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Why Fiverr International Fell by 16.9% in November

By Royston Yang – Dec 8, 2021 at 3:24AM

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The freelancer platform suffered from weak sentiment but its business momentum remains as strong as ever.

What happened

Shares of Fiverr International (FVRR -1.78%) fell by 16.9% in November, according to data provided by S&P Global Market Intelligence.

This drop means that the shares of the company, which provides a platform for freelance services, are now down around 28.7% year to date.

Person drinking coffee while working at home.

Image source: Getty Images.

So what

Fiverr announced its fiscal 2021 third-quarter earnings during the month, and it was yet another strong quarter for the Israeli company. Revenue increased by 42% year over year to $74.3 million while gross profit increased by roughly the same quantum to $61.9 million. Although operating loss deepened due to higher spending on marketing and research, free cash flow nearly tripled year over year from $9.4 million to $27.9 million.

Other financial metrics were also encouraging, signaling that growth is still intact for the freelance services platform. Active buyers grew by 33% year over year to 4.1 million, while spend per buyer climbed by 20% year over year to $234. Fiverr's take rate also improved to 28.4% during the quarter, reflecting an increase of 1.4% from a year ago. The company has also bumped up its full-year revenue guidance from between $280 million and $288 million to between $292.4 million and $295.4 million, implying a year-over-year growth of around 55%.

The weakness in Fiverr's stock price seems to be the result of overall weak sentiment with high-growth stocks and does not seem specific to the company.

Now what

The company went from strength to strength as it reported both revenue and user growth. Two acquisitions made during the quarter look set to bolster its competitive position and widen its breadth of services offered. The first was of CreativeLive, an education platform that allows people to learn about design, video, marketing, and other disciplines from a diverse group of award-winning authors and entrepreneurs. The second, Stoke Talent, will help the company to provide more value to larger businesses by extending tools such as payments and budget tracking to help improve workflows. 

At the same time, Fiverr has also launched Fiverr Workspace to help freelancers with a comprehensive solution to managing their business. Freelancers can use a single login to access the company's marketplace and workspace, and order and income information can be transferred seamlessly from one platform to the other. 

The company's continuous efforts in improving its platform should enable it to remain top of mind for buyers, while also attracting more freelancers to sign up and stay on its platform, thus strengthening its network effect. Fiverr also has plans to expand internationally now that it has its localization infrastructure in place, and investors could soon see more good news on this front as the company grows its global footprint.

Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Fiverr International. The Motley Fool has a disclosure policy.

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