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01/11 11:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights robust growth in services revenue, a strong performance in the Programming and Tech vertical, and strategic AI-driven initiatives. Despite flat GMV trends, the company's focus on larger projects and AI integration is promising. The management's confidence in AI driving future growth, alongside a significant increase in spend per buyer, suggests optimism. However, the wide guidance range due to macroeconomic conditions tempers expectations slightly. Overall, the positive aspects outweigh the negatives, projecting a positive stock price movement.
Revenue Revenue for the third quarter was $107.9 million, up 8% year-over-year. The increase was driven by strong performance across both Marketplace and Services segments, with tailwinds in AI-related categories and expanded Managed Services and Dynamic Matching.
Adjusted EBITDA Adjusted EBITDA for Q3 was $24.2 million, representing an adjusted EBITDA margin of 22%, an improvement of 260 basis points from a year earlier. The improvement was attributed to strategic restructuring and disciplined expense management.
Free Cash Flow Free cash flow totaled $29.1 million in Q3. This was supported by strong profitability and robust cash flow generation due to strategic restructuring and disciplined expense management.
Spend per Buyer Spend per buyer increased 12% year-over-year, driven by wallet share expansion across the buyer base and growth in larger projects through Dynamic Matching and Managed Services.
Dynamic Matching GMV GMV for Dynamic Matching grew 22% year-over-year, with 15% of job briefs having a budget of over $1,000 and an average order value of $2,200. This growth reflects the adoption of dynamic matching for larger projects.
Managed Services GMV Managed Services GMV grew 65% year-over-year, with average project size reaching $17,000. This growth was driven by capturing larger and more sophisticated engagements.
Programming and Tech Vertical The Programming and Tech vertical grew 14% year-over-year in Q3, driven by surging demand for AI-related services such as AI agents, workflow automation, and vibe coding.
Marketplace Revenue Marketplace revenue was $73.6 million, driven by 3.3 million active buyers, $330 in spend per buyer, and a 27.6% marketplace take rate. Growth was fueled by AI-related categories and expanded Managed Services and Dynamic Matching.
Services Revenue Services revenue was $34.3 million, representing a year-over-year growth of 40%. Growth was driven by Fiverr Go, increased adoption of Seller Plus (20% year-over-year growth), Fiverr Ads, and AutoDS synergies with Shopify.
Dynamic Matching GMV: Grew 22% year-over-year with 15% of job briefs having a budget of over $1,000 and an average order value of $2,200.
Managed Services GMV: Grew 65% year-over-year with average project size reaching $17,000.
AI-related services: Programming and Tech vertical grew 14% year-over-year, driven by demand in AI agents, workflow automation, and vibe coding.
Spend per buyer: Increased 12% year-over-year, the strongest growth rate since the COVID era.
Services revenue: Grew 40% year-over-year, driven by Fiverr Go, Seller Plus (20% growth), Fiverr Ads, and AutoDS partnerships.
Adjusted EBITDA margin: Achieved a record high of 22%, an improvement of 260 basis points from a year earlier.
Free cash flow: Generated $29.1 million in Q3, reflecting strong cash flow generation.
Strategic restructuring: Streamlined headcount and enhanced operational efficiency, contributing to increased profitability.
AI-first transformation: Focused on building an AI-native team, upgrading tech infrastructure, and reimagining the marketplace with AI integration.
Upmarket expansion: Transitioning to agentic matching for complex projects and enhancing buyer experience with AI-powered workflows.
Macroeconomic Environment: The macro environment remains uneven, with mixed labor market trends and broader hiring recovery being elusive. Elevated uncertainty in the macro environment is reflected in the wider-than-normal revenue guidance for Q4 2025.
Strategic Restructuring: The company announced a strategic restructuring plan in September to streamline operations and focus on AI-first initiatives. While this aims to enhance efficiency, it also involves risks related to execution and potential disruptions during the transition.
AI Transformation: The company is heavily investing in AI-related services and infrastructure. While this presents growth opportunities, it also carries risks such as high costs, technological challenges, and the need for specialized talent.
Upmarket Expansion: The focus on upmarket expansion involves serving more complex projects and larger clients. This strategy carries risks related to execution, client acquisition, and maintaining service quality for high-value projects.
Services Revenue Growth: Services revenue growth is expected to moderate as the company laps the one-year anniversary of an acquisition. This could impact overall revenue growth rates.
Competitive Pressures: The company is positioning itself as a leader in AI and upmarket services, but faces competitive pressures in these rapidly evolving markets.
Revenue Expectations: For the full year 2025, revenue is expected to be in the range of $428 million to $436 million, representing year-over-year growth of 9% to 11%. For the fourth quarter of 2025, revenue is expected to be between $104.3 million to $112.3 million, representing a year-over-year growth of 1% to 8%.
Adjusted EBITDA Projections: Full-year adjusted EBITDA guidance is raised to a range of $88 million to $93 million, representing an adjusted EBITDA margin of 21% at the midpoint. For Q4 2025, adjusted EBITDA is expected to be $23.9 million to $27.9 million, representing an adjusted EBITDA margin of 24% at the midpoint.
Services Revenue Growth: Services revenue growth is expected to moderate as the company laps the 1-year anniversary of the acquisition but is projected to maintain healthy double-digit revenue growth. Services revenue is expected to represent a little over 30% of total revenue for the full year 2025.
Long-term Adjusted EBITDA Margin: The company remains committed to achieving a long-term adjusted EBITDA margin of 25% in 2026.
AI and Upmarket Initiatives: The company plans to redeploy cost base savings into selective, high-impact investments in AI and upmarket initiatives in 2026.
The selected topic was not discussed during the call.
The earnings call highlights robust growth in services revenue, a strong performance in the Programming and Tech vertical, and strategic AI-driven initiatives. Despite flat GMV trends, the company's focus on larger projects and AI integration is promising. The management's confidence in AI driving future growth, alongside a significant increase in spend per buyer, suggests optimism. However, the wide guidance range due to macroeconomic conditions tempers expectations slightly. Overall, the positive aspects outweigh the negatives, projecting a positive stock price movement.
The earnings call summary indicates strong financial performance, with growth in both Marketplace and Services segments, particularly in AI-related services. The improved EBITDA margin and free cash flow are positive signs. The Q&A section reveals optimism about future growth through AI and upmarket strategies, despite some uncertainties. The guidance for revenue and EBITDA growth is also positive, suggesting confidence in achieving targets. Overall, the strong financial metrics, optimistic guidance, and strategic focus on AI and upmarket efforts suggest a positive stock price reaction.
The company presented strong financial performance with 15% YoY revenue growth and improved margins. Positive guidance for revenue and EBITDA indicates optimism. The stock repurchase program reflects confidence in long-term prospects. However, stable demand without inflection and competitive pressures pose risks. The Q&A highlighted satisfaction with Fiverr Go and growth in services revenue, although some answers lacked clarity. Overall, the combination of financial strength, positive guidance, and shareholder returns supports a positive sentiment, likely leading to a stock price increase of 2% to 8% over the next two weeks.
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