Q126 update trading update
| Exhibit 1: Q126 highlights |
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| Source: Freelancer |
For Q126, group GMV of A$263.3m was up 14.0% y-o-y whereas group revenue of A$12.2m
declined 10.3% y-o-y due to mix (see divisional discussion below for more detail).
As the majority of revenues were earned in US dollars, the strength of the Australian
dollar versus the US dollar reduced reported GMV and revenue (average A$1.44/US$ in
Q126 vs 1.59 in Q125).
The group broke even at the operating profit level before fx, with Escrow.com generating
a record operating profit. After a positive fx contribution, the Freelancer segment
excluding Loadshift delivered a modest operating profit on a reported basis.
Operating cash flow was -A$0.1m compared to A$3.5m in Q125 due to a combination of
lower operating profit and lower user balances. Net cash flow was -A$1.7m versus A$2.2m
in Q125. During Q126, the company paid another A$0.4m instalment for the purchase
of Loadshift shares. The company also incurred one-off costs from the closure of the
Buenos Aires office and the Manila lease transition (including make-good and fit out
costs, and deposits). PBT, which included an fx gain, was positive for the quarter.
Cash at the end of Q126 was A$20.8m, down 18% y-o-y and 9% q-o-q.
Freelancer division: Core marketplace weakness
The division saw Q126 GMV down 14.8% y-o-y and revenue down 19.0% y-o-y. The divisional
take rate of 30.6% was down from 32.2% a year ago, we estimate mainly due to the higher
proportion of enterprise and Loadshift GMV in the mix, both of which have a lower
take rate than the core marketplace.
Core marketplace
The core marketplace had a challenging quarter. In Q126, it added 1.31m users (down
24% y-o-y and q-o-q) and 150,000 new projects (down 18% y-o-y and up 6% q-o-q). The
average project size grew 20.4% y-o-y to
US$414, bids per project increased 4.1% to 51 and contest entries increased 72.4% to 862
per contest. The primary paid acquisition channel grew 5.5% y-o-y, as measured by
deposits from new clients in the first 28 days. Repeat customer award and milestone
rates also increased y-o-y due to product improvements.
Three factors negatively affected performance during the quarter:
- Security enhancements created friction for returning users. The business rolled out two-factor authentication in late 2025 to reduce fraudulent
account activity and strengthen platform integrity. This created friction for returning
users, particularly for longer-term users with legacy account configurations. The
company is refining the authentication process for verified users and believes that
the impact on volumes is now stabilising.
- Organic search volumes down. In late 2025, the company migrated substantially all site traffic to content delivery
network (CDN) -based caching infrastructure to address elevated automated crawler
activity, particularly from AI training and scraping agents. As part of this process,
rate-limiting controls were applied to Google crawler traffic, which inadvertently
affected legitimate indexation and reduced organic referral traffic. The increased
prominence of AI-generated search summaries is also likely to have contributed to
lower search volumes. Some technical fixes were put in place in Q1 and have delivered
some improvements, but the channel has not yet returned to prior year levels. To reduce
reliance on organic search, the company is focused on three areas: 1) making technical
improvements relating to indexation, schema mark-up and site architecture, 2) producing
a content programme that targets high-intent skill and project categories to capture
commercial search demand and 3) investing in answer engine optimisation (AEO) and
generative engine optimisation (GEO) to ensure Freelancer appears in large language
model (LLM) search results.
- Recruiter volumes down. The Recruiter function (which helps larger customers to find approved freelancers)
was moved to Manila from Buenos Aires to improve operational efficiency. The Manila
team has managed to lift award rates for managed projects. However, changes were made
to qualifying thresholds for complimentary Recruiter upgrades, and this resulted in
a temporary reduction in the volume of high-value projects. Management is reviewing
the thresholds to restore volumes while preserving the improved conversion rates.
The company is also scaling team capacity and increasing automation to support sustainable
growth in throughput, and it expects that volumes should revert to previous levels
in the coming quarter.
In addition to the work underway to resolve the issues described above, the business
delivered a new bid ranking algorithm at the end of Q126, which helped overall award
and accept rates. It is expected to be particularly attractive to users searching
for niche skill sets and with complex, high value projects. The business also implemented
a policy change that limits the bidding pool, resulting in an 80% reduction in low
quality bids for specific project categories. In Q226, the business expects to accelerate
the automation of support functions and noted that its in-house coding agent, Diffuty,
can now process increasingly complex coding tasks, which should support higher coding
throughput.
Enterprise
The business expanded its customer base across AI data services, field operations
and managed workforce solutions and has contracts and pilots at various stages of
execution across digital payments, customer experience and AI data services. Notable
events in Q126:
- Freelancer has worked with NASA since 2015 managing crowdsourcing for innovation,
and in Q126, the Artemis II mission carried with it Rise, a soft toy that is used
as a zero-gravity indicator (ZGI). The toy was designed by a participant in the Moon
Mascot: NASA Artemis II ZGI Design Challenge managed by Freelancer for NASA.
- The UN Development Programme has engaged Freelancer to crowdsource affordable tools
for the detection and marking of underwater explosive ordnance.
- The business signed its first commercial partner for the Freelancer Moonshot Innovation
Programme (built on the proprietary model developed for NASA), launching a challenge
to produce physics-based AI modelling to predict the particle distribution and aftermath
of high-energy disruptive events.
Loadshift
In Q126, the business saw revenue growth of 6.8% y-o-y and GMV growth of 5.7% y-o-y.
Job postings increased 18.3% y-o-y to 12,518 and awards increased 9.6% to 3,359, resulting
in a decrease in the award rate to 26.8% from 28.9% in Q125 and 27.1% in Q425. Delivered
loads increased 11.6% y-o-y to 2,785. The Iran-related increase in fuel prices drove
higher quoting levels resulting in increased job repostings, which in turn reduced
the award rate. We estimate fuel price volatility could dampen freight volumes for
at least the current quarter.
Escrow division: An exceptional quarter
In Q126, the division grew GMV and revenue by 18.9% y-o-y with a take rate of 1.48%,
flat y-o-y. This was the second-highest revenue quarter in its history. Domain name
GMV was
US$128m/A$184m, up 19.6% y-o-y and making up 78% of divisional GMV, helped by growing demand
for the .ai domain. The company also noted strength from IPv4 deals. As noted above,
operating profit was at a record level.
Outside the core domain names business, Escrow.com continues to develop partnerships
in other verticals including e-commerce, global trade, B2B electronics and IPv4.
As we have previously discussed, the business is working on operational improvements,
in particular to bring automation to manual processes and to strengthen its payments
infrastructure. The migration of the front-end to the Freelancer technology stack
is underway with go-live expected in Q226.
