Overview: Freelancer Ltd (“Freelancer”, “the Company”) is an Australian-based software company operating the world’s largest freelancing, outsourcing, and crowdsourcing marketplace. Freelancer owns online marketplace Freelancer.com and payments company Escrow.com. The Freelancer platform has 31.4 million users and 15.1 million posted jobs while Escrow has processed over US$4 billion in transactions. Wise-owl initiated coverage in June 2015.
Catalysts: Following a period of stagnation Freelancer has delivered strong growth across all key metrics during the first quarter of the year, delivering $2m positive operating cashflow. Freelancer’s ability to extract value from the Freelancer and Escrow ecosystems via partnerships and vertical product extensions is a major growth driver. Freelancer is well funded with a cash balance of $35 million which allows the Company to strategically invest capital.
Hurdles: The current valuation assumes ongoing growth, which could result in share price volatility if targets are not met. There is no guarantee that Freelancer can continue to grow its ecosystem and maintain its market-leading position. Entry barriers to the industry are limited and Freelancer may be subject to increasing competition.
Investment View: Freelancer offers speculative exposure to online employment and payment service trends through a portfolio of digital assets. Freelancer’s management team has a strong track record of value creation and we are attracted to the Company’s growth trajectory, growing ecosystem, and balance sheet. Operational risks, valuation, and competition are primary hurdles. Following a period of stagnation and share price volatility, the recent results suggest renewed growth momentum and a return to the Company’s long-term growth trend. Whilst risks are moderate we see strong growth potential and upgrade our view to ‘buy’.
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