Sydney-headquartered online jobs marketplace Freelancer Limited (ASX: FLN) has reported a difficult first half of FY26, swinging to a net loss of $2.1 million as tightened security controls designed to stamp out bad actors on its platform drove away legitimate customers at the same time.
Group revenue fell 12.1 per cent to $23.9 million for the six months to June this year, despite gross marketplace value (GMV) of $574.6 million, up 30.9 per cent.
EBITDA for the six-month period dropped to $1.1 million from $3.8 million in the prior corresponding period leading to an operating loss of about $300,000, compared with an operating profit of $1.8 million a year earlier.
The bottom-line $2.1 million loss was also weighed down by a $2.4 million non-cash impairment of non-core digital assets.
The damage was concentrated in the flagship Freelancer marketplace, an online platform where businesses and independent workers connect.
Revenue for the Freelancer platform slumped 23.2 per cent to $14.9 million and gross merchandise value fell 20.3 per cent to $42.4 million.
The introduction of mandatory two-factor authentication, aimed at curbing fraud and fake accounts, triggered significant churn among returning customers who had not previously been required to verify their identity.
Chairman and CEO Matt Barrie is blunt in his assessment of the latest result, acknowledging the marketplace "had a hard half" and describing the problems as largely self-inflicted.
"The causes are not mysterious," says Barrie.
"We tightened integrity controls and caught legitimate customers alongside the bad actors. AI scrapers destabilised the site, and the remediation cost us search rankings.
"A gateway migration exposed payment acceptance problems that had quietly been costing us for some time. All three are identified, all three are being fixed."
Beyond the authentication crackdown, Freelancer's marketplace was hit by a confluence of other headwinds.
AI-powered web scrapers disrupted the platform's search engine rankings, reducing organic traffic, while a payment gateway migration exposed long-standing acceptance problems that had previously gone undetected.
Temporary disruption from changes to the platform's Recruiter function added further pressure.
On a constant currency basis, the Freelancer marketplace revenue decline was 15 per cent, reflecting the additional drag of unfavourable currency movements.
However, the group's broader diversified businesses performed strongly over the past six months.
Escrow.com, the company's domain name and high-value transaction settlement platform, posted GMV growth of 39 per cent to $517.6 million, lifting revenue 15.1 per cent to $7 million.
Freight marketplace Loadshift delivered record revenue of $1.8 million, up 12.2 per cent on the prior corresponding period.
Group GMV rose 30.9 per cent to $574.6 million, driven almost entirely by Escrow.com's strength.
Cash on hand fell to $17.9 million from $22.9 million, with operating cash flow swinging to negative $0.5 million from positive $6.8 million in the first half of FY25.
Barrie points to the performance of Escrow.com and Loadshift as evidence of diversification providing insurance against the marketplace's struggles, while signalling that efforts to unwind the damage from the platform integrity changes were underway.
Barrie says priorities in the second half include Freelancer product stability under new leadership and "getting Freelancer growing again", to keep Escrow.com "compounding" and to lift monetisation for Loadshift.
The CEO says the company plans to "use AI where it moves a number rather than where it makes a headline".
"We are debt-free and close to breakeven," says Barry.
"Nearly every problem in front of us is one we caused ourselves, which means it is one we can undo."
Shares in Freelancer closed 15 per cent higher at 11.5c today.
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