Fiverr International Ltd.

Good morning, good afternoon, good evening, and welcome to the Fiverr third quarter fiscal 2020 earnings conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your questions, please press star and 2. Please note that this event is being recorded. I now hand the conference over to Jinjin Chen. Please go ahead.

Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining us on Fiverr's earnings conference call for the third quarter ended September 30th, 2020. Please note that this call is being webcast on the investor relations section of the company's website. Full details of our results and additional management commentary are available in our shareholder letter, which can be found on the investors relations section of our website at investors.fiverr.com. Joining me today on the call are Miha Kaufman, founder and CEO, and OfferCard's CFO. Before we start, I'd like to remind you that certain matters discussed today are forward-looking statements that are subject to risks and uncertainties relating to future events and or the future financial performance of Fiverr. Actual results could differ materially from those anticipated in those forward-looking statements. Additional information that could cause actual results to differ from forward-looking statements can be found in Fiverr's periodic public filings with the U.S. Securities and Exchange Commission, including those factors discussed under the risk factor section in Fiverr's 20F filed with the SEC. The forward-looking statements in this conference call are based on the current expectations as of today, and Fiverr assumes no obligation to update or revise them, whether as a result of new developments or otherwise. And now I'll turn the call over to Miha.

Good morning, everyone, and thanks for joining us on the call today. We are excited to deliver another quarter of record-setting growth as revenue, active buyers, and spend-per-buyer all further accelerated from the prior quarter. Revenue grew 88% year-over-year. Active buyers grew 37% year-over-year to over $3.1 million. and spend per buyer increased 20% year over year to $195. Our success underscores the tremendous growth potential of our business. This is supported by a large and mainly untapped addressable global market, our strong business model that's highly efficient and scalable, as well as industry tailwind towards remote work and digital transformation. The velocity of our growth matters, but it's the quality of our buyers and the efficiency of how we attract those buyers that gives us confidence in driving long-term sustainable growth in the business. Spend per buyer jumped $11 sequentially from Q2 to Q3, the largest quarter over quarter improvement we have experienced, even as we've added over 310,000 new buyers during the quarter. High-value buyers, those who spend over $500 annually, now represent over 57% of core market-based revenue, up from over 55% in Q2 2020. We saw a strong increase in spend per buyer across all our annual cohorts, as buyer spend level remained elevated since the peak of the COVID-19 pandemic. We are further encouraged by our Q2 2020 cohort that reached a cumulative ROI of 1.5X after only two quarters, which is slightly ahead of a typical cohort. This gives us confidence in the quality of the new buyers that we are attracting since the outbreak of COVID-19, as well as confidence to continue investing aggressively in marketing. Strong momentum in both organic and paid channels continued in Q3, We continued to drive the majority of our new business from organic channels and TROI for performance marketing remained above one X for the quarter. Our brand investments continue to pay off as seen by our Google brand traffic that has more than doubled year over year. The perception of Fiverr as the leading voice in digital services and remote work is also gaining momentum. We were very excited to launch an evolution of Fiverr's brand identity during the quarter with a new look and feel to our logo, fonts, color, and a new brand language. We continue to place our community of buyers and sellers at the heart of our brand. And with the new branding, we strive to be even more inclusive as we grow our market base. To be increasingly seen as a strategic partner for businesses of all sizes to go digital and to be more socially responsible as we spearhead the change in the future of work. Brand remains a key investment area for us going forward. Over the last few months, we have continued to make exciting progress towards our key strategic initiative that is going upmarket, international expansion, and expanding promoted gigs. Fiverr Business was officially launched in September after running a beta with selected partners. We introduced a brand new onboarding flow and started to make top of funnel marketing investment in both awareness and acquisition. One of the major value propositions for Fiverr Business is to allow us to lend more buyers with our initial touch points within larger organizations And we are encouraged by the fact that nearly 50% of new registrations so far have invited other members to join their Fiverr business account. We're also launching a new user experience to allow buyers and sellers to break large projects into milestones or incremental steps. Not only do these features enable sellers to receive payments for their work faster, but it also gives buyers more flexibility in purchasing, especially when it comes to large ticket size items and when they are buying from a new seller that they've never worked before. We are also introducing features that will allow buyers to make recurring purchases. These are especially relevant when it comes to ongoing digital investments such as SEO or content marketing. You can expect us to continue rolling out products like these for both buyers and sellers as we continue to move up market. In Q3, we continued to execute on international expansion. Our sixth non-English website was introduced in Portuguese, allowing us to expand our country presence into Portugal and Brazil. We also integrated with a local payment solution provider in Brazil to streamline the local payment experience. On the marketing front, we continue to ramp up our performance marketing infrastructure across international regions, expanded our affiliate program in Germany and France, and added localized affiliate dashboards in five languages. What we see is that the affiliate program worked extremely well in the international market in a similar way to the US market in terms of efficiency and scalability. Last but not least, an update on promoted gigs. Promoted gigs now cover 60 categories. This is significant step up from 15 categories since Q2 2020. We can now see ad listing not only on category pages for those 60 categories, but also nearly 10,000 search queries that are associated with those categories. In addition, We deployed open enrollment for sellers in those categories as long as they meet the published quality criteria. As a result, monthly active sellers in the program grew to over 5,000 at the end of September, a significant increase from just under 200 at the end of June. 2020 has certainly been an eventful and highly productive year at Fiverr. Over the past 10 years, we have built the world's largest marketplace for freelancers with a proprietary digital service catalog, a sophisticated matching quality and liquidity engine powered by a decade of transaction data, a highly efficient and scalable marketing infrastructure, a global brand and a global community with millions of buyers and sellers. These allowed us to execute and grow with tremendous momentum in 2020, and expand our leadership position during a time when businesses and freelancers needed us the most in terms of digital transformation and income opportunities. We are excited to be in a position to finish out the year strong and even more excited about what lies ahead in 2021. We are currently developing our 2021 roadmap, and as we deepen our efforts in bold strategic areas and plan towards many others, We expect to continue our momentum into next year and set ourselves up for a great 2021 and beyond. With that, I'm going to turn the call over to Ofer, who will share a few financial highlights with you. Ofer?