Freelance platform Fiverr International (FVRR -1.44%) has garnered heightened attention from investors since the pandemic began as the workforce increasingly transitions to remote and hybrid options. The stock is down by double digits since the beginning of this year. Is now a good time to buy? In this segment of Backstage Pass, recorded on Dec. 1, Fool contributors Rachel Warren and Brian Feroldi discuss.
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Rachel Warren: I will take it away with Fiverr then. As The Great Resignation continues, a company like Fiverr that provides the platforms and tools that freelancers need to succeed in their side hustles or full-time businesses, it's becoming more relevant than ever before. Fiverr is trading down about 30% over the past year. But over the past five years, the stock has gained a premium of about 350%. The company recently reported its third-quarter earnings results. The stock jumped on that news. That was a really strong quarter for the company a lot of ways. For example, its revenue grew 42% year over year.
This was driven by a few key factors, one of which was that the number of active buyers on its platform surged 33% year over year, and its average spend per buyer was up 20% compared to the third quarter of 2020. The company also noted that it continued to improve its take rate, which management said "underscores the strength and resilience of our business."
The company has launched a range of services as well as made some recent acquisitions that have really contributed to the overall value that its platform can provide, both to buyers and sellers of services on its platform. The company launched something called Fiverr Workspace, which essentially helps to automate the freelance process with everything from task management tools for freelancers to making it easier for freelancers to invoice clients as well as process payments from those clients.
Notably, management raised its guidance for the full-year 2021 after its third-quarter report. The company is now targeting between 54% and 56% year-over-year revenue growth, which could be as high as $295.4 million for the 12-month period. Fiverr also announced, I believe, earlier in November, that it was acquiring a company called Stoke Talent, an intuitive all-in-one solution that helps companies manage their work with freelance talent. This was a $95 million acquisition. But this brought a whole host of tools into Fiverr's portfolio.
Management said these include tools to onboard, pay, track budgets, and more. With Stoke's products, Fiverr is looking to add more value to larger businesses and integrate with existing corporate workflows. Also, in the third quarter, the company acquired an online learning company called Creative Wise, which it described as a renowned creative and entrepreneurial education platform where people can learn more about design business, photography, video marketing, and more. The platform features a range of best-selling authors, thought leaders and entrepreneurs, and instructors.
Fiverr is clearly making massive strides to not only grow its platform and grow the buyers and sellers of services on that platform, but also to create more value to those customers, so very interesting company in my view.
Brian Feroldi: This company has been under a lot of selling pressure for almost a year now. One of the reasons why is Microsoft has been talking up its investments in LinkedIn and getting more freelancer attention through the LinkedIn platform. Do you think that that is an existential threat to Fiverr?
Rachel Warren: At the moment, no. I think that Fiverr has, like Upwork, very much differentiated itself as, this is its business model. Its platform solely exists for buyers and sellers of freelance services to connect, contributing massively to the gig economy, which is more and more becoming a part of the overall economy as well.
I think these trends we're seeing with The Great Resignation of so many employees going to start their own businesses, turning to side hustles or maybe turning their side hustle into their full-time job, I think one of the platforms that those individual automatically think of is a company like Fiverr. I think it's carved a really nice little niche out for itself. I'm not concerned about that threat from Microsoft, at least not in the near future.
