Shares in Freelancer Ltd (ASX: FLN) have been on a wild ride this morning with the share price sinking 16.7% lower before staging a recovery to trade just 3.7% lower at the time of publishing.
Freelancer operates the world’s largest freelancing and crowdsourcing marketplace by total number of users and jobs posted. It also operates a large escrow or secure online payments service.
What Happened?
Freelancer released their results for the third quarter of 2019 (the company reports its financial results in line with the calendar year).
Freelancer reported its cash receipts for the quarter were up 9.4% on the previous corresponding period (pcp) to $14.3 million. This brings total cash receipts for the nine months until September 30 to $42.6 million which is an increase of 12.4% on pcp.
Freelancer Group saw gross payment volume of $197.8 million, an increase of 5.4% on pcp but below prior company records.
The Freelancer division recorded gross payment volume growth of 7.0% to $45.7 million and the Escrow segment grew gross payments by 4.9% to $152.1 million. Excluding China, Escrow’s gross payment volume was $144 million, making it the third highest quarter on record.
Net operating cash flow for the quarter was negative $1.5 million and the group ended the period with cash and cash equivalents of $33.8 million.
The company is estimating there will be $15.1 million in cash outflows in the final quarter which means cash receipts would need to grow by about 6% to turn operating cash flow positive.
Why Are Shares Down?
The market may have been anticipating slightly better results, which would explain the strong sell-off when ASX trading commenced this morning.
However, it’s worth noting that Freelancer shares trade with a much lower volume than popular large-cap shares like Telstra Corporation Ltd (ASX: TLS) or Commonwealth Bank of Australia (ASX: CBA) which can make the share price more volatile in the short term.
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At the time of publishing, Luke has no financial interest in any of the companies mentioned.
