It's been a wild ride for Fiverr International (FVRR -1.68%) stock since the company's initial public offering in June 2019 at $21 per share. From a period of rapid growth during the pandemic that sent shares of the freelancer marketplace soaring to $323 in 2021, an ensuing slowdown pushed the stock to as low as $18.83 earlier this year.
The good news for investors is that the company's recent results show some encouraging signs of a turnaround. At the time of writing, the stock is up 22% in just the past month amid an improved outlook toward more consistent profitability.
Let's discuss whether this rally can continue and if you should buy Fiverr International stock now.
Higher quality growth into 2025
Fiverr is a hub for individuals to offer digital skills like writing services, graphic design, online marketing, media editing, and computer programming. The marketplace has democratized freelance work and the gig economy by making it easy for sellers to connect with potential clients from all over the world, supported by critical tech infrastructure to handle billing and support.
That said, the platform has seen a significant shift in recent years toward greater professionalization in the pool of both buyers and sellers. Compared to independent hobbyists simply taking on projects as a "side gig," Fiverr is seeing sellers offering more advanced and complex services along with larger small and medium-sized businesses (SMBs) representing key buyers.
The impact is evident across Fiverr's key performance metrics, with buyers making more repeat purchases and spending more per transaction. These dynamics are positive and have positioned the company for more durable growth.
Image source: Getty Images.
Climbing profitability
In the third quarter, Fiverr reported revenue growth of 8% year over year as the average spend per buyer climbed 9%. Adjusted earnings per share (EPS) of $0.64 came in ahead of the consensus Wall Street estimate, marking an increase from $0.55 in Q3 2023.
Fiverr is capturing an expanding share of the total marketplace transaction value through a 33.9% take rate, up from 31.3% in the prior-year quarter. Management is citing the strong response to premium and value-added features such as new artificial intelligence (AI) tools for sellers and enhanced marketing services like "promoted gigs" as growth drivers.
Maybe the biggest development from the latest earnings report was the updated full-year guidance. Fiverr hiked its 2024 revenue growth forecast to a range of 7%-8% from the prior 6%-7% estimate. The company is now targeting 2024 adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of $73 to $75 million, around 25% higher at the midpoint compared to the 2023 result.
The trends suggest Fiverr is making progress on executing its strategy, eyeing what the company believes to still be the early stages of a significant opportunity. The plan going forward is to grow the buyer base, expand internationally, introduce new gig categories, and consolidate market share.
| Metric | 2023 | Prior 2024 Estimate | New 2024 Estimate |
| Revenue (millions) | $361 | $383 to $387 | $388 to $390 |
| Change (YOY) | 7% | 6% to 7% | 7% to 8% |
| Adjusted EBITDA (millions) | $59.2 | $69 to $73 | $73 to $75 |
Source: Fiverr International. YOY = year over year.
Reasons for caution
There's a lot to like about Fiverr International as an investment idea, but it's important to acknowledge some of the challenges the company faces.
One concern is the declining number of total active buyers on the platform, which fell to 3.8 million this past quarter from 4.2 million last year. Even as the cohort of loyal buyers increases their spending on marketplace services, Fiverr will need to reenergize that metric for its next round of growth.
The industry is also highly competitive with companies like Upwork and other niche platforms that operate similar freelancer marketplaces. Ultimately, these areas of uncertainty, combined with the risk that results over the next several quarters will be disappointing could keep shares of Fiverr volatile.
Decision time for Fiverr stock
I'm bullish on Fiverr International and see the company set to benefit from a resilient macroeconomic backdrop into 2025. The company isn't perfect, but the stock looks like a bargain, trading at just 11 times its 2024 consensus EPS estimate of $2.39 as a forward price-to-earnings (P/E) ratio. Investors confident in the company's long-term potential can find a place for this industry leader within a diversified portfolio.
