Fiverr Announces Second Quarter 2021 Results

Rhea-AI Summary

Fiverr International Ltd. (NYSE: FVRR) reported a 60% year-over-year revenue growth in Q2 2021, totaling $75.3 million. Active buyers increased by 43% to 4 million, and spending per buyer rose 23% to $226. The company achieved a GAAP gross margin of 83.4% and a non-GAAP net income of $7.9 million. However, due to evolving post-COVID behaviors, Fiverr expects modest growth in new customer cohorts and has adjusted its Q3 2021 revenue outlook to $68.0-$72.0 million with a 30-38% growth forecast.

Positive

• Revenue growth of 60% y/y to $75.3 million.
• Active buyers increased by 43% to 4 million.
• Spend per buyer rose 23% to $226.
• GAAP gross margin improved to 83.4%.
• Non-GAAP net income increased to $7.9 million.

Negative

• GAAP net loss of $13.3 million compared to previous year.
• Expectations of reduced online activity affecting growth.

Fiverr International Ltd. (NYSE: FVRR), the company that is changing how the world works together, today reported financial results for the second quarter of 2021. Complete operating results and management commentary can be found in the Company’s shareholder letter which is posted to its investor relations website at investors.fiverr.com.

“Fiverr delivered another great quarter as we saw robust revenue growth of 60% y/y driven by strong active buyer growth as businesses continue turning to Fiverr to access digital service providers,” said Micha Kaufman, Fiverr’s Founder and CEO, “We are accelerating the pace of investments to make Fiverr into a powerhouse that enables more buyers and sellers to participate in the digital service economy.”

Ofer Katz, Fiverr’s President and CFO, added, “Fiverr continues to deliver strong results across all metrics as we continue expanding market share and executing on our long-term strategic initiatives. Our business is well positioned to successfully navigate the uncertain environment.”

Second Quarter 2021 Financial Highlights

• Revenue in the second quarter of 2021 was $75.3 million, an increase of 60% year over year.
• Active buyers as of June 30, 2021 grew to 4.0 million, compared to 2.8 million as of June 30, 2020, an increase of 43% year over year.
• Spend per buyer as of June 30, 2021 reached $226, compared to $184 as of June 30, 2020, an increase of 23% year over year.
• Take rate for the quarter ended June 30, 2021 was 27.8%, up from 27.0% for the quarter ended June 30, 2020, an increase of 80 basis points year over year.
• GAAP gross margin in the second quarter of 2021 was 83.4%, an increase of 30 basis points from 83.1% in the second quarter of 2020. Non-GAAP gross margin for both the second quarter of 2021 and 2020 was 84.4%.
• GAAP net loss in the second quarter of 2021 was ($13.3) million, or ($0.37) basic and diluted net loss per share, compared to ($0.1) million, or less than ($0.01) basic and diluted net loss per share, in the second quarter of 2020. Non-GAAP net income in the second quarter of 2021 was $7.9 million, or $0.22 basic net income per share and $0.19 diluted net income per share, compared to $3.6 million, or $0.11 basic net income per share and $0.10 diluted net income per share, in the second quarter of 2020.
• Adjusted EBITDA¹ in the second quarter of 2021 improved to $7.4 million, compared to $3.1 million in the second quarter of 2020. Adjusted EBITDA margin was 9.8% in the second quarter of 2021, an improvement of 310 basis points from 6.7% in the second quarter of 2020.

Financial Outlook

Our Q3’21 outlook and updated full year 2021 guidance reflects the new post-COVID effect we saw in recent weeks. As COVID restrictions are lifted in many parts of the world, people are spending more time out of home and less time on screens. The reduced online activity translates into more modest new customer cohorts and less activity for older cohorts. We are providing the following guidance accordingly. Given the uncertainty of the ongoing impact and unprecedented conditions surrounding the COVID-19 pandemic on economies globally, we will provide investors with updated business trends as they evolve.

	Q3 2021	FY 2021
Revenue	$68.0-$72.0 million	$280.0-$288.0 million
Year over year growth	30-38%	48-52%
Adjusted EBITDA	$2.5-$3.5 million	$12.0-$14.0 million

¹Adjusted EBITDA is a non-GAAP financial measure. See “Key Performance Metrics and Non-GAAP Financial Measure” for additional information regarding this and other non-GAAP metrics used in this release.

Conference Call and Webcast Details

Fiverr will host a conference call to discuss its financial results on Thursday, August 5, 2021, at 8:30 a.m. Eastern Time. A live webcast of the call can be accessed from Fiverr’s Investor Relations website. An archived version will be available on the website after the call. Investors and analysts can participate in the conference call by dialing (866) 360-3590, or (412) 317-5278 for callers outside the United States, and mention the passcode, “Fiverr.” A telephonic replay of the conference call will be available until Thursday, August 12, 2021, beginning one hour after the end of the conference call. To listen to the replay please dial (877) 344-7529, or (412) 317-0088 for callers outside the United States, and enter replay code 10157464.

About Fiverr

Fiverr’s mission is to change how the world works together. Since 2010, the Fiverr platform has been at the forefront of the future of work connecting businesses of all sizes with skilled freelancers offering digital services in more than 500 categories, across 9 verticals including graphic design, digital marketing, programming, video and animation. In the twelve months ended June 30, 2021, 4.0 million customers bought a wide range of services from freelancers across more than 160 countries. We invite you to become part of the future of work by visiting us at fiverr.com, read our blog and follow us on Facebook, Twitter and Instagram.

CONSOLIDATED BALANCE SHEETS
(in thousands)
		June 30,				December 31,
		2021				2020
		(Unaudited)				(Audited)
Assets
Current assets:
Cash and cash equivalents		$	146,722			$	268,030
Marketable securities			166,117				129,372
User funds			121,613				97,984
Bank deposits			129,000				90,000
Restricted deposit			346				346
Other receivables			7,667				5,418
Total current assets			571,465				591,150
Marketable securities			274,863				228,048
Property and equipment, net			6,367				6,265
Operating lease right of use asset			14,136				15,611
Intangible assets, net			9,767				5,884
Goodwill			15,900				11,240
Restricted deposit			2,589				2,589
Other non-current assets			528				415
Total assets		$	895,615			$	861,202
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables		$	3,962			$	3,622
User accounts			113,723				92,027
Deferred revenue			8,375				5,957
Other account payables and accrued expenses			43,591				40,396
Operating lease liabilities, net			3,340				3,307
Current maturities of long-term loan			507				560
Total current liabilities			173,498				145,869
Long-term liabilities:
Convertible notes			361,923				352,034
Operating lease liabilities			12,096				13,861
Long-term loan and other non-current liabilities			2,348				4,035
Total long-term liabilities			376,367				369,930
Total liabilities		$	549,865			$	515,799
Shareholders' equity:
Share capital and additional paid-in capital			549,372				517,444
Accumulated deficit			(203,716	)			(172,573	)
Accumulated other comprehensive income			94				532
Total shareholders' equity			345,750				345,403
Total liabilities and shareholders' equity		$	895,615			$	861,202

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(Unaudited)								(Unaudited)
Revenue		$	75,263			$	47,130			$	143,583			$	81,280
Cost of revenue			12,528				7,957				24,074				14,777
Gross profit			62,735				39,173				119,509				66,503
Operating expenses:
Research and development			20,106				10,533				36,979				20,507
Sales and marketing			38,184				23,207				80,823				41,428
General and administrative			12,789				6,031				23,876				11,621
Total operating expenses			71,079				39,771				141,678				73,556
Operating loss			(8,344	)			(598	)			(22,169	)			(7,053	)
Financial income (expenses), net			(4,944	)			491				(8,918	)			822
Loss before income taxes			(13,288	)			(107	)			(31,087	)			(6,231	)
Income taxes			(11	)			(17	)			(56	)			(48	)
Net loss attributable to ordinary shareholders		$	(13,299	)		$	(124	)		$	(31,143	)		$	(6,279	)
Basic and diluted net loss per share attributable to ordinary shareholders		$	(0.37	)		(*)				$	(0.87	)		$	(0.19	)
Basic and diluted weighted average ordinary shares			36,338,172				33,172,593				35,988,608				32,484,425
* Represents amounts less than 0.01

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Three Months Ended							Six Months Ended
		June 30,							June 30,
		2021			2020				2021			2020
		(Unaudited)							(Unaudited)
Operating Activities
Net loss		(13,299	)		(124	)			(31,143	)		(6,279	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,373			1,016				2,691			1,981
Amortization of discount of marketable securities		1,658			(66	)			3,481			(337	)
Amortization of discount and issuance costs of convertible notes		4,973			-				9,877			-
Shared-based compensation		13,174			3,062				23,657			5,824
Net income from exchange rate fluctuations		393			19				302			213
Changes in assets and liabilities:
User funds		(1,286	)		(20,737	)			(23,629	)		(28,665	)
Operating lease ROU assets and liabilities, net		272			-				(257	)		-
Other receivables		(559	)		(335	)			(1,267	)		113
Trade payables		(837	)		2,764				253			2,180
Deferred revenue		121			796				2,395			1,806
User accounts		1,403			19,782				21,696			26,920
Other account payables and accrued expenses		8,630			857				12,736			3,582
Payment of contingent consideration		(507	)		(1,960	)			(507	)		(1,960	)
Non-current liabilities		6			164				(235	)		162
Net cash provided by operating activities		15,515			5,238				20,050			5,540
Investing Activities
Investment in marketable securities		(40,833	)		(135,036	)			(166,831	)		(171,822	)
Proceeds from sale of marketable securities		39,065			113,451				78,995			150,539
Bank deposits		(39,000	)		(15,000	)			(39,000	)		(15,000	)
Acquisition of business, net of cash acquired		(410	)		-				(9,288	)		-
Purchase of property and equipment		(389	)		(406	)			(700	)		(537	)
Capitalization of internal-use software		(180	)		(166	)			(322	)		(451	)
Other receivables and non-current assets		-			2				-			54
Net cash used in investing activities		(41,747	)		(37,155	)			(137,146	)		(37,217	)
Financing Activities
Proceeds from follow on offering, net		-			130,670				-			130,670
Payment of deferred issuance costs related to follow on offering		(5	)		-				(381	)		-
Payment of convertible notes deferred issuance costs		-			-				(34	)		-
Payment of contingent consideration		(1,105	)		(2,040	)			(1,105	)		(2,040	)
Proceeds from exercise of share options		1,563			2,704				6,351			4,652
Tax withholding in connection with employees' options exercises and vested RSUs		(10,951	)		(16	)			(8,629	)		2,256
Repayment of long-term loan		(139	)		(124	)			(273	)		(244	)
Net cash provided by (used in) financing activities		(10,637	)		131,194				(4,071	)		135,294
Effect of exchange rate fluctuations on cash and cash equivalents		236			55				(141	)		(246	)
Increase (decrease) in cash and cash equivalents		(36,633	)		99,332				(121,308	)		103,371
Cash and cash equivalents at the beginning of period		183,355			28,210				268,030			24,171
Cash and cash equivalents at the end of period		146,722			127,542				146,722			127,542

KEY PERFORMANCE METRICS
		Six Months Ended
		June 30,
		2021			2020
Annual active buyers (in thousands)			3,998			2,792
Annual spend per buyer ($)		$	226		$	184

RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT
(in thousands, except gross margin data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(Unaudited)								(Unaudited)
GAAP gross profit		$	62,735			$	39,173			$	119,509			$	66,503
Add:
Share-based compensation and other			338				87				617				157
Depreciation and amortization			440				499				877				973
Non-GAAP gross profit		$	63,513			$	39,759			$	121,003			$	67,633
Non-GAAP gross margin			84.4	%			84.4	%			84.3	%			83.2	%

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME AND NET INCOME PER SHARE
(in thousands, except share and per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(Unaudited)								(Unaudited)
GAAP net loss attributable to ordinary shareholders		$	(13,299	)		$	(124	)		$	(31,143	)		$	(6,279	)
Add:
Depreciation and amortization		$	1,373			$	1,016			$	2,691			$	1,981
Share-based compensation			13,174				3,062				23,657				5,824
Contingent consideration revaluation, acquisition related costs and other			1,201				(337	)			2,521				(466	)
Convertible notes amortization of discount and issuance costs			4,973				-				9,877				-
Exchange rate loss (income), net			432				-				(23	)			-
Non-GAAP net income		$	7,854			$	3,617			$	7,580			$	1,060
Weighted average number of ordinary shares - basic		$	36,338,172			$	33,172,593			$	35,988,608			$	32,484,425
Non-GAAP basic net income per share attributable to ordinary shareholders			0.22				0.11				0.21				0.03
Weighted average number of ordinary shares - diluted		$	40,921,663			$	36,053,713			$	40,854,045			$	34,715,990
Non-GAAP diluted net income per share attributable to ordinary shareholders		$	0.19			$	0.10			$	0.19			$	0.03

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(in thousands, except adjusted EBITDA margin data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(Unaudited)								(Unaudited)
GAAP net loss		$	(13,299	)		$	(124	)		$	(31,143	)		$	(6,279	)
Add:
Financial expense (income), net		$	4,944			$	(491	)		$	8,918			$	(822	)
Income taxes			11				17				56				48
Depreciation and amortization			1,373				1,016				2,691				1,981
Share-based compensation			13,174				3,062				23,657				5,824
Contingent consideration revaluation, acquisition related costs and other			1,201				(337	)			2,521				(466	)
Adjusted EBITDA		$	7,404			$	3,143			$	6,700			$	286
Adjusted EBITDA margin			9.8	%			6.7	%			4.7	%			0.4	%

RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES
(in thousands)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(Unaudited)								(Unaudited)
GAAP research and development		$	20,106			$	10,533			$	36,979			$	20,507
Less:
Share-based compensation			4,909				1,202				9,011				2,244
Depreciation and amortization			190				130				377				246
Non-GAAP research and development		$	15,007			$	9,201			$	27,591			$	18,017
GAAP sales and marketing		$	38,184			$	23,207			$	80,823			$	41,428
Less:
Share-based compensation			3,457				552				6,045				1,079
Depreciation and amortization			686				338				1,325				668
Contingent consideration revaluation, acquisition related costs and other			398				-				695				121
Non-GAAP sales and marketing		$	33,643			$	22,317			$	72,758			$	39,560
GAAP general and administrative		$	12,789			$	6,031			$	23,876			$	11,621
Less:
Share-based compensation			4,470				1,221				7,984				2,344
Depreciation and amortization			57				49				112				94
Contingent consideration revaluation, acquisition related costs and other			803				(337	)			1,826				(587	)
Non-GAAP general and administrative		$	7,459			$	5,098			$	13,954			$	9,770

Key Performance Metrics and Non-GAAP Financial Measures

This release includes certain key performance metrics and financial measures not based on GAAP, including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP operating expenses, Non-GAAP net income (loss) and Non-GAAP net income (loss) per share as well as operating metrics, including GMV, spend per buyer, active buyers and take rate. Some amounts in this release may not total due to rounding. All percentages have been calculated using unrounded amounts.

We define GMV or Gross Merchandise Value as the total value of transactions ordered through our platform, excluding value added tax, goods and services tax, service chargebacks and refunds. We define active buyers on any given date as buyers who have ordered a Gig or other services on our platform within the last 12-month period, irrespective of cancellations. Spend per buyer on any given date is calculated by dividing our GMV within the last 12-month period by the number of active buyers as of such date. Take rate is revenue for any such period divided by GMV for the same period.

Management and our board of directors use these metrics as supplemental measures of our performance that is not required by, or presented in accordance with GAAP because they assist us in comparing our operating performance on a consistent basis, as they remove the impact of items not directly resulting from our core operations. We also use these metrics for planning purposes, including the preparation of our internal annual operating budget and financial projections, to evaluate the performance and effectiveness of our strategic initiatives and to evaluate our capacity to expand our business.

Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP operating expenses, Non-GAAP net income (loss) and Non-GAAP net income (loss) per share as well as operating metrics, including GMV, spend per buyer, active buyers and take rate should not be considered in isolation, as an alternative to, or superior to net loss, revenue, cash flows or other performance measure derived in accordance with GAAP. These metrics are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Management believes that the presentation of non-GAAP metrics is an appropriate measure of operating performance because they eliminate the impact of expenses that do not relate directly to the performance of our underlying business.

These non-GAAP metrics should not be construed as an inference that our future results will be unaffected by unusual or other items. Additionally, Adjusted EBITDA and other non-GAAP metrics used herein are not intended to be a measure of free cash flow for management's discretionary use, as they do not reflect our tax payments and certain other cash costs that may recur in the future, including, among other things, cash requirements for costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA and other non-GAAP metrics as supplemental measures of our performance. Our measure of Adjusted EBITDA and other non-GAAP metrics used herein is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

See the tables above regarding reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures.

We are not able to provide a reconciliation of non-GAAP financial measures guidance for the third quarter of 2021, and the fiscal year ending December 31, 2021 to the comparable GAAP measures, because certain items that are excluded from non-GAAP financial measures cannot be reasonably predicted or are not in our control. In particular, we are unable to forecast the timing or magnitude of share based compensation, amortization of intangible assets, income or loss on revaluation of contingent consideration, convertible notes amortization of discount and issuance costs and exchange rate income or loss as applicable without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, GAAP measures in the future.

Forward Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance and operational performance for the third quarter of 2021 and the fiscal year ending December 31, 2021, our expected future Adjusted EBITDA profitability, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: our ability to successfully implement our business plan during a global economic downturn caused by the COVID-19 pandemic that may impact the demand for our services or have a material adverse impact on our and our business partners’ financial condition and results of operations; our ability to attract and retain a large community of buyers and freelancers; our ability to achieve profitability; our ability to maintain and enhance our brand; our dependence on the continued growth and expansion of the market for freelancers and the services they offer; our ability to maintain user engagement on our website and to maintain and improve the quality of our platform; our dependence on the interoperability of our platform with mobile operating systems that we do not control; our ability and the ability of third parties to protect our users’ personal or other data from a security breach and to comply with laws and regulations relating to consumer data privacy and data protection; our ability to detect errors, defects or disruptions in our platform; our ability to comply with the terms of underlying licenses of open source software components on our platform; our ability to expand into markets outside the United States; our ability to achieve desired operating margins; our compliance with a wide variety of U.S. and international laws and regulations; our ability to protect our intellectual property rights and to successfully halt the operations of copycat websites or misappropriation of data; our reliance on Amazon Web Services; our ability to mitigate payment and fraud risks; our dependence on relationships with payment partners, banks and disbursement partners; our dependence on our senior management and our ability to attract new talent; and the other important factors discussed under the caption “Risk Factors” in our annual report on Form 20-F filed with the U.S. Securities and Exchange Commission (“SEC”) on February 18, 2021, as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. In addition, the forward-looking statements made in this release relate only to events or information as of the date on which the statements are made in this release. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804006198/en/

FAQ

What were Fiverr's Q2 2021 revenue figures?

Fiverr reported Q2 2021 revenue of $75.3 million, marking a 60% year-over-year increase.

How many active buyers did Fiverr have as of June 30, 2021?

As of June 30, 2021, Fiverr had 4 million active buyers, up 43% from the previous year.

What is Fiverr's guidance for Q3 2021 revenue?

Fiverr's Q3 2021 revenue guidance is between $68.0 million and $72.0 million.

How did Fiverr's net income change in Q2 2021?

Fiverr reported a non-GAAP net income of $7.9 million in Q2 2021, an increase from $3.6 million in Q2 2020.

What factors are influencing Fiverr's future growth?

Fiverr is adapting to post-COVID behaviors, expecting modest new customer cohorts and changes in online activity.