Q1 2020 Earnings Call

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Ladies and gentlemen, thank you for standing by welcome to upward first quarter 2020 earnings conference call. At this time, all participants' lines are in listen only mode. After the speakers presentation there'll be a question and answer session to ask a question. During this session you'll need to press star one on your telephone.

Please be advised that today's conference is being recorded if you acquire any further assistance. Please press star Zero I would now like turn the conference over to your Speaker today Ms., Denise Garcia Investor Relations. Please go ahead ma'am.

Welcome to Appworks discussion of its first quarter 2020 financial result, leading the discussion today, our Hayden Brown, Appworks, President and Chief Executive Officer, Brian Kinyon Appworks Chief.

Financial Officer following management's prepared remarks, we will be happy to take your questions. The first let me review the Safe Harbor statement.

During this call we may make statements related to our business that are forward looking statements under the federal Securities laws.

These statements are not guarantees of future performance, but rather are subject to a variety of risks uncertainties and assumptions our actual results could differ materially from expectations reflected in any forward looking statements. In addition, any statements regarding the current and future impacts of the cobot 19 pandemic on our business and actions we've taken in response to the code.

In 19 pandemic are forward looking statements and related to matters beyond our control and are changing rapidly.

For a discussion of the material risks and other important factors that could affect our actual results. Please refer to our FCC filings available on the FCC website and on our Investor Relations website as well as the risks and other important factors discussed in today's press release additional information will also be set forth in our quarterly report on form 10-Q for the three months ended.

Arched 31st 2021 file.

In addition reference will be made to non-GAAP financial measures information regarding reconciliation of non gap to GAAP measures can be found in the press release that was issued this afternoon on our Investor Relations website and investors thought Upwork dot com as always reported figures around it unless otherwise noted comparisons of the first quarter of 2020 or to the for.

First quarter of 29 team all measures or gap and most cited as non-GAAP. Please note that consistent with recent FCC guidance today, we will be just got disclosing more current and detailed information regarding our operating results and financial condition in order to provide insight into the impact of the cobot 19 pandemic on our business. We do not currently plan to provide.

These types of disclosures and future earnings calls.

The prepared remarks corresponding to the information reviewed on today's conference call will also be available on our Investor Relations website. Shortly after the call has concluded now I'll turn the call over to Hayden.

Thanks, Denise and thanks, everyone for dialing in today.

The covert 19 pandemic has unsettled Oh gosh I'd like to start by saying that our hearts are with everyone impacted by this unprecedented event.

Sure so incredibly grateful for the many individuals on the front line of this crisis. Thank you.

In the face of the pandemic and the associated economic crisis, Upwork is focusing with a renewed sense of purpose on our mission, which is to create economic opportunities. So people have better lives.

In the current environment, we're drawing on our 20 years of practicing and enabling remote work.

Her to support our clients many of whom our mobile I think to expand their remote works capabilities internally as well as seeking the talent they need to address urgent and emerging challenges and opportunities.

I'm pleased to say that given our prior experience working with a highly remote company that transition to remote work for us has been snooze.

More than half of our team members, we're already working from home across 800 cities before the pandemic and today all of our approximately 2000 team members are working remotely.

As a result, we have successfully maintained high performing operations, while continuing to innovate our product offering.

I want to express deep gratitude for the incredible effort by our dedicated upward team who have stayed focused on serving our customers. During this time of unparalleled change.

Last quarter I shared that our company is positioned at the crossroads or major trends.

First a planet blanketed by high speed Internet access offering the potential to connect people across the globe like never before.

I can better and better collaboration tools, making remote work increasingly comparable to being face to face.

Third shifting sands into labor force in which people increasingly demand to work differently seeking freedom from the traditional nine to five workplace and greater autonomy and when and for whom they work and force and increasing war for talent with companies running out of options for how to attract and retain the types of workers they need it.

To be competitive.

In the last eight weeks two of these trends have accelerated at an astonishing pace.

Remote work has gone mainstream and the Genie is not going back in the bottle.

A recent Gartner CFO study found that 74% of companies plan to permanently shift to more remote work. After the current crisis passes I.

Additionally, working from home has opened many more workers eyes to the benefits a remote work a recent citrix pole found at 28% of people who moved to work remotely. During this crisis Lantus. He got a job the let some work remotely after the crisis passes.

I think was built to help companies excel in the very condition, but businesses are finding themselves in today.

A world in which companies of all sizes are comfortable with a portion of their workforce being remote and the time when companies recognize the strategic value of greater flexibility in how when and what cost the talent is engaged.

We believe these two values embracing remote cowen and placing a premium on workforce agility and efficiency will be hallmarks of the new normal that emerges from the current crisis.

We are staying focused on serving our customers through this difficult time and setting our business up to support them as a new normal is established.

First and foremost were regularly providing for clients and highly skilled independent professionals with the information resources and tools to help them adapt quickly.

I want to share a few examples of the steps we've taken the last eight weeks to meet the emerging needs of our customers.

We launched a remote work resource that chart with best practices for how to build and manage a remote workforce.

We began a series of training Webinars for our customers and together with Udacity, we developed a managing remote teams all my course.

Our t. moved quickly to address the critical needs a freelancers, who were a founding partner of the freelancers relief fund, which assists independent workers experiencing financial hardship as a result of dependent make.

We mobilized to offer our top rated freelancers faster access to their funds accelerating their hourly contract you missed by 50%.

We also launched a new product called direct contracts, which enables freelancers to receive the payments protection of our escrow service for fixed price engagement outside of the Upwork marketplace.

Finally, we have seen unprecedented influx of new talent to our platform and our streamlining our talent onboarding experience to better identify the most qualified professionals possessing the most in demand skills to fast track them to open opportunities.

The most important way we can help our feelings are community through this difficult time is by bringing them more work.

Last week, we debuted our work together talent Grant program, which offers $1 million in grants for companies that higher independent professionals on Upwork work on Kobin 19 really it projects.

We also launched a curated kind of job tablets help client identify and immediately act on the crisis response and business continuity needs they have.

Speaking of these needs I'd like to briefly provide some color on how our clients have been looking to upwork for critical helped during this crisis.

We have received requests from multiple clients for helped reviewing and analyzing which of their open staff augmentation roles. They can source via remote workers, we're working with a large U.S. based multinational corporation to deliver on projects that are typically completed by contingent and statement of work providers and are creating.

Talent pipeline in case employees or current contractors cannot work due to the crisis.

For another European based enterprise client, we identified roles across software development.

Ops finance accounting and HR it could move to Upwork supported by our employer of record services.

Another area of activity is urgent project based work.

Small tech nonprofit turned to upward for the user experience design translation and marketing talent they needed to rapidly launch I Cobot 19 resource Center.

Another small business client a commercial lender turn to upwork to grow its customer service team to meet increased customer demand due to the Kobin 18 crisis.

Larger clients are also coming to upward for large project based work the training and enablement team of a multinational cyber security company used up work to source instructional designers and E learning developers to create new training materials for their customers and internal teams.

Sports marketing agency is hiring highly skilled independent professionals on up work with expertise in software development quality assurance testing user experience design graphics and animation as they develop entirely new product offering augmented reality experiences and gamification programs.

We also heard from clients asking to move their non upward contractors agencies to our platform to take advantage of our global payroll and work protection products, which enables businesses to classify and pay independent professionals Compliantly in 160 countries.

These customers wanted the unified billing and Hampton visibility on reporting strong spend to control and worker classification peace of mind offered by our platform.

One client a global electronics conglomerate was faced with a sudden inability to relocate a pool of newly hired international team members to U.S. office due to covert 19 border restrictions.

Instead of having to cancel this program and recent these team members offers they were able to onboard these employees onto our remote talent infrastructure, ensuring continuity of the program.

It is truly humbling to see the human ingenuity and creativity revealed on our platform as businesses nimbly adapt to the current challenges.

Now I'd like to transition into discussing the performance of our business, including the impact of the pandemic.

Our first quarter revenue was strong 83.2 million, representing 21% year over year growth and exceeding the high end of our guidance range.

A pandemic started to impact our platform during the second week of March for two weeks, we saw a deceleration in client initiating new work, which we believe with a symptom of companies entering a tree arash fade as they pivoted focus in response to the crisis and be impending shelter in place orders.

By the fourth week of March this client activity started to rebound and accelerate week over week.

Early to mid April we began to surpass pre crisis levels on numerous client activity metrics and momentum has continued to build.

The last week for example, we broke our own records by a significant margin on leading indicators such as client registration and new job post.

While it's still early in the U.S trends, we are optimistic that these leading indicators of future spend will translate as they typically do into GSV and revenue.

These signals indicate companies have shifted from the tree Arash phase in March two way transition phase in April as they're now focused on getting worked on in new ways as they navigate the opportunities and constraints as crisis has created.

That said significant actable macroeconomic risks, we'll continue to present throughout 2020 and beyond.

The biggest unknown for our business. This year is how well our existing small and midsize business customers will fare since these businesses comprise a majority of our GSP.

So far these businesses appear to be weathering the pandemic well.

We observed average weekly GSV from small and midsized clients decreased 3% starting in the week of March night, and lasting through early April compared to the average level seen earlier in the quarter.

Just relatively muted impact maybe due to our clients industry mix with approximately one third of our GSV generated by clients in industries classified by Goldman Sachs Research report as low exposure to refresh and risk.

Another one third of our client industries are classified as moderate exposure and only 1% as high exposure with the remainder having an unspecified industry.

Further our own analysis of changes in demand that we saw as the crisis hit in March suggest that approximately half of the GSV on our platform comes from categories of work that are essential to our clients businesses and an additional one third is from categories that are somewhat essential.

This leads us to believes that the large majority of work being performed on the upper platform will endure as long as these clients are still in business.

I want to emphasize that the data analyses of perspective share today, our recent and may be subject to change given the unpredictable and volatile nature of the pandemic and its ongoing impact personally I'm concerned about the pace at which we as a global community will emerge from the shadow of this pandemic.

However, I continue to believe in the resiliency of our business and our customers and I'm confident in the positive impact we will see overtime as a result of the hard work, we're doing now to ensure current and prospective customers understand the strategic advantage of embracing upward in a significant and sustaining way.

Against that backdrop I'll provide an update on our focus areas for Q2.

On our last call I shared our three pong growth strategy for 2020, which is our plan for achieving and sustaining a 20% plus annual revenue growth rate in the years to come.

While the global economic climate has changed dramatically since the beginning of the year.

They continue to believe this goal is achievable and that these two colors are as critical delivering growth now as they were a quarter ago.

The first goal to attract more bigger clients has been at the forefront as we aim to close the perception versus reality gap that we face too many prospective clients have either never heard of upwork or wrongly belief that were only a site for small giggle Burke.

In Q1, we saw significant traction on this goal with our year over year brand awareness among prospect, increasing 70% exceeded by increasing strength in the volume of high value job coast in our marketplace.

This quarter, we are retooling, our sales assets and talk tracks to speak to our target client needs at the current moment and are launching new solution focused landing pages. It's showcase the ways companies can leverage independent professionals immediately for their most pressing needs.

We're also encouraged by progress on our second growth goal.

Enabling more spend per client in Q1, even though through the pandemic onset. We substantially grew the number of users per enterprise account increased the number of account spending a million dollars or more and exceeded our goal for GSV per contract every single week of the quarter.

We continue to improve our secure authentication option for businesses of all sizes, including enhanced single sign on capabilities that streamline user onboarding and corporate accounts and we began engineering work on a roadmap of enhancements for our employer a record service.

We continue to invest to ensure this solution is truly unparalleled in enabling clients to work with highly distributed flexible teams around the globe.

And our third goal to make more high quality matches has been a particular focus as we make the most of the massive influx of new talent, we have seen since the start of the pandemic as was the heightened activity levels from existing freelancers on our site.

Our ability to precisely categorize highly skilled independent professionals and jobs and maximum at scale is more important than ever and we made a number of positive changes in Q1, including modification to our connect program. The virtual tokens used to submit proposals for jobs as well as changes to our search and matching system that if country.

But it just pushing or fill rate up.

In Q2, we are focused on key enhancement to our search and match capabilities as well is rolling out easier act to prevented talent that is ready to work for our business and enterprise clients.

Now I'd like to take a minute to talk about how we're managing expenses. During this time of uncertainty.

We've trimmed spending in areas, such as tea and E and ancillary office related expenses and we have stepped up our cost management efforts across the board.

This includes reevaluating vendor and head count spend although we are continuing to higher for roles that support our growth priorities. We saw some sales productivity softness in Q1 as a result, if the pandemics immediate impact on larger companies general willingness to sign new contracts. Consequently, we have paused for their sales hiring and.

Adapting our sales approach to better address clients, both top of mind concerns.

We continue to have confidence and the economics of our sales model and the imperative of serving larger clients as evidenced by the sales team achieving close to full Q1 quota. Despite the challenges in March.

We will read initiate they'll keep hiring once we see more predictable economic activity from larger clients. During this crisis.

Given our strong balance sheet and relevant value proposition. We're redeploying these cost savings and incrementally investing to take advantage of this unprecedented moment to reach and serve customers like never before.

On the marketing side and see a unique opportunity to drive higher performance from both direct and brand advertising given the stronger appetite for more remote friendly and flexible solutions from customers right now.

On the R&D side, we're continuing to invest in product innovations that will drive growth. Both this year and in the years ahead.

I'm confident that the steps, we're taking today by investing in serving our customers in critical ways are moving us towards a sustainable 20% plus revenue growth rate in the future with the goal of fully unlocking our 560 billion dollar market opportunity.

I'd like to thank our teams for their around the clock works. During this unprecedented time, our customers for their continued loyalty and trust and our investors for seeing the future that we see a future with greater talent access for businesses as organization unshackled themselves from outdated location based.

Straight that have governed with whom and how they work.

A future with greater freedom for workers as they trade and painful commutes pointless face time requirements in exchange for greater autonomy and job satisfaction.

And the future with greater productivity in our economy as businesses integrate the powerful advantages that modern capabilities and tools, including Upwork can deliver.

Now I'll turn the call over to Brian before we open the call to your questions.

Thank you Havent good afternoon, everyone.

To start with a brief update on our first quarter financial result, it's your thoughts regarding our outlook before opening the culture questions.

Yes.

Quite spin and additional towards other value added services was 559.5 million in the first quarter.

Core clients increased by approximately 4001st quarter, two probably 129000.

Core clients increase in line with our expectations given our current emphasis not just adding new accounts, but expanding our footprint within existing accounts.

Klein search engine was 102% as of March 31st 2020 steady with where this metric was in Q4.

Revenue increased by 21% year over year, two maybe 3.2 million in the first quarter.

Excuse me the high end of our guidance range of 82.5 million.

We estimate that our Q1 revenue year over year growth rate was reduced by approximately 1%.

19 pandemic.

Marketplace revenue increased by 24% year over year to 74.8 million in the first quarter, representing 90% or total revenue.

Services revenue increases expected growing 5% in the first quarter to 8.4 million.

Our overall take rate in the first quarter was 14.9% up from 14.1% linear prior our marketplace take rate improved to 13.6% in Q1 compared to 12.6% in the year prior.

This improvement was primarily from several changes we made after the first quarter of last year.

Turning the adoption of new paid find subscription plans changes to connect which are the virtual tokens that allow independent professionals to bid on projects on our platform.

Increasing client payment fees, corporate basic and plus from 2.75% to 3%.

Non-GAAP gross profit was 59.9 million representing 72% of revenue for was 69% in the first quarter 40 19.

The increase was primarily due to the growth of marketplace revenue and improvements in the management of our cloud computing cost.

Turning to operating expenses February 2020 prior to the Koby thanking pandemic, we made significant organizational changes to streamline the delivery of our end to end customer experiences that resulted in a one time charge and $1.6 million.

Operating expenses will increase in absolute dollars, but fluctuate as a percentage of revenue for period occurred as we continue to invest for growth.

Non-GAAP sales and marketing expenses were 29.8 million in first quarter, representing 36% of total revenue as compared to 29% in the prior year.

The year over year increase was driven by the build out of our direct sales team to the back half of 29 team by increased marketing investments, including our brand campaign.

The second quarter, we expect to spend an additional $3 million to $5 million above what we typically spend as we're focused on driving both brand awareness performance marketing given the markets increased appetite for remote friendly and flexible workforce solutions.

Non-GAAP R&D expenses were 17.4 million, representing 21% of total revenue as compared to 21% in the first quarter for 2019, we continue to invest in product innovation as a core part of our growth strategy.

Lastly, non-GAAP gene expenses were 14.5 billion, representing 17% of total revenue compared to 18% in the first quarter of 29 team.

Transaction losses were 0.9 million in the first quarter, representing approximately 1% of total revenue.

Typically range has been between 1% in 2% of revenue.

We expect transaction losses will return to the high end of the typical range. During the current 19 pandemic due to changes in class ability to pay and due to our move to pay operated freelancers faster.

Non-GAAP net loss was 3.6 million in the first quarter 2020, compared to non-GAAP net income of 0.1 million in the first quarter of 29 team.

Our basic and diluted non-GAAP net loss per share was three cents and the first quarter falling 20 compared to breakeven in the first quarter 2019.

Adjusted EBITDA loss was 1 million in the first quarter compared to adjusted EBITDA was 1.8 million in the first quarter 2019.

Now I'd like to share thoughts regarding our outlook.

Given the rapidly evolving and unpredictable environment and the combination of both Tailwinds and headwinds that we can contemplate impacting our revenue performance in the next few quarters.

During our annual revenue guidance.

However, providing guidance for the second quarter 2020.

We expect revenue to be in the range of 79 million to 81 million. This anticipates the effect of the aforementioned March slowdown and client activity, which will impact our business in the second quarter as weaker new activity March translate into less associated recurring revenue going forward.

Our approach regarding guidance on EBIT and our focus on investing for growth versus profitability. This year has not changed.

At this time, we do not expect EBITDA to be positive 2020, as we remain bullish on our business opportunities and plan to continue funding both near term and long term growth initiatives, we're closely monitoring our performance to achieve our ROI thresholds.

Continue to manage costs.

Just one preserving our cash and maintaining our strong balance sheet, which included cash and marketable securities of over $145 million at the end of the first quarter.

While there are many unknowns about the future of this pandemic Dennis macroeconomic effects, we remain optimistic about the outlook for our business given the secular trends that are being some into today.

Appworks business model is durable to a variety of potential impacts were executing on a plan to allow us to exit the current crisis stronger than before.

While we are buoyed by the speed and strength of the resurgence in activity.

Another platform in recent weeks. We're also taking measures to ensure we are prepared for whatever the future holds.

Our ongoing scenario planning anticipates, a range of economic outcomes and these plans give us confidence that we have ample cash runway even in the event of years about macro economic hardship.

We are committed to providing regular investor updates and plan to participate in virtual investor conferences and alternative meetings as much as possible despite the challenging macroeconomic environment.

I'll take your questions.

Thank you.

As a reminder to ask a question. Please press Star then the one key on your Touchtone telephone.

So what you all your question press the pound key.

Again, if you would like to ask a question Cresta starts and the one key on your Touchtone telephone.

And we have a question from Marvin song would be T.I. G. Your line is open.

Good afternoon. Thank you for taking my questions on.

Oh.

Okay.

Thought I thought it would just.

Elaborating on the.

The adjustment, you're making and advertise or performance marketing and brand awareness advertising. If you could just kind of talk about.

The ROI that do that this new environment is you know how much better. The ROI is with regards to performance marketing Doug I'd be interested to know and then also are you able to.

Calculate an ROI on your brand awareness spending as well, thanks, and I look forward.

Marvin Thanks for the question.

We think that this is really a once in a generational moment for us in terms of building our brand awareness and that's one of the reasons, we're moving to really shore up all of our channels and make sure that we are full force sending the message to customers about how relevant our solution is at this very moment in terms of the ROI and performance marketing we have seen actually.

Similar ROI over the last couple of months and weeks as we've seen historically so the performance marketing spend has been returning similar is all placing in the past and that's an area, where we're continuing to invest where we see opportunities on the brand side. We are trying to close this perception versus reality gap that I think exists in the market and our forward.

Five by the fact that the brand investments we've made in 2019 heading into this year already resulted in a 70% increase and brand awareness amongst our target marketplace buyers. So I think there are great signs, but the brand work. We're doing is driving the results there were looking for and how we're increasingly focused on measuring as well.

Conversion around the users deeper into the final although as you know with brand spending some of those attribution there are always a little bit less direct than what we have on the performance side, but stepping back I think this is really a time, where we feel the interest and relevancy of our message is at an all time high and we've taken measures in Q1 to really retool a lot of our marketing.

Assets to speak to customers at this very moment around things that are most top of mind for them and so thats, where we think now we're prepared with some of the really relevant messaging that can help them understand.

We are relevant and really lower the barriers to them starting out in trailing our offering.

And I would add the other thing that we've been doing is targeting when how are we thinking about the marketing channels. So no longer doing outdoor and come back on radio and really focusing on the right channels in the six in this environment again, measuring that ROI threshold and making sure we get pay for performance advertising, what we see strong economics, yes.

I would add as part of this investment in Q2 is this.

Things like very thoughtful around deploying some of this related to be working together Telegraph program, where we always get at a million dollars. We felt it was the right thing to do enables us to both get new and existing customers experience I've worked in new ways, while supporting our community of independent professionals and will result in some really powerful stories that bring our solution that works professor.

The life.

Terrific, Thanks for that it and Brian and my follow up question.

You know is very encouraging to hear about a leading metric indicators and I understand the second quarter.

Rental revenue guidance was impacted by what happened in March and and I guess in April as well. So just kind of help me square that in the sense you know, perhaps you could just kind of.

More color too.

The run rate, but we're kind of operating though through April into those first on M&A would seem to indicate that the run rate is above the 83 million for first quarter since though.

Correct me, if I'm wrong was there your highest revenue quarter.

So far in the history or just kind of help me square those two comments you made thanks.

Theres definitely still a number of question permit in terms of how quickly and how aggressively the really strong leading indicators that we've been seeing in the last few weeks I will translate into GSP in revenue. So what we did with us because this quarter's forecasters, we really looked at a number of different scenarios and have been planning around the various outcomes that we.

Dissipate both based on some of the Tailwinds, we've been seeing the last few weeks as well as a number of things that could happen in a more macro environment to the business and so we basically came up with a balanced approach where we baked in some of the continued headwinds from March continuing with our smbs as their activity may still.

I'll be dampened and in areas, where there still facing uncertainty deciding how to spend are facing challenges because of their business models. But also you know that that impact. We think we'll continue to be muted barring much worse things happening in the macro environment. So that's factored into the Q2 forecast and.

We also have a little bit of upside factored in due to the tailwinds that we've been seeing in the last few weeks, but anticipate that that may not materialize in a significant wait until late in the quarter or the following quarter, just given the pacing at which just type of activity.

The timing it takes the kind of translate into GSP in revenue. So we try to balance some of those different factors with this forecast.

Terrific, thanks for that color and leather once hope in safe and I hope as we make the kids. Thank you [noise] MTO. Thanks.

Thank you. Our next question comes freed from GE on Lee with RBC capital markets. Your line is open.

Great. Thank you added as Jan for Mark Mahaney So.

Couple of questions here, one on the just double clicking on the improvement and take rate I Wonder if you can highlight a where you're seeing the most improvement then is interest from new subscriptions uptake or the adjustments you made and come back and that is this a metric that you think has stabilized or do you think there's still room to grow into next.

Corridors, and then I have a follow up thanks.

Thanks, Yeah. The improvement in Q1 was relating to the adoption of the play client subscription plans, we launched last year in.

Late Q1 early Q2.

And then there was the changes in connex as well that we had introduced last year and we certainly kind of rolled back a little bit about in the late part of Q1 in into Q2.

Just going to be a little bit of a headwind for the rest of the year, we talked about in the last call and an increase in the client payment fee that we also introduced last year was 2.75% we moved out to 3% last year. So this was a high watermark for us on the take rate for for quite a while here.

We expected due to come down in Q2 with the Connex changes, we've mentioned before and remain in line with lots of the rest of the year.

Great. Thank you and also just the if you can hear any color on the around client spend retention I retention rates and stable versus last quarter, but wondering if you have you are seeing different trends in SMB your intention versus enterprise, especially I think historically enterprises, a higher retention rate just one.

Sorry, if that trend has been increasing either before or after the cobot outbreak. Thank you.

We feel really good about where client spend retention netted out in the past quarters. Thanks, Dave, let one or 2% and I'd say between SMB in mid market.

Slightly different performance, we mentioned in our remarks that small and midsize businesses did see a softening of Jesse by about 3%. We did see an uptick on mid market on larger customers. So that was slightly offsetting that trend.

And I'd say in general for this metric is still really early innings for us to anticipate where it might go with Qubits specifically.

It looks really solid again the trends, we're seeing in terms of our existing cohort of customers are really strong, but there is some unforeseen bumpiness I could come out of the macroeconomic conditions that you know it definitely access and since this is a trailing 12 month metric.

It may take a while for those things to took to flow through the metric, but so far it's looking really really positive.

Great. Thank you.

Thank you and we have a question from Ron Josey with JMP Securities.

Some increased demand for freelancers services and as unemployment increases do you see some of these organizations more permanently shifting to freelancers and then number two can you highlight any verticals like creative and design or technical.

All that are seeing higher lower demand, we're performing better or worse. Thank you.

Pardon me.

Ron can you repeat your question.

Oh, sorry I.

Thank you my line cut out walk around with asking the first part of his question. Ron can you repeat the question related to I think you're asking about freelance there. So I think becoming more permanent fixture for larger companies.

Oh, yes, great. This is David for Ron.

Yeah.

You talked about seeing some increased demand for freelancer services in your prepared remarks and I'm wondering.

If you can see some of these.

Some of this demand being more permanent as unemployment increases.

Absolutely I think that that's a lot of the conversations that we're having with customers answer unless we're looking at a lot of the data from folks like Gartner Pwc and others, who are talking to many CFO as to your isn't in the landscape are now we're saying this these trends around promote work and having a more flexible workforce.

Our things that are more important to companies now than ever before and we do expect that as companies plays a higher premium on having flexibility in their workforce models right now they are scrambling to figure out how to create more of that flexibility overnight and I think we'll be realizing that that flexibility as something that will serve them well even after this crisis.

Those because it lets them be much more dynamic in adapting to the variety of business challenges and opportunities that they face you know even outside of a process. So we do anticipate that it more dynamic flexible models will be the rules the road going forward I think.

Our model is particularly interesting because we provide not just freelancing talent and I see compliance, but also we havent employer a record and pay rolling solution. So we're also having a lot of cut customer conversations right now where companies are looking at moving their distributor workforce that takes a lot of different forms onto our platform.

Take advantage of both the I see talent capabilities, we have as well as global payroll and compliance and I think those the types of things that more companies will be doing in a once they start seeing the opportunities during the crisis. It will become part of their kind of new normal way of operating after the crisis passes.

The only other thing.

For the feeling for services, which had been ventures was would do it created this new offering called direct contracts, which is a service for freelancers that on the platform to bring their work to the platform. So they get the payments protection about Appworks escrow service, so hopefully that will bring more freelancers that.

Not working that's only on the platform and bring them more on taller platform as well as.

More of their existing business as well as which should help us grow as well.

To your second question about some of the trends we're seeing around use cases, right now I think theres a lot of an incredible activity happening and I can characterize a few brought theme that we're seeing so the first one is around customers looking for infrastructure skills for digital transformation digital tools that they're implementing and really all of that does.

A little pieces of their business continuity planning and execution right now and so customers coming to look for <unk>.

It's freelancers, who can help us deployments around.

Website, but they're building for the first time, we've had customers looking to build cobot 19, app tracking mechanisms or new digital storefront that they're moving from bricks and mortar to online. So there's a lot of activity around kind of ITC infrastructure support the second big theme that we are seeing is around marketing and content. So.

And so many companies are pivoting to address customer needs in new ways in new channels. So theres kind of broadly a content explosion happening with companies trying to create relevant timely content for customers that addresses those pain points on top of my concerns that their customers are having right now so that's pretty demand for people who are doing writing.

Content creation content strategy, and then areas within the same theme around designers video production animation those type of skills are really a demand right now as companies are looking for new digital vehicles for communicating with their customers and they usually don't have those skills fully in house.

And maybe redeploying their marketing budgets from in person events to virtual events and they need help to create all of the content assets videos et cetera that would go with those types of activities.

Third area that we're seeing a lot of activities around customer support because whether companies are benefiting from the current crisis or struggling with the current crisis, we're seeing a trend where so many companies regardless of their situation are getting a spike in customer contacts and so they're looking to us to provide a customer support reps who could.

Really deal with these unexpected demand surges in speaking with customers, which is so critical to them to guest feedback or can communicate key messages are a result customer issues.

The fourth and final thing I'd say is there are definitely some interesting niece verticals that have become very active for us are much smaller relative to our total business, but areas like Im development instructional design E. Learning all of those are I think areas, where you wouldn't be surprised us to imagine the types of use cases that companies are lean.

The into right now to stay relevant pivot and really big make sure that they are delivering but the messages solutions that are that they need to at this very moment. So those are some of the really interesting themes that we're seeing.

That's really helpful. Thank you.

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And I'm showing no further is no further questions at this time.

That concludes our call for today. Thank you for participating you may now disconnect everyone have a great day.

Okay.

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