Stock to watch: Fiverr International Ltd (NYSE: FVRR)

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Fiverr International Ltd (NYSE: FVRR), one of the five largest B2B-focused human cloud platforms, stock surged 29.36% on April 8th, 2020 (Source: Google finance) and lost over 2.7% in the pre market session of April 9th, 2020 (Source: Google finance). The company sees its business activity rebound after an initial impact from Covid-19 in March. The activity across the platform had temporarily declined in March by 10-15% compared to the previous week. In the fourth week the decline had stabilized and exhibited a meaningful rebound, with the growth continuing robustly into the beginning of April. The COVID-19 pandemic is far from being over, but, the company is encouraged after seeing so far and freelancers are signing on to the platform in record numbers. The Tel Aviv, Israel-headquartered company has also prioritized product initiatives to help its community amid the Covid-19 crisis. Fiverr’s revenue & adjusted EBITDA for the first quarter is anticipated to come in slightly above its guidance. However, it is too early to draw conclusions looking forward because Covid-19’s impact remains uncertain. Further, Needham analyst Brad Erickson has maintained a Buy rating on Fiverr International (FVRR) and has set a price target of $38.00.

For the first quarter of 2020, the company expects revenue to be in the range of $32.0 – $33.0 million, which reflects y/y growth between 35% – 39% and for fiscal 2020, the company expects revenue to be in the range of  $139 – $141 million, which reflects y/y growth 30% – 32%

For the first quarter of 2020, the company expects adjusted EBITDA to be in the range of ($5.5) – ($4.5) million and for fiscal 2020, the company expects adjusted EBITDA to be in the range of  ($15.0) – ($13.0) million

Meanwhile, the company has reported Adjusted EBITDA to be ($3.3) million, or (11.3%) of revenue in Q4 2019, compared to ($4.1) million or (19.7%) in the prior year period. The improved EBITDA margin was on the back of improved leverage in operating expenses.  The company has delivered the net loss on a GAAP basis in Q4’19 was ($7.4) million, compared to ($5.9) million. The company’s Non-GAAP gross margin decreased by 130 bps 80.8% in Q4’19, from 82.1% in Q4’18. The reduction in gross margin was mainly due to the growth of the content marketing subscriptions business, which has a higher take rate but lower gross margin compared to the overall marketplace.

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