Freelancer Limited - Half-Year Financial Results - 30 June 2024
FLN (FLN) Share Update July 2024 Monday 29th
Freelancer Limited Reports Increased Losses Amid Revenue Decline
Freelancer Limited (ASX: FLN) has reported substantial losses for the half-year ended 30 June 2024, with a notable decline in revenue and increased operational challenges.
Instant Summary:
- Revenue decreased by 8.0% to $24.95 million.
- Net loss increased by 189.7% to $1.01 million.
- Gross profit fell by 12.5% to $19.9 million.
- Operating expenses reduced by 8.5% to $22.3 million.
- No dividends declared for the period.
Financial Performance
Freelancer Limited reported a revenue decline of 8.0% to $24.95 million for the half-year ended 30 June 2024, compared to $27.12 million in the same period last year. This decline was driven by reduced activity in both the online marketplace and online payment services segments.
The company's net loss for the period increased significantly to $1.01 million, a 189.7% increase from the $349,000 loss reported in the previous year. This was primarily due to lower revenue and increased costs associated with fraud prevention and lower-margin enterprise revenues.
Segment Performance
The online marketplace segment generated $20.3 million in revenue, down 9.2% from the previous year. The online payment services segment saw a smaller decline, with revenue falling by 3.2% to $4.6 million.
Gross profit for the period was $19.9 million, down 12.5% from $22.8 million in 1H23. The gross margin also decreased to 79.9%, compared to 84.0% in the previous year, due to higher fraud-related costs and lower-margin revenues.
Cost Management
Despite the revenue decline, Freelancer Limited managed to reduce its operating expenses by 8.5% to $22.3 million. This reduction was mainly due to a 12.0% decrease in payroll-related costs. The company reported positive operating cash flow of $2.2 million, up from $1.3 million in the previous year.
Outlook
The company expects to achieve sustainable profitability in the second half of 2024, supported by a significantly lower cost base and modest revenue growth. However, it remains cautious due to ongoing economic uncertainties, technological disruptions, and regulatory changes.
The increased losses and revenue decline are likely to negatively impact Freelancer Limited's stock price. Investors may react to the heightened risks and uncertainties surrounding the company's ability to achieve profitability in the near term.
Investor Reaction:
Analysts are expected to express concerns over the significant increase in net loss and the challenges faced by the company in maintaining revenue growth. The reduction in operating expenses is a positive sign, but the overall financial performance may lead to cautious investor sentiment.
Conclusion:
Investors should closely monitor Freelancer Limited's performance in the second half of 2024 and assess the company's ability to navigate the challenging operating environment. The company's strategic initiatives to reduce costs and improve profitability will be crucial in maintaining investor confidence.