Adam Schwab: How Freelancer went from giddy heights to consistent poor performer
There have been few companies in the past decade that have underperformed expectations as much as Matt Barrie’s Freelancer, writes Adam Schwab.
There have been few companies in the past decade that have underperformed expectations as much as Matt Barrie’s Freelancer.
Here’s a quick history:
In 2013, Freelancer, a global marketplace for online workers listed on the ASX at 50 cents per share (valuing the business at $218 million). Freelancer (cherry picking its preferred metrics) claimed to be the global leader in the global freelance marketplace and had reportedly spurned a takeover bid from Japanese conglomerate, Recruit Co, which valued the business at more than US$400 million ($594 million).
On the day it listed, Freelancer’s share price peaked at $2.60 — briefly valuing the business at $1.1 billion. Founder and CEO, Matt Barrie, who was once dubbed BRW’s ‘Entrepreneur of the Year’ would soon be valued by the same publication at a juicy $255 million. Part of the reason for the share price appreciation was hype, coupled with a very tight register — Barrie and his long-time backer, wealthy tech entrepreneur, Simon Clausen, owned more than 75% of outstanding shares.
Freelancer never reached such giddy heights again — other than a brief COVID-19 spike. Last week, Freelancer’s share price touched an all-time low of 26 cents, giving it a value of only $118 million — about 85% lower than its peak seven years ago (Barrie’s stake is now worth $49 million).
Despite Barrie’s confidence, Freelancer has been a cash incinerator for almost a decade. When it listed in 2013, the business’ prospectus forecast it would generate $477,000 in after tax profits (and at the time, had reported retained earnings over its entire existence of $755,000). Fast forward nine years and Freelancer has recorded consistent losses since, racking up an accumulated deficit of more than $15 million.
The business even managed to lose $4.3 million before tax in the last six months (after losing $3.1 million before tax for 2021), an especially impressive performance given Freelancer runs an online labour marketplace during the tightest labour market in living memory. Freelancer’s recent performance would have been even worse without a 6% kicker from a lower Australian dollar.
Freelancer’s increasing losses come despite the company reporting record gross payment volume of $652 million. Expenses at Freelancer continue to grow at a far higher rate than revenue, with staffing costs rising by 17% and marketing spend up 31%.
Freelancer’s flailing performance doesn’t appear to have dulled Barrie’s willingness to give others advice. Last year, Barrie, who appears to moonlight as a COVID-19 doomer/vaccine sceptic/ivermectin fan, wrote a stinging criticism of the government-commissioned Doherty Report, at one point suggesting that Australia would run out of ICU beds (spoiler alert: ICU use reached around 6% of total surge capacity during COVID-19).
In addition to being a part-time would-be epidemiologist, Barrie also runs what he claimed to be Australia’s largest startup and growth conference, StartCon.
Leaving aside the irony of Barrie running an event offering “actionable insights from the world’s best to help accelerate your company through highly-measurable growth and marketing tactics”, it appears StartCon’s fate was even worse than Freelancer’s — no conferences have been held since 2019.
That 2019 event would certainly have been insightful (if not overly helpful), to budding tech entrepreneurs.
The event was headlined by John McAfee, who had been charged with criminal tax evasion and died in mysterious circumstances in 2021.
Regardless of its continued poor performance, investors shouldn’t expect too many managerial changes at Freelancer not withstanding its recent performance.
Barrie continues to own 42% of Freelancer scrip, while the other board members are long-time business partners Simon Clausen (35% shareholder) and Barrie’s former partner at Sensory Networks, Darren Williams (6%).
