Gimme Five(rr)!
With Fiverr reporting their earnings in just a few days, let look at the company and see why this stock has more room to grow.
** If you don’t have an eToro account – you can set one up here! **
** Already have an eToro account? Check out my profile! **
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Note that this does not apply to US Users and eToro USA LLC does not offer CFDs.
What is Fiverr?
Fiverr is an online marketplace, where people can flog their skills, businesses can match those skills with what they want. Simple supply and demand. Graphic designer? Yep! Artist? Yep!
Key points
- Another startup from Israel (omg just like eToro!)
- This gig economy is not going anywhere. With more people working from home, they no longer have to commute, thus having a few hours each week to potentially start a side hustle.
- With the increase in working from home situations, small-medium enterprises need to get up to speed… fast. No better opportunity to bring in a specialist freelancer for that one particular job.
- Started 10yrs ago as a way for tech freelancers to pick up a quick $5 for basic digital services (hence the Fiverr component)
- Unemployed workers and students entering the workforce were increasingly likely to sell their services on marketplaces such Fiverr in the absence of (or in addition to) job openings in the formal sector. Where unemployment rates rocketed, Fiverr became a much-needed source of income for many families.
Looking to Fiverr’s future
This gig economy is going no more. Businesses find it a better financial decision to bring in a specialist worker to provide their services and get out. Sure, their rate might be higher initially but these are just short stints. Quick onboard, quick offload. You pay a premium for a premium service.
This is just going to grow and grow the more international gigs that pop up. No longer will you have to be in the same building, city or state as your freelancer. With the rise of technology, so has risen the remote working force. Even I signed up and I’m working remotely as a project manager, assisting a company in a different timezone in their implementation of Office365. As they’re in a different timezone, I can work in the evening when they’re still at work and it works around my home life.
Fiverr is not the only player in the gig economy marketplace but they have carved out a nice section for themselves by listening to their users. Their user experience is second to none.
Covid was a Fiverr’s growth catalyst
In 2019, Fiverr had a great year, with strong revenue results compared to 2018. It hit nearly 2.5 million buyers in 2019, compared to 2.1 million the previous year. Now we look at June 2020 – a few months into the COVID pandemic. They hit 2.8mill users – so an increase of 300k in only 6 months. Not only did the users’ increase, so did sales growth (82%).
Cinque/Cinco/fünf time!
A key part of its growth is upping their work in the international, non-English speaking market. Places like Germany, Italy, Spain and France (combined 260million population) have enjoyed expansion into their countries, in their language. Making it easier to converse and secure work.
Next step? Fiverr Business!
Fiverr is adding some key enhancements to their platform to make it more appealing to businesses using it, rather than just individuals. Fiverr Business signs up businesses to establish an account. Through their account, they’re than handle budgets, track project status, track performing freelancers and use tools to get the best talent for the job.
Hmmm, there must be something wrong with Fiverr
Fiverr hits the spot on sales growth but where it falls behind is becoming consistently profitable. This will be evident in the upcoming earnings report (28 Oct). One thing to keep an eye on is the regulatory efforts in labour rules. This rule impacts freelance workers performing multiple roles without being classified as employees for state employment law purposes.
Earnings Report
Zacks consensus estimate is that Fiverr is expected to post quarterly earnings of $0.08 per share in its upcoming report, which represents a year-over-year change of +166.7%. Revenues are expected to be $49.32 million, up 77% from the year-ago quarter. These are the key numbers to listen out for during the earnings call. Over the last 4 quarters (since IPO), Fiverr has beaten consensus EPS estimates 4 out of 4 times. But this quarter, there are big expectations. Can they beat estimates again? To me, it doesn’t matter. I’m looking at 4-5yrs, not 4-5days into the future.
Final thoughts
I like Fiverr. A lot. I wanted to see what the fuss was about so I signed up. Then I looked into the company more. How were people using it, why were they using, where is the company headed. After uncovering a few bits of information, it seemed like a no brainer for me and I added $FVRR to my portfolio in September, even though it was up over 400% since the March lows. There’s still plenty more room to grow over the years.
The above was constructed with the help of Motley Fool, Yahoo Finance, Zacks, Barrons, and me being a nosy researcher and looking through Fiverr’s shareholder documents.
