Fiverr(FVRR) - 2021 Q4 - Annual Report

Executive Summary & Management Commentary Fiverr announced strong Q4 and FY2021 results, driven by revenue growth and exceptional retention, reflecting its vision for the evolving work environment Announcement & Overview Fiverr International Ltd. announced strong financial results for the fourth quarter and full year 2021, highlighting significant revenue growth and exceptional retention trends, driven by its vision for the evolving work environment - Fiverr reported financial results for the fourth quarter of 2021, with complete operating results available on its investor relations website[3] - CEO Micha Kaufman emphasized Fiverr's vision driving innovation and product roadmap, leading labor market transformation and delivering a strong finish to 2021 with exceptional retention trends[4] - CFO Ofer Katz noted exceptional growth of 178% over the last two years, with Q4 revenue increasing 43% year-over-year to $79.8 million, providing confidence for strong guidance[4] Financial Highlights Fiverr demonstrated robust financial performance in Q4 and full-year 2021, marked by substantial revenue growth, increased buyer engagement, and improved profitability metrics Fourth Quarter 2021 Financial Highlights Fiverr's Q4 2021 saw 43% revenue growth, increased active buyers and spend per buyer, and improved Adjusted EBITDA margin, despite a higher GAAP net loss Fourth Quarter 2021 Key Financial and Operational Metrics (amounts in millions, unless otherwise specified) | Metric | Q4 2021 | Q4 2020 | YoY Change | | :----------------------- | :---------- | :---------- | :--------- | | Revenue | $79.8 million | $55.885 million | +43% | | Active buyers | 4.2 million | 3.4 million | +23% | | Spend per buyer | $242 | $205 | +18% | | Take rate | 29.2% | 27.1% | +210 bps | | GAAP Gross Margin | 80.9% | 82.6% | -170 bps | | Non-GAAP Gross Margin | 83.4% | 83.9% | -50 bps | | GAAP Net Loss | ($19.5) million | ($8.1) million | -141% | | Non-GAAP Net Income | $9.2 million | $4.8 million | +91.7% | | Adjusted EBITDA | $8.9 million | $4.6 million | +93.5% | | Adjusted EBITDA Margin | 11.1% | 8.3% | +280 bps | - Launched 'Fiverr Inspire,' a new browsing experience for buyers to find freelancers through past projects and deliveries[7] - All older cohorts (joined on or before 2018) retained over 110% of revenue from the previous year, indicating strong retention trends[7] Full Year 2021 Financial Highlights Fiverr's FY2021 saw 57% revenue growth, significant improvements in non-GAAP net income and Adjusted EBITDA, despite an increased GAAP net loss Full Year 2021 Key Financial Metrics (amounts in millions, unless otherwise specified) | Metric | FY 2021 | FY 2020 | YoY Change | | :----------------------- | :---------- | :---------- | :--------- | | Revenue | $297.7 million | $189.510 million | +57% | | GAAP Gross Margin | 82.6% | 82.5% | +10 bps | | Non-GAAP Gross Margin | 84.1% | 83.7% | +40 bps | | GAAP Net Loss | ($65.0) million | ($14.8) million | -339% | | Non-GAAP Net Income | $24.5 million | $10.4 million | +135.6% | | Adjusted EBITDA | $22.9 million | $9.1 million | +151.6% | | Adjusted EBITDA Margin | 7.7% | 4.8% | +290 bps | - Revenue increased 57% year over year, or 178% over two years, demonstrating robust growth[7] Financial Outlook Fiverr provides Q1 and full-year 2022 guidance, projecting continued revenue growth and improved Adjusted EBITDA, with growth accelerating in the second half Q1 2022 and Full-Year 2022 Guidance Fiverr projects continued revenue growth and improved Adjusted EBITDA for Q1 and FY2022, with growth accelerating in H2, alongside steady buyer metrics and stable take rate Q1 2022 and Full-Year 2022 Financial Guidance (amounts in millions, unless otherwise specified) | Metric | Q1 2022 Guidance | FY 2022 Guidance | | :---------------- | :----------------- | :----------------- | | Revenue | $85.0 - $87.0 million | $373.0 - $379.0 million | | YoY Growth | 24% - 27% | 25% - 27% | | Adjusted EBITDA | $1.5 - $3.5 million | $27.0 - $33.0 million | - Expects tough comparisons in H1'22 due to unusual growth spikes during COVID quarters, with growth accelerating in H2'22[11] - Anticipates active buyers to grow in the high single digits and spend per buyer to grow in the teens year-over-year for full-year 2022, with take rate remaining steady with modest upside[11] - Plans catch-up hiring for customer support, product, and engineering teams, while continuing to improve sales and marketing as a percentage of revenue and progress towards a long-term Adjusted EBITDA margin target of 25%[12] Company Information This section provides details on Fiverr's conference call, company mission, platform offerings, and investor/press contact information Conference Call and Webcast Details Fiverr hosted a conference call on February 17, 2022, to discuss its financial results, providing access via live webcast and a telephonic replay for investors and analysts - A conference call was held on Thursday, February 17, 2022, at 8:30 a.m. Eastern Time[14] - A live webcast and an archived version were accessible from Fiverr's Investor Relations website[14] - A telephonic replay was available until Thursday, February 24, 2022[14] About Fiverr Fiverr's mission is to transform how the world collaborates, connecting businesses with skilled freelancers offering digital services across more than 550 categories and 9 verticals since 2010 - Fiverr's mission is to change how the world works together, connecting businesses with skilled freelancers[15] - The platform offers digital services in over 550 categories across 9 verticals, including graphic design, digital marketing, programming, video, and animation[15] - As of December 31, 2021, 4.2 million customers from over 160 countries utilized the platform[15] Investor Relations and Press Contacts Contact information for Fiverr's Investor Relations and Press departments is provided for inquiries - Investor Relations contact: Jinjin Qian at investors@fiverr.com[16] - Press contact: Siobhan Aalders at press@fiverr.com[16] Consolidated Financial Statements This section presents Fiverr's consolidated balance sheets, statements of operations, and cash flows, detailing the company's financial position and performance Consolidated Balance Sheets Fiverr's consolidated balance sheet as of December 31, 2021, shows an increase in total assets to $931.6 million, driven by growth in marketable securities, intangible assets, and goodwill, while cash and cash equivalents decreased significantly Consolidated Balance Sheet Highlights (in thousands of US dollars) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :-------------------------- | :----------- | :----------- | | Total Assets | $931,570 | $861,202 | | Total Liabilities | $584,702 | $515,799 | | Total Shareholders' Equity | $346,868 | $345,403 | | Cash and cash equivalents | $71,151 | $268,030 | | Marketable securities (non-current) | $317,524 | $228,048 | | Intangible assets, net | $49,221 | $5,884 | | Goodwill | $77,270 | $11,240 | Consolidated Statements of Operations For the full year 2021, Fiverr's revenue grew to $297.7 million, but the company reported an increased GAAP net loss of ($65.0) million, primarily due to higher operating expenses, particularly in sales and marketing, and research and development Consolidated Statements of Operations Highlights (in thousands of US dollars) | Metric | FY 2021 | FY 2020 | Q4 2021 | Q4 2020 | | :---------------------------------------- | :-------- | :-------- | :-------- | :-------- | | Revenue | $297,662 | $189,510 | $79,755 | $55,885 | | Gross profit | $245,939 | $156,322 | $64,542 | $46,182 | | Total operating expenses | $291,279 | $168,132 | $78,418 | $49,956 | | Operating loss | ($45,340) | ($11,810) | ($13,876) | ($3,774) | | Net loss attributable to ordinary shareholders | ($65,012) | ($14,810) | ($19,520) | ($8,077) | | Basic and diluted net loss per share | ($1.81) | ($0.46) | ($0.53) | ($0.23) | Consolidated Statements of Cash Flows In 2021, Fiverr generated $38.0 million in net cash from operating activities, a significant increase from 2020. However, substantial cash was used in investing activities, primarily for marketable securities and business acquisitions, leading to an overall decrease in cash and cash equivalents Consolidated Statements of Cash Flows Highlights (in thousands of US dollars) | Metric | FY 2021 | FY 2020 | Q4 2021 | Q4 2020 | | :---------------------------------------- | :-------- | :-------- | :-------- | :-------- | | Net cash provided by operating activities | $38,037 | $17,135 | $8,245 | $4,778 | | Net cash used in investing activities | ($229,470) | ($326,357) | ($82,638) | ($259,938) | | Net cash provided by (used in) financing activities | ($2,397) | $551,813 | $2,634 | $416,056 | | Increase (decrease) in cash, cash equivalents and restricted cash | ($193,960) | $243,859 | ($71,571) | $162,066 | | Cash, cash equivalents and restricted cash at end of period | $74,070 | $268,030 | $74,070 | $268,030 | Key Performance Metrics & Non-GAAP Reconciliations This section details Fiverr's key operating metrics and provides reconciliations of GAAP to non-GAAP financial measures, highlighting adjustments for a clearer view of operational performance Key Performance Metrics Fiverr's key operating metrics for 2021 demonstrate continued expansion of its user base and increased engagement, with significant growth in both annual active buyers and annual spend per buyer Annual Key Performance Metrics | Metric | FY 2021 | FY 2020 | | :---------------------- | :-------- | :-------- | | Annual active buyers (in thousands) | 4,217 | 3,418 | | Annual spend per buyer ($) | $242 | $205 | GAAP to Non-GAAP Gross Profit Reconciliation Fiverr's non-GAAP gross profit for Q4 and FY 2021 exceeded GAAP gross profit, primarily due to adjustments for share-based compensation, other expenses, and depreciation and amortization. Non-GAAP gross margin remained strong, showing a slight decrease in Q4 but an increase for the full year GAAP to Non-GAAP Gross Profit Reconciliation (in thousands of US dollars) | Metric | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | GAAP gross profit | $64,542 | $46,182 | $245,939 | $156,322 | | Non-GAAP gross profit | $66,537 | $46,860 | $250,254 | $158,668 | | Non-GAAP gross margin | 83.4% | 83.9% | 84.1% | 83.7% | GAAP to Non-GAAP Net Income and Net Income Per Share Reconciliation Fiverr reported positive non-GAAP net income for Q4 and FY 2021, contrasting with GAAP net losses. This divergence is mainly attributed to adjustments for non-cash items such as depreciation, share-based compensation, contingent consideration, convertible notes amortization, and exchange rate fluctuations GAAP to Non-GAAP Net Income Reconciliation (in thousands of US dollars, except per share data) | Metric | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | | :------------------------------------ | :-------- | :-------- | :-------- | :-------- | | GAAP net loss | ($19,520) | ($8,077) | ($65,012) | ($14,810) | | Non-GAAP net income | $9,244 | $4,769 | $24,487 | $10,409 | | Non-GAAP basic net income per share | $0.25 | $0.13 | $0.68 | $0.32 | | Non-GAAP diluted net income per share | $0.22 | $0.12 | $0.60 | $0.29 | GAAP Net Loss to Adjusted EBITDA Reconciliation Adjusted EBITDA showed significant improvement in both Q4 and FY 2021, reflecting stronger underlying operational performance when excluding non-operating and non-cash expenses such as financial expenses, income taxes, depreciation, share-based compensation, and acquisition-related costs GAAP Net Loss to Adjusted EBITDA Reconciliation (in thousands of US dollars) | Metric | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | GAAP net loss | ($19,520) | ($8,077) | ($65,012) | ($14,810) | | Adjusted EBITDA | $8,880 | $4,620 | $22,857 | $9,111 | | Adjusted EBITDA margin | 11.1% | 8.3% | 7.7% | 4.8% | GAAP to Non-GAAP Operating Expenses Reconciliation Non-GAAP operating expenses for Research and Development, Sales and Marketing, and General and Administrative were lower than their GAAP counterparts in both Q4 and FY 2021, primarily due to the exclusion of share-based compensation, depreciation, amortization, and acquisition-related costs GAAP to Non-GAAP Operating Expenses Reconciliation (in thousands of US dollars) | Metric | Q4 2021 (GAAP) | Q4 2021 (Non-GAAP) | FY 2021 (GAAP) | FY 2021 (Non-GAAP) | | :-------------------------- | :--------------- | :----------------- | :--------------- | :----------------- | | Research and development | $21,829 | $15,875 | $79,298 | $58,504 | | Sales and marketing | $40,244 | $34,589 | $159,365 | $140,783 | | General and administrative | $16,345 | $7,193 | $52,616 | $28,110 | Non-GAAP Measures Explanation & Legal Disclaimers This section clarifies Fiverr's key performance metrics and non-GAAP financial measures, along with important disclaimers regarding forward-looking statements and associated risks Key Performance Metrics and Non-GAAP Financial Measures Explanation This section defines key performance metrics such as GMV, active buyers, spend per buyer, and take rate, and explains the company's rationale for using non-GAAP financial measures like Adjusted EBITDA. It clarifies that these metrics aid in assessing core operational performance and planning, while acknowledging their limitations and non-comparability to GAAP measures - Defines GMV as the total value of transactions ordered through the platform, excluding VAT, GST, service chargebacks, and refunds[33] - Explains that non-GAAP metrics are used by management and the board as supplemental measures to compare operating performance consistently, remove non-core impacts, and for planning purposes[34] - States that non-GAAP metrics should not be considered in isolation, as an alternative to, or superior to GAAP measures, and are not intended to be a measure of free cash flow[35][36] - A reconciliation of non-GAAP financial measures guidance to comparable GAAP measures for Q1 and FY 2022 is not provided due to the inability to reasonably predict certain excluded items[38] Forward-Looking Statements This section provides a standard disclaimer regarding forward-looking statements, emphasizing that they are based on current expectations and involve known and unknown risks and uncertainties that could cause actual results to differ materially from projections - All statements not relating to historical fact, including expected financial and operational performance for Q1 and FY 2022, are considered forward-looking statements[39] - These statements involve known and unknown risks, uncertainties, and other important factors that may cause actual results to be materially different from any future results expressed or implied[39] - Key risks include the impact of the COVID-19 pandemic, ability to attract and retain users, profitability, brand maintenance, market dependence, data security, platform defects, international expansion, compliance, intellectual property, reliance on AWS, payment and fraud risks, and dependence on senior management[39] - The company undertakes no obligation to update or revise publicly any forward-looking statements, except as required by law[39]