Fiverr is an online marketplace for freelancers, covering services like writing, translation, marketing, music, video, and other digital services. CEO Micha Kaufman joined the Watch List to discuss their “incredible” 4Q and integrating A.I. into the business. The stock dropped post-earnings and is down over 12% year-over-year.

Founded in 2010 and based in Israel, Fiverr now operates in around 160 countries by its estimate. Its clients have included Meta (META), Netflix (NFLX), PayPal (PYPL), and other S&P 500 companies, but it often works with small businesses. An example on their site is Vontelle Eyewear, a small eyewear company that “uses Fiverr freelancers for everything from 3D Product Design…Email Marketing and more.”

Less a headhunter or talent agency than a sort of Angie’s List, Fiverr has positioned itself as a labor broker. It claims to advocate for freelancers by boosting their economic opportunities and offering “support mechanisms during times of crisis” to “foster a more sustainable workforce.” To that end, they launched a Freelancer Equity Program on Thursday that will “grant shares to U.S. based top performing” freelancers on the platform.

Like everyone else, though, Fiverr is interested in using A.I. in their business. Their newest introduction is Fiverr Go, which allows freelancers to train personal A.I. models in their styles, which clients then use to “generate unique work instantly.” Kaufman emphasizes that the generation is the first step: the freelancer behind the A.I. assistant will then finish the project.

They are cognizant of freelancers worrying about then being replaced by the models, assuring workers in an introductory video that “everything your A.I. model generates, it’s yours, 100%.” The goal, they assure viewers, is “to support and help you scale your business on your terms.” Kaufman says that the dominant A.I. models that learns from “everything everyone ever created” without compensating the original creators “risks the motivation of people to create.” Fiverr’s model offers an alternative and explicitly designates their A.I. as a “tool” for the creators, not a replacement.

By personalizing the A.I. model’s training, Fiverr is sidestepping a lot of the copyright lawsuits going on with A.I. right now. For example, in Concord Music Group vs Anthropic, music publishers sued Anthropic for using their copyrighted songs to train its A.I.

Not only is the suit over the training material, it’s also about the generative output: Concord also seeks damages for the A.I. allegedly generating “output containing their copyrighted song lyrics (Jackson Walker News). With consenting individuals personally training A.I. models on portfolio materials they already own, Fiverr can get around the alleged data theft of many other generative A.I. companies.

However, the United States Copyright Office also released a report in January that concludes “if the content is entirely generated by A.I., it cannot be protected by copyright.” This explicitly limits copyright to “human” authorship. This raises an interesting question as to whether the output of the individual models can be copyrighted, either by the freelancer behind the training data or the company using the product. More to come on that subject, I’m sure.

Regardless, refocusing on its earnings, Fiverr missed EPS estimates with $0.64/share but beat revenue with $103.7 million (+13% year-over-year). Its active buyer pool shrank to 3.6 million from 4 million last year, but the spend per buyer jumped 9%, to $302. It reported operating margin of -5.7%, with free cash flow of $29.6 million in 4Q. CEO Kaufman calls this an “incredible” 4Q that “beat every number the market had” and maintains Fiverr’s focus on the “Rule of 30”.

Looking ahead, Kaufman says Fiverr is seeing a lot of demand for A.I. freelancers, marketing work, and “digital transformation”, such as building websites. “We’re committed to the long-term targets,” he says, “and we’re doing it in a very steady and consistent manner.”

He blames the drop off in active buyers on “macro headwinds” and says that they’re focusing on repeat clients with deeper pockets. However, he thinks Fiverr Go will attract a host of new clients, adding that there are “thousands” of A.I. assistants already running since their launch on Feb. 18. He calls this a move from the “gig economy” to the “giga economy.”

Overall, Fiverr knows it needs to grow business customers and increase their active spend. Investors should consider whether this A.I. initiative will attract more interest and watch the company’s metrics in the next few quarters to see the initial impact of the launch.

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