Fiverr (NYSE:FVRR) Exceeds Q3 Expectations But Quarterly Guidance Underwhelms

Kayode Omotosho /
2022/11/09 3:11 am EST

Online freelance marketplace Fiverr (NYSE: FVRR) reported results ahead of analyst expectations in the Q3 FY2022 quarter, with revenue up 11% year on year to $82.5 million. Guidance for the full year also exceeded estimates, however the guidance for the next quarter was less impressive, coming in at $82.8 million, 1.03% below analyst estimates. Fiverr made a GAAP loss of $11.3 million, improving on its loss of $14.3 million, in the same quarter last year.

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Fiverr (FVRR) Q3 FY2022 Highlights:

  • Revenue: $82.5 million vs analyst estimates of $81.1 million (1.72% beat)
  • EPS (non-GAAP): $0.21 vs analyst estimates of $0.05 ($0.16 beat)
  • Revenue guidance for Q4 2022 is $82.8 million at the midpoint, below analyst estimates of $83.6 million
  • Free cash flow of $5.31 million, down 15% from previous quarter
  • Gross Margin (GAAP): 81%, down from 83.2% same quarter last year
  • Annual Active Buyers: 4.2 million, up 100 thousand year on year

“I am proud that our business has remained strong in a slowing macro economy. Our focus on driving the flywheel of our marketplace and investing in going upmarket is paying off as over 4.2 million businesses continue to make Fiverr the go-to place for digital services,” said Micha Kaufman, founder and CEO of Fiverr.

Based in Tel Aviv, Fiverr (NYSE: FVRR) operates a fixed price global freelance marketplace for digital services.

The 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 Growth

Fiverr's revenue growth over the last three years has been exceptional, averaging 53.3% annually. Fiverr may have benefited slightly from the initial impact of the pandemic bringing forward some sales, but growth rates have normalized since then.

Fiverr Total Revenue

This quarter, Fiverr reported an mediocre 11% year on year revenue growth, roughly in line with what analysts expected.

Guidance for the next quarter indicates Fiverr is expecting revenue to grow 3.81% year on year to $82.8 million, slowing down from the 42.7% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 12.2% over the next twelve months.

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Usage Growth

As a gig economy marketplace, Fiverr generates revenue growth by a combination of the volume of services users order and how much commission it earns.

Over the last two years the number of Fiverr's active buyers, a key usage metric for the company, grew 26.2% annually to 4.2 million users. This is a fast growth for a consumer internet company.

Fiverr Annual Active Buyers

In Q3 the company added 100 thousand active buyers, translating to a 2.43% growth year on year.

Key Takeaways from Fiverr's Q3 Results

With a market capitalization of $1.05 billion Fiverr is among smaller companies, but its more than $375.5 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

Fiverr topped analysts’ revenue expectations this quarter, even if just narrowly. That feature of these results really stood out as a positive. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations and the revenue growth was quite weak. Overall, this quarter's results could have been better. The company currently trades at $27.69 per share.

Fiverr may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.