Freelancer Limited

Hello, everyone.

Sorry for that. Apparently, we were on mute, so I'll start again. Welcome to the Free Answer Limited first half of 2022 financial results presentation. My name is Matt Barry, and I'm the Chief Executive of Free Answer Limited. With me here today, I've got Neil Katz, who's the Chief Financial Officer, Sean McMeekin, who's the Vice President of Sales, and Hector volume was restored. in the period. And the campaign cost, you can see that. It's a little. And liquidity also has been increasing, with the percentage of projects receiving their first bid in 30 seconds increasing up to 49% as of the writing of this report. Average project size increased as well, up 12% in PCP to $241 U.S. but it is in the report. It's on the ASX. an offering to a particular client for payment, effectively a quotation, just as it works in the real world. This is an improvement and an addition to the current marketplace model where people post projects, people build on them and so forth. Francis can now send quotations to anyone in the marketplace for on-work or new work and so forth, and we'll be expanding the ways in which that can happen. It also provides a better way We also talked in the past about wanting to improve the performance of upgrades and backlog of both feature equipment extracting in terms of work between two people. If you're in the Western economy and you have someone and also leave a video on your bid. And that's been live for the past five days, and that's showing a great uplift in terms of interactivity and engagement from people, as well as building that trust and empathy between clients and employers. We also pulled some fun Okay, so there's a lot of... And we've started to improve quite a number of things in the core marketplace for fixed price, non-HIME projects. And we think in the second half of this year, we're going to start to see the fruits of that. And I can talk about that a little bit later when we get to the Q&A, if anyone's got questions on that. I'll just switch to the slide deck. For some reason, the Google Docs is not behaving very, very well in terms of performance there. In terms of... In the escrow.com segment, we also had a record first half for that business. The business was also profitable in the first half. We had a positive EBITDA of $0.7 million. So that business, in addition to doing well over $1 billion a year in volume in Australian dollars, to doing $1 billion a year in volume for US dollars. We can do a trade on Blinker in the US. So for the very, very first time, you can... rorted, because that's where dealers make all their money. You get a marketplace of offers. You can make a down payment, which goes into escrow.com, which allows you to lower the costs. You can get your offer accepted. You can do the title transfer, the insurance, everything through the app, and finally get the car delivered. So this is really for the very, very first time you can effectively get all of that done at the same time. I'm sure it's not on Google yet. We're going to tip the entire automotive sector over time. It will take a couple of years, but we've obviously got a strong foothold with eBay Motors. We've got AutoTrader US now. We've closed and signed AutoTrader Canada, and we have in development and are ready, hopefully in the second half of this year, to go out for AutoTrader Canada. We've made some improvements to the availability of Canadian dollars also in the first half We also enabled some improvements around vendor financing payment method for Shopify Exchange. We're in Flippa for buying and selling websites and apps. We are also in now Microacquire, which is a hot tech company in Silicon Valley for buying and selling whole startups. And we also went into a number of other M&A, traditional, more traditional M&A businesses over the period. And we also added in the services space, a cybersecurity firm. We also had Dr. Bing Rong join us in the first half, who is a former professor and T.J. Watson Scholar from IBM in engineering, and he's in charge of going on here, but there's quite a number of big wins that happened over the first Deloitte My Gigs, which we've talked about for some time. We've been working with Deloitte since about 2018. That is imminently turning on for external and for their consultants. They're going to start in week one, and I believe that could even be today or tomorrow. It's literally days away. 30... Then from there, there's 50,000 in the initial target groups, and an additional 12,000 roughly will be added post that 38,000 being onboarded. And they've also said that 30,000 more will be joining, taking the total to 80,000 with the inclusion of... about four years of work. And so we're very, very, very excited about that. And it's been a lot of work from the team to really get it down to the final yards in the last couple of weeks. But that is literally in the next few days going live. And hopefully we'll be able to get out something to the ASX feed on that when that does go live just to kind of let everyone know. So that's a big one. Another big one is there's a global computer and printer company that everyone probably on this somewhere where we've been reconfiguring how they do field services so that when you log a call or you go to the very, very, very successful. We have been live in India for some time. We've just expanded to the fifth city and three more cities are underway. There's about... working in the greater network, repairing computers and printers. In Indonesia, we expanded to three more cities, Serang, Baloraja, and Bogor in the second So we just expanded to Brisbane as a last step on the scope of work. Beyond that, we've also signed New Zealand. five countries in terms of that work. We are also in a paid engineering services integration right now. It's about $200,000 US worth of work to integrate our systems into their systems. So job and work orders go in directly and get directly injected into their system. That will now enable a big scale-up of the volume, right? the other things that have happened in the, um, $125 million US. There were 19 joint winners originally of the contract, $25 million. We got about, of the $25 million, about $13 million We expect from here on in, we will get both an increase in frequency of task orders as well as an increase in size of task orders. We're starting to see that. The complexity of the work and the value of the work is going up. Right now, live, At the moment, it's very, very pen and paper orientated. So that's currently live. You can go to our website and you can enter that if you wish. And, you know, one thing I want to point out here is that in child morbidity. included teams such as Columbia University, In terms of other things that are happening in the enterprise division, InSource, which is our generalized version of MyGeeks, is under development. This is basically second half at some point. We've already been demoing it to some of the largest companies in the world. We've got some great feedback and so forth, but that's underway. We also awarded a number of other task forces for NASA's connection. Maybe Sean, I can turn it over to you, maybe you can mention some of the other names we've been working with Enterprise and kind of what's happening in that front.

Yeah, sure, Matt, so as Matt mentioned, the growth in GMB, but also reflected in the Europe, utilising us out of Berlin, Oslo and Singapore. We've got Adobe out of the US and we've got a couple of the largest BPA companies in India, for example, Emphasis and Tata. So the sales splits from the team has been going on for the first half of the year and will continue. The borders opening up will allow us to

and you can just go about your everyday life. You don't have to sit at a dealer for six hours while they do paperwork and and so forth. So, effectively, procuring a system freight bulletin board in the country. We bought that in partnership with Wes Mars, who's the founder and CEO of Mars Group, which is a multi-billion on the carrier side. So there's quite a lot of monetization there. So if you look at the graphs in front of you, in terms of the load volume, that's been increasing quite strongly over a period of time. It's about a decade of history there. In the second quarter, we did a little bit over 20,000 loads. quarter, we also did about 29 million kilometres of freight. So last year, we did about 120 million or so kilometres of freight, as that represents notionally around 350 million per annum. On a forward basis from today, there'll be probably about 380 million, notional million dollars worth of freight posted in the freight division, and we'll be able to start monetising that at 13%. 13% reviews and so forth, so it's a much better model for both carriers and for freight owners. We did the largest marine movement by land in history in the southern hemisphere. We moved the pride of the Murray from Victoria to Queensland. It was about 1,000 years ago. the largest overland marine transport operation ever attempted in Australian history. So we're really in this business, you know, freelancer, escrow, and on the freight side, we're doing a lot of stuff. go to Q&A. I just want to point out to everyone just where I think the upside will be in the second half of this year, and there's quite a lot of things, so I just want to go through this before you turn it over for your questions. In the second half of this year, Deloitte's going live. I've talked about that. Initially, it would be a ramp-up, 30 consultants And depending on kind of what jobs are enabled and not enabled, depending on the countries, there's commercial and there's consumer. And then there's certain product ranges that we're doing repairs on and certain product ranges we're not doing repairs on. But across 13 countries, which is roughly the number that they're talking with us in terms of the initial kind of focus. And we believe Europe will be the next countries, a couple of countries in Europe will probably go like it after those first five. You know, the GPV there, I mean, I want to couch this. I mean, this is a forecast and this is not firm. There's nothing contractually signed about the actual volumes. And there's a lot of work we have to do in terms of the ramp up there. But, you know, if you add to execute and really go from, at the moment we're In the first $25 million, we estimate roughly about $13 million is going to be awarded. We've got about 4.3 of that. There's still that $12 million of that first $25 million. There's now $175 million. It has gone from 19 tenderers to 31 tenderers, but we're still the biggest pretty much in that group. proposals. And we think there'll be a lot of upside from NASDAQ in the next 12 months. We're starting to see the frequency and the value of these task orders. They wouldn't increase the value of the program, the funding of the program by 600%, unless things are going right. And you can certainly see from the stuff we've awarded so far, it's done really well. In terms of escrow, auto trade is live. That's starting to ramp up. We're going to be ultimately on all private part.

exactly that, classified science.

There's a big opportunity in freight, as I said just a second ago, monetizing that $380 million worth of freight opportunity at 13%. We don't know how much we're going to be able to monetize, but we're very bullish in terms of what we think we can do internally. On that, as I said before, there's about $49 million if you included everything. If you make an assumption only half of the stuff moves, there's maybe a $25 million revenue opportunity. That should spit out cash pretty quickly, right? There's been... A drag on the core marketplace for some time. We know now, we think we've got a fairly good idea of what it is. And we've started rectifying it. It's been a multi-year thing. It's been a bit of an insidious issue that's kind of crept in that's been a little bit hard for us to diagnose. But I think we've now had a good handle of what it is. And we have a war room that we've created where week by week by week we're kind of working through that. So there's, I think, a big improvement that's going to turn around in the core market.

what I will do. So over to you. Any questions, don't be afraid. Let me check the chat.

Okay, Ray to everyone. Can you comment on how Freelancer is performing relative to its competitors? Is the pie growing or? Look, the space in it is in its very, very early days. If you look at how many users we've Our closest competitors are in the millions of users. I haven't checked their actual user counts, but one of our closest competitors got to 20 million users, and they made the decision that they wanted to really focus on high-end jobs and U.S. jobs. And so they kind of went from 20 million to 2 million, and I don't know where they are now. Maybe they're back up to 10 million. Maybe they're back up to 20 million. But certainly wouldn't be in the 100 million user range. And another competitor of ours, which is a big one in the U.S., listed... You can make an assumption, maybe they've added 10x since then, maybe it's 8 million, I don't know, but it certainly wouldn't be 100 million service providers. And a bunch of the freelancers have accounts on multiple sites. So if you add up the total number of online workers globally on all the sites, I think you would struggle to be more than 100 million users. Now, if you think about who could make use of freelance services, there's about 5 billion people on the internet. 5 billion people also in the world are on $30 a day or less, so need a better job. And if you're not part of that 5 billion that need a better job, you probably need someone to help you a part of your everyday life, whether it's at a I think we've lagged a bit in terms of our share of the pie. A lot of that has been the core consumer marketplace. And, you know, I've talked about, you know, some of the own goals we've kicked in terms of product. I think we've gone top of down what has been We are well on top of what the issues are, and now we have a plan to solve them. So I want to turn that around. We did have very strong revenue growth in the core consumer marketplace in the early days. We were at 50.0 compound average revenue growth in the very, very early days before that triple-digit of a low base. So I think we have some work to do there, Ray, in terms of really turning things around. But I will say one thing. We have done a lot with this business on very little operating capital, right? Yeah, we... We started off and we raised $1.5 million to buy a marketplace back in 2009. We didn't raise a single cent of operating capital. And we just focused on revenue growth. We focused on execution. We executed very well back then. And we took it public. And it had a very successful IPO in the day. And we were the first company to go public in the space. We were the first company to reach a billion in market capitalization, although it's dropped back a third. Now it's actually quite ridiculous with the valuations right now. But, you know, I am very much confident over the last 18 months. The freight division is going to blow the stocks on everyone. I think there's really going to be a big uplift in revenue there that I think is being attributed with zero value by investors in the market right now. In fact, I think there's probably zero value on quite a number of parts of the business right now, We just want to work on it, right? And the only thing that will generate an ultimately positive result in the market is execution and delivery of financials, right? And all that matters, in my opinion, is revenue, revenue, revenue. That's all that matters, and I think we're really close to getting there. The freight business, I will note, as of July will be cash flow positive. So that division will be cash flow positive. And so I do want to get to a profitable, fully profitable basis across the entire group and keep it profitable. And over the years, we've kind of scared it in and out. Some months have been profitable, some months have been not profitable. And I've reported, you know, maybe this month escrow has been, maybe that month freelancer has been. and keep that growing, right? Now, I will note that we have very little in the way of CapEx in this business, almost zero CapEx in this business. It's all OpEx, and the OpEx basically goes into headcount marketing and rent. Now, in the first half, I will mention just on the EBITDA basis, we had negative $4 million in EBITDA in the first half. That was due to a 30% increase in marketing as we kind of really tried to get that model executing. We did pay that back by the end of the second quarter, but we have trimmed that back so the marking costs have come back. And we've also, on the headcount costs, we did build out the headcount a little bit in anticipation of big revenue growth. That revenue growth, a tiny little bit of revenue growth in the first half, but it was a little bit premature. We kind of wound a little bit back in certain areas. We were about halfway back between where we were in the first half, inflation in tech that's happened, particularly over the last 18 months. The tech market's been a bit crazy, engineers and so forth. I think there's a bit of reality that is creeping in now because of what's been happening in the US and so forth and in crypto and so on. So I ask you a question. going to take any of them. We're not imminently going to take any of them. But there is some optionality, as I mentioned before, that has opened up in terms of our ability to take money into that business. It's obviously quite a unique asset. There's a lot of innovation that's happening in payments. Apple Pay, Samsung Pay, Facebook Pay, PayPal, Venmo, Afterpay, Cell. But it's all in the low-value transaction size. So Apple Pay's average transaction size is $23 US. PayPal is $60 US. to $64 US, they're most about the same. Credit cards are at $57 US, unless you go to Amex, which is about double. Afterpay is $108 US, roughly. So it's all in that low-end transaction size. Now, all that red ocean, where they're all fighting it out, you know, Samsung versus Apple versus Google versus whatever, PayPal versus Afterpay, they're all built on cards. They're all either built on a credit card or they're built on a debit card. by value of the entire US market. we've got to build out-of-sales organization, right? Which is basically going to a series of verticals, and I've got them listed here, which I'll just show you. And we've got some good footholds in these verticals. We've got, the verticals are basically, it's got a good presence in online. I've talked about that before, where everyone's really brought their domain names to us, whether it's Twitter or Uber or SpaceX or what have you. We're building strong footholds in automotive. part to payments. You can't go to Zillow and pay for a house. You can't go to virtually all the marketplaces in the world for cars and pay for a car. And we're transforming these platforms from no payments to payments. At the very low end, yes, you do compete with credit cards and everything else when you have low-end watches, for example. But high-end watches, $50,000, $100,000, $150,000, if you go to Amazon.com right now today... and you go type in watches and then you apply the filters in Amazon the highest filter But we do have options on the table, if we wanted to, to raise money. And we've had some term sheets put in front of us to do so, and those term sheets have gone up to $50 million in terms of the quantum. And again, as I mentioned, we're not going to take any of those, and we're not actively considering taking any of those. But the great thing about this business is it is a businessman. so question from Alan Wise what happened to Fantero and freemarket.com those businesses are still live on their respective domains and they're operating we have no not a left over, for example, from work, or they might do it in their spare time, or what have you, or other freelancers might want to use or incorporate. We think in the future that there's a big potential here, but right now there's a very small investment. Again, with free market, it's a marketplace applying and selling domain names and so forth. We do think that over time there will be opportunity for us to extend that into other asset classes and what have you, but really the bulk of the focus right now is Ethan Chan has got a question. There are quite a few reviews on the web from freelancer.com platform users complaining about fake listings or bids. How big an issue is this? As users are global, do you ensure signups are real users? And thank you. Okay. So on the fake listing issue, so what's happening there is during COVID in particular, there was a big uplift in scammers trying The scam on the fake listing side is basically people posting a project saying that they are a large company, like a deco or what have you. They're not, obviously. They're saying they've got a lot of work to do. copywriting or very low-end copywriting. Then what happens is in order for the freelancer to win the job, they say to them, you've got to pay $7 as a job placement fee or an IP agreement fee or what have you. By the way, here's my Telegram phone number and my WhatsApp link and click on that to make me the payment or make me the payment in really cracked down on us in a big way. And in particular now, you can't award a project on Freelancer unless you go through the cart process, which means you've got to pay the project fee and put up a milestone in payment. And that really... there was quite a number of projects that were removed from the marketplace that were standing. And we've made some really, really good progress there. But this is a demo across the entire space. Really now, you've got to verify your phone number to post a project. You've got to verify your email address. And we think through things like use of video and so forth will really weed out a lot of the scammers that continue to operate and play in these marketplaces and online. On top of that, on the freelancer side, people complain about fake bids. There's not really fake bids on the freelancer side. What actually is happening? And what the freelancers do, it's a bit like eBay, where you might be, if you purchase something on eBay and the type is running out on eBay, at the very end you might get sniped on an auction. as fast as you can to try and beat all the other bidders that are in. It's a bit like walking into, if you ever walk into a marketplace in an emerging market, you've walked into a bazaar in India or you've walked into somewhere in Indonesia or what have you, right? Everyone kind of runs and tools to bid on your project quickly. They're also the power users. They're actually good freelancers. They're the ones that are paying for all the bids. It's not free accounts with only looks great, but at the initial moment, we can really break the magic of the marketplace. You've got to be careful because those feeds that are coming in quickly, for some people, they love it. For some people, they're like, I'm really frustrated getting a job done. Oh, wow, there's someone picking up my job. Oh, wow, okay, I can talk to them. They start talking to them. Oh, this is incredible. If you post your job, and then we've done a lot of research on this. We've got all the data and all the analysis on this. Every second that someone decides to not engage with a website and the bids don't come in, for example, to drive engagement, they can just log off Then you've got the franchise. They get very frustrated because they need to be able to pay for all the staff they've got working for them. They're used to winning lots of jobs and doing 50 projects a month or whatever it may be. They will downgrade their membership plans and the membership plans determine how much bids you get. is when you actually review, you can do a search of lots of things on the web, a lot of things on the internet. If you go to Google, and you type in freelancer.com and our major competitors, you go to Twitter, and you type in freelancer.com and our major competitors, you go to YouTube, we have more videos, we have more tweets about us, we have more listings in Google, we have better reviews than our competitors, They've got 8,400 reviews in their 4.4. If you go type in another competitor into Trustpilot, 7,000 at 3.9. you're reading up about spam. I mean part of the reason why there is spam kind of inherently in these marketplaces, you can see there are 12,600 reviews on SiteJabber for freelancer, if you type in our competitors. And you can see this, you go into YouTube and you type in us versus competitors into YouTube, type in Twitter, et cetera, 2,700 reviews for our book, et cetera. But inherently what happens there is because it's free to post a project and it's free to bid, And we do that to really make it easy for new users to get going. You do have spam. And you can stop it by requiring review of that etc so we've we've really um we have done a cost review in the second quarter of this year and we have brought back the cost quite a lot and we've really got a target to get to sustained availability um from uh the end of the third quarter so from there on we should be um i believe there's a strong ability for us to be profitable and then we can start really investing in headcount. So that's really where we're going to focus. Headcount and marketing, obviously. So that's what we're going to do is we're going to get it profitable in the third quarter. That's the target. We're going to get it profitable. There should be a big revenue uptick coming in, I believe, in the next 12 months from all the things I've It's a good comment. There is a lot of news that's out there about all the businesses. I mean, if you go search in Google, there is news, but you've got to go find it. We do try and put as much as we can on the ASX feed. We have a real problem with the ASX and getting anything out. The compliance manager that we've been assigned simply will not let us post trying to get anything on the ASX feed. They wouldn't let us publish the original announcement about winning the NASA tender. They wouldn't let us publish about eBay. They wouldn't let us publish about Autotrader. Every single thing we try and get out, it's literally a phone call. We argue with them. And I don't know why they do this. It's the responsibility of directors and officers of the company to make sure that the market is fairly informed. I don't know why they're putting themselves in a position of liability to not let us push stuff out. But Neil, maybe you can comment on

There have been a few where we've had to modify them. I mean, ultimately, we have got the announcements out that we needed to, but the frustration that we experience sort of doesn't encourage us to sort of put out more because of this problem we have all the time.

Now, we did have a conversation. We do have an IR firm that's kind of working with us nationally. I think we're on call as well today. There was a discussion today about how the visibility issue. We're just trying to rectify there about being able to see it on some of the major business news sites. But it is something that I do hear you loud and clear. I've had a lot of feedback from investors. I've seen them in the share trading forums complaining about news, etc. And we are really trying to figure out how we rectify that and really do improve the news flow. Again, there's this whole continuous disclosure thing. We want to make sure that anything that is material does go out on the ASX feed and everyone does see it. But we do literally have a half hour to hour and a half world. We recently just did that because what they did was they split their mobile phone app, for example, into two apps, one for clients, one for freelancers. And quite cunningly, and I think probably in an attempt to damage our trademark, they called one of the apps Freelance So we do strongly defend our marks. We do have global marks. Our freelancer mark is incontestable in the US. We've had it for so long. and we do go out there and we do strongly protect them. And, for example, I don't launch lawsuits against companies, but this was, I thought, quite egregious. We did launch a suit against Apple, which we got settled. No monetary payment, but they've stopped. And we didn't intend on monetary payment, but they've agreed to stop using our muck throughout.

Next question. What margins, if any, do we make for car financing? Okay. Okay.

car financing, but we will start to make a margin from financing, which we're in very deep discussions with a finance provider. We had a relationship for some time that already does provide finance for freight business. We're now talking to them in quite a lot of detail about asset financing. We have proposed on that. We think that will be very large over time. We think that will be larger than the actual payment. The payment's about 100 basis points at the moment. So it's quite cost-effective and cheap to use escrow.com, much cheaper than PayPal, for example, in many circumstances. We think financing can really leverage that margin quite a lot by multiple, more than the multiple, more than the basis point, a couple hundred basis points, we believe. We don't know exactly where it's going to end up, that and build a track record to allow us to get a wholesale facility to offer financing at a much lower cost for us. So we'll see. We'll inform you over time as that becomes available. Currently, we're not making any money on the financing. It's more of a proof that we can provide us the more automated providers and so forth, there may be an opportunity in the future, and I think there certainly will be an opportunity in the future to make more margin from finance as well as the transaction.

Obviously in the short term, the more we can integrate with financing providers that make it easier for consumers to get the finance, the transaction flow will increase.

Yeah, we'll also get the expansion. In some of these assets, like the car, get it off of finance.

Any others? Don't be shy. I've got to ask, answer any question you want.

You're directed to the management. You don't have to answer questions today or if you want to follow up, email me directly at investorreprudence.com.

Neil and I can arrange a one-on-one if you want to do a one-on-one with us. We're happy to do that. Okay. Ten more seconds. Your chance to get your question in. Okay, well, thank you, everyone. That was the first half of 2020.