Fiverr(FVRR) - 2024 Q3 - Quarterly Report

Management Commentary and Q3 Highlights Management highlighted strong Q3 results, exceeding guidance and raising full-year outlook, driven by value-added services and strategic focus on larger customers - CEO Micha Kaufman emphasized the success of value-added products and the integration of GenAI to build new experiences for larger customers[3] - CFO Ofer Katz noted that top and bottom lines exceeded expectations, putting the company on track for its three-year targets, alongside a disciplined capital allocation strategy[3] - Key strategic initiatives include growing wallet share with a 9% YoY increase in spend per buyer, enabling complex projects with tools like Dynamic Matching, and raising full-year guidance[4] Third Quarter 2024 Financial Highlights Q3 2024 revenue grew 8% to $99.6 million, driven by increased spend per buyer and take rate, despite fewer active buyers Q3 2024 Key Financial & Operational Metrics (YoY Comparison) | Metric | Q3 2024 | Q3 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue ($M) | $99.6 | $92.5 | +8% | | Active Buyers (M) | 3.8 | 4.2 | -9% | | Spend per Buyer ($) | $296 | $271 | +9% | | Take Rate (%) | 33.9% | 31.3% | +260 bps | | GAAP Net Income ($M) | $1.4 | $3.0 | -53% | | Non-GAAP Net Income ($M) | $24.6 | $22.6 | +8.8% | | Adjusted EBITDA ($M) | $19.7 | $16.5 | +19.4% | | Adjusted EBITDA Margin (%) | 19.7% | 17.9% | +180 bps | Financial Outlook Fiverr projects Q4 2024 revenue of $100.2M-$102.2M and raised full-year 2024 guidance to $388.0M-$390.0M revenue Financial Outlook for Q4 and Full Year 2024 | Metric | Q4 2024 Guidance | FY 2024 Guidance | | :--- | :--- | :--- | | Revenue ($M) | $100.2 - $102.2 | $388.0 - $390.0 | | YoY Growth (%) | 9% - 12% | 7% - 8% | | Adjusted EBITDA ($M) | $19.5 - $21.5 | $73.0 - $75.0 | Consolidated Financial Statements Detailed unaudited consolidated financial statements for Q3 2024, including Balance Sheets, Statements of Operations, and Cash Flows Consolidated Balance Sheets Total assets increased to $1.035 billion, while total liabilities rose to $710.3 million, leading to a decrease in shareholders' equity Consolidated Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 (Unaudited, $ thousands) | Dec 31, 2023 (Audited, $ thousands) | | :--- | :--- | :--- | | Total Current Assets | $696,618 | $594,476 | | Cash and cash equivalents | $159,245 | $183,674 | | Total Assets | $1,034,810 | $1,023,604 | | Total Current Liabilities | $232,906 | $205,425 | | Convertible notes | $457,220 | $455,305 | | Total Liabilities | $710,324 | $667,830 | | Total Shareholders' Equity | $324,486 | $355,774 | Consolidated Statements of Operations Q3 2024 revenue reached $99.6 million, but GAAP net income declined to $1.4 million due to increased operating expenses Consolidated Statement of Operations Summary (in thousands) | Account | Q3 2024 (Unaudited, $ thousands) | Q3 2023 ($ thousands) | | :--- | :--- | :--- | | Revenue | $99,628 | $92,532 | | Gross Profit | $80,735 | $77,457 | | Total Operating Expenses | $84,211 | $79,802 | | Operating Loss | $(3,476) | $(2,345) | | Net Income | $1,353 | $3,025 | | Diluted Net Income Per Share ($) | $0.04 | $0.07 | Consolidated Statements of Cash Flows Net cash from operations decreased to $10.9 million, with significant cash used in investing and financing activities Consolidated Statement of Cash Flows Summary (in thousands) | Activity | Q3 2024 (Unaudited, $ thousands) | Q3 2023 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,867 | $23,399 | | Net cash provided by (used in) investing activities | $(13,774) | $(55,673) | | Net cash provided by (used in) financing activities | $(26,682) | $198 | | Decrease in cash and cash equivalents | $(29,484) | $(32,362) | Key Performance Metrics Active buyers decreased to 3.77 million, but annual spend per buyer increased to $296 for the LTM period Key Performance Metrics (LTM as of Sep 30) | Metric | 2024 | 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Annual active buyers (thousands) | 3,773 | 4,164 | -9.4% | | Annual spend per buyer ($) | 296 | 271 | +9.2% | Reconciliation of GAAP to Non-GAAP Measures Detailed reconciliations of GAAP to non-GAAP financial measures, adjusting for non-cash and non-recurring items for clarity Gross Profit Reconciliation Non-GAAP gross profit reached $83.7 million (84.0% margin) in Q3 2024, adjusted from GAAP gross profit of $80.7 million Q3 2024 Gross Profit Reconciliation (in thousands) | Account | Amount ($ thousands) | | :--- | :--- | | GAAP gross profit | $80,735 | | Add: Share-based compensation | $514 | | Add: Depreciation and amortization | $2,415 | | Non-GAAP gross profit | $83,675 | | Non-GAAP gross margin (%) | 84.0% | Net Income Reconciliation Q3 2024 Non-GAAP net income was $24.6 million ($0.64 per share), adjusted from GAAP net income of $1.4 million Q3 2024 Net Income Reconciliation (in thousands) | Account | Amount ($ thousands) | | :--- | :--- | | GAAP net income | $1,353 | | Add: Depreciation and amortization | $3,392 | | Add: Share-based compensation | $18,464 | | Add: Other adjustments | $1,402 | | Non-GAAP net income | $24,611 | | Non-GAAP diluted net income per share ($) | $0.64 | Adjusted EBITDA Reconciliation Q3 2024 Adjusted EBITDA was $19.7 million (19.7% margin), reconciled from GAAP net income of $1.4 million Q3 2024 Adjusted EBITDA Reconciliation (in thousands) | Account | Amount ($ thousands) | | :--- | :--- | | GAAP net income (loss) | $1,353 | | Less: Financial income, net | $(6,881) | | Add: Income taxes | $2,052 | | Add: Depreciation and amortization | $3,392 | | Add: Share-based compensation | $18,464 | | Add: Other adjustments | $1,273 | | Adjusted EBITDA | $19,653 | | Adjusted EBITDA margin (%) | 19.7% | Operating Expenses Reconciliation Non-GAAP operating expenses were lower across R&D ($16.3M), S&M ($38.6M), and G&A ($9.2M) after adjustments Q3 2024 Operating Expenses Reconciliation (in thousands) | Expense Category | GAAP ($ thousands) | Non-GAAP ($ thousands) | | :--- | :--- | :--- | | Research and development | $22,424 | $16,261 | | Sales and marketing | $42,970 | $38,577 | | General and administrative | $18,817 | $9,184 | Free Cash Flow Reconciliation Q3 2024 free cash flow was $10.6 million, derived from $10.9 million in operating cash flow less capital expenditures Q3 2024 Free Cash Flow Reconciliation (in thousands) | Account | Amount ($ thousands) | | :--- | :--- | | Net cash provided by operating activities | $10,867 | | Less: Purchase of property and equipment | $(290) | | Less: Capitalization of internal-use software | $0 | | Free cash flow | $10,577 | Supplementary Information Provides definitions for key non-GAAP and operational metrics, alongside standard forward-looking statements and risk disclaimers Definitions of Key Metrics and Non-GAAP Measures Defines key performance metrics like active buyers, spend per buyer, and take rate, along with non-GAAP measures - Active buyers: Buyers who have ordered a service on the platform within the last 12-month period[31] - Spend per buyer: Calculated by dividing Gross Merchandise Value (GMV) within the last 12-month period by the number of active buyers[31] - Free cash flow: Defined as net cash provided by operating activities less capital expenditures (property/equipment purchases and capitalized software)[30] Forward-Looking Statements Standard disclaimer on forward-looking statements, highlighting risks like political instability, economic conditions, and competition - The statements are not guarantees and involve significant risks and uncertainties[37] - Key risk factors mentioned include political/military instability in Israel, adverse economic conditions, competition, ability to attract/retain users, and data security[37]