Freelancer Ltd

ASX:FLN

Earnings Call Transcript 2022-Q3

[Robert Barrie, executive]

[Audio Gap]

Third quarter 2022 business update. My name is Matt Barrie, and I'm the Chief Executive of Freelancer Limited. Today with me today, I've got Neil Katz, Chief Financial Officer, Adam Byrnes, VP of Product and Growth, and Shaun McMeeken, the VP of Enterprise.

Today, I'll be presenting the business updated and as always you may ask Q&A to anyone in the room after the update has been provided.

In the third quarter, Freelancer Limited total gross payment volume of $242.4 million, down 14.3% or USD 165.8, down 20.1%.

Freelancer GMV was $31.5 million, down to 5.1% [indiscernible] or [ $25 million], down 1.6% in U.S. dolalrs. The GPV for Escrow was $200 million, down 16.2% or $136.8 million, down 22%.

The group net cash receipts were -- despite the drops in GMV, they held flat at $30.5 million, down 1.5%. The Freelancer cash receipts were $11.2 million, down 1.4% on PCP and the Escrow cash receipts of 2.3, down 1.9%.

FX tailwind of 7% in the quarter, approximately 74% of the group revenue is in U.S. dollars and 7% in Australian dollars.

We had a negative net operating cash flow of $3.2 million for the quarter compared to $1.6 million the year before, ended with cash and cash equivalents of $28.6 million, down 2.7% on PCP.

Moving to each of the segments in terms of Freelancer. Obviously, we have a series of pretty awful macroeconomic events, which deteriorated sharply from May. Initially, we had the crypto crash, took [ 1 million ] of wealth and that led to a broader tech wreck coupled with the high inflation over 40 years and also the worst living standards in '56 -- since 1956, which cut budgets as living standards deteriorated.

Additionally, the war of Ukraine cost about 3% of GMV due to people not being on the platform. And we also were in the summer in the Northern Hemisphere, which seasonality was actually very, very high [ throughout ] this year COVID and the general impression that we've got from talking to clients and talking to customers and so forth is very much more in using [indiscernible] the summer given the difficult situation in May, June and July.

However, that having been said, there are quite a number of things that are positive on the horizon. From August 1, we saw a broad-based lift in our statistics across the board, which has continued till now. I will detail this in a second and in quite a bit of detail across Freelancer and Escrow businesses.

In September as well, we also rectified the long-standing problem in the core marketplaces. It's been with us for a number of years and this is something that I think that will be very, very positive, and I'll get to some of the statistics on that and the results we got from our testing. And that's why the production -- and we really do expect that will be a quite a positive thing moving forward from here in the core marketplace.

Also, we do believe that while it was initially negative in terms of the macro environment, that will play into our favor. If we do hit into a pretty horrible 2023, we will see all the things that we saw in COVID and all the things we saw in the global financial crisis, which are really three items.

One is that people will be looking for jobs online. We've already seen an uptick in that. A number of U.S. citizens are signing up to the platform. It has increased about 33,000 a month to 42,000 since June. We will see a lot of businesses looking to cut costs online as we saw in COVID. We saw in the GFC. And we also see a lot of startup businesses being formed in the past 50 that we've just released, [indiscernible] midnight with CNBC last night, the jobs we are seeing coming to platform at the moment are growing very, very strongly. They're the very same sort of job we saw during COVID where things like Android app development. People are starting startup businesses, building apps, building websites and so forth and looking to start business to bridge them through the bad times and through the good times. So I think ultimately that will play in to our favor.

If you look here, for example, at the number of projects posted. These are good projects, this is really [indiscernible] and so forth. You can see that from really August 1, we had a broad lift in projects being posted on the platform. That has also been replicated in new depositing employees. So these are customers that have signed up, clients that stack their credit card and paid money to the platform. You can see in May, just how sharp decline was when we had this economic correction, it trended down through to the Northern hemisphere summer, but from the 1st of August, it has been lifting. And in fact, these new depositing employees, they're in the U.S. Their quality, their -- exactly the demographics we want to be on the platform posting projects. So that's very, very positive.

In terms of non-rookies. So these are not new customers. These are existing customers. They are raising the platform. Obviously, there's a lot more because about 66% of projects on the website at any point in time from repeat customers versus new customers. Again, you can see that trend through August and so forth, there's a lift up in terms of the milestones in place in a platform that pay money. And what we care about is the GPV most of all. You can see there, there's been a lift since August in the gross payment volume. So while we had a hit overlay, the Northern Hemisphere summer quarter. You can see that we've got a high point here in October, and this is also replicated in the Escrow stack. So it was a tough quarter, but we are seeing a recovery across both the businesses.

We've got a great year in the Wall Street Journal. This is sort of a front page sort of story on freelancing. Again, as I mentioned a second ago, we're going hit this week in CNBC, [indiscernible] view last night on that. And so we have got the press team that -- the team is firing, which is good.

Now getting to a little bit more detail the core market place because this is the question that will probably come up in the Q&A and there's been a lot of people come and say, what's going to the core marketplace. When can we see some really strong growth happening there.

Well, there has been an issue that we've fortunately discovered as initiative has unfortunately been with the business for a number of years, it's kind of cracked into the code bases. This really goes around how projects are set up in the main non-home funnel. This is the funnel where people those projects brand a bit on them, they're awarded, they're accepted and so forth.

And effectively, what's happening is that over time, the last few years, there's been a bug or a feature, I know you want to describe it, where when you award the project to a freelancer, the freelancer will then say, "I want a certain amount of money to be put in the system in order to show that you're credible and you're real to get going." And that percentage of money that's been requested from the freelancer upfront has been creeping up and up over time.

Now there's a couple of different reasons why it's been creeping up. One is because simply there's a prompt. There was one of the co-basis that made a suggestion for what an initial default there would be. The second is that there's been a much greater use of automated tools software both over source and commercial products that the prices have been using to assist them in their meeting. And these products range from just enhanced tools to more specifically target projects freelancers like based upon their certain parameters and skills right through to actual boss, which are effectively spanning the marketplace and just hoping that someone will buy and win them a project.

So this is correcting over time. These sort of tools kind of affect really every marketplace. On Ebay, you've got sniping tools that come in and kind of snipe the option last minute. In some ways, it's a good validation of just how popular are there's so many tools out there to do this, but it has become a problem over time in combination with an issue that was in one of the code bases. They're more pronounced over time as we deprecated into various native mobile co-basis, the legacy mobile web code base and merge goods, so we've got one code base.

And the great thing about that is the one code base made us a lot more productive. You have four separate engineering teams working on four separate products. But this issue became more and more pronounced over time. And in fact, the unfortunate thing is that the order in which we kind of integrate those code bases, generally make the issue become that obvious until we really merge the platforms with the freelancers who are bidding the most.

For example, the Android app platform, which is the last code basically merged in. Now these tools and so more the software has resulted in a lot of liquidity in the marketplace in a very real-time nature. Your post your project and you get 80% of people bidding within effectively 60 seconds and so forth or 70 seconds, but it has led to a little bit of frustration from our clients on bids coming too fast, and the freelancers not reading the bids probably as well as created friction because they're asking for more -- they've been asking for more and more money upfront so is not a project.

Now obviously, from a freelance perspective, brands want all the money upfront because that's the best situation for them, right? If all the money is being paid upfront, that's great. The freelancer comes in and he knows all the money is there. The problem is that, that is quite a lot of friction on high-end projects, right?

So if you're dealing with a project, it's $1,000, $2,000, $5,000, and so forth, asking to take clients for the first time who's never used the website before to put in that sort of money is a big ask and is increasingly quite a bit of friction. And that's kind of correcting with [indiscernible] and has correcting with the merger code bases.

Now we have an initial terms last quarter to sort of fix this problem. The issue that has meant that I talked into this quarter to actually resolve it is the fact that when we push changes to the website, we do that in a very well-structured and organized manner using what's called a AV testing framework.

So we have quite a sophisticated framework that we built. It uses quite a lot of statistics and data science to know that there's actual -- there's no correlation, causation. There's something we've changed on the website has led to a certain output with surety as opposed to something just happens. It happens to happen at the same time it's correlated.

So the issue is that, that framework is in the front end of the website, and a lot of these automated tools that the freelancers have been using is in the back-end API, which have kind of bypassed that framework. So when we made initial attempt to try fix this problem because you might think it might be relatively easy. The problem is that most of the quick bidders, the bids that came in super quick have been from API tools, various bits of software and so forth, which basically made -- obscured it from the clients' perspective. If you post a project, then always automated tools and so forth will start popping in and it becomes a bit of a problem. Because when the real bid comes in, it comes as later, but anybody has seen all these bots come in requesting all the money upfront and so on and so forth.

So we have to solve this bot problem first. And it's a bit of a technology war because it's bit like client frequency trading where high frequency traders will try and lower the latency as much as possible. They're close to the exchange as possible in order to get their trading quickly. The same thing is happening with bids because when the freelancer is all about hedging front of the client, the fastest to get that relationship formed and they like to do a market in an emerging marketplace in an emerging market.

If you walk into the market, what you want to buy, you're going to buy shoes, you're going to buy handbags and what have you, people will get in front of you really quickly to trying to get that client relationship and then they're trying to fill at the back end.

So we have to solve that problem. And we actually managed to successfully do it in the quarter, which is great. You can see this graph here. That it was previously within 30 seconds, you had a little bit under 50% of the bids coming in. That's too quick to actually read and write a well-crafted proposal. And it was [indiscernible] the first time to use the website, you might go, "Wow, look at the liquidity." The second or the third time you realize they're not really -- [indiscernible] brief properly and it's been an issue.

So we solved that problem. You can see that the good bidders are unaffected. So the bidders that came in around less than 5 minutes that really -- I mean, in the half is where we've got a benchmark the fastest that human can possibly [indiscernible] probably think about the way to play. Those sites are unaffected, but we kind of found a way to slow down the bots effectively. I mean the assisted software bidders.

So we have to solve that. We want to do it in a very, very careful way because attempts to fiddle with a marketplace with [indiscernible] being the profit objective on both sides, you can get all sorts of unexpected consequences with us [indiscernible] to make things better, might make it a bit worse.

So we may successfully do that, took a lot of care. And then we manage to solve the problem in terms of reducing the amount of upfront payment was being required.

And we AV tested this and if anyone to follow up and then go through the report card with us, it's actually quite fascinating. There's quite a number of insights there.

But we saw that over 21 days, the gross marketplace value for fixing this actually looked at -- by about 17% for non-rookies. So these experienced users and client activity in general and economic activity after 1 week was up 4%. Propensity close to a second job and not churn, which is a really, really big one here, was up 18% in the week and higher second freelancers [indiscernible], up 6%.

So we saw a lot -- a fairly big increase across the board with very, very positive results. In many ways, it's intuitive because we've asked a lot of money up front obviously for some clients, they're going to churn. The average project size is -- look, $300. I'll get that in a second. But the median project size is $80.

So for the projects $80 and under asking for $80 upfront is not an issue, right? And we've left the site to basically -- whatever the freelancers will ask, they can ask. But above that, when you start getting into the $500, $1,000 and so forth, it's unreasonable to ask for a huge amount of money upfront because you've never worked with that freelancer before potentially. And you just want to get going, put enough to fund the project and so forth.

So we think there's some very, very, very positive things happening here in the core marketplace. And we think these retention effects will continue to play on for a very, very long time term. And so we're going to see some very, very positive effects here. We're very confident about this.

In terms of supply and demand, we added 1.5 million users in the third quarter. As I said a second ago, our U.S. freelancer lifted to about 42,000 from 33,000 in the month from the month of June to September. So we're seeing a big uplift in the U.S. sign-ups, which is fantastic. The average project size lifted to $256, which is up 13.3% on PCP.

Now that's just been trending up over time, but we also think that freelancers are lifting the rates in which they're bidding on projects because of inflation and all things that are happening in the world. So we did see a big lift there in terms of the average project size.

In terms of acquisition, we've got obviously organic channels. We've got pay channels. One big thing we've been talking about in previous call, the reports the pay channels, where we talked about late last year and so forth. I'm pleased to say that's well under control. In fact, the number is actually better than us now. But in terms of the return on investment for our paid channels. It's performing very, very well and looks to be reasonably profitable, which is fantastic.

And right now, we're really just focusing on lifting the volume up in that pay channel, but it's looking fantastic. We have a great return on investment there. And we did this all while reducing our costs in terms of searching and marketing. So we were just by about 30% just on the last quarter alone, in the second quarter of the year to the third quarter of the year.

We've now got a big focus on the organic channels such as SEO and so forth, and we expect to get some good lifts in the remainder of the year from that because that's where we're putting our focus.

In terms of the products, we talked about three objectives in the year, and they remain the same. And we'll go into the detail, but we are improving the visual design and so forth. Our collaborative features are also assisting with the average project size being lifted. So quotations was one example of one of the things we've pushed. Still relatively early days but millions of dollars of GMV have gone through this already and basically the ability for a freelancer to send a quote to anyone.

At the moment, anyone on the platform, very shortly will be putting on to the Internet. But effectively, it's how the real world works. Deployment comes to your house, they'll give you a quote quite a mixture of things in it such as 20 hours at $50 an hour; 10 hours, at $35 an hour from my apprentice, parts, maybe call app fee, et cetera, and so on. So that's going well.

In terms of video bids, we're now introducing a lot of interactivity through video on the platform. We basically made it now so that if you're a verified freelancer, you can actually record a video on your bid, which actually breaks through and actually creates a bit of empathy between the client and the freelancer. What is very interesting about this is that when we push this wide, and lifted the award rate by a couple of percent across the board, not necessarily to the freelancers that were bidding with video bids but has created enough interactivity in the marketplace to actually want to spend time to look through the rest of the bids and actually find the freelancer that they want to speak to.

And we'll be using a lot more video across the platform in a lot of different places. One place we'll be using them as group. So you can think of groups as similar to Facebook groups. So these are basically -- it scales from a communications platform with very small groups of people, 3, 4, 5 people working on a project together. And you can think of it like a group you might see on Facebook. So you got to fee, people can write status updates and respond and share files and so forth. But we've also integrated task lists, so you can actually have a task for people to perform in that little work room, but it also starts up to millions of users.

In fact, if you talk on the platform today, we have over 6 million users and groups and some of the individual groups now have over 3 or 4 million users in the one single group. And we managed to implement that in a way where we're not getting a huge amounts of spam, where there's a great -- there's conversations forming. There's relationships forming and real engagement forming.

And shortly, when you log in and you see the news feed, you'll see a completely different experience where you get a mix of the things you're working on as well, the buzz of activity that's happening on the platform. So we think that's going to really lift engagement in a big way.

We also made a number of purpose task lists. So anyone that's worked in engineering or product before knows that your backlog, which is all the tickets related to bug features and fixes and so forth, these things grow forever because they capture your dreams and aspirations as well as all things you want to improve it fits the platform.

So we've built that into the platform itself. It's a bit like Jira from Atlassian, a very premier version of that or Trello. Many people are probably use Trello. This will be going out to more and more functionality, but it's also integrated to groups. So you can have a group of freelancers working with your workers and you have a lot of task allocated to people and time lines and so forth.

And basically, what it does is it creates more and more work to be done on the platform, more and more work is more and more GMV on the platform.

We did all that through our design system, which is improving in lease bonds fantastic. You can see that use the platform. It's getting better and better and better in terms of how things look and feel, and I'm very confident by the end of year we will have a really good-looking product.

And we also reduced a lot of spam on the platform. This is a beta is hitting everyone. At the moment, if you look at -- if you go look at the news for the moment, Elon Musk is supposed to be closing the Twitter acquisition on Friday. And the #1 topic is spam on the Twitter platform. It's everywhere. In bad economic times, there's a profit voting from spammers and become more pronounced, particularly during COVID. We've been battling it like everyone else has been battling it, but we've very successfully reduced the number of spam accounts closed in 1 hour in the first half from 78% closed in 1 hour compared to only 48% in the year before.

So we've made a lot of improvements there. And in the third quarter, we continue to solidify that, and we will keep building on that.

Now in all of that enterprise done pretty well. Shaun is obviously here with me and at the end, you can address any Q&A to him. But the GMV in the third quarter for enterprise did grow 99% year-on-year, which is very positive. There's quite a lot of really big things happening here that I will talk about in a little bit of detail here, but if you want to get into the nitty gritty, you can ask Shaun a bit later on.

One, as we talked about some time is we have been working with the global computer printer company to basically do field services to the repairs and computers and printers in many countries around the world, right? We have just completed the integration of the freelancer system with their system. It's called EDG. So that means jobs when they come into the company's website to repair my computer or printer automatically get injected into our website and there's a whole workflow. There's a whole workflow where field service technicians will get out of the job, they choose the job. There's a map, they get tracked. They've got to take photos of the parts. They then go through a whole step -- a multistep process, which is on par with exactly the process that these service technicians do if they're bagged working for the specular company. That is getting turned on literally tomorrow and Friday or Monday will be the commissioning for Australia and New Zealand.

And in India, it will be about 2 weeks after that in terms of commissioning. You just get Diwali this week, which is kind of delayed things a little bit.

But we're live at the moment in 8 cities in India going to 18. We're live in 6 cities in Indonesia, 6 in Australia and 2 in New Zealand. That's also expanding. These are both regional and metro areas. Malaysia is imminently turning on. I'm sure I forget the data on that, but it's literally imminent. And the integration will not just step up in order of magnitude actually quite a bit more than that.

In India alone, there's 660,000 jobs a year that are the overall break/fix number of jobs, and we will get a reasonable percentage of that. And we've also now been greenlight of installation jobs as well. There's actually a lot more installation jobs than break fixed jobs, and it's actually an easier job because you're just installing a computer or a printer as opposed to diagnosing mixing and potentially doing some hardware engineering. But this is going very, very well. It's integrated and step-up is going to happen literally from next week onwards start across all these different regions.

In addition, we're about to close Turkey and the Middle East, which is Saudi Arabia, Turkey and I believe, Dubai, but I can talk about Dubai a bit later as we get the detail.

The other is we've got another -- this is a huge engagement. It's with a $1 trillion market cap technology company. It's for a dynamic -- it's very similar in the way to what we do with the computer and credit company, but it's in the area of customer support. So it's a flexible dynamic customer support, 24/7 operation, which in multiple languages for our particular products for this $1 trillion software company. Everyone has this software stored on one of the computers in their home or their office. They're well-known household name. I can't mention that just yet, but soon, hopefully, we've got to mention the name, but we're basically done onboarding now and over the go-live day, ideally in January of next year, possibly before that, but January is kind of when we're targeting that.

We've also got quite a lot of things happening with BPO providers and contingent workforce providers. We have now six of the large global BPO signed in MSAs. One of the six is actually through a partner of theirs, that's not direct, but there's -- we're obviously stitching up all the big BPO players and our volumes are ramping very well there. And also with contingent workforce management in North America, where we are looking to integrate into their vendor management systems for labor because they all need a freelance component and none of them have it.

And these are the big workforce -- for example, we've got an existing relationship with manpower, which is tucked in, and there are many like businesses like this. I want to tell the exact names, but I'll tell you who's in the industry [indiscernible], Deco, KellyOCG, [ FirstlKelly ]. Those sort of companies that we're working with. So there's potentially shortly some engineering services integrating into those platforms.

Deloitte we've integrated now. It's live. The cloud -- the external cloud is live. Projects are flowing. And now, we're at the point where we're looking at really scaling up the adoption. We've got the first couple of projects through. We've tested all the compliance processes, all the queues, the quality control and some really good results there in terms of liquidity. Even though there's a relatively small pool of eternal freelances. We gave out on average by 8 bps per job versus the internal pool, which is close to 4. So there's about double the liquidity coming from external freelancers as from the internal. And now it's really the job to sell this up and get those 50,000 consultants posting jobs and really building up the GMV. And we've got some pretty lofty numbers that have been provided to us by Deloitte. And now it's really down to the change management and the activation side to get that going. So that's integrated.

Now there's obviously still ongoing engineering service work. We'll do this skill of features we want to turn on and enable and so forth. But the great thing is it's really to start scaling the GMV, and we'll start seeing them again.

What's also scaling is NASA. We won the biggest task order to date just recently. It's USD 6.7 million, which is a bit over AUD 10 million. The biggest task order before then was about 1-point-something million. So you can see there's a big step up there. Obviously, we talked about for some time how the contract has gone from the $25 million contract of GMV and revenue to $175 million of that initial $25 million, about $12 million, $13 million has been awarded, and we've won about 4.3% prior to the $6.7 million graph, which has just come through. And this is for GMV. So we're looking at another way, both in vivo and ex vivo of doing gene therapy in humans in targeting the central nervous system and so forth.

So you can see here, this is about as high end a project as you can get. It's about as high end a client as you can get. It's very fine in terms of the dollar value of the work, and we expect to see a lot more of this.

We've just actually took a live visit to Texas with our team, our NASA team. We're actually the only vendor to actually have ever visited NASA as part of this program, the NOISE program they're very excited about that, and there's a lot of ways going to work together.

There's also NOISE 3 coming, which will be even bigger, we believe, than the $175 million from NOISE 2. So everything is kind of scaling up in a big way, and NASA is really acting as a center of excellence from all of the U.S. government. As you can see here, this $6.7 million task quarters with the National Institute of Health. We've worked with CDC, we've worked with Department of Commerce, Department of Energy, we've worked with NIST, there's $1 million passport right now to build a minority, [indiscernible] a dashboard for instant response. But NIST, et cetera, and so forth. Departure of reclamation and so on.

So that's going to ramp up a lot. We've also just started as well exploring and going directly to these government departments after we've done work with them for follow on.

We've also been invited to bid on another bit of work with NASA. There's a contract that's expiring shortly with them. And we're putting a submission around in-source to that, and that none fairly positive in terms of what we've seen so far.

In addition, we've got a whole rate of different clients. We don't have time to go through all of them on the enterprise side. There's one called out here where there's commercials and program management work, continuing with a EUR 40 billion enterprise in Europe on energy. We also brought in a very experienced sales executive, Franky Wong, who has been working for the last 20 years about, I think, 5 years of IBM 4 years at Cognizant, which provides a services. He's actually one of the enterprise clients in our pipeline and Verizon is staring to help us.

So cloud services, telco services and labor services to enterprise is 20-something years has been a great addition.

More detail about Deloitte while we're here, about 39,000 people on the platform already, 180,000. We're really -- the average project size action at the moment is about USD 2,100. So that's fantastic. And we're obviously targeting 52,000 users that go to 2,000 women included the wider U.S. India group, and that's just Deloitte Consulting U.S.

We have some other engagements right now with other countries around the world typically in the U.K., Australia and Switzerland as well as tax, which is another completely different part of Deloitte.

On average, the external projects have a minimum budget of $195 million and a maximum budget of $3,500, an average about $2,100. The average bit count is about 8.4% for freelancers. It's a little bit high than that actually for internal now, it's a little bit closer to 4% in terms of the average number of bids. So they get quite a healthy number of bids on their projects for an overall on both internal and external project. And that will continue to lift as we onboard more freelancers and Deloitte has agreed to double the size of external call already. So we're doing that -- in the process of doing that right now.

So that's doing very, very well. And there's more engineering services work that will be continuing through the rest of the year, building out features and adding new things to the platform because here, it's quite a beautiful product. It's the result of many years of work, and it's also the foundation for insource, which we're taking to a bunch of other enterprise clients. We've got a number of pilots lined up to that across the world in various sectors.

Going into a little bit more detail of that computer and printer company. There's a lot of work we've done here. There's a whole workflow as I've talked about in terms of how the field services work. We're doing everything for this particular company, including recruiting of field service technicians, training them, quality control, on-ground management, parts warehousing and delivery and routing and all the logistics around that.

The case tracking with the EEG integration, all of -- there's photographs of being on-site, photographs of the parts. There's a customer signature, just like, for example, you get a DHL delivery or you get someone to repair something on your house to sign off on the screen and so on. So it's quite a great solution that's been there to be paid and turn engineering work. And there's a lot of ramp-ups coming right now starting next week.

Australia will be Friday/Monday. India will be about 2 weeks after that in terms of being turned over the EEG. Then it will ramp up, and there's a lot of volume coming through there.

There's over 99 field service technicians now that have been hired in the existing network. That's going to ramp up now that EEG is being done. And we've got a whole training and QA organization and management organization. So this whole org structure year that's working for this company through the global fleet. Every single role in this org structure is freelance with the exception of the program managing global. So we have one person internally managing this whole thing for them, which is amazing. It shows the scale and the power of freelancing ed with the fuel modifications to our platform, how we can manage a network like this very effectively. So that's going very, very well.

And then there's more detail in various countries. I won't get to that, but we're both regional and metro. Malaysia is about to start. Turkey is about to start. Saudi Arabia is about to start. Dubai is about to start. There's a video as well. You can watch on your own time, a day in the life of a freelancer or field engineer, that's actually you got our www.freelancer.com channel on YouTube, you'll be able to see it. There is a link there. And you'll actually see what's actually happening, what technicians are working, how they're working, why they're working on the platform, why they love it, et cetera, and so on. And that might surprise you because it's probably a bit different from what you expect.

And this kind of shows some of the screen shots in terms of the workflow, they're very high level. There's quite a number of different things that happen and exactly mirrors the conventional workflows.

And what we're doing is we're really transforming the workforce, the field services here. Transforming it by making it global with the one platform. At the moment, there's a patchwork in 53 different countries. There's a patchwork of outsourced providers or banks of employees that provides a service to that particular company. We're now a global one platform, and we're doing it dramatically cheaper. It's about 1/3 of the cost in many regions to get things done versus traditional members.

And obviously, a lot of expansion there, not just in brake-fix but also in new installations.

In terms of NASA, I'll skip through speak pretty quickly because it talked about before, but we're doing some stuff on water conservation with the Bureau of Reclamation and the USDA. I've talked about with NFT, what we're doing with this $1 million task right now for this minority report. That has pictures of the context side there for that.

We talked about the $6.7 million task order for gene editing. There's some [indiscernible] what we're doing there. But you can see it's extremely sophisticated work. So no one can say on Freelancer, you can't get just work done. This is about a complex of work because you can get possibly done in the world, and you don't see there on any competitor platforms at all. You don't see this at all.

And as part of doing this, what's happening here as well is National Ministry of Health is building an approved work, they're doing a network of talent that has entered this competition that can be used for ongoing work for different things that is already -- you're already somewhat better because you've seen the quality of the work they've done is submitted in the form of the task order itself.

So all of this goes to building really sophisticated high-end temp pools, which could be used by the NIH or any other one of our enterprise clients.

In addition, we completed a bunch of tasks in the quarter. I won't get into too much detail there. But again, these are very high end, sophisticated work, very technical in nature. For example, here, edge processing on [indiscernible] platform continues high-electron plant protection. You don't find these in some competitive businesses, right? So it's all very high end complex where you can see a big step up there. In Australian dollars, $10.6 million for that task order. And the closest task order previously has been $2 million.

So we're going to see a step up in volume and a step up in value for the work coming through NASA as NOISE 2 starts kicking in, which is imminent.

Now Escrow in the quarter did have a fairly large drop in gross payment volume, but have a very marginal effect on receipts. So the drop was 22% in U.S. dollars or 16% of Australian down to $200 million. And this is purely attributed to large value domains basically transaction volume over summer drawing up, right? The pricing of those demand remains very high. Transactions are going through. In fact, in the last 2 weeks, and I'll show in a second, we've got a big recovery post-summer. So we're still seeing big pricing in these demand and the domain prices continue to appreciate. We just published a second quarter domain investment index that would show you that. We've had some very good growth over the last couple of years. This is trailing 12 months to June. You can see that trailing 12 months of June of this year, $519 million in volume going through growing.

But really, that June month June, July and August, and you saw a big drop. And I'll show you what it looks like right here. In terms of the GPV. It just hit June, and you saw a big drop in terms of volume. And in the last 2 weeks, it kind of recovered, and we'll see if this we will do the same. But effectively, it was just -- during summer, this big $5 million, $10 million, $15 million domain names basically stopped trading as the brokers and so forth just went on holiday. I mean we were at [indiscernible] Texas in August and September. It was all the talk basically effectively gone fishing for the summer because, obviously, you have the crypto crash, you have the tech wreck, you [indiscernible] capital is pulled back in funding of startups, new start-ups are big purchases of large value domains.

For example, I'll give you an example of the sort of domains. HubSpot earlier this year bought Connect.com for USD 10 million, right? We've sold meta.com to Facebook. We've sold crypto.com, we saw f.com -- nfts.com, a lot of them were some of the big sort of domain names in the last year or so, and some of that crypto stuff pulled back the VC-funded startups, investments that pulled back in the last quarter. VC investment in the start-up was about $80 billion, which is down 53% from the year before. It's close to about $170 billion in the quarter for the year prior. So if that funding dries up, then these mega domains dry up.

When you get into the actual transaction counts and so forth to the Escrow business, the transaction count has recovered. And in fact, year-on-year, it was basically flat through this period. So it's really just this mega domain thing is the issue. And you can see that in the last 2 weeks, we've done actually over USD 10 million in GPV. You can see that has come out of summer and its come back to work and things continuing.

In addition, we made a number of things to improve the products. We built effectively a tracker, a bit like FedEx. Taking a code tells you exactly where your transaction is. The goal of that is to provide a better experience for our customers as well as reduce our support costs because most -- the vast majority of the calls are coming to the contact center to support for escrows, where's my money. So that makes things easier, a better. We also broadened the ability to buy and sell things to different categories, I will get into a little detail there.

In terms of partner activity, the one thing I will leave with was the disappointing thing and the most disappointing thing for the group as a whole has been an order trader. We did a lot of work auto trader. There were 88 screens of integrated work with [indiscernible] who organized the financing marketplace as well as -- and hand-in-hand, we develop effectively a platform for buying selling financing in cars.

Now for whatever reason, and we can't get a straight answer out of [ water trader, ] other than they've decided to just temporarily halt consumer activity and focus business to consumer. They put a live for 2,500 listings and then within a week to 2 weeks, a very short period of time, we didn't see any transactions come through on our side. Effectively, they turned it off. So we still try to figure out what happened. It was in the middle of summer, this all occurred. Blinker is now working with us to go to other automated marketplaces. The solution is portable. But that is actually a negative thing that we had always expectations and so forth and explicitly, we haven't got a good answer about [ water trader, ] why they're based. And we never saw a loan application came through. So it wasn't even rolled out to a pilot. So that was a negative thing.

But in terms of other marketplaces, but we've seen a number of platforms integrate us. We've seen some pretty good rising volume out of marketplaces like Flipper where January to September it was up [ $1.66 ] a number of IP address platforms and so forth. Home renovation marketplace, we're starting in construction and so on. And we attended [indiscernible].

So look, what we've done with the sales team is the Sales team now reports into Sean McMeeken. He's done such a great job on the enterprise side, looking the GMV. And a lot of that comes down to structure and process around how we work with our customers, all the way through from how we do lead generation, how we have those done scorecard for scoring the customers and moving them through the pipeline through to closing of contracts, integration and so on. And we're basically now under his leadership, we've got the team actually now following the same sort of structure that we've had on the enterprise side of Freelancer. We've seen a big uptick in activity from the team and enthusiasm is someone, but in the quarter, we could have done a lot better there. And the thing that we're most disappointed about is [ auto trade-up. ]

On the freight side, we've always done a lot of work now merging in various platforms. And I'm pleased to say, as we are one platform now. It's now called Loadshift, the Freelancer name has been retired. And now, the freelancer stack, it's live, we can test it for yourself. All loads coming through go through the platform. In the same way, it goes through the enterprise versions of Freelancer as a one code base. So Loadshift now, going to pace, getting benefits from all the updates as we do them on the core platform or for the enterprise customers, which is fantastic.

In the quarter, we had about 8,500 loads go through, which is down 24%. I will say that, that is a bit of a misnomer comparing year-on-year and particularly because on the old platform with Loadshift, the loads only lasted 3 days.

So after 3 days, every single load was removed from the platform, automating just rolled off. It's more of a bulletin board. And on the new platform, they're up 30 days. So you can't -- it's not really apples-to-apples comparison comparing those loads in terms of the volumes. Since the platforms have merged, we've seen a good uptick in terms of loads being posted, loads being awarded, loads being accepted and so on. I'll show that in a second.

We've had also a big uptick in the parameters around the loads. So the average distance was up 17%. The average freight charge was actually up 40%. A lot is driven by fuel and rising fuel prices. But of course, because we make a commission, that's beneficial for us, because we make a percentage of that. And the average load side was actually as a result of that up 62%.

We do think that will come down a little bit. We have seen energy prices around the world skyrocket and pull back a little bit. So we'll be banking on more of a sort of a $5,000 average load size, but that load size will trend up.

So we basically successfully merged the platforms. We're now in a position to start extracting a marketplace commission. Now that has not happened right as yet because we've been very gentle with the merger to make sure that we don't offset the supply being the drivers on the platform.

So we've now got them on the platform, but we're now trying -- we're now working very gently to pull the jobs onto the platform because traditionally, [indiscernible] was handed out and the driver is called directly. We still have the fund numbers out, but we now state all the bidding activity on the platform. So that's happening as we speak.

So the net. So we are seeing a big lift in awarded jobs in the platform, accepted jobs on the platform, et cetera, and so on. But we -- and [indiscernible] we're generally doing this to make sure that we don't cause issues. But the site is live, it's pretty much got almost all the features that the old loads like hat in terms of build of controls and book marketing and so forth. And there's a lot more function areas come through now with the merged platforms because it's a marketplace, you've got all the live chat, you've got support, you've got secure payments. And you've got all these features you've got on the main platform there.

So there's a big uplift coming from this. There's about $1 million a day of GMV posted on the platform. In fact, the number has gone up a bit because of the freight charges have gone up quite a bit with the fuel charges. And the goal now and I think the biggest area for growth for revenue of the company is converting that GPV of $1 million a day of gross load value, if you want to call it, to that 30% commission model. And that's really going to start kicking through the rest of the year and into the first quarter in a big way.

Now with all of that, we've had also a focus on cost reduction. I know that was a comment and the Q&A as of the last quarter. We've successfully reduced in the quarter alone cost by $1.2 million. So we really -- on an annualized basis, that means $4 million or $5 million, that was an annualized basis. We will be reducing in the third quarter cost by another $1 million. Those cost reduction initiatives actually have been already underway in the last quarter. And there's a number of things we've done there. There have been a couple of headcount reductions that we've made. We've done that because coming out of COVID, there's a lot of people that literally work from home, it's not work from home, it's work from XBox, or work from PlayStation or what have you, and they're just looking in the cadence that we expect in the business and we saw pre-COVID.

So there's been a little bit of headcount reduction. There's also been a general review of cost control in the business, unnecessary subscriptions and so forth. Obviously, on cost that get reduced kind of when you make a trimming of those costs as well. So we've done a pretty successful job of cost control, $1.2 million in the last quarter will be another 1 million further reduction in the third quarter. Sorry, for the fourth quarter -- and we will be profitable in the next quarter, we'll be and we'll keep us safe that, but we will definitely be profitable in the next quarter.

We have negative operating cash flow, $3.2 million of the order and cash flow was down 1.7%. So what I will do now as I open up to do the floor for questions and Q&A. So please ask your questions. You may address them to anyone in the room. I may remind you there's myself in the room. There's Neil Katz, Chief Financial Officer. There's Shaun McMeeken, who's the VP of Sales who runs the enterprise divisions for both Freelancer and escrow and we've got Adam Byrnes who is the VP Product & Growth, you can ask any questions, too.

So please open the floor for questions. Thank you.

[Robert Barrie, executive]

And Alex, how do they ask questions? Maybe...

[Unknown Executive]

In the chat.

[Robert Barrie, executive]

Okay, [indiscernible] if you ask questions. So maybe just read the question, then I'll please answer it.

[Unknown Executive]

What's the status requiring for escrow financial licenses in Europe?

[Robert Barrie, executive]

Okay. That's a good question. Our target date to have -- this bid is going for a long time in the United Kingdom. We have [ Darren Groner, ] who runs the Compliance team with a -- Head of Compliance and MLRO in London. The application date for submission that -- we submitted earlier in the year back in April, and there was some feedback that came back on that. We had to put in place a wind-down plan and is at the [indiscernible] for the application, which is something a bit new that we didn't have in all detail. Plus, we took the opportunity to be -- to put a more robust application in. [indiscernible] December is the date that will be resubmitted.

So I don't know, Neil, if you want to maybe make some comments to that.

[Neil Katz, executive]

Well, it's actually at the end of November, we've paid [indiscernible].

[Robert Barrie, executive]

End of November...

[Neil Katz, executive]

Yes.

[Robert Barrie, executive]

[indiscernible] channel deadline.

[Neil Katz, executive]

Yes, the channel deadline that we're using 2 weeks to sort of the internal review submitted in early December, and we expect -- because we've paid quite a good dealings with the FCA already here. We've got a relationship manage and we expect the...

[Robert Barrie, executive]

Yes. I think when we said fast track as opposed to 3 months.

[Neil Katz, executive]

Yes, fast tracking and it would have been this 3 months to year to get a response.

[Robert Barrie, executive]

So we think it's a fairly -- we have a fairly robust application going in. It's been a lot of work over -- quite a number of years actually to get this done. There's a lot of requirements in the U.K., which are over and above what you expect from the U.S. states. So yes, so that is going in again in November. Then from there, the next location is Europe. So it's not clear still how whether -- how much the U.K. application can pass forward. Obviously, the U.K. has left the European Union. And these applications used to pass forward.

But I think there's a lot of work we've done now for Australia, the Canada, for the U.S., for -- and we've got licensing now in all the states bar Nevada. And I think it's verbally been told we're getting that. So the U.S. is pretty much almost done with the exception of a couple of territories. And so we've done a lot of work, which should make Europe really straightforward for us to put the application in but these things take a lot longer than you expect.

By way of comparison, Airbnb, for example, with Airbnb payments and started in 2015. The same thing we did themselves, and they still don't have the licensing in the U.S. everywhere, right? They're still missing a bunch of different states. It can take 5 to 7 years to get a license in many jurisdictions.

So I know it's been a long time, but I think we're at the final end of the road for the U.K.

[Neil Katz, executive]

At least for Europe. Thank you.

[Unknown Executive]

Ray also asks, what's the value proposition for the Loadshift user in terms of the commission that they'll pay.

[Robert Barrie, executive]

That's a good question. So from the shippers' perspective, it protects them and ensures the load is delivered, but the driver turns up, the load is delivered and the payment is not released until they can inspect the delivery at the other end.

Plus now it's a marketplace model. There's a whole bunch of stuff that we've built in around GPS tracking, delivery documentation. We're going to make it so that when you start your load, you can take photos and walk around the vehicle with a video camera to make sure all the compliance obligations have been met by the driver. We've met the drivers, which wasn't done in the past. We checked their documentation and there's reviews and the feedback on the platform.

So from a shipper perspective, paying the 3%, which is literally nothing. In the past, they used to paying 17.5% to 25% with freight forwarders. They get always benefit and they get to make sure that look gets delivered on time before the payment has been released, and there's no issue right?

From the driver's side, they get access to all the jobs, right? So there's about $1 million of jobs a day on the site. In the past, the way that's been monetized has been a bit of a wild west scenario. It's been a $79 a month membership fitting. And that's it. You pay $79 a month fee, you get all the phone numbers and then that's it, you're kind of your own. There's no one to help you. There's no ops team to coordinate. So there's no one to call the shipper and make sure we've got all the contact details and everything is -- they check the weather, check the access to handle the permitting and the pilots.

When we moved the pride of the Murry, that involved surveying the road from Victoria to Queensland to ensure that the width of the vessel will actually make it through all the power lines, et cetera, and so forth. There has to be some power lines that had to be removed. We have to mention what we take certain past because based on the region away and what have you, pilots had to be organized, police escorts had to be organized, permitting had to be organized, lobbying had to be organized with actually the electric office of Gregory to ensure that we got fast track because the weather was kind of on and off because obviously at El Nino and so on.

So there's a lot of benefit on the driver side and on the shipper side, having experts there to help and track and go forward with the load.

The other thing is simply $79 a month. That prior to the Murray movement was a $300,000 movement, right? So you can obviously understand there's a bit of a mispricing there. For some people who are maybe truck drivers that drive every once every few months and just pick up a job here or there and maybe have some regular work that's contracted and they use this for backloads. Maybe the $79 a month is too expensive for them because they're not using it for a few months of the year, right?

For others, it is way too cheap and it doesn't represent the value. I mean the crane movement is about $100,000 and so on. Machinery can be $20,000, right? So it's completely mispriced how it was done in the past, and there's a lot of benefit from the platform and all the supported side and the management route.

And the other thing is that the world has changed. I mean in all our businesses, there's a huge amount of regulatory impact that's occurred over the years, given around work classification, around tax agent. The freight business has channel responsibility. That was very different from it was 3, 4 years ago. Now there's responsibility all through the chain. And if there's an accident or a load is not tied down properly or this at the other, the ramifications are a lot more higher than they were in the past. So both the shipper and the carrier needs the support that we provide in terms of assisting to make sure the average goes through safety, security and meets the compliance standards and so on. So there is a lot of value there.

And in fact, in all the forms and maybe the shippers are -- so the drivers are very, very happy to pay a lot more money. They just want easy-to-use features and so forth. And so the great stuff that's coming through in the future will be, if you're a driver looking for a backload and 40% of the trucks in Australia's roads, for example, when it's global as well are empty, right? We're going to build a picture and you get a button, and basically hold your hand up and on a map of the world, there'll be plenty a little light, the GPS order saying it's truck available, looking for a backlog, here's roughly where I want to pick up. Here's roughly where it's going to go. So we're going to reduce the number of instances where a driver is driving empty on the road because they're driving empty, they're paying for the fuel, but they're not making any money off of it. And it's the bugbear of all drivers.

It's very similar to the freelancing world. The benefit of freelancers and the benefit of paying a 10% commission, a, it's very cheap, that commission. And b, there's jobs. You don't have to spend all your time chasing down the jobs, finding the jobs. We deliver the jobs to you. You put your settings in terms of what you're interested for the loads and we'll deliver those lots to you. And our ops team will call you if we think there's a load and matching, and we need someone to take something and deliver it straight away.

So there's a lot of benefits there. And the cost is marginal. 3% of the shipper side, that's nothing. 10% of the side, the drive side -- in fact, they enter their bid, so they know about that and they factor it in they put their bidd in, that's nothing. And in the freight world, the pricing is very much random, and freight forward is charged 7.5%, 20% and so forth. So it's very cost effective.

And the competitive nature of the platform are the driver to compete against each other also drives down the cost a little bit on the shipper side. So they know to get a great result that we'll manage.

[Unknown Executive]

Ray asked escrow, eBay update, please.

[Robert Barrie, executive]

Yes. So is a live in motor vehicles, but now we just try and get live in other categories. We're trying to go live in business industrial. We're trying to go live with fashion [indiscernible], discussions with the Volt, which is the controlled temperature storage facility for things like trading cards and comics. We're trying to go live in sneakers and other forms of collectibles.

So that's ongoing, but there's no update in terms of new categories at this point in time other than a bunch of discussions going on with Manuel and so forth with various different parts of eBay.

We are in the process of building a bunch of sort of marketing collateral for them. There's a really nice eBay watch video where deposits are doing a nice eBay motor vehicle video that will go out to their users. Surveys just being done by eBay on the motor vehicle side, answering questions and so forth and educational questions, so on. So we expect to be [indiscernible] collateral in each categories.

[Unknown Executive]

[indiscernible] asked, can you elaborate on your confidence in achieving profitability next quarter? Is the confidence from revenue growth or more due to additional costs out.

[Robert Barrie, executive]

So both revenue growth and from costs, maybe I'll get Neil to add some color to this as well.

[Neil Katz, executive]

Yes, as Matt said, it's from both. We've done significant cost reduction. So on that level, we expect that to contribute significantly to getting us to breakeven and reaching a sustained point of getting to profitability. And we're also expecting revenue growth. For Q4, the revenue growth will be, I guess, moderate, that together with significant cost reductions, which was $1.2 million in Q3 and expect another $1 million in Q4 should reach that point. So we are confident we will get there.

[Robert Barrie, executive]

I will add some color to that. I mean, Neil's comment about growth being moderate. There's a lot of upside that's a little bit hard to forecast from our side. So one thing -- a few things I will point out in terms of the revenue growth side that were hard to forecast could lead to some good things happening.

First of all, we have made a major fix in the core marketplace around how milestones work also on the bot side and also on the [ stamp ] side. But this way -- this whole way in which our projects are awarded in milestone, what have you is a very, very positive fix. And I think certainly from the AV test results and I have to walk through anyone who wants to get into the detail there. I think that will lead to really strong retention and growth.

In addition, the product is really starting to come together on the core marketplace side, on the collaborative side, we are seeing a lift in average product size and so on that continues to happen. Deloitte is now integrated and ready to go for the volume. And really, it's a bit of work now on activation and this at the other, but that could be quite a positive surprise at any time. Same on the computer and printer company that's integrated now and rolling out over the next couple of weeks, and they'll be ramping up there. NASA is ramping. The trillion dollar technology company work, that's a very substantial engagement, a multimillion dollar engagement doing effectively what's done with computer and printer customer support in a global support network. So that's a big one.

The logic platforms emerged. There's a lot of upside there coming as soon as we can get the commissions starting to really flying up. That's starting now like it's really all the award rates and the accept rates and so forth is starting to really come through. And it's just -- it has to be gentle in how we've done it. But that will start really kicking through. There's a huge amount of upside there, and to generate 13% from some substantial portion of $1 million of GMV a day.

And so all that combined, there's a lot of things happening there in terms of positive upside, but it's hard to forecast. But the work is done for a majority of that in terms of the actual technical work, the engineering work, that's done. So we're just reading out for the volume.

Okay. Well, I'll keep it over for the 10 or 20 seconds on your last question in. But as always, we're available for one-on-one if you want to contact us directly, either [e-mail] or [e-mail] and...

[Unknown Executive]

We have another question on the call.

[Robert Barrie, executive]

There's one more?

[Unknown Executive]

Yes, one more from Ray. Do you have any thoughts on the escrow Autotrader issue and expansion?

[Robert Barrie, executive]

Yes. So this is my biggest disappointment overall. We've built a solution, a solution works in terms of the funnel. We haven't tested it by property and production at because it went live on 2,500 listening. They're all down about 1.5 weeks. So we never actually saw anything kind of hit hard into the funnel, which is unfortunate. We are taking this with [indiscernible] other automotive marketplaces. We had a couple of minutes to them about doing that. Blinker has already approached a bunch of marketplaces. We're going to start doing that jointly. I don't know, Shaun, if you've got any other comments around that at all. But we have a solution. The good thing is because it deals with private money financing and most vehicles are financed, and we onboarded the finance companies with us directly. We are ready to go with other automotive platforms. So we will be taking it to them both in partnership with Blinker, and we continue to do the work we're doing with sales team independently of that.

Shaun, do you have anything to say on that?

[Shaun McMeeken, executive]

[indiscernible] we've got our most experienced partner manager and the team she's in contact with Blinker on a weekly basis, and we'll continue to do so until we can resolve that situation.

[Robert Barrie, executive]

Yes.

[Unknown Executive]

Adam asks, anything happening with escrow real estate in the American market?

[Robert Barrie, executive]

Yes. So we've started integrating some construction marketplaces. That's where we're going to start moving into that space. Real estate, there is some work we've got to do in a couple of states around title on this at yellow. We can operate today in real estate in the majority of states. In the U.S., we completed a quite an extensive review with Pillsbury, who are players in New York on this. But right now, it's in the construction side that we're going to start, and that's where you'll see the first activity and we'll take that, and then we'll kind of go down there.

After we get the U.K. was installed and the next two things we're doing in terms of priority are the remainder of the items and the compliance side of real estate and Europe. So they are the next two things the compliance team are really trying to knock out on that front. We do get inquiries every week, where people will send us various documents and so forth, trying to get to close the house out for them and so on. We haven't taken any of that on to date, but we do constantly get queries. And we do have an engagement with auction.com to take deposits for foreclosed houses to be bought and sold that we've got a bit of work to do still, but we've had discussions for a long time about that work.

So there are some things in having in that space, and that is obviously a massive industry. Any other questions?

Okay. Well, thank you for your time today with the third quarter business update. And if you'd like to reach out directly to myself, Neil or [e-mail] for a one-on-one, please do so. Thank you.