Stock Story -
Online freelance marketplace Fiverr (NYSE:FVRR) reported results in line with analysts' expectations in Q2 CY2024, with revenue up 5.9% year on year to $94.66 million. On the other hand, next quarter's revenue guidance of $96 million was less impressive, coming in 1.7% below analysts' estimates. It made a non-GAAP profit of $0.58 per share, improving from its profit of $0.49 per share in the same quarter last year.
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Fiverr (FVRR) Q2 CY2024 Highlights:
- Revenue: $94.66 million vs analyst estimates of $94.63 million (small beat)
- Adj. EBITDA: $17.8 million vs analyst estimates of $17.4 million (small beat)
- EPS (non-GAAP): $0.58 vs analyst estimates of $0.57 (2.3% beat)
- Revenue Guidance for Q3 CY2024 is $96 million at the midpoint, below analyst estimates of $97.69 million
- The company slightly lifted its revenue guidance for the full year from $384 million to $385 million at the midpoint
- Gross Margin (GAAP): 83.1%, in line with the same quarter last year
- Free Cash Flow of $20.66 million, similar to the previous quarter
- Active Buyers: 3.9 million, down 322,000 year on year
- Market Capitalization: $847.2 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 mediocre, averaging 15.1% annually. This quarter, Fiverr reported mediocre 5.9% year-on-year revenue growth, in line with analysts' expectations.
Guidance for the next quarter indicates Fiverr is expecting revenue to grow 3.7% year on year to $96 million, slowing from the 12.1% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 7.9% 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.
Fiverr has been struggling to grow its active buyers, a key performance metric for the company. Over the last two years, its buyers have declined 1.9% annually to 3.9 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q2, Fiverr's active buyers decreased by 322,000, a 7.6% 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 strong over the last two years, averaging 9.3%. Although its active buyers have shrunk during this time, the company's ability to successfully increase prices demonstrates its platform's enduring value for existing buyers. This quarter, ARPB grew 14.6% year on year to $24.27 per buyer.
Key Takeaways from Fiverr's Q2 Results Revenue, adjusted EBITDA, and EPS beat. The company also slightly raised full year revenue guidance, showing that topline trends are better than just a few months ago. Overall, this was a solid quarter for Fiverr. The stock traded up 3.3% to $22.65 immediately following the results.
