Stock Story -
Online freelance marketplace Fiverr (NYSE:FVRR) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue up 6.3% year on year to $93.52 million. The company expects next quarter's revenue to be around $94.5 million, in line with analysts' estimates. It made a non-GAAP profit of $0.52 per share, improving from its profit of $0.36 per share in the same quarter last year.
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Fiverr (FVRR) Q1 CY2024 Highlights:
- Revenue: $93.52 million vs analyst estimates of $92.47 million (1.1% beat)
- EPS (non-GAAP): $0.52 vs analyst estimates of $0.45 (15.2% beat)
- Revenue Guidance for Q2 CY2024 is $94.5 million at the midpoint, roughly in line with what analysts were expecting (adjusted EBITDA guidance for Q2 ahead)
- The company reconfirmed its revenue guidance for the full year of $384 million at the midpoint (adjusted EBITDA guidance for the full year ahead)
- Gross Margin (GAAP): 83.5%, up from 82.2% in the same quarter last year
- Free Cash Flow of $20.8 million, down 24.1% from the previous quarter
- Active Buyers: 4 million, down 300,000 year on year
- Market Capitalization: $786.4 million
Based in Tel Aviv, Fiverr (NYSE:FVRR) operates a fixed price global freelance marketplace for digital services.
Gig EconomyThe iPhone changed the world, ushering in the era of the “always-on” internet and “on-demand” services - anything someone could want is just a few taps away. Likewise, the gig economy sprang up in a similar fashion, with a proliferation of tech-enabled freelance labor marketplaces, which work hand and hand with many on demand services. Individuals can now work on demand too. What began with tech enabled platforms that aggregated riders and drivers has expanded over the past decade to include food delivery, groceries, and now even a plumber or graphic designer are all just a few taps away.
Sales GrowthFiverr's revenue growth over the last three years has been solid, averaging 19.6% annually. This quarter, Fiverr beat analysts' estimates but reported mediocre 6.3% year-on-year revenue growth.
Guidance for the next quarter indicates Fiverr is expecting revenue to grow 5.7% year on year to $94.5 million, improving from the 5.1% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 5.8% over the next 12 months.
Usage Growth As a gig economy marketplace, Fiverr generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Over the last two years, Fiverr's active buyers, a key performance metric for the company, grew 0.1% annually to 4 million. This is one of the lowest rates of growth in the consumer internet sector.
Unfortunately, Fiverr's active buyers decreased by 300,000 in Q1, a 7% drop since last year.
Revenue Per BuyerAverage revenue per buyer (ARPB) is a critical metric to track for consumer internet businesses like Fiverr because it measures how much the company earns in transaction fees from each buyer. This number also informs us about Fiverr's take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.
Fiverr's ARPB growth has been decent over the last two years, averaging 8%. The company's ability to increase prices while growing its active buyers demonstrates the value of its platform. This quarter, ARPB grew 14.3% year on year to $23.38 per buyer.
Key Takeaways from Fiverr's Q1 Results It was good to see Fiverr narrowly top analysts' revenue expectations this quarter. Revenue guidance for the full year was slightly ahead but adjusted EBITDA guidance was firmly ahead. On the other hand, its number of buyers declined. Overall, we still think this was a solid quarter. The stock is up 5.8% after reporting and currently trades at $21.49 per share.
