Fiverr's (NYSE:FVRR) Q1 Earnings Results: Revenue In Line With Expectations, Next Quarter Growth Looks Optimistic

Radek Strnad /
2023/05/11 3:26 am EDT

Online freelance marketplace Fiverr (NYSE: FVRR) reported results in line with analyst expectations in Q1 FY2023 quarter, with revenue up 1.47% year on year to $88 million. The company expects that next quarter's revenue would be around $89 million, which is the midpoint of the guidance range. That was roughly in line with analyst expectations. Fiverr made a GAAP loss of $4.27 million, improving on its loss of $17 million, in the same quarter last year.

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Fiverr (FVRR) Q1 FY2023 Highlights:

  • Revenue: $88 million vs analyst estimates of $87.7 million (small beat)
  • EPS (non-GAAP): $0.36 vs analyst estimates of $0.24 (49% beat)
  • Revenue guidance for Q2 2023 is $89 million at the midpoint, above analyst estimates of $88.4 million
  • The company reconfirmed revenue guidance for the full year, at $360 million at the midpoint
  • Free cash flow of $13.2 million, up 38.1% from previous quarter
  • Gross Margin (GAAP): 82.2%, up from 80.4% same quarter last year
  • Annual Active Buyers: 4.3 million, up 100 thousand year on year

“We started off the year with strong execution, which has successfully helped us navigate through the current macro environment while we continue to make progress towards our long-term vision for the future of work,“ 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 impressive, averaging 46.7% annually. This quarter, Fiverr reported a rather lacklustre 1.47% year on year revenue growth, in line with analysts' expectations.

Fiverr Total Revenue

Guidance for the next quarter indicates Fiverr is expecting revenue to grow 4.69% year on year to $89 million, slowing down from the 13% 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 8.82% over the next twelve months.

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Usage Growth

As a gig economy marketplace, Fiverr generates revenue growth by the volume of services its users order (e.g. rides, deliveries, freelance jobs) and how much commission it earns from each service unit provided.

Over the last two years the number of Fiverr's active buyers, a key usage metric for the company, grew 15.2% annually to 4.3 million. This is a solid growth for a consumer internet company.

Fiverr Annual Active Buyers

In Q1 the company added 100 thousand active buyers, translating to a 2.38% growth year on year.

Key Takeaways from Fiverr's Q1 Results

With a market capitalization of $1.08 billion Fiverr is among smaller companies, but its more than $329 million in cash and positive free cash flow over the last twelve months give us confidence that Fiverr has the resources it needs to pursue a high growth business strategy.

It was good to see Fiverr provide next quarter revenue outlook exceeding analysts’ expectations. That feature of these results really stood out as a positive. On the other hand, it was less good to see that the revenue growth was quite weak. Overall, it seems to us that this was a complicated quarter for Fiverr. The company is flat on the results and currently trades at $29.52 per share.

Should you invest in Fiverr 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.