Online freelance marketplace Fiverr (NYSE: FVRR) reported results in-line with analyst expectations in Q1 FY2022 quarter, with revenue up 26.8% year on year to $86.6 million. Guidance for the next quarter missed analyst expectations with revenues guided to $86.7 million at the midpoint, or 6.34% below analyst estimates. Fiverr made a GAAP loss of $16.9 million, improving on its loss of $17.8 million, in the same quarter last year.
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Fiverr (FVRR) Q1 FY2022 Highlights:
- Revenue: $86.6 million vs analyst estimates of $86.6 million (in-line)
- EPS (non-GAAP): $0.11 vs analyst estimates of $0.07 (46.6% beat)
- Revenue guidance for Q2 2022 is $86.7 million at the midpoint, below analyst estimates of $92.6 million
- The company dropped revenue guidance for the full year, from $376 million to $355 million at the midpoint, a 5.58% decrease
- Free cash flow of $6.81 million, down 10.2% from previous quarter
- Gross Margin (GAAP): 80.4%, down from 83.1% same quarter last year
- Annual Active Buyers: 4.2 million, up 400 thousand year on year
“Millions of businesses continue to turn to Fiverr to find a freelancer, as they enjoy the unmatched convenience, speed and selection of the on-demand digital services we provide,“ 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 58.2% annually. The initial impact of the pandemic was positive for Fiverr's revenue, but growth rates subsequently normalized.
This quarter, Fiverr reported a decent 26.8% year on year revenue growth, in-line with what analysts were expecting.
Guidance for the next quarter indicates Fiverr is expecting revenue to grow 15.2% year on year to $86.7 million, slowing down from the 59.6% 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 27% 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 33.1% annually to 4.2 million users. This is among the fastest growth of any consumer internet company, indicating that users are excited about the offering.
In Q1 the company added 400 thousand active buyers, translating to a 10.5% growth year on year.
Key Takeaways from Fiverr's Q1 Results
With a market capitalization of $1.5 billion Fiverr is among smaller companies, but its more than $212.2 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 delivered solid revenue growth this quarter. And we were also glad to see the user growth. On the other hand, it was unfortunate to see that the revenue guidance for both the next quarter and the full year missed analysts' expectations. Overall, it seems to us that this was a complicated quarter for Fiverr. The company is flat on the results and currently trades at $39.5 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.