Freelancer (FLN) is the world’s largest freelancing and crowdsourcing marketplace based on the number of users and projects posted. Freelancer.com is a website that allows employers to post a job that is usually digital in nature and have freelancers from around the world bid on it. Freelancer currently has over US$3 billion worth of projects posted and acquired Escrow.com, a global secure online payment platform with over US$3 billion in transactions, in 2015. Freelancer’s revenue is derived from project commissions, membership plans and value-added services.
The online crowdsourcing market is still in its infancy and its growth will be spurred by the structural shift of employers seeking flexible, skilled labour and workers opting out of working for large corporations to pursue flexible employment. According to Freelancers Union, the US freelance workforce alone earned an estimated US$1 trillion from freelancing this past year – up from about US$715 billion in 2014. Freelancers across 180 countries have been making significantly more than non-freelancers for years, according to data from Payoneer. From an employer’s perspective freelancers not only can work on demand, but businesses can pick and choose work-ready talent with specific skills, such that training will not be required.
Freelancer’s leading market presence means that it is strongly positioned to profit from the rise of the crowdsourcing economy. The business has recently turned earnings before interest, taxation, depreciation and amortisation (EBITDA) positive and recorded a net profit $0.1 million for the first time in two years. This result came about despite a significant interruption in sales due to Freelancer’s overhaul of Escrow.com dampening transaction volumes.
Turning EBITDA and net profit positive is an indicator of Freelancer’s revenue finally gaining the scale required to overcome the business’s fixed cost base. With high gross margins and revenue growth above cost growth over the next few years profitability will grow from a low base.
Freelancer’s growth strategies include expansion into new markets via local web site launches and increasing the number of users on the platform, while acquiring similar crowdsourcing businesses and working on expanding escrow.com. Freelancer has a management team with extensive experience in the technology industry and track records in successful exits to major global corporations.
Glennon Capital does not own Freelancer in the portfolio.