Freelancer Limited

who's the Vice President of Product and Growth, Brock Adesnijad, who's running the escrow division, and Habib Ullah, who is running the load shift division. You may address any question in the Q&A to any of us in the room at the end of the financial results presentation. So in the first half, France Limited delivered gross payment volume of $576.9 million, which is down 0.6%. Freelancer GMB was up 0.8% to $65.2 million. Escrow GPV was $489.4 million, down 13.2%. Group net revenue was 27.1%, down 7.3% on PCP, with freelance revenue of $22.3 million, down 4.8%. Escrow revenue is $4.8 million, down 17.2% on PCP. The escrow division was profitable for the first half, and the core marketplace and load shift are now effectively at a breakeven position. They're in operating profitability and breakeven overall. We had a significant turnaround in profitability with NPAT at negative $300K versus $3.1 million in the PCP, and FX at a tailwind of 6.5%. The group had positive net operating cash flow of $1.3 million for the first half, ended with cash and cash equivalents of $23.1 million, up 1.8% on the first quarter. Moving in by segment, so the freelancer revenue was $22.3 million, down 4.8%. Freelancer GMV was $65.2 million, up 0.8% on PCP. The segment, excluding load shift, was operating either positive and break-even for EBITDA in the quarter, the difference being the unrealised FX translation. This is with a decrease of $1.7 million in marketing costs year-on-year, as the marketing has got quite profitable in the last 12 months. In the second quarter, we added 1.8 million new users and 280,000 new projects in the marketplace. The average product size lifted to $275, up 4.1% on PCP in the quarter. Note in the calculation average project size, we're including everything in the freelancer segment and the logistics segment, given that the financial metrics are all put together. The average project size includes all enterprise customers and the logistics division. In the enterprise customer segment, there's actually quite a significant lift in the volume of low-value projects from the live computer and printer company that we have, that we've talked about for a few quarters. That is counterbalanced to some extent by the load shift division where the average project size is close to $4,000. So we've put it all in together because the financial metrics are all being reported together in terms of revenue and GMV in this segment at the moment. On the contest side, the average entries for contests was very strong, and liquidity in the marketplace is extremely strong. I would challenge anyone to find a marketplace that was stronger for labour in terms of liquidity anywhere. There's about 300 entries per contest. In contest scale, anywhere from $10 up to $10 million. So for $10, you can get a logo done or some simple graphic design done or photoshopping or what have you as an example, or you could do it in $2,700. Of the categories we have at the high end, the largest contest we have acted right now is for $6 million US, roughly $10 million Australian, which is for NASA and the National Institute of Health in gene editing in the central nervous system of humans. It's a pretty exciting contest. shows that the high end and the sophistication of the work we can do compared to any competitive peers is pretty unrivaled, as well as the quality of the freelancers entering, which in this case will be very high end research institutes and sciences and so forth. The focus for 2023 for Freelancer, we've talked about this several times before in the quarterlies and so forth, is four major points. The first is really personalization to drive the core marketplace conversion. So what we're doing here with personalization is really telling the experience taking advantage of some of the advances in things like AI, which can really look at user-generated content and really provide a highly tailored experience. It's pretty amazing, our A-B testing in various parts of the funnel, all the way from traffic, to posted projects, to awarded, to ultimately paid and completed, showing quite dramatic lifts, actually, when we apply very high levels of personalisation. So that's very encouraging. And as a result of this, actually, we've bucked seasonality quite well over the last couple of months. So we're currently heading into the northern – we're in the middle of the northern hemisphere summer – Usually that's a bit of a downtrend in the metrics, and we've bucked that with the improvements we've made with personalization. So that's doing quite well. So that's really driving sort of conversion of the funnel. We've also made improvements in the way we do recommendations to clients. Again, we can do that in a very highly personalized way. We've got a lot more coming here. We can actually go further. quite a long way with how we do personalizations, recommendations, given the fact that a lot of the interactivity of the website is text-based and then following that sort of chat and video. And these are all areas in which you can apply things like AI very, very, very well and very strongly. We also have a very large showing in some of the open corpuses for training of the AIs, given the fact that we have a lot of data on our website and we have more users than any of our competitors. We also optimise how we provide notifications and so forth. This has led to a statistically significant increase in GPD and GMV, and we intend on driving that further. We're also really on a roll at the moment in delivering product features for many quarters. I apologise. I'm sorry, I'm not sharing your screen.

Oh, sorry about that. Where are we? Sorry, I'm just trying to find the screen sharing here. Alex, do you know where it is? Usually it's Hangouts. It's at the bottom. Can you stop video security in this chat? There we go. Apologies to this. There we go. Okay, is this coming through now? Yep.

Okay, so we're really deploying a lot of product quite quickly. We've, you know, for many quarters we talked about, you know, improving the front end infrastructure, the back end infrastructure and so forth, and we've got through that now. So we're really panning through the release of features. The project clarification board is a way in which you can post a project and Francis can ask clarifying questions, which improves the conversion of projects. We also have got a feature we pushed a little while ago with quotations that we continue to iterate on, which allows freelancers to issue quotations naturally like they would in the real world, where someone can ask them for some work and they can send them a quotation. This now supports fixed price and hourly projects, and shortly it will also support many other ways in which you can pay for work. We've had a lot of success with the collaborative features. We talked about this last quarter, but we've got a number of things which allow sort of interactivity between the clients and the freelancers. One is with groups, which is simply very similar to sort of what you expect with sort of a Facebook group cell interface. This is growing very, very strongly. It grew about average of 6% month-on-month through the first half of 2020. 2023 and will continue to grow. Our audio and video calling is growing very strongly. It grew about 300% in terms of call count in the first half. All this interactivity is designed to increase the average project size. At $275, that is still a relatively small amount of work. If you are in the Western world and you hire one full-time staff member in the US, UK, Canada, Australia, and so forth, you're probably paying $40,000, $45,000 minimum wage, no matter where you are in the world, for an annual wage. So $275 is a relatively small amount of work compared to what businesses will pay to employ even one person. And even if you're a freelancer in India and you're a software developer, you probably earn $1,500, $2,000 US a month. Really, this is the lever I think we can pull to really drive the growth of the business. If you go up and down funnel conversion, and we've had some pretty tremendous lifts, actually, with the personalization results where you've seen double-digit increases in up-funnel metrics for conversion, and then filtering down to the down-funnel metrics, that's great. But you can get a big lift, I think, pulling the average project size netting of zero to the end of it. So you can see that's the lift in the call-connected count, and that will, I believe, continue as we continue to really hone and push out collaborative features like this. We also have improved our acquisition funnel. I think if you remember, the second half of last year, we pushed out a new predictive long-term value model for paid acquisition of customers through the paid search engine marketing channels and so forth. And that requires a bit of time to train and calibrate and so forth. That's fully live and active now. And we've actually delivered now five-year highs in terms of sessions and marketing profitability, which is up 81% on PCP. And this is all in the face of cutting back about $1.7 million of spend on the marketing side as well. So the paid acquisition channels are doing pretty well. We also have got some personalisation that we've deployed in all the funnels for paid acquisition, and that's showing some strong uplifts. In particular, a series of A-B tests we had showed a 20% increase in new paying clients And also one test showed post-project conversion about 14% of mobile apps, another showed new paying clients and Five Eyes up about 16.5%. So we continue to deploy that across the website and hone that and improve that. So that's good. And I think we have got a very clear pathway, at least for the rest of the year and probably into next year, in terms of what we can do with personalization and what we can do in terms of funnel optimization in terms of what we can do with driving that average project size. The second major thing that we're focusing on product is really getting the design from consistent to delight. So the course of the last year, you know, we had to deploy a new front-end interface that really basically involved rebuilding the entire website while a public company, which is obviously a very challenging thing to do. That interface is now fairly consistent. We've got our own design system called Bits, and now we're taking that from consistency to delight. So where I want to get to at the end of the year is to be able to hold up the app and hold up the website and be on par with sort of, you know, the world-leading product examples of great UX and great design. So, you know, examples like, you know, GitHub or Discord or the like, and that's really what the goal is of design and UX to get to by the end of the year. So we're powering through that, and I think anyone that uses the website will see the changes. We've got a lot of positive feedback from the freelancers on this. We actually had a whole bunch of quotes from the freelancers in this report, but the ASX for some reason doesn't like that, so we had to pull it out. But But anyone who uses the website will see that the interface is improving in sort of leaps and bounds. Now, the enterprise division in the first half, the GMV was up 37% on PCP. In the second quarter, the growth was a bit slower than past quarters. That almost entirely was attributed to timing with sort of NASA payments. If you actually had the NASA payments we had in the first quarter and you added them again to the second quarter, you would be on par with Q2, with Q1. We did have a couple of other things that kind of contributed to the second quarter being a little bit soft. One was that we had a very, very, very large enterprise client that we really dedicated a lot of work and energy into. And we talked about in previous quarters, this is one of the – it's a trillion-dollar tech company that we were working for, you know, very hard for a very long time to activate for a very large engagement. Now, what actually happened was they had a couple of other vendors in the program and they shut the whole program down – the day after we passed vendor onboarding. Now, they have told us that there is an actual engagement for us, and post-summer here in the Northern Hemisphere, we've got a kick-off meeting to kind of figure out what that engagement might exactly be in August. So I'm pretty hopeful and pretty positive we'll get something. They told us that uniquely... We have the broadest offering and we actually have the best pricing by far. So we'll see what it is, but big companies sometimes make some decisions to cut whole divisions and that. That was before that we actually generated a dollar of GMV and three other vendors have been totally cut from that program. But we do put a bit of effort into that, but I think that will turn around because I think it's quite promising the number of meetings we've had since then and it also pays a little bit of money for something else. So I think we'll kind of get there on that. And the other two things are... One is that in India, we've got quite a number of BPOs. In fact, the who's who of BPOs and back office sort of style organisations in the signed MSAs that we're supplying labour to. Somewhat a victim of our own success, that volume has been ramping quite well. And we had to change the operating model because when we first went into India, what we did was we were running the payments directly out of India to our Australian entity. And as that became bigger and bigger and along with computer and printer company, that's also ramping volume quite significantly. We basically were accruing quite a large withholding tax issue because that model. So what we've done now is we've fully committed to India. We have an incorporated entity in India and we've got a new model where we get paid directly in rupees with a pure agent model. And so we had to have a little bit of disruption going through client by client or enterprise customer by customer model. moving across to that new model. We haven't fully completed that yet, but there was a bit of disruption, obviously, getting them across to a new model. Now, ultimately, I think that our Indian clients will be much more happy to be paying in rupees than paying FX and paying an Australian entity. There's a number of other advantages because there's quite a complex tax situation in India with tax collected at source, tax deducted at source, and equalization levied on top of that. So we've got to, you know, the good news is we've got, I think it's significantly better for India. It's been paid in rupees. It's much better for both the enterprise customer and ourselves. But there was a little disruption in the quarter, kind of moving everyone across, and we've got to go to kind of get more fully, all the accounts fully there. The other thing is that we did have a change in the leadership of the enterprise division. Sean McMicken, unfortunately, left us. And we're already well into a process with a number of candidates. We, in fact, finished our final presentation and the final four in the last couple of days. And we aim to make an offer in the next 24, 48 hours to a candidate. And I think we'll get a very, very solid step-up of candidates. So there's a few things, but some highlights in terms of the quarter where basically we executed MSA with a Fortune 1000 IT consulting firm with 50,000 employees, kicked off the first project, which is the third one. We continued our relationship with a consulting giant with over 200,000 employees globally. They've been running several location-specific research projects for hundreds of freelancers on the platform on behalf of Fortune 50. We've got 123% quarterly growth from a Fortune 500 technology client and strong and forward bookings. They're running several large-scale projects to expand their central workforce program. We've finalized an engagement model with a statewide government organization and APAC. This is actually quite interesting. We're actually bringing them together with another enterprise client to do something Pretty interesting. This is a very, very well-funded government organisation that's looking to provide employment in their particular area to about 6 million people who are unemployed. We obviously weren't going to do a full 6 million, but the point is they're very well resourced and they've actually done a fair bit of work on their particular platform, which is quite interesting, and we're going to dovetail into that. We also added to our government team with a new hire to lead the growth of our NASA noise engagements. Tricia is quite a solid performer, masters from Caltech and geophysics. So that's a great compliment in terms of the science base for NASA. We in fact have won three task orders in the last week for NASA. So some pretty interesting stuff up and coming, including one of them actually for the detection of micro debris in orbit. This is one millimetre, 10 millimetre particles in orbit. figure out a way to detect and remediate that is a pretty interesting challenge as a space program. And we're pretty excited to be supporting that. We've got another one with one, which is improving the GCC compiler, which is being used by the Orion Space Mission. And there's another one on comfort in air taxis. So visual comfort in air taxis. So when you're flying around in an air taxi in the future, how can you make sure that people are kind of and so forth. So they're pretty interesting projects. And TaskForward has continued to come out and ramp. Obviously, the program has expanded from $25 million to $175 million. There's talk about expanding it further. So we'll see where that goes ultimately. But the engagement still is going very, very strong and continues to get bigger and better. And we're seeing the size of these TaskForwards grow quite significantly. Obviously, with the NIH one that's live now on the website for June, I think that's one of the biggest ones to date, which is $6.7 million US dollars. We also added to our enterprise sales team with a new senior hire with a nine-year sales and marketing experience. Deloitte is now up to 8,000 consultants in the platform. We're powering through a whole bunch of product improvements that they want to put in the platform. You know, my gigs is, you know, it is quite a revolutionary platform. I think quite well-leading platform for augmenting a physical workforce with a cloud workforce. You can post a project as a Deloitte consultant and have it go to 48,000 other Deloitte consultants or go to the world. A couple of quarters ago, they doubled the engineering services component for us on that, and that will continue through the rest of the year, so that's quite strong. So we're really just heads down building product for them. The big focus is on the internal side of the MyGigs marketplace rather than the external. Obviously, you've got to go slowly, slowly in the consulting world and make sure everything is well-ordered and well-managed. You've got to love compliance and risk and other participants, making sure that everything is done properly. in a great, well-ordered fashion. So that just means things go slowly. On the other hand, we've built a really robust enterprise-grade product offering we can take to others. One advantage, however, of building the internal marketplace is that 60% of the internal projects are eligible for external, even if they're not being allowed by the compliance team to go external. So as we build that internal marketplace, it's also building potential external volume. So we're We're still plugging away at that at scale, and that's growing, that engagement, and there's a lot of participants on the Deloitte side. We're working on that, and it's powering along. So that's going well. Global Fleet is going very well as well. We're now operative in five countries. We're in 28 cities, 25 of them we've integrated directly into this customer's back-end support system. We've done 22,000 jobs now. So this is 22,000 jobs for repairing computers and printers in five countries. That's going to go pretty quickly to that sort of order of magnitude per month now, because we're in the ramp-up phase. We've got some pretty interesting results. We've got a lot of parts usage per repair in the Department of Labor. I don't know if that's the case. We're just not sure, but that's an interesting statistic. We've got a service law agreement on par with the other partners, and we've got custom satisfaction for up to 22,000 jobs, which is a pretty solid achievement for our global fleet offering. So basically what's happening here is if you break the computer in these particular regions of the chance, I don't know if our friends are out there going to remember carrying it. We're also going live and rolling out in other cities in these five regions. So a couple of the cities in India. In Australia, we're going to Wollongong and Alice Springs and so forth. So you can see that we're quite good, not just in city metro, but also regional. We actually thrive where it's very hard to get service coverage from either full-time staff or traditional providers. We're also being told the volume's going to wrap significantly in Malaysia. We're going to Singapore. And we're about to turn on overflow operations in the US, which is really the main game. This is really... you know, this is really where we want to go ultimately is with the big volume, the high value projects. And we had a couple months ago, we had a uh big kickoff meeting i was in that call and uh it was quite interesting uh uh going through all the various regions in the us and so forth and and you know where we will start is the same as in all the other countries we'll be in wichita and arkansas and all these weird places and we'll start with only overflow but as we kind of prove ourselves we'll get more and more and close to the metros and so on and but the last regions we'll probably get to ultimately will probably be new york and san francisco and LA and so forth, and that we'll have to prove ourselves just like we've proved everywhere else. But we've done quite well so far, and 22,000 jobs have been done to date, so that's pretty significant. In terms of NASA, this completed a million-dollar task order with the National Institute of Science and Technology. That was for building up the next heads-up display for first responders going into emergency situations. So, you know, this is, for example, going to an earthquake or a bombing, and the ARVR system allows you to tap into the CCTV streaming camera, vital signs of the first responders and so forth. And that was very successful. The four finalists, I believe, are all successful. a commercial product we're about to have it produce a commercial product so there's commercial outcomes in these innovation contests. Not only do the organisations that launch them get to solve very innovative moonshot sort of problems at the high end, there's also commercial outcomes that come from that, as well as a talent pool they can tap into to do further work. So there's a lot of advantages, and contests generally give you a 40x bang for buck in terms of spent results, and that's out of Peter Diamandis' XPRIZE Foundation book, Bold. um we also i've talked about this 10 million dollar um task order and gene editing i went back we also um completed um a uh innovation contest for the u.s bureau of reclamation in um modeling of um sedimentation and rivers and this require is speeding up a optimization like the solver And we actually got very dramatic improvements in that. I can't remember what the original target was they wanted to get in speed up. I think the solver can take up to a month to run. And I believe they're looking for a speed up around 30%, 40% from memory. And we ended up getting it 80 times faster. So they were pretty blown away with the results for that. So that was quite a good achievement. And then we also built a next-generation precipitation measurement device. So this was for water measurement in environments that could be extreme, so from negative 40 to plus 50 degrees. UV exposure, high wind loads, extreme precession events and so forth. Probably something that could be quite useful for Australia as a product if it was productised. We also want to fill the small projects. As I mentioned in the last week, we won three, either by ourselves or in partnership. Now, in terms of escrow, the GPP in the second quarter, now, this is quite interesting. It was $220.6 million down 21.7% or $147 million down 27% on PCP. Now, You can see the long-term uptrend. I mean, you know, we're still in the uptrend, and, in fact, this is a top-ten result. But up until the last four weeks of the second quarter, we were actually very strong. On a rolling three-month basis, up until the end of May, the chief year was actually at $193 million, which is actually above... the first quarter numbers. So it was really just in the last four weeks that it came off. And again, the volatility that you see in these numbers here comes from domain name transactions, in particular mega transactions. There's about $45 million of mega transactions that kind of rolled off in those last four weeks that weren't replaced by new transactions. I did actually expect that to continue. We had just come out of the NamesCon conference, which is the big domain conference of the year, which ends on the 3rd of June. And what we're told is that after the 3rd of June and the conference and the traveling, that a lot of the participants who are involved in these big transactions actually just took leave rather than got into business. So I was a bit surprised by that. That was really just in the last four weeks. I do expect this to bounce back quite strongly for the rest of the year. There is a bit of a boom happening in venture funding in certain segments such as AI. And I do think we'll see a bunch of mega transactions go through in the second half of this year. We already sold chat.com and prompt.com for quite significant numbers. I do expect a lot more of that to continue. And I do think that the, the funding for venture-backed startups is shrinking a little bit after that valley of death in the second half of last year. So I was a little bit taken aback by that last four weeks. I do think that's going to come back in the second half and so on. You can see that, you know, if you kind of go into July, you know, this is, again, very short-term data here. So this is only a couple of weeks into July. You can see the counts have bounced up a bit in July. So I'm confident that this is going to come back and we actually will finish up the year actually pretty strongly and continue that trend. In terms of the product, we did do a major overhaul in the second quarter. We have really ripped out the product and it's a lot more modern. It was quite dated, so that was quite a bit of technical debt we paid down, and that will continue into the third quarter a little bit, but we'll finish that off. I think quite a number of... Obviously customers always come first. Second is to improve the KYC to be best in class. The next is to improve the friction of the transaction flow, basically get it super slick. And then really provide a great 95% of the volume that goes through escrow right now are results of eBay motors and eBay watches and quite a common and so on so that's a really long-term plan with escrow is to get that checkout experience super slick and then you know kind of do you know try and do what after they did which is that great sales team going up the merchants and platforms and the second is having a partner activation team that when you do these platforms you activate them really strongly you really build that ecosystem and you get the volume the bits around partners so we're really dedicating a lot of resources in the third quarter on that so i'll talk about that later but it's early days that we're one of the alternate payment Good shift segment. This is going extremely well. In the second quarter, we saw significant uplifts in the first quarter. We're not really reporting year-on-year because the merger of the bulletin board model and the marketplace really only happened in August of last year. So we'll soon be able to talk about year-on-year numbers that make sense. Otherwise, you're kind of mostly talking about different business models. The GMV was up 53.7% quarter. We had an all-time record for the most quotes per day, which is up 53% quarter-on-quarter. We had an all-time record of about 35% on the quarter. Conversion rate jobs up some chips on the quarter. Use and completed loads up 39%. Average converted load size is about 3,600, which is flat average freight charge up on the quarter. That's something that's on PCP, that one. We've also got the break here. So it's positive in May and slightly negative in June. So we're basically... which, you know, all three businesses, which is great. And I think we've really got a big turn into the whole group and engineering businesses is on its way. So the goal is to keep that going. In the second half, we'll be able to start publishing year-on-year because we'll lap the August. In terms of total loads posted, I do put these numbers out there, but they don't really – a bit of apples and oranges here. So when we compared the bulletin board model before, where it was free to post a project and for $79 the drivers to get the phone numbers, compared to now we've got to put the money through the site, pay to the site, et cetera, and so on, and it's – removed a lot of the fluff and the other activity that was happening on the site. The loads posted to the second board were about 13,000 and the comments were about almost 18 million. These numbers are down a fair bit from the actual bulletin board model, but they're not realistic because in the bulletin board model, the loads came off within 72 hours automatically. In the marketplace model, that's about 30 days. So there's a lot of reposting in the original numbers, but I'm still reporting them for consistency's sake. um it'll make more sense when we allow year-on-year you'll be able to see a real understanding of kind of what's going on here there's about 300 million of notional load volume program being posted under the site and the goal really is now to to basically um but as much of that as possible to gmb and revenue the composition of different machinery um stays strong it's about 29 percent of the week uh general for those are at 65 you can see here there's lots of stuff we do if you've got ...freight that moves from a strand location to a strand location anywhere in the country, Australia only. The goal is to basically convert as much of that freight as possible. Currently, it's come from the merger of the two... ...the marketplace model and after that, we have a couple of avenues