Fiverr (FVRR)

Online freelance marketplace Fiverr (NYSE:FVRR) announced better-than-expected revenue in Q1 CY2025, with sales up 14.6% year on year to $107.2 million. Guidance for next quarter’s revenue was better than expected at $107 million at the midpoint, 0.7% above analysts’ estimates. Its non-GAAP profit of $0.64 per share was 8% 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 sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Fiverr’s sales grew at a mediocre 8.6% compounded annual growth rate over the last three years. 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 reported year-on-year revenue growth of 14.6%, and its $107.2 million of revenue exceeded Wall Street’s estimates by 1%. Company management is currently guiding for a 13% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 8.7% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and indicates its newer products and services will not lead to better top-line performance yet. 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 6.7% annually to 3.5 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 Q1, Fiverr’s active buyers once again decreased by 500,000, 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 17.5%. 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 $30.62. It grew by 31% 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 82.2% gross margin over the last two years. That means Fiverr only paid its providers $17.76 for every $100 in revenue.

Fiverr’s gross profit margin came in at 81% this quarter, marking a 2.5 percentage point decrease from 83.5% in the same quarter last year. Fiverr’s full-year margin has also been trending down over the past 12 months, decreasing by 1.8 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs.

Unlike enterprise software that’s typically sold by dedicated sales teams, consumer internet businesses like Fiverr grow from a combination of product virality, paid advertisement, and incentives.

It’s expensive for Fiverr to acquire new users as the company has spent 53.6% 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.

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 18.3%. 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 10.5 percentage points over the last few years, as its sales growth gave it operating leverage.

In Q1, Fiverr generated an EBITDA profit margin of 18.1%, up 1 percentage points year on year. The increase was encouraging, and because its gross margin actually decreased, we can assume it was more efficient because its operating expenses like marketing, R&D, and administrative overhead grew slower than its revenue.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Fiverr’s EPS grew at an astounding 51.8% compounded annual growth rate over the last three years, higher than its 8.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

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 10.5 percentage points over the last three years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, Fiverr reported EPS at $0.64, up from $0.52 in the same quarter last year. This print beat analysts’ estimates by 8%. Over the next 12 months, Wall Street expects Fiverr’s full-year EPS of $2.50 to grow 2.7%.

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% over the last two years.

Taking a step back, we can see that Fiverr’s margin expanded by 9.7 percentage points over the last few years. This is encouraging because it gives the company more optionality.

Fiverr’s free cash flow clocked in at $27.36 million in Q1, equivalent to a 25.5% margin. This result was good as its margin was 3.3 percentage points higher than in the same quarter last year, building on its favorable historical trend.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

Fiverr is a well-capitalized company with $502.1 million of cash and $463.1 million of debt on its balance sheet. This $38.99 million net cash position is 4.1% 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.

Revenue, EBITDA, and EPS all beat in the quarter. It was also encouraging to see Fiverr’s EBITDA guidance for next quarter beat analysts’ expectations. We were also glad its revenue guidance for next quarter slightly exceeded Wall Street’s estimates. On the other hand, its number of active buyers fell short of Wall Street’s estimates. Overall, this was a solid quarter. The stock traded up 2.7% to $27.50 immediately following the results.

Updated: May 22, 2025 at 10:08 PM EDT

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Fiverr, you should also grasp the company’s longer-term business quality and valuation.

We think Fiverr is a solid business. Although its revenue growth was mediocre over the last three years, its EPS growth over the last three years has been fantastic. And while its active buyers have declined, its top-tier ARPU growth shows the increasing value of its products.

Fiverr’s EV/EBITDA ratio based on the next 12 months is 14.1x. Looking at the consumer internet landscape right now, Fiverr trades at a pretty interesting price. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $36.44 on the company (compared to the current share price of $32.36), implying they see 12.6% upside in buying Fiverr in the short term.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

To get the best start with StockStory, check out our most recent stock picks, and then sign up for our earnings alerts by adding companies to your watchlist. We typically have quarterly earnings results analyzed within seconds of the data being released, giving investors the chance to react before the market has fully absorbed the information. This is especially true for companies reporting pre-market.