Fiverr (FVRR)

Online freelance marketplace Fiverr (NYSE:FVRR) met Wall Streets revenue expectations in Q3 CY2025, with sales up 8.3% year on year to $107.9 million. On the other hand, next quarter’s revenue guidance of $108.3 million was less impressive, coming in 0.9% below analysts’ estimates. Its non-GAAP profit of $0.84 per share was 22.9% above analysts’ consensus estimates.

Company Overview

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.

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Fiverr’s 8.6% annualized revenue growth over the last three years was mediocre. This wasn’t a great result compared to the rest of the consumer internet sector, but there are still things to like about Fiverr.

This quarter, Fiverr grew its revenue by 8.3% year on year, and its $107.9 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 4.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 6.2% over the next 12 months, a slight deceleration versus the last three years. This projection is underwhelming and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

Buyer Growth

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.

Fiverr struggled with new customer acquisition over the last two years as its active buyers have declined by 9.4% annually to 3.3 million in the latest quarter. This performance isn't ideal because internet usage is secular, meaning there are typically unaddressed market opportunities. If Fiverr wants to accelerate growth, it likely needs to enhance the appeal of its current offerings or innovate with new products.

In Q3, Fiverr’s active buyers once again decreased by 473,000, a 12.5% drop since last year. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t moving the needle for buyers yet.

Revenue Per Buyer

Average revenue per buyer (ARPB) is a critical metric to track because it measures how much the company earns in transaction fees from each buyer. This number also informs us about Fiverr’s take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.

Fiverr’s ARPB growth has been exceptional over the last two years, averaging 21.6%. Although its active buyers shrank during this time, the company’s ability to successfully increase monetization demonstrates its platform’s value for existing buyers.

This quarter, Fiverr’s ARPB clocked in at $32.70. It grew by 23.8% year on year, faster than its active buyers.

A company’s gross profit margin has a significant impact on its ability to exert pricing power, develop new products, and invest in marketing. These factors can determine the winner in a competitive market.

For gig economy businesses like Fiverr, gross profit tells us how much money the company gets to keep after covering the base cost of its products and services, which typically include server hosting, customer support, and payment processing fees. Another cost of revenue could also be insurance to protect against liabilities arising from providing transportation, housing, or freelance work services.

Fiverr’s gross margin is one of the highest in the consumer internet sector, an output of its asset-lite business model and strong pricing power. It also enables the company to fund large investments in product and marketing during periods of rapid growth to achieve higher profits in the future. As you can see below, it averaged an elite 81.8% gross margin over the last two years. Said differently, roughly $81.83 was left to spend on selling, marketing, and R&D for every $100 in revenue.

In Q3, Fiverr produced a 81.7% gross profit margin, in line with the same quarter last year. Zooming out, Fiverr’s full-year margin has been trending down over the past 12 months, decreasing by 1.5 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs.

Consumer internet businesses like Fiverr grow from a combination of product virality, paid advertisement, and incentives (unlike enterprise software products, which are often sold by dedicated sales teams).

It’s expensive for Fiverr to acquire new users as the company has spent 51.5% of its gross profit on sales and marketing expenses over the last year. This inefficiency indicates that Fiverr’s product offering can be easily replicated and that it must continue investing to maintain an acceptable growth trajectory.

Investors regularly analyze operating income to understand a company’s profitability. Similarly, EBITDA is a common profitability metric for consumer internet companies because it excludes various one-time or non-cash expenses, offering a better perspective of the business’s profit potential.

Fiverr has been a well-oiled machine over the last two years. It demonstrated elite profitability for a consumer internet business, boasting an average EBITDA margin of 19.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Fiverr’s EBITDA margin rose by 12.9 percentage points over the last few years, as its sales growth gave it operating leverage.

In Q3, Fiverr generated an EBITDA margin profit margin of 22.4%, up 2.7 percentage points year on year. The increase was encouraging, and because its EBITDA margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Diving into the nuances of Fiverr’s earnings can give us a better understanding of its performance. As we mentioned earlier, Fiverr’s EBITDA margin expanded by 12.9 percentage points over the last three years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Fiverr reported adjusted EPS of $0.84, up from $0.64 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Fiverr’s full-year EPS of $2.81 to shrink by 2.1%.

Although EBITDA is undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Fiverr has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the consumer internet sector, averaging 23.6% over the last two years.

Taking a step back, we can see that Fiverr’s margin expanded by 18.2 percentage points over the last few years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.

Fiverr’s free cash flow clocked in at $29.13 million in Q3, equivalent to a 27% margin. This result was good as its margin was 16.4 percentage points higher than in the same quarter last year, building on its favorable historical trend.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

Fiverr is a well-capitalized company with $712.5 million of cash and $463.6 million of debt on its balance sheet. This $248.9 million net cash position is 31.2% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We were impressed by Fiverr’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its number of buyers declined and its number of active buyers fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock traded up 5% to $22.70 immediately after reporting.

Updated: December 4, 2025 at 9:10 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Fiverr.

Fiverr isn’t a bad business, but we’re not clamoring to buy it here and now. Although its revenue growth was mediocre over the last three years and analysts expect growth to slow over the next 12 months, its rising cash profitability gives it more optionality. We advise investors to be cautious with this one, however, as its active buyers have declined.

Fiverr’s EV/EBITDA ratio based on the next 12 months is 7.4x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $31.90 on the company (compared to the current share price of $21.35).