Online work marketplace Freelancer.com has released its prospectus for its proposed float on the Australian Securities Exchange, giving the public the first real insight into the business

Caitlin Fitzsimmons Online editor

Under the hood of Freelancer.com: a cheat sheet to the prospectus

Published 15 October 2013 11:50, Updated 15 October 2013 14:51

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Matt Barrie will retain plenty of skin in the game when Freelancer lists. Photo: Sasha Woolley

Online work marketplace Freelancer.com has released its prospectus for its proposed float on the Australian Securities Exchange, giving the public the first real insight into the business. Here are the five most interesting things in the prospectus.

1. Finances

This is the first time Freelancer has disclosed its revenue: $8.46 million for the half year ended June 30, 2013 and a forecast of $18.3 million for the full year. It is growing fast, considering revenue was $10.63 million for the entire 2012 calendar year. However, it is a lot less than the $1.2 billion figure that has regularly been mentioned in connection with company in recent years. That figure represented the value of projects listed on the site. While the company never claimed it represented revenue it did sound impressive. Profit after tax is expected to be $471,000 for the full-year 2013 and earnings before interest, taxation, depreciation and amortisation is forecast at $736,000.

2. Valuation

The company is offering shares at 50¢ each, implying a market capitalisation of $218 million.It is interesting that this values the company at a lot less than what Japanese recruitment site Recruitco was prepared to pay for it in a trade acquisition.

In September, Freelancer co-owner and chief executive Matt Barrierejected a $US400 million ($421 million) offer from Recruitco to buy the business outright.

That suggests Barrie is taking a long-term bet on the company’s growth prospects.

He has plenty of skin in the game. At the date of the prospectus he retains well over 200 million shares, representing nearly 46 per cent of the total.

The number of shares being offered to the public are 30 million, while an additional 5.1 million are offered to employees.

3. Board composition

The board is small and there are no independent directors.

The board members include two executive directors, Barrie and chief technology officer Darren Williams, and one non-executive director Simon Clausen.

Clausen, who is already a major investor in Freelancer, holds nearly 168 million shares at the time of the prospectus, 38.5 per cent of the total.

Between them, the three directors own more than 87 per cent of the business. This is listed as a risk in the prospectus.

4. Gender diversity

Freelancer has done a better job than Twitter on gender balance. There are no women on the board, but there are two women in management roles deemed senior enough to name in the prospectus. Twitter has no women on a board of seven and only one woman in senior management.

The Freelancer women are legal director Isla Hale and regional director North America and Oceania, Nikki Parker. There are nine men in management roles.

5. Traffic is everything

The prospectus outlines a variety of risk factors for the company, but the first in the list is anything that would diminish its ability to attract web traffic.

This includes ineffective marketing, reputational damage and changes to the Google algorithm that could affect search engine traffic.

Like many consumer-facing businesses, reputation is important and the business is susceptible to public pressure.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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