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Fiverr International Ltd. (FVRR) Q4 2019 Earnings Call Transcript

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FVRR earnings call for the period ending December 31, 2019.

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Fiverr International Ltd. (FVRR 2.81%)
Q4 2019 Earnings Call
Feb 19, 2020, 8:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good day, and welcome to the Fiverr Q4 fiscal 2019 earnings conference call. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jinjin Qian. Please go ahead.

Jinjin Qian -- Vice President, Strategic Finance

Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining us on Fiverr's earnings conference call for the fourth quarter ended December 31, 2019. Please note that this call is being webcast on the investor relations section of the company's website. Full details of our results and additional management commentary are available in our shareholder letter, which can be found on the investor relations section of our website at

Joining me today on the call are Micha Kaufman, founder and CEO; and Ofer Katz, CFO. Before we start, I would like to remind you that certain matters discussed today are forward-looking statements that are subject to risks and uncertainties relating to future events and/or the future financial performance of Fiverr. Actual results could differ materially from those anticipated in these forward-looking statements. Additional information that could cause actual results to differ from forward-looking statements can be found in Fiverr's periodic public filings with the U.S.

Securities and Exchange Commission, including those factors discussed under the risk factors section in Fiverr's final prospectus under Rule 424b filed with the SEC. The forward-looking statements in this conference call are based on the current expectations as of today, and Fiverr assumes no obligation to update or revise them whether as a result of new developments or otherwise. And now I'll turn the call over to Micha.

Micha Kaufman -- Founder and Chief Executive Officer

Thank you, Jinjin. Good morning, everyone, and thanks for taking the time to join us on the call today. 2019 was a fantastic year for Fiverr. We delivered three consecutive quarters of consistent and strong financial results as a new public company.

This exceeded the aggressive goals that we set at the time of the IPO. For the full year, revenue grew 42% year over year, and our EBITDA margin improved by nearly 1,100 basis points. This is even more impressive when we consider the pace of our product launches throughout the year and the scaling of operations as a public company. Fiverr is a company that delivers on its promises, and we have a solid business model with high levels of consistent buyer behavior.

The freelance economy is growing rapidly around the world. Fiverr is enabling and harnessing this momentum. Our business model is seen as a simple and beautiful two-sided marketplace. We are a technology company at core, and we had an amazing year of product innovation in 2019.

From Fiverr Learn, which directly connects learning with work opportunities; to Fiverr Studios that enables virtual collaboration among our skilled freelancers; to the recent Fiverr Logo Maker that puts the power of AI into the hands of our design community. We made some bold strategic bets that reimagine how work can be done on our platform. User response to these initiatives have been strong, and you should anticipate continued innovation from Fiverr in the years ahead. Our continued investment in quality, matching and improving the buyer and seller experience has also paid off.

This accelerated momentum in the second half of the year. We also executed well against both our category and international expansion strategies. During the year, we launched over 100 new categories in seven new industry stores. This served as a strong engine for pushing top-of-funnel growth and provides our existing customers with many reasons to explore our new options and return to buy more.

During 2019, we expanded our team's footprint in the U.K. and in Germany. Our marketplace has always been global. However, having a team on the ground that executes localized product and marketing strategies, combined with our enhanced ability to transact in multiple currencies, puts us into a completely different level, and we are already enjoying these benefits.

As we kick off 2020, we will continue to execute on our growth strategies, growing our buyer base, going upmarket, expanding categories, innovating our products and international expansion. We are currently focused on several areas that we are very excited about, and I would like to highlight a few of them now. First, is international expansion. Until now, our website was only in English, but that is changing.

A few days ago, we launched our first two localized sites: for German language speakers and for Spanish language speakers. This is just the beginning. What we plan to do next is to convert all user-generated content, including gig listings, as well as the seller experience. We're also going to start optimizing localized marketing to become more efficient and effective in driving local adoption.

Localization is a long-term investment for us. And we are super excited about the potential market opportunities beyond the U.S. user base. I'm happy that we were able to roll out these two new languages ahead of what we promised.

Next is going upmarket. Today, Fiverr has over 2.4 million active buyers, the majority of whom are entrepreneurs in very small companies, with 15 employees or less. There are over 30 million SMBs in the U.S. alone.

So we are barely scratching the surface. As with many disruptive technologies, we see a natural path of adoption from the bottom-up. Small businesses are typically more cost-conscious and are naturally early adopters who take advantage of new technologies first. As we go upmarket, we want to expand our addressable market and extend our reach to the next tier of users, which we define as organizations of up to 200 employees.

We have invested in tackling these new buyer segments with products such as Fiverr Studios, which help accommodate larger projects, team accounts that allow larger teams to collaborate on Fiverr; Fiverr's VID program, which provides dedicated support for our high-value buyers; industry stores that grows awareness among business users and targeted performance marketing campaigns to acquire these business users. All of these products and marketing investments are geared toward growing market share among larger businesses without the need of a sales force. And you should expect to see more of this theme throughout 2020. The next initiative I would like to highlight is Fiverr's technology infrastructure.

Fiverr's mission is to change how the world works together. And our marketplace is evolving from a simple transaction platform to an ecosystem of products that bring businesses and freelancers together. You've already seen us releasing products like Learn, And Co and ClearVoice to our marketplace to help our buyers and sellers become more successful. In 2020, we will invest in strengthening our core infrastructure.

So we can unlock our data assets, innovate even faster and create more synergy among our products. You will see continuing investment in proprietary quality search and catalog technology. You will also see us investing in personalization and recommendation engines. And finally, we have made strong internal progress on promoted listings.

This will be the first time we give our sellers a tool to proactively promote themselves on our platform. It is something our sellers have requested for a long time, and we believe they will be excited about the product as well. We are taking sufficient time to make sure we get this right from the user experience perspective, and I'm happy to announce that we will be rolling out the beta for promoted listings in April. The rollout of the beta of this product will be an important step in the evolution of the Fiverr marketplace.

To sum up, these investments will allow for continued growth, enable more rapid international expansion in the development of new technologies in automation, advertising and collaboration. I am very excited about 2020. We expect another strong year of growth and progress toward profitability. I look forward to our next call and to sharing our progress with you.

We look forward to seeing many of our investors on the road and at the JMP Securities conference in San Francisco next week. With that, I'm going to turn it over to Ofer, who will share with you a few highlights and our financial outlook for 2020. Ofer?

Ofer Katz -- Chief Financial Officer

Thank you, Micha, and good morning, everyone. We are very happy with the financial results we delivered in 2019 and the growth we are experiencing across all underlying metrics. As Micha mentioned, full-year 2019 revenue grew 42% year over year to $107.1 million. This was driven by 17% growth in active buyers, 17% growth in spend per buyer and a 100 basis point improvement in take rate.

The growth in active buyer and spend per buyer is consistent with the balanced approach we have spoken about before. More importantly, we saw acceleration trends in those two metrics in the back half of the year. The investments we've made in quality, matching and personalization are paying off. We also continued to see strong organic and paid trends at the top of the funnel.

Going forward, we expect we would continue to grow active buyer and spend per buyer in balance session. Our take rate for Q4 was 26.7%, up 100 basis points year over year. To break it down a little more, the 26.7% take rate primarily consist of approximately 25% we charge on the marketplace transaction. The remaining contributions come from Fiverr Learn, And Co, ClearVoice and incremental revenue from currency fees on the marketplace, which we have expect can continue to make modest contribution to the overall take rate throughout 2020.

Moving to expenses. In 2019, we made a significant progress on our path for profitability. Our gross margin continues to be strong and consistent at 80% level. Adjusted EBITDA for the year was negative $18 million, an improvement from the loss of negative $21 million in 2018.

Adjusted EBITDA margin gained 1,100 basis points from the prior year, primarily driven by a 330 basis point improvement in R&D and 780 basis point improvement in sales and marketing. On a full year basis, we saw a modest increase in G&A as a percentage of revenue due to IPO and public company related costs, but these costs have stabilized and showed improving leverage in Q4, a trend we expect to continue into 2020. Overall, we expect continued leverage gain across all operating expenses in 2020, narrowing EBITDA loss on both dollar and margin basis. We are providing strong guidance for the year.

We expect 2020 revenue in the range of $139 million to $141 million, representing year-over-year growth of 30% to 32%. We expect adjusted EBITDA to continue to improve to negative $15 million to negative $13 million, representing a negative 11% to negative 9% of adjusted EBITDA margin. This is an improvement of 680 basis points for over 2019 at midpoint, and we intend to continue making progress for profitability. We expect 2020 quarterly revenues will be distributed with a similar cadence to 2019 revenue.

In Q1 of 2020, we expect revenue of $32 million to $33 million, representing 35% to 39% year-over-year growth. Q1 adjusted EBITDA guidance is negative $5.5 million to negative $4.5 million. We expect adjusted EBITDA margin to increase throughout the year, consistent with prior year pattern. As part of our 2020 revenue guidance, we are taking the following key factors into consideration: First, consistent revenue contribution from our existing cohorts; second, organic revenue growth from new buyers through a growing network effect; third, incremental revenue from new buyers from paid marketing channels.

This is based on planned marketing budget and payback efficiency consistent with historical level. And lastly, continued take rate expansion from products such as Fiverr Learn, And Co and ClearVoice. We've been able to build a diversified business, and as part of that, we added new components to our platform with several product offerings. Some of them were introduced at the end of 2018 or beginning of 2019, which will be lapping a full year by the end of Q1 2020.

We expect the impact on the overall revenue growth will be normalized starting from Q2 2020. The potential revenue impact from new products, such as promoted listings, the additional gains from our continued investment in marketing efficiency, incremental revenue from global expansion efforts and potential conversion improvement from new products in our pipeline are not included in our guidance as the timing and magnitude of these contributions are uncertain. We ended 2019 with excellent results, and the strong business momentum give us confidence in driving continued growth in 2020 and beyond. With that, I will now turn the call over to the operator to open it up for questions.


Questions & Answers:


[Operator instructions] Our first question comes from Doug Anmuth with JP Morgan. Please go ahead.

Doug Anmuth -- J.P. Morgan -- Analyst

First, I was just hoping you could talk about your marketing and customer acquisition a little bit. You talked about tROI the last two quarters at less than four months. So maybe you could just expand on some of the key drivers there, in particular, some of the growth in the affiliated program as well? And then secondly, can you just talk more about how you're balancing growth and profit going forward? You know we've been thinking about EBITDA positive some time in 2022. Is this something you can talk forward, if you could just talk about your kind of outlook and philosophy there?

Micha Kaufman -- Founder and Chief Executive Officer

Thank you and good morning Doug, thanks for the question. So when we think about the marketing and customer acquisition, what we've really pushed during the year that has been very effective for us is the right balance of how we invest across different channels and how we use marketing automation to optimize every campaign that we're running. And that has yielded a great result that some of that reflects in tROI that was kept very low and some in the quality of the buyers that we were acquiring. What we've done along the lines of opening new channels is pretty much doubled our affiliation program, and that has been a very successful driver for us.

Ofer Katz -- Chief Financial Officer

In terms of the second part of the question about growing profit going forward. I think that you've probably noticed, we made a significant progress in 2019 in terms of improving EBITDA margin. It has been improved by 1,100 basis points all the way from 28% in 2018 to 17% by the end of 2019. But having said that, growth continued to be our top priority.

Bear in mind that despite of the impressing financial result of last year, we are still a very young company, and we think that the big time is ahead of us. So we've been very consistent about our commitment, but also our proven ability to increase the efficiency as we scale. We run a marketplace model with a very high gross margin and a highly scalable. So that we plan to continue to be committed to push for profitability in a very consistent and a steady pace as we have done in the last few quarters all the way to breakeven and beyond.

Doug Anmuth -- J.P. Morgan -- Analyst

OK. If I could just follow-up quickly, Ofer, I think, at the end of your remarks, just talking about the outlook, you mentioned a couple of things that were not included in the guidance. Can you just repeat that? I think you said promoted listings and maybe a couple of others, I just want to make sure we got that.

Ofer Katz -- Chief Financial Officer

Thanks. So the way we build the guidance is based on the things we know. And we have enormous repeat community that keep active in the marketplace, generating a fixed stream of revenue over a very long period. Then we also know based on historical data how efficient is our marketing spend.

And we plan to keep the investment looking forward and bringing more cohorts on top of the existing. But we do plan to release a few product ahead of us. Those that we have already spoken about includes promoted listings that we plan to release for beta on April within a few weeks. Because as we're uncertain of magnitude and our plan to softly release in a very certain categories at the beginning, we didn't include this type of product into our guidance.

Same goes to international expansion. We've just released a few days ago two language. It's the first time that Fiverr enabled buyers to engage and buy in different language other than English. We have, on the road map, a few additional improvement of this experience, a few more language.

But yet, the guidance doesn't take good impact of this type of product release. Having said that, bear in mind that the product road map includes few more product, but it's too early to discuss. So all in all, I think, just to summarize, just to recap, the guidance is based on what we know and future products are not included in this aggressive plan for next year.

Doug Anmuth -- J.P. Morgan -- Analyst

Great. Thank you both.


Our next question comes from Ron Josey with JMP Securities. Please go ahead.

Ron Josey -- JMP Securities -- Analyst

Great, thanks for taking the the question. Micha, I wanted to follow up on your commentary, and Ofer as well, just around promoted listings, what you're just talking about. With the beta expected in April, can you just talk about what you've seen in early testing that gives you the confidence it's ready to go in April? And then maybe any insights on the actual data, how you plan to continue to test the product to make sure it's doing what you think it would, would be helpful to understand just the rollout for promoted listings? And also just on the tROI question that Doug was asking. Clearly, we're seeing improvement in brand awareness and the industry as a whole continues to move online.

Any insights on just Fiverr's brand awareness just given the marketing spend this past year would be helpful as you perhaps reached outside of some of the major cities out there?

Micha Kaufman -- Founder and Chief Executive Officer

Thank you. Good morning Ron, thanks for the question. So as to promoted listings, we've been talking about that in the previous few quarters. And I think that we shared with you that we've studied this matter and have been learning how other marketplaces have been successfully rolling out the system.

And I think that based on these learnings, we have been able to develop the system internally. It is worth noting that this is going to be the first time in which Fiverr actually gives its sellers the ability to promote themselves and participate in increasing their success. And so we get a lot of excitement from the community and high interest in doing that. In the rollout plan, essentially, is to start with a number of categories.

First, test the system, but test it with real services and real sellers to see the impact and to start optimizing. I have mentioned before that optimizing a system of promoted listings is a journey and it will take a few good quarters to get it right. And this is one of the reasons why we're not factoring any wishful thinking around that into our guidance. I think the second question was about brand awareness.

So this is an area where we've invested in 2019, including the fact that the IPO itself was a pretty big brand awareness event. And we've done brand awareness campaigns in Germany and in the U.K. And what we see is we see an increase in brand awareness that translates into organic traffic in a way that has been very successful for us. A couple of years ago, when we started doing brand awareness, we were really starting from awareness.

Now a lot of our branding campaign are going down to consideration and to conversion. And that has been translating also into the efficiency of our paid marketing. Brand marketing and paid marketing go side-by-side and have a strong influence on each other. And I think that what we've seen is we've seen that paid off really well and also resulting in a lot of organic activity that has to do with the virality of the service.

All of that, as I've said, translated into mostly organic traffic, which is the way you typically measure brand awareness. So getting all of that success and seeing how that was contributing to the acceleration from the first half of last year to the second half, we're seeing that momentum carried over to the first quarter of this year, which is influencing our guidance for Q1 as well.

Ron Josey -- JMP Securities -- Analyst



Our next question comes from Jason Helfstein with Oppenheimer. Please go ahead.

Jason Helfstein -- Oppenheimer and Company -- Analyst

Thanks. I have two. So clearly, you're seeing good marketing leverage and you've talked about that. You talked in the letter just about the expansion of the German and Spanish local websites.

You talked about that being a long-term investment. Will that weigh on marketing efficiency during 2020? And just how do you think about those opportunities relative to the current marketing flywheel? And then second, what do you think is the most important factors for growth in 2020 as you think about the new products that you launched last year because there were a good amount of things that you'd put out in the marketplace?

Ofer Katz -- Chief Financial Officer

Thanks. So on the first question, on the marketing level, I think that what we have experienced in Germany last year is out-of-home campaign and just the beginning of performance marketing. I think that we are now ready to shift for optimization on performance marketing on a higher scale. Same goes to the U.K.

and same will go to any other language that we plan to release throughout the year. What we did in Germany and U.K. last year is building up the playbook according to which we figured out the formula how to scale in different territories. It's been a successful year in terms of the activity in Germany and its contribution to our growth.

I think we mentioned before that Germany and the U.K. grew faster in the second half of the year. This is part of the reason why we've been able to accelerate the business. We are doubling down on that in terms of performance marketing investment and opening more and more territories as part of the global expansion program.

Micha Kaufman -- Founder and Chief Executive Officer

The second question pertains to the key drivers or what should be expected to drive growth in 2020. I would say that it all starts with the consistent cohorts' behavior that we're seeing. The cohorts are growing and are contributing more and more to our revenues. In addition to that, obviously, we are very excited about what we're doing on the international front, and we think that, that has a great potential.

What we're doing with the larger types of businesses and teams on the platform is something that is definitely contributing to it. Our content marketing platform, which is growing even at a faster pace than the overall growth, and initiatives such as Fiverr Studios that we began last year, and we'll continue to double down this year. So all in all, I think that one of the messages that we're sending to the market is that Fiverr is a product company that pushes innovation across the year, and you should expect to get a pretty steady cadence of new products that we are going to release. We're obviously very excited about what we're doing with sponsored listings.

As I've said, it's really early days, and it's going to take time. But these are all products with very high potential. So all of these are going to be main contributors to our 2020.

Ofer Katz -- Chief Financial Officer

I think just to complement on what Micha said and maybe a kind of a recap, we are pushing hard on active buyer, and we've seen the acceleration last year, which is an indication of our ability, and within a very tight feline. We're pushing hard on spend per buyer, and Micha mentioned all the activities involved, and then we also plan to increase the take rate. And we've done that before, and the plan is to continue modestly increase the take rates throughout the year. The combination of active buyer, spend per buyer and take rates has driven the overall revenue growth throughout the year.


Our next question comes from Nick Jones with Citi. Please go ahead.

Nick Jones -- Citi -- Analyst

Hi. Thanks for taking my questions. I guess, first, on the Logo Maker that you launched. I know it's really early, but is there any kind of early adoption indicators you can talk about? And then maybe to follow on that, when we think about your product rollout plans, are you going to be launching products that compete with kind of industry-leading products that some of the freelancers are using? Or how should we just think about more broadly the product strategy?

Micha Kaufman -- Founder and Chief Executive Officer

Morning Nick, thanks for the question. So first on the Logo Maker, as you pointed out, it's very, very early in the cycle to talk about a lot of details, but what I can say is that the adoption seems to be great, levels of satisfactions are high. The ASP of that product is actually higher and really, what we need to understand around that product is that we're actually from now offering two options. One is of a customized do-it-for-me design, which is the usual way in which customers work with agencies and freelancers.

And the other, which is the Logo Maker that enables a more of a do-it-yourself through the usage of our AI. So it takes human design, but it gives access to this design through AI, which allows customers to customize these logos for their needs really quickly. So that's instant gratification. And that, I think, reflects in both pricing.

By the way, as a product, it's a product that has a higher take rate, that should be noted. And we're seeing high levels of satisfaction around that. Second question, as to product rollout plan. So what we are very focused on growth strategies, and I think, the rollout plan aligns with that.

What we did mention are the investment that we're going to continue doing on the international front. It is important to understand that what we've done in the past few months was to build the infrastructure to have a multilingual service, and that goes for our web service, our mobile services, our mobile apps, which was a big undertaking moving from one language to multiple languages. And what we're doing right now is that we have launched German and Spanish. And what we are doing is we are now moving to add machine translation to the user-generated content, which is an important phase.

And then we're going to also support the ability of customers and freelancers to actually have a conversation in different languages, which are, we think, important cornerstones in the product to have a full multilingual support. Sponsored listings is a big theme. And obviously, and I think, we've demonstrated the impact of what we've done with the expansion of our catalog and building more stores in the catalog to cater to more industries and more use cases. So along those lines of growth vectors, we are going to align the investment in product.

Nick Jones -- Citi -- Analyst

Great. Thanks for taking my questions.


Our next question comes from Eric Sheridan with UBS. Please go ahead.

Eric Sheridan -- UBS -- Analyst

Thanks for taking the question. Maybe coming back to the marketing leverage you're seeing in the business, can you talk a little bit about how your distribution channels, where you're spending your marketing dollars might continue to be evolving as the brand awareness of the company continues to grow? And whether you're taking advantage of sort of paid performance channels versus unpaid channels to some degree and how we should think about that evolving overall from either an efficiency or an ROI standpoint for the company not only 2020, but looking out over the medium to long term? Thanks guys.

Micha Kaufman -- Founder and Chief Executive Officer

Thanks, Eric. Good morning. So basically, when we talk about channels, the majority of our investment is in traditional SEM. And that is where the majority of our attention goes to.

Obviously, what we've done and one of the benefits of being a marketplace that has so many different services listed is that there is a very strong SEO footprint that translates into organic traffic that comes from search, which has been very, very important for us. And what we've done is alongside what I've already mentioned about affiliation, we have done an investment around influencer marketing; as well, we're investing in social channels. And what we're seeing is we're seeing that alongside the work that we're doing on the paid side, there is a lot of organically created viral content that has to do with the amazing capabilities that our platform has, and you can find so many viral videos on YouTube and other channels that are talking about the amazing things that people are getting from the platform, which is also serving us. One of the great signals for us is that, obviously, we do invest more and more in paid marketing.

However, when you look at the relationship between paid and nonpaid, that relationship remains, which means the majority of our new business comes from organic, nonpaid. And the more we spend, the more organic we get, which means that the viral coefficiency of what we're doing is very high.


Our next question comes from Drew Kootman with Cantor Fitzgerald. Please go ahead.

Drew Kootman -- Cantor Fitzgerald and Company-- Analyst

I was curious, as you continue to gain market share and grow your brand awareness, can you talk about the competitive landscape and if you're seeing any changes over the last few quarters?

Micha Kaufman -- Founder and Chief Executive Officer

Drew, thanks for the question. So actually, we haven't seen much of a change. I think that when it comes to brand awareness, I think that the growth of our brand seems to be much faster than other brands in the space. But we haven't seen any change other than that.

As I've said, that translates into higher organic. So it's not just the awareness that is growing, but it's paying off because it's returning as traffic in this business, but we haven't seen any major changes in that space.

Drew Kootman -- Cantor Fitzgerald and Company-- Analyst

Got it. And then what regions and industries within freelancing are you guys seeing the strongest demand for your products?

Micha Kaufman -- Founder and Chief Executive Officer

So obviously, traditionally or historically, we have invested most of our marketing efforts in the U.S., being our biggest market and having a high-growth opportunity because of its term. Over time, we started investing in other areas, and this was mostly around our efforts that have to do with international expansion. So we have invested in Germany and in the U.K., specifically, and we are seeing efficiency of that marketing as we do it side-by-side with what we do with the multilingual support, the addition of other currencies that we added, and in terms of which categories that is most effective so that's another strength of Fiverr as a horizontal marketplace. We don't need to focus on any specific vertical.

We don't need to win on any specific keyword. The fact that we have so many different categories, over 300 categories, and within each category, we have infinite amount of keywords that we can market for, allows us to have a very smart and effective marketing campaign system and that is all powered by marketing automation that allows us to find at any given moment, what are the best categories in which we can acquire customers for. So there is no one category or two that are actually doing much better than others. It changes moment by moment.

And I think that, that is one of the strength of having marketing automation in a horizontal marketplace because you can actually shift your budget almost instantaneously between different campaigns and different categories.

Drew Kootman -- Cantor Fitzgerald and Company-- Analyst



[Operator instructions] Our next question comes from Brad Erickson with Needham & Company.

Brad Erickson -- Needham and Company -- Analyst

Hi guys. Thanks. Just a couple here. One, can you just remind us on the philosophy.

Looks like basically exceed your customer acquisition goals here with the efficiency you called out. Are you pouring those incremental dollars directly back into the business? Or will some of that flow to the bottom line going forward if the NASDAQ continues materializing? And then I have a follow-up.

Ofer Katz -- Chief Financial Officer

Brad, thanks for the question. I think the philosophy and what we've demonstrated last year is that approximately 50% of the exceeding revenue being transferred to the bottom line. So we reinvested approximately 50% of the exceeding revenue in certain marketing, mainly on some R&D.

Brad Erickson -- Needham and Company -- Analyst

Got it. That's great. And then just on the Logo Maker. I know this got asked a little bit earlier, but just wanted to follow up.

I guess, two on that one. One, is that just intended to be a buyer acquisition tool? Or is it more just the obvious driver of driving spend per buyer? And then second, I guess, is there a product push internally trying to drive more integration like this where you're actually creating products your freelancers use every day effectively? Or is this more of like a one-off thing?

Micha Kaufman -- Founder and Chief Executive Officer

Thank you. So on the first part of the question, it is intended to be an acquisition tool and a spend per buyer impact. And to my earlier point on that, I think that what we've acknowledged is that there's a few classes of customers. And some would like a highly customized do-it-for-me service and some would like to have an instant design made for them.

And that is the power of connecting human creativity and design with the power of AI to customize those designs for people's needs. And definitely, we are seeing a potential of using more of these tools, more of this automation in other categories. We are not ready to announce anything at this point. But the idea of creating that system, of creating the technology of automation was not designed just specifically for logo, but has a lot of power to be applied for other categories as well.

And this is definitely one of those things that we're thinking of the types of tools that we can give our freelancers to either make their life easier or to allow them to make a higher income.

Brad Erickson -- Needham and Company -- Analyst

That's great. Thanks.


This concludes our question-and-answer session. I would like to turn the conference back over to Micha Kaufman for any closing remarks.

Micha Kaufman -- Founder and Chief Executive Officer

I just wanted to thank everyone for being on the call today, and wish everyone a great day.


[Operator signoff]

Duration: 52 minutes

Call participants:

Jinjin Qian -- Vice President, Strategic Finance

Micha Kaufman -- Founder and Chief Executive Officer

Ofer Katz -- Chief Financial Officer

Doug Anmuth -- J.P. Morgan -- Analyst

Ron Josey -- JMP Securities -- Analyst

Jason Helfstein -- Oppenheimer and Company -- Analyst

Nick Jones -- Citi -- Analyst

Eric Sheridan -- UBS -- Analyst

Drew Kootman -- Cantor Fitzgerald and Company-- Analyst

Brad Erickson -- Needham and Company -- Analyst

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Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

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