• Revenue: $99.6 million, up 8% year over year.
• Adjusted EBITDA: $19.7 million, with a margin of 19.7%.
• Spend per Buyer: $296, representing a 9% year over year growth.
• Take Rate: 33.9%, an improvement of 260 basis points year over year.
• Free Cash Flow: $10.6 million; $22.7 million excluding one-time escrow payment.
• Full-Year Revenue Guidance: $388 million to $390 million, representing 7% to 8% growth.
• Full-Year Adjusted EBITDA Guidance: $73 million to $75 million, with a margin of 19% at the midpoint.
• Q4 Revenue Guidance: $100.2 million to $102.2 million, representing 9% to 12% growth.
• Q4 Adjusted EBITDA Guidance: $19.5 million to $21.5 million, with a margin of 20.2% at the midpoint.

• Warning! GuruFocus has detected 3 Warning Signs with FVRR.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fiverr International Ltd (NYSE:FVRR) exceeded its revenue and adjusted EBITDA guidance for Q3 2024, showcasing strong financial performance.
• The company reported an 8% year-over-year revenue growth, with a significant improvement in adjusted EBITDA margin by 180 basis points.
• Fiverr's strategy to go upmarket and expand value-added services has resulted in a higher spend per buyer, which grew by 9% year-over-year.
• The introduction of innovative AI-powered tools like Dynamic Matching and Neo has been well-received, leading to larger and more complex projects on the platform.
• Fiverr has a strong balance sheet with over $650 million in cash, allowing for continued investment in growth and shareholder value initiatives.

Negative Points

• Despite the positive financial results, the overall SMB sentiment remains weak, and the hiring environment continues to be challenging.
• Active buyer growth was muted, indicating potential challenges in attracting new users to the platform.
• The macroeconomic conditions, including a downturn in the professional staffing market, pose ongoing challenges for Fiverr.
• There is uncertainty regarding the impact of seasonality and upcoming elections on future performance.
• The company faces pressure to maintain its take rate expansion amidst macroeconomic volatility and competitive market conditions.

Q & A Highlights

Q: Can you elaborate on the stabilization of demand trends and the impact of new products on the buyer base? A: Micha Kaufman, CEO, explained that while there was volatility in June and July, September and early October showed more stability. However, this is not yet a trend due to upcoming seasonality and elections. Regarding the buyer base, new products like Dynamic Matching and hourly contracts are designed to address the needs of larger customers, offering speed, convenience, and clarity, which are attracting higher quality buyers who spend more and stay longer on the platform.

Q: How should we think about the revenue guidance for Q4, considering the take rate and GMV? A: Micha Kaufman, CEO, stated that despite challenging macro conditions, Fiverr is offsetting negative trends through product improvements and new offerings. The growth is driven by a combination of better top-of-funnel performance, tools like Promoted Gigs, and increased spend per buyer due to upmarket products. The strategy remains consistent, focusing on delivering value through innovative products.

Q: What are the early metrics for Dynamic Matching, and does it impact advertising or take rate? A: Micha Kaufman, CEO, noted that early signs for Dynamic Matching are positive, allowing customers to specify complex projects and get matched with suitable talent. It doesn't immediately impact advertising, as it's more relevant for customized projects, while Promoted Gigs continues to grow.

Q: Can you discuss the impact of AutoDS and the business rewards program on spending and loyalty? A: Micha Kaufman, CEO, mentioned that AutoDS is contributing positively to the take rate and had a better-than-expected quarter. The business rewards program enhances engagement and retention by encouraging repeat interactions between buyers and sellers, which is crucial for Fiverr's ecosystem.

Q: What are Fiverr's long-term expectations for take rates, and how does the mix of business influence this? A: Ofer Katz, CFO, expressed satisfaction with the take rate growth, driven by value-added services. While macro conditions are volatile, take rate expansion remains a key growth driver. As the market improves, the contribution of take rate will continue, albeit at a slower percentage growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.