Fiverr Announces Second Quarter 2022 Results
Q2 Results demonstrated solid Adjusted EBITDA. Revenue grew 13% y/y to $85 million as SMB spending grew more cautious. We delivered solid Adjusted EBITDA of $4.6 million, or 5.4% in Adjusted EBITDA margin, as a result of strong execution and disciplined expense management.
Strong and resilient growth in SPB. Spend per buyer increased 14% y/y to $259 with continued expansion of wallet share especially among our larger customers. Buyers with annual spend of over $10K grew over 60% y/y.
Innovations to unlock larger projects and longer engagement. We rolled out project briefing capabilities to allow buyers to describe projects with complex scope in a structured way. We continued to expand Subscriptions on our marketplace, especially in digital marketing categories, as buyers place recurring orders to engage with sellers for longer duration.
Strengthen growth and profitability profile. Post the second quarter, we took steps to recalibrate our spending priorities, resulting in a workforce reduction of approximately 60 people across our offices. The streamlined cost structure, together with a strong balance sheet, provides us with financial strength to build for long-term success.
Guidance update. Our updated revenue guidance reflects the increased macro headwinds on SMB spending as reflected in our second quarter results. We are increasing our Adjusted EBITDA expectations based on the steps we took to streamline costs and recalibrate investment spending. We are committed to delivering continued EBITDA expansion and growing towards our long-term margin target.
NEW YORK–(BUSINESS WIRE)–Fiverr International Ltd. (NYSE: FVRR), the company that is changing how the world works together, today reported financial results for the second quarter of 2022. 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.
“We have built a great team and freelance marketplace over the past decade. In fact, Fiverr today is three times larger than the company we took public only three years ago,“ said Micha Kaufman, founder and CEO of Fiverr. “Growth has and will always be our priority. However, with market conditions worse than anticipated, when growth becomes expensive, instead of growing at any cost, we decided to prioritize EBITDA and free cash flow, and accelerate the pace towards our long-term target model. We believe this puts us in a stronger financial position to double down on growth investments when market conditions improve.”
Ofer Katz, Fiverr’s President and CFO, added, “We delivered better adjusted EBITDA than guided during the quarter. Post the quarter, we took additional steps to streamline our cost structure as we increased our focus on profitability. The strong Adjusted EBITDA margin execution together with July’s realignment of resources and the recalibration of our investments demonstrates our commitment to progressing towards our long term target model.”
Second Quarter 2022 Financial Highlights
Revenue in the second quarter of 2022 was $85.0 million, an increase of 13% year over year.
Active buyers as of June 30, 2022 grew to 4.2 million, compared to 4.0 million as of June 30, 2021, an increase of 6% year over year.
Spend per buyer as of June 30, 2022 reached $259, compared to $226 as of June 30, 2021, an increase of 14% year over year.
Take rate for the period ended June 30, 2022 was 29.8%, up from 27.8% for the period ended June 30, 2021, an increase of 200 basis points year over year.
GAAP gross margin in the second quarter of 2022 was 79.4%, a decrease of 400 basis points from 83.4% in the second quarter of 2021. Non-GAAP gross margin1 in the second quarter of 2022 was 82.7%, a decrease of 170 basis points from 84.4% in the second quarter of 2021.
GAAP net loss in the second quarter of 2022 was ($41.9) million, or ($1.13) basic and diluted net loss per share, compared to ($13.3) million, or ($0.37) basic and diluted net loss per share, in the second quarter of 2021. Non-GAAP net income1 in the second quarter of 2022 was $4.9 million, or $0.13 basic net income per share and $0.12 diluted non-GAAP net income per share, compared to $0.22 basic net income per share and $0.19 diluted non-GAAP net income per share, in the second quarter of 2021.
Adjusted EBITDA1 in the second quarter of 2022 was $4.6 million, compared to $7.4 million in the second quarter of 2021. Adjusted EBITDA margin1 was 5.4% in the second quarter of 2022, compared to 9.8% in the second quarter of 2021.
_________________
1 This is a non-GAAP financial measure. See “Key Performance Metrics and Non-GAAP Financial Measures” and reconciliation tables at the end of this release for additional information regarding the non-GAAP metrics used in this release.
Financial Outlook
Our Q3’22 outlook and updated full year 2022 guidance reflects the recent trends in our marketplace as global SMB spending grew more cautious leading to less demand for freelancers. We expect to continue improving Adjusted EBITDA from the recent cost reductions and a strengthening investment focus.
Q3 2022
FY 2022
Revenue
$80.5 – $82.5 million
$332.0 – $340.0 million
Year over year growth
8%-11% y/y
12%-14% y/y
Adjusted EBITDA
$5.0 – $6.0 million
$19.5 – $21.5 million
Conference Call and Webcast Details
Fiverr will host a conference call to discuss its financial results on Thursday, August 4, 2022, 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 +1 (844) 200-6205, or +1 (929) 526-1599 for callers outside the United States, and enter the passcode, 805771.
About Fiverr
Fiverr’s mission is to revolutionize how the world works together. We exist to democratize access to talent and to provide talent with access to opportunities so anyone can grow their business, brand, or dreams. From small businesses to Fortune 500, over 4 million customers worldwide worked with freelance talent on Fiverr in the past year, ensuring their workforces remain flexible, adaptive, and agile. With Fiverr’s Talent Cloud, companies can easily scale their teams from a talent pool of skilled professionals from over 160 countries across more than 550 categories, ranging from programming to 3D design, digital marketing to content creation, from video animation to architecture.
Don’t get left behind – come be a part of the future of work by visiting fiverr.com, read our blog, and follow us on Twitter, Instagram, and Facebook.
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30,
December 31,
2022
2021
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
$
98,122
$
71,151
Restricted cash
–
2,919
Marketable securities
209,060
118,150
User funds
142,575
127,713
Bank deposits
110,000
134,000
Restricted deposit
1,172
35
Other receivables
16,095
14,250
Total current assets
577,024
468,218
Marketable securities
221,136
317,524
Property and equipment, net
6,253
6,555
Operating lease right of use asset, net
10,612
11,727
Intangible assets, net
17,624
49,221
Goodwill
77,270
77,270
Other non-current assets
2,113
1,055
Total assets
$
912,032
$
931,570
Liabilities and Shareholders’ Equity
Current liabilities:
Trade payables
$
3,957
$
8,699
User accounts
132,442
118,616
Deferred revenue
12,291
12,145
Other account payables and accrued expenses
62,022
44,260
Operating lease liabilities, net
3,140
3,055
Current maturities of long-term loan
–
2,269
Total current liabilities
213,852
189,044
Long-term liabilities:
Convertible notes
451,499
372,076
Operating lease liabilities
7,853
10,483
Long-term loan and other non-current liabilities
1,057
13,099
Total long-term liabilities
460,409
395,658
Total liabilities
$
674,261
$
584,702
Shareholders’ equity:
Share capital and additional paid-in capital
527,494
585,548
Accumulated deficit
(275,390
)
(237,585
)
Accumulated other comprehensive income (loss)
(14,333
)
(1,095
)
Total shareholders’ equity
237,771
346,868
Total liabilities and shareholders’ equity
$
912,032
$
931,570
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
Revenue
$
85,010
$
75,263
$
171,695
$
143,583
Cost of revenue
17,526
12,528
34,503
24,074
Gross profit
67,484
62,735
137,192
119,509
Operating expenses:
Research and development
24,523
20,106
48,297
36,979
Sales and marketing
44,325
38,184
92,192
80,823
General and administrative
13,658
12,789
28,910
23,876
Impairment of intangible assets
27,629
–
27,629
–
Total operating expenses
110,135
71,079
197,028
141,678
Operating loss
(42,651
)
(8,344
)
(59,836
)
(22,169
)
Financial income (expenses), net
841
(4,944
)
1,071
(8,918
)
Loss before income taxes
(41,810
)
(13,288
)
(58,765
)
(31,087
)
Income taxes
(53
)
(11
)
(73
)
(56
)
Net loss attributable to ordinary shareholders
$
(41,863
)
$
(13,299
)
$
(58,838
)
$
(31,143
)
Basic and diluted net loss per share attributable to ordinary shareholders
$
(1.13
)
$
(0.37
)
$
(1.60
)
$
(0.87
)
Basic and diluted weighted average ordinary shares
37,027,317
36,338,172
36,846,989
35,988,608
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
Operating Activities
Net loss
(41,863
)
(13,299
)
(58,838
)
(31,143
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
3,142
1,373
6,252
2,691
Loss from disposal of property and equipment
(12
)
–
(12
)
–
Amortization of premium and discount of marketable securities, net
1,997
1,658
3,684
3,481
Amortization of discount and issuance costs of convertible notes
631
4,973
1,262
9,877
Shared-based compensation
19,114
13,174
37,117
23,657
Net Gain/(Loss) from exchange rate fluctuations
314
393
171
302
Impairment of intangible assets
27,629
–
27,629
–
Changes in assets and liabilities:
User funds
4,441
(1,286
)
(14,862
)
(23,629
)
Operating lease ROU assets and liabilities, net
(1,101
)
272
(1,430
)
(257
)
Other receivables
(2,677
)
(559
)
(2,435
)
(1,267
)
Trade payables
662
(837
)
(4,757
)
253
Deferred revenue
(1,237
)
121
146
2,395
User accounts
(3,904
)
1,403
13,826
21,696
Account payable, accrued expenses and other
3,964
8,630
11,178
12,736
Revaluation of contingent consideration
(3,152
)
–
(3,842
)
–
Payment of contingent consideration
(504
)
(507
)
(504
)
(507
)
Non-current liabilities
(353
)
6
216
(235
)
Net cash provided by operating activities
7,091
15,515
14,801
20,050
Investing Activities
Investment in marketable securities
(45,160
)
(40,833
)
(90,007
)
(166,831
)
Proceeds from sale of marketable securities
49,737
39,065
83,346
78,995
Bank and restricted deposits
24,000
(39,000
)
22,863
(39,000
)
Acquisition of business, net of cash acquired
–
(410
)
–
(9,288
)
Acquisition of intangible asset
(175
)
–
(175
)
–
Purchase of property and equipment
(338
)
(389
)
(831
)
(700
)
Capitalization of internal-use software and other
(504
)
(180
)
(903
)
(322
)
Other non-current assets
(1,000
)
–
(1,078
)
–
Net cash provided by (used in) investing activities
26,560
(41,747
)
13,215
(137,146
)
Financing Activities
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
)
(1,105
)
(1,105
)
(1,105
)
Proceeds from exercise of share options
1,000
1,563
1,711
6,351
Tax withholding in connection with employees’ options exercises and vested RSUs
(556
)
(10,951
)
(2,130
)
(8,629
)
Repayment of long-term loan
–
(139
)
(2,269
)
(273
)
Net cash (used in) financing activities
(661
)
(10,673
)
(3,793
)
(4,071
)
Effect of exchange rate fluctuations on cash and cash equivalents
(314
)
236
(171
)
(141
)
Increase/ (Decrease) in cash, cash equivalents and restricted cash
32,676
(36,633
)
24,052
(121,308
)
Cash, cash equivalents and restricted cash at the beginning of period
65,446
183,355
74,070
268,030
Cash and cash equivalents at the end of period
98,122
146,722
98,122
146,722
KEY PERFORMANCE METRICS
Six Months Ended
June 30,
2022
2021
Annual active buyers (in thousands)
4,220
3,998
Annual spend per buyer ($)
$
259
$
226
RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT
(in thousands, except share and per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
(Unaudited)
(Unaudited)
GAAP net loss attributable to ordinary shareholders
$
(41,863
)
$
(13,299
)
$
(58,838
)
$
(31,143
)
Add:
Depreciation and amortization
$
3,142
$
1,373
$
6,252
$
2,691
Share-based compensation
19,114
13,174
37,117
23,657
Impairment of intangible assets
27,629
–
27,629
–
Contingent consideration revaluation, acquisition related costs and other
(2,627
)
1,201
(2,690
)
2,521
Convertible notes amortization of discount and issuance costs
631
4,973
1,262
9,877
Exchange rate (Gain)/Loss, net
(1,155
)
432
(1,248
)
(23
)
Non-GAAP net income
$
4,871
$
7,854
$
9,484
$
7,580
Weighted average number of ordinary shares – basic
37,027,317
36,338,172
36,846,989
35,988,608
Non-GAAP basic net income per share attributable to ordinary shareholders
$
0.13
$
0.22
$
0.26
$
0.21
Weighted average number of ordinary shares – diluted
$
40,767,393
$
40,921,663
$
41,009,735
$
40,854,045
Non-GAAP diluted net income per share attributable to ordinary shareholders
$
0.12
$
0.19
$
0.23
$
0.19
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,
2022
2021
2022
2021
GAAP net loss
$
(41,863
)
$
(13,299
)
$
(58,838
)
$
(31,143
)
Add:
Financial (income) expenses, net
$
(841
)
$
4,944
$
(1,071
)
$
8,918
Income taxes
53
11
73
56
Depreciation and amortization
3,142
1,373
6,252
2,691
Share-based compensation
19,114
13,174
37,117
23,657
Impairment of intangible assets
27,629
–
27,629
–
Contingent consideration revaluation, acquisition related costs and other
(2,627
)
1,201
(2,690
)
2,521
Adjusted EBITDA
$
4,607
$
7,404
$
8,472
$
6,700
Adjusted EBITDA margin
5.4
%
9.8
%
4.9
%
4.7
%
RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
GAAP research and development
$
24,523
20,106
$
48,297
36,979
Less:
Share-based compensation
6,521
4,909
12,726
9,011
Depreciation and amortization
202
190
403
377
Non-GAAP research and development
$
17,800
$
15,007
$
35,168
$
27,591
GAAP sales and marketing
$
44,325
$
38,184
$
92,192
$
80,823
Less:
Share-based compensation
4,575
3,457
9,005
6,045
Depreciation and amortization
821
686
1,681
1,325
Contingent consideration revaluation, acquisition related costs and other
–
398
–
695
Non-GAAP sales and marketing
$
38,929
$
33,643
$
81,506
$
72,758
GAAP general and administrative
$
13,658
$
12,789
$
28,910
$
23,876
Less:
Share-based compensation
7,247
4,470
13,908
7,984
Depreciation and amortization
102
57
195
112
Contingent consideration revaluation, acquisition related costs and other
(2,627
)
803
(2,690
)
1,826
Non-GAAP general and administrative
$
8,936
$
7,459
$
17,497
$
13,954
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 Adjusted EBITDA guidance for the third quarter of 2022, or the fiscal year ending December 31, 2022 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, impairment of intangible assets, income or loss on revaluation of contingent consideration, other acquisition-related costs, 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 2022 and the fiscal year ending December 31, 2022, our expected future Adjusted EBITDA profitability, our business plans and strategy, 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 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 and our ability to manage the business and economic risks of international expansion and operations; 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; the impact of currency exchange rate fluctuations on our results of operations; impacts resulting from inflationary pressures and geopolitical turmoil, including the war in Ukraine; and the other important factors discussed under the caption “Risk Factors” in our annual report on Form 20-F filed with the U. Contacts
Investor Relations:
Jinjin Qian
investors@fiverr.com
Press:
Abby Forman
press@fiverr.com
Read full story here
