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Growth Portfolio 2015: Freelancer Ltd (ASX: FLN)

Published 03-JUN-2015 00:00 A.M.


1 minute read

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Overview: Freelancer Ltd ("Freelancer", "the Company") is an Australian-based software company operating the world’s largest freelancing, outsourcing, and crowdsourcing marketplace. Founded in 2009, the company connects employers and freelancers from over 247 countries. The Company has 14.3m users and 6.9m total projects and contests as of 31 December 2014. The company listed on the Australian Securities Exchange in November 2013.

Catalysts: Revenue has increased by 58% per annum for the past three years. As the business operates with a relatively low degree of fixed and variable costs, incremental revenue growth can have a significant impact on profitability. In April Freelancer acquired payment service provider for US$7.5m funded from a A$10m placement, which was raised at a premium to market. The acquisition of as well as the launch of the new business arm ‘Local Jobs’ underlines management’s effort to pursue growth opportunities.

Hurdles: Whilst revenue has been growing at a modest pace, earnings have been subdued. Competitive barriers are limited as startups may increasingly push in the market space to threaten Freelancer’s leading position.

Investment View: We are attracted to Freelancer’s market position and growth trajectory. Whilst current earnings appear marginal, we expect accelerating revenue growth to be a major long-term value driver. Management has a favourable record of building start-up tech ventures and pursuits a proactive strategy to achieve horizontal growth in the online space. We initiate coverage with a ‘buy’ recommendation.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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