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It's been a wild ride for Fiverr International (NYSE: FVRR) 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.
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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.
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.