Q3 2020 Upwork Inc Earnings Call
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All because it sounded like you know [laughter] because I think they show that will be a question. One last question you asked the question during the session. When you could buy side I'm, just I think you touched on top.
Please be advised that todays call is being recorded.
If you recall [laughter], Oh, I don't know.
I would now like to turn the conference over to your speaker today can Miss Garcia.
Uh huh.
Welcome to <unk> first discussion of third quarter 2020 financial results, leading the discussion today, our Hayden Brown, Vice President and Chief Executive Officer, and Jeff Mccomb works Chief Financial Officer, following management's prepared.
Remarks, we'll be happy to take your questions.
First I'll review the Safe Harbor statement.
During this call we may make statements related to our business that are forward looking statements under 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 COVID-19 pandemic on our business and current and future impacts of actions. We have taken in response to the cup at 19 pandemic or forward looking statements and related to matters is 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 SEC filings available on the FCC website and on our Investor Relations Web site 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 September Thirtyth 2021 file. In addition reference will be made to non-GAAP financial measures information regarding reconciliation of non-GAAP to GAAP measures can be found in the press release that was issued this afternoon on our Investor Relations website at investors the Upwork Dot com.
As always reported figures are rounded unless otherwise noted comparison of the third quarter, a 20 to 20 or to the third quarter of 2019, all measures our GAAP unless stated as non-GAAP.
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 will turn the call over to Hayden.
Thanks, Denise and thank you all for joining today.
I'm pleased to report third quarter revenue of 97 million, representing 24% year over year growth and exceeding the high end of our guidance range gross.
Pro services volume grew 23% year over year and accelerated quarter over quarter due to a continued secular shift toward remote and independent work coupled with strong execution by our team against our growth strategy.
Our third quarter performance was fueled by both existing clients and new clients, who adopted upward in record numbers.
At the start of the quarter, we recognized that some clients continued to face pandemic related challenges and we prepared for the possible impact on our business.
Our stronger than expected third quarter was driven by our customers accelerating adoption of upwork acknowledging the value we offer regardless of their situation or condition.
The value we create is inherent in what we are up work is the world's largest work marketplace as measured by GSV connecting businesses with independent talent.
We enable trusted relationships between clients and freelancers that result in high quality work outcomes at a speed and with a value otherwise on achievable.
Once clients realize what can be accomplished on upwork, they proactively and strategically built a virtual talent bench of freelancers with whom they work time and again.
Across a widening range of use cases.
And in turn freelancers earnings power on Upwork expanse as they build their business best suited to their own needs Hsas, we are leading a shift to a new way of working.
Along those lines I would like to read a quote from a recent article in the Harvard business review title Rethinking the on demand workforce, which surveyed 700 U.S. business leaders on the topic.
The authors observer quote.
The companies are leveraging high skilled platform in large numbers came as no surprise to us because in recent years, we've seen how they can increase labor force flexibility accelerate time to market and enable innovation.
We werent impressed however by the variety of engagements that companies are making with the platform. There you can help with projects that are short and long term tactical and strategic.
<unk> yeah the general.
What's more 90% of the leaders we surveyed C suite and frontline believed these platforms will be core to their ability to compete in the future and quote.
As the pioneer in our space, we have been building capabilities and tools for a world now increasingly ready to use them.
Our vision is to place independent talent at the heart of every business.
Everything we do is and will continue to be focused on powering our customers' progress.
With that backdrop I'd like to discuss our third quarter performance first is the length of our ability to generate new business be a client acquisition and then through the lens of our ability to generate new spend via existing client retention.
After that I would like to highlight a couple of timely topic related to what we're doing to continue to make upward a single destination for every business to realize their full potential by working with independent talent.
Starting with new client acquisition, we maintain the elevated pace of new client registrations, which appeared in the second quarter. This boost translated into meaningful GSV and revenue growth during the third quarter. In fact, we are seeing that cohorts of our clients acquired since the beginning of the second quarter, our spending at higher levels than similar.
[noise] age cohorts from prior quarters.
We expect a strong recent performance and new client acquisition will continue to positively impact our growth moving forward.
Nimble execution against our strategic growth initiatives has contributed to the growth we've seen in client acquisition.
We strategically deployed messaging to resonate with businesses in search of remote work solutions and simultaneously increase our investment in paid acquisition channels by 41% year over year at equal or better cost per acquisition.
We're able to do this by expanding our FCM presence on mobile expanding our international reach and improving our bidding algorithm as a result, both our U.S. and international client registrations grew at record levels.
In addition, we continue to drive improvements in I C O performance as well as conversion optimization through the funnel in.
In Q3, we saw an 89% year over year increase in client registrations from the C. O channel as a result of a disciplined and systematic set of improvements we have been making over the past year.
We also launched a new content management system developed and deployed our key I feel many pages more effectively.
Now, let's shift gears to client retention, which was strong in the third quarter.
Client spend retention was steady at 100% and the number of customers graduating to be core clients, which are our largest vendors through significantly faster in the third quarter than it had in previous quarters.
Our focus has been to make it as easy as possible for clients to work more deeply and broadly with a full array of talent on up work and for talent to similarly expand their earning power on up work.
We hear from client again, and again about the new potential they unlock for their businesses by building their own virtual talent bench of team members on Upwork. Once a client works with a freelancer on upwork. They consider that freelancer to be part of their extended team perpetually available on their upward virtual talent bench the client.
Let me go back to that freelancer every month or once a year, but that connection doesn't typically and with the project. Our goal is to help clients unlock productivity gains by utilizing an ever deeper and wider virtual talent bench.
And the benefit to talent is similar by building a roster of clients that they've worked with on a repeat basis. They spend less time, winning new work and more time doing the work they love with clients that they have strong and trusted relationships with spanning many years.
I'd like to highlight a client making strides to develop their virtual talent bench one of our large technology clients recently transitioned all open employee requisitions to Upwork and decrease their time to hire 10, X. from 80 days down to eight days.
They were able to lower cost by more than 50%, while achieving their growth goals based.
Based on the success of the program. This client is working to expand the program by 50 or more freelancers from up work by the end of the year.
They have told us how extraordinary Ben to find people to do work that previously they only imagine they could have done by full time employees.
And the upper talent working with this client is able to leverage their skills and expertise while growing their own business.
We're working with some of our largest clients to unlock the full benefits they realize by building a virtual talent bench on up work that integrates their upward and did not upwork talent on our platform.
Our bring your own talent or B Y O service, which grew 37% year on year in Q3.
Allows clients to essentially and seamlessly manage the entirety of their independent workforce program and projects on one platform, whether or not the current was sourced via upwork and whether or not that talent isn't independent contractor or employees through our employer of record service.
Enterprise clients in particular have started to uncover the full value of the service, which gives them the visibility and control they require for high skilled workforce programs without sacrificing strong relationships with incredible trusted talent for critical work.
Now I'd like to drill down a bit on our enterprise customers, specifically as it relates to our sales strategy.
We recently completed a comprehensive analysis of the economics of our sales efforts it.
The key finding was that the lifetime value of the customers on our enterprise service plan are compelling, but that if the customers on our business service plan relative to the support costs are less so well.
While enterprise plan customers spend an average of $1 million per year.
Business plan customer spend less get carried significant cost to support.
We are confident that we can acquire and support the type of clients currently on our business plan more efficiently through our self service marketplace solutions, the basic and plus plans, thereby freeing up the business plan related sales and support resources for higher return investment opportunities.
Consequently, we are strategically realigning our sales organization to target new accounts with greater than 250 employees and new clients with fewer employees will be served via our self service offerings our.
Our sales team is refocusing its energy on selling the enterprise plan targeting its capabilities against the right opportunities.
As part of this process, we will reduce our sales team by approximately one third focus primarily on those who were selling the business plan to smaller customers we.
We do not take such decisions lightly, but rather was full consideration of what is best for all of our stakeholders.
These actions do not change, our near or long term growth expectations.
In fact, this move sharpened our sales focus on our strategic priorities of getting more bigger clients and enabling more spend per client.
Our recent analyses, resulting in tighter account targeting criteria and a smaller more fit for purpose team.
Strengthen our ability to grow the business faster by selling our enterprise plan into truly large accounts that meet our criteria, enabling them to build their virtual talent bench of high quality freelancers to one lease their full business potential.
One recent example of an enterprise customer building their virtual talent bench on Upwork is Zen desk and integrated customer support software company with more than 4000 employees then.
Vendetta became a client in the second quarter at first experimenting with how to uncover strategic value using talent found on our work marketplace.
Now their virtual talent bench is extensive and growing with teams across end desk using upward across seven categories from accounting and administrative support to engineering and software development.
Next I'd like to highlight another way in which we are expanding our platform to more effectively serve our customers.
Last week, we announced the launch of project catalog, a curated collection of pre scopes project easily purchase via E commerce click and by experience it.
It provides a new way for clients and freelancers to work together on the upper platform and as part of an ongoing expansion of the Upwork experience.
Project catalog is in beta now and it will launch to all customers in February of next year.
We created project catalog based on feedback from freelancers and clients looking for expanded ways to engage on Upwork perks.
For clients project catalogs represents an easy way to quickly purchased some of the most popular services freelancers offer from website development and graphic design 'cause videos and digital marketing for.
For example, a client that wants to create an animated Explainer video can search project catalog and quickly choose from a range of pre packaged options.
For new clients project catalog represents an additional pathway to discovery the incredible array of work solutions offered by the world of Cowen <unk> Upwork.
For existing clients project catalog can augment larger and more complex gold based work with smaller welded pipe.
<unk> I didn't voice over two and video project logo design to a brand identity project or Copywriting tool website redesign project.
For our freelancers project catalog as an opportunity to augment the businesses they've built on upward with a new way to market and sell the services. They do time and again, thereby amplifying their earning power.
The response from freelancers to the project catalog beta has been impressive significantly exceeding our goals within the first few weeks.
Long time, Upwork freelancers have told us how excited they are to create a new income stream by showcasing their top services such as building responsive web sites with where press pretty Explainer videos are writing a series of blog post.
In closing I want to look to the future.
This has been a challenging year for the world and it's impossible to know what lies ahead.
Despite the uncertainty upwork sees the future that is rich with possibility and opportunity for our clients and talent we.
We are committed to removing the constraint of establish work norms in order to unlock our customers' true potential.
Through the upward marketplace, our customers don't just find each other they discover a transformational way of working.
We noticed first hand that upwork, where approximately two thirds of all of our internal talent, our freelancers from the Upwork marketplace.
Our vision that upward is that independent talent works at the heart of every business and I couldn't be more excited about our trajectory for helping more businesses discover the power of independent talent, making that vision a reality.
I'll now turn the call over to Jeff to discuss our financial results in more detail.
Thanks.
I'm now one quarter end and I've had the opportunity to dive into our business a few things stand out first I'm impressed by the passion of the team and is focused on delivering on our mission second as I suspected when I decided to join up work.
Derek is driving material structural changes in the way work is done and third we are well positioned and have an amazing opportunity for support freelancers and clients in achieving their potential in this new world of work.
I dive into the business I'm evaluating what metrics will be most helpful for the investment community in evaluating our performance and potential for value creation.
Some of our current metrics, including claims spend retention and core clients are fairly lagging in nature and don't provide as much real time insight into how the business is currently performing as we'd like.
We are planning an analyst day in the first half next year to provide a more in depth look at the go forward strategy near term priorities and potentially new metrics now, let's look at the third quarter numbers.
GFT in the third quarter was 655, million% to 23% year over year increase revenue in the third quarter was 97 million, reflecting a 24% year over year increase driven by marketplace revenue growth.
Marketplace revenue was <unk> million, reflecting a year over year increase of 26% driven by free rents are tiered service fee revenue payments revenue, which benefited from more foreign exchange fees due to growth in international revenue and revenue from CNET.
Which are our virtual tokens for freelancers.
Men's services revenue was not.
Fine.
Core clients grew by approximately 5600 to 139000 at the end of the third quarter with new core clients in the quarter growing 24% year over year claim spend retention was 100% and we expect the spending strength of existing clients in Q3, well push this metric up in future quarters as.
Even referenced our retention performance in Q3 exceeded our own expectations for a couple of reasons first we anticipate that many of our small business customers would be negatively impacted by macroeconomic conditions in ways that would cause them to pull back spending on our platform.
While this did happen to some of our clients. It was less than we had prepared for.
Second cohorts of clients, we acquired in the past year performed well bolstered GST in revenue, even though they will not impact our client spend retention number this quarter.
Our overall take rate in the third quarter was 14.8% and our marketplace take rate dropped slightly from 13.7% in Q2 to 13.6% in Q3.
This decrease was almost entirely driven by an increase in deferred revenue, resulting from more revenue being earned in the 20% and 10% tears in Q3 than in Q2 due to strong client acquisition in Q3.
Non-GAAP gross profit was $70.4 million or 73% of revenue.
Non-GAAP sales and marketing expenses were 32.4 million, representing 33% of total revenue as compared to 32% in the third quarter of 2019.
The increase was driven by investments to drive brand awareness performance marketing and sales.
Non-GAAP R&D expenses were 18.3 million, representing 19% of total revenue consistent with the third quarter of 2019.
Non-GAAP operating expenses were 14.3 million, representing 15% of total revenue as compared to 18% in the third quarter of 2019.
We will continue to drive leverage in DNA as we scale for growth.
Transaction losses, Brazil point 7 million in the third quarter, representing approximately 1% of total revenue at the low end of our typical 1% to 2% range concern.
Consistent with Q2 depend demick and faster payouts have not increased transaction losses as much as we had anticipated.
Non-GAAP net income was 5 million in the third quarter of 2020 compared to non-GAAP net income of $1.1 million in the third quarter of 2019.
Our basic and diluted non-GAAP net income per share was four cents in the third quarter of 2020 as compared to a non-GAAP net income per share of one cents in the third quarter of 2019.
Adjusted EBITDA was 6.7 million in the third quarter compared to adjusted EBITDA of $2 million in the third quarter of 2019.
We are guiding fourth quarter revenue between 96 million and 98 million and expect year over year GSV growth to be in line with revenue growth.
We remain bullish on our business opportunities and we'll continue funding growth initiatives, while closely monitoring our performance to achieve our ROI thresholds.
Looking at the investments we plan to make in Q4, we expect EBITDA margin to be in the low single digits. We will continue to manage cost with discipline, while preserving our cash maintaining our strong balance sheet, which included cash and marketable securities of over 155 million at the end of the third quarter.
As we look to the future while uncertainty in the overall environment remains firm Kogut, we're excited about where the business is headed.
In terms of 2021, we are targeting revenue growth of 20% with an EBITDA margin in the low single digits. We plan to provide formal guidance on our next quarterly earnings call. Thank you and we will now take your questions.
Thank you.
And then as they might have to ask the question you're one of the fastest find and no. One can I have touched on telephone to which I have a question. Please press capacity.
I love the composite can and <unk>.
And last question coming from the line of friends tell with Jefferies. Your line is now open.
Good afternoon, I hate and as it relates to the change in the Midmarket sales team I'm curious if you could just walk through.
How you're reallocating towards the enterprise and is there any disruption that helps in the short term given some of the deals that were in flight or.
The disruption minimal and and you think that ultimately this is just a kind of a win win move.
Move on in.
In making this change.
Thanks, Brent Yeah, the big theme for this quarter on the sales transition is I think it is a win win a it's really that we're getting a lot more focused so we're not anticipating any kind of disruption.
Our existing customers, we're going to continue to support in a really Smith way that works for them and for us, but as we step back and look at some of the findings that we have from the analyses that we did number one was we concluded that we can really serve the types of customers. We had been going after with the business account really more cost effectively with a self service model and I think.
That's a really positive thing for US second it's critical that we did reconfirm that our enterprise accounts have compelling economics spending on average a million dollars per year and going forward, we're really focusing our reps on a much more set a target a set of opportunities with big returns with those bigger account types and I think we're setting them up for.
Our success with some of the changes, we're making to really nail those opportunities on those large accounts, which is where there is you know a lot of market opportunity for us so against the backdrop of so much having changed with co bid and our client mindsets, having evolved rapidly towards a higher comfort with remote.
Work and enterprise customers, I think really leaning into new strategic opportunities I feel really good about how we're set up with the sales teams to go after those opportunities and tapping into companies like the one we talked about earlier you know a large tech company moving all of their racks onto our platform and really leaning into.
Do I think what is you know for a lot of executives. This label moment about how they can work differently as their organizations have adapted to remote work and are really learning new tools and behaviors and so this is a big moment I think for a lot of organizations there, they're rethinking their strategy and their talent strategies and I think our our sales team is now set up in a new way to go.
After where we see the biggest opportunities in the market with you know really no disruption to the current business.
Maybe just a quick cleanup I'm on for Jeff on just the linearity what you saw throughout the quarter and into the current quarter sounds like a lot of companies are seeing.
The underlying foundation strengthen alone with what are what are you seeing just high level directionally in terms of of that improvement.
Sure. Thanks Brent.
The the performance of the business.
Has been strong and.
With co good impacting things were seeing week to week volatility, albeit at elevated levels. So we're confident in the guidance, we provided at 20% to 22% for for Q4.
Yeah, that's really how we're thinking about it.
Great. Thank you.
Our next question coming from the line I'm joking with safety and security Your line is open.
Great. Thanks for taking the question Hasan I wanted to ask maybe bigger picture you are now three quarters in three plus quarters into your your role here is leading the organization and understood. We just talked about the change the salesforce, but maybe from a product side or just Oregon. Overall, you just talk about how some of these changes you made in the past couple call. It nine months or so have have led to this call it back to.
20, plus percent growth in revenue and GSV and then and then also I thought it was interesting to launch the product project catalog.
Maybe talk little bit more about that if he could thank you.
Sure. So I think what we're seeing is really the strategy has coalesced around our position being the leader in and having built a true work marketplace for our customers, which is differentiated in bringing together multiple ways that they can use our platform both clients and freelancers.
To really connect with on the client side connect with a distinct independent professional talent all over the world and build these virtual talent benches that are very enduring very strategic for them and really enable them to work with a independent talent for both small through large projects and I think that the value proposition that's been true for.
Our business for many many years, but this year, we've really been kind of accelerating I think the tempo of some of the work around the product expansion and that is evident with some of the more recent releases, including the project catalog piece, which I think rounds out our offering in terms of giving customers yet another way that they can connect with independent talent.
Get started quickly with small projects that Ben can graduate into longer term and media relationships that were already really good at serving through our platform and so as we've been launching that product in its beta form what we've been hearing from customers is they are excited to have you know get another way that they can use apart.
Would you additional types of work or in the case of freelancers to for them to pack. It up the type of projects that they've been doing for customers in many cases on a repeat basis and now they can.
Build those income streams, even more readily by pre packaging that work and have it be instantly kinda clicking by experience that customers can activate immediately so the product strategy has always been about being a single destination, where clients and freelancers really can't take advantage of the full breadth of ways that up over to Mark.
It plays such as ours can serve them and and pull together that full potential that we unlock for customers and so project catalog really round that out I'd say the the second thing that I think you're seeing from US is just the execution strength over the last 10 months has been a real focus for us and that's been true on the marketing side with a lot of improvements on <unk>.
On acquisition on brand marketing I mean, we've been really building a lot of the momentum there and I think that's coming through in the numbers that you see for Q3 and something that we're going to be continuing to push on a as well as things like partnerships. You know we've been working with Citrix with zoom with others to really be sure that we are putting up are front and center, where our clients are as well as making sure that.
The tools that our clients are using our front and center in their upwork experience, where they need to be and so all of this is about you know continuing to make sure that we are the market leader in our space and are bringing exactly what our customers are looking for a right to them at this moment when I think they're really looking to us for you know all of the needs that they have a in a time when remote work.
And independent town I think is even more top of mind than ever before.
That's great. Thank you.
Our next question coming from the line of blood in common with Stifel. Your line is open.
Hi, Thanks for the question wondering if you could talk about the mix of GST in the quarter by job type.
Maybe with an emphasis on the newly acquired clients wondering if JV has been more in line with the.
Historically disclosed mix is 65% being larger jobs, 20% agency spend 15% on dig work or if that mix has shifted in more recent quarters, particularly this quarter and then the second part of that on on mixes just performance by job type inverted.
Coal, where you're seeing strength.
And where are your how you're thinking about the sustainability.
In some of those verticals, whether its IP marketing or in a web services related et cetera. Thanks.
Sure. Thanks for the question I'll start with that.
Really the strength that we've seen in the quarter has been very broad base, so largely across all categories because the.
And strong growth and acceleration from Q2 into Q3.
A few category.
Of particular note that showed strength in acceleration was web mobile software development sales marketing design and creative.
There were a few that.
<unk> also performed strongly but not as not as strong that included translation and Ikea networking services.
We also saw strength both in a newly acquired clients as well as those clients that we have.
Have acquired in the past so.
Your performance from a retention perspective was up spend.
Spend was up on a per client basis really strong performance across a across the board.
Nothing to call out in terms of a particular area that was stronger or weaker including agency versus non agency. So really the strength was was broad based across virtually every dimension.
Yeah, if I can just add to that Jeff I think if you zoom out and think about what that trend really means for our business.
I think that kind of underscores the fact that that some of it is the secular shift that people just saying Oh. This remote work thing that I thought was so hard and what's holding you back from using a platform like upward for the range of things that approach has always offered customers suddenly that speed bump for them has become you know not an issue.
And so the full range of things that we've offered you know for quite some time, we're seeing that lift across categories across customer types across hourly work in fixed price work across agency work and independent contractor work and so again I think that is a testament to not just the breadth of our platform, but the fact that I think customers are just finding it.
So much more feasible once they've gotten comfortable with working digitally working remotely suddenly you know all of these things become appealing to them. It's not just about a single vertical or a single work model, which is which is exciting I think a great tailwind for the business going forward.
Okay, Thanks, and Jeff and if I can just tack on one more to that.
Weve typically thought of the businesses being more driven from a supply and demand perspective by.
The client side of course.
But just if we could spend a moment on the the freelancers side and.
Obviously been pretty unprecedented supply of freelancers.
Is there a way that you're thinking about this uptick in interest from the freelancer side and has that had any measurable or meaningful.
Benefit to results are to the trends that you're seeing within that.
Some of the products around that that you have.
[noise] created like the expert vetted talent probe.
Program, how has that performed and are you seeing meaningful demand from that from the client side. Thanks.
Sure you know, we're seeing a very high engagement from our freelancers at all levels certainly seen that at peak levels. During the pandemic and a continued to be really strong in Q3.
I'd say this is where we're really trying to lean into their feedback and make sure that they have a full set of tools and opportunities to build their businesses and really make sure that they're getting the full income that they want out of working on upper going elsewhere watching new thing such as project catalog or the offering that we've been building out our direct contracts, which is another way.
So that they can actually build their existing book of business that they may have outside of upward through the upwork global billing platform with escrow with the security that we can provide them a using everything that we have there is another example of how we're really trying to support them through the pandemic and makes that they have all of the business will that they need to build their feelings.
So I'd say, we are things like interest from our customers on things like the expert at a program and they rely on all of the trust signal that we've built up over many years, including that went and other such a top rated and all of the ratings and reviews that are a rich part of the upwork marketplace for sure, but I'd say right.
He just leaning on both the client side and the talent side right now to listen to customers understand where they want new signal or new ways to earn income in the case of our talent in particular and trying to innovate around those kinds of picks up here just building the velocity there on an increasing their experiences with it. They are you know building all of that.
Oh, great income and a power supply on our platform and and that's something we're seeing a lot of success in the past quarter.
Okay. Thanks for the detailed guidance.
Yep.
[noise] and after my lifetime Gentleman, that's question Press Star one.
And our next question coming from the line Oh, My Gosh why would they T. I see your line is open.
Great. Thanks for taking my questions and.
Welcome aboard Jeff I, just wanted to follow up first on project catalog.
No very interesting product I'm, just curious you know from your testing it and the way you are thinking about strategically what should we expect it to be entirely complementary or do you expect any color on kind of place cannibalization or competing with the existing where you're going to market and secondarily on project catalog.
I will start out as sort of a smaller project side kind of in line with what other competitors that have a similar go to market.
<unk>.
Thanks, Marvin we really see this as highly complimentary to the existing business not cannibalistic in that this is something that really add on to the existing wave, but clients in town are already using up work. So in the case, where a customer is already doing an animated video they.
News product catalogs to get you know the voice over work done for that video and even higher velocity way for example.
And on the talent and again.
Thanks, where talent are already doing many of us and will be repeated projects for customers and they can now package those up have their existing clients do that work in a way that we still keep that work on our platform, but also attracting new clients to buy those services from now using this offering which is I think very attractive for new.
Clients to immediately imagine see the outcomes that they're going to get from freelancers through this more pre packaged experience. So our belief is that this is a nice way for new customers to have an entry point into the marketplace that may start small and to your question about the size of the projects I think our belief is that many of these books.
Be smaller than a typical project work, but it's a great gateway for them to get a taste of the platform that an understanding of what an independent sealants or can do for them and then we have all of the robustness of a very mature product offering that has the proven characteristics around building those long term relationships where our.
Talent can help graduate those customers from that smaller project into a longer term relationship an hourly contract, perhaps a larger complex project and that's where I think theres a beautiful synergy between those smaller projects in the catalog offering and a larger complex work and longer project work, which is already such a stable enough.
Mark So I think there is a great benefit to both of those things working really well together and that's the feedback that we've gotten so far from customers. I mean, it's very early days of course, any offering but they really do see how these things can be both an entry point for new customers on since are saying, Hey, I can bring in new business this way as well as add on to it.
Large project.
Smaller you know offerings around the edges that could be additive as well.
Hi.
Great. Thank you for that and then my follow up is just on what you're talking about the cost I think you said your cost per acquisition or.
I'm doing very well.
Or better than historical rates I'm just curious.
How would you characterize sort of the.
The supply environment in terms of pricing or cost per clicks.
April and then secondarily, given sort of the rate at which potentially clients are becoming more valuable.
And do you think you might.
You know increase the amount you're willing to spend on Oh, you know.
Before.
Onboard the clients.
Thinking that their lifetime value is going to be hard. Thanks.
Sure. Thanks for the question.
So in terms of.
Well, what we're seeing or how we're responding to the lifetime value improvements.
And what we're doing from a cost per acquisition perspective, our methodology, obviously could to figure out where we can earn the required return that were looking to achieve so as our lifetime value as we have competence or lifetime values are changing and will persist, we'll adapt our or marketing stride.
Jeeze and cost properties that were willing to spend we clearly saw improvements in the quarter.
On on both the LTV fronts and the cost per acquisition front end.
And our our adjusting we do need to to make sure that we pay attention to the sustainability of those so clearly.
Clearly it's limited data that we have we don't know how long.
These these.
These levels will stay but they're continuing to perform at this level in terms of the the question of.
Are we seeing prices get tighter.
Kind of as we're moving into Q4, we haven't noticed anything material good on that front, so its not impacting.
Impacting our ability to spend whatsoever.
Great. Thanks, very much appreciate it.
Now next question coming from the line of Connie MKM Partners. Your line is open.
Oh, great. Thanks up on a couple of questions on the sales realignment as and I'm wondering whether you can give more color on kind of the enterprise sales people, who are you hoping to have them kind of categorize as like hundreds was as governors or more.
More longer lines of multiply and Doug religion on here. So and then in terms of broken up for a second question would be on 2021 guidance as in impressive led grew 20% revenue growth, but wondering like on the margins so what.
So going to Directionally, what types of incremental investments that you're looking at.
Next year is that correct.
But any more color on those lines.
Sure sure. So I'd say, Oh God I wasn't there the sales team I'd say broadly can characterize it as you know a split of hunters and gatherers, we have a strong land and expand model that that improve includes both.
Identifying and growing customers, who sometimes do start as self service customers inside of our marketplace offering and so we will see a time very large companies that have individual users or department leads that actually sign up in our marketplace account begin using one of our free or low cost offerings and our sales team actually identifies.
Users and then built a relationship and help grow those account into a true enterprise customers that have you know that that's been characteristic that we talked about ramping to that million dollar plus target. We also have teams that are working on maturing companies that don't start out self service on our offering at all but.
Rather work with our sales team directly to say began a pilot project have some initial use cases that they build out you think upwork have those wins inside of a team or department and then those become wonderful proof points inside the organization to go ahead and scale out further across teams.
Maintenance and across the entire company and so it really is a land and expand notion that can start in a couple of different ways, depending on whether the account may have already started organically using up or whether that relationship as develops directly to the sales team, but it really is something that our our account management side of the house does spend time and energy you know building is really.
Second helping expand those accounts overtime and I'll, let Jeff comment them. There are aspects of your question.
Sure. Thanks, so with respect to 2021.
We noted that we're targeting 20% revenue growth. We're excited that were that we were able to achieve the 20 plus percent gold ahead and set out earlier in the year and we said with respect to 2021 that we would do so with an EBITDA margin in the low single digits.
Our top priority right now is to continue investing for growth.
And it's a significant market and there's lots of opportunities to continue doing that will provide more details.
In the next quarterly earnings, but it will be across the board from.
Marketing product project catalog et cetera. So we're excited by the opportunities to deploy more capital against the opportunity and look forward to providing more insights into that next earnings call.
Okay. Thank you guys.
Yes.
Thank you and I'm not showing any further questions at this time.
Ladies and gentlemen that basketball conference for today. Thank you for your participation you may now disconnect.
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