Is this unique e-commerce play a buy?

It’s time to explore another business of the digital world. Here is the break down on $FVRR, otherwise known as Fiverr International.


Current Price: $188.69

52/Wk High: $336.00

52/Wk Low: $115.73


Market Cap: $6.9 Billion

3 Month Performance: -5.41%

(9/15/2021)


Read below for the break down!


Fiverr International ( $FVRR ) is a unique e-commerce company that provides customers with a unique platform that follows a service-as-a-product (SaaP) model.


Breaking down Fiverr’s business model the company earns a majority of revenue through the Core Marketplace, where buyers and sellers are connected.


Sifting through Fiverr’s software-as-a-product (SaaP) model, a buyer initiates a transaction and pays Fiverr directly for their chosen service, Fiverr then prompts the seller to deliver the complete service, and once complete Fiverr makes 80% of the transaction value available to the seller.


Furthermore, Fiverr offers customers Fiverr Learn, And.Co, ClearVoice, and Promoted Gigs, all of which make up the company’s additional revenue.


In recent news, Fiverr launched Seller Plus throughout the quarter. According to the company, Seller Plus is a “subscription-based loyalty program for freelancers,” that is offered for $29/month.


The program provides subscribers access to a bevy of tools that increase customer loyalty for the seller and assist business growth.


Fiverr is led by Co-founder, Director, and CEO Micha Kaufman who has been with the company since its inception. Kaufman boasts prior experience from several technology companies including Invisia, Keynesis, and Spotback.


Shifting into the team behind Kaufman, management is filled with leaders boasting prior experience from the likes of Wix, Adallom, Onavo, Wilocity, 888 Holdings, SimilarWeb, Marvell Technologies, and IBM Corporation.


Digging into the numbers Fiverr beat Q2 2021 expectations with an EPS of $0.19, better than the analyst’s EPS consensus estimate of $0.10. On a year-over-year basis, EPS improved by 90%.



On the revenue front, Fiverr reported $75.3 million in Q2 2021 revenue, representing a strong 60% improvement on a year-over-year basis. For reference, the Q2 2020 revenue level was $47.1 million.



According to management revenues were driven higher by an increase in take-rate, active buyer growth, and spend per buyer.


Alongside revenue, gross profit and gross margin continued to improve with Fiverr reporting $62.7 million in Q2 gross profit and a GAAP gross margin of 83.4%. For reference, the Q2 2020 gross profit level was $39.2 million and gross margin was 83.1%.



Rotating into spend-per-buyer (SPB), Fiverr delivered a Q2 2021 SPB of $226 per buyer, representing 23% expansion on a year-over-year basis when compared to the same time 2020 level of $184 per buyer.



Furthermore, Active Buyers continued to expand with Fiverr ending Q2 2021 with a whopping 4.0 million active buyers, representing 43% growth year-over-year in active buyer count.



Flipping into take-rate, Fiverr delivered a Q2 2021 take-rate of 27.8%, representing an 80 basis point improvement year-over-year. According to management, the rate was driven higher by the implementation of a service fee, software subscriptions, e-learner courses, and more.



Rounding out the quarter, Fiverr reported a Q2 net loss (GAAP) of $-13.3 million, representing an expanding net loss over the same time 2020 level of $-0.1 million.


Finally, Fiverr reported an improving EBITDA with Q2 2021 adjusted EBITDA totaling $7.4 million, representing 9.8% of revenue. Referring back to Q2 2020, adjusted EBITDA totaled $3.1 million, representing 6.7% of revenue.


Management was upbeat about the second quarter.


“Looking at the last two years, we have effectively doubled our active buyer base, tripled our revenue base, and achieved a nearly 30% positive swing in EBITDA margin. We grew significantly faster than our competitors and rapidly expanded our market share in the freelancing economy,” Kaufman said.


Looking to the future leadership guided Q3 2021 revenues to a range of $68.0 million to $72.0 million, representing 30% to 38% growth year-over-year. Furthermore, Q3 adjusted EBITDA is expected to land within a range of $2.5 million to $3.5 million.



On a full-year basis, leadership lowered guidance, now expecting FY 2021 revenues to land within a range of $280 million to $288.0 million, representing 48% to 52% growth year-over-year.


Finally, FY 2021 adjusted EBITDA is expected to land within a range of $12.0 million to $14.0 million, representing a lower range than the previously guided range of $19.5 million to $24.5 million.


Shifting into the balance sheet the numbers are solid.


Total Debt: $365 Million


Total Liabilities: $550 Million


Total Assets: $896 Million


Cash & Short Term Inv: $442 Million


On a valuation basis, Fiverr does trade at a premium.


Forward Price to Earnings: 341.21x


Price to Sales: 27.37x


Price to Book: 19.84x


Price to Free Cash Flow: 235.19x


Management could be more effective in the years ahead.


Return on Equity: -12.61%


Return on Assets: -6.10%


Return on Invested Capital: -7.86%


Given the numbers the analysts are bullish with a mean price target of $220.50/share, representing a 16.86% upside.


The high price target is $257.00/share, representing a 36.20% gain, meanwhile, the low price target is $200.00/share, representing a 5.99% upside.


The big money on the otherhand is less involved with just 45.28% of Fiverr being owned by institutions. Top holders include Bessemer Venture Partners, Sands Capital Management, and Franklin Advisers.


On a technical basis, Fiverr has been rather stagnant. According to the six-month charts the MACD is moving with upside momentum within a range of -1.775 down to -4.827.


The six-month charts are also indicating an RSI of 52.82 and CCI of 106.22, both of which are on the high end.



Exploring investor sentiment the bears believe that Fiverr benefited greatly from the pandemic and that growth will rapidly decelerate in the upcoming quarters.


Meanwhile, the bulls see opportunity in Fiverr’s unique e-commerce business model and believe the service as a product marketplace will thrive as the world goes digital.