long way to go in the Australian market in terms of maturity. As I mentioned before, we've got about 10% unprompted brand awareness now. It depends on which metric it can use. And there are lots of public studies you can use to work this out but it's around about 10%. And if you think about how Airtasker works, one of the most important things is the trigger that makes you go and find Airtasker. And it's kind of not obvious in the case of Airtasker. Like, if you think about like, say, Uber Eats, it's really obvious what the trigger is. It's like it's dinner time, who should I choose? Uber Eats, go to McDonald's, cook for myself. There's a very clear trigger for that. But so much of what Airtasker does, do not have a clear trigger. For example, you're on the weekend, your garage is filled with boxes that you need to get rid of. You look at these boxes and go, "Man, I don't want to have to go through all of that myself." That is a time where if Airtasker is in your head, you might go, "You know what, I should get someone at Airtasker to do that." Similarly, your bathrooms are dirty or you have to clean up after a potty or you're a small business and you need some help, and you're like, "Who should I get?" And so we think that a massive dial is how many people have Airtasker are sitting on their shoulder going, "You should use Airtasker." You should use that, I think the upside for that is enormous. After taking that number from something like 10% to something like 50% is a massive opportunity. Now if you look over the last 2 years, we've dialed it back from a $5 million, $6 million, $7 million a year to about $2 million a year in FY '24. And the reason why we did that is we have a massive focus on cash generation and making sure that our business was not in a position in which we needed to raise cash. And so we made that decision to pull down the cash investment into media. We're successful in getting cash flow positive. And I think that is the right move in this environment. But if you look over the long run of brand investment, you want to be consistently topping that up. And I think what you'll see in FY '25 is we bring that back to the normalcy. And I think that normalcy is something in the range of 3% to 4% of your top line GMV. In our case, we did over $190 million with about 1% allocation to do brand marketing overall. And really, I think that number should normalize at 3% or 4%, which might be $6 million or $7 million in FY '25.

Just a question here on markets. So you've moved into the U.K. and the U.S. markets. Are there other markets that you've got your eye on that you think this product and this platform would resonate well in?

Yes. I think one of the things that really resonates for me is the idea that if you can create a flexible structure in which you don't have -- in which you've managed risk on the downside, it actually lets you go and pursue a lot more upside because you've managed that downside. So if you look at the way that we've structured these media partnerships, the total risk that we take in a new country is actually just that small cash investment that we make into marketing upfront because we're actually partnering with a local firm who is backing it in. Now that local firm is taking the risk that if things go well, that's amazing. I'm going to have some big upside. But if things don't go so well, they might go, "I'm not going to get a payout from Airtasker." So it's effectively performance-based marketing, if you look over that 5-year period. It's literally revenue, you must create revenue for Airtasker. Otherwise, you do not get paid out. What that means is that we can go and try a lot more countries. Every new country is a free shot on goal almost. And so I think there's huge opportunity there. That's we're balancing that with execution. It's one thing to say about the financial side of things. It's another to say that execution. But I'd encourage you, folks, to sort of look through how that deal structure works, it basically means if you went to try Airtasker Canada and you're able to get a Canadian media firm to back that in, there's a huge upside with the managed downside.

And in terms of media partners, clearly, you've gone to localized partners with big footprints. Is there an opportunity to go to more global partners and partner with them regionally but using sort of a global parent?

I think most of the global folks at the moment are sort of like the digital companies like Google and Meta and things like that. And if you look at most of them, right now, they're in a position in which they're more looking after themselves and they are looking after their advertising sales businesses. So if you look at something like Meta, you see massive increases in advertising revenue whilst GDP is sort of flat. So you kind of did the math on then, you kind of said like, "Hey, is that marketing. She's benefiting in those kinds of markets." Now I think what you see in broadcaster media is a massive opportunity because they too have huge eyeballs, huge viewership but they have not as much influence in terms of ad sales. And that is a perfect environment for us to be doing these deals. Because what do we care if your ad sales business is going well or not? That's literally the opposite of what I want. I actually want to go and be contrarian and go where advertisers aren't going but where there is still big viewership. And so I think actually working with local broadcast media firms is actually really our strategy because of that dynamic at play. Put it another way, Google, Facebook, these guys are charging a lot of money for a certain amount of value and there's potentially value upside to be gotten somewhere else.

And in terms of the U.S. media deals just announced recently or in the last few days even, and that you touched on your presentation, how wide do you have discussions? So you talk about going into the U.S., do you talk to -- do you hand pick, if you like, the types of groups that you want to talk to and then whittle them down? Or do you start with a pretty wide lens to see what pops in? And then the follow-on question that's come through is, how long does it take to sort of close those sort of deals on average?

So I think the first thing is that the U.S. market is an incredibly complex market in terms of media landscape. So we have to be very selective about how we found the partners that we were going to work with. And I think the great thing about that the iHeart and Univision is that they're both largely vertically integrated media firms, meaning they make the content, they broadcast the content, they monetize it by ad sales. And that means that we can deal with a partner, do a media for equity deal and then get access to all the content and integration opportunities. So for example, in Televisa Univision, they have a long running television program called Despierta America, which is sort of the most large morning show in the Hispanic community over there, 10s of millions of viewers on this. And Airtasker can go and do a segment in that show and really find the audience and go to where they are. If you look at how many of the other media firms that are structured, one person does the advertising, another person does the broadcast, another person does the content creation, so you wouldn't get that holistic view. So I think that's the reason why we have to be selective. It's a very complicated market but we found 2 partners who embody what we wanted. In terms of how long it takes to do a deal, I think the U.S. market was the critical one today. As much as everyone, other countries are doing their own thing, very much, people looking at the U.S. are still that is where people who know what they're doing in scaling these media deals are, as I think it was a really important milestone for us to have spent that time. And it's been a good 9 months to get that deal, right, have the relationships, both the deals. But I think actually going into new markets, it's now -- it's almost the inversion of that, which is, "Oh, geez, if these American companies, which have done this stuff before, they do it at a world-class level, I imagine that makes some of the other conversations a little bit more straight forward."

A question here, does the equity ad media model create a disincentive or restriction to having additional media deals with U.S. or U.K. markets? And the point I think the question is trying to make is the impact of media from the first placement sort of can benefit others if others come in. Is there a saturation point for media partners that you go and look in every market, we really only want 1 or 2 partners because we know the net benefit we're going to get is going to be great, which is why you take the time to get the partners, but if we have 10 partners, how do you know who's actually driving the value? Or does it not matter?

That is actually a really astute point. I think there is certainly a limitation on how many media partners you want. And I think concentration is much better than the fusion. Like, I don't think you want to be spreading out me across all of these different channels and all these different spots. So I think that it's actually better to be like, let's get that audience and engage our audience and absolutely how many Airtasker message in within the kinds of budgets that we're talking about. And I think that's different if your Amex or Coca-Cola and you've got hundreds of millions a year to spend. But certainly for us, I think the concentration is a good thing. I also think it's a good thing because it becomes more significant to the media partner, too. And so they actually really care, not just from a financial perspective but also from a case study perspective. Effectively, Televisa and iHeart had both gone out into market and said, we're backing Airtasker, this is going to be good because our media really works. And that is incredibly strong incentive for them to work hard. Because if we come out in 5 years' time, "No, it didn't really work. We did this thing with Televisa and iHeart, the media didn't really bring many customers to us." That does not look good for them. And I think that is a very, very powerful incentive and why doing these deals is better than just doing cash deals. That said, I do kind of also want to highlight one thing, which is that in Airtasker Australia, we had to generate enough gross margin to cover this enormous relatively fixed cost base, which is product managers, engineers, CEO, CFO, HR, infrastructure, all of these things. The economics that may go into a new market is simply the marketing money going out and the revenue coming in. We've got very few employees in any of these spaces. I think between the U.S. and the U.K., we have 4 employees, so incredibly lean structure there. And so I think that the path to profitability is faster. And that is also a big cart for these media companies because they're like, "Oh my God, this is going to be profitable super soon." Who are you going to spend your money on as you keep marketing, who you're going to spend your money with? Obviously, the guys who have already proven that the model works. I think that's a -- it's a great incentive for that side, too.

This is a good question here for Mahendra. Can you provide some insight into the metrics around the cost of acquisition, i.e. how does cost of acquisition compared to LTV in the mature Australian Airtasker market? And how long does it take to recoup the dollar of advertising spend in revenue?

Sure. So I guess, first, I'd say we don't really think about the business or our ad spend in terms of cost of acquisition that much. If you look at our marketing dollars, where they go, it's broadly sort of 3 buckets that the marketing falls into. So the paid performance marketing, so the likes of Google and Facebook and so on, which is very targeted around particular searches that customers or consumers might be undertaking. The second bucket is PR. And one of the reasons we spend a lot of effort or time into PR, you get an outsized return on that. So you get a lot of press coverage for relatively less spend. And so we can make quite interesting or quirky things, to Tim's point, the zeitgeist of things that get picked up. And then the main one we've done historically is really above the line brand marketing. So this comes back to Tim's point about the prompted and unprompted brand awareness and getting to brand selling. So a lot of these deals that we've done recently with media partners are really around going back to significant investment in brand marketing and getting that awareness up in these different marketplaces. In terms of lifetime value, I don't think the Australian market is matured all. I think we probably underinvested over the last few years in the market, in the brand piece, in the Australian market, we'd certainly be doing the paid piece. But I think what we've proven in recent times and looking at the U.K., you need the combination of both the brand marketing piece as well as the paid performance piece as well as the PR. In terms of recouping, that was a good question. So I think, yes, because we don't tend to look at it on a straightforward CAC model, in looking at the brand investment that we're making, whether it's cash or contramedia, I don't think really matters too much. It's having an accounting expense. You're certainly not going to get a 1-year payback. So if we go into market and spend $10 million, there is no way we're going to get $10 million of revenue. What I can say is we will probably get a payback over 3 years. So if you -- we're taking kind of an amortization view on that. So if we go into these new markets, if you think about how much we might be spending in year 1, it's partly about building brand awareness, it's partly about building the network effect, and then that compounds over a 3-year horizon, which is the payback period.

A question for you, John, or a couple of questions. How does Airtasker stack up against its peers and other online marketplaces?

Well, I guess -- so the piece that we identify are sort of -- we have kept to Australia in small caps. So there's no -- they just many marketplaces. And they're in various stages, I guess, development. So it is difficult to compare some of your peers. But so -- but certainly, it's got more cash in the bank than most of them on a market cap basis. It's probably -- it's larger than a lot of the ones we use. Like, MadPaws and Camplify, they're sort of similar. Obviously, they don't do services but they're marketplaces. Yes, but I haven't gone to that sort of looking at the big players overseas and comparing them. That's probably 2 or 3 months' work. Yes, but so certainly and then obviously, in the way we look at the stock, we look at those peers that have reasonable multiples. I mean, for example, Camplify for FY '25 using consensus estimates, it's about 45x EBITDA. So we don't use that as one of our peer multiples, we strip that out. We just look at the peers that have sensible multiples on the average multiple of those 5 peers that we use is about 12.7x EBITDA. And so that's a starting place from a valuation point of view as to how we look at Airtasker and particularly the Australian business. So I don't know if that answers the question, but this is -- we're cognizant of not wanting to compare a $120 million market cap to a $12 billion market cap. We tend to stick to the small ones, sub-$300 million, sub-$400 million. And in that space, there's varying marketplaces at various stages of development. I think we've come to a good medium as to how we look at Airtasker relative to those stocks.

And from a personal point of view, someone who's done the work, what will you be looking for during the coming 12 months? And what does success look like for you?

Well, I guess I think the management has certainly made a comment about the priorities for '25 and that's the moment is keeping that cash balance, which I think is a good thing because there's potential liabilities 2 or 3 years' time on these new deals. So you want to keep some of that cash should those liabilities come through. So that's certainly one. Obviously, you've got to see an uplift in revenue and GMV from both the discretionary environment, which looks to be improving. I'm not calling it a huge recovery. But certainly, everything we've seen from the list of retailers is the like sales declines are slowing and if anything, turning. So you want to see the same likes of Airtasker, particularly with the media spend. Yes, so it's really based -- and then obviously, international getting some benefits. I mean, it shouldn't be hard to see the U.S. as Mahendra said, they won't necessarily see a day 1, month 1, but from a low base, with that sort of ad spend, you want to see some traction developing in the next 6 to 12 months.

Tim, last couple of questions for you, just conscious of time. How quickly do you expect to see the benefits on the U.S., in the new U.S. media capital deals? And given the size of the U.S. market, do you focus on regions rather looking at the whole market as one opportunity?

Yes. So we literally inked the deals over the weekend. So definitely a bit of planning things to go forward from there. So I think we'll be out in market in earnest in Q3 of this financial year. So that's sort of the Jan to March period. We'll be out a little bit before then, but I think we'll have a full quarter then. So I think that's really the timing of when to do the first sort of check-in on progress. In terms of what we're expecting to see. So I'd say in this early stage is you're really looking to be at sort of doubling year-on-year, so seeing a bump initially and then from that bump, doubling year-on-year. That's sort of the benchmark. And the other look at what we've done in the U.K., when we started with Channel 4, we were roughly at 30% year-on-year. In March, we were at 50% year-on-year. In June, we're at 75% growth year-on-year. I think you really start to see that momentum, start to build out and tracking towards that sort of doubling year-on-year sort of thing. So I think the expectations will be check in March, see that first bump. And then from there, our goal is to be at least 100% year-on-year.

And similarly, I've just had a question come through. Last question, a similar question that's come through from John. What does success look like for yourself and Mahendra and the Airtasker team, look forward 12 months from now, what are you hoping to see?

So I'd say we have a really good understanding about the unit economics of like a large city model. And I think what we're seeing in the U.K. is really tracking along to that model. And so by the end of this financial year, by the end of sort of June '25, we want to see Australia hit strong double-digit growth. We want the U.K. to be at that level where it's generating really meaningful revenues. So when I say meaningful revenues, I'm talking about in that sort of AUD 5 million range in sort of revenues. And I think I'm confident that we can track towards that. I think the U.S.A., it's too early to put a specifics to that. But as I mentioned, I think you're talking about seeing a big a decent bump and then at least doubling year-on-year for a couple of years there. And that is going to involve some heavy investment to make that the case. I think the great thing is we have a proven model in the Australian market, where we can see what those curves should look like. And so we don't have to close our eyes and look at it in 5 years' time, we can be tracking progress along the way.

Well, a proven model, a strong technology platform foundation to build the growth from and a strong cash position, inking key media deals which is what the market wants to see. And as you say, will help underpin the growth in those markets for many years to come. Thank you for presenting today, Tim, Mahendra and John. Thanks, everyone, for your questions and submitting them through, a stack of great questions come through. Again, thanks for presenting.

Thanks, guys. Thanks, David.

And to each of you watching online, on behalf of Airtasker, thank you for participating, and have a great day. Thanks, everybody.