Online freelance marketplace Fiverr (NYSE: FVRR) missed analyst expectations in Q2 FY2022 quarter, with revenue up 12.9% year on year to $85 million. Guidance for the next quarter also missed analyst expectations with revenues guided to $81.5 million at the midpoint, or 7.11% below analyst estimates. Fiverr made a GAAP loss of $41.8 million, down on its loss of $13.2 million, in the same quarter last year.
Is now the time to buy Fiverr? Access our full analysis of the earnings results here, it's free.
Fiverr (FVRR) Q2 FY2022 Highlights:
- Revenue: $85 million vs analyst estimates of $86.7 million (1.95% miss)
- EPS (non-GAAP): $0.12 vs analyst estimates of $0.09 (33% beat)
- Revenue guidance for Q3 2022 is $81.5 million at the midpoint, below analyst estimates of $87.7 million
- The company dropped revenue guidance for the full year, from $355 million to $336 million at the midpoint, a 5.35% decrease
- Free cash flow of $6.24 million, roughly flat from previous quarter
- Gross Margin (GAAP): 79.3%, down from 83.3% same quarter last year
- Annual Active Buyers: 4.2 million, up 200 thousand year on year
“We have built a great team and freelance marketplace over the past decade. In fact, Fiverr today is three times larger than the company we took public only three years ago,“ 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 55.9% annually. The initial impact of the pandemic was positive for Fiverr's revenue, but growth rates subsequently normalized.
This quarter, Fiverr reported an mediocre 12.9% year on year revenue growth, and this result fell short of what analysts were expecting.
Guidance for the next quarter indicates Fiverr is expecting revenue to grow 9.65% year on year to $81.5 million, slowing down from the 41.9% 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 19.2% over the next twelve months.
In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.
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 30.3% 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 Q2 the company added 200 thousand active buyers, translating to a 5% growth year on year.
Key Takeaways from Fiverr's Q2 Results
With a market capitalization of $1.37 billion Fiverr is among smaller companies, but its more than $307.1 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.
It was good to see that ARPU is still growing. On the other hand, it was unfortunate to see that the revenue guidance for the full year missed analysts' expectations. Overall, this quarter's results could have been better. The company is down 10.9% on the results and currently trades at $33 per share. Overall, it seems to us that this was a complicated quarter for Fiverr. The company is down 10.9% on the results and currently trades at $33 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.
One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.
The author has no position in any of the stocks mentioned.