Hey guys, it's sasha, something amazing happened this morning and i just had to make a video to talk about it. This might just be the best investing opportunity this year. In my opinion, i am not exaggerating and i'm about to take full advantage of it, and i wanted to share it with you in this video. I am going to explain why i am so ridiculously excited by this opportunity.

I'll show you the numbers and then, as the markets open in a few hours, i am putting about 5 000 into this stock. That's quite a lot for me personally, but just before we dive into all the details. Remember that this is just my personal opinion. I am not a financial advisor.

I can't provide financial advice to you and if you do need financial advice, please make sure you go and seek the help of a suitably qualified professional. So this morning fiverr published their q2 results. Fiverr is a company that i already talked about. I already have a position in, but these results have been fascinating.

Fiverr made a record revenue of 75 million dollars, it's up 60, compared to the same quarter in 2020 and 10 percent up on q1 this year. The number of active buyers is up to four million - that's 43 growth year on year, and those buyers are spending a record 226 per year on average on the platform. All of these numbers are insane. The adjusted ebitda is at 7.4 million dollars.

That's 10 percent of revenue and for an early stage, business with fiverr's business model. That is incredible, but the shares fell by 23 in pre-market trading, and that is huge. So why did fiverr share price fall? Well, the market likes to overreact and especially overreact to high level numbers without diving into any kind of details and fiverr slashed their projection for 2021 in half on ebitda. They previously said that they're expecting an ebitda of 19.5 million to 24.5 million dollars for the year and in the q2 update this year, they've dropped that forecast from 12 to just 12 to 14 million.

That's almost 50 percent, and so the market reacted really badly and threw their toys out. The pram fiverr lost a quarter of their value, that is mind-boggling, and that is exactly why i am going shopping for fiber shares as soon as the market opens. I think this is a rare, huge, investing opportunity that comes along extremely rarely. Let me explain why, first off to point out the obvious fiverr explained why they have reduced their outlook in the shareholder letter.

Let me read it and quote it directly: in many parts of the world, q2 marks the beginning of an increase in vaccination rates and the relaxation of covert related restrictions. As a result, people are taking vacations and getting some off-screen time. We saw the strand of reduction of online activity since the second half of may to be prudent and consistent with our forecasting methodology. We are adjusting a four-year guidance based on these incremental trends.

Then they say this. That said, none of this near-term fluctuation changes the underlying strength of our business, our long-term outlook and the massive market opportunity. That's ahead of us. There is a lot of data in this report, but let me show you the numbers that really really matter.

First, let's look at the revenue composition by cohort 45 of the revenue generated in 2020 came from the new 2020 cohort. The number of buyers in 2021 is growing even faster than it did in 2020, and those buyers are spending 10 more each on average, so that ratio of new customer earnings versus the rest is probably going to be, maybe even greater for 2021, maybe coming up to Somewhere around 50 - and this is why it is incredibly important - pay attention. Look at the performance of older cohorts over time. Improvements in the platform over the last couple years have actually started growing.

The revenue from those older cohorts that are 6 to 10 years old and if you look at the trend, the revenue generator from the older cohorts remains incredibly robust. For years after those customers are acquired, you can see that the number of new customers 5 we got in 2020, dwarfs any other year before it, and in fact, over the last few years that has happened every single year, they keep breaking previous records. Now look at this chart on the next page. This is the most important chart in this presentation.

It might be the most important chart in my investing year. It shows the revenue that each quarterly cohort of customers earns in each quarter after the customer signs up and that revenue is shown as a proportion of the marketing spend spent on acquiring that cohort. So you can see that the new customers pay back their marketing, spend in the first quarter of being on the platform that is incredibly good within four quarters a year those customers make about two times the marketing spend and over the lifetime of those customers. If you're looking at the older cohorts, they are earning something like four times the marketing spend already, and that number is growing.

In fact, the newer cohorts are actually on a much better trajectory than the old ones. Their revenues are growing at a much faster pace, and if you look at the old cohorts from 2017, they are still growing massively every quarter. In fact, their actual revenue is accelerating rather than slowing down. That is ridiculous.

This is the reason why these cohorts are doing so well. There is no reason why they can't be hitting six to eight times the advertising revenue over their lifetime. When you take it all the way out into the future, and if this trajectory continues, and that means that the customers being booked right now today in the last quarter, this year may well be reaching more than that number, maybe as much as 10 times, their advertising Cost over the life cycle, it definitely looks like that is quite likely. That is 10 times of the marketing spend that those customers should earn in revenue over the full number of years in the future over the life cycle of those customers.

And what is that marketing spend well? In the last quarter, it was 38 million dollars and in 2021 so far, fiverr has spent 80 million dollars on marketing. Now remember back from the previous graph. These cohorts should be getting about four to six times that amount of revenue within four years or so, and they look like they'll, be hitting 10 times that number over the full life cycle. So the customers that fiverr have brought in the first half of this year should earn about 800 million dollars of revenue over the coming years.

That's 80 million dollars spend on marketing times 10. fiverr's gross margin. At the moment, based on the last quarter is 86.8 percent and their operating margin after taking all the other costs out is 39.6. If i strip out the marketing cost, the marketing cost is buying revenue for future cohorts.

It is spending money today that will then generate revenue in the future. So, if i'm trying to understand whether the current cohorts that i've already booked are actually profitable or will be profitable, that marketing revenue is irrelevant, i need to be applying the marketing revenue i spent on those particular cohorts in the past instead, if that makes any sense, So, did you follow that out of the hundred percent that the customers are going to earn in revenue at the moment about 60 percent is spent on running the business, all the different costs? This number will almost definitely come down as the company scales and grows because typically business costs don't scale linearly as the business expands, so i'd expect it to probably be below 50 in a few years. So let's assume 50 then subtract another 10 for the marketing cost. On those customers remember that those customers are expected to earn 10 times the marketing cost as revenue.

Therefore, marketing cost for that cohort will be 10 of that revenue. So i get 40 margin left so 40 of the revenue that those customers will generate over their life cycle, using the numbers that we're seeing today will be effectively left as profit. So the customers that fiverr have just got in the first half of this year already should make about 800 million dollars in revenue over time and 40 percent. Of that 800 million dollars is 320 million dollars, that's just from the first half of this year.

So, let's double it to get rough figure for a full year at the moment, that's 640 million dollars. That's just this year's cohort and that's profit. All of the other years are continuing to earn revenue too, and the likelihood is that over the next few years the company will actually be growing. The number of new customers it's acquiring and the existing cohorts are going to continue growing the revenue too.

This is a classic example of a non-linear model where costs are front loaded and the revenue for each cohort over time is backloaded, and the beauty of this is that simple pe ratios or anything else completely misses on this point. Fiverr spends 60 percent of its money today on marketing and that marketing cost you money today this year, the revenues that these customers that you've acquired from this marketing will earn. You will be coming next year, the year after that, in four years time. In 10 years time in the future, but let's go back to that number we just looked at this year's cohort is looking likely to generate about 640 million dollars in profit in the future.

That's just one year's worth of customers and every year in the future, five will most probably be getting more. Customers and those customers will be generating more profit. Fiverr has 38 million shares at the moment and at the price of 180, i'm recording this video that gives fiverr a market cap of about 6.9 billion dollars. That is a multiple of less than 11 on the profit that the current year cohort will generate.

So if you assume any reasonable growth over the next few years and then add 30 or 50 to each of those cohorts and then begin adding up all of those cohorts together, the valuation really breaks down and becomes ridiculous. I think that the market is completely not understanding, what's happening with fiverr and the way that those numbers work. The company is literally at the start of an exponential growth curve, and it is clear you can see the numbers they show you the charts. Every year, the company spends as much money as possible on marketing.

That is why they are at break. Even that is why they are not posting profits, because they are booking tomorrow's revenue using all the money they have today and that huge spend is masking that insane growth that costs that cost that they're spending every month makes it look like the business is not profitable. When you don't consider the individual cohorts, you are none the wiser, but, as i look deeper, this is a multi-bagger business. For me, i think that share price today is ridiculously undervalued and there are not many opportunities like that in the market.

Remember. This is just my personal opinion. I might be completely wrong. I might have no idea what i'm talking about, i'm just a guy on youtube, but i do hope that you found this useful and maybe you'll prompt you to have a think and do your own research.

If you haven't done it already, if you did find it useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much and as always, thank you for watching this video. I really really appreciate it and i'll see you guys later. You.