Fiverr turns profitable earlier than expected

Micha Kaufman

Non-GAAP earnings became positive in the second quarter, and the gig economy platform has raised its annual guidance.

The second quarter results from gig economy platform Fiverr International Ltd. (NYSE: FVRR), released today, blow apart market estimates, as the company turns profitable on the basis of adjusted EBITDA and non-GAAP accounting earlier than expected. Fiverr has also raised its guidance for the current year.

The company, whose internet platform connects freelancers with customers, is traded on the New York Stock Exchange at a market cap of $3.7 billion. Its share price has crossed the $100 threshold, 15 months after its IPO at $21 per share.

Fiverr is a beneficiary of one of the main trends of the coronavirus period - the switch to working from home. Its solution enables deals to be made without physical meetings between customers and providers. The second quarter results reflect this: revenue grew 82% in comparison with the second quarter of 2019, and by 38% in comparison with the previous quarter, to $47.1 million, considerably above the company's guidance of $35.5-36.5 million.

On a GAAP basis, Fiverr narrowed its net loss almost to breakeven. It reported a loss for the second quarter of $124 thousand, which compares with a loss of $9.4 million in the corresponding quarter of 2019. Excluding certain items, chiefly stock-based compensation, Fiverr posted a non-GAAP net profit of $3.6 million, which compares with a loss of $4.9 million on the same basis in the corresponding quarter of 2019. Earnings per share were $0.10; the consensus analysts' estimate was $0.06.

The only figure that did not shine in comparison with the previous quarter was the take rate - the level of commission that Fiverr receives on each transaction between freelancer and buyer. In the year to the end of June, the take rate was 27%, which compares with 27.1% in the year to the end of March, and 26.4% in the year to the end of June 2019.

Adjusted EBITDA for the second quarter was $3.1 million positive, and compares with negative EBITDA of $4.9 million in the corresponding quarter, and with guidance of $1.5-2.5 million negative.

Fiverr generated $5.2 million cash from regular activity in the second quarter. In the corresponding quarter it burned cash amounting to $3.4 million. At the end of the second quarter of this year it had cash and cash equivalents of $290 million, after exploiting the positive momentum in its share price during the quarter to raise $120 million. The offering was at $60 per share - as mentioned, the share price is now above $100.

For the third quarter, Fiverr sees revenue of $48-49 million, representing growth of 72-76% over the third quarter of 2019. The current analysts' consensus estimate is $37.9 million. Adjusted EBITDA is expected to be $203 million positive.

Fiverr has again raised its annual revenue guidance, form $145-147.5 million to $177.5-179.5 million. The updated guidance represents 66-68% growth over 2019. Adjusted EBITDA for the year is expected to be $4.5-6.5 million positive, which compares with earlier guidance of $7-9 million negative, and a switch to positive EBITDA only in the second quarter of 2021.

"We have delivered an outstanding quarter of results as our strong execution amidst the Covid-19 pandemic resulted in 82% year on year growth in revenue and adjusted EBITDA profitability," said Fiverr founder and CEO Micha Kaufman. "I’m incredibly proud that Fiverr has been playing an important role in the livelihoods of individuals and businesses everywhere during this challenging global environment. As businesses endeavor to reshape their team structures and accelerate the pace of digital transformation, I believe there is a tremendous amount of growth runway ahead of us."

Fiverr CFO Ofer Katz added, "Fiverr has reached an inflection point in the second quarter, having achieved adjusted EBITDA profitability and brought our topline scale to the next level. While the global macroeconomic conditions remain highly uncertain, we are confident that our business model, strong execution ability and financial discipline will continue to drive our growth forward."

Published by Globes, Israel business news - en.globes.co.il - on August 5, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Micha Kaufman
Micha Kaufman
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018