Q1 2021 Fiverr International Ltd Earnings Call
Yeah.
[music].
Good morning, welcome to the side with first quarter 2021 earnings conference call.
Okay for Lucky the statement can be found under the risk factor section and fibers, most reconfirm 20th and other filing for the SEC.
During this call will be referring to from non-GAAP financial measure.
The reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measures are provided in the earnings for at least the issue today and our shareholder of leather each of which is available on our website the investors that fiber dot com.
And now I won't turn the call over to me Huh.
Good morning, everyone and thank you for joining us from the call today.
Today, we reported and own spending sort of resolved after of Lindmark year of the incredible growth and resilient. We took of the year with the revenue growth accelerating two 100% year over year W. A revenue to 68 $3 million.
Underlining the growth strength across our business matrix.
The buyers grew 56% of year over year two of $3.8 million.
Spend per buyer increased 22% here for Ya.
We see consistent and increasing spend across our existing cohort and.
Continued growth in revenue from high value of wires.
The world, even the myths of a massive digital transformation.
Companies across the globe are adopting remote working models and shifting to hybrid the teams by integrating more freelancers into their businesses.
This past year has been a whirlwind for small businesses, forcing many of them too quickly adopt and find new ways to serve their customers.
For many this meant the need to digitally transform.
They turned to fiverr to rebuild fever and launched their businesses.
For some this meant adopting from brick and mortar shoving of digital storefront.
As we sold massive spikes in searches around E Commerce website design and sales management tools, others turn to Fiverr for tools for helping hands and rebuild their businesses like building your own in house food delivery up.
As the crisis reinforces and accelerate the trend towards adopting remote work.
And moving businesses on line we.
We believe our market base is well positioned to address current needs and serve as the key resource when the economy Reaccelerate.
It's critical to remember that the majority of market is still operating offline for.
Presenting of massive and still largely on top of opportunity to bring that business on line.
Is the key the wind effects fade we.
We are continuing to focus and aggressively invest in our key initiatives and growth engine.
After a year of significant growth and powerful Q1, even the more excited for what's stored for the rest of the year and beyond.
We have continued to make exciting progress towards our key strategic initiatives move.
Moving on the market.
Expanding internationally.
In the developing and enhancing new capabilities for our products and tools, while heavily investing in our brand in marketing.
On the demand from.
Or deepening customer loyalty and engagement with our subscription and milestone products.
Increasing the lifetime value of our existing and new cohort.
Fiber business also continues to grow rapidly and we have implemented strategies to further build brand awareness.
And have an amazing pipeline of new products planned.
For the fiber business community.
On the supply front, we are excited to have a new vertical centered around data services.
This is our latest example of building on our successful table with the vertical launches.
By opening of vertical focused solely on data services.
We create a path for elevated category expansion in the data analysis space and further capture and capitalize on the high demand for the services.
International expansion is the key component of our upmarket strategy, we continue to aggressively invest on a global scale with a focus on deepening are of penetration an existing markets and our local marketing effort. We are encouraged by our localization effort so far.
And we are investing prudently in building our infrastructure to support further expansion into new geography.
And finally promoted gigs continue to enjoy healthy seller growth contributing to our take right expansion. We saw this quarter.
Fiber is becoming a household name investments in brand awareness are generating a continuous long term drive for organic traffic and growth and spend our superbowl AD was viewed by millions of potential buyers and sellers through our television campaign digital and social channeled significantly boost.
Being our brain and we look forward to expanding on our momentum.
The last year has shown us that fibers business is stronger and more resilient the never.
We have never been more proud of our talented and dedicated team.
We have shown that in times of great uncertainty, our ability to execute from our strategy and mission.
Ah the only grown more robust.
We are operating a highly efficient.
Driving scale on our platform and investing in our product ecosystem to further fuel our business.
We took tucker public less than two years ago.
This year, we are going to be about three times larger while growing approximately 50 per cent faster.
All of this is reflected in the significant upward revision of our 2021 revenue growth rate guidance of 59% to 63% compared to our previous guidance of 46 to 50 per cent, we are confident and highly bullish on the.
The ability to deliver and execute on our goals.
We are just getting started.
With that.
I will turn the call over to offer who will share a few Q on the highlights as well as some color for the rest of of this year of her.
Thank you my car and good morning, everyone.
The vehicle mentioned in his remarks.
We are very excited to the middle of another fit of amazing the results.
And Q1 <unk> one of the strongest revenue growth rates in our history with an outstanding of 100% people believe increased to 68 3 million the.
Doubling or revenue from the same period last year.
This will driven by of Spike and active bio.
Spending 56% of overview of of three 8 million.
And the recognize the opioids price.
Transaction fee increase introduced at the end of the quarter.
We reported adjusted EBITDA of negative <unk> 7 million for.
The negative 1% margin significantly above the high end of our Q1 guidance of <unk>.
<unk> four to negative $3 million.
The adjusted EBITDA of negative $8 7 million includes the long term investment of approximately $8 million and the Super Bowl ads.
We will continue to prioritize growth and at the same time, we expect to make continued progress toward our long term target model.
And now for our guidance.
For the second quarter.
<unk> 2021 revenue is expected to be 73 million to $75 million.
This represents even though the growth of 55% to 59% of does.
The inventory is expected to be <unk>.
Two 7 million.
We are also upgrading our full year 2021 guidance.
We now expect revenue to be at the range of 300, the two to 308 million representing <unk> of the real growth of 59% to 63%.
Adjusted EBITDA is expected to be in the range of 19, five to $24 5 million.
Representing an adjusted EBITA margin of 7% at the midpoint of the range.
The compounding strength of our existing cohorts and confident that day.
The sustained at an elevated level of spending.
Along with the addition of new cohort set of stronger new baselines for our guidance.
As we begin to lap the COVID-19 tailwind starting from Q2 2021, we expect our growth to become more normalized but stronger than when we entered the pandemic period.
As Lisa said, we are at the intersection of a new generation of workforce participant the increasingly sophisticated needs of businesses to have of digital strategies.
We see the digital services shift via the freelancer market as the global secular plan, which will continue to growth.
Pfizer has been and will continue to power of the ship with our other unique platform.
We have a robust pipeline planned for the rest of the year and I'm excited to share of this update with you.
Throughout the rest of the year and beyond.
With that we'll now turn the call over for the operator for questions.
Peter.
We will now begin the question and answer session.
I'll ask a question you might have.
And you touched on some.
If youre using a speakerphone please pick up your handset before pressing the key.
What's sort of your question. Please press Star then Tim.
At this time of a pause momentarily to assemble our roster.
Our first question is from Mike.
From Goldman Sachs go ahead.
Thank you for the question I just have two first I was just wondering if you could talk a little bit more about the characteristics of some of the newly acquired cohorts and how that.
Compares to your historical cohorts and then second I was just wondering if you could give us a sense of.
How we should think about the pace of active buyer growth throughout the rest of the year, particularly as growth becomes more normalized thank you very much.
Thanks for the question Mike Good morning.
So I think that as we've noted in our remarks the characteristics of the newly acquired cohorts are pretty similar for historical cohorts, but with more focus on high value buyers.
As of being.
Being shown and demonstrated in the percentage of high value buyers that is increasing including the addition of customers that are joining by her business.
And our spending as we said about the three times more than our regular customers.
What we've seen so far and this is true by the way for all countries, including those who are actually starting to come out of the COVID-19 situation.
Those are areas in the U S U K, Israel and other countries, where the percentage of oxygenated population is about 50%.
Haven't seen any change in that trend and this is very encouraging.
What we're seeing is that the momentum that we've been demonstrated throughout the pandemic.
It is not dying for it.
Continuing and continuing very very strong.
Hey, Mike This is ofer for B the <unk>.
Second part of the question.
So.
As we look forward into Q2, and the rest of the fleet guidance.
We anticipate that the lapping.
Of the last couple of quarters is starting and that we anticipate from level up.
Normalization.
<unk> growth.
Get to the spread much faster than what we are doing.
Free cash.
On the 90 day.
If you recall.
At the beginning of the last year, we were always mentioning that we anticipate balanced growth in terms of kind of.
I am.
And as the buyer for that we anticipate that the kind of momentum will continue.
<unk> into the future and the meaning is that without the fifth some level up.
Normalized growth of.
The buyer.
From.
But the scale much faster than what we have seen and used to before the pandemic.
Great. Thank you you may have thank you ofer.
Thank you Mike.
Our next question is from Doug and Matt from Jpmorgan go ahead.
Okay.
Okay.
Firstly I was just hoping to get your view on supply and demand on the marketplace and just kind of where you of our terms of talents.
Going forward and I'm, just wondering is there any potential of sellers, just kind of going back into the primary or previous type of jobs with the opening of hiring picks up more or do you think that the pandemic vaccines.
Forever change the operating environment.
And then the second.
I guess can you elaborate a little bit more zone on fiber business in terms of the higher for you can see buyers and more expensive.
But just how youre thinking about progress there I know, it's still early as well.
Good morning, Doug and thanks for the question.
So first when you look at the.
The active active buyer is relations to the sellers you see the the ratio has been pretty constant.
And we know that there is differences between sellers in there.
Very bold and motivation for some of full time paying and they would like to get as many customers as possible for some.
It's a side job and the limit their participation to only a few hours a day.
In <unk>.
Having the system that the actually understands the odds and ends or manages liquidity in the right way has been essential for our March pace for many many years.
Kip.
But the very tightly.
We have seen during the pandemic these newer cohorts of <unk>.
More sophisticated.
And more experienced sellers.
That we're joining us and some of which of bin.
The showcased on the media recently.
There were two big stories on CNBC.
About sellers from.
From the U S that have joined Fiverr. Thus recently mid last year and are already making hundreds of thousands of dollars.
On a yearly basis.
We think that the pandemic has changed the way freelancers are viewing this opportunity.
Think that being of freelancing deemed the freelancer is much more of a valid.
Career path.
And it enables a.
The new type of lifestyle.
So we haven't seen.
In the activity of sellers, we haven't seen any of those cohorts of retracting or leaving the market base in favor of going back for their jobs in many cases, just because they're making so much more money on cyber Monday.
We're doing.
In the nine to five job before that for.
The body.
Spending a lot of their time trying to chase customers in freelancing offline.
So for Doc on the the first part of of the question.
For our fiber business.
I think you rightly.
Noted that it is very early at this point for what we're seeing is and this is really interesting is that five of our business has a lot of capabilities that are very suitable for individual role within organizations.
For for entire team so we have within the fiber business.
You may have a manager within the company running an account and over time, the data account growth and we of accounts, where we have close to 100 people on as the team.
And again this is very encouraging.
Very early days of.
What we're seeing is we're seeing that the cross category activity there the ability of the organization to use fiverr more as a way to of demand on the team activity.
Allow the teams to find the type of talent that they don't have within the organization either having a hard time hiring.
Or not meeting the us on a full time basis.
Is it is a clear case and.
And again, our view for for this entire decade.
Is that fiber business is going to be the place where companies and businesses come in to integrate freelancers into their workflows and what we're seeing from fiber business is. This example use case is whats happening.
Great. Thank you for the color I appreciate it.
Our next question is from Ron Josey from Kevin and Keith Kennedy.
Great. Thanks for taking the question I have two please if you could ask if you could talk a bit more of a kind of just about brand awareness you mentioned the letter building 500 in the household name and the growth in awareness around SMB and also for medium sized businesses, which talks about going upstream and NPS scores accelerating but post Super Bowl and all of the different.
Benefits that came from that can you just talk a little bit more about the marketing strategy is as brand awareness continues to grow and I think youre doing that in multiple different countries and then Ofer you mentioned an increase in transaction fee. I think you said in the back half of the quarter, just talk a little bit more about that increase and how you see that going forward.
Great quarter guys. Thank you.
And from my from good morning.
So.
We've been talking for a few quarters about brand awareness and about building of household brand.
And maybe the peak of that effort.
For for this year has been definitely the Super Bowl AD.
But definitely what we're seeing is we're seeing the brand awareness in general both before the Super Bowl and after he is on the increase which means that we're gaining more organic traffic that is coming to us.
A lot of it.
<unk> to the viral co efficiency.
Of our brand.
<unk> makes our performance marketing more efficient for cheaper.
And that is really important for us.
And so the idea is to continue pushing on that front.
Because you become weaker fiverr, we make fiber into a synonym for.
For accessing.
Accessing talent accessing freelancing pilot.
In the very easy to use platform.
But definitely something that we will continue investing in unfortunately, there is not an additional super Bowl this year.
But the.
But we're definitely seeing a lot of opportunity to invest around.
Some of the stories that have been popping out there on the news of bin of been happening organically.
The story that I've mentioned on CNBC is a story that was picked up by media with no intervention on our side.
And this is exactly the cycle that we want to create.
We're seeing also the contribution of organic and brand awareness.
For the positioning of our services online.
Logo maker is one of those examples for you see of service that we launched a few quarters ago and have been increasing its placement on search engines.
And because of its high placement at this point it is generating.
Organic traffic.
Not paying for.
For the logo maker and for the entire site.
We've extended that strategy from.
More than just the U S.
We've done TV campaigns outside of the U S. In August the online campaign and all of them of of shown tremendous efficiency as long as this continues to be the case, we will continue to invest in.
On those efforts.
For still the minority of our investments.
But the combination of brand awareness with performance marketing is something that has proven himself to work really well.
And then Ron on the second part of the question on the slide the sea.
The takeaway for the further the what perrigo, but changing the services of the fact that.
As of cross border transactions.
Cost of the book.
Book of mall.
The structure of the <unk> with the appropriate COVID-19 has been has been changed.
And it causes us to the pump for this both into.
And for the buyer so.
We did some cash throughout the quarter.
To confirm the fact that.
From a.
Absolutely.
And there is no FX in terms of conversion.
Which leads us to to add the <unk> five.
Five per pound.
Across the across the.
The entire platform at the end of the quarter.
<unk>.
We see that as the part of the new structure.
Definitely impact.
The safe day.
<unk>.
But again due to the.
The two conversion in October.
<unk>, we don't think that.
The reasoning behind it.
The actually give us a little bit more control.
And the value of that we provide.
The platform.
Our ability to increase take rate even the arm.
The 27%.
Ah well accepted.
On the buyer and the silicon.
Great. Thank you for your kind of.
Our next question is from Nick Jones from Citi Go ahead.
Great. Thanks for taking the questions I guess two one.
Can you just provide an update on geographic expansion the traction of progress Youre seeing just given COVID-19.
Is that of the kind of of varying impact.
By region is there anything different there or is it kind of tracking similar to the US just any color there and then all of the follow up thanks.
Morning, Nick.
Thanks for the question.
So in terms of Geo expansion.
Again, another one of our growth for vectors.
The impact that we're seeing.
Through countries that are either experiencing newer waves.
Of of of COVID-19 outbreak for countries that are moving into normalization.
What we've seen is we've seen about performance.
He's actually not being affected the anything we're seeing performance continued to increase.
In those regions.
Been starting to.
The out of the pandemic of Israelis, maybe Ah and.
An extreme case.
Because the the vast majority of the population is estimated in.
Just to share with you guys things in Israel.
Are looking as if COVID-19 almost never existed.
And we haven't seen any any change if anything the upward trend is continuing.
Is continuing very very nice the the same goes in the U S. In the UK, we have seen obviously in in areas like like in the or Germany, where they are experiencing new waves of outbreak for you see some some.
Lifting in traffic that are are similar to what we've seen in in myths of the pandemic.
Sending you know more courts of of supply.
Through the March 8th.
But we haven't seen any any trans or anything that would indicate that the posts and mimic we should expect to see the.
See a return for the old <unk> I think all for mentioned.
There is there is and we do expect that there there is going to be some normalization as we start the lapping.
Ah dots normalization of.
I mean that we're going to be historical level, our new baseline is being kept which means that we are.
Much much larger these days of growing much much faster.
Great. Thanks, and then and then just one once Ah I guess separate question yesterday of the U S. Labor Department rescinded of regulation proposed none of the Trump administration regarding gig worker of employment status. This for.
Reverts kind of back to the department of Labor rule from 2000 Man I think of the the seven factor task you just remind us of out of.
Or how should we be thinking about the impact of this on fiverr in the U S of if there is any impact at all.
Absolutely.
So.
Fiverr business or subscriptions in.
In the guidance for the rest of the year. Thank you.
Hey, guys.
I think the way we measure the marketing efficiency.
Well demonstrate demonstrated in the DIY.
And Gary if you follow that you can see that we are able to cover the cost.
Our international investment.
Within the.
Within the first quarter of the investment so that the CLI actually.
Approximately three months.
This has been the case.
Almost seems to the published three of the government just getting better.
Now we are able to invest more.
The dollar wise.
Bring more of <unk> partners.
Bringing GAAP.
Yeah.
Bigger wallet vials.
But still keep the DIY.
Super efficient the also been able to increase the marketing investment.
And the awareness of <unk>.
Sales other than.
Conversion.
And the reduce the cost of sales and marketing.
As the fed from the revenue over time, so thats, how we measure.
The thing that the buyers of the brand has.
A highlight frame value, which doesn't mature.
In the in the first quarter.
Meyer of Bedford breakdown in active.
In the marketplace for many years.
For that.
We live in a quarter of two quarters ago.
Adding I think users.
We are collecting the data.
So that is still early and over time.
We think that.
We'll be able to share more darker it will just on.
Lots of at the point that the two.
Do capture the.
Gone of market and the contribution of all of the productive to relieve the pain.
We do share the the the high value higher percentage of revenue how how this how this group is punked the new thing to the overall revenue list has been growing to 59% of the.
Our our corporate of revenue from.
Spending 58 in the last quarter of for the contribution.
Of the product yet too early.
Sure.
Two two model.
Of contribute for the overall high value buyer and you can see the ads how units the few practice high volume higher although.
Update you can see how this number of drawing morning before the those type of pain.
Thank you.
That's kind of close that question and answer session I would like to turn the conference back over to move Huh.
For closing remarks.
Educate.
Thank you everyone for joining of the call today.
And have a good rest of the day will you next quarter.
<unk>.
It'll come from sales not confirm your day. Thank you for attending cables come from tension you may not disconnect.