Freelancer.com is a global outsourcing marketplace founded by Matt Barrie in 2009. The company expanded its business through acquisition of GetAFreelancer (Sweden),vWorker, LimeExchange (United States), Scriptlance (Canada), Freelancer.co.uk (United Kingdom), Freelancer.com.au (Australia), Freelancer.de Booking Center (Germany) and Freelancer Hong Kong (China). It is the world’s largest freelancing, crowdsourcing and outsourcing market place that connects 9,261,113 freelancers and employers with 5 million jobs worth $1.2 billion dollarsfrom over 247 countries around the world. The company expects to make US$17.3 million (AUS$18.3) million revenue from its about $81 million of gross transactions which is more by 73% over 2012 figure and expects to grow more in the coming years. The company earned a revenue of US$ 10 million (AUS$10.6 million) in 2012.
The owner of crowdsourcing job has targeted a mid-November initial public issue to raise US$ 206 million (AUD$ 218 million) by market value. Thirty million new shares will be offered to the public at $0.50 AUD per share. As per the revelation of the issue prospectus, out of the shares offered 85% or AUD$ 17.6 million are available to the investors and the remaining 15% will be earmarked for employees. 5.1 million number of new shares will be offered to the eligible employees as per the plan and Freelancers registered with active accounts with the site can invest through the Freelancer Foundation Shareholder program.
The fund raised by the issue will be utilized to accelerate growth in the operations of the company and maintain acquisition opportunities. The CEO and Chairman of the company Matt Barrie along with other directors of the company has agreed not sell any stock for at least twelve months. The stock is expected to be listed in the Australian Stock Exchange on 15 November 2013.
However, there are few facts on which Matt Barrie will have to work hard to convince conservative investors on his unique business model.
- As per the prospectus disclosure, its financial performance or the value of the outsourced job completed on Freelancer platform is $1.2 billion. The prospectus also shows its expected revenue for 2013 will hit $18.3 million, well ahead of the 2012 figure at $10.6 million. But while the Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA is going to jump as per projection from $9.3 million to $16 million, net profit forecast has come down from AUS$728,000 and AUS$471,000.
- This is a difficult business model to understand by the common investors. Because it does not have comparable peers and it is more difficult to determine how the company is valued.
- Another feature of this issue is its board composition. There are three board members of whom two are dependent on Matt Barrie who is the chairman and chief executive of the company. This goes against the ASX’s corporate governance guidelines.
- The IPO is pretty small even smaller than its one year’s revenue. The company is expected to earn $18.3 million in calendar year 2013 while when it gets listed on 15 November 2013 will sell just $14.2 million worth of shares, or 6.7% of the company.
- In September, the company rejected a buyout offer from a Japanese recruitment site “Recruit Co”, that offered near to over $200 million, close to Barrie’s 46% stake. The Freelance prospectus has valued the company at almost half of this recent public buyout offer. When Barrie was asked why bother listing at all with so little scripts on the offer and carrying burdens connected with running a public company, he replied it is all about setting a foundation while he and his executives retain control and flexibility.
- The small net profit implies forecast earnings multiple of 463 times of the shares offered at 50¢ per share.
- Application forms will be available once the Offer is open. It is expected that the offer will open on Monday, 21 October 2013 (GMT + 11). It is to be noted that Freelancer Limited reserves the right to amend this date without notice.