- Delivered another quarter of strong revenue growth of 42% and
significant progress towards profitability, exceeding prior
guidance
- Active buyer growth accelerated for the third consecutive
quarter, driven by consistent cohort performance and strong trends
in traffic and conversion
- Spend per buyer continued strong growth momentum driven by
quality, repeat, and cross-category purchases and targeted
marketing
- Guidance calls for a strong finish to the year - raising FY19
revenue guidance to over 40% with significant year-over-year
improvement in adjusted EBITDA margin1
Fiverr International Ltd. (NYSE: FVRR), the company that is
changing how the world works together, today reported financial
results for the third quarter ended September 30, 2019. Complete
operating results and management commentary can be found by
accessing the Company’s shareholder letter posted to its investor
relations website at investors.fiverr.com.
“It is gratifying to see another quarter of stellar performance
and rapid growth and that our continued investment in the platform
experience is paying off. Importantly, we are also making great
strides on our path to profitability,” said Fiverr CEO Micha
Kaufman. “Recent strategic initiatives that highlight our multiple
growth levers continue to focus on enhancing our value proposition
to both buyers and sellers globally while simultaneously growing
our addressable market.”
Ofer Katz, Fiverr CFO, added, “The growth of our active buyer
base was driven by continued and consistent cohort behavior,
further gains in performance marketing efficiency, and our latest
product and technology enhancements. The strong growth in spend per
buyer highlights our continued success in moving upmarket, and we
continued to expand our industry-leading take rate. We look forward
to ending 2019 on a strong note.”
Key Third Quarter 2019 Financial Results
- Revenue in the third quarter of 2019 was $27.9 million, an
increase of 42% year over year.
- Active buyers as of September 30, 2019 were 2.3 million,
compared to 2.0 million as of September 30, 2018, an increase of
16% year over year.
- Spend per buyer as of September 30, 2019 was $163, compared to
$141 as of September 30, 2018, an increase of 15% year over
year.
- Take rate for the twelve months ended September 30, 2019 was
26.6%, compared to 25.2% for the twelve months ended September 30,
2018, an increase of 140 basis points year over year.
- GAAP gross margin in the third quarter of 2019 was 79.0%, a
decrease of 170 basis points from 80.7% in the third quarter of
2018. Non-GAAP gross margin in the third quarter of 2019 was 80.8%,
a decrease of 140 basis points from 82.2% in the third quarter of
2018.
- GAAP net loss in the third quarter of 2019 was ($8.4) million,
or ($0.26) per share, compared to ($7.2) million, or ($1.10) per
share, in the third quarter of 2018. Non-GAAP net loss in the third
quarter of 2019 was ($4.0) million, or ($0.12) per share, compared
to ($3.8) million, or ($0.17) per share, in the third quarter of
2018.
- Adjusted EBITDA in the third quarter of 2019 was ($4.4)
million, compared to ($3.9) million in the third quarter of 2018.
Adjusted EBITDA margin was (15.6%) in the third quarter of 2019, an
improvement of 430 basis points from (19.9%) in the third quarter
of 2018.
Recent Business Highlights
- Launched the first four industry stores on our platform:
Gaming, E-commerce, Architecture and Politics, enabling us to
further expand our catalog and deepen our relevance and market
share among larger businesses.
- Fiverr Studios is gaining early traction, with hundreds of
freelancers now offering Studios Gigs® that are, on average, seven
times larger than an average Gig on Fiverr.
- Continued strong growth momentum in Germany, with traffic to
fiverr.de doubling from Q2 to Q3, driven by the successful
execution of, and response to, our summer brand campaign in
Berlin.
Financial Outlook
Based on our results for the first nine months of 2019 and the
strong momentum we see across our platform, we are raising our
revenue guidance for the year to 40-41% with continued progress
towards profitability.
Q4 2019
FY 2019
Revenue
$28.0 - $29.0 million
$105.5 -$106.5 million
Year over year growth
35% - 40%
40% - 41%
Adjusted EBITDA
($4.3) - ($3.5) million
($19.0) - ($18.2) million
1
Adjusted 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’s management will host a conference call to discuss its
financial results on Wednesday, November 13, 2019 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) 270-1533, or
(412) 317-0797 for callers outside the United States, and
mentioning the passcode, “Fiverr.” A telephonic replay of the
conference call will be available until Wednesday, November 20,
2019, 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 passcode
10135686.
About Fiverr
Fiverr's mission is to change how the world works together. The
Fiverr platform connects businesses of all sizes with freelancers
offering digital services in more than 250 categories, across 8
verticals including graphic design, digital marketing, programming,
video and animation. Since inception, the platform has served over
5.5 million businesses and has facilitated over 50 million
transactions. Fiverr's global community of freelancers spans across
more than 160 countries. We invite you to visit us at fiverr.com,
read our blog and follow us on Facebook, Twitter and Instagram.
CONSOLIDATED BALANCED
SHEETS
(in thousands)
September 30,
December 31,
2019
2018
(Unaudited) (Audited) Assets Current assets:
Cash and cash equivalents
$
22,741
$
55,955
User funds
54,700
39,736
Bank deposits
20,000
-
Restricted deposit
310
327
Marketable securities
109,945
-
Other receivables
2,889
776
Total current assets
210,585
96,794
Property and equipment, net
5,418
5,143
Intangible assets, net
7,396
4,065
Goodwill
11,240
1,381
Restricted deposit
3,182
3,191
Other non-current assets
493
456
Total assets
$
238,314
$
111,030
Liabilities and Shareholders' Equity Current
liabilities: Trade payables
$
1,995
$
3,364
User accounts
54,700
39,736
Other account payables and accrued expenses
22,097
10,231
Current maturities of long-term loan
496
445
Total current liabilities
79,288
53,776
Long-term loan and other non-current liabilities
5,389
3,280
Total liabilities
84,677
57,056
Shareholders' equity: Share capital and additional
paid-in capital
303,664
178,164
Accumulated deficit
(150,324
)
(123,592
)
Accumulated other comprehensive income (loss)
297
(598
)
Total shareholders' equity
153,637
53,974
Total liabilities and shareholders' equity
$
238,314
$
111,030
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except loss per
share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2019
2018
2019
2018
(Unaudited) (Unaudited) Revenue
$
27,867
$
19,653
$
77,542
$
54,798
Cost of revenue
5,863
3,792
16,104
11,603
Gross profit
22,004
15,861
61,438
43,195
Operating expenses: Research and development
9,088
6,611
25,161
19,180
Sales and marketing
15,859
12,651
47,087
38,039
General and administrative
5,894
3,923
15,871
16,363
Total operating expenses
30,841
23,185
88,119
73,582
Operating loss
(8,837
)
(7,324
)
(26,681
)
(30,387
)
Financial income, net
483
84
687
209
Loss before income taxes
(8,354
)
(7,240
)
(25,994
)
(30,178
)
Income taxes
(80
)
-
(106
)
-
Net loss
(8,434
)
(7,240
)
(26,100
)
(30,178
)
Deemed dividend to protected ordinary shareholders
-
-
(632
)
-
Net loss attributable to ordinary shareholders
(8,434
)
(7,240
)
(26,732
)
(30,178
)
Basic and diluted net loss per share attributable to ordinary
shareholders
$
(0.26
)
$
(1.10
)
$
(1.61
)
$
(4.63
)
Basic and diluted weighted average ordinary shares
31,867
6,606
16,647
6,524
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2019
2018
2019
2018
(Unaudited) (Unaudited) Operating Activities
Net loss
$
(8,434
)
$
(7,240
)
$
(26,100
)
$
(30,178
)
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization
961
586
2,678
1,641
Stock-based compensation
2,600
2,737
6,562
10,355
Net gain from exchange rate fluctuations
69
75
132
24
Changes in assets and liabilities: User funds
(4,697
)
-
(14,964
)
-
Other receivables
(60
)
44
(1,351
)
(689
)
Trade payables
(2,386
)
1,067
(1,510
)
1,019
User accounts
4,697
1,977
14,964
8,495
Other account payables and accrued expenses
4,956
(1,319
)
9,049
2,017
Amortization of discount on marketable securities
(558
)
-
(558
)
-
Non-current liabilities
167
10
62
194
Net cash used in operating activities
(2,685
)
(2,063
)
(11,036
)
(7,122
)
Investing Activities Acquisition of business, net of
cash acquired
-
-
(9,967
)
(2,676
)
Purchase of property and equipment
(376
)
(235
)
(835
)
(607
)
Capitalization of internal-use software
(199
)
(190
)
(523
)
(646
)
Other receivables and non-current assets
111
143
(11
)
(115
)
Bank deposits
-
-
(20,000
)
-
Restricted deposit
-
-
-
(60
)
Investment in marketable securities
(34,961
)
-
(144,352
)
-
Proceeds from sale of marketable securities
34,997
-
34,997
-
Net cash used in investing activities
(428
)
(282
)
(140,691
)
(4,104
)
Financing Activities Proceeds from exercise of
options
32
520
573
670
Proceeds from initial public offering, net
(3,155
)
-
113,802
-
Proceeds from issuance of protected ordinary shares, net
-
-
4,340
-
Repayment of long-term loan
(119
)
(111
)
(347
)
(327
)
Net cash provided by (used in) financing activities
(3,242
)
409
118,368
343
Effect of exchange rate fluctuations on cash and cash
equivalents
(16
)
(46
)
145
(167
)
Decrease in cash and cash equivalents
(6,371
)
(1,982
)
(33,214
)
(11,050
)
Cash and cash equivalents at the beginning of period
29,112
18,798
55,955
27,866
Cash and cash equivalents at the end of period
$
22,741
$
16,816
$
22,741
$
16,816
KEY PERFORMANCE
METRICS
(Unaudited)
Twelve Months Ended September 30,
2019
2018
(Unaudited) Annual active buyers (in thousands)
2,265
1,954
Annual spend per buyer ($)
$
163
$
141
RECONCILIATION OF GAAP TO
NON-GAAP GROSS PROFIT
(in thousands, except gross
margin data)
Three Months Ended Nine Months Ended
September 30, September 30,
2019
2018
2019
2018
(Unaudited) (Unaudited) GAAP gross profit
$
22,004
$
15,861
$
61,438
$
43,195
Add: Share-based compensation
43
2
93
7
Depreciation and amortization
479
282
1,335
811
Non-GAAP gross profit
$
22,526
$
16,145
$
62,866
$
44,013
Non-GAAP gross margin
80.8
%
82.2
%
81.1
%
80.3
%
RECONCILIATION OF GAAP TO
NON-GAAP NET LOSS AND NET LOSS PER SHARE
(in thousands, except loss per
share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2019
2018
2019
2018
(Unaudited) (Unaudited) GAAP net loss attributable to
ordinary shareholders
$
(8,434
)
$
(7,240
)
$
(26,732
)
$
(30,178
)
Add: Deemed dividend to protected ordinary shareholders
-
-
632
-
Depreciation and amortization
961
586
2,678
1,641
Share-based compensation
2,600
2,737
6,562
10,355
Other initial public offering related expenses
-
-
416
-
Contingent consideration revaluation and acquisition related costs
918
95
2,364
1,468
Non-GAAP net loss
(3,955
)
(3,822
)
(14,080
)
(16,714
)
GAAP weighted average number of ordinary shares outstanding - basic
and diluted
31,867
6,606
16,647
6,524
Add: Additional weighted average shares giving effect to exchange
of protected ordinary shares at the beginning of the period
-
16,144
11,426
16,138
Non-GAAP basic and diluted weighted average ordinary shares
31,867
22,750
28,073
22,662
Non-GAAP basic and diluted net loss per share attributable to
ordinary shareholders
$
(0.12
)
$
(0.17
)
$
(0.50
)
$
(0.74
)
Note: Non-GAAP basic and diluted net loss per ordinary share for
the nine months ended September 30, 2019 were calculated based on
ordinary shares outstanding after accounting for the exchange of
Fiverr's then outstanding protected ordinary shares into 18.7
million ordinary shares as though such event had occurred at the
beginning of the periods. In the same calculation for the three and
nine months ended September 30, 2018, we accounted for the exchange
of Fiverr’s then outstanding protected ordinary shares into 16.1
million ordinary shares at the beginning of the periods.
RECONCILIATION OF GAAP NET
LOSS TO ADJUSTED EBITDA
(in thousands, except adjusted
EBITDA margin data)
Three Months Ended Nine Months Ended
September 30, September 30,
2019
2018
2019
2018
(Unaudited) (Unaudited) GAAP net loss
$
(8,434
)
$
(7,240
)
$
(26,100
)
$
(30,178
)
Add: Financial income, net
(483
)
(84
)
(687
)
(209
)
Income taxes
80
-
106
-
Depreciation and amortization
961
586
2,678
1,641
Share-based compensation
2,600
2,737
6,562
10,355
Other initial public offering related expenses
-
-
416
-
Contingent consideration revaluation and acquisition related costs
918
95
2,364
1,468
Adjusted EBITDA
$
(4,358
)
$
(3,906
)
$
(14,661
)
$
(16,923
)
Adjusted EBITDA margin
(15.6
%)
(19.9
%)
(18.9
%)
(30.9
%)
RECONCILIATION OF GAAP TO
NON-GAAP OPERATING EXPENSES
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2019
2018
2019
2018
(Unaudited) (Unaudited) GAAP research and development
$
9,088
$
6,611
$
25,161
$
19,180
Less: Share-based compensation
850
314
2,386
533
Depreciation and amortization
116
113
328
316
Acquisition related costs
12
48
106
702
Non-GAAP research and development
$
8,110
$
6,136
$
22,341
$
17,629
GAAP sales and marketing
$
15,859
$
12,651
$
47,087
$
38,039
Less: Share-based compensation
642
1,217
1,365
1,354
Depreciation and amortization
323
152
887
400
Acquisition related costs
375
47
1,073
701
Non-GAAP sales and marketing
$
14,519
$
11,235
$
43,762
$
35,584
GAAP general and administrative
$
5,894
$
3,923
$
15,871
$
16,363
Less: Share-based compensation
1,065
1,204
2,718
8,461
Depreciation and amortization
43
39
128
114
Other initial public offering related expenses
-
-
416
-
Contingent consideration revaluation and acquisition related costs
531
-
1,185
65
Non-GAAP general and administrative
$
4,255
$
2,680
$
11,424
$
7,723
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 loss and Non-GAAP
net loss per share as well as operating metrics, including GMV,
spend per buyer, active buyers and take rate.
We define GMV or Gross Merchandise Value as the total value of
transactions through our platforms, excluding value added tax,
goods and services tax, service chargebacks and refunds. Active
buyers on any given date is defined as buyers who have ordered a
Gig on Fiverr 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
loss and Non-GAAP net 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.
We are not able to provide a reconciliation of Adjusted EBITDA
guidance for the fourth quarter of 2019 or the fiscal year 2019 to
net loss, the comparable GAAP measure, because certain items that
are excluded from Adjusted EBITDA 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, and gain or loss on revaluation of contingent
consideration, as applicable without unreasonable efforts, and
these items could significantly impact, either individually or in
the aggregate, net loss in the future.
See the tables above regarding reconciliations of these non-GAAP
measures to the most directly comparable GAAP measures.
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
fourth quarter of 2019 and the fiscal year ended December 31, 2019,
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 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 final prospectus under Rule
424(b) filed with the U.S. Securities and Exchange Commission
(“SEC”) on June 12, 2019 in connection with our initial public
offering 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/20191113005265/en/
Investor Relations: Jinjin Qian investors@fiverr.com
Press: Siobhan Aalders press@fiverr.com
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