Revenue for Q1 2024 reached $93.5 million, a 6.3% increase year-over-year, at the top end of guidance.
Adjusted EBITDA for Q1 was $16 million, above the guidance range, with a margin of 17.1%.
Gross Merchandise Volume (GMV) grew 2% year-over-year, an acceleration from the previous quarter’s 1% growth.
Active buyers totaled 4 million, with spend per buyer at $284.
High-value buyers, spending over $500 annually, grew by 4% year-over-year.
Take rate for the platform increased to 32.3%, up 190 basis points from the previous year.
Promoted Gigs and Seller Plus programs showed robust year-over-year growth of over 55% and 75%, respectively.
Strategic and Operational Updates
Fiverr continues to evolve its platform to serve both small tasks for small businesses and larger, complex services for bigger clients.
AI-related services, especially chatbot development, saw a 95% year-over-year growth in GMV.
Fiverr Neo, an AI matching assistant, significantly improved order conversion rates to nearly 3x the marketplace average.
The company plans to unveil more product initiatives in the upcoming Summer Product Release, focusing on product leadership, data and AI matching, and brand and traffic.
Future Outlook and Guidance
For Q2 2024, revenue is projected to be between $93.5 million and $95.5 million, with adjusted EBITDA expected to be between $16 million and $18 million.
Full-year 2024 revenue guidance has been updated to a range of $381 million to $387 million, with adjusted EBITDA anticipated to be between $67 million and $73 million.
The company has announced a $100 million stock repurchase program, reflecting confidence in its business fundamentals and a commitment to creating shareholder value.
Question and Answer
AI and Complex Projects
Question
Can you provide more details on the approach Fiverr is taking with AI, given the increasing demand and the platform’s 10,000 expert networks? What type of projects are coming in, and how is this impacting the mix shift towards more complex projects and spend per buyer?
Answer
Fiverr is experiencing significant demand for AI-related projects, particularly in categories like AI avatars and chatbots, which require higher levels of expertise and are associated with higher prices.
The company is actively investing in the supply side to meet this demand and enhance the customer and seller experience through AI integration.
The growth in AI and complex projects is contributing to the increasing spend per buyer, and there is room for further expansion as Fiverr continues to focus on going upmarket and offering more complex services.
Trust and Agencies
Question
Can you elaborate on the role of trust in fulfilling complex projects and the initiatives Fiverr is undertaking in this regard, such as the involvement of agencies on the platform? What are some key trust-building initiatives, and what is the potential with agencies in different verticals?
Answer
Trust is a critical factor in enabling the execution of complex projects, particularly as spend levels increase, and Fiverr recognizes the importance of building trust between customers and service providers.
The company views agencies as a means to establish trust and quality, and it has been gradually introducing agencies in specific categories, with plans to expand this approach across more verticals.
Early results show promising signs, with agencies driving higher conversion rates, increased engagement, and significantly higher average spend per buyer compared to the platform average.
Product Evolution and Take Rate
Question
How does the product need to evolve to accommodate more complex gigs and provide liquidity for these projects, moving beyond simple point-and-click gigs? Additionally, can you provide insights into the take rate on the platform and its trajectory and sustainability?
Answer
Fiverr has been developing solutions under Fiverr Business Solutions to address the needs of more complex projects, such as product management services that involve orchestrating entire projects.
The company is also exploring other models and solutions to cater to the increasing demand for bespoke and complex services, with more details expected in upcoming releases.
Regarding take rate, Fiverr is confident in the sustainability of the current rate, which is based on transactionable services and value-added offerings for both sellers and buyers.
The company sees room for modest expansion of the take rate in the coming quarters, driven by the growth of existing services like Promoted Gigs and Seller Plus, as well as the introduction of new products.
Spend per Buyer and AI Demand
Question
Can you provide insights into the drivers of the improved spend per buyer, specifically the contributions from SMB spend versus moving upmarket to a higher-value mix? Additionally, while AI categories are showing clear momentum and demand, are there any offsetting factors or headwinds in certain categories that are less impacted by AI?
Answer
The growth in spend per buyer is primarily driven by Fiverr’s focus on acquiring high-value buyers and the continuous improvement in core customer behavior, leading to higher spending in initial and subsequent transactions.
The company has not observed any macro changes impacting spend per buyer, and the overall investment in higher-quality customer cohorts is proving successful.
While AI has a negative impact on very simple and low-priced services, the majority of Fiverr’s contribution comes from more complex projects, and the company sees AI as a net positive, driving growth and attracting new and repeat customers.
Go-to-Market Strategy and Sales Force
Question
Can you remind us of the go-to-market strategy for targeting larger wallet clients and how the need for a sales force may evolve as Fiverr continues to move upmarket?
Answer
Fiverr’s top-of-funnel traffic already includes many of the customers the company is targeting in the upmarket segment, and the focus is on identifying these customers and guiding them towards the Fiverr Business Solutions suite, with Pro services leading the way.
The company has introduced programs like the partnership program and certified enterprise to cater to a wider range of customers, and the sales team, particularly on the enterprise side, remains small as Fiverr continues to attract major clients through its existing funnel.
The company will continue to refine its customer identification and solution pairing processes to improve conversion and engagement with larger wallet clients.
Share Buybacks and Return on Investment
Question
Given the recent share repurchase authorization and the strength of the balance sheet, what is the expected pace of buybacks and the rationale behind this decision?
Answer
Fiverr’s share repurchase program reflects the company’s confidence in its long-term opportunities and its commitment to both growth investments and returning value to shareholders.
The pace of buybacks will depend on strategic considerations and market conditions, with the goal of executing the program as quickly as possible while the stock is considered undervalued.
International Expansion and Market Focus
Question
How should we think about the international opportunity for Fiverr in terms of expanding deeper into existing markets versus entering new geographic regions? What factors influence these decisions, including macro conditions and return on investment considerations?
Answer
Fiverr’s current focus for international expansion is primarily on the U.K. and Germany, where the company is seeing strong growth rates exceeding those in the U.S.
The company attributes this success to the untapped potential in these markets, the optimization of marketing and customer engagement channels, and product tweaks to accommodate cultural differences and enhance the user experience.
Fiverr will continue to prioritize growth in these markets, leveraging the larger SMB base in Europe compared to the U.S., and will expand further as macro conditions improve.
Complex Services and Full-Year Guidance
Question
Can you clarify whether the reference to “complex services” reaching over one-third of the marketplace pertains to GMV or the number of jobs? Additionally, what is the expected mix shift for complex services in the full-year guidance?
Answer
The statement refers to GMV, and Fiverr expects the growth of complex services to continue, with a further shift towards more complex and higher-value projects.
AI Growth and Long-Term Profitability
Question
The 95% growth in AI GMV is impressive, but can we expect this trend to accelerate as new use cases and buyers emerge? Additionally, can you provide more details on the current strength and areas of growth within AI-related GMV, such as the contribution from small versus high-value buyers or repeat versus net new buyers?
Answer
While AI is still a relatively new category with a smaller base, Fiverr is continuously adding new AI categories and expanding its pool of AI experts, attracting both new and repeat customers.
The demand for AI services is coming from various customer segments and is particularly strong in higher-ticket and more complex projects that require bespoke development.
Fiverr expects AI to have a significant impact on both customer acquisition and retention, and the company is well-positioned to benefit from the growth of this category.
Long-Term Profitability and EBITDA Margins
Question
Given the share buyback program and the company’s increasing confidence, can you provide insights into the long-term profitability potential of Fiverr? How high could EBITDA margins go, considering the performance of similar marketplaces with margins in the 30-35% range?
Answer
Fiverr has demonstrated consistent progress in improving EBITDA margins over the past few quarters, and while the company is committed to reaching the 25% margin target, there is potential for further expansion beyond that level.
The company will continue its disciplined approach to margin improvement while focusing on sustainable growth, and any adjustments to long-term margin goals will be based on continued execution towards the established targets.
Fiverr is confident in its ability to deliver on its current guidance and manage the business carefully during the challenging macro environment, balancing growth investments with maintaining the health of the business.
The company plans to continue investing in product and marketing to support growth, while also improving EBITDA margins throughout the remainder of the year.
