Fiverr Announces Second Quarter 2022 Results

Fiverr Announces Second Quarter 2022 Results




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

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