The next big stock debut could be the Fiverr IPO. Recently, the IPO market has gotten choppy. Of course, there were the disappointing offerings of the high-profile Uber (NYSE:UBER) and LYFT (NASDAQ:LYFT). Pinterest (NYSE:PINS), which came public in mid-April, is also coming under pressure because of a disappointing earnings report.
Despite all this, the volume of IPO activity remains strong. It certainly helps that there have been some standout deals like Zoom Video Communications (NASDAQ:ZM). And of course, another key is that — even with the recent volatility — the markets are still near all-time highs.
So what about the Fiverr IPO?
What Is Fiverr?
The roots of Fiverr go back to 2010 when two entrepreneurs in Tel Aviv, Micha Kaufman and Shai Wininger, teamed up to build an online marketplace for connecting freelancers with buyers. The concept was simple: With as little as $5, you could get quality service.
According to Micha, in the Fiverr IPO filing: “Shopping online has evolved into an enjoyable experience that has many benefits: efficiency, diversity and choice, transparency of product attributes, quality and price and the reliability of service and delivery. We saw no reason why we couldn’t create a similar model for digital services.”
While the initial Fiverr website was fairly basic, it still worked quite well as growth took off. Along the way, the company was able to raise venture capital from top-tier venture capitalists like Accel Partners and Bessemer Venture Partners. There were also several acquisitions to bulk up the operations, including deals for VeedMe (video creation marketplace), AND CO (software tools for freelancers) and ClearVoice (content marketing).
As of now, Fiverr is a diverse platform that offers over 200 services. Just some of these are voiceover, logo design, language translation and blog writing. In fact, since the inception of Fiverr, there have been more than 50 million transactions from over 5.5 million buyers and more than 830,000 sellers.
Pulling this off has certainly required sophisticated technology development to scale the operations. And yes, a key part of this has been leveraging AI (Artificial Intelligence). According to the Fiverr IPO filing: “Our proprietary machine learning technology and expansive data sets allow us to personalize experiences for both buyers and sellers. We strive to anticipate our buyers’ future needs based on their buying behavior and provide category and service recommendations. We also provide deep insights to our sellers through sophisticated data analytics and streamlined software tools so that they can effectively manage their business and maximize earnings.”
In terms of growth, it has been robust. In the latest quarter, revenues jumped by 43% to $23.8 million (the company generates revenue primarily from transaction and service fees). The market opportunity is also enormous. Fiverr estimates the spending at a whopping $100 billion. Some of the drivers include: the growth in freelancing, the ubiquity of smartphones and the popularity of the do-it-for-me movement.
Bottom Line on Fiverr Stock
So what are the prospects of the Fiverr IPO? Well, there have been several online marketplace operators that have come public during the past year and the results have been somewhat mixed. Pluralsight (NASDAQ:PS) has logged an impressive return of 129% while Upwork (NASDAQ:UPWK) is up about 6%.
Something else: The initial Fiverr IPO filing does not have any pricing details. Until they are disclosed — which will likely be in a couple weeks — it will be easier to evaluate the offering.
Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.