Freelancer Limited

Limited full year of 2022 financial results presentation. My name is Matt Barry, and I'm the Chief Executive of Pre-Answer Limited. With me today in the room, I have Neil Katz, who's the Chief Financial Officer of Pre-Answer Limited. I've got Sean McMeekin, who's the BPO of sales. I've got Adam Burns, who's the BPO of products. And I've got Drew Davis, who's the General Manager of WorkShift.

And after the commentary, you may address questions in the Q&A to any of the people in the room, and we'll be happy to answer those questions for you. So in FY22, our gross payment volume was $1.127 billion. It was down 10.5% on PCP. segment by segment um on record. Liquidity in the marketplace remains strong with the percentage of bids that are received in 60 seconds dropped slightly from 59% to 51%. That's mainly due to our effort to kind of knock out the spammy bids that the freelancers are using, using automated tools to bid, and so that reduced slightly A tweet last night by a U.S. marketer actually that said Freelancer Please is one of the most underrated websites on the Internet. And he was raving on about contests and how good they were. About half his spend was in contests. On average, there's about 320 entries in a contest, which is pretty remarkable given the fact that the contests start from $10. And you can go all the way up to the very, very large-scale contest. you know we made in purpose to have a And by virtue of that, we reduced a lot of spam in regards to what we call hire me spam, where people will click on user profiles and attempt to hire them on the website. The way it worked in the past was a little bit clunky and quite spammy, but with quotations it behaved. this year. You can see here in terms of our higher time efforts. We also fixed a major conversion problem with the or so, we still think we can add a zero to the average project size. Because $250 is a relatively small amount of money, even for a developer that maybe is somewhere like India with maybe $1,500, $2,000, $2,500 a month. So that's a big leap Looking at non-brand Google, for example, probability is up 77% on the low and 43% overall for the year. We can talk about that. where people get excited about 2020. number of periods. And the other is to then now focus the acquisition efforts on the organic And each of these basically, you know, combined, I think, will have cumulative effects. Now, one division that shone in the FY22 was the enterprise division. And there's a lot of irons in the fire here, as I've described many, many times. Of course, Sean's here to answer any questions you've got in the Q&A. But the GMV in that division was up 101.5% year-on-year. So that's grown quite strongly. Starting to come a... November 2022 was an all-time record in the month, This is a multi-billion dollar company who are using us to basically launch a new service offering. It's a company that everyone has installed in their phone, probably in this call. We've got a number of actually global talent providers that we're integrating with. There's actually more than one. But there's other vendor management systems and so forth that we're going to be using as a channel. We also got quite a pipeline of engineering services proposals in with both existing and new customers, ranging from the big guys that work with Deloitte, a big computer company and so forth, right through to a number of governments, as well as a global BPO and national telco. Now, there was one downside in the enterprise division, which may turn into a project. Went through all the onboarding, signed the scope of work, went through all the bidding and so forth, got green light on the system and literally last Friday we got news that the entire division where we haven't started operating yet in terms of answering calls that we're providing basically a global support organisation and multiple people for them. They've got a number of other vendors that actually are live and have been live for some time, but the whole thing has been shut down and merged in and restructured as part of a So we've actually got a meeting lined up next week where the Quiet, what about? marketing team and so really the focus now and the name and any month now there will be an announcement about this. We've got approval to announce who they are and so forth as part of the work. We've got quite a good integration here now. We've integrated our system directly into next Monday. So I think two cities are done. Chennai, Ahmedabad and Delhi are going live on the 23rd of February tomorrow and then next Monday we'll have Mumbai going live and then effectively 10 cities will be live integrated out of 18 and there's eight more cities to launch over the course of the year. Indonesia, we're doing We're one of 31 vendors in the program, but we're effectively the biggest In terms of escrow.com, now we had obviously a phenomenal year in 2021. But the volume has yet to return to the giddy highs you know, the domain name market, you know, liquidity drops, the pricing still holds strong, but the volume drops in terms of just simply transactions not happening. Now, I will say that we, in this year already, last week, we did do a domain name, a mega domain name attempt to That's probably all I'll say. It'll be a pretty marquee transaction if it goes through and it's been many, many So you can see here in Q4 there was a bit of an uptick And overall, really quite a slick integration in terms of the KK experience and automate a lot of the internal processes that we have. So in terms of partner activity, we've got kind of a number of things happening. We've got the green light on a number of states' real estate. We've got some construction, solar is where we're going to start there in real estate. A number of the M&A... and things happening in solar and construction. Now moving on to load shift. I did put this graph in, although it's... We've done some pretty amazing loads. We've got some pictures and some of it in the presentation, so we'll look at what we do. But we move, the bigger and the uglier it is, the more we specialise in it. But the second half of 2020 GPV was up 63% on the first half. The average load size was a bit over 5%.

the ops team who were there kind of to... ...for a year now is to simply just convert as much of that freight to be paid on platform as possible.

The old model was basically drivers would go to the bulletin board, they'd pay the $79 a month membership, and then that was it. They just got phone numbers to all the shippers, and it was just a wild west. Now, a few things that are happening here. One is that's actually jobs go through where the shipper is paid not just 10-20% more for a high quality carrier but substantial numbers like 50% or even more. So it's a better experience all round and you can see here this is the daily quoted carriers, in fact this week the numbers actually spiked up even higher. So the liquidity on the supply side is there, it's very, very, very strong. I asked, brain category. So, I've David is, uh, uh, So that's it. I'll open it up now to Q&A. And again, you may address your questions to anyone in the room. I've got Neil Katz, who's the Chief Financial Officer. Sean is the VP of Sales. Adam Burns is the VP of Products. Drew Davis, who is the General Manager of the Low Cheap Division. So Alex, could you open it up, please? And then maybe just read out the questions.

Hey, Matt, I'm just wondering, like, with your report on your update in October, you hear that we're getting knocked around with the crypto crash, and also you rip that inflation is the highest it's been in over 40 years. I'm just wondering, like, how is our business going compared to competitors like Upworks and Fiverr in this environment? Are we holding up all right, or are they –

Yeah, I've worked in, you know, also had a tough economic environment and, you know, they've had large operating losses, particularly they had a particularly bad quarter. I mean, their Q3 was terrible and Q4 had stabilised a bit, but they're still, you know, not profitable. And so, yeah, We're operating in a similar sort of economic environment to them and sort of feeling the same kind of macroeconomic sort of headwinds that our competitors are facing.

Yeah, the difference is we're not running at a massive loss. I think they've still got a bit of the Silicon Valley mindset where you can run very, very large losses. We've been pretty careful on the cost side. just now focusing on just operation. The crypto side of things, I mean, I don't think the crypto market will come back at all. colour job and I think there'll be a boom obviously in the domain market there as well.

So over the long term, we're going to be able to outrun these guys, do you think?

Look, here's the thing, right? It's a marathon. You know, we've been going now, I've been going at this in venture capital and they were kind of burning it all on paid marketing and so forth. So we're still really, really, really early days in the space. Now, why is it taking so long? Why does it take so long to kind of... If you think about the market, you look at it, some of the largest companies in the world by market capitalization are global marketplaces of products. You've got your Amazons, your Alibabas, you've got your Etsys and your Edays and so forth. Delivery of a service online People have to go online, learn And they've also kicked off all the low-paid workers because they want to focus on effectively high-end. They can't do what we do with our enterprise condition. I don't see anywhere in Upwork where you can do gene editing. I don't see anywhere that you can even get a laptop repaired. All right. But, yeah.

Thanks for the question. Yeah. Thank you. Matt, there's a question from Vesta in the chat. Yeah.

The question is from Vesta. With such a significant drop in share prices, Look, there's a lot of companies that have been beaten around the head. It's a lesson we learn in the market, but I think the thing is, there's all these things you can do in terms of capital markets, activities and so forth, but I think the number one thing is just getting the revenue line, printing results, getting the revenue line moving and demonstrating a track record of financial performance. just get the revenue line moving at a rate where investors Effectively, I want a better word, it's a regulatory monopoly in terms of large-value payments out there. It's a very small business in the scheme of things in terms of the global payment space. But if you think about payments, retail, e-commerce is a potential. I think it's really going to start to happen in a decent way. All the things happening in enterprise are amazing. The GMV, I mean, it is what it is. I mean, Sean comes in every quarter. The GMV's up way up, right, each quarter on quarter, right? And only just scratching the surface with some of the opportunities, like literally scratching the surface. You know, one enterprise in the Fortune 500 probably has a labor bill in the $10 billion or so plus, right? And convert, you know, just 5% of that to the cloud. We got beaten up a little bit in the second half, but that will come back. I'm very confident it'll come back. As I said, we did make a transaction. We've got a very, very, very large transaction that's hopefully going to go through. I hope it's not a strategy. We'll see. And then low shift. You know, in asking a question, the big thing we're going to do is we're going to show connection performance, right?

That's the number one thing. So thanks, Esther.

Next question. Hey, Matt, just one more question on the load shift business. So currently the model is that they can just go onto a website and get a phone number, and you're going to sort of change that. I think I've had it explained to me that it's going to be more like an Uber model where you're clipping and you get the job paid and all that. But I'm just wondering, like, is there a bit of a concern that now that these guys have got each other's numbers that they'll just sidestep that model and won't use our platform to pay the commission? Yeah.

If you do pay your membership, we do allow you to see some phone numbers are and have a big map of the world where we know where the drivers are and this, that, the other end. At the end of the day, the cost of freight in some of these businesses is minuscule compared to problems caused by the freight not arriving reliably on time. If you run a mine that's in production, you want that to be up 100% of the time, 99% of the time without operating. If you need to ship a part or a use now quickly, right? So, you know, I'm very excited about that, because it's something that's simply an absolute gem of a business. And, by the way, the model, as everyone knows, the actual stack is exactly the Freelancer Enterprise stack. So the same stack that we built Deloitte MyGigs for is the same stack for LoadShift. We've got rid of the separate code base. It's all the features that come into Freelancer, and and all that sort of stuff that we have in Freelance. That's all free now. So that's pretty amazing. we had. Every single week there were big companies in the news for announcing significant job losses, particularly in the tech space. That's our bread and butter in terms of digital work, development work, software engineering work, etc. people running the field services program. And on top of that, so these companies are announcing their job losses. They're going through the process of working out where those job losses are going to be. And once those decisions have been made, the focus is then on cost cutting. So we are building more inquiries. exams online, building up a bank effectively of exam questions. And that's a signal that, yes, in the news, there may be all of these companies that are experiencing some tough times, but it's actually fast-tracking their actually Deloitte did a demo of my gigs to one of their health clients and the health client said, can we have something like that? So certainly we're very confident that the signals that we're seeing are positive and trending in the right directory. And our model is basically we don't charge big upfront fees or monthly fees, unless there's some sort of integration that they want to do. unless they're using in-source, in which case there's a perceived licensing fee for any internal work, or unless there's some engineering services. So it's very, very inexpensive. So I think it's a good model for the times.

Next question. Any other questions, don't be afraid.

Good morning, gents. I've got a couple. The first is just can you put some numbers around the potential Deloitte contract, the external kind of placement, you know, say a three-year run rate. What kind of magnitude of revenue could that generate for freelancers?

Okay. Well, we actually have a three-year forecast that was provided by Deloitte to us. Okay. and we've also had a meeting at the end of last year to try and set those targets in stone. Incidentally, it's funny you bring it up, Sean actually emailed last night to look like a meeting to try and get those numbers fixed. So we have, I kind of want to, I don't know if I should mention the numbers or not, but like... Well, their comment to us was that they basically and all the marketing the group's functionality, which is about to happen when they adopt some AI functionality, that we'll really start to see, well, this year is the year that we'll see the ramp up in external projects. Now, we do publish the average project sizes. So the average project size at the moment is around 1469 U.S., And we do, I mean, if you run the numbers on, say, 50 projects a day, you'll kind of see what the GMV kind of looks like over the course of a year, just on 50 projects out of, you know, 35,000, right?

That's about 27 million GMV, is that right? Yeah, about that, yeah. So revenue for freelance.

Revenue to us will be 10% on that, unless it goes to a preferred freelancer, which would be 15%. Right. about freelancers which we're building on. adoption, right, and I've turned that very, very rough estimation into some sort of firm that was pre-going live, pre-everything, right? That was based on an assumption of $2,000 a project is their assumption, right? So what we need to do is we need to basically get some targets So Deloitte's a large organization, and there are many branches around the world. And outside of consulting, you've got tax, audit, and all these other divisions which are completely separate from consulting. And we have in the UK, Australia, Switzerland, and New Jersey, you've got various levels of engagements, discussions, what have you. Some earlier stations will be at later stage about coming onto the market platform as well. So, you know, it's one of those things where it's, you know, again, heads down, see what we can do and work with their team to drive the marketing as much as we can. There's quite a number of marketing teams on the way right now.

Okay. And then kind of following on from there, you kind of mentioned they've got other departments, tax and so on, but you also mentioned earlier they've got a customer in the healthcare space that was also interested. So the tech stack's already built, the model's built, so incremental GMV coming through, incremental revenue, I assume the only incremental cost for you guys is the cost of the chaperones and the cost of XP.

They're paying for some engineering. So there's some features we haven't turned on yet. So hourly projects are not live yet. Contests are not live yet. Things like groups are not live yet, et cetera. They're all things kind of in the short-term engineering plan to turn on. So that's been paid for with engineering services. So there are some features that will turn on that will increase the ability for the revenue line there in the next couple of weeks. But yeah, the platform right now can take projects. It is successfully completing projects. I'll give some examples in the PowerPoint of what's being done. But there's quite a number of different use cases the platform is being used for. But yeah, as of today, it can take projects. There could be something going out from the CEO saying, okay, Brian, I want you to do one project and kind of report back what you've done.

I was more trying to get at what the incremental revenue would convert to the bottom line. What's the additional cost of goods sold and operational costs?

All engineering we do on the platform is paid for, and we make a marginal management. So that's all being paid for, but there's a per seat licensing we get for the internal they're currently paying 3% off. So it's currently 3 plus 10 or 3 plus 15, but then over time as the volume goes up, that 3 will go to 0.

Maybe I'll put it this way. If PwC came along and said, or let's say Accenture came along and said, we want the same, and they're going to provide an additional $100 revenue for freelancer, What's that operational say at the EBIT level? What's the cash conversion taking into account that you've got obviously more hosting fees and so on, but the key incremental cost for you is probably the chaperone cost to actually make sure that the customer gets the right freelancers. Is that right? So are we talking kind of a... Okay, there's a couple of engagements happening

There is a bit of customization that would have to be done if they want exactly the same thing. And so the customization would have to be look and feel, obviously. You'd need the logo and the colors to be updated, which is very simple. There would be integration into whatever their ERP system is. A little bit of customization work there that we paid for in order to do that, to get that identical experience and either brands that branded the experience, that would all be profitable for us because we get, you know, engineers get paid to do that. But in terms of the actual, like the service delivery, once that's up and live and running, there is virtually no incremental costs. You know, we have better talent pools already and all the enterprise customers as an employee. But yeah, in terms of incremental costs, it's just that some recruiters are handling projects, recruiters are profitable in themselves, hosting costs are de minimis. Yeah, so basically... There would be an opportunity to sum it up from how the consumer marketplace... Yeah, so you just pump some more projects into the consumer marketplace. It's the same sort of thing.

Yeah, okay. All right, and then just last question around... Around load shift, you kind of talked about this great momentum, but can you put some kind of revenue, dollar value, what the incremental increase you would expect in 23?

Yeah, I expect some to ask that question. We'll break out the numbers when they get significant. Let me put it this way. Okay. I personally think it's they go to the website, they post the thing to get a logo done, and they go, oh, do you really know how to tell a programmer to make an app? And, oh, gee, this is a lot of work. And, you know, it goes by the wayside. Well, on the other hand, if you've got a cat D12 bulldozer, you don't post a job on Lodeshift saying move it from Townsville to Kalgoorlie unless you've actually got a cat D12 bulldozer. Or you're looking at buying a cat D12 bulldozer. Some people will. a price quote. Outside of that, you don't have an entrepreneur going, maybe one day I'll get into construction, I'll post a job to move a bulldozer. It doesn't happen. So I think at some point, I'm not saying 2023, but I think at some point that award rate will be about 60% or more. with fuel costs and inflation and what have you. So, 350 million of volume at 60% is 210 and then ultimately at 13% at the moment it's not there. At the as of today, like right now today, if you're not on a legacy load shift membership that you got prior to the merger, so we're honouring the people that have legacy memberships that have sailed that, they're currently paying zero. But right now, if you pay for a membership as of today, it's 5%. So you're either paying 3 plus 0 or 3 plus 5, or if you're not on a membership, you're paying 3 plus 10. And if it's an enterprise job that goes through like from a Newcastle board, because it comes from the sales team, they're at 10. And if it's an enterprise job, close to 50 million. And of course those numbers are rising. So the question just is, how quickly can we get that award rate up? There is a graph in here where we show where we've got it to so far. Although I will say, this graph right now, it's biased on low-end jobs. So jobs that go in for 500 bucks, like move a car, But as that goes up, the average job going through there will go up as well. So it's really just consumer behaviour, behavioural changes, a little bit of product stuff, and building up the ops team. But the ops team, I mean, you know, the ops guys, the average load is about five grand. And if an ops person can do, you know, five a day, that's 25 grand of GMV a day, just from one, sorry, six a day. So that's 30 grand a day of GMV just from one person. And we already have one ops agent that's reliably doing that. The other team are growing strongly. A new ops agent can do, we've seen now last month a new ops agent did 100 grand of GMB in the first month and we've got a new ops guy this month that looks like he'll do it 100 for his first month. The ops team are figuring it out and it's just a matter of and to look at the question, I took the question from Deloitte of what are the incremental costs that happen here for each unit of revenue or GMV that's coming on the load shift. The tech stack is basically 90% free, right? I mean, how many people are in the total engineering team on load shift? Stan's team and Habib's team. I'll have to check, but I believe it's something on the order of five. Yeah, we've got five people in technology in this business driving that revenue line. And then we've got five people in ops. Five people in ops. And we've got a general manager. If you include all the people in tech. business very, very, very low.

Okay. Thank you very much.

Any other questions? Anything coming through the chat? Alex? No?

Okay. Can I just ask a question? Sean, thanks for that comment. Matt, can you just elaborate on your confidence in the main marketplace? Because it's been a drag for a while.

Yeah, I know. Trust me, I I think that's been my bug there because this So in 2016, 2017, 2018, there was a third bit And we have done, and I know investors were quite frustrated for many quarters. We were saying, oh, we're fixing the front end, we're fixing this, we're fixing that, whatever. I know Greg, he had a comment to us like, gee, if I see that one more time, I'm going to scream at you. But maybe, Adam, you can give some commentary on why we think we're in a pretty good place now.

Yeah, I mean, I just want to reiterate that idea of getting away from back in 2018 and so on, but there really is a big focus now on product quality. And it's coming through in our 2023 product mission. The number one top point, taking our UX and design to the next level from consistent to delight. And really, last year we had a big focus on it, but really it was just getting the platform consistent. Before then, the platform was pretty wild there.

The reason why it's relevant is it just slows everyone down. If an engineer is working on designing a new feature, and they can't just drag a design element in, like they've got a certain widget, and they've got to make a new widget, and then you have inconsistency of which widget to use, and then you've got testing problems, and then always overhead comes in because even on different pages on the same platform with the same thing, right? So we just got all that unified in the code bases, and we built a design system. So you just drag that widget out, and it's the same everywhere. It works everywhere. And that's given the productivity improvements to the team, but as well as made it easier to get things out in terms of testability,

And separately, there's been a big focus as well last year, and it's very much coming through for fruition this year, on collaboration. And that does have a direct impact on retention and engagement, and retention and engagement do have a direct impact on revenue. And you can see some of those in the group's numbers, which we will leads to revenue. I think the other major point, I guess, that we're really focused on is personalisation. Again, it's really all around retention and engagement. There's some stuff coming out there very soon. I unfortunately can't quite talk about it yet. We've got Adam Simone a little bit.

There's five I don't want to give away the secret sauce here, but I think that's going to have a big lift on the metrics. Big, big lift on the metrics. Yeah.

I absolutely agree. Cool. Thanks for that. Any other questions for now? Alex, no?

Okay then.