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Freelancer Positions Itself As Amazon.com Of Outsourcing

Freelancer (ASX:FLN) has continued to book strong revenue growth and improve margins in 2014 as it moves to position itself as the Amazon.com of the outsourcing industry.

Overall financial metrics were positive and reflected a drive to consolidate acquisitions as well as the industry.

Net revenue was $11.9 million for 1H FY14, which was 41% higher for same period last year, while gross margins at 88.3% are at a level most companies would dream about, up from 87.6% in FY13.

The world's largest outsourcing market place reported net operating cash flow of $246,000 on revenue of $18.54 million in the full 12 months of 2013.

Key revenue growth drivers were growth in gross payment volumes and project & contest acquisition and conversion rate improvements.

While product development & increased take up of value-added services added to revenue growth as did an increased take-up and optimisation of memberships.

Overall, the world's largest outsourcing market place added 2.8 million users to 12.4 million, up 138% on 1H 2013, of which 1.8 million were organically acquired, up 54% on same period last year.

While 1.0 million were acquired including from recent acquisition Warrior Forum, that are yet to be integrated / cross promoted into Freelancer.

Total projects and contests posted were 6.1 million at June 30, 2014.

Operating cash flow was a positive $1.4 million which resulted in total cash at period end of $19.7 million and no net debt.

Recent activity included:

- Acquired leading pure play marketplace in Poland, zlecenia.przez.net
- Acquired virtual content marketplace, fantero.com
- Acquired Warrior Forum, the world's largest Internet marketing marketplace & community since 1997

Product Improvements for 1H FY14 included:

- Launched Freelancer Messenger App for Android & Android Wear - whereby Employers and freelancers can stay in touch away from their desk. Which speeds up communications by allowing employers and freelancers to chat hands free
- Launched Freelancer Desktop App for Windows, Linux - which builds trust & helps freelancers accurately capture hours for billing
- Launched Mobile Website
- Targeted experience for growing number of mobile users
- Introduced Intro memberships (99c / month) which is more accessible for new freelancers in the developing world

Analysis

Freelancer is on the road to its objective of becoming the Amazon.com of the outsourcing market place, continuing to re-invest and grow top line revenues.

With a motto of "Every job, every country, every language, every currency, at any time" Freelancer has a platform that can continue to scale to leverage the growth in outsourcing jobs from businesses and consumers.

A key strategy for 2014 is the scalability of its platform and to broaden its offerings and to build out product & user experience to drive engagement. Launching mobile offerings will assist the cause.

The market is vast - McKinsey Global Institute has estimated that 160 million jobs, or about 11% of the projected 1.46 billion services jobs worldwide, could in theory be carried out remotely, barring any constraints in supply."

Freelancer has estimated its global web design revenue opportunity at ~$1.8 billion ($8.2b GPV).

Add in demand from small businesses revenue opportunity and consumer demand and potential revenue attainable for Freelancer is dizzying at $16 billion.

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