Fiverr's (NYSE:FVRR) Q4 Earnings Results: Revenue In Line With Expectations But Full Year Sales Guidance Misses Expectations

Anthony Lee /
2023/02/22 1:58 am EST

Online freelance marketplace Fiverr (NYSE: FVRR) reported results in line with analyst expectations in Q4 FY2022 quarter, with revenue up 4.23% year on year to $83.1 million. On the other hand, guidance for the full year missed analyst expectations with revenues guided to $357.5 million at the midpoint, or 2.29% below analyst estimates. Fiverr made a GAAP loss of $1.3 million, improving on its loss of $19.5 million, in the same quarter last year.

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Fiverr (FVRR) Q4 FY2022 Highlights:

  • Revenue: $83.1 million vs analyst estimates of $83.5 million (small miss)
  • EPS (non-GAAP): $0.26 vs analyst estimates of $0.18 (47% beat)
  • Revenue guidance for Q1 2023 is $87.5 million at the midpoint, roughly in line with what analysts were expecting
  • Management's revenue guidance for upcoming financial year 2023 is $357.5 million at the midpoint, missing analyst estimates by 2.29% and predicting 5.97% growth (vs 13.8% in FY2022)
  • Free cash flow of $9.54 million, up 79.6% from previous quarter
  • Gross Margin (GAAP): 81%, in line with same quarter last year
  • Annual Active Buyers: 4.3 million, up 100 thousand year on year

“We are proud to deliver a strong finish to a challenging year. With a shift in the macro environment and SMB spending sentiment, we quickly adjusted our business focus to drive efficiency, which is reflected in us delivering the most profitable quarter in the company’s history in terms of Adjusted EBITDA1,” 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 50.2% annually. Unfortunately, the pandemic had a negative impact on Fiverr's revenue growth.

Fiverr Total Revenue

This quarter, Fiverr reported a rather lacklustre 4.23% year on year revenue growth, falling short of Wall St expectations.

Guidance for the next quarter indicates Fiverr is expecting revenue to grow 0.94% year on year to $87.5 million, slowing down from the 26.9% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $357.5 million at the midpoint, growing 5.97% compared to 13.8% increase in FY2022.

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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 21.4% annually to 4.3 million users. This is a strong growth for a consumer internet company.

Fiverr Annual Active Buyers

In Q4 the company added 100 thousand active buyers, translating to a 2.38% growth year on year.

Key Takeaways from Fiverr's Q4 Results

With a market capitalization of $1.4 billion Fiverr is among smaller companies, but its more than $328 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

We struggled to find many strong positives in these results. On the other hand, it was unfortunate to see that the revenue guidance for the full year missed analysts' expectations and the revenue growth was quite weak. Overall, it seems to us that this was a complicated quarter for Fiverr. The company currently trades at $39.34 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.