Business Wire | Aug 5, 2020 01:00AM EDT

Fiverr Announces Second Quarter 2020 Results

Aug. 05, 2020

NEW YORK--(BUSINESS WIRE)--Aug. 05, 2020--Fiverr International Ltd. (NYSE: FVRR), the company that is changing how the world works together, today reported financial results for the second quarter of 2020 ended June 30, 2020. 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.

"We have delivered an outstanding quarter of results as our strong execution amidst the COVID-19 pandemic resulted in 82% y/y growth in revenue and Adjusted EBITDA profitability. I'm incredibly proud that Fiverr has been playing an important role in the livelihoods of individuals and businesses everywhere during this challenging global environment," said Fiverr founder and CEO Micha Kaufman. "As businesses endeavor to reshape their team structures and accelerate the pace of digital transformation, I believe there is a tremendous amount of growth runway ahead of us."

Ofer Katz, Fiverr CFO, added, "Fiverr has reached an inflection point in Q2, having achieved Adjusted EBITDA profitability and brought our topline scale to the next level. While the global macroeconomic conditions remain highly uncertain, we are confident that our business model, strong execution ability and financial discipline will continue to drive our growth forward."

Second Quarter 2020 Financial Highlights

* Revenue in the second quarter of 2020 was $47.1 million, an increase of 82% year over year. * Active buyers as of June 30, 2020, grew to 2.8 million, compared to 2.2 million as of June 30, 2019, an increase of 28% year over year. * Spend per buyer as of June 30, 2020, reached $184, compared to $157 as of June 30, 2019, an increase of 18% year over year. * Take rate for the twelve months ended June 30, 2020, was 27.0%, up from 26.4% for the twelve months ended June 30, 2019, an increase of 60 basis points year over year. * GAAP gross margin in the second quarter of 2020 was 83.1%, an increase of 360 basis points from 79.5% in the second quarter of 2019. Non-GAAP gross margin in the second quarter of 2020 was 84.4%, an increase of 300 basis points from 81.4% in the second quarter of 2019. * GAAP net loss in the second quarter of 2020 was ($0.1) million, or less than ($0.01) net loss per share, compared to ($9.4) million, or ($0.88) net loss per share, in the second quarter of 2019. Non-GAAP net income (loss) in the second quarter of 2020 was $3.6 million, or $0.11 and $0.10 basic and diluted net income (loss) per share, respectively, compared to ($4.9) million, or ($0.19) for both basic and diluted net income (loss) per share, in the second quarter of 2019. * Adjusted EBITDA1 in the second quarter of 2020 improved to $3.1 million, compared to ($4.9) million in the second quarter of 2019. Adjusted EBITDA margin was 6.7% in the second quarter of 2020, an improvement of 2,570 basis points from (19.0%) in the second quarter of 2019.

Financial Outlook

We are introducing Q3'20 guidance and raising our full-year guidance. Given these unprecedented times and the dynamic impact of COVID-19 on economies globally, we will provide investors with updated business trends as they evolve.

Q3 2020 FY 2020

Revenue $48.0 - $49.0 million $177.5 - $179.5 million

Year over year growth 72 - 76% 66 - 68%

Adjusted EBITDA $2.0 - $3.0 million $4.5 - $6.5 million

_____________________________^1 Adjusted EBITDA is a non-GAAP financial measure. See "Key PerformanceMetrics and Non-GAAP Financial Measure" for additional information regardingthis and other non-GAAP metrics used in this release.

Conference Call and Webcast Details

Fiverr will host a conference call to discuss its financial results on Wednesday, August 5, 2020, 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) 360-3590, or (412) 317-5278 for callers outside the United States, and mention the passcode, "Fiverr." A telephonic replay of the conference call will be available until Wednesday, August 12, 2020, 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 replay code 10145989.

About Fiverr

Fiverr's mission is to change how the world works together. The Fiverr platform connects businesses of all sizes with skilled freelancers offering digital services in more than 400 categories, across 8 verticals including graphic design, digital marketing, programming, video and animation. In the twelve months ended June 30, 2020, 2.8 million customers bought a wide range of services from freelancers 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 BALANCE SHEETS

(in thousands)

June 30, December 31,

2020 2019

(Unaudited) (Audited)AssetsCurrent assets:Cash and cash equivalents $ 127,542 $ 24,171

Marketable securities 44,300 88,559

User funds 84,610 55,945

Bank deposits 30,000 15,000

Restricted deposit 324 324

Other receivables 3,570 3,117

Total current assets 290,346 187,116

Marketable securities 87,841 21,805

Property and equipment, net 5,499 5,321

Intangible assets, net 6,048 7,188

Goodwill 11,240 11,240

Restricted deposit 3,168 3,168

Other non-current assets 471 522

Total assets $ 404,613 $ 236,360

Liabilities and Shareholders' EquityCurrent liabilities:Trade payables $ 5,963 $ 3,749

User accounts 79,933 53,013

Deferred revenue 5,054 3,248

Other account payables and accrued expenses 25,601 21,426

Current maturities of long-term loan 508 503

Total current liabilities 117,059 81,939

Long-term loan and other non-current liabilities 3,970 5,612

Total liabilities 121,029 87,551

Shareholders' equity: Share capital and additional paid-in capital 446,819 306,334

) )Accumulated deficit (164,042 (157,763

Accumulated other comprehensive income 807 238

Total shareholders' equity 283,584 148,809

Total liabilities and shareholders' equity $ 404,613 $ 236,360

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except loss per share data)

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

(Unaudited) (Unaudited)Revenue $ 47,130 $ 25,912 $ 81,280 $ 49,675

Cost of 7,957 5,305 14,777 10,241 revenue Gross profit 39,173 20,607 66,503 39,434

Operating expenses:Research and 10,533 8,457 20,507 16,073 development Sales and 23,207 15,852 41,428 31,228 marketing General and 6,031 5,621 11,621 9,977 administrative Total operating 39,771 29,930 73,556 57,278 expenses Operating loss (598 ) (9,323 ) (7,053 ) (17,844 )

Financial 491 (10 ) 822 204 income (expense), net Loss before (107 ) (9,333 ) (6,231 ) (17,640 )income taxes Income taxes (17 ) (20 ) (48 ) (26 )

Net loss (124 ) (9,353 ) (6,279 ) (17,666 )

Deemed dividendto protected - - - (632 )ordinaryshareholdersNet lossattributable to (124 ) (9,353 ) (6,279 ) (18,298 )ordinaryshareholdersBasic anddiluted netloss per share $ (*) $ (0.88 ) $ (0.19 ) $ (2.06 )attributable toordinaryshareholders Basic anddilutedweighted 33,172,593 10,664,285 32,484,425 8,868,123 averageordinaryshares * Representsamounts less than 0.01

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

Operating ActivitiesNet loss $ (124 ) $ (9,353 ) $ (6,279 ) $ (17,666 )

Adjustments toreconcile netloss to netcash provided by (used in)operatingactivities:Depreciation 1,016 1,981 1,717 and 910amortizationAmortization of discount on (66 ) - (337 ) - marketablesecuritiesShared-based 3,062 2,216 5,824 3,962 compensationNet income from exchange 19 116 213 63 ratefluctuationsChanges inassets and liabilities:User funds (20,737 ) (1,942 ) (28,665 ) (10,267 )

Other (335 ) ) 113 (1,291 )receivables (44

2,764 2,180 Trade payables 365 876

User accounts 19,782 1,942 26,920 10,267

Deferred 796 1,806 revenue - -

Other accountpayables and 857 2,599 3,582 4,093 accruedexpensesPayment of (1,960 ) (1,960 ) contingent - -considerationNon-current 164 (163 ) 162 (105 )liabilitiesNet cashprovided by 5,238 (3,354 ) 5,540 (8,351 )(used in) operatingactivities Investing ActivitiesAcquisition of business, net - - - (9,967 )of cashacquiredPurchase of (406 ) (282 ) (537 ) (459 )property and equipmentCapitalizationof (166 ) (221 ) (451 ) (324 )internal-usesoftwareOtherreceivables (122 )and 2 - 54non-currentassetsBank deposits (15,000 ) (10,000 ) (15,000 ) (20,000 )

Investment in (135,036 ) (109,391 ) (171,822 ) (109,391 )marketable securitiesProceeds from sale of 113,451 - 150,539 - marketablesecuritiesNet cash used (37,155 ) (119,894 ) (37,217 ) (140,263 )in investing activities Financing ActivitiesProceeds from 2,704 4,652 exercise of 485 541optionsProceeds from 117,362 117,362 initial public - -offering, netProceeds fromissuance of 4,340 protected - - -ordinaryshares, netPayment ofdeferred issuance costs - - - (405 )related toinitial publicofferingProceeds from 130,670 130,670 follow on - -offering, net Payment of (2,040 ) (2,040 ) contingent - -considerationRepayment of (124 ) (116 ) (244 ) (228 )long-term loanTaxwithholding inconnection (16 ) 2,256 with - -employees'optionsexercisesNet cashprovided by 131,194 117,731 135,294 121,610 financingactivities Effect ofexchange rate fluctuations 55 (7 ) (246 ) 161 on cash andcashequivalents Increase(decrease) in 99,332 (5,524 ) 103,371 (26,843 )cash and cashequivalentsCash and cashequivalents at 28,210 34,636 24,171 55,955 the beginningof periodCash and cashequivalents at $ 127,542 $ 29,112 $ 127,542 $ 29,112 the end ofperiod

KEY PERFORMANCE METRICS

Twelve Months Ended

June 30,

2020 2019

(Unaudited)Annual active buyers (in thousands) 2,792 2,175

Annual spend per buyer ($) $ 184 $ 157

RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT

(in thousands, except gross margin data)

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

(Unaudited) (Unaudited)GAAP gross $ 39,173 $ 20,607 $ 66,503 $ 39,434 profitAdd: Share-based 87 28 157 50 compensationDepreciation 499 450 973 856 and amortizationNon-GAAP gross $ 39,759 $ 21,085 $ 67,633 $ 40,340 profitNon-GAAP gross 84.4 % 81.4 % 83.2 % 81.2 %margin RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS) AND NET INCOME (LOSS) PERSHARE

(in thousands, except share and per share data)

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

(Unaudited) (Unaudited)GAAP net lossattributable $ (124 ) $ (9,353 ) $ (6,279 ) $ (18,298 )to ordinaryshareholdersAdd: Deemeddividend to - - - 632 protected ordinaryshareholdersDepreciation 1,016 910 1,981 1,717 and amortizationShare-based 3,062 2,216 5,824 3,962 compensationOther initialpublic - 416 - 416 offering relatedexpensesContingentconsiderationrevaluation (337 ) 868 (466 ) 1,446 andacquisitionrelated costsNon-GAAP net 3,617 (4,943 ) 1,060 (10,125 )income (loss)GAAP basicweightedaverage number 33,172,593 10,664,285 32,484,425 8,868,123 of ordinarysharesoutstanding Add: Additionalweightedaverage sharesgiving effectto exchange of - 15,959,764 - 17,266,411 protectedordinaryshares at thebeginning ofthe periodNon-GAAP basicweightedaverage number 33,172,593 26,624,049 32,484,425 26,134,534 of ordinarysharesoutstanding Non-GAAP basicnet income(loss) per $ 0.11 $ (0.19 ) $ 0.03 $ (0.39 )share attributableto ordinaryshareholders Non-GAAPdilutedweighted 36,053,713 26,624,049 34,715,990 26,134,534 average number of ordinarysharesoutstanding Non-GAAPdiluted netincome (loss) $ 0.10 $ (0.19 ) $ 0.03 $ (0.39 )per share attributableto ordinaryshareholders

Note: Non-GAAP basic and diluted net loss per ordinary share for the three andsix months ended June 30, 2019 were calculated based on ordinary sharesoutstanding after accounting for the exchange of Fiverr's then outstandingprotected ordinary shares into 18.7 million ordinary shares as though suchevent had occurred at the beginning of the periods.

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA

(in thousands, except adjusted EBITDA margin data)

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

(Unaudited) (Unaudited) $ ) $ ) $ ) $ )GAAP net loss (124 (9,353 (6,279 (17,666

Add: Financial ) ) )(income) (491 10 (822 (204expense, net Income taxes 17 20 48 26

Depreciation and 1,016 910 1,981 1,717amortizationShare-based compensation 3,062 2,216 5,824 3,962

Other initialpublic offering - 416 - 416relatedexpensesContingentconsideration revaluation (337 ) 868 (466 ) 1,446 andacquisitionrelated costsAdjusted $ $ ) $ $ )EBITDA 3,143 (4,913 286 (10,303

Adjusted 6.7 % (19.0 %) 0.4 % (20.7 %)EBITDA margin RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES

(in thousands)

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

(Unaudited) (Unaudited)GAAP research $ $ $ $ and 10,533 8,457 20,507 16,073developmentLess: Share-based compensation 1,202 901 2,244 1,536

Depreciation and 130 109 246 212amortizationAcquisition related costs - 47 - 94

Non-GAAP $ $ $ $ research and 9,201 7,400 18,017 14,231development GAAP sales and $ $ $ marketing 23,207 15,852 41,428 31,228

Less: Share-based compensation 552 467 1,079 723

Depreciation and 338 308 668 564amortizationAcquisition related costs - 410 121 698

Non-GAAP sales $ $ $ $ and marketing 22,317 14,667 39,560 29,243

GAAP general $ $ $ $ and 6,031 5,621 11,621 9,977administrativeLess: Share-based compensation 1,221 820 2,344 1,653

Depreciation and 49 43 94 85amortizationOther initialpublic offering - 416 - 416relatedexpensesContingentconsideration revaluation (337 ) 411 (587 ) 654 andacquisitionrelated costsNon-GAAP $ $ $ $ general and 5,098 3,931 9,770 7,169administrative

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 income (loss) and Non-GAAP net income (loss) per share as well as operating metrics, including GMV, spend per buyer, active buyers and take rate. Some amounts in this release may not total due to rounding. All percentages have been calculated using unrounded amounts.

We define GMV or Gross Merchandise Value as the total value of transactions ordered through our platform, excluding value added tax, goods and services tax, service chargebacks and refunds. We define active buyers on any given date as buyers who have ordered a Gig or other services on our platform 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 income (loss) and Non-GAAP net income (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 Non-GAAP financial measures guidance for the third quarter of 2020, and the fiscal year 2020 to the comparable GAAP measures, because certain items that are excluded from Non-GAAP financial measures 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 income or loss on revaluation of contingent consideration, as applicable without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, GAAP measures in the future.

See the tables above regarding reconciliations of these non-GAAP financial 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 third quarter of 2020 and the fiscal year ended December 31, 2020, our expected future Adjusted EBITDA profitability, 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 to successfully implement our business plan during a global economic downturn caused by the COVID-19 pandemic that may impact the demand for our services or have a material adverse impact on our and our business partners' financial condition and results of operations; 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 annual report on Form 20-F filed with the U.S. Securities and Exchange Commission ("SEC") on March 31, 2020 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.

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CONTACT: Investor Relations: Jinjin Qian investors@fiverr.com

CONTACT: Press: Siobhan Aalders press@fiverr.com