Shares of Fiverr International (FVRR -4.19%) started Wednesday's trading session strong, having gained 11.9% at 10 a.m. ET. The freelance services marketplace operator reported robust results in the second quarter of 2024, narrowed its full-year revenue guidance on the high end of previous projections, and announced a strategic buyout in the dropshipping e-commerce space.
Fiverr's Q2 by the numbers
Fiverr's second-quarter sales rose 5.9% year over year, landing at $94.7 million. Adjusted earnings fell from $0.58 to $0.49 per diluted share, based on $20.0 million in adjusted net income. At the same time, free cash flow increased 13% to $20.7 million.
Your average Wall Street analyst would have settled for earnings near $0.55 per share, though their consensus revenue projections turned out to be precisely on target.
Looking ahead, Fiverr's management raised the midpoint of their full-year revenue guidance from $384 million to $385 million -- a slight tweak inspired by rising interest in more complex, skill-based, and costly freelancer services.
Moreover, the company is buying the dropshipping services expert AutoDS for an undisclosed sum. The deal boosts Fiverr's presence in a global market worth $285 billion last year, estimated to expand by a compound annual growth rate of 24% over the next nine years.
AI's place in Fiverr's business plan
Fiverr continued to deliver solid results despite the rise of artificial intelligence (AI) tools such as ChatGPT and DALL-E 3. As it turns out, it still takes human creativity to craft effective AI prompts, select promising results from AI-generated texts or images, and turn generative AI products from raw ideas into business-grade results.
"AI continues to be a net positive for us, with the growth of complex services more than offsetting the decline in simple services," Fiverr's management stated in the earnings report. "In fact, we continue to see improving trends on simple services, as the overall mix of projects within these categories shift [sic] toward higher-end skills."
It's no surprise to see Fiverr's shares rise on this solid report, given the positive developments in the company's revenue trends and product mix. Still, the stock remains 27% below its 52-week highs and much further below the all-time peak price of $323 per share in February 2021. Changing hands at just 16 times free cash flows today, Fiverr's stock looks like a no-brainer buy, despite the morning's big jump.
