Freelancer Limited

Sorry, was I on mute? Yeah, I think so. Hello and welcome to the Freelancer Limited 2025 half-year financial results. My name is Matt Barry. I'm the Chief Executive and Chairman of Freelancer Limited. With me today, I have Neil Katz, the Chief Financial Officer of the business, Andrew Bateman, who's the VP of Product Management and Enterprise, Mas Mohamed, who is running Loadshift Business, and August Piave, who's running the escrow business. As always, in the Q&A, you may direct your questions to either myself or any one of the executives in the room. or follow up afterwards for a one-on-one by emailing investor at freelancer.com. At Freelancer, we are building the Amazon services. We are in the fields of labor, payments, and freight. We have three businesses that are all very strategic and groundbreaking in their own right and world-leading. Freelancer is the world's largest online crowdsourcing marketplace with over 82 million people. connecting people up from all around the world and any country where there's electricity internet that we're able to legally operate. Escrow is the world's largest online escrow company that's secured over 7.7 billion payments for expensive and complicated items. And LoadShift is an Australian-only business, but the largest heavy freight marketplace in the country that we will be, at some point in the future, expanding overseas. We're all solving trillion-dollar problems. Each of the fields of labour payments and freight are very large trillion-dollar markets. In the field of freelancer, 5 billion people need a better job, and intellectual capital is the battleground in the 21st century, as Mike Milken says. The defining characteristic of the 21st century will be the competition for intellectual capital. So with freelancer, we make it real. We turn your dreams into reality, whether you're a small business for the future. For escrow in the payments field, you know, trust closes deals and in high-stakes transactions, a bulletproof escrow isn't a luxury. So we ensure that transactions happen, such as, you know, we've secured things like the sale of grok.com to x.ai. We secured the sale of meta.com to Facebook. We secured the sale of chat.com to HubSpot, which ultimately sold it on to OpenAI in the field of AI. And that's just the field of AI alone in the field of domain names. So when you transact a large or a valuable item over the internet, there's risk in escrow powers, global trade without borders by reducing that risk. The freight field with load shift, it's logistics gone digital. It's basically Uber for freight. It's the same code basis freelancer just running for a dedicated industry being load shift. And midweek, we get about 300,000 plus kilometers of freight per day, which is on par with the distance to the earth to the moon and exceeding it some days of the week. So we keep the world supply chains running. How we generate revenue. It's quite a simple business model. It's a consumption-based model. With Freelancer, we do jobs from $10 to $10 million. With 80 million users, we collect the 3% free from clients and the 10% from freelancers. Once you award the job and the job is accepted, we have some optional other revenue lines and premium add-ons. With escrow, we take a very small commission. for securing transactions. We've been averaging about 1.64% on each transaction as a whole. And, you know, basically repeat deals, monetize trust at scale. And for load shift, it's the same as freelancer, 3% plus 10%, et cetera. So our competitive edge is monetizing critical business infrastructure across the digital economy. Now getting into the half year results. So the gross, The revenue was 28, which is up about 8%. NPAT swung positive to an all-time record for the half year of $1.9 million. That's a big step up from last year, where it was slightly negative. The operating cash flow grew very strongly to $6.8 million positive. That's up 209% in the half. The cash flow is also very strong at $3.3 million, which is up from a small negative to flat number of last here is an all-time record half-year profit and quite robust cash flow and powering the growth into the second half. Looking across at a high level by segment, and I will do some commentary after I go through the first set of slides here just on the overall high-level numbers. So the GMB was up a bit to $66.5 million. The revenue was up also 3% to $21 million for a freelancer. A big win we We had in the first half, you'll see the video that we played at the beginning of the call today, is we were a joint winner of the National Open Innovation Series 3, $475 million US dollar contract. We've been working with NASA for about a decade. We were a winner of Noise 2, which started off at $25 million US dollars and jackpotted to $125, $175 million, I think it was. $175 million. That It has some spare powder in it. It's a five-year contract. This new one is a 10-year contract. The original number of vendors in Noise 2 was 32, and that's been actually reduced to 25 in Noise 3. And we are by far win task orders or partner with other smaller entities with domain expertise to win. So this is a great validation of the business. We obviously work with NASA on very, very high-end scientific and technical breakthroughs and moonshots. As you saw in the introduction video, the sorts of things we've worked on in the past have included how to detect, track, and remediate, and that means shoot out of the sky, small orbiting debris between one millimeter and 10 millimeter, which we came up with quite a number of different solutions and different approaches and different technologies. We've done things recently such as um and we've got a big one that's actually been running just right now which actually mass market uh but it's had heavy support from the astronauts in um educating kids with a zero gravity device replacement that goes up with the armaments two mission um into space but i'll talk about that a little bit later but it's not just space we do everything from product design to electrical engineering to software optimization uh and so forth and that is only going to increase over the next 10 years in terms of the diversity complexity to 80 million minds for really true genius and a very large variety of approaches, some of them unorthodox, some of them really delivering breakthroughs and we've landed part of those 25 vendors. And moving forward, I think we'll play a very, very big role in that program for the next 10 years. In terms of other momentum, we added 2 million new users in the half, up 17.5%. We have now extreme liquidity in the France marketplace. And actually, in terms of contests, we actually now have 772 entries per contest, which is pretty insane when you know that contests can run anywhere from $10 to $10 million plus. Escrow, the revenue was $372.5 million. It's a bit choppy on the GMB number because we do have these very, very large transactions. We almost had a big $35 million transaction happen in the cycle. And there's a couple of very large $10 million transactions which are partially funded slash pushed over until the next quarter. So that could have easily have been quite a positive number on the GMV. But the revenue is up 32.3%. They're doing very, very well. This is our fifth year of profitability with escrow. We're out of tax credits now. So we will start paying tax for this business, which is the first world problem to have. We also were live with Shopify, with the beta. Our golden transaction went through, which is a full end-to-end test of the system and paid. That transaction was a $12,000 transaction. And you can imagine that using the tradition been a little bit difficult to take a payment at that size. So, you know, the big thing here is that we will be able to, you know, you've got to use a Shopify site to take large value payments, for example, sell a house, sell a jet, jet parts, you know, intellectual property, a business, et cetera. So really this is a brand new capability. We've been taking it very, very slow, but, you know, funds are flowing through now. And again, we would just be just gently stepping us up because we need to make sure that we have everything in place with the business to be able to scale because obviously they're very, very high volume ecosystem. Domain volume was up a bit to 196.9 million. And we've got a bunch of positive interest from import export. We have a very, very, very strong integration pipeline with escrow that Elliot and the team have been driving. Lottery for revenue is up to 9.1%. We twice hit an all-time high monthly revenue in the first half, beating the previous numbers by 12% and 8%. And I'm pleased to say that we've rolled out in-app video and audio calling, which is a big thing that we've been waiting on to really drive up the award rate. The award rate is actually slightly higher than 27.8% at this point in time. We actually even pushed an even new update to the audio and video calling this morning. So for those of you who do use the site, update your apps. And the calling is getting fairly robust and there's quite a bit of polish going into it. So I expect over the course of this quarter to be able to report that that award rate has been nudged up to an even higher level. And we'll see how high we can get it to. We're also going to be opening up the calling on the site in thing to remember here is that a win on one platform gets a win on both platforms. And so freelancer will have calling, you know, has been progressively benefiting from the calling being rolling out. We've heavily restricted the calling on freelancer because simply we have so many users and you want to avoid spam vectors and so forth. But now we've got a real-time data pipeline running on So that was great. So we had record half-year profit and cash flow with all the three engines starting to get primed. The big thing now is you just need to focus on the revenue number. So just focus on that revenue number and get them all pumping. We've got one business at a pretty good rate, but we'll get all the businesses at that level and we will be flying. This is what the cash flow looks like for the profile for the first half. You can see there was really good $6.8 million of operating cash flow. under the new was AASB 16 you've got to account for lease liabilities in such a manner on your books and there's basically de minimis capex in this business and the 733k is for increasing our stake in the load shift subsidiary so that gives you a run down of where we ended up at up to 26 million cash in bank So you can see the impact swung quite positively. We went from a negative impact in the first half of last year to almost $2 million in the first half alone. It's the largest half-year profit to date in the company at all time. Net revenue is up at 8.5%, powered by escrow and steady marketplace growth. We did get the gross margin lifting just a little bit. The lapping number in the first half of 24 was abnormally low for our gross actually accurate. Previously, our steady state gross margin has hovered around 83%, 84% roughly. In that particular first half, we had some abnormals from, I think it's primarily fraud. Is that correct, Neil? A toll fraud attack on the rectified. So we do have a very strong gross margin. Historically, at the very beginning of the business, I think it was about 85%. Dropped down a little bit over the years, and we managed to get that back up a little bit again. So that's great. We've been tightly managing our costs. Admin's down 3%, occupancy down 8%. We're gently nudging up the marketing at the same time a little bit. And you can see that quite a number of numbers swung positive here in the for the first half up from a negative 1.4. So you can see that it's about a $4.2 million swing in the net profit before tax number. And overall operating profit before tax is about 1.8. So that gives you a good idea of where we are. And, you know, obviously, I mean, I've said in the past about a year ago that my goal was to get to half a million dollars a month probability operating profit consistently every single month consistently forever. And then build a base and then obviously grow the revenue number as much as I can and just gently nudge up the profit over time. I think we've done a pretty good run to kind of get to this point. We always have a little bit more to go to get to the number that I was putting back there, but it's pretty close. And I think that will provide a good foundation and stability with the business in So, you know, the goal here is I won't be happy until I've got, you know, good revenue growth numbers across all businesses. We do have a little bit of cost savings still to come. There is still fat in the business, particular areas. I'll highlight that there is fat, for example, in our hosting costs still, and we have a plan to reduce that a little bit. There's a little bit of fat still in the payments infrastructure because obviously we operate the reduce that with kind of just working on those revenue numbers. As we said before, the cash and cash equivalents were up again for the fourth quarter in a row. This is up 12.3% to 26 million. Receivables down a little bit. Reflexes shifted in the mix of payment processes with shorter settlement times, which is better for us. And the right of use, lower depreciation in line with lease terms and reduced lease liabilities. Neil's done a very good job every time we've got a lease renewal. We've managed to chop some off. from all the offices around the world. So obviously, we will continue to do that as the lease is kind of mature and so forth. But congratulations to Neil for kind of making sure that cost control has been well applied. The reserves are now 14% simply because we increased our stake in load shift and so the non-controlling interest reduced to acquisition of some minority shareholders in load shift. And so some high-level vision, strategic vision in 2025 outlook, you know, I think we're leverage is starting to show through with the profitability. We're focusing on AR leadership. I'll talk about it a bit more in the commentary. The second half focus is really prioritising our GenAI tools for customers and partners. We've also got a big engagement doing some stuff with foundational models that we're being paid for right now with integration. We have a bigger thing coming as well in that particular area, but I'll save that for the commentary area. In terms of customer acquisition, coming in from new customers in the first 30 days in the free ads of business. I personally wanted the number to be significantly higher. We had a bit of issues over the Easter period where we were a little bit thinly staffed and we had a few bug rollouts. Not entirely our fault. We actually had an issue with the Chrome browser rollout, which affected quite a number of websites. But it's trending back now. But we've had good user signups and we've also been improving our workflows. And my goal is to get the cash coming in from customers back up to over 20% year on year. minimum, and I know how we can get there. Big focus on retention. The video calling rollout is going to be a big one. We've got a bunch of smarter matches happening right now in development. We've got a genetic framework improvements. It's pretty crazy the sort of things we can do now with AI agents on the side. Continue the cost discipline, and if we can just keep chipping away on the cost discipline while spending the money where we want to spend it. We spend it on good people in the company, nudge up the market a little bit and kind of trim the fat from from from from waste in a few areas. And there are some places in a couple areas and it's still and so the catalyst our free answer is continued customer acquisition, AI driven demand NASA government wins amongst other things. There's a bunch of really good enterprise opportunities from this will hear escrow expanding the high value verticals expanding integrations continue the Shopify rollout, load shift the enterprise freight growth with the audio video calling GPS tracking on onboarding improvements, etc. And We're currently lean, focused, and ready to ride the wave. AI, and we want to get basically revenue across all the business lines now to double digits and sustainable profitability. And the cash has been building up. We want to continue to keep building up. So what I might do now is just go across to the commentary. And is that coming through? No, it's not. Okay, here we are. So I'll just go through the commentary in a bit of an overview. I won't go through it in a huge amount of detail, but I'll lift and excellence the reader, but then I'll look up the Q&A. And again, you may address your questions to myself or anyone in the room. So we talked about the high-level numbers for freelancer. And I've talked about the users being up 17.5%. The average project size continued to grow which is inclusive of all enterprise customers in the load shift division, et cetera, is just across all projects. It's the same stack. Liquidity is, is, and the 722 entries per contest up 113%. A lot of that liquidity is driven by sort of AI assistance in bidding. So, you know, people getting GPT to write their bids and so forth. We have some work we're doing this cycle to, which we run six times a year, a two month cycle for product development to crack down a little bit on this liquidity. It's very, very good to have liquidity, but it's a bit too much, particularly in the contest side of the business. it can be a little overwhelming getting so many contest entries submitted. So we're going to crack down a little bit in the next couple of months. So this is what the average project size looks like. You can see that really since 2020, it's kind of really been taking off. It's a mix of the ability to do a higher level, sophisticated jobs on the platform, There would be a little bit of inflation in there, but that's one of the components. And it's really, you know, one lever we can really move in this business is the average project size. And for other businesses, it might be the average order size. $350 today probably gets you about $7,000 worth of Western work. It really has that sort of, that sort of leverage. And still, $350 is not a lot of spend even for a small business who, if you're in the UK, USA, Canada, Australia, et cetera, you probably have someone on staff for $45,000 a year. So we're talking, this is a number that we could easily figure out how to put a zero on the end of. We have some pretty exciting things coming that I think will put a zero on the end of. this number, but it is a leap that can really, really strongly move and far more than the effect of what you can do with funnel optimization and so forth. But we're working on the funnel optimization and the retention as well. This is probably my most negative thing for the half, which was the acquisition. So this is cash coming in from new customers in the first 30 days or 28 days. You can see there, really up until Easter, We had the number peaking above 25% year on year. And of course, that just flows through the business and ultimately hits revenue and ultimately hits GMV. Literally, I got on a plane to go do an investor tour around the Easter and the number went backwards. There's a couple of things that went on there. There was a Chrome, I think it was version 135 of the They had a Chrome update which produced a set interval timer in the Chrome browser to basically not have a minimum trigger delay. So it causes a bit of a locking up on a number of websites around the internet. You can Google it and ask me for more information. That took a little while to debug and we fixed it. But just this was over Easter where you do have a little bit of a pullback and when you've got a little bit thinly staffed. recovered a bit after Easter, above 10% year-on-year. It's come down a little bit again. It's trending up in the last couple of days. It's been trending up quite strongly. We will get this number back up again to higher than 20% year-on-year. But this is the thing that if we had that number up there at 20% year-on-year, the NPAT would have had a much higher number on it. But we're getting there. We will get it back there. This is the GMV. However, you can see the GMV is quite healthy in terms of the year-on-year numbers here. You can see that we've been in green for quite a bit of time here. Here's the Delta. So that's for new customers, that top graph. And this is for all customers through the business. You can see that we're still hitting the greens, but the key is really to get those acquisition numbers happening again in combination with retention. So they're the three levers, just customer acquisition and getting that firing again, which we will. The retention is inching up quarter by quarter by quarter, by 5% or so at a time. I think we did about 5% last year. We just need to kind of keep that going, get the acquisitions numbers moving, and then keep pushing the lever on the average order size and we'll kind of get some good places. AI type of jobs going into the business is growing really strongly. We're actually going to issue a fast 50 jobs report this week, which we'll get into a lot more detail about that. You can see that the AI jobs are going up. I fully expect this to go 10x at one point. I have been very bullish on what I can see what we do with AI agents on the platform. I'm seeing what customers are doing with AI agents, and I guarantee you this is going to be the new web design. Every business in the world very soon, the aha moment will happen. They'll realize how they can get it done, and their phones will be answered by AI to take an order, process a credit card, make a booking, and they'll come to Freelancer to get it done. The same place you get your websites done and you get your apps built. So I'm pretty excited about where that's going. We've done some overhaul with brand marketing that will continue to improve. We continue to maintain a really good Trustpilot score, actually the best on the planet, amongst the major marketplaces and continue to maintain that. We've started doing the integration work, which has been paid for one of the largest generative AI models in the world. There's 175,000 freelancers that have at one point in time worked on this. Once we get this integration done, the ability for us to marshal significantly easier than what we've been doing up to today, which has been very manual. There's quite a large number of projects we've been working on with one particular partner across not just the hyperscaler foundational models, but also quite a number of smaller engagements. What we're seeing in the market is we're seeing that just about every major business in the world that's in the Fortune 2000 as proprietary data are kind of building their own foundational models to basically provide a way to better access to them. So for example, if you're Bloomberg and you have access to all this financial data, you don't want it scraped by Google, you don't want it scraped by Meta, for access to that data. And so there is, you know, we've just opened an office in Bangalore. It's a small office at the moment because a lot of this work is happening through the BPO industry in India. We did a six city tour in the half in India and that convinced us to open an office because there's almost infinite demand for this sort of work. Literally, every BPO has this work available from the small scale up to the very, very large scale. And it's pretty exciting. So we're very bullish in all of that. For the field services as well, India is moving up the S curve. And by doing so, everyone's buying air conditioners, alarm systems, computer equipment, networking is rolling out, satellite dishes, et cetera. Again, there almost seems to be an infinite amount of work for global coming out of India. So that's another major reason why we opened an office in Bangalore. And even this week, we're waiting on a very, very large job that wouldn't start till 2026. But it's pretty exciting. We're one of the most exciting companies in the world, and it's at scale. So we'll see if we win that. But, you know, I'm very, very, very bullish today. And Mas, who's in the room with me here, is leading all of that. And let me tell you, you get him on the phone with customers, he's a professional. He used to work at MBN and Telstra and what have you. He knows the ins and outs of field services. He knows to get anyone anywhere with any skill set on a roof with all the certifications, you name it, he knows how to do it. He knows how to do it very, very quickly. So that's fantastic. I've talked about NASA and what we've done there. I'm pretty excited and bullish about that. I do think we're going to see some great things coming. We're already seeing a lot of task orders. I think Tricia last week applied for six or seven of them. They got sprayed out in one week. So there's a lot of activity there happening in that front. As I said before, NASA is now representing the whole of US government. So we're getting task orders from every agency you can possibly think of in the US government. This is obviously a massive upsize. we also poached the head of sales from the number two um uh task order winner from noise two so um that's uh ed wong who has joined us in the last um two weeks and uh runs ourselves enterprise sales team now out of vancouver reporting into andrew So, you know, I think we'll have a lot of firepower there on this front moving forward. And here's examples of certain things that are going out. We obviously continue to award prizes. In the half, we handed out 2.5 million US for a gene editing task order, which I'm not sure what the total value of it now. It was 6 million US, but I understand it's jackpot a little bit.

Yeah, they've decided to award some additional prizes, basically.

Yeah. So, I mean, it's pretty amazing. You know, if I think back to when I started this business back in 2009, you know, you had 20 categories of work, you put $50 in, you got a $50 website and it looked like a $50 website. Now you work, you know, with the top end service providers. So you've got everyone from Harvard, Yale, Princeton, et cetera. You've got the research labs, you've got professional scientists, you've got hobbyists, retirees, you name it, hackers, you know, contributing to these prizes. It really is accessing 80 million minds of genius to solve and deliver moonshots for science and technical problems. You know, to think that, you know, back then that we would be, you know, not just delivering on gene entering in the sense, gene editing on the central emphasis of the humans, but to do so in a way where they've jackpotted the, you know, You know, a six million US dollar challenge for gene editing because the quality of the work is so good, they want to award more winners. So it's a phenomenal validation of what we do. And we do plan now on opening up this capability to Fortune 2015. and working on all sorts of things, sustainable business models, et cetera, and so forth. We're also working with government to help solve unemployment in countries around the world. We've done it in a few countries now. Bahrain's going very well. The 97% approval rate of the delivery of that particular program. Escrow, as I mentioned before, about the numbers, the revenue's doing really good. The GMB, or GPB, or GMB kind of bounced around a little bit. was almost a blowout quarter. If we got one of these deals across the line, it would have been a blowout quarter. So as I said before, there was a big deal that kind of got missed, and then there's a couple that one got partially funded. So we've got some amount of $10 million, and there's a few other big $10 million transactions being set up. So that number could easily bounce back up in a big way very shortly. And we talked about... Shopify, we're very excited about that. We do have a bunch of shopping carts lined up at the moment. There's a very strong pipeline there. But the big thing is, you know, we are a high friction payment business in that we have to KYC people. We have a lot of obligations as part of our 55 licensing jurisdictions that we operate in to ensure that we do all the checks around sections and politically exposed persons and check that the for an appropriate price and do modeling of the pricing in some circumstances and fuzzy matching and you name it. So it is a high friction payment system. And so when you're taking a high friction payment system into a traditional compliance and everything else will operate hand in hand to make it work to give it the product experience. So we're chipping away at that and we will continue to report on that. But we're just going slowly because we want to make sure it's all So it's starting to happen. We also have a very strong pipeline, as I mentioned before, with Elliot and the team of integrations. And August, maybe you can jump in and help me here, because of my memory. There's automotive. We found a great new use case for car dealerships. There's machinery. There's agricultural machinery. There's a fuel credits marketplace in Europe. What else we got?