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Summary
- The share price of Fiverr International nose-dived 24 per cent on 5 August 2021, after the declaration of its revised guidance for the full-year 2021.
- The company reported a whopping 60 per cent year-on-year growth in revenue to $75.3 million in Q2 2021.
- The company now expects the full-year revenues to reach $280.0-$288.0 million, a year-on-year increase of 48 per cent-52 per cent.
Established in 2010, Fiverr International (NYSE:FVRR) is an Israeli-based online freelance professional service marketplace, reported a whopping 60 per cent year-on-year growth in revenue to $75.3 million in Q2 2021 and a 43 per cent year-on-year increase in the number of active buyers to 4.0 million in the period compared to 2.8 million as in Q2 2020.
The spend per buyer reached $226 as of 30 June 2021, a year-on-year 23 per cent increase compared to $184 in Q2 2020. Additionally, the adjusted EBITDA increased to $7.4 million in Q2 2021 compared to $3.1 million in the same period in 2020. However, it was the guidance that weighed down the sentiments, and the stocks suffered a sharp drop of over 24 per cent on 5 August 2021
Fiverr’s guidance for FY 2021
In its Q3 2021 outlook, the company factored in the post-COVID effect as restrictions are lifted across many countries globally, and people are expected to spend more time outside their homes and reduce screen times. As a result, the company expects Q3 revenues to reach approximately $68.0-$72.0 million, reflecting year-on-year growth of 30 per cent to 38 per cent, while in its guidance for the full year 2021, the company expects revenues in the order of $280.0-$288.0 million, an increase of 48 per cent-52 per cent year-on-year.
Consequently, the company reduced its previous revenue estimates for the FY 2021, originally set at US$309 million, to the new $280-$288 million. The market capitalisation of the company was valued at US$2 billion lower, with the change in guidance. Nevertheless, the company’s long-term outlook remains unchanged and anticipates double-digit revenue growth for the coming years.
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Why did the share price slump?
Fiverr's major competitor, Upwork (NASDAQ:UPWK), share price also declined by 9.5 per cent on 5 August 2021. The drop in share prices of Fiverr and Upwork are being related to the changing market scenarios rather than company performance. The outlook for both the companies have been reduced for the rest of the year due to the reopening of the economy, an increasing number of vaccinated people leaving homes, and return to normal work and leisure activities. Reduced online activity and screen time translates into more number of people joining regular jobs as compared to part time opportunities that people preferred during the pandemic.
However, the fundamentals of Fiverr remains strong; in its endeavour for future expansion, the gig-work platform had launched Seller Plus, a subscription product built around Fiverr’s most engaged sellers aimed at driving business growth, in Q2 2021. In the same period, it entered into new partnerships with Salesforce (NYSE:CRM) and Wix (NASDAQ:WIX) will enable the two companies to qualify Fiverr sellers through training programs and minimising the time taken for screening and onboarding.
Further, the company is focused on speeding up investments to make Fiverr a gig platform that allows more sellers and buyers to engage in the digital service economy. Reopening of several economies globally, increase in vaccination rates, rise in the number of people stepping out for jobs and reduction in the amount of time spent at home is expected to pose a threat to the part-time job market. Against this backdrop, the share price of Fiverr International nose-dived on 5 August 2021.
