Is Freelancer Ltd a gangbusters growth stock?

Leading online freelancing and crowdsourcing marketplace Freelancer Ltd (ASX: FLN) this morning delivered its best quarterly result to the market.

In a statement to the ASX, the $470 million company revealed quarterly cash receipts totalling $13 million for the fourth quarter of its 2016 financial year (FY16). Over the full year the company said receipts were 35% higher.

Freelancer said cash receipts were $51.9 million for the full year but revenue would be higher given its use of accrual accounting, which allows businesses to report revenue before cash payments are made.

Source: Freelancer Ltd ASX update

Source: Freelancer Ltd ASX update

The company’s operations were also cash flow positive, which is an important step in the right direction. Freelancer had $35 million in cash with no debt at year-end.

The company also boasted about its ability to keep marketing costs low at 16% of cash receipts through efficiencies, thereby lowering its cost base.

But most importantly the company continues to gain traction with creators. Freelancer said 626,000 jobs were posted in the quarter — an increase of 40%. However, the company made a number of acquisitions during the year.

Source: Freelancer Ltd ASX update

Source: Freelancer Ltd ASX update

“2016 was a record year of cash receipts for Freelancer and best since IPO in USD constant currency – our highly cash generative business model yielded for the year record receipts from customers, positive operating cashflow and the company has a strong and growing balance sheet,” Freelancer CEO, Matt Barrie, said.

Looking ahead the company expects to report revenue higher than cash receipts, when it releases its full-year result on 23 February 2017.

Foolish Takeaway

At today’s prices, Freelancer remains richly priced with expectations for strong growth in years ahead. While it could be a gangbusters growth stock, investors seeking to buy shares may want to wade in slowly over time to mitigate the risk of the company missing analyst expectations.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @OwenRask.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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