The Airtasker Ltd (ASX: ART) share price has soared by more than 7% today upon its latest forecast update. Can the Airtasker share price keep flying?
Airtasker is an online marketplace for local services, connecting people and businesses who need work done (Customers) with people and businesses who want to work (Taskers).
ART share price
Airtasker exceeds IPO forecasts
Airtasker advised trading for the March quarter (Q3) exceeded initial expectations outlined in its prospectus.
The company has upgraded its FY21 revenue forecast from $24.5 million to between $25.5 million and $26 million.
As for gross marketplace volume (GMV), wait hold on, what’s this may you ask?
In Airtkaser’s prospectus, it defines GMV as the total price of all tasks booked through the marketplace before cancellations, including price adjustments between Customers and Taskers, bonuses paid by Customers to Taskers, fees payable by Customers and Taskers to Airtasker, and any applicable sales taxes.
That’s a long definition, in other words, GMV is a measure of the total value of the gross transactions that get processed through the Airtasker marketplace.
Why is GMV important? Airtasker takes a slice of the pie (GMV) through service fees for Taskers and booking fees for Customers.
The bigger the pie, the more money Airtasker takes.
So, in terms of GMV, Airtasker has revised its guidance from $143.7 million to between $148 million and $152 million.
The three Cs
Airtasker notes its cumulative paying customers exceeds 1 million.
Including the IPO costs, Airtasker was $484,000 operating cash flow positive for Q3. If you exclude IPO costs, the business generated $2.1 million in positive operating cash flow over the same period.
And the company said costs were below initial forecasts.
My takeaway
It’s encouraging to see Airtasker exceeding initial expectations but I would also monitor its ability to generate free cash flow.
Airtasker is still in the early stages of scaling the marketplace, which will result in higher operating costs over the short term. This is reflected by the large discrepancy between gross margins and operating margins.
It’s easy to get carried away with such positive announcements and the best way to not get distracted is by focusing on your thesis.
I will be closely monitoring the fundamentals of Airtasker for now.
If you are hunting for ASX growth share ideas, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.
