Freelancer Limited (ASX:FLN)

September 10, 2015 | Price: $1.26

Growth Portfolio Update

Overview: Freelancer Ltd (“Freelancer”, “the Company”) is an Australian-based software company operating the world’s largest freelancing, outsourcing, and crowdsourcing marketplace. As of 30 June 2015 Freelancer 15.9m total registered users and 8m total projects and contests. Freelancer acquired payment service provider Escrow in April 2015. Our last advice was a ‘buy’ recommendation on 3 June 2015 at $1.14.

Catalysts: Freelancer is on track to achieve another year of double-digit revenue growth. We expect growth momentum to continue throughout 2015, buoyed by favourable currency exchange movements. As most of its revenue is derived offshore further depreciation of the AUD will enhance its revenue profile. Management recently sold $35m worth of shares to increase the free float to 23%. Large institutions are starting to accumulate and more liquidity should attract investor interest in the long- term.

Hurdles: Despite incremental revenue growth, Freelancer has not made a profit yet and remains reliant on external funding. Growth through acquisitions results in integration risks for management. The current valuation incorporates future earnings growth, which could result in share price depreciation if targets are not met.

Investment View: We continue to be attracted to Freelancer’s growth trajectory and favourable outlook. We expect growth momentum to continue bolstered by a low AUD. While Freelancer is starting to attract large institutions, we reiterate our ‘buy’ advice and raise our 12-month price target to $1.70.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this report is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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