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Freelancer Posts 56% Revenue Growth, Positive EBITDA

Freelancer Posts 56% Revenue Growth, Positive EBITDA
The driver for growth was accelerating volume in gross payments which quadrupled to $354.9 million, compared to $64.1 million during the same period last year.
Jul 28, 2016 By Simon Tags: FLN

Freelancing and crowdsourcing marketplace provider Freelancer Limited (ASX:FLN) posted record results for the half year ended 30 June 2016 as revenue rose 56% to $26.2 million.

The driver for growth was accelerating volume in gross payments which quadrupled to $354.9 million, compared to $64.1 million during the same period last year. Gross Payment Volume, also referred to as GPV, is the total payments that go through Freelancer and Escrow. GPV is an important metric for Freelancer as most of its revenue is derived as a percentage from total transactions.

Freelancer and Escrow Grow, Operating EBITDA Positive

Payment platform Escrow contributed $4.3 million to the total revenue, a 18% increase in constant currency terms. The core Freelancer business accounted for the remaining $21.8 million.

Both businesses combined posted positive operating EBITDA of $0.1 million, which management calls an “inflection point” for profitability. Operating cash flow was 409% higher than last year at $4.5 million.

Freelancer CEO and Chairman Matt Barrie was upbeat about Freelancer’s results: “Freelancer is continuing its exceptional growth, with record net revenue, gross volumes, registered users and posted projects in 1H16.”

While management has been able to deliver consistent revenue growth, they focus now on unlocking value to shareholders by focusing on operating cash flow and EBITDA. Matt Barrie added: “Freelancer is strongly operating cash flow positive and also operating EBITDA positive, reducing operating risk while maintaining a unique exposure to a deflationary environment.”

As at 30 June 2016 cash and cash equivalents equalled $35.2million, up 9% since the beginning of the year.

Investors Digest Freelancer’s Results

FLN was volatile following the release of the results as the stock rose on the open before pulling back and trading essentially flat around 11am. Wise-owl recommended to buy FLN on 3 June 2015 at $1.14 and we reiterated our buy advice on 10 September 2015 at $1.26.

FLN has gained over 45% in the past 12 months but is relatively flat so far this year.

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Simon Author: Simon Jul 28, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian. Simon worked for Wise-owl from 2013 until January 2020.

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