On Wednesday, Citi maintained a Buy rating on Fiverr International Ltd . (NYSE:FVRR), raising the price target to $39.00 from the previous $36.00. The adjustment follows Fiverr's announcement of third-quarter results that surpassed expectations, along with forward guidance for the fourth quarter that suggests continued growth.
The company's performance was attributed to a stabilizing economic environment in recent months, increased engagement from its High Quality Buyers, and a higher take rate resulting from the growing adoption of value-added services. Despite a 9% year-over-year decline in Active Buyers during the third quarter, Fiverr's strategic shift towards becoming a hiring platform, rather than just a marketplace, appears to be gaining traction.
Investments in new tools such as the Profession-Based Catalog, Hourly-Based Contracts, and the newly introduced Dynamic Matching are facilitating this transition. These initiatives are aimed at improving the platform's conversion rates and are reportedly yielding better performance from newer user cohorts compared to older ones.
Furthermore, the company's take rate continues to increase through the adoption of features like Promoted Gigs, Seller Plus, and the integration of its AutoDS acquisition. This has also contributed to expanding EBITDA margins. The analyst firm reiterated its Buy/High Risk rating, reflecting confidence in Fiverr's direction and the potential for further growth.
InvestingPro Insights
Recent InvestingPro data aligns with Citi's optimistic outlook on Fiverr International Ltd. (NYSE:FVRR). The company's market cap stands at $1.02 billion, with a P/E ratio of 94.05, indicating high growth expectations. Fiverr's impressive gross profit margin of 83.34% for the last twelve months ending Q2 2024 underscores its efficient business model, supporting the company's strategic shift and investment in new tools.
InvestingPro Tips reveal that Fiverr holds more cash than debt on its balance sheet, providing financial flexibility to fund its transition to a hiring platform. Additionally, management has been aggressively buying back shares, potentially signaling confidence in the company's future prospects. These factors, combined with the expectation of net income growth this year, support Citi's bullish stance.
For investors seeking a deeper understanding of Fiverr's potential, InvestingPro offers 13 additional tips, providing a comprehensive analysis of the company's financial health and market position.
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