The crisis in high-tech: Fiverr and Outbrain are laying off about a hundred employees

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by Ifi Reporter Category:Hitech Jul 27, 2022

After a long series of cuts in the startup companies and the unicorns, it is the turn of the public high-tech companies. The Fiverr company, which was considered one of the most successful Israeli IPOs of recent years, informed its employees of the layoff of 60 employees, half of them in Israel.
Fiverr developed a platform to connect freelancers with organizations and enjoyed a tremendous boom during the Corona period which led to the recruitment of many employees to meet the load of demand.

Now the company states: "During the past few months, we decided to focus on our core business and improving the company's expense structure in order to strengthen and ensure the trend of revenue growth and improvement in profitability while adapting to macroeconomic changes. This week we are completing a series of additional efficiency measures that include reducing employees in the company's offices throughout the world. The company makes every effort to help them in this process and further along their path."
As of the end of 2021, Fiverr employed 787 employees, of which 580 are in Israel. Faber's stock, which falls sharply at the opening of trading on Wall Street, is trading around a value of $1.26 billion, after completing a 66% drop since the beginning of the year and a deeper dive of almost 90% since the peak it hit in early 2021.
Fiverr does not lack cash and its coffers totaled about half a billion dollars at the end of the first quarter. However, already with the publication of the financial statements last May, it signaled a slowdown in its market and mainly referred to the expected volatility going forward. Accordingly, it is estimated that it will not grow in the second quarter - Fiverr will publish the results of the quarter next Thursday.
According to the company's forecast, the annual growth rate will amount to 16%-23%, so Fiverr should present revenues of 365-345 million dollars in the summary of 2022. Although this is a fast growth, this is a lower rate than what the company "provided" to investors in the last two years. Also, this slowdown will also delay reaching the profitability targets that Faber aimed for. Meanwhile, Faber recorded a loss of $17 million in the first quarter, similar to the corresponding quarter, where revenues were significantly lower.
Outbrain, the eternal rival of the Israeli Tabula in the field of user content recommendations, is also cutting staff, but most of it will not apply to Israel. The company, which employs 1,100 people, will say goodbye to 38 employees worldwide - about 3% of its workforce. Unlike Faber, which still maintains a value of more than a billion dollars, Outbrain parted with the unicorn title a long time ago and is currently traded at a value of about 300 million dollars.
Outbrain went public about a year ago after being forced to reduce its value and raised $160 million at a valuation of $1.12 billion. Today it still has about half a billion dollars in cash, so it is trading below cash value. Outbrain was already profitable in the past, but it ended the first quarter of the year with an operating balance and a slight loss on the bottom line. According to forecasts it provided with the publication of the reports for the first quarter, it is expected to show an adjusted EBITDA profit of 4-6 million dollars in the second quarter and about 50-60 million dollars in the annual summary.

 

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