Here’s When Fiverr (NYSE: FVRR) Can Go Profitable and How It Stacks Up To Upwork (NASDAQ: UPWK)

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This article originally appeared on Simply Wall St New

Looking at Fiverr International Ltd. (NYSE: FVRR) future, there are a few things to consider. Their platform, how many people will convert to freelancers during the pandemic, how many people will stay after the pandemic, what long-term growth will look like and how will they fare compared to their main competitor Upwork (NASDAQ: UPWRK). After taking these factors into account, we will assess when the company can break its profits.

Anyone who has visited the Fiverr platform has had the experience of quickly finding what they are looking for. The range of independent services is quite wide and expanding. Buyers can find something to suit all budgets, and small and medium-sized businesses have an effective alternative for outsourcing tasks. Platform expanded for longer term engagements and services, expanding their possible reach and usable market. Creators and freelancers are also flocking to Fiverr, as the platform makes it easier for them to reach customers and receive secure payment that makes both buyer and seller more confident in their business.

Considering the possible growth, we’ll see how much the platform has grown over the previous period and what analysts believe it will accomplish in the future.

revenue-and-profit-growth

The chart above shows us that Fiverr saw an increase in 2020 and the first half of 2021, but what is interesting is that this trend is expected to continue in the future, with analysts estimating revenue growth of 22. , 1% next year. It’s obvious that the independents and buyers come back to Fiverr, which inspires confidence that the company is doing certain things right and growing organically.

Many investors are also considering how Fiverr will compete with its main competitor, Upwork. Looking at the two companies, we can see that while they started out with distinct business models, both have converged on how they deliver their services. When one company innovates, the other often throws a similar future in the near future. The main difference between the two competitors was that Upwork offered freelancers an hourly rate, while Fiverr paid on completion of tasks. These lines are now quite blurry as both now offer these options.

At Simply Wall St, you can get a report for both Fifth and Upwork, and see which company is doing best on your most loved metrics. We did some research and made some comparisons:

Society

Market capitalization

Income ttm

Estimated revenue growth next year

Cash

Debt

Fifth

6.7b

US $ 251.8 million

27%

441.8 million US dollars

US $ 364.7 million

Upwork

5.4b

US $ 440.7 million

22%

$ 172.4 million

US $ 6.9 million

As we can see, investors have more hope for Fiverr and give them more credit for future cash flow. Considering the revenue, Fiverr clearly lacks Upwork and both companies are expected to grow at about the same rate. Fiverr has more capital to deploy for the business, but it is backed by debt that must be repaid later, making the business riskier for investors – it is generally not recommended for new businesses. growing to finance their operations through debt financing.

So what could be the reason why investors value Fiverr more than Upwork?

One of the reasons could be a qualitative aspect, such as confidence in management. The other is much more concrete, Fiverr has operating cash flow of $ 31.6 million, while Upwork has $ 18.1 million. This is not significant when a company invests in growth, but implies larger margins for Fiverr in the future. when cash flow turns into earnings.

Now let’s move on to Fiverr’s path to profitability.

The $ 6.7 billion market-capitalization company recorded a loss in its last year of $ 15 million and the last year-over-year loss of $ 40 million, resulting in an even larger gap between loss and breakeven point.

Many investors are questioning the rate at which Fiverr International will make a profit, the big question being when will the company break even?

See our latest review for Fiverr International

The consensus of 9 US e-commerce analysts is that Fiverr International is on the verge of breaking even.

They expect the company to record a terminal loss in 2022, before making a profit of US $ 146,000 in 2023. So the company should breakeven point approximately In 2 years.

How fast will the business need to grow each year to break even by 2023?

Looking back at analysts’ estimates, it turns out that they expect the company to experience 69% year-over-year growth, on average, which indicates a great confidence of the analysts.

If the business grows at a slower pace, it will become profitable later than expected.

earnings per share growth

earnings per share growth

Before concluding, there is one problem worth mentioning. Fiverr International currently has a debt ratio of 106%. A higher level of debt requires more rigorous management of capital, which increases the risk of prolonging the deficit period.

Key points to remember

Fiverr is a pioneer in freelance concert services that seem to be in demand by companies looking to optimize their operations and outsource various tasks.

Fiverr’s growth is expected to continue for years to come as buyers and sellers continue to use the platform. The company has also broadened the scope of services offered, thereby broadening its target market.

Fiverr and Upwork are the main competitors with similar business models and services offered. Currently, investors seem to be giving Fiverr a higher valuation, possibly due to the larger cash flows that have the potential to turn into higher margins in the future.

Fiverr is expected to reach profitability within 2 years – in 2023. The company is likely to grow a lot in the meantime and be an established force in the independent economy.

This article is not intended to be a full review on Fiverr International, so if you want to understand the business on a deeper level, take a look at The Fiverr International company page on Simply Wall St. We have also compiled a list of important aspects you should consider in more detail:

  1. Management team: An experienced management team at the helm increases our confidence in the company. Find out who sits on the board of Fiverr International and the CEO’s background.

  2. Other high performing stocks: Are there other stocks that offer better prospects with a proven track record? Check out our free list of these great stocks here.

Simply Wall St analyst Goran Damchevski and Simply Wall St have no positions in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents.

Do you have any feedback on this item? Are you worried about the content? Contact us directly. You can also send an email to [email protected]


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