Freelancer Limited - 1H24 Financial Results - 30 July 2024
FLN (FLN) Share Update July 2024 Monday 29th
Freelancer Limited Reports Decline in 1H24 Financial Results
Freelancer Limited (ASX: FLN, OTCQX: FLNCF) has released its financial results for the first half of 2024, reporting a significant decline in Gross Marketplace Volume (GMV) and revenue.
Instant Summary:
- Group GMV down 18.2% to $449.8 million.
- Revenue decreased by 8.0% to $25.0 million.
- Net Profit After Tax (NPAT) of $(1.0) million, compared to $(0.3) million in the previous corresponding period (pcp).
- Operating cash flow increased to $2.2 million from $1.3 million in 1H23.
- Cash and equivalents remained flat at $21.2 million.
Financial Performance Overview
Freelancer Limited reported a Gross Marketplace Volume (GMV) of $449.8 million for the first half of 2024, marking an 18.2% decline compared to the previous corresponding period (pcp). This decrease was driven by a 20.5% drop in Escrow GMV to $385.1 million and a slight 0.8% decline in Freelancer GMV to $64.7 million.
Group revenue also saw a downturn, falling by 8.0% to $25.0 million. Freelancer revenue decreased by 9.0% to $20.4 million, primarily due to lower enterprise engineering services, which contributed to a 3% decline. Escrow revenue, on the other hand, fell by 3.2% to $4.6 million, despite a 10.5% increase in the second quarter of 2024.
Profit and Cash Flow
Freelancer Limited reported a Net Profit After Tax (NPAT) of $(1.0) million, a significant drop from $(0.3) million in the pcp. The decline in net revenue and lower gross margins, attributed to increased fraud provisioning and prevention costs, were key factors in this result.
Operating cash flow improved to $2.2 million from $1.3 million in 1H23, indicating better cash management despite the challenging market conditions. Cash and equivalents remained steady at $21.2 million, showing resilience in maintaining liquidity.
Revenue Composition and Cost Management
Approximately 71% of the group's revenue was generated in USD, with 10% in AUD. The company continued its cost optimization efforts, reducing operating costs by 8.5% compared to the pcp. Payroll-related costs were down by 12.0% due to a lower average headcount.
Freelancer Limited aims to improve revenue growth and sustain positive operating EBITDA through ongoing strategies focused on cost optimization and revenue enhancement.
The decline in GMV and revenue reflects broader market challenges and increased competition in the online services marketplace. The increased fraud prevention costs and lower enterprise revenues have impacted gross margins, leading to a negative NPAT. This financial performance may lead to a cautious outlook from investors, potentially affecting the company's stock price.
Investor Reaction:
Analysts are likely to express concern over the significant decline in GMV and revenue. The mixed performance in different segments, with a notable drop in Escrow GMV, may lead to a cautious approach from investors. However, the improvement in operating cash flow and steady cash reserves could provide some reassurance.
Conclusion:
Investors should closely monitor Freelancer Limited's strategic initiatives to enhance revenue growth and manage costs effectively. The company's ability to navigate these challenges and sustain positive operating EBITDA will be crucial in maintaining investor confidence.