Fiverr shares plunge as AI disruption forces a major outlook cut
The freelance marketplace missed earnings expectations and lowered its 2026 forecast as generative AI reshapes demand for basic digital services.
Fiverr reported second-quarter results on Wednesday that missed Wall Street expectations on both revenue and earnings, while sharply lowering its full-year outlook as the rapid adoption of generative AI continues to reshape the freelance economy and replace some lower-complexity digital work.
The Tel Aviv-based freelance marketplace reported second-quarter revenue of $97.8 million, down 10% from $108.6 million in the same period last year and below analyst expectations of $99.8 million. Adjusted net income came in at $0.50 per share, missing consensus estimates by two cents.
Fiverr’s shares fell 20% in pre-market trading following the report. The company began the day with a market cap of around $415 million, down over 40% in 2026.
The decline was driven primarily by weakness in lower-complexity categories, including basic copywriting, simple graphic design and entry-level programming, where customers are increasingly turning to generative AI tools instead of hiring human freelancers.
Marketplace revenue, which excludes other businesses such as Fiverr Business and advertising-related products, declined 15.5% year-over-year to $63.1 million. The number of annual active buyers fell 21.9% to 2.7 million.
"Our second-quarter results reflect a market that is changing faster than expected, driven by rapid AI adoption," said Fiverr CEO Micha Kaufman.
In response to the disruption, Fiverr is attempting to reposition itself around more complex, higher-value projects that require human expertise, project management and collaboration.
While the overall buyer base contracted, spending among remaining customers increased. Average annual spend per buyer rose 15.6% year-over-year to $368, while the number of customers completing projects worth more than $1,000 increased 13%.
High-value demand was particularly strong in some categories, with gross order volume for large programming and technology projects rising 34% year-over-year and graphics and design projects increasing 25%.
Fiverr is also investing in proprietary AI-powered matching tools and quality verification systems aimed at helping businesses find freelancers for larger, multi-stage projects. However, company executives said the financial benefits of the transition are expected to take several quarters to materialize.
Fiverr significantly lowered its expectations for the remainder of 2026. Third-quarter 2026 revenue is expected at $80 million-$88 million, representing an 18%-26% year-over-year decline and below Wall Street expectations of $99.26 million. Full-year 2026 revenue was reduced to $356 million-$372 million, representing a 14%-17% annual decline and below previous analyst expectations of $402.1 million.
Despite the revenue pressure, Fiverr remained profitable and generated $13.6 million in free cash flow during the quarter. The company ended the period with $308.5 million in cash and marketable securities.
Adjusted EBITDA totaled $17.5 million, representing a 17.9% margin.
During a conference call with investors following the earnings release, Fiverr executives failed to reassure analysts. If anything, they heightened concerns. According to the company, its transformation strategy, replacing the simple, quick-turnaround gigs that have traditionally driven its marketplace with larger, more complex projects, is expected to take six quarters to complete. That is an unusually long transition period for a public company, and it is unclear whether investors will be willing to wait that long for results.
The extended timeline also increases the uncertainty surrounding Fiverr's outlook, particularly as the AI technologies disrupting its business are expected to become even more powerful and widely adopted over the same period. CEO Micha Kaufman noted that one of the factors weighing on Fiverr's performance in recent months has been Google's integration of its Gemini AI model into Search, which has reduced user traffic to Fiverr's platform.
At this stage, Fiverr is not planning to reduce research and development spending, but it intends to moderate its investment in sales and marketing.
