Good morning. Welcome to CIBRA First Quarter 2021 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.
I would now like to turn the conference over to Maya Tracy, Investor Relations Manager. Please go ahead.
Thank you, operator, and good morning, everyone. Thank you for joining us on fiber's earnings conference call for the Q1 ended March 31, 2021. Joining me on the call today are Michal Kaufmann, Founder and CEO and Ofer Katz, President and CFO. Before we start, I would like to remind you that during this call, we may make forward looking statements and that these statements are based on our current expectations and assumptions as of today and fiber There is no obligation to update or revise them. A discussion of some of the important risk factors that could cause actual results to differ materially from any forward looking statements can be found under the Risk Factors section in fiber's most recent Form 20 F and other filings with the SEC.
During this call, we'll be referring to some non GAAP financial measures. A reconciliation of the non GAAP financial measures to the most directly comparable GAAP And now I will turn the call over to Micha.
Good morning, everyone, and thank you for joining us on the call today. Today, we reported an outstanding set of results after a landmark year of incredible growth and resilience. We kicked off the year with revenue growth accelerating to 100% year over year, doubling our revenue to $68,300,000 Underlining the growth is strength across our business matrix. Active buyers grew 50 6 percent year over year to over 3 The world is in the midst of a massive digital transformation. Companies across the globe are adopting remote working models And shifting to hybrid teams by integrating more freelancers into their businesses.
This past year has been a whirlwind for small businesses, forcing many of them to quickly adopt and find new ways to serve their customers. For many, this meant the need to digitally transform and they turned to fiber to rebuild pivot and launched their businesses. For some, this meant adopting from brick and mortar Driving a digital storefront as we saw massive spikes in searches around e commerce, website design And sales management tools. Others turn to Fiverr for tools to help enhance and rebuild their businesses like Building your own in house food delivery app. As the crisis reinforces and accelerates the trend towards adopting remote work And moving businesses online, we believe our market base is well positioned to address current needs and serve as a key resource When the economy reaccelerates, it's critical to remember that the majority of market is still Operating offline, presenting a massive and still largely untapped opportunity to bring that business online.
Businesses around the world and across all industries continue to invest and spend more of their budget on transformation. When they make the lead, there is no turning back. They will continue to spend and invest in their digital channels And our business model gives us visibility and confidence that this cohort behavior will continue far beyond the pandemic. Our market based model benefited from the compounding transaction volume by the effects of the pandemic driving outsized cohorts to the platform last year and increased spend across existing cohorts. As we mentioned earlier this year, on average, Existing cohorts from 2018 and older grew spend 15% in 2020 compared to 2019.
We believe that there is a long growth runway ahead of us and we are confident that with continued excellent execution, innovation and investment In the creation of valuable tools for our community, we will continue to grow. We believe that our proven ability To successfully create revenue generating products that expand our total addressable market backed by Powerful macro industry tailwind is highly encouraging for our future. These factors Lead to a strong new baseline for our guidance. To ensure this growth continues as the tailwind effect fades, We are continuing to focus and aggressively invest in our key initiatives and growth engines. After a year of significant growth and powerful Q1, I'm even more excited for what's stored for the rest of the year and beyond.
We have continued to make exciting progress towards our key strategic initiatives, moving up market, Expanding internationally and developing and enhancing new capabilities for our products and tools, While heavily investing in our brand and marketing, on the demand front, we're deepening customer loyalty engagement with our subscription and milestone products, increasing the lifetime value of our existing and new cohorts. Fiverr Business also continues to grow rapidly and we have implemented strategies to further build brand awareness And have an amazing pipeline of new products planned for the fiber business community. On the supply front, we are excited to have a new vertical centered around data services. By opening a vertical focused solely on data services, we create a path for elevated category expansion in the data analysis space And further capture and capitalize on the high demand for these services. International expansion is a key component of our upmarket strategy.
We continue to aggressively invest on a global scale with a focus on deepening our penetration in existing markets And our local marketing efforts. We are encouraged by our localization efforts so far and we are investing prudently in building our infrastructure to support further expansion into new geographies. And finally, promoted gigs continue to enjoy healthy seller growth, contributing to our take rate expansion we saw this quarter. Fiverr is becoming a household name. Investments in brand awareness are generating a continuous long term drive for organic traffic and growth in spend.
Our Super Bowl ad was viewed by millions of potential buyers and sellers through our TV campaigns, Digital and social channels significantly boosting our brands and we look forward to expanding on our momentum. The last year has shown us that fiber's business is stronger and more resilient than ever. We have never been more proud of our talented and dedicated team. We have shown that in times of great uncertainty, Our ability to execute on our strategy and mission has only grown more robust. We are operating at highly efficient, driving scale on our platform and investing in our product to further fuel our business.
We took fiber public less than 2 years ago. This year, We are going to be about 3 times larger while growing approximately 50% faster. All of this Is reflected in the significant upward revision of our 2021 revenue growth rate guidance of 50 3% compared to our previous guidance of 46% to 50%. We are confident And highly bullish on the ability to deliver and execute on our goals. We are just getting started.
With that, I will turn the call over to Ofer, who will share a few Q1 highlights as well as some color for the rest of this year. Ofer?
Thank you, Micha, and good morning, everyone. As Micha mentioned in his remarks, We are very excited to deliver another set of amazing results. In Q1, we achieved one of the strongest revenue growth Right in our history, with an outstanding 100 percent Pivot area increased to 68,300,000 Doubling our revenue from the same period last year. This was driven by a spike in active buyer, Spending 56 percent year over year to over $3,800,000 Additionally, we saw accelerating growth Throughout the quarters with outsized trends in the back half of the quarter driven by a jump in traffic and the registration in the U. S.
Shortly after our Super Bowl Center buyer was $216 up 22% year over year and up by $11 compared to Q4 'twenty. This was driven by the compounding transaction volume of the outsized new cohort we acquired last year, Combined with increasing spend across existing cohorts, as businesses accelerate their pace in digital transformation investment And start to integrate more freelancers into their workflows, we expect the spend to remain at an elevated level going forward. To continue capitalizing on this trend, we are investing aggressively to extend the lifetime value of our new cohort by providing products With larger budget and larger businesses, while rolling out new enhancements and capabilities on our In addition, we will continue to make significant investment in our brand, building on our growth and momentum from our most recent Our platform continues to enjoy a market leading take rate and a 10 basis point expansion to 27.2% continue to grow value added services offerings in our robust pipeline and recognize the 0.5% transaction fee increase introduced at the end of the quarter. We reported adjusted EBITDA of negative 0.7000000 Negative 1% margin, significantly above the high end of our Q1 guidance of negative 4,000,000 to negative 3,000,000 The adjusted EBITDA of negative $700,000 includes the long term investment of approximately $8,000,000 in the Super Bowl ad.
We will continue to prioritize growth and at the same time, we expect to make continued progress toward our long term target model. And now for our guidance. For the Q2 to be $73,000,000 to $75,000,000 This represents year over year growth of 55% 59%. Adjusted EBITDA is expected to be $5,000,000 to 7,000,000 We are also upgrading our full year 2021 guidance. We now expect revenue to be at the range UP $302,000,000 to $308,000,000 representing Evotavio growth of 59 to 63%.
Adjusted EBITDA is expected to be in the range of $19,500,000 to 24.5 $1,000,000 representing an adjusted EBITDA margin of 7% at the midpoint of the range. The compounding strength of our existing cohorts and confidence that they will sustain at an elevated level of spending, Along with the addition of new cohorts sets a strong new baseline for our guidance. As we begin to lap the COVID tailwind starting from Q2 2021, we expect our growth to become more normalized but Stronger than when we enter the pandemic period. As we have said, we are at the intersection of a new generation We see this digital services shift via the freelancer market as a global secular trend It will continue to grow. Fiber has been and will continue to power the shift with our unique platform.
We have a robust pipeline planned for the rest of the year and I'm excited to share this update with you throughout the rest of the year and beyond. With that, we'll now turn the call over to the operator for questions. Operator?
We will now begin the question and answer session. Our first question is from Mike Nunn from Goldman Sachs. Go ahead.
Call. I just have 2. First, I was just wondering if you could talk a little bit more about the characteristics of some of the newly acquired cohorts And how that compares to your historical cohorts? And then second, I was just wondering if you could give us a sense of How we should think about the pace of active buyer growth throughout the rest of the year, particularly as growth becomes more normalized? Thank you very much.
Thanks for the question, Mike. Good morning. So I think that as we've noted in our remarks, the characteristics of the newly acquired cohorts are pretty similar Our historical cohorts, but with more focus on high value buyers. And this is Being shown, demonstrated in the percentage of high value buyers that is increasing, Including the addition of customers that are joining fiber business and are Spending is, as we said, about 3 times more than regular customers. What we've seen so And this is true, by the way, for all countries, including those who are actually starting to come out of the COVID situation.
Among those are areas in the U. S, U. K, Israel and other countries where the percentage of vaccinated Our population is above 50%. We haven't seen any change in that trend, and this is very encouraging. What we're seeing is that the momentum that we've been demonstrated throughout the pandemic is not dying.
It is continuing and continuing very, very strong.
Mike, this is Ofer. That's for The second part of the question. So as we look forward into Q2 and the rest of the year guidance, we anticipate That the lapping of the last 4 quarters is starting, and We anticipate some level of normalization or normalized growth, yet to be said Much tougher than what we experienced pre COVID-nineteen. So that If you recall, at the beginning of last year, we were always mentioning that We anticipate balanced growth in terms of potential buyers and active buyers. So that we anticipate that This kind of momentum will continue into the future.
And the meaning is that we'll Still much faster than what we have seen and used to before the pandemic.
Thank you,
Mike. Our next question is from Doug Call. Ann Muth from JPMorgan. Go ahead.
First, Mihael, I was just Hoping to get
your view on supply and demand on the marketplace and just kind of where you are in terms of balance and Going forward, I was wondering, is there any potential of sellers just kind of going back into primary or previous type of jobs with Reopening as hiring picks up more or do you just think that the pandemic has forever changed the operating environment? And then just second, I guess, can you elaborate a little bit more on fiber business in terms of higher frequency buyers and more expensive Giggs, I'm pretty sure you're thinking about progress there. I guess it's still early as well. Thanks.
Good morning, Bhavan. Thanks for the question. So first, when you look at The active buyers as relations to sellers, you see that the ratio has been pretty constant With and we know that there is differences between sellers in their goals and motivation. For some, it's a full time thing and they would like to get as many customers as possible. For some, it's a side job And they limit their participation to only a few hours a day.
And having a system that actually understands that and Sens dot and sends or manages liquidity in the right way has been essential for our market It's for many, many years. And that has been kept very tightly. What we've seen during the pandemic is newer cohorts More sophisticated and more experienced sellers that were joining us, and some of which have been Showcased on the media recently. There were 2 big stories on CNBC About sellers from the U. S.
That have joined fiber just recently mid last year And are already making 100 of 1,000 of dollars on a yearly basis. We think that the pandemic has changed The way freelancers are viewing this opportunity. I think that being a freelancer It's much more of a valid career path and it enables a New type of lifestyle. So we haven't seen in the activity of sellers, we haven't seen Any of those cohorts retracting or leaving the marketplace in favor of going back to their jobs, in many cases, just because they're making So much more money on fiber than they were doing in their 9 to 5 jobs before that Or by spending a lot of their time trying to chase customers and freelancing offline. So that's on the first part of the question.
As for fiber business, I think you rightly noted that it's very early at this point. But what we're seeing is, and this is really interesting, Is that fiber business has a lot of capabilities that are very suitable for individual roles Within organizations or for entire teams. So we have within fiber business, you may have a manager within a company Running an account and over time that account grows. And we have accounts where we have close to 100 people on as a team. And again, this is very encouraging.
It's very early days. What we're seeing is we're seeing that The cross category activity there, the ability of the organization to use fiber more as a way to augment On the team activity, allow the team to find the type of talent They don't have within the organization either having a hard time hiring or not meeting that on a full time basis It's a clear case. And again, our view for this entire decade is that Fiber Business is going to be the place where companies and businesses come in to integrate freelancers into their work And what we're seeing from fiber business is this exact use case is what's happening.
Great. Thank you for the color. I appreciate it.
Our next question is from Ron Josey from JMP Securities. Great.
Thanks I have 2, please. If you could talk a little more, Micha, just about brand awareness. You mentioned a letter building Fiverr into a household name and And the growth and awareness around SMBs and also for medium sized businesses, which talks about going upstream and NPS scores accelerating. But You know, post Super Bowl and all the different benefits that came from that, can you just talk a little bit more about the marketing strategy As brand awareness just continues to grow and I think you're doing that in multiple different countries. And then Ofer, you mentioned an increase in transaction fee, I think you said in the back half call.
Of the quarter. Just talk a little bit more about that increase and how you see that going forward and great quarter guys. Thank you.
Thanks so much, Ron. Good morning. So we've been talking for a few quarters about brand awareness And about building household brands. And maybe the kick of that effort for this year That's been definitely the Super Bowl ad. But definitely what we're seeing is we're seeing that brand awareness in general, Both before the Super Bowl and after is on the increase, which means that we're gaining more organic traffic That is coming to us.
A lot of it contributes to the viral coefficiency of our brand, which makes our Performance marketing more efficient or cheaper. And that is really important for us. And so the idea is to continue pushing on that front because you become we turn fiber we make fiber into a Synonym for accessing talent, accessing freelancing talent in a very easy At Hughes platform. So definitely something that we will continue investing in. Unfortunately, there's Not an additional Super Bowl this year, but we're definitely seeing a lot of opportunity to invest Around that and some of the stories that have been popping out there on the news have been happening organically.
The story that I've mentioned on CNBC is a story that was picked up by media with no intervention on our side. And this is exactly the cycle that we want to create. We're seeing also the contribution of organic and brand awareness To the positioning of our services online, Logo Maker is one of those examples Where you see a service that we launched a few quarters ago and have been increasing its placement on search engines. And because of its high placement at this point, it is generating organic traffic that we're not paying for to the logo maker and to the entire site. We've extended that strategy to more than just the U.
S. We've done TV campaigns outside of the U. S. And obviously online campaigns. And all of them have shown Tremendous efficiency.
As long as this continues to be the case, we'll continue to invest and continue to expand those efforts. There's still the minority of our investments, but the combination of brand awareness with performance marketing is something that has proven itself to work Really well.
Then Ron, on the second part of the question on the service fee, The take rate for the service fee. What's really the change in the service fee is the fact that cross border transaction Cost us more. The structure of the fee with the process has been changed. And it caused us to transfer this cost into the buyer. So we did some tests throughout the quarter To confirm the fact that customers are absolutely agile and there is no effect in terms of conversion, Which leads us to add this 0.5% across the entire platform at the end of the quarter.
We see that as part of the new structure, this will definitely impact the take rate Throughout the year. But again, to the to conversion and active buyer, we don't think there is And it actually give us a little bit more comfort on the value that we provide Throughout the platform, where our ability to increase take rates even beyond the 27% has been Well accepted on the buyer and the seller side.
Great. Thank you, Mikhail.
Our next question is from Nick Jones from Citi. Go ahead.
I guess, 2. 1, can you just provide an update on geographic expansion, the traction and progress you're seeing, just given COVID It sounded like kind of a varying impact by region. Is there anything different there? Or is it kind of tracking Just any color there? And then I have a follow-up.
Thanks.
Good morning, Nick. Thanks for the question. So in terms of geo expansion, we again, Another one of our growth vectors. We've been continuing our investment there. We currently localize in We Enter Brazil and Mexico markets in November.
We've ran TV campaigns in U. K, Germany, Australia. And what we're seeing is we're seeing great growth there. Our strategy is pretty straightforward. Maybe we've talked to that like it before.
And that is every country that we open, we want to see its Baseline growth changing. The first is changing that trend. The second phase is to make that country grow faster And the overall growth of the market base. What we're seeing is we're seeing more countries out of the countries that we've opened well over half of them That are hyper growing, triple digits and more percentages in growth. And this is very encouraging signal for us.
And what we've created is we've created a playbook, a blueprint that allows us to Launch more countries in the near future, contributing to growth through that vector. 2nd part, As to COVID, I think the second part was COVID impact on by region. So I've alluded to that in the beginning of The Q and A by saying that we're tracking very closely the impact that we're seeing Through countries that are either experiencing newer waves of COVID outbreak Or countries that are moving into normalization. What we've seen is we've seen that performance It's actually not being affected. If anything, we're seeing performance continue to increase In both regions that have been starting to go out of the pandemic, I mean, Israel is maybe An extreme case, because the vast majority of population is vaccinated.
And just to share with you guys, things in Israel are looking as if COVID almost never existed. And we haven't seen any change. If anything, the upward Trend is continuing very nicely. The same goes in the U. S.
And the U. K. We have seen obviously in areas like India or Germany where they're experiencing new waves of outbreak, We see some uplifts in traffic that are similar to what we've seen in the midst of the pandemic, Sending more courts of supply to the market base. But we haven't seen any trends or anything that would indicate that post pandemic, We should expect to see a return to the old baseline. I think Ofer mentioned that There is and we do expect that there is going to be some normalization as we start lapping.
But that normalization doesn't mean that we're going back to the historical levels. Our new baseline Is being tipped, which means that we are much, much larger these days, but growing much, much faster.
Great. Thanks. And then just one, I guess, separate question. Yesterday, the U. S.
Labor rescinded a regulation proposed under the Trump administration regarding gig worker employment status. This reverts kind of back to the Department of Labor rule 2,008, I think it was the 7 factor task. Can you just remind us how or how should we be thinking about the impact of this on fiber In the U. S, if there is any impact at all? Thanks.
Absolutely. So there should be a clear distinction Between the gig economy and the freelancing economy or the talent economy. The latter In which we fall into focuses on providing freelancers with the freedom to work On whatever they want, whenever they want and charge whatever they see fit for their services. So Our service resembles the relationship that Amazon has with its merchants or Etsy has with its sellers. But we don't believe that The current folks are relevant for the e commerce platform.
We do continue to monitor the developments, but we definitely think that the rules that are within the regulation And within court decisions, do not apply to fiber.
Great. Thank
you. Thank you.
Our last question is from Jason Helfstein from Oppenheimer. Go ahead.
Guys, two questions. One just on marketing. So you've obviously seen significant, I guess, marketing efficiency tailwinds. A big chunk of that's COVID, but also you've built meaningful brand awareness. So Just help us think about how you see marketing efficiency going from here.
I mean, we can all kind of like run numbers and we kind of have a sense Probably based on the guidance what you're going to spend on marketing, but how should we think about marketing efficiency and what it means for like net adds for the rest of the year? And then is this And just how do we think about that? And do we hit a point where you start adding more add, more net adds, but perhaps they spend less? So Just how do we think about the relationship for the rest of the year? And then for the guidance for the rest of the year, any meaningful contribution From, Fiverr Business or subscriptions in the guidance for the rest of the year.
Thank you.
Hey, Jason. So I think the way we measure the marketing efficiency It's well demonstrated in the CROI chart. And if you follow that, you can see that we are able to cover the cost of our investments Within the Q3, the investments are there. The TRY are actually approximately 3 months. And this has been the case Almost seems to have been public 2 years ago, and it's just getting better.
We are able to invest more Dollar wise, bring more buyers, bring Bigger wallet buyers, but still keep the DIY superstitions. We're also being able to increase the marketing investment on the awareness and the awareness phase rather than Conversion and reduce the cost of the marketing that's affecting the revenue over time. So that's We think that the buyers we bring has a high lifetime value, which doesn't mature In the Q1, buyers that we bring are inflexives In the marketplace for many years. So that if I refer back to the PROI, you can see that after 2, 3 4 years, the Lifetime value to PAC is more than 4, and it's growing on a quarterly basis Call. So that when we look forward, we believe that we can maintain The sustainable TRY metrics, we do that by Adding more channels, investing in technology, opening more categories And increasing lifetime value of buyers.
Let's go to the second part of the question in terms of products like fiber business, Product live subscription, but many others. So that every quarter and this has been the case since Since inception of the company, the quality of the buyer is higher. We are able to pay more for each buyer because of its lifetime value And keeping the CRY for the addition. So in terms of guidance, once the fiber business or subscription Become more mature and more substantial to the business will give more color. I think we are those products have just been released in a quarter or 2 quarters ago and still Adding users, we are collecting the data, so that is still early.
And over time, We think that we'll be able to share more data. I would just point last data point The 2 do capture this growing up market and the contribution of all the products that we released. I think that we do share the high value buyer percentage of revenue. How this group Contributing to the overall revenue, this has been growing to 59% of our corporate revenue, Comparing 58 in the last quarter for the contribution of those products, yes, too early To model aside but contribute to the overall high value buyer, And you can see that how if you track this high value buyer over since we went public, you can see how this number is growing Because of those type of time initiatives.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Micha for closing remarks.
Thank you, Kate. Guys, Thank you everyone for joining the call today and have a good rest of the day. We'll talk to you next Call.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.