Fiverr Shares Plunge Over 16% as AI Cuts Revenue and Customer Base

Fiverr's stock dropped more than 16% in pre-market trading in New York following the release of its second-quarter financial results, which showed declines across nearly all key metrics. The internet company, which operates a platform connecting freelancers with organizations, reported a 10% revenue decrease to $97.8 million, hitting the lower end of its forecast. Active customers fell sharply by 22% to 2.7 million from 3.4 million a year earlier, as AI technologies have replaced many services traditionally offered on Fiverr's platform.

The company also experienced a 45% plunge in cash flow from operations, down to $13.2 million. Despite these setbacks, Fiverr posted a net profit of $4.4 million, roughly matching its operating profit. The outlook remains bleak, with third-quarter revenue projected between $80 million and $88 million, representing a drop of over 20% compared to the same period in 2025. Consequently, Fiverr lowered its full-year revenue forecast to $356 million to $372 million, down about 15% from previous estimates exceeding $400 million.

Fiverr attributes the downturn to the rapid and unexpected adoption of artificial intelligence, which accelerated particularly in the final weeks of the quarter and is expected to continue eroding demand. In response, the company is shifting focus toward larger projects requiring human involvement, acknowledging that the era of simple freelance transactions, such as translation, logo design, and basic programming, now largely automated by AI, is ending. CEO Micha Kaufman described this as a "transformative process" expected to span several quarters.

Fiverr began adjusting to this new reality about a year ago by cutting 25% of its workforce to "return to a startup mode." Given current performance, further efficiency measures seem likely. Recently, Fiverr also reversed plans to relocate to Wix's campus in Glilot, Tel Aviv, and may remain in its existing offices after cybersecurity firm Kaito abandoned its move there. Negotiations are underway for Fiverr to become a subtenant of Kaito, potentially incurring penalties for not moving to Wix's campus. The anticipated stock decline will push Fiverr's market value below $400 million, close to its cash reserves, indicating investors no longer assign significant value to its ongoing operations.