A study showed that 36% of the US workforce has freelanced during the pandemic, a necessity for some as businesses in industries affected by COVID-19 were forced to shut down or lay off workers. Freelancing platform Fiverr International (NYSE:FVRR) has been among the companies helping people turn their skills into income.

But don't make the mistake of assuming that this company needs COVID to grow. Here are three reasons why Fiverr will continue to thrive well past the pandemic.

The workspace is changing

Freelancing has slowly grown in the U.S. over many years, from 17% of full-time workers in 2014 to 28% in 2019; in Europe, it's grown 45% over the same time period. Younger workers often appreciate the benefits of freelancing; these include flexibility to work on their own schedules, potentially higher pay, and work-from-home settings that many prefer because they feel like their own bosses.

Businesses have also adopted freelancers; in 2019, 59% of companies used freelancers or remote workers to some degree. As technology improves, many companies have saved money by outsourcing skills that might not justify a full-time employee, such as graphic design and copywriting.

A younger worker sits at a laptop in a creative work space.

Image source: Getty Images.

These are valuable skills that freelancers can sell to multiple businesses, creating a situation where both the company and the worker benefit. The average skilled freelancer earns $31 per hour -- often enough to make a living, without the expenses of commuting to (or dressing up for) work.

COVID has boosted freelancing, but that market grew before the pandemic and could easily continue to grow beyond the pandemic.

Fiverr's platform is expanding

The company's popular project-selling platform gives buyers and sellers a place to come together, providing a system to advertise, negotiate, communicate, and exchange payment -- all in one place. The company estimates that its total addressable market is currently worth $115 billion, and is branching out to continue grabbing more of it.

Fiverr generates revenue by taking a percentage of the value of each job booked on its platform, so it's taking steps to increase the dollar amounts involved. The changes are working, too. Average spend per buyer has grown from $145 in 2018 to $216 for the first quarter of 2021. The company is driving this increase by expanding its platform to attract higher-skilled sellers who charge more, and by launching premium services such as Fiverr Business, which caters to companies. Sellers can also promote themselves with advertising on the platform, which Fiverr provides in exchange for a larger portion of the job value.

The company is expanding internationally and provides options for speakers of German, Spanish, French, Portuguese, Italian, and Dutch. Fiverr's variety of languages, job categories, and business services offered, all support revenue growth within an expanding freelance economy. In Q1 2021, revenue grew 100% over the prior year, and while growth could regress to pre-pandemic levels as COVID passes, its 41% revenue growth in 2019 indicates that Fiverr was already doing great before the pandemic. 

Profitability is ramping up

The business has become increasingly profitable as it grows larger. Revenue has grown from $76 million in 2018 to $190 million in 2020; EBITDA (earnings before interest, taxes, depreciation, and amortization) margin has improved from negative 28% to positive 5% over the same time frame.

Fiverr's 2020 EBITDA of $9.1 million was its first profitable year. Management is guiding for EBITDA between $19.5 million and $24.5 million in 2021. The company is at that turning point in a business where revenue is growing faster than expenses. Fiverr is still growing, projecting 2021 revenue to grow between 59% and 63%, to more than $300 million; that could mean accelerating earnings growth in coming years.

Is Fiverr a buy?

At $240 per share, the stock trades at a price-to-sales (P/S) ratio of about 30 based on management's 2021 guidance. Compared to Fiverr's closest competitor Upwork, which trades at a P/S of 14, shares of Fiverr seem expensive. However, it's growing revenue twice as fast as Upwork, so investors are giving the stock a premium valuation.

Keep an eye on how revenue growth rates look as COVID begins to recede, and make sure that earnings growth continues now that Fiverr is profitable on an EBITDA basis. Shareholders could benefit if the company continues to perform at a high level, as its $9 billion market cap grows to match the large freelance economy Fiverr serves.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.