Fiverr reported soft earnings but powerful sales growth in the third quarter, and future business prospects look robust. Here’s how the freelance services vendor is moving forward.
Freelance marketplace operator Fiverr International (FVRR 16.31%) reported fantastic third-quarter results on Wednesday morning, sending the stock skyward. Share prices rose as much as 30.4% in the morning session, retreating to a still-impressive 15% gain by 12:45 p.m. ET.
Fiverr’s mixed Q3 results
Fiverr’s third-quarter revenues rose 8% year over year to $99.6 million. A 9% smaller number of freelance service buyers spent 9% more per order. Fiverr’s top-line growth stemmed from a significantly larger cut of each transaction, as the company’s take rate rose from 31.3% to 33.9%.
Adjusted earnings per diluted share landed at $0.55, down from $0.64 in the year-ago period. At the same time, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 19% to $19.7 million.
The consensus Street projections had called for an adjusted net loss of $0.59 per share on sales of roughly $96.4 million. Investors brushed off the slight bottom-line miss to focus on Fiverr’s surging sales and optimistic forward guidance.
Long-term goals and future growth prospects
Fiverr has refocused its business model around long-term relationships, with service buyers returning for several orders and trusted freelancers. Value-added services and client-matching tools powered by artificial intelligence (AI) have also emerged as strong near-term growth drivers.
Management raised their full-year revenue guidance by 1% and reiterated Fiverr’s ambition to reach an adjusted EBITDA margin of 25% by the end of 2027. That margin stopped at 19.8% in the third-quarter report, up from 18.1% a year ago.
The gig economy survived the end of the coronavirus pandemic, and Fiverr looks ready to soar as the economy springs back from the recent inflation panic.
Anders Bylund has positions in Fiverr International. The Motley Fool has positions in and recommends Fiverr International. The Motley Fool has a disclosure policy.
