Freelancer: ASX Spotlight Series March 2016, New York

Interviews

Freelancer Limited (ASX:FLN) Deputy CFO, Christopher Koch discusses the company’s latest financial results and acquisition of Escrow.com at the ASX Spotlight Series 2016, New York
 
Freelancer Limited (ASX:FLN) is the world’s largest marketplace for outsourcing and crowdsourcing. We have nearly 20 million users on the platform. We’ve had more than nine million projects posted, representing about $3 billion worth of project value. It’s a marketplace you can get literally anything you want to get done, done.
 
That might be design a logo, do some content writing, do some research, presentation, financial modelling, right through to we’ve had projects in aerospace engineering. We’ve had really creative and very unusual projects. So it’s a really, really large liquid marketplace. You can jump on there and you can post a project or contest, and two thirds of our projects are getting bids within 60 seconds. People jumping up and saying, I want to work with you.
 
So revenue growth, the business has had a fantastic track record of growth and we’ve continued that. We did $38.6 million of revenue in fiscal 15. That was a 48 per cent growth rate on the prior corresponding period. Our gross volumes, we’ve done $229 million, which is up 120 per cent on the prior year. And we’ve continued to chip away at metrics that we really care about, like increasing the take rate, which is a measure of how we monetise. We’ve kept our gross margins high but flat at 87/88 per cent and we’ve grown. The metrics that we’re really focused on like growing the number of projects and contests posted, we have 1.7 million projects and contests posted in a year. It’s up 27 per cent on the prior year. So everything is growing and growing well, and we’re just really excited about the way the business is performing.
 
So Escrow is a secure payments business. And it’s secure in the sense of having a payment that you know is not going to be reversed or re-traded on. So there are a lot of payment situations that we see with people who might be dealing with someone that they don’t know remotely. If you’re buying something via Alibaba or a platform like that, you might be buying a Domain name from someone that you don’t know.
 
All the payment methods that you might want to use have a bunch of problems. If you wire someone, that’s irreversible, who goes first, do I wire you first or do you wire me first. If we use credit card there are charge backs, because you can sort of reverse a credit card payment. PayPal has a whole bunch of buyer protection issues, sometimes around how you reach finality on a transaction. Escrow is like an online scalable version of how you buy a house, with a legal form of escrow.
 
So if I’m going to buy something from you for a million dollars, I put the money into escrow held on trust for me. We agree our transaction and our transaction happens. And when it’s completed that money’s held on trust for you, no reversals. So for people in business, for people who are transacting significant sums of money, it’s a way to get your transaction done with zero per cent risk of it been unwound later on.
 
Probably the most interesting would be NASA. They approached us in the middle of last year to use the platform to crowd source a design, modular design of components for the International Space Station, which is really cool. Turns out that NASA had a robotic astronaut on the space station, which we all found a bit scary because we’ve all seen science fiction movies, where the robotic astronaut goes haywire. It’s been up there for years and hasn’t caused anyone any problems. And what they’re doing is they’re putting legs on this robotic astronaut, so it can actually go outside the ISS.
NASA has used us for a whole bunch of things. They actually just a couple of weeks ago, launched a challenge to crowd source all of the design, like the architecture, the strategic engineering and the design of a robotic arm for a free flying robot that they had, that flies around the inside of the space station. So really cool stuff and it’s a great example of use cases for the platform. And people are trying to work out, can I use this in my business, can I use this in my small business or my start-up, or any of the things people want to do. When you see an organisation like that use the platform, it’s great validation of how great it can be.
 
The business is growing really well. We see that growth continuing and we’re really excited about how it’s performing. Escrow is a great addition to the business. Payment businesses go hand in hand with marketplace businesses. So this’ll be the first full half and then full year that we’ll have the payment business alongside. So it should be a really exciting year for us.
 
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