One of the best earnings reports I’ve seen in this earnings season was from Fiverr. This is mainly because they changed growth cohorts. For this year, previously they were guiding for 46%-50% YoY growth, but now they have updated their forecast to 59%-63% YoY growth! For comparison, Crowdstrike, my highest conviction stock, is “only” forecasting growth at 64% for 2021 (but to be totally fair, CRWD hasn’t reported Q1 yet and so will also likely beat/raise their guidance.)

This is not to say that I like FVRR better than CRWD. FVRR will probably never be as good as CRWD simply because FVRR is not a SAAS company. It’s a marketplace. That doesn’t mean the stock is bad or not worth owning – it just means I probably will never own a huge 25% concentration in FVRR when I can just as easily put my money into SAAS companies, with built in recurring revenue.

Additionally, for Q1 2021 revenue growth accelerated to 100% year-over-year, doubling revenue to $68.3 million. Non-GAAP gross margins were 84%, up from 81% in the comparable quarter last year.

Fiverr is riding the long term tailwind of businesses seeking out digital transformation through project based free lance work, a mega trend which got even hotter due to covid. Management highlighted website design, sales management, mobile app development, and ecommerce as areas of work that are particularly popular on the Fiverr marketplace. Although FVRR is yet another covid benficiary, management went out of their way on the call to explain that, even in places where covid has waned significantly (such as Israel, where Fiverr is based), business is a boomin’.

Growth in active buyers was up 56% YoY to 3.8mm. Management cautioned this will normalize once pandemic numbers are lapped. However, from a purely statistical perspective, the numbers show no signs of slowing. From Q2 2020 to the present quarter, active buyers QoQ growth has been 12%, 11%, 10%, 12%. Before Q2 2020 (pre-covid), active buyers tended to grow around 4% or 5% each quarter, a huge difference. It’s worth taking management seriously, but at the same time there is also a decent chance management is just being cautious and sand bagging.

Furthermore, there has been steady growth of spend/buyer. Pre-covid, it was increasing 4% or 5% per quarter, and during covid it continued to grow 4%-6% each quarter. In q1 2021, the QoQ increase was 5%, which translates to 21% YoY.

Importantly, a new part of Fiverr’s business called “Subscriptions”, launched in February with 8 categories and now has 25 categories as of the end of Q1. Subscriptions gives freelancers on Fiverr the opportunity to establish long-term, ongoing relationships with their customers. This will appeal to larger businesses in particular.

For Q2 2021, Fiverr is guiding for a 10% QoQ revenue bump, which translates to 60% YoY rev growth. On average they tend to beat revenue estimates by 5%, so we can guess they will probably come in at 15% QoQ growth, which would be 68% YoY growth.