Online freelance marketplace Fiverr (NYSE: FVRR) reported results in line with analysts' expectations in Q2 FY2023, with revenue up 5.15% year on year to $89.4 million. The company also expects next quarter's revenue to be around $91 million, roughly in line with analysts' estimates. Fiverr made a GAAP profit of $227 thousand, improving from its loss of $41.9 million in the same quarter last year.
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Fiverr (FVRR) Q2 FY2023 Highlights:
- Revenue: $89.4 million vs analyst estimates of $89.3 million (small beat)
- EPS (non-GAAP): $0.49 vs analyst estimates of $0.37 (31% beat)
- Revenue Guidance for Q3 2023 is $91 million at the midpoint, roughly in line with what analysts were expecting
- The company reconfirmed revenue guidance for the full year of $361.5 million at the midpoint
- Free Cash Flow of $18.4 million, up 39.4% from the previous quarter
- Gross Margin (GAAP): 82.5%, up from 79.4% in the same quarter last year
- Active Buyers: 4.2 million, in line with the same period year ago
“We continue to push forward towards executing our long-term strategy and are excited about our recent product launches that we believe will create a step function change in how businesses can engage with freelancers,” 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.
Fiverr's revenue growth over the last three years has been impressive, averaging 40.3% annually. This quarter, Fiverr reported mediocre 5.15% year-on-year revenue growth, roughly in line with what analysts were expecting.
Guidance for the next quarter indicates Fiverr is expecting revenue to grow 10.2% year on year to $91 million, in line with the 11.1% year-on-year increase it recorded in the same quarter last year. Ahead of the earnings results, analysts covering the company were projecting sales to grow 12.4% over the next 12 months.
While most things went back to how they were before the pandemic, a few consumer habits fundamentally changed. One founder-led company is benefiting massively from this shift and is set to beat the market for years to come. The business has grown astonishingly fast, with 40%+ free cash flow margins, and its fundamentals are undoubtedly best-in-class. Still, its total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.
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.
Over the last two years, Fiverr's active buyers, a key performance metric for the company, grew 9.81% annually to 4.2 million. This is decent growth for a consumer internet company.
Key Takeaways from Fiverr's Q2 Results
Sporting a market capitalization of $1.08 billion, Fiverr is among smaller companies, but its more than $353.7 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.
While revenue growth was slow and active buyers were flat year on year, it was good to see Fiverr's unit economics move in the right direction. Overall, the results were ok, showing progress towards profitability. The stock is up 1.65% after reporting and currently trades at $29 per share.
So should you invest in Fiverr right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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The author has no position in any of the stocks mentioned in this report.