Fiverr

Summary

Summary

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our ordinary shares. You should read the entire prospectus carefully, including the "Risk factors," "Business," and "Management's discussion and analysis of financial condition and results of operations" sections and our consolidated financial statements and notes to those consolidated financial statements before making an investment decision.

Our mission is to change how the world works together. We started with the simple idea that people should be able to buy and sell digital services in the same fashion as physical goods on an e-commerce platform. On that basis, we set out to design 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.

We believe our model reduces friction and uncertainties for both buyers and sellers. At the foundation of our platform lies an expansive catalog with over 200 categories of productized service listings, which we coined as Gigs®. Each Gig has a clearly defined scope, duration and price, along with buyer-generated reviews. Using either our 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. We call this the Service-as-a-Product ("SaaP") model. Our approach fundamentally transforms the traditional freelancer staffing model into an e-commerce-like experience. Since inception, we have facilitated over 50 million transactions between over 5.5 million buyers and more than 830,000 sellers on our platform.

Our business of enabling freelance work is deeply connected to the opportunities that technology has enabled in the modern economy. While businesses want frictionless and seamless access to a global pool of talent, individuals increasingly want to choose where they work, when they work and what they do for work. Our platform was designed to serve these needs. Our buyers include businesses of all sizes, while our sellers are a diverse group of freelancers and small businesses from over 160 countries who tap into our platform to earn their full-time living or augment their income.

As a marketplace, we succeed when our buyers and sellers succeed. We designed our platform to make it easy for our buyers to find and purchase the digital services they are looking for without time-consuming negotiations or uncertainty of pricing, while offering them what we believe to be the best value for their money. At the same time, we enable our sellers to reach a large buyer universe, allowing them to spend more time on doing what they love and are best at, rather than on demand generation, contract negotiation, payment collection and other requirements of running a digital services business.

Technology is at the core of everything we do. Our proprietary machine learning algorithms, together with our dataset on profiling, transaction and user behavior, which rapidly grows with increasing buyer and seller engagement, enable us to personalize our user experience, improve quality and provide a more robust ecosystem. We are focused on constant innovation and have designed our platform such that we can continuously enhance the value we deliver to our buyers and sellers.

We generate revenue primarily through transaction fees and service fees. We have achieved significant growth and scale since inception. On each transaction processed through our platform, we collect total transaction value plus the service fee from the buyer. Upon completion of the order, we then transfer the transaction value less the transaction fee to the seller. In the years ended December 31, 2018 and 2017, our revenue was $75.5 million and $52.1 million, respectively, a 44.9% increase, and we incurred net losses of $36.1 million and $19.3 million, respectively.

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The global market for freelancers is large and increasing in size and diversity. We believe the following trends and drivers will continue to shape the future of the freelance industry:

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Do-it-for-me movement. Professionals are increasingly willing to spend money to save time. They hire others with the right skills to do things for them and value convenience, speed and a frictionless on-demand experience while getting the best value for money.

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Adapting to evolving talent landscape. Companies of all sizes are looking to benefit from the availability of reliable temporary skilled workers. The increase of available freelance workers coupled with technology-based communications and other tools allows them to find talent more easily and cost effectively than ever before.

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Employees are increasingly empowered to make their own purchase decisions. When it comes to the adoption of technology and business tools or the utilization of freelance work, employees are increasingly empowered to make their own purchase decisions in order to drive productivity and efficiency within their organizations.

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The modern workforce values flexibility and choice. People increasingly want to choose where they work, when they work and what they do for work. This has contributed to a large increase in "independent work." According to the McKinsey Independent Work Study, up to 162 million people in the United States and Europe were engaged in "independent work" in 2016.

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Technology enables convenient and efficient remote collaboration. From cloud-based file sharing tools to a wide range of collaboration software, from co-working spaces to remote video conferencing systems, technology has made it easier for people to work together across different physical locations.

Notwithstanding these trends, both businesses and freelancers have traditionally faced significant challenges:

For businesses:

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Finding the right talent can be difficult and costly.

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Reference and trust are uncertain.

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Negotiating price, scope of work and terms is time consuming and inefficient.

For freelancers:

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Finding jobs is not easy.

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Winning a job is even harder.

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Payment is uncertain.

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We expect adoption of freelance work by businesses to increase as online solutions, such as our platform, alleviate these traditional challenges. We estimate our total market opportunity within the United States alone to be approximately $100 billion. We derived our estimate based on the latest U.S. Census Bureau Nonemployer Statistics ("NES") data, which includes income data of all U.S. businesses that have no paid employees and are subject to federal income tax, which we believe provides a good proxy for total freelancer income in the United States, filtered by categories most relevant to our marketplace. We believe that our opportunity outside the United States is even larger than our opportunity within the United States given the overall size of global markets outside the United States.

The Fiverr platform is built with a comprehensive SKU-like services catalog and an efficient search, find and order process that mirrors a typical e-commerce transaction.

Our buyers include businesses of all sizes and from various industries. In the twelve months ended March 31, 2019, we served approximately 2.1 million active buyers from over 160 countries across the globe.

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Value for money. We provide what we believe to be the best value for money for our buyers by alleviating frictions and inefficiencies in the value chain. Our expansive digital services catalog enables us to offer sophisticated browsing and filtering functions. We believe that this results in a lower time-to-hire for buyers compared to traditional offline hiring platforms, saving buyers valuable time.

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Access to an expansive catalog of digital services. Our catalog of digital services has over 200 categories and continues to grow and evolve. Prices can range from $5 to thousands of dollars, depending on the scope and perceived quality of each individual Gig.

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Access to a diverse pool of freelancers. We provide instant access to hundreds of thousands of freelancers with a broad set of skills. Using Fiverr, buyers can easily connect with these freelancers and get a broad range of digitally delivered services executed quickly and efficiently.

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Transparency and certainty of price, scope of work and quality. Our SaaP model enables transparency and certainty when it comes to cost, duration and scope. Our buyer-driven rating system provides a transparent quality rating mechanism for every Gig, helping buyers make informed purchasing decisions.

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Trusted brand for customer service. We are relentlessly focused on providing quality customer service to drive repeat purchase behavior. Our dispute resolution technology enables us to flag issues in a timely manner and to guide users to a solution.

In the twelve months ended March 31, 2019, our platform empowered approximately 255,000 active sellers from over 160 countries across the globe. Our sellers are a diverse group of freelancers who we believe value the flexibility and financial opportunity our platform provides. They range from individuals who use our platform to earn their full-time living to those who augment their income.

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Maximize project pipeline. Sellers on our platform do not need to bid to win a project. Instead, they list the service on our platform with a well-defined scope, duration and price, and our proprietary

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technology directly matches them with buyers who are looking for the service they provide. As a result, sellers can list their Gigs on our platform and focus on the work they love doing while maximizing their earning potential.

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Flexibility and control. Our platform embraces habitual changes in the workforce and provides freelancers with the ability to find work and offer their services from anywhere in the world at any point in time.

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Frictionless payment processing. Getting paid on time after project completion has historically been an uncertain and time-consuming process for sellers. We eliminate this friction by working with third-party agents to collect the funds from the buyer at the time of purchase and timely release them to the seller upon project completion.

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Credentialed storefront. We enable our sellers to professionally showcase their services to buyers, establish a track record, develop a buyer base and build a professional reputation on our platform.

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Business support infrastructure. We provide access to a robust set of technology tools for our sellers that enable them to manage all of the administrative aspects of their business while allowing them to track their performance and manage their business efficiently.

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Success management and support. We provide our sellers with a comprehensive suite of onboarding resources, and our online help desk and offline customer support team provide 24/7 support to ensure sellers succeed in all stages of their freelance journey.

Horizontal platform at scale. We believe that our approach and global scale provide us with a differentiated and defensible market position. Since inception, we have invested significantly into building our services catalog and attracting users to our marketplace. Today, we facilitate millions of transactions between buyers and sellers across over 200 categories and provide a one-stop shop for digital services. We believe that the breadth and depth of offerings that can be easily searched, found and purchased on our platform coupled with our growing user base provide us with a strong competitive advantage that is difficult to replicate.

Powerful network effect. The value we provide to our users has allowed us to build one of the largest networks of buyers and freelancers in the world, generating a powerful network effect. As our buyers complete more transactions successfully, they bring us referrals. As our buyer community grows and our seller support functions deepen, more freelancers with high value skills are attracted to our platform. We help sellers build a business and a reputation that perpetuates their success. Fueled by the growth of our seller base and the related expansion of talent breadth and depth, we are able to expand our catalog of Gigs, further accelerating our value proposition to buyers and thus creating a strong growth flywheel.

Scalable Service-as-a-Product marketplace. The productization of services with a SKU-like approach provides buyers with certainty of cost, duration and scope for their projects. Buyers have access to an extensive catalog of Gigs and can compare and filter across parameters including Gig details, reviews and price. Each Gig page contains comments from previous buyers, allowing buyers to easily make decisions based on their needs, budgets and tastes. Our approach therefore allows Gigs to be bought on a much more frequent basis without the inherent frictions of the traditional hourly based model. This allows us to more easily scale our business as supply of and demand for freelancers increases across the globe.

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Efficient marketing and buyer acquisition. We drive a majority of our buyer acquisition through organic channels, supplemented by efficient performance marketing investments. Our organic buyer growth results from the embedded network effect of our marketplace model and our continued growth in our brand awareness. We continue to diversify and strengthen our performance marketing capabilities and invest in data science technologies to acquire more buyers as well as buyers with higher lifetime value.

Advanced seller infrastructure. We provide sellers with tools for every step in a transaction from standardized contracts, expense tracking and time tracking to task management and invoicing. These tools are critical to our sellers' businesses and embed us deeply within their workflow, making Fiverr the central hub to manage all of their transactions.

Proprietary technology with deep insights. 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.

We intend to grow our business through the following key areas:

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Bring new buyers to our platform

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Increase the lifetime value of our buyers

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Expand our Gig catalog

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Continue to innovate in technology and services

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Expand our geographical footprint

Investing in our ordinary shares involves risks. You should carefully consider the risks described in "Risk factors" before making a decision to invest in our ordinary shares. If any of these risks actually occurs, our business, financial condition or results of operations could be materially and adversely affected. In such case, the trading price of our ordinary shares would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face:

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Our growth depends on our ability to attract and retain a large community of buyers and freelancers, and the loss of our buyers and freelancers, or failure to attract new buyers and freelancers, could materially and adversely affect our business.

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We have incurred operating losses in the past, expect to incur operating losses in the future and may never achieve or maintain profitability.

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If we fail to maintain and enhance our brand, our business, results of operations and prospects may be materially and adversely affected.

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If the market for freelancers and the services they offer is not sustained or develops more slowly than we expect, our growth may slow or stall.

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If user engagement on our website declines for any reason, our growth may slow or stall.

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If we fail to maintain and improve the quality of our platform, we may not be able to attract and retain buyers and freelancers.

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We face significant competition, which may cause us to suffer from a weakened market position that could materially and adversely affect our results of operations.

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Our business may suffer if we do not successfully manage our current and potential future growth.

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Our user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks and standards that we do not control.

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We or our third-party partners may experience a security breach, including unauthorized parties obtaining access to our users' personal or other data, or any other data privacy or data protection compliance issue.

Our principal executive offices are located at 8 Eliezer Kaplan St., Tel Aviv 6473409, Israel. Our website address is www.fiverr.com, and our telephone number is +972-72-2280910. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus and is not incorporated by reference herein. We have included our website address in this prospectus solely for informational purposes. Our agent for service of process in the United States is C T Corporation System.

We qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, as amended (the "JOBS Act"). An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to U.S. public companies. These provisions include:

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an exemption to include in an initial public offering registration statement only two years of audited financial statements and selected financial data and only two years of related disclosure;

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reduced executive compensation disclosure; and

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an exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") in the assessment of the emerging growth company's internal control over financial reporting.

The JOBS Act also permits an emerging growth company such as us to delay adopting new or revised accounting standards until such time as those standards are applicable to private companies. We may choose to take advantage of some but not all of these reduced reporting burdens.

We will remain an emerging growth company until the earliest of:

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the last day of our fiscal year during which we have total annual revenue of at least $1.07 billion;

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the last day of our fiscal year following the fifth anniversary of the closing of this offering;

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the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or

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the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which would occur if the market value of our ordinary shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.

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In addition, upon the closing of this offering, we will report under the Exchange Act as a "foreign private issuer." As a foreign private issuer, we may take advantage of certain provisions under the rules that allow us to follow Israeli law for certain corporate governance matters. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

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the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

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the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time;

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the rules under the Exchange Act requiring the filing with the U.S. Securities and Exchange Commission (the "SEC") of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events; and

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Regulation Fair Disclosure ("Regulation FD"), which regulates selective disclosures of material information by issuers.

Foreign private issuers, like emerging growth companies, also are exempt from certain more stringent executive compensation disclosure rules. Thus, if we remain a foreign private issuer, even if we no longer qualify as an emerging growth company, we will continue to be exempt from the more stringent compensation disclosures required of public companies that are neither an emerging growth company nor a foreign private issuer.

We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We are required to determine our status as a foreign private issuer on an annual basis at the end of our second fiscal quarter. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: