Earlier this morning, Fiverr's (FVRR) 5.26 mln share IPO priced at $21, above the $18-$20 expected price range. Its strong pricing comes on the heels of CrowdStrike's (CRWD) highly successful IPO yesterday, indicating that the IPO market is in a healthy state ahead of next week's highly-anticipated IPO, Slack (WORK).
While FVRR's growth has been solid and the IPO market in general has been supportive for new deals, on one level the healthy demand for FVRR's IPO is a little surprising.
That's because Upwork (UPWK), one of FVRR's closest peers, has struggled mightily since its October 2018 IPO. Specifically, it is down 35% from its IPO opening price. Based on its pricing, investors appear confident that FVRR will fare better in the public markets than UPWK has.
In total, its IPO generated $110.5 mln in total gross proceeds. The lead underwriters on the deal were JP Morgan and Citigroup and shares are set to open for trading later this morning on the NYSE.
FVRR is the designer and owner of a digital marketplace that is built with a comprehensive SKU-like services catalog and an efficient search, find and order process that mirrors a typical e-commerce transaction. At the foundation of its platform lies a catalog with over 200 categories of productized service listings, which it calls "Gigs". Each Gig has a clearly defined scope, duration and price, along with buyer-generated reviews.
Using either its search or navigation tools, buyers can easily find and purchase productized services, such as logo design, video creation and editing, website development and blog writing, with prices ranging from $5 to thousands of dollars. FVRR calls this the Service-as-a-Product (SaaP) model.
FVRR's buyers include businesses of all sizes, while its sellers are a diverse group of freelancers and small businesses from over 160 countries who tap into its platform to earn their full-time living or augment their income.
The company generates revenue primarily through transaction fees and service fees. On each transaction processed through its platform, it collects total transaction value plus the service fee from the buyer. Upon completion of the order, it then transfers the transaction value less the transaction fee to the seller.
For the three months ended March 31, 2019, revenue increased 42% yr/yr to $23.8 mln. The increase was mainly due to an increase of 13.1% in the number of active buyers and an increase of 18.8% in spend per buyers.
Gross margin improved to 79.2% from 77.1% in the year ago period, due to the increase in revenue.
Total operating expenses decreased by 7% to $27.3 mln, but, the company still had an operating loss of ($8.5) mln for the period.