I have had a pretty good look at ART over the past week or so

For me it's a high conviction buy

I think the progress in the business is being overlooked by the market for the following reasons:

1. The stock got overhyped post IPO. The IPO price was already expensive. Then it went a lot higher. Then the "weighing machine" kicked in and the share price dropped something like 85% over around 2 years (2021 - 2023).
2. The profitability of the underlying business is masked by the fact that they are investing all of the Australian profits in overseas expansion
3. Not many analysts cover the stock, due to its small market cap. It is not in any major indices
4. It is not as high quality a business as other digital marketing businesses (eg REA, Carsales)

BUT

Despite all of the above. Despite the fact that it is more like a "dating service" (it earns a fee for the initial introduction, but then the tasker and client can connect directly for subsequent jobs). Despite the fact that peeple try to exchange contact details and then cancel the job to avoid fees. Despite all of this, the business is performing. Plus it is at an inflexion point. Current revenue covers costs (sort of). Future revenue increases will mostly flow straight into profit.

Here is total revenue for the last 4 financial years:

2021 $26571

2022 $31469

2023 $ 44171

2024 $46643

2025 $52700

There was disruption by COVID, and the Oneflare acquisition in 2022 (which added around $6 million of annual revenue). But the overall trend is pretty good. This was during a period that was not easy for the business (with pandemic lockdowns etc)

The vast majority of revenue (over $49 million) is still from the Australian business. The latest quarter showed growth of over 20% in revenue from the AU business (vs PCP). Revenue growth from the core Airtasker marketplace is even better than this (Oneflare, with annual revenue around $8 million, actually shrank slightly). Growth in the Australian business is actually accelerating, due to a combination of improvements to the pricing model and increased marketing. Even including the extra spend on marketing, the Australian business is throwing off cash. EBITDA was $2.5 million for the quarter and $8.1 million for the FY (for the AU business). This is after deducting all head office costs and AU marketing. Some of the marketing is "non-cash" (see below), so the free cash flow from the AU business is even higher ($4.8 million for the quarter)

The Australian business alone is almost certainly worth more than the current market cap ($159 million). Growing rapidly, throwing off cash and only valued at a little over 3 times revenue. Plus they have $19 million in cash and no debt (although there are share repurchase liabilities, see below).

ART is founder-led. Tim Fung still owns over 10% of the company. He appears to have a long-term focus. Most of the marketing is "above the line" brand marketing, aimed at increasing brand awareness. This takes longer to pay off than some other forms of advertising, but is the right thing to do for the long-term.

Airtasker's overseas expansion is mainly focussed on the UK and the USA. It has been slower than might have been hoped initially. But real progress has occurred in the past 12 months, particularly in the UK business. Increased marketing and platform improvements are starting to work. UK revenue for the trailing 12 months was $2.9 million, an increase of 123%. The US is up over 400% for the same period, but much earlier stage (TTM revenue $560k).

It is important to understand that some of the increased marketing has been funded by equity sales and convertible notes. Details are in a previous post. There was $53 million in "share repurchase liabilities" in the last HY report. Only around half of this money has actually been spent to date (we will see exactly how much when the annual report comes out shortly). It will have to be repaid over the next few years (or converted to equity at a discount). But it is important to note that the liabilities are held against the overseas businesses only, and the expiry dates are staggered over several years. It was a way for ART to obtain cheap funding to "kick-start" the overseas marketing, by allowing partners to share in the upside. And there is good evidence that it is working

Conclusion

So in conclusion, you have an Australian business growing well and profitable, which is investing in an overseas expansion that is starting to work. The Australian business alone is worth more than the current market cap. Overseas is the cream on top

If the trends of the past 12 months continue (or even get close) ART can easily multi-bag. Even if it stagnates in Australia and fails overseas, you are still not going to lose all your money. Risks skewed to the upside IMO