>To me, it looks like FY16 went well so was profitable, then FY17 had a small fall in revenue and a small rise >in expenses, so profit crashed to negative. I suspect they'll only get back to profit if revenue starts to rise >again
Key things to understand are that this business has traditionally reinvested all profits in growth, so quarter to quarter they always just about break even.
In the first 3 quarters of calendar year 2017 the freelancer.com website implemented a 'one click' job posting. This drove higher offers, but they were poor quality, and resulted in lower revenue. Matt describes it in the video commentary of last quarter. This derailed revenue growth for the whole business in 2017.
They reversed this and made some other quality improvement measures.
Last quarter Matt suggested that forward looking indicators suggest revenue growth has returned, but this quarter is the first where there will be reportable dollar figures to confirm or refute that.
Last quarter Matt also stated they will manage the business to be demonstrably profitable this year, rather than hovering around break-even. Many commentators here got fixated on whether the business made a $200k profit or loss each quarter, stealing oxygen from the real growth story. My understanding is that by trimming back the investment in growth a tiny bit they intend to always land slightly in the black.
There will still be commentators who believe the business can't turn a substantial profit, but for me, I prefer organic growth from earnings, rather than the US style bleeding of VC funds to grow.
If you buy the growth story, understanding that dividends are a way off when the growth plateaus, then now is a good time to buy. If you expect the stock to be stable and gradually produce a dividend, then you will be disappointed. This company has years more growing to do.
FLN Price at posting:
60.0¢ Sentiment: Buy Disclosure: Held
