Freelancer delivers record earnings, 2016 to see accelerated growth

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Freelancer has charted positive financial numbers for FY15 Freelancer (ASX Code:FLN) has delivered a record quarter with record cash receipts in Q4 2015 of $11.9 million, up 62% year on year, and positive operating cashflow for both the quarter and FY15. This quarter was the first to have a…

Freelancer has charted positive financial numbers for FY15
Freelancer has charted positive financial numbers for FY15

Freelancer (ASX Code:FLN) has delivered a record quarter with record cash receipts in Q4 2015 of $11.9 million, up 62% year on year, and positive operating cashflow for both the quarter and FY15.

This quarter was the first to have a contribution from the acquisition late last year of Escrow.com, a U.S.-based payments security company which has managed more than US2.7 billion in secured transactions.

Escrow.com contributed for two months to the company’s financial results and holds circa US$20 million in cash, in trust, off balance sheet.

As at 31 December 2015, the company held cash and equivalents of A$32.2 million.

Cash in bank decreased from $42.6 million at the end of Q3 2015 due to the payment of consideration for the Escrow.com acquisition (US$7.5 million).

In Q4 2015, Freelancer had positive operating cashflow of $0.36 million. For FY15, the company had positive operating cashflow of $1.43 million.

Ahead of the completion of the Escrow.com acquisition, Freelancer incurred throughout FY15 one-off legal and other acquisition related expenses, along with staffing costs for Escrow.com ramping up from April 2015 prior to the completion of the acquisition.

The number of registered users of Freelancer's online recruitment services has experienced a 15-year streak of consistent year-on-year growth in total registered users since FY00.

This expansion rate is underpinned by encouragingly stable macro trends, including the fact that 55% of the global population does not yet use the internet - but will do so imminently.

As people in development countries go online in increasing numbers, their first priority is expected to be the use of the internet to raise their socioeconomic status.

Freelancer services stands to benefit from this trend by offering employment opportunity and income even in countries where the world's leading industries are not physically in operation.

This is expected to be amplified by a revolution in online education via the likes of Coursera, Udacity, Khan Academy and edX.

Matt Barrie, chief executive, commented:

“Freelancer once again achieved absolutely outstanding results in Q4 with record receipts from customers.

"Our FY15 results will be released on 23 February 2015.

"2016 will also be an outstanding year for Freelancer, with a full year contribution from Escrow.com and accelerating growth across our businesses.”

NASA partnership

With Escrow.com contributing a full year of cashflows in 2016, Freelancer is in a strong position to springboard off a recent agreement with NASA to help design an arm for a robotic astronaut on the International Space Station (ISS).

Freelancer will assist the U.S. space agency by crowdsourcing parts from over 17 million freelancers from around the world.

This builds on a previous collaboration in 2015 where NASA crowdsourced the design and implementation of a Smartwatch app to be used by ISS astronauts, and provided 3D models for training the image recognition system on an ISS robot.

The systems architecture will be decomposed and subsystems designed for the latest project through dozens of crowdsourced contests on Freelancer.com throughout 2016.

Over a thousand UX, graphic, engineering and industrial designers from all over the world have taken part in those challenges.

Analysis

The outstanding financial metrics for Freelancer for both the quarter and the financial year reflect a growth streak and scalable business model that should see a strong 2016 year. Its FY15 results will be released around 23 February.

The acquisition of Escrow.com has made an immediate impact on Freelancer’s bottom line and promises to be an important contributor and factor in the company’s ongoing growth and increase in earnings.

Gross payment volume for Escrow.com in FY15 was announced in early January as US$430 million, up from US$320 million in FY14 (up 34% year on year).

Proactive Investors said in April 2015 that Freelancer, trading at around $0.90, was one of its top stock picks for 2015/16.

Freelancer last traded at $1.85.

We continue to hold the view that the company is one of our top stock picks through 2016.


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