What happened
Shares of Fiverr International (FVRR 3.74%) caught a tailwind on Thursday. The operator of a freelance services marketplace reported robust business results Wednesday evening, beating Wall Street's expectations across the board. The stock hovered around a 20% gain at 1:45 p.m. ET today.
So what
Fiverr's second-quarter sales increased by 5% year over year, landing at $89.4 million. Adjusted earnings more than tripled from $0.12 to $0.49 per share. The analyst consensus called for earnings near $0.41 per share on revenue in the neighborhood of $89.2 million.
The top-line result was in line with management's guidance for the quarter, while the period's profits came in well above the posted guidance range. Management raised its full-year profit guidance by 11%, citing strong interest in several freshly launched services alongside a more profitable business mix.
Now what
New tools such as Fiverr Certified and Fiverr Pro are designed to fit the needs of enterprise-scale customers and highly qualified freelancers. If you think of Fiverr as a hobbyist marketplace, that description is becoming less accurate over time. This sharp focus on big-ticket jobs for large client businesses should fuel Fiverr's profit margins and bottom-line results over the next few years.
Moreover, the company just introduced Fiverr Neo, an artificial intelligence tool that helps freelancers connect with the right opportunities in plain English. A ChatGPT-like interface reaches into Fiverr's jobs database, matching the worker's skills to the right tasks with the help of neural networks and deep learning analysis.
So Fiverr isn't sitting still in an evolving market, and the effort is starting to show real business results. The revenue line is still muted due to turmoil in the global economy, but the company is setting the stage for a strong rebound as the economic pressure fades away.
And despite Thursday's impressive bounce, you have not missed the Fiverr boat. The stock price is actually down 9% over the last 52 weeks, and you can pick up shares at the modest valuation ratios of 26 times earnings or 3.7 times sales.
It's nice to see my Fiverr holdings adding some value today, but I still recommend buying the stock today as the modest share price doesn't reflect the company's tremendous long-term business prospects.
