Freelancer.com announces the acquisition of Escrow.com and completion of capital raising
Some big news for a Sunday night, Escrow.com getting acquired by Freelancer.com. Back in September of 2014, Escrow.com purchased Agreed.com.
SYDNEY, April 27, 2015:
Freelancer.com, the world’s largest freelancing and crowdsourcing marketplace,today announced that it had entered into a definitive agreement to acquire Escrow.com from a private investor for US$7.5 million in cash, and completed a AUD$10 million placement of ordinary shares to institutional investors.
Headquartered in California, Escrow.com provides online escrow services that facilitate and accelerate e-commerce by assuring secure settlement. It was founded in 1999 by FidelityNational Financial, a Fortune 500 company and the US’s largest provider of commercial and residential mortgage and diversified services.
Escrow.com is the leading provider of secure online payments and online transaction management for consumers and businesses on the Internet, with FY14 gross payment volume of US$265 million, net revenue of US$5 million, US$1.2 million in EBITDA and over US $2.2 billion in transactions to date.
Escrow.com reduces the risk of fraud by acting as a trusted third party that collects, holds and disburses funds according to buyer and seller instructions. Escrow services provided by the company are licensed and regulated.
Freelancer.com Chief Executive Matt Barrie said, “We are pleased to acquire Escrow.com, the world’s largest online escrow company. This highly complementary acquisition will enhance the ability of our 15 million users to transact securely, and there
are large opportunities for growth and synergies with core offerings.
Here is a link to the full release
We are missing something here E, $7.5M only?
I woulda bought it for that!
Chump change
Maybe make the new owners an offer then?
The price seems low but the figures are also a lot lower than I would guessed, think the price is probably right.
Hey Snoop;
How much is the ‘stand alone’ domain worth?
and the Brand?
I am not saying the price is right or wrong but it seems to me that it was paid next to nothing for the ‘goodwill’.
Equivalent price of Diamond.com sold in 2006
Debt load must have been massive
The number itself puzzles me simply based on the stated net revenue.
There is something we are not in the know on here a factor.
So, it sold for 6.25 times EBITDA. I am surprised that revenue was only $5 million. I am not surprised that EBITDA margin was 24%.
True enough Logan, just still seems on the low side to me both the sold price and the actual net.
7.5 MM
What a miserable amount, they got paid what they were worth!
Of: smoke, mirrrors, Tulips, fuzzy math, Artificially inflated exepctations
Single domains have been sold for more…
Just happy Frank didn’t buy this. Be a very sad day for the domain industry if that ever happens.
Imagine all the deals he sees and adds to his buying power at Namejet. Keywords and like what he’s doing with his parking operation. Inquiry info. Bidding his customers out. The list goes on and on
I could not agree more.
Congrats escrow.com
Hello Ray,
The Intrinsic Marketing Strategy Value of ESCROW.com is more like 30 million$
People are being Totally Misinformed, for years now. The really Smart Money decieves .COM Platform Stakeholders so they can HOSE them in the Secondary Markets.
Speaking of hosing, We are near publishing a book, that will blow the cover off the Ball of deceit going on. The Biggest Threat to GOOGLE, APPLE, and Amazon is the tremendous drawing power of the ,COM Platform Extension Globally. Watch for this Book that will open many more eyes to the Battle For Eyeballs Online. JAS 4/26/15
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger) (Former Rockefeller IBEC Marketing Analyst/Strategist )
wow. 5M in revenue? never thought on that but it makes sense. it gives about an average of 2% in commissions. 5 times EBITDA. seems logic but a very low interest market with these numbers. didn’t expected that. better take expired domains from clients and sell them at auctions. that’s a better business by far
here is a prediction…it will be sold again in a year or two and bounced around several times before things start to fall apart.
1.5x Revenue and 5-6x EBITDA is pretty standard valuation. The irony is that the seller whose business oversees hundreds of millions of dollars in domain sales might have failed to take into account the stand alone value of the escrow.com domain. That should’ve been negotiated separately and added to the total. I would say the buyer got a $500,000-$1M discount because of that oversight.
Bad news, now I can not longer trust Escrow.com , Freelancer.com is know to allow domain name escrow fraud on their FreeMarket.com website. After scammer buyers get your domain , the buyers to do a chargeback , and FreeMarket.com chargers the sellers. So the sellers lose both the domain and the money (according to a few posts on namepros)
congrats to buyer and seller, and to brandon and his team.
sure revenue could have been higher, if they didnt offer the most reasonable fees out there to keep market share. And profits could have been higher if they didnt have an “all hands on deck” attitude about serving all customers.
so the future, i hope the expected ROI for the purchasor comes form venturing into new products and services like freelancing and crowdfunding, and not doubling fees. Escrow.com market leading position exists because they are low priced enough we dont look for alternatives, but everyone out there i just waiting for fees to go up to add competition.
Brandon you survived a bubble and lehman brothers and a housing crisis and kept your company going,
nice job on the transaction if, and i hope this is true, this gives you access to grow the company.
and to the buyer, please tread carefully, you have purchased an amazing and in some ways incalcuable amount in goodwill this company has built up in our industry.
thats why the purchase prices seems low, we just like them so much. but it is at its heart a low margin business and we would mind it staying that way.
page howe
It worries me that Domain Escrow or Domains were not mentioned at all in the press release. Domains are Escrow.com’s central business at present, the new buyer is not in the domain business. Can they open up the service to ebay-style chaos and still serve the domain market???
I fear domains are not much in the new owners’ vision. It looks like they want a Paypal of escrow, and Domainers may be left behind.
And we were hoping the Agreed purchase would mean Escrow would take possession of the domain …..
We don’t know all Escrow.com financials, including its NFP, but the purchase price looks kinda cheap, considering, among other factors, the goodwill and reputation it brings and the value of the domain Escrow.com stand-alone.
Ironically, Freelancer.com, a small cap as well (26.1 mln AUD sales in 2014) has a worse profitability, with an Ebitda loss of 2.1 mln AUD …
Hope the new owner will manage the company properly, not messing it up and keeping fees at the same acceptable level.
Totally agree with what Page Howe said above, while I also see the risk mentioned by “accent” above, with a company which could become less focused on domains or to further change in ownership … let’s hope for the best …
to folks in very specific circles, like domain sales, escrow.com is a household name.
go out on the street and ask 100 people if they have ever heard of Escrow.com – likely none.
that said 7.5mm seem like a decent number.
And Jeff – Frank is a business guy – and you clearly are not
What about Agreed.com, you guys forget about this asset within the company, 2 for the price of 1?
What asset ? how many people actually even used agreed.com ? how much you think the domains worth 25grand ?
Brandon Abbey was so kind to email me recently and I know he had a look to my comment about Escrow.com acquisition by Freelancer.com, and I appreciated.
That’s why I’d like to share with him and some people here a few details which IMHO can be “food for thoughts” regarding this transaction.
I’d suggest you not to focus and to count too much on the fact that Freelancer.com has a Mkt Cap of over 450 mln AUD, since Mkt Cap doesn’t necessarily represent the strength, also in terms of competitive position, of the company, and surely not its financial or profitability soundness.
To keep it very short, without going into too many details, we are talking of a small cap which has a structurally low margin business model, in a business with low barriers to entry, net sales of 26.1 mln AUD (2014 data), an Ebitda loss of 2.1 mln AUD, net equity for 18 mln USD, top-line growth driven by a more than proportional increase of OPEX (mainly employee, many of which “low cost”, & admin expenses) …
If they are not able to leverage margins on their OPEX in an extremely favorable, and very low (or zero) interest rates, business environment, when they will ever be?
A company which also according to a very bullish report prepared by Canaccord Genuity (Australia) Ltd. will be loss-making at Ebitda level at least until 2017 …
Let me tell that that report is one of the worst I’ve ever read, besides being biased (conflicts of interest), it’s simply ridiculous both in its basic P&L and competitive analysis assumptions, use of the DCF methodology and valuation conclusions.
No offense, but I’d never hire an analyst who write stuff like that.
When Mr Barrie said he paid a “fair price” for Escrow.com he was right, the price was surely “right” for him, since he indirectly paid through expensive paper, aka the 10 mln shares they issued for 1.00 AUD each to finance the acquisition …
And yes, at approx 1.00 AUD, IMHO Freelancer.com shares are definitely overly expensive and overvalued on all reasonable (and tangible) metrics, I’d never purchase them at that price.
What I’m trying to tell you is that you shouldn’t count too much on the long-term viability of Freelancer.com business model … surely structural profitability is low, let’s see if they will able to survive the downturns of the markets … that’s why in my comment above I was not ruling out a further change of ownership for Escrow.com in the (near?) future …
Personally I see many failures, bankruptcies of start-ups and companies without or with a poor business model in the upcoming months, when the bubble will burst.
And no offense, but I see too many people improvising themselves as financial or corporate valuation experts …
Just my quick two cents. 🙂
Hello Andrea,
We think the synopsis of your adroit analysis is right on.
Pointing out the truths of Fundamental Marketing truths Trumps Shady Slick presentations. The truth in the long run Prevails. Kudos Andrea JAS 4/29/15
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger) (Former Rockefeller IBEC Marketing Analyst/Strategist)
Hello MHB,
It can be said that the True Creative Forces Trump Frustrated Digital Code Interlopers of Truth. GOOGLE has sadly created a generation of Digital Code Grifters. This can be directly related to the movie of Zuckerberg being a hero for stealing from others for his own gain. This is not what our forefathers held in esteem. Its Grifting, and lots of people support this failed Moral Abyss. We will with great effort fight this FAILED PIPE DREAM. The ending Moral of the story is = ( The Truth Matters- Its your Integrity. It is Everything ! ) JAS 4/29/15
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger) (Former Rockefeller IBEC Marketing Analyst/Strategist)
I would love to know what people love about escrow.com and not other services like escrowhill.com