Cost base reduced to offset revenue decline

In Q326, gross marketplace value (GMV) grew 13% y-o-y, driven by 19% growth at Escrow.com and 17% growth at Loadshift, partially offset by a 28% decline in the Freelancer marketplace. Group revenue fell 17%, reflecting the marketplace's higher take rate and a shift towards larger, lower-margin transactions at Escrow.com. Operating expenses declined 11%, limiting the reduction in EBITDA to A$0.7m from A$1.4m in Q325. The Freelancer marketplace continued to be affected by operational issues, although management reported improvements. Loadshift delivered record quarterly GMV and revenue and is now profitable, while Escrow.com benefited from strong growth in wholesale electronics transactions.

Factoring in marketplace improvements from Q426

Management’s immediate priority is to restore customer acquisition and activity in the Freelancer marketplace, supported by improvements to platform functionality, payment acceptance and organic search visibility. Longer-term growth initiatives include launching specialist vertical marketplaces, becoming a trusted partner for businesses adopting AI, and expansion of enterprise and field services. We have revised our forecasts to reflect marketplace weakness, lower-than-expected Escrow.com volumes and operating cost reductions.

Valuation: Marketplace turnaround is key

A reverse discounted cash flow analysis implies that the market is factoring in only low-single-digit revenue growth and margins over FY28–35. With strong performance in Escrow.com and an already high take rate for the Freelancer marketplace, we view reversal of the core marketplace GMV declines as the key driver of revenue growth. Factoring in 5% revenue growth per year for FY28–35 and growing the EBITDA margin to 18% by FY35 results in a valuation of A$0.37/share, well above the current share price. Share price catalysts include improved customer acquisition and retention rates in the core marketplace, growing Loadshift GMV and a growing contribution from new verticals for Escrow.com.

Q326 trading update

Exhibit 1 summarises group performance in Q326. Group GMV was 13% higher y-o-y (22% in US dollars), due to growth in Escrow.com transactions partially offset by weaker volumes in the Freelancer marketplace. As the marketplace has a much higher take rate, this resulted in a 17% revenue decline y-o-y (11% in US dollars). The company reduced overall operating expenses by 11% y-o-y, which resulted in a much smaller decline in EBITDA from A$1.4m in Q325 to A$0.7m in Q326. Company adjusted operating profit was A$0.1m versus A$0.5m in Q325. Q326 profit before tax was positive.

Exhibit 1: Q326 trading update

Source: Freelancer Note: EBITDA includes interest income and excludes sub-lease income, fx gains and losses and share-based payments. Company adjusted operating profit includes lease finance costs and excludes fx gains and losses.

Freelancer marketplace

The marketplace saw a further decline in GMV, down 28% y-o-y in Q326 (down 22% in US dollars) and down 23% for the first nine months of 2026 (9M26). The take rate increased marginally resulting in Q326 revenue down 26% y-o-y (21% in US dollars) and 9M26 revenue down 24%. The operational issues disclosed at H126 results continued to weigh on demand. Management noted that progress had been made in the three problem areas, although this has yet to translate into a recovery in customer activity.

Progress update on operational issues

Platform integrity and authentication controls

The introduction of tighter security measures, particularly two-factor authentication in late 2025, created additional friction for returning customers and contributed to customer churn. Management has progressively refined the authentication process to make it easier for existing employers to log in while retaining stronger fraud protection. Management indicated that the process had been optimised as far as practicable, with the focus now shifting towards recovering customers lost during the disruption.

Platform stability and organic search traffic

A 1,300% increase in search traffic, primarily from AI scrapers, between 2024 and 2026 caused significant platform stability issues. Measures introduced to restrict scraping also inadvertently affected legitimate search-engine crawlers, resulting in pages being removed from Google's index and reduced organic customer acquisition. Management believes the stability issues have now largely been resolved, with uptime improving significantly. Google is now indexing c 5m Freelancer pages, compared with 1.2m at the beginning of Q326. Organic search sign-ups from Google have recovered to c 37,000 per week, 25% above the November–December 2025 trough, although still 16% below Q325. Management cautioned that the quality of organic traffic has not yet returned to previous levels. To help rebuild search visibility and attract higher-value customers, Freelancer has also launched three specialist vertical landing pages, with another 13 in development.

Payment acceptance

A problematic migration at one of Freelancer's credit card payment gateways in Q126 resulted in the consolidation of merchant accounts and disrupted payments from some existing customers. Management has subsequently transferred most transaction volumes away from the affected gateway, introduced new payment routing and restored overall card acceptance rates to levels comparable with the prior year. New-card payment success rates had recovered to early-2026 levels by September. Google Pay was introduced towards the end of Q326, while additional payment infrastructure is being implemented in the UK and India, including support for local Indian payment methods such as RuPay and UPI. Management highlighted that its main US card gateway continues to demonstrate healthy recurring payment growth and customer spending, suggesting that the underlying marketplace may perform better once payment problems across the remaining gateways are resolved. Payments remediation remains a key near-term priority.

Underlying marketplace activity and strategic developments

Despite lower overall activity, average project values increased 25% y-o-y to US$498, while average bids per project rose to 63 from 58 in Q325, indicating continued marketplace liquidity. AI-related projects increased to 7.7% of project GMV from 5.7% in Q325.

The enterprise business continued to secure specialist assignments, including a new robotics engagement under NASA's Open Innovation Services 3 (NOIS3) programme and further work for the US National Institutes of Health. The field services business also made progress, expanding a field sales pilot for a major global payments provider into merchant onboarding and securing an agreement with a global post-sales service provider to medical device and technology manufacturers to provide on-site services. Two new field workforce-management products, Flock and Goldie, were launched following the quarter end. The enterprise team has built an approved pool of around 500 assessed freelancers for an AI data company and started an audio annotation pilot for a business process outsourcing company using US-based freelancers.

Looking ahead, management intends to strengthen customer acquisition through specialist vertical marketplaces, AI-powered search and matching, and integrations with AI platforms. It is developing application programming interface (API) and Model Context Protocol (MCP) connections that would allow users of AI applications to engage human freelancers when additional expertise or execution is required. A beta MCP server is already being tested. Management also plans improvements to the contest offering and tools for more sophisticated projects.

Loadshift’s record quarter

Loadshift delivered its strongest quarter on record, with GMV up 17% y-o-y and revenue up 18%. For 9M26, GMV was up 12% y-o-y and revenue was up 16%. September was also a record month, with GMV of A$3.1m (+9.0% y-o-y) and revenue of A$0.38m (+13.7%). Management confirmed that the division is now profitable, with an annualised profit run rate in seven figures, although no precise divisional profit figure was disclosed.

Growth reflected both higher marketplace activity and improved conversion of freight listings into completed bookings. Loads awarded increased 14.8% y-o-y to 4,032, while the award rate rose to 29.9% from 28.3%. Product enhancements contributed to this improvement, particularly the introduction of public switched telephone network (PSTN) calling, which increased call connection rates for Estimate Only loads from 21% to 93%. The award rate for these loads subsequently improved from 18.2% to 22.3%. Management believes further improvements in conversion could increase revenue from existing marketplace activity without requiring a corresponding increase in load postings.

Monetisation improved, with paid memberships increasing 58% to 560 and 40 accounts moving onto enterprise membership during the quarter. Enterprise GMV increased c 15% to A$1.8m. The platform also awarded its largest-ever individual load, valued at A$0.3m, in late September, although this was not included in Q326 GMV because it had not been completed.

Loadshift launched FindTruck, enabling carriers to advertise planned journeys and available empty-truck capacity to shippers. Management intends to automate more of this process, potentially improving utilisation and marketplace liquidity. Another new feature, Quote Guidance, prompts carriers to price individual loads rather than relying on generic estimates.

Management's priorities are to increase the proportion of loads converted into jobs, expand paid memberships and enterprise accounts, and explore opportunities in additional markets, including Canada.

Escrow.com benefiting from new verticals

Escrow.com reported Q326 GMV growth of 19% y-o-y (28% in US dollars). However, revenue declined 2.4% y-o-y (up 5.3% in US dollars) due to a greater proportion of larger transactions, which generate lower take rates, alongside seasonal weakness in domain name transaction volumes. The business has benefited from the expansion into wholesale electronics, a new vertical entered during FY26. This accounted for 12.8% of divisional GMV in Q326 and is now Escrow.com's fastest-growing category. The business held more than 25 meetings with server and hardware resellers during the quarter and has subsequently onboarded several partners conducting live transactions. Management is recruiting additional staff to develop the sales pipeline and plans to introduce a dedicated electronics transaction workflow in Q426.

Escrow.com is also exploring other transaction categories, including data brokering for AI companies. Product development included migrating the website's front end to a new technology platform, activating domestic US dollar payment processing through JPMorgan Chase and beginning the rollout of international US dollar processing. Management is also introducing faster payment capabilities, including real-time payments, to improve transaction processing speed and customer experience.

Management expects wholesale electronics and domain names to be the principal growth drivers in Q426, supported by an anticipated recovery in domain name activity following the summer slowdown.

Outlook and changes to forecasts

We have revised our forecasts to reflect another weak quarter for the Freelancer marketplace, lower-than-expected Q3 volumes in Escrow.com and cost-reductions, particularly employee costs.

Exhibit 2: Changes to forecasts

Source: Edison Investment Research

Exhibit 3: Financial summary

Source: Freelancer, Edison Investment Research