Please ensure Javascript is enabled for purposes of website accessibility

Fiverr in 5 Charts

By Jason Hawthorne - Jan 30, 2021 at 9:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These pictures tell the story of accelerating growth and a march to profitability.

The term "gig economy" gets thrown around a lot, but it's often not well defined. The term simply refers to a marketplace where employers hire temporary workers for short-term assignments as needed. While companies like Uber, Lyft, and DoorDash are most often associated with the idea, the best example to date has been Upwork, a platform for connecting temporary workers with employers.

However, a lesser-known company that went public last June is creating a marketplace for professional service "gigs," and it's growing like a weed. As remote work became the norm in 2020, Fiverr International (FVRR -6.92%) found itself in the sweet spot between businesses with short-term work that could be done from anywhere, and talented professionals scattered all over the world looking for jobs they could do without leaving home.

The stock is up 940% since the beginning of 2020, and the following five charts tell the story of a company that may keep up its winning ways even if things go back to normal.

Newspaper headline clippings reading "Gig Economy", "Quick Jobs", "Independent Contractors", etc.

Image source: Getty Images.

1. Active buyers

Active buyers -- those who have used the company's services recently -- are flocking to the site, and the trend has only accelerated during the pandemic. Growth in active buyers, which was 13% in 2018 and 16% in 2019, was already 32% by the third quarter of 2020. The company is adding features to maintain the pace, such as promoted gigs and the ability to break large projects into individual milestones. By making it easier to get work done on the platform, buyers will continue coming back for the jobs they need to get completed.

Bar chart with active buyers increasing from 1.8 million in 2017 to 3.1 million in the third quarter of 2020.

Data source: Fiverr. Chart by author. 

2. Average spend per buyer

Not only are there more buyers coming to Fiverr, but they are spending more when they log on. The average spend per buyer has increased every year and continues to climb, despite the increasing number of buyers on the platform. This is a great sign for continued growth. While many companies suffer once they expand beyond an engaged cohort of early adopters, these numbers show that new customers are continuing to embrace the platform to get more and more of their work done.

Bar chart showing average spend per buyer increasing from $119 in 2017 to $195 in the third quarter of 2020.

Data source: Fiverr. Chart by author. 

3. Revenue growth

That combination of more buyers who each spend more every year is producing accelerating revenue growth. Management estimates revenue for the full year 2020 will come in at $192 million. That will be 79% year-over-year growth from 2019. Compare that to the 42% growth for 2019 and it's clear that Fiverr is nowhere near slowing down.

Line chart with annual revenue increasing from $52 million in 2017 to $192 estimated for 2020.

Data source: Fiverr. Chart by author. 

4. Sales and marketing as a percent of revenue

Another metric pointing in the right direction for Fiverr is the percent of revenue the company is spending on sales and marketing. Early in a company's life, the playbook calls for growth at all costs. What makes a great business is when every dollar a company spends acquiring a new customer generates significantly more over the lifetime of the relationship. With a platform like Fiverr, growth should become self-sustaining as more buyers attract more people looking for work, which brings additional buyers, and so on. Fiverr's numbers are headed in the right direction, although still hovering around 59% in 2019. For comparison, Facebook spends 14% of revenue on sales and marketing in 2019.

Line graph showing sales & marketing as a percent of revenue decreasing from 65% in 2017 to 50% in Q3 2020.

Data source: Fiverr. Chart by author. 

5. Adjusted EBITDA margin

The accelerating growth, combined with a lower percent of revenue needed for sales and marketing, is propelling the company to profitability. In fact, adjusted EBITDA, a proxy for cash flow, as a percent of sales has been less negative each year with the second and third quarters of 2020 turning positive. Fiverr is scaling impressively. With expenses climbing slower than revenue, the company's profitability should continue increasing as it grows.  

Line graph showing adjusted EBITDA margin climbing from egative 33% in 2017 to positive 8% in the third quarter of 2020.

Data source: Fiverr. Chart by author. 

Worth a thousand words

It's been said that a picture is worth a thousand words. These five charts show a growing business that accelerated during the pandemic to produce positive EBITDA on an adjusted basis. If workforce trends from 2020 persist, Fiverr is poised to continue its torrid growth.

It's hard to say how fast and how long the company could grow. Management estimates the addressable market at $115 billion. That sounds like an exaggeration, but the total market for freelancing is $815 billion in the U.S. alone.

Investors buying shares now are certainly paying a steep price -- the company currently trades at 48 times sales. However, Fiverr's market cap is only $8.6 billion. If management can tap even a small percent of the addressable market over the next decade, the stock is poised to multiply several times over. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fiverr International Ltd. Stock Quote
Fiverr International Ltd.
$35.89 (-6.92%) $-2.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.