Q1 2020 Earnings Call
[music].
Before launching into our financial results I would like to acknowledge this challenging time that we are all facing.
My Hope is that you are all staying safe.
And our immense gratitude goes out to the doctors nurses first responders and everyone who worked on the front line over central services to keep us all safe and healthy.
Today, He fiber reported strung Q1 result would revenue growing 44% you're over here.
This represents a third consecutive quarter of accelerating growth in beating our prior expectation across all matrix.
We also significantly narrowed R.E.P. dot loss by 1400, and 30 basis point.
And our own accelerated path toward profitability.
All of this was achieved I meet a global pandemic.
Have shocked humbled untested our society as a whole.
It's five or we are proud unfortunate that we have the ability to step up and be there for our community.
For buyers five or is a place to build and expand their online presence.
Even if they don't have the skills are tools to do so themselves.
There's a place to find the team and collaborate even when hiring an employee becomes impossible.
And it is a place for businesses to get more things done with more efficient budget and resources.
<unk>.
<unk> is increasingly important source of income as we enable them to find remote work opportunities engage with their clients and deliver digital services, all without leaving their homes.
Covert 19 update to shareholders in early April we mentioned, how our business experience a brief period of volatility in mid March and quickly rebounded and resumed strong growth within a couple of weeks.
Since then we have continued to gain significant momentum every week across all cohorts over to cold in O.G. overseas.
Weekly G.N.V. when our court market pace has accelerated on a year over year bases for every week in April for a total of six consecutive weeks since mid March.
We hate all kind daily revenue records four times in April.
By the fact that April typically is not as seasonally strong month with Easter holidays.
All of our existing cohorts of rebounded strongly from March volatility.
Not only back to their historical pattern of contributing a consistent stream of revenue, but also beyond those levels with increasing revenues.
We believe this resiliency underscores the loyalty of our existing buyer base.
We are also experiencing a strong uplift on new buyer acquisition.
Driven by an unprecedented jump in organic awareness.
<unk> attractive opportunities in performance marketing.
All verticals have rebounded with similar trends to the overall market pace.
And we have seen particular strength in categories related to moving businesses from all flying to on line.
As well as digital content related categories, such as gaining social media.
<unk>.
Last but not least we are seeing the strength of our business not owning the U.S., but across the world, especially in several European countries, where are tiny investment in local expansion or interface right around the time when global stayed home orders intensified both.
New sellers and new buyers registration have been particularly strong in Spain, and France in recent weeks.
I'm incredibly grateful and proud of the resilience.
<unk> and dedication of our team across the world.
Circumstances evolved rapidly.
Only did our team rise to the occasion in terms of executing numerous initiative to help our buyers and sellers navigate through Kobe 19.
But they also succeeded in executing our existing roadmap often ahead of schedule.
Complex and groundbreaking products, such as promoted gigs and machine translation to localize our user generated content or successfully rolled out.
Beautiful marketing campaigns were created and executed even when everything in the original plan how to be scrapped due to the global travel band.
A record number of community events with a record number of global participants were who said that virtually during the quarter.
At the time, when social distancing has cut down our human interaction everywhere.
To ensure that we leave enough time to take your questions. We have included a detailed account of our extensive list of initiatives. Following the covert 19 outbreak you know our letter to shareholders.
Our team has demonstrated the strength or culture by moving smoothly to the stay at home reality and in <unk> basing their responsibility we have to our community in these testing times.
We'll be happy do they questions regarding our approach to helping our community.
Well the future is in many ways still uncertain.
When we take a step back and look at the ways covered 19 touched fiber or buyers are sellers and the way. We enable work we have never been more confident about our mission our business model and our growth path forward.
Fibers mission of connecting businesses and freelancers around the world and enabling remote work to be done digitally.
Are thought for never been more critical.
The crisis reinforces and accelerates the trends towards adopting remotes work in moving businesses on line. We believe our market base is well positioned to both address current needs.
And to be a key resource when the economy Reaccelerate.
We run a horizontal market base with one of the largest service <unk> in the world.
Our revenue diversification across all the categories and our ability to identify market trends and expand our capital to meet those trends quickly.
Provide us with a tremendous amount of the sensibility and growth ammunition given the.
Constantly evolving user preference and my Perl environment.
We enjoy inexpensive and we'll diversified global buyer base that stays active with us and contribute to the continuous endurable revenue streams for a very long time.
Our bottom up approach of our go to market strategy is highly viral.
And we enjoy increasing word of mouth benefits as we scale.
Are <unk> data driven inefficient marketing strategy also allows us to find target and acquire relevant buyers without the need of a sales force or a long sales cycle.
Talent to global and so is the demand for talent.
Our recent progress on international expansion and the encouraging results in those countries <unk>.
Continues to reaffirm this belief and signals the huge market opportunity globally.
We are taking a disciplined approach and developing a repeatable playbook in order to drive long term and sustainable growth in those countries.
<unk> celebrated its 10th anniversary in February and there was much to celebrate.
Well, we have barely scratched the surface of the large opportunity head of us.
I can confidently say that as a company growth will continue to be our top priority for many years ahead.
And with that I'm going to turn it over to offer.
Who will share with you a few financial highlights.
<unk>.
Oh, Thank you in good morning, everyone.
I'd like to join me high in the <unk> this difficult time.
I hope that you and those in talking to you a safe and healthy.
Isn't become engine type of business has stayed strong.
And the zillion viewing this uncertain time.
Q1, I've any grow 44% the overview.
34.2 million.
This is what's driven by seven per cent growth in Oxford, bio, 18% growth and spent the by and a nightly basis points improvement in thinking.
The throne Menthol, we had during the first two months <unk> the good thing rebound.
When we exited the quota youth of <unk> from the short period, the <unk> <unk> you wouldn't need mileage.
As long as old we were able to deliver <unk> live unexpected across doubled.
We also continue to be highly efficient on the marketing from.
Friends from both some gardening can pay channels come to me to be strong and benefited from the continuing supplement to him from lost to you increase the channels. They for 50 occasion and uplift from international unexplained <unk>.
The development of 19 also drove <unk> as people spend more time on line.
Engage be a social media and consume online content.
We have also moderately step up and marketing investment in recent weeks.
As the less competitive advertising space open additional performance marketing opportunities for us.
The flows through upstart I still think growth in Cuban plenty plenty has let them strung gross margin you'd be terminology and then it'll tell you can catch cold improvement during the quota.
<unk>, 81.6% return.
It was that thing 60 basis point you've proven.
Adjusted <unk> negative 824%.
Improvement a full to you.
Hundredth them that'd be bases point, primarily driven by improving leverage in M.D. and says in a marketing.
Oh, but you can catch from 10 positive and coupon attorney took place <unk> in gross margin and <unk>, so significant you'd be thought improvement together with some timing benefit from account pay them.
Looking forward, while the long time in fucked up coping 19, if we main highly uncertain.
Cautiously more optimistic about upcoming cute too and that in mind enough that you.
It's not as old we now expects cute to having you to be 35 25 to 36.5 comedian they put something you know that it grows that is 741%.
Adjusted it'd be tough acute too is expected to be negative to clean fine too negative things probably comedian.
Dumped him negative 5.6% to meet them.
Yeah, I think our full you know Avenue guidance to 145.5 to 127.5 for me then Oh that just six 238%.
Built up from probably haven't gotten stuff 139 to one floating on video and Oh Saturday to study 2%.
Growth.
We are increasing fully you'd better guidance, so neglected nine to negative seven viewed in up from guidance after negative fit into negative 13 million.
In addition, we expect on with priming <unk> by approximately one me you know sums up we expected.
We now expect to each it'd be to profitability in the second half of 2021.
We expect that I was trying to <unk>.
With Frank took on growth and pet to perfect ability allows us to continue to Ohio and make learning some investment in <unk>.
Such as going up market Caetano expansion international expansion and innovative product in order to support group.
Was that I will now tend to call over to be able to like though if a question well, but I thought.
Yes. Thank you <unk> again the question last recession.
To ask a question you if I star than one on your touched on phone.
If you're using a speaker phone you should cover handset before pressing the keys to.
We'll try a question please press saw that too.
At this time, we all paused momentarily draw some of the roster.
And the first question today comes from <unk>, what J.P. Morgan.
Great. Thanks for taking the questions I've to versus anyhow.
We'll talk more about six three weeks and soldering G.M.D. a little more on your views on how you think Kobe 19 is and changing the business and potentially what new opportunities does it open up for you you know beyond the crisis and then Oh for you just.
Eat with a profit on a polling forward roughly a year or so just will be you could spend a little bit on what gives you the compliments on going out into the back half of Ah 21. Thanks.
<unk> thing for the the question so as to the accelerating gene V.
I think that you know in in our update in April we said that the volatility period as being very short for US. It was about 10 days and afterwards, we didn't just bounced back, but we actually resumed a pretty significant growth.
The good news is we're seeing that growth across the board.
Or c. dot across all category.
We see that cross all cohort.
New and old.
And we see that across all geography.
Oh I think that.
In in in some.
In some special way.
Although the covers 19 had some devastated effect.
It also made the case for what five or is preaching for for 10 days for it for 10 years.
The ability to hire a workforce remotely to engage remote the in a very efficient way.
Become something of an increase awareness.
And I think that fiber is becoming more all of a.
In a sense a critical tool for both businesses <unk>.
So the fact that we were seeing Doc growth.
Coming very strong in April.
In some in some vertical.
We see that growth being nearly doubling the girlfriend a monthly basis.
And we see that across all of our category.
And we see that are new customers, those who joins fibre post the covered 19.
They their behavior is very consistent with our older cohort.
In terms of.
Their activity.
The categories in which they purchase.
And I think that in a sense fiber I've enjoyed a massive awareness jump due to this situation into five that people were locked home and were forced to think about how to do things remotely.
So.
Although it's very hard to predict what's going to be in the future I think that they're resiliency of our cohorts both new.
And and old.
Reaffirm our assuring that survivor is indeed, a critical go to market pace Ah for our neat.
[noise] [noise] and thought that this is this is also a second thought that the question was about the the put full of.
The <unk> in one in on on what give us a the confident thing that the <unk>. The confidence is based on what we've been things and <unk> followed by the last a few weeks into cute too.
Think that behavior <unk>, Oh, it's called together with <unk> and <unk> tend to business in such a short time in terms of efficiency says a marketing and thumbs up I go Smile, you that that go.
Hi, fast and together with the update the the guy them and stuff and yeah.
<unk> previous a guy don't fit expectation gave us the confident that we can have h. two the fine, but the scale ability of the business and the foundation of the business, which is based on existing call that could could contributing more and more just we're just going.
<unk> trying to find area.
So this this this is what we are based on.
Right. Thank you both.
Thank you. Thank you and the next question <unk> Bank of America.
Yeah, Hi, guys, Hey, it's her anyway any characterization you can give me of the new buyers would use.
More or traditional small company buyers looking for help on single things or or have you done more to penetrate the large buyers given the environment also on the seller side.
No you said across all categories, but has there been any particular change on what has shown up on the platform at this new and interesting since the change in kind of stay at home orders.
Oh, good morning, net and and and thanks for the question. So so to begin with there is an increase in our high value buyers, which now are present 58 per cent of our.
Of of our revenues and what we're seeing is that we're seeing that the we're seeing that the behavior. The behavior of all of these new buyers is very consistent with what we've seen.
We have a combination of small businesses meeting businesses in larger businesses <unk> with maybe a little bit worse cued in in recent cohorts stores that more to larger.
Dot said, the S.N.B. couldn't couldn't who'd be very vibrant and and this is shown by the fact that are older cohorts. Those <unk> have been with us for even 10 years I've been going back into growth.
So sore seen this really across the board.
In terms of in terms of categories I.
I think that you know in in April we we talked in our update to the fact that there were.
<unk> as we view it for phase is to this crisis. The the first was was the fact that I think there was a denial in in most countries didn't think that it was their problem then it turned into panic, where I think people were starting to focus home vendors self preservation.
And where people are home and figuring out what to do in very fronts from dot there's adaptation.
So when people started being at home, we've we've witnessed a few new types of interest <unk>.
<unk> are more around online tutorials.
Taking courses things that have to do with with more of the stayed home, but that trend shifted very fast now we're reacted to it by launching 30, new categories and there's nothing very very fostered and and what are the benefits of being a horizontal market base.
We can react super fast do any trends that is within the market.
But we we we saw that there were in essence, the the categories were all picking up.
And there wasn't any concentration around any specific category.
And and whatever trends whatever new trends that we're seeing we're reacting to.
The the one thing that is I think a parent or emphasize in this in this era is the fact that a lot of businesses are realizing that they need to move a lot of their off line up D.V.D. into the online and there's no better place to do that then on fibre.
And this is why a lot of our initial complains that the reaction to the cope with 19 and a lot of our engagements with our community was to really help then do exactly adopt.
So use the fact that this look down that was imposed to us would be used by businesses to move their activity to the online and we've seen a load of activity around dot.
But by the way point this was across the board.
<unk>.
Just on a separate question we've heard a lot about the changing media dynamics as other companies have pulled back because of their the negative impact. This is headed on their business. There are are you <unk> doing anything to really adjust your media spend the end are you seeing new areas that are opening up for you.
In order to increase engagement.
Particularly <unk>, we know the search will probably hold on in your categories for a little bit, but I could imagine that you have a lot of opportunity in Brandon other you know off one ad campaigns.
Yeah.
Thank you. So so we're definitely reacting to change it. So so the first one is the fact that as a as I've noted there is a huge increasing awareness, which means that the organic portion of our marketing is growing very very.
<unk> then we can use dot in the mix with our performance marketing.
The changes or the trend that we're seeing where the performance marketing is the fact that.
Very large advertisers are pulled off from the market.
It's an example, you know the travel business or the hospitality business that that I've pulled off the market, creating an opportunity for a for an acquisition in a much lower prices.
And obviously, we are there to capture this opportunity and respond to it.
And again, because we're a horizontal market base, we're we're able to diversify our marketing campaign.
So that we pick the most optimized keywords. The most open c. my categories. It each and every point to ensure that we're paying as little as possible and converting as high as possible. So we've seen those those changes and I I've made a note in my opening.
Coming to the fact that we've been able to produce.
Marketing campaign, using our own plots for.
We were imposed not to travel and not to work with any production companies. We've done everything on the plot for it.
So a lot of the beautiful complains that we've been shipping during the first quarter and into the second quarter were performed and produced on the platform.
In in in or not the only ones who are taking advantage of that our our customers are taking advantage of that as well.
Great. Thank you all what you get on to other guys, but.
Okay. Thank thank you.
Question comes from Ron Josie with J.M.P. Securities.
Great. Thanks for taking the question and make I really appreciate the increase guidance and an insight here, maybe changing tack a little bit and talking about just newer products and on promoted gigs you talked about five categories and 80% adoption rate and retention rates I'm Wonder if you can talk about what you're seeing early days on just the are alive promoted gigs to the.
Sellers the rule out plan for more categories and and over I think you mentioned in the letter wouldn't have an impact this year <unk> wondering why not I guess to the question <unk>. Thanks again.
Thanks for on a good morning.
So promoted gigs was actually launched ahead of schedule with we're very happy with it.
And you original plan as as we discussed in in previous earning earning cold.
Well, it's two Groggily released dot tested optimize it then perfected overtime.
The idea was to start in in just again to emphasize.
What's really important about promoted gig.
<unk> dot those odd placements are gonna be relevant.
To be high quality.
So all we've done is we've launched with five category.
We've limited offering with the limited group of sellers, two start testing and number of thing.
Relevancy and quality is over you see one of them.
But then also to make sure.
It is being very well accepted by our customers to see that the click through and the conversion are very strong.
The arrow why on promoted gig is very high and because of that.
What we see ease we see a nearly 100 per cent retention among those sellers who started testing it.
Because of this strong R.Y.
So the adoption of this long to those who we are offered to participate it was very high was more than 80 per cent.
The retention was close to 100% and everything that we see from dot He's very high.
Same goes for the buyers were actually using it.
This is demonstrated indie click through.
And the conversion, but the levels of 50 functions are very high so with dot. The plan is to start scaling this product to more sellers.
Two more category.
Into more areas of the product we just started.
The test with the sub category pages.
We're going to extend it.
To our search and two other areas of the site.
So this is going to be garage only for all the year and I think we made the nodes thought from from the experience of other companies that have done it and we'd get in touch with it we know that it could take up to 12 months to optimize this product and I think that'd be cause of dot.
We've taken the cautious measure oh, not factoring any wishful thinking into it.
And this is why this is <unk> when we think about guidance.
Not a part of it.
Because again, it's a new product that pace of adoption that piece of scale.
May differ <unk>.
<unk>, depending on the program and.
And this is why we didn't want to foster this in into our guidance.
Oh.
Thank you huh.
Thank you.
Thank you and then ask questions wasn't <unk> need them in company.
Okay. So this one and the smell of article on off maybe in some way the jumped on a little late so pauses, but let's just when we think about the real G.M.B. composition of these categories, where you saw activity increases the function of work from home and stay at home and and he called some of them out gaming they get social media online muscle.
I think it would eat books. So when you think about those categories that are specially stronger lately.
Yeah, what portion of those situations from a business planning assumption standpoint, or where you think we've fundamentally changed online from offline permanently versus maybe some of the effects are a bit more temporary I know, it's a really hard question answer, but just wonder if you could help but investors understand that what kind of what your gut tells you there given how broad data.
The categories, you address or whenever follow up thanks.
<unk> good morning.
So so essentially.
I I've made them note that a lot of businesses are taking this opportunity to move from all fine to on line I don't think that this is going away I don't think that this is changing I think that the awareness.
Importance of doing business online.
He he's not going to fade away.
That said if I relate to some of the categories that that we mentioned in in and you repeated in your questions like gaming social media E. books, and so forth.
What we're seeing these categories is that even if you have customers that are joined through gaming. These customers continue to buy with us across many other categories.
So essentially we don't think because of the court at least from what we're seeing right now and again I I, one I want to put the <unk> dot nobody really knows how where this is going to develop into.
But what we're seeing in Indy five weeks since the since the outbreak or the the the rebound from volatility.
<unk>, we're seeing a consistent cohort behavior that he's not limited or not concentrated into specific categories.
These new cohorts behave very similar to our older cohort in all of them are growing.
All of them, including very old cohorts, they didn't just rebound to their activity, but art spending more and being more active on the on the market pace.
So while it's to your point, it's very very hard to forecast, what's gonna happen and and nobody can actually do that what we're seeing from our data right no.
He's very consistent and they're very resilient T.V.C., oh, our customers across all cohorts, including new one.
I I would like to a man and say that we have the capacity.
<unk> behavior, yeah, not only on cut the go 11, but they'll so geography, which give us a huge advantage as we speak to see how different countries and and different audience in the in countries that go through this pandemic in different time zone.
On the doctors and whether the will come home, how how how does it implies into a into a number to hold of the categories behavior.
And so what what they can check I mean is that while some countries.
Well it wasn't much block in terms of of of you know, we'll can only from home if if any and some of them over to do the least we've we see an experience I've continued.
Continue strong CVP. Despite the fact that that people are we'll come back from the office and I'm going to normal cool stuff running the business. So so this is why we don't think it's necessarily simple or the raise.
Driven only by the fundamental.
But super how bold color thing and then maybe just to follow pro per just related to the raise revenue guides for the year.
Is there any contribution of that from Spain, and France roll up it sounds like it's going a little bit better than expected or they're just more function of just the broadly stronger activity, you're talking about with everyone being at home right. Now. Thanks, So obviously, a French and Spain in Germany Super performing and <unk>.
Off the the the rays of guy them to relate that the <unk> thing that you know you've probably one booty they'll come into push earlier today, we we lose the you know machine learning compilations of actually what would you give us a good. So you can I don't know about about the usage.
So together with emerging <unk>.
That's some conversion.
I think we'll something Oh continue to see you know the <unk> the majority of the investment in yoga for expansion in different languages.
That's great. Thanks.
Oh harder.
Yes, yes, <unk>, the restaurants cautious and how Siemens Oppenheimer, Hey, guys thing I'll have to I don't think <unk> after that but apologized that they were any update on tracks and you're seeing five or studios.
And then kind of just how you're thinking about that for the rest of the year and then it seems that you are going to lead into marketing and second quarter and beyond because marketing is.
More fish and now given what's happening in the market and how well you're able to actually convert new traffic just how should we be thinking about.
A marketing for the rest Kate into the rest of the year and then perhaps you know domestically versus international thanks.
A Jason good morning, and thank you for the question so as for it for five or studios fiber studios is growing very nicely and actually it is just the beginning of what we're planning around this area.
With the great signals that we've seen from five or studios. We are planning right now to Lick, then dot product and not sunny grow it into something more extensive that's will not not just allow.
Sellers from five or team up into virtual studios.
But will allow existing agencies.
Well, joining the platform and use it as an agency.
So again early days in dot product.
But we have a great plans for it it is growing.
It is doing well, but we think that this is just the beginning of a larger offering that we have around dot.
In fact on Hey, this is they'll found a second the second thought that the person about market thing. So we stoically, usually been investment in a in marketing Olympic nothing P. one on that's that that has been done.
Okay, 20% compelling enough them, but then you know historically it seems to be stay long throughout the throughout the.
I think we are taking advantage of the circumstances.
And the fact that I lots of opportunity for us to Spain.
And you should expect that investment in in marketing and cute too and beyond is gonna be bigger than q. on.
So so we playing very opportunistic being aggressive as units economy frame woke allows enough on the people pay for food investment bloomed.
Okay. Thank you.
<unk>.
Q.
And then ask questions <unk> shared and once you B.S.
Thanks for taking the question.
If I can one you know in terms of the behavior seeing on the platform.
Do you on what that might mean longer term for t. crates in the business, especially maybe even driven by the adoption of value added services by the demand side, you're seeing in the current environment and then Oprah with pulling the profitability forward into 21 curious if that also has an update for your long term March and pot. Thanks, so much.
Yeah.
So like I I'm, the think I we.
Demonstrating over the past few close.
Oh and ability to improve take the take like a monopoly.
And we plan to continue to do that by providing <unk> <unk> spoke about promoting earlier this is.
This is one type of additional services on the set aside that's kind of <unk>. So we feel very comfortable with the take that that it is.
I would take the advantage of this timing to shell that we don't feel any any push back.
A new than on the by on <unk> on pricing and they they feel very convenient on confident.
With the is this things about two if take the we haven't made any changes on planes to making change on the fundamental things, which is <unk> related.
So that any additional take said that you that you would seem to future is tied up and directly related to lose a decision on services and we have few of them on the <unk>.
So so I think this is on the.
This is on the on the <unk> in terms of as long as dumb margin thought there hasn't been change, it's 25% as we said before.
And and we are having their just to make an upscale of the business.
Things the efficiency is embedded to everything we do not all the way from gross margin through our M.D.'s to the marketing a G.N.A. I think we've been.
Ah able to demonstrate.
How we do that during the last you know Foucault as soon as we went public.
<unk> Comfy, then we can keep the leave them.
December Russian on in the future.
Thanks, so much.
Thank you.
And the final question <unk> Cantor Fitzgerald.
Hi, Thanks for taking my question just one for me and wanted to touch on annual guidance. You guys were one of the few companies. That's continued to give annual got into just great. So just curious what kind of economic conditions, you're assuming a guidance and any thoughts on higher revenue growth react if the economy is faster or slower to recover.
So <unk>. This is also an things that.
We have been tracking.
The the behavior of of course on the market place them on on a daily daily basis conception, including the lost a few weeks.
Ah well, we've truck, it's even more intensively.
We actually open that's a hub so all hands with many people the company participate daily updates on behaviour across all they mentioned that that you could you could imagine.
On on that if the only categories <unk> and many of <unk> in the company.
So <unk> in when when we look followed we always said that you guys based on what's going on we feel confident based on existing <unk> and not only <unk>.
That that even in in scenario of that the coveted the coping 19 pandemic onset than sort of comes and says we feel confident that they're awesome circumstance and so as to to benefit so <unk>.
Positive and negative impact of the continuous so company.
But from what we've seen the recently we have the confidence.
To to upgrade I wouldn't guidance for their mind off too.
Yeah.
Thank you.
Thank you.
It doesn't cause a crushing session I was I turned the corner of the speakers printing cousin comments.
Yeah I just wanted to thank everyone to that participated in in the cold today and and the wish everyone. A a grey day and could need to say safe guys. The the most important thing. Thank you.
Thank you the conference US all concluded. Thank you for attending today's presentation may not a centralized.
[laughter].
[laughter].