Fiverr International Ltd.’s (NYSE:FVRR) Path To Profitability

We feel now is a pretty good time to analyse Fiverr International Ltd.’s (NYSE:FVRR) business as it appears the company may be on the cusp of a considerable accomplishment. Fiverr International Ltd. operates an online marketplace worldwide. With the latest financial year loss of US$15m and a trailing-twelve-month loss of US$26m, the US$7.8b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Fiverr International’s path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Fiverr International

Fiverr International is bordering on breakeven, according to the 8 American Online Retail analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$19m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 114% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:FVRR Earnings Per Share Growth July 18th 2021

We’re not going to go through company-specific developments for Fiverr International given that this is a high-level summary, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Fiverr International currently has a debt-to-equity ratio of 105%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Fiverr International, so if you are interested in understanding the company at a deeper level, take a look at Fiverr International’s company page on Simply Wall St. We’ve also put together a list of essential factors you should look at:

  1. Valuation: What is Fiverr International worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Fiverr International is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Fiverr International’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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