Why Fiverr's Q3 Earnings Should Keep It Among the Year's Best Tech Stocks

Services

Published: October 28, 2020 10:51 am

Fiverr International Ltd. (NYSE: FVRR) reported third-quarter 2020 results before markets opened Wednesday. The gig platform provider posted adjusted diluted earnings per share of $0.13 on revenue of $52.3 million. In the same period a year ago, the company reported a loss-per-share of $0.12 on revenue of $27.9 million. Third-quarter results also compare to consensus estimates for EPS of $0.08 on revenues of $49 million.

As of a week ago, Fiverr was one of the best-performing tech stocks of the past 12 months. Shares had added 678% to their price since trading at around $21 a year ago. It’s been a rough week since then, however, and the Israel-based company closed Tuesday up more than 520% for the past year.

Fiverr reported 3.1 million active buyers as of September 30, an increase of 37% year over year. The average spend per buyer rose from $163 to $195 over the same period. Adjusted gross margin rose by 360 basis points to 83.4%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved from a loss of $4.4 million in the year-ago quarter to a profit of $4.2 million in the third quarter.

The company provided revenue and adjusted EBITDA guidance for the fourth quarter and raised guidance on those two metrics for the full fiscal year. For the fourth quarter, Fiverr projects revenue growth of 77% to 81% year over year to a range of $52.4 to $53.4 million. Adjusted EBITDA for the quarter is forecast at $4.0 million to $4.5 million.

For the full year, the company raised revenue guidance from a prior range of $177.5 million to $179.5 million to a new one of $186.0 million to $187.0 million. Adjusted EBITDA guidance was raised from a prior range of $4.5 million to $6.5 million to a new range of $8.5 million to $9.0 million.

Analysts estimate fourth-quarter EPS of $0.08 on revenue of $49.7 million. For the full year, the consensus estimate calls for EPS of $0.23 on revenue of $179.9 million.

Fiverr provides a platform for companies seeking temporary, freelance help with services like graphic design, content marketing and web analytics. The COVID-19 induced work-from-home trend almost certainly played a part in the company’s growth this year.

That said, however, the pandemic was likely a proving ground for Fiverr’s jump in buyers for its services. The trick for the company will be to maintain those buyer connections when the world returns to some semblance of normality.

The stock traded up 4.3% Wednesday to $155.01, in a 52-week range of $19.32 to $184.99. The consensus price target on the stock is $135.38. The stock closed Tuesday at $146.00, a multiple of 228 times expected 2021 earnings. Ahem.