Exploit the Market With a Quick Tech Win

Last week saw tech favourite release there quarterly results. Now I know what you’re thinking, we spoke about ASX:FLN a couple of weeks ago. For those that missed it here it is, for those that purchased congratulations on the 24% capital return in that time. But back to why we are talking about it today, well those quarterly results were great, pointing to a good outlook for the group.

Starting at the top, the all-important revenue figure. The cash receipts from the marketplace business is up 42%, posting $9.7m in the September quarter. This suggests the group are moving in the right direction, but also shows that hockey stick growth that we have been crying out for. This has also put the business in a position to maintain a positive cash flow ($1.1m), crucial for fledging tech companies.

Something that might relax the risk adverse in the room is the solid balance sheet position. Currently sitting at $42.6m made of cash and equivalents. At the time of writing the market capitalisation of the business is nearing $700m. This position is expected to allow the group to continue this strong growth agenda.

But perhaps the most important metric of results for a tech company like Freelancer (Unfortunately, we could not get stock quote ASX:FLN this time.) is the user base. The last quarter was the group add 850,000 users giving them in excess of 16m. This is a solid base, especially considering the nature of the service being rather niche. It’s also worth highlighting that the business is quite young, founded only in 2009. But of course we want to see how active the user base is, as it is how many jobs get completed which contributes to the all-important bottom line.

Well the September quarter was a big one for projects posted as well. Another 450,000 were added to the site, making 6.8m in total. The growth here is quite significant too, in year on year terms the number of Freelancer users posting jobs has increased 39%. These kinds of marketplaces should benefit from the avalanche effect, where as more people see the work completed from Freelancer, the ease and quality, the more users that will sign up and post jobs.

A quick google search will show articles of countless start-ups which have outsourced parts of their development (sometimes heaps) to freelance to make use of the expertise, while remaining capital light. When you consider this practically, as businesses grow using Freelancer, we will have more and more big businesses reliant on outsourcing this work as Freelancer takes a cut. The cut is less than those that friendly recruiters charge, and the cost of labour generally is too.

One of the other powerful tools for this group at the moment is the low AUD. Currently the user base is 90% global, including 29% from the US and 10% from the UK. As revenue from these countries come in, the low AUD will inflate the figure and improve the revenue line. But what these user base figures also show is there is significantly more growth to be had. Nearly 50% comes from Australia, USA and the UK, yet the start-up scenes in countries like Israel, India and Russia have a lot more to add.

So as growth continues, and success stories are publicised and celebrated Freelancer, and Australian success story could be that exploding stock we have been crying out for.