FVRR Q1 Earnings Call: AI Initiatives and Upmarket Strategy Drive Revenue Outperformance

Online freelance marketplace Fiverr (NYSE:FVRR) announced better-than-expected revenue in Q1 CY2025, with sales up 14.6% year on year to $107.2 million. Guidance for next quarter’s revenue was better than expected at $107 million at the midpoint, 0.7% above analysts’ estimates. Its non-GAAP profit of $0.64 per share was 8% above analysts’ consensus estimates.

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StockStory’s Take

Fiverr’s first quarter results were influenced by the company’s ongoing push into higher-value client segments and the early impact of its AI-powered Fiverr Go product. Management attributed the quarter’s performance to continued strength in Fiverr Pro, which targets enterprise clients with tailored solutions, and the rapid adoption of value-added services. CEO Micha Kaufman specifically highlighted several large enterprise deals, including a $200,000 engagement with a book publishing company, as evidence of Fiverr’s ability to scale upmarket. The company also noted strong engagement and conversion improvements from Fiverr Go, emphasizing its role in driving buyer and seller satisfaction.

Looking to the remainder of the year, management emphasized three strategic priorities: expanding upmarket with enterprise clients, accelerating adoption of value-added services, and broadening the use of AI across the platform. CEO Micha Kaufman stated, "Our strategic focus on going upmarket, expanding value-added services, and leveraging the power of AI positions us for continued success." Management expects Fiverr Go to play a larger role as it is integrated into more categories and touchpoints, aiming for improvements in both buyer confidence and seller productivity. CFO Ofer Katz also indicated that ongoing investments in marketing and R&D will be balanced with a disciplined approach to profitability and cash flow.

Key Insights from Management’s Remarks

Management credited Q1’s revenue growth to larger enterprise contracts and the successful launch of Fiverr Go, while stable freelancing demand provided a reliable foundation.

• Enterprise client momentum: Management cited several new six-figure contracts, including with a major book publisher and an online education company, as evidence of Fiverr’s ability to serve larger, high-value clients through its Fiverr Pro suite. These deals were achieved without a traditional sales force, relying instead on targeted engagement and tailored offerings.
• Fiverr Go early traction: CEO Micha Kaufman provided details on the February launch of Fiverr Go, reporting over 6,000 top-quality sellers and 200,000 buyers engaged with the platform. Sellers using the Personal Assistant feature saw a 56% uplift in one-hour conversion rates and a 10% improvement over 14 days, suggesting measurable operational benefits for both sellers and buyers.
• Value-added services expansion: Services revenue, which includes Fiverr Ads, Seller Plus, and AutoDS, grew 94% year-over-year and now represents over a quarter of total revenue. Management highlighted the services business as a key driver of overall margin improvement and expects its contribution to exceed 30% of total revenue this year.
• Marketing investment strategy: Fiverr increased marketing spend in Q1 to capitalize on favorable opportunities identified across geographies and channels. Management described their approach as nimble and data-driven, emphasizing the company’s ability to quickly scale campaigns and optimize return on investment.
• Stable macro environment: Leadership reported that the broader freelancing demand environment remained steady, with no significant change due to macroeconomic factors. The focus on high-value buyers and mission-critical projects has helped reduce Fiverr’s sensitivity to broader economic volatility.

Drivers of Future Performance

Management expects growth to be fueled by enterprise client expansion, further integration of AI tools, and a greater mix of value-added services, alongside ongoing margin discipline.

• Broadening Fiverr Go integration: Management plans to expand Fiverr Go into additional service categories and make it a core part of the buyer journey. They believe this will increase engagement, drive higher conversion rates, and further differentiate Fiverr’s platform by providing a more personalized experience powered by generative AI.
• Upmarket and services focus: The company intends to continue shifting its customer mix toward larger, higher-value clients, leveraging Fiverr Pro and increased account management. Leadership anticipates that this strategy will improve average spend per buyer but could result in a continued decline in the total number of active buyers as smaller customers become less central to growth.
• Margin improvement initiatives: Management expects to generate marketing leverage throughout the year and indicated that R&D expense growth will moderate after Q1. These measures, combined with a disciplined approach to capital allocation, are aimed at supporting adjusted EBITDA margins and free cash flow growth over the longer term.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the scale and impact of Fiverr Go as it is integrated into more service categories, (2) the pace of enterprise client wins and the resulting changes to average spend per buyer, and (3) the growth trajectory of value-added services as they approach a larger share of total revenue. Additionally, we will track Fiverr’s ability to sustain margin improvements while balancing investments in AI and new product development.

Fiverr currently trades at a forward EV/EBITDA ratio of 13.7×. In the wake of earnings, is it a buy or sell? The answer lies in our full research report (it’s free).

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