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Fiverr Announces Third Quarter 2019 Results

November 13, 2019

NEW YORK--(BUSINESS WIRE)--Nov 13, 2019--

Fiverr International Ltd. (NYSE: FVRR), the company that is changing how the world works together, today reported financial results for the third quarter ended September 30, 2019. Complete operating results and management commentary can be found by accessing the Company’s shareholder letter posted to its investor relations website at investors.fiverr.com.

“It is gratifying to see another quarter of stellar performance and rapid growth and that our continued investment in the platform experience is paying off. Importantly, we are also making great strides on our path to profitability,” said Fiverr CEO Micha Kaufman. “Recent strategic initiatives that highlight our multiple growth levers continue to focus on enhancing our value proposition to both buyers and sellers globally while simultaneously growing our addressable market.”

Ofer Katz, Fiverr CFO, added, “The growth of our active buyer base was driven by continued and consistent cohort behavior, further gains in performance marketing efficiency, and our latest product and technology enhancements. The strong growth in spend per buyer highlights our continued success in moving upmarket, and we continued to expand our industry-leading take rate. We look forward to ending 2019 on a strong note.”

Key Third Quarter 2019 Financial Results

Recent Business Highlights

Financial Outlook

Based on our results for the first nine months of 2019 and the strong momentum we see across our platform, we are raising our revenue guidance for the year to 40-41% with continued progress towards profitability.

 

Q4 2019

FY 2019

Revenue

$28.0 - $29.0 million

$105.5 -$106.5 million

Year over year growth

35% - 40%

40% - 41%

Adjusted EBITDA

($4.3) - ($3.5) million

($19.0) - ($18.2) million

1

Adjusted EBITDA is a non-GAAP financial measure. See “Key Performance Metrics and Non-GAAP Financial Measure” for additional information regarding this and other non-GAAP metrics used in this release.

Conference Call and Webcast Details

Fiverr’s management will host a conference call to discuss its financial results on Wednesday, November 13, 2019 at 8:30 a.m. Eastern Time. A live webcast of the call can be accessed from Fiverr’s Investor Relations website. An archived version will be available on the website after the call. Investors and analysts can participate in the conference call by dialing (866) 270-1533, or (412) 317-0797 for callers outside the United States, and mentioning the passcode, “Fiverr.” A telephonic replay of the conference call will be available until Wednesday, November 20, 2019, beginning one hour after the end of the conference call. To listen to the replay please dial (877) 344-7529, or (412) 317-0088 for callers outside the United States, and enter passcode 10135686.

About Fiverr

Fiverr’s mission is to change how the world works together. The Fiverr platform connects businesses of all sizes with freelancers offering digital services in more than 250 categories, across 8 verticals including graphic design, digital marketing, programming, video and animation. Since inception, the platform has served over 5.5 million businesses and has facilitated over 50 million transactions. Fiverr’s global community of freelancers spans across more than 160 countries. We invite you to visit us at fiverr.com, read our blog and follow us on Facebook, Twitter and Instagram.

CONSOLIDATED BALANCED SHEETS

(in thousands)

 

September 30,

December 31,

2019

2018

(Unaudited)(Audited)
Assets
Current assets:
Cash and cash equivalents

$

22,741

 

$

55,955

 

User funds

 

54,700

 

 

39,736

 

Bank deposits

 

20,000

 

 

-

 

Restricted deposit

 

310

 

 

327

 

Marketable securities

 

109,945

 

 

-

 

Other receivables

 

2,889

 

 

776

 

Total current assets

 

210,585

 

 

96,794

 

 
Property and equipment, net

 

5,418

 

 

5,143

 

Intangible assets, net

 

7,396

 

 

4,065

 

Goodwill

 

11,240

 

 

1,381

 

Restricted deposit

 

3,182

 

 

3,191

 

Other non-current assets

 

493

 

 

456

 

 
Total assets

$

238,314

 

$

111,030

 

 
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables

$

1,995

 

$

3,364

 

User accounts

 

54,700

 

 

39,736

 

Other account payables and accrued expenses

 

22,097

 

 

10,231

 

Current maturities of long-term loan

 

496

 

 

445

 

Total current liabilities

 

79,288

 

 

53,776

 

 
Long-term loan and other non-current liabilities

 

5,389

 

 

3,280

 

 
Total liabilities

 

84,677

 

 

57,056

 

 
Shareholders' equity:
Share capital and additional paid-in capital

 

303,664

 

 

178,164

 

Accumulated deficit

 

(150,324

)

 

(123,592

)

Accumulated other comprehensive income (loss)

 

297

 

 

(598

)

Total shareholders' equity

 

153,637

 

 

53,974

 

Total liabilities and shareholders' equity

$

238,314

 

$

111,030

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except loss per share data)

 
Three Months EndedNine Months Ended
September 30,September 30,

2019

2018

2019

2018

(Unaudited)(Unaudited)
Revenue

$

27,867

 

$

19,653

 

$

77,542

 

$

54,798

 

Cost of revenue

 

5,863

 

 

3,792

 

 

16,104

 

 

11,603

 

Gross profit

 

22,004

 

 

15,861

 

 

61,438

 

 

43,195

 

 
Operating expenses:
Research and development

 

9,088

 

 

6,611

 

 

25,161

 

 

19,180

 

Sales and marketing

 

15,859

 

 

12,651

 

 

47,087

 

 

38,039

 

General and administrative

 

5,894

 

 

3,923

 

 

15,871

 

 

16,363

 

Total operating expenses

 

30,841

 

 

23,185

 

 

88,119

 

 

73,582

 

Operating loss

 

(8,837

)

 

(7,324

)

 

(26,681

)

 

(30,387

)

Financial income, net

 

483

 

 

84

 

 

687

 

 

209

 

Loss before income taxes

 

(8,354

)

 

(7,240

)

 

(25,994

)

 

(30,178

)

Income taxes

 

(80

)

 

-

 

 

(106

)

 

-

 

Net loss

 

(8,434

)

 

(7,240

)

 

(26,100

)

 

(30,178

)

Deemed dividend to protected ordinary shareholders

 

-

 

 

-

 

 

(632

)

 

-

 

Net loss attributable to ordinary shareholders

 

(8,434

)

 

(7,240

)

 

(26,732

)

 

(30,178

)

Basic and diluted net loss per share attributable to ordinary shareholders

$

(0.26

)

$

(1.10

)

$

(1.61

)

$

(4.63

)

Basic and diluted weighted average ordinary shares

 

31,867

 

 

6,606

 

 

16,647

 

 

6,524

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
Three Months EndedNine Months Ended
September 30,September 30,

2019

2018

2019

2018

(Unaudited)(Unaudited)
Operating Activities
Net loss

$

(8,434

)

$

(7,240

)

$

(26,100

)

$

(30,178

)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization

 

961

 

 

586

 

 

2,678

 

 

1,641

 

Stock-based compensation

 

2,600

 

 

2,737

 

 

6,562

 

 

10,355

 

Net gain from exchange rate fluctuations

 

69

 

 

75

 

 

132

 

 

24

 

Changes in assets and liabilities:
User funds

 

(4,697

)

 

-

 

 

(14,964

)

 

-

 

Other receivables

 

(60

)

 

44

 

 

(1,351

)

 

(689

)

Trade payables

 

(2,386

)

 

1,067

 

 

(1,510

)

 

1,019

 

User accounts

 

4,697

 

 

1,977

 

 

14,964

 

 

8,495

 

Other account payables and accrued expenses

 

4,956

 

 

(1,319

)

 

9,049

 

 

2,017

 

Amortization of discount on marketable securities

 

(558

)

 

-

 

 

(558

)

 

-

 

Non-current liabilities

 

167

 

 

10

 

 

62

 

 

194

 

Net cash used in operating activities

 

(2,685

)

 

(2,063

)

 

(11,036

)

 

(7,122

)

 
Investing Activities
Acquisition of business, net of cash acquired

 

-

 

 

-

 

 

(9,967

)

 

(2,676

)

Purchase of property and equipment

 

(376

)

 

(235

)

 

(835

)

 

(607

)

Capitalization of internal-use software

 

(199

)

 

(190

)

 

(523

)

 

(646

)

Other receivables and non-current assets

 

111

 

 

143

 

 

(11

)

 

(115

)

Bank deposits

 

-

 

 

-

 

 

(20,000

)

 

-

 

Restricted deposit

 

-

 

 

-

 

 

-

 

 

(60

)

Investment in marketable securities

 

(34,961

)

 

-

 

 

(144,352

)

 

-

 

Proceeds from sale of marketable securities

 

34,997

 

 

-

 

 

34,997

 

 

-

 

Net cash used in investing activities

 

(428

)

 

(282

)

 

(140,691

)

 

(4,104

)

 
Financing Activities
Proceeds from exercise of options

 

32

 

 

520

 

 

573

 

 

670

 

Proceeds from initial public offering, net

 

(3,155

)

 

-

 

 

113,802

 

 

-

 

Proceeds from issuance of protected ordinary shares, net

 

-

 

 

-

 

 

4,340

 

 

-

 

Repayment of long-term loan

 

(119

)

 

(111

)

 

(347

)

 

(327

)

Net cash provided by (used in) financing activities

 

(3,242

)

 

409

 

 

118,368

 

 

343

 

 
Effect of exchange rate fluctuations on cash and cash equivalents

 

(16

)

 

(46

)

 

145

 

 

(167

)

 
Decrease in cash and cash equivalents

 

(6,371

)

 

(1,982

)

 

(33,214

)

 

(11,050

)

Cash and cash equivalents at the beginning of period

 

29,112

 

 

18,798

 

 

55,955

 

 

27,866

 

Cash and cash equivalents at the end of period

$

22,741

 

$

16,816

 

$

22,741

 

$

16,816

 

KEY PERFORMANCE METRICS

(Unaudited)

 
Twelve Months Ended
September 30,

2019

2018

(Unaudited)
Annual active buyers (in thousands)

 

2,265

 

1,954

Annual spend per buyer ($)

$

163

$

141

RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT

(in thousands, except gross margin data)

 
Three Months EndedNine Months Ended
September 30,September 30,

2019

2018

2019

2018

(Unaudited)(Unaudited)
GAAP gross profit

$

22,004

 

$

15,861

 

$

61,438

 

$

43,195

 

Add:
Share-based compensation

 

43

 

 

2

 

 

93

 

 

7

 

Depreciation and amortization

 

479

 

 

282

 

 

1,335

 

 

811

 

Non-GAAP gross profit

$

22,526

 

$

16,145

 

$

62,866

 

$

44,013

 

Non-GAAP gross margin

 

80.8

%

 

82.2

%

 

81.1

%

 

80.3

%

RECONCILIATION OF GAAP TO NON-GAAP NET LOSS AND NET LOSS PER SHARE

(in thousands, except loss per share data)

 
Three Months EndedNine Months Ended
September 30,September 30,

2019

2018

2019

2018

(Unaudited)(Unaudited)
GAAP net loss attributable to ordinary shareholders

$

(8,434

)

$

(7,240

)

$

(26,732

)

$

(30,178

)

Add:
Deemed dividend to protected ordinary shareholders

 

-

 

 

-

 

 

632

 

 

-

 

Depreciation and amortization

 

961

 

 

586

 

 

2,678

 

 

1,641

 

Share-based compensation

 

2,600

 

 

2,737

 

 

6,562

 

 

10,355

 

Other initial public offering related expenses

 

-

 

 

-

 

 

416

 

 

-

 

Contingent consideration revaluation and acquisition related costs

 

918

 

 

95

 

 

2,364

 

 

1,468

 

Non-GAAP net loss

 

(3,955

)

 

(3,822

)

 

(14,080

)

 

(16,714

)

GAAP weighted average number of ordinary shares outstanding - basic and diluted

 

31,867

 

 

6,606

 

 

16,647

 

 

6,524

 

Add:
Additional weighted average shares giving effect to exchange of protected ordinary shares at the beginning of the period

 

-

 

 

16,144

 

 

11,426

 

 

16,138

 

Non-GAAP basic and diluted weighted average ordinary shares

 

31,867

 

 

22,750

 

 

28,073

 

 

22,662

 

Non-GAAP basic and diluted net loss per share attributable to ordinary shareholders

$

(0.12

)

$

(0.17

)

$

(0.50

)

$

(0.74

)

Note: Non-GAAP basic and diluted net loss per ordinary share for the nine months ended September 30, 2019 were calculated based on ordinary shares outstanding after accounting for the exchange of Fiverr’s then outstanding protected ordinary shares into 18.7 million ordinary shares as though such event had occurred at the beginning of the periods. In the same calculation for the three and nine months ended September 30, 2018, we accounted for the exchange of Fiverr’s then outstanding protected ordinary shares into 16.1 million ordinary shares at the beginning of the periods.

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA

(in thousands, except adjusted EBITDA margin data)

 
Three Months EndedNine Months Ended
September 30,September 30,

2019

2018

2019

2018

(Unaudited)(Unaudited)
GAAP net loss

$

(8,434

)

$

(7,240

)

$

(26,100

)

$

(30,178

)

Add:
Financial income, net

 

(483

)

 

(84

)

 

(687

)

 

(209

)

Income taxes

 

80

 

 

-

 

 

106

 

 

-

 

Depreciation and amortization

 

961

 

 

586

 

 

2,678

 

 

1,641

 

Share-based compensation

 

2,600

 

 

2,737

 

 

6,562

 

 

10,355

 

Other initial public offering related expenses

 

-

 

 

-

 

 

416

 

 

-

 

Contingent consideration revaluation and acquisition related costs

 

918

 

 

95

 

 

2,364

 

 

1,468

 

Adjusted EBITDA

$

(4,358

)

$

(3,906

)

$

(14,661

)

$

(16,923

)

Adjusted EBITDA margin

 

(15.6

%)

 

(19.9

%)

 

(18.9

%)

 

(30.9

%)

RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES

(in thousands)

 
Three Months EndedNine Months Ended
September 30,September 30,

2019

2018

2019

2018

(Unaudited)(Unaudited)
GAAP research and development

$

9,088

$

6,611

$

25,161

$

19,180

Less:
Share-based compensation

 

850

 

314

 

2,386

 

533

Depreciation and amortization

 

116

 

113

 

328

 

316

Acquisition related costs

 

12

 

48

 

106

 

702

Non-GAAP research and development

$

8,110

$

6,136

$

22,341

$

17,629

 
GAAP sales and marketing

$

15,859

$

12,651

$

47,087

$

38,039

Less:
Share-based compensation

 

642

 

1,217

 

1,365

 

1,354

Depreciation and amortization

 

323

 

152

 

887

 

400

Acquisition related costs

 

375

 

47

 

1,073

 

701

Non-GAAP sales and marketing

$

14,519

$

11,235

$

43,762

$

35,584

 
GAAP general and administrative

$

5,894

$

3,923

$

15,871

$

16,363

Less:
Share-based compensation

 

1,065

 

1,204

 

2,718

 

8,461

Depreciation and amortization

 

43

 

39

 

128

 

114

Other initial public offering related expenses

 

-

 

-

 

416

 

-

Contingent consideration revaluation and acquisition related costs

 

531

 

-

 

1,185

 

65

Non-GAAP general and administrative

$

4,255

$

2,680

$

11,424

$

7,723

Key Performance Metrics and Non-GAAP Financial Measures

This release includes certain key performance metrics and financial measures not based on GAAP, including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP operating expenses, Non-GAAP net loss and Non-GAAP net loss per share as well as operating metrics, including GMV, spend per buyer, active buyers and take rate.

We define GMV or Gross Merchandise Value as the total value of transactions through our platforms, excluding value added tax, goods and services tax, service chargebacks and refunds. Active buyers on any given date is defined as buyers who have ordered a Gig on Fiverr within the last 12-month period, irrespective of cancellations. Spend per buyer on any given date is calculated by dividing our GMV within the last 12-month period by the number of active buyers as of such date. Take rate is revenue for any such period divided by GMV for the same period.

Management and our board of directors use these metrics as supplemental measures of our performance that is not required by, or presented in accordance with GAAP because they assist us in comparing our operating performance on a consistent basis, as they remove the impact of items not directly resulting from our core operations. We also use these metrics for planning purposes, including the preparation of our internal annual operating budget and financial projections, to evaluate the performance and effectiveness of our strategic initiatives and to evaluate our capacity to expand our business.

Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP operating expenses, Non-GAAP net loss and Non-GAAP net loss per share as well as operating metrics, including GMV, spend per buyer, active buyers and take rate should not be considered in isolation, as an alternative to, or superior to net loss, revenue, cash flows or other performance measure derived in accordance with GAAP. These metrics are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Management believes that the presentation of non-GAAP metrics is an appropriate measure of operating performance because they eliminate the impact of expenses that do not relate directly to the performance of our underlying business.

These non-GAAP metrics should not be construed as an inference that our future results will be unaffected by unusual or other items. Additionally, Adjusted EBITDA and other non-GAAP metrics used herein are not intended to be a measure of free cash flow for management’s discretionary use, as they do not reflect our tax payments and certain other cash costs that may recur in the future, including, among other things, cash requirements for costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA and other non-GAAP metrics as supplemental measures of our performance. Our measure of Adjusted EBITDA and other non-GAAP metrics used herein is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

We are not able to provide a reconciliation of Adjusted EBITDA guidance for the fourth quarter of 2019 or the fiscal year 2019 to net loss, the comparable GAAP measure, because certain items that are excluded from Adjusted EBITDA cannot be reasonably predicted or are not in our control. In particular, we are unable to forecast the timing or magnitude of share based compensation, amortization of intangible assets, and gain or loss on revaluation of contingent consideration, as applicable without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, net loss in the future.

See the tables above regarding reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.

Forward Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance and operational performance for the fourth quarter of 2019 and the fiscal year ended December 31, 2019, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: our ability to attract and retain a large community of buyers and freelancers; our ability to achieve profitability; our ability to maintain and enhance our brand; our dependence on the continued growth and expansion of the market for freelancers and the services they offer; our ability to maintain user engagement on our website and to maintain and improve the quality of our platform; our dependence on the interoperability of our platform with mobile operating systems that we do not control; our ability and the ability of third parties to protect our users’ personal or other data from a security breach and to comply with laws and regulations relating to consumer data privacy and data protection; our ability to detect errors, defects or disruptions in our platform; our ability to comply with the terms of underlying licenses of open source software components on our platform; our ability to expand into markets outside the United States; our ability to achieve desired operating margins; our compliance with a wide variety of U.S. and international laws and regulations; our ability to protect our intellectual property rights and to successfully halt the operations of copycat websites or misappropriation of data; our reliance on Amazon Web Services; our ability to mitigate payment and fraud risks; our dependence on relationships with payment partners, banks and disbursement partners; our dependence on our senior management and our ability to attract new talent; and the other important factors discussed under the caption “Risk Factors” in our final prospectus under Rule 424(b) filed with the U.S. Securities and Exchange Commission (“SEC”) on June 12, 2019 in connection with our initial public offering as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. In addition, the forward-looking statements made in this release relate only to events or information as of the date on which the statements are made in this release. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

View source version on businesswire.com:https://www.businesswire.com/news/home/20191113005265/en/

CONTACT: Investor Relations:

Jinjin Qian

investors@fiverr.comPress:

Siobhan Aalders

press@fiverr.com

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: PROFESSIONAL SERVICES DATA MANAGEMENT TECHNOLOGY HUMAN RESOURCES SOFTWARE CONSULTING INTERNET

SOURCE: Fiverr International LTD.

Copyright Business Wire 2019.

PUB: 11/13/2019 07:00 AM/DISC: 11/13/2019 07:01 AM

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