Q1 2022 Upwork Inc Earnings Call
Thank you for standing by and welcome to the upward first quarter 2022 financial results. At this time all participants are in listen only mode. After the presentation. There will be a question and answer session to ask a question during that session you will need to press star one on your telephone.
Be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to Evan Barbosa, Vice President of Investor Relations. The floor is yours.
Thank you welcome to upwards discussion of its first quarter 2022 financial results.
The discussion today are Hayden Brown upward, President and Chief Executive Officer, and Jeff Mccall upwards, Chief Financial Officer. Following management's prepared remarks, we will be happy to take your questions, but 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 our current and future impacts of Russia's invasion of Ukraine, and our decision to suspend business.
Operations in Russia, and Belarus, and the Covid.
The COVID-19 pandemic on our business and current and future impact of actions. We have taken in response to Russia's invasion of Ukraine, and the COVID-19 pandemic are forward looking statements related to matters that are beyond our control and changing rapidly.
For a discussion of the material risks and other important factors that could affect our actual results. Please refer to the SEC filings available on the SEC website and on our Investor Relations website as well as the risks and other important factors discussed in today's shareholder letter.
Additional information will be set forth in our quarterly report on Form 10-Q for the quarter ended March 31, 2022 wind farm.
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 shareholder letter that was issued this afternoon on our Investor Relations website at investors start up work Dot com as always.
Unless otherwise noted reported figures are rounded and comparisons of the first quarter of 2022 are to the first quarter of 2021. All measures are GAAP unless cited as non-GAAP now I'll turn the call over to him.
Thanks, Evan and thank you all for joining us today for our first quarter 2022 earnings call.
First quarter represented no shortage of global uncertainty and conflict and also demonstrated the strength of our parts business as we continue to execute on our strategy to innovate evangelize scale the worlds work marketplace in.
In the first quarter of 2022, TSB grew 27% year over year to over $1 billion and revenue increased 24% year over year to 141 3 million. This.
This is the first time, our quarterly GSP 1 billion, marking an important landmark in our growth.
We continue to build recognition of upbringing offering. We're also thrilled to be recognized on the time 100, most influential company.
Our continued momentum with marked by milestone spanning product marketing and sales our product innovation and scaling continued with the launch of project catalog of consultation the rollout of the proposal and availability badges to all talent and the announcement of the simplification of our pricing and packaging for.
Non enterprise clients.
We also launched improvements in contract messaging between clients and talent furthering their ability to build long lasting relationships on our marketplace.
On the marketing side, we continue to be laser focused on raising awareness of I've worked with customers and prospects.
We are encouraged by early signals, we are seeing from our brand marketing investments.
This includes a 20% increase in overall website traffic and 24% increase in client registration from the level in the third quarter of 2021 prior to our brand marketing investments briefing.
On the sales we delivered another strong quarter with new enterprise client deal up 33% year over year and enterprise revenue growing 57% year over year.
We operate a global business and more than 180 countries and the Russian invasion of Ukraine on February 24th impacted our team our customers and our business.
Ultimately, 10% of our 2021 revenue stemmed from work for either the talent. Our client was located in Ukraine, Russia, Belarus, and approximately 10% of our own team members were located in these three countries.
While this quarter has put us to the test. This test has highlighted three truths about effort.
First that our team and customer relationships are strengthened by our shared purpose and values.
Second that our business is robust and resilient.
Third at the upfront business has attributes that are increasingly relevant and distinctive in our evolving world.
The first truth from this crisis has been the power of our shared purpose and values and aligning our internal team and our global community, we moved thoughtfully decisively and making the decision to suspend operations in Russia, and Belarus. It was clear from our values and an operational perspective that this was the right choice for FERC.
And our global customer base.
We operate a people centric business with trust based relationships at its core. So we took extreme care with every step of the decision to suspend new business initiation with customers in Russia, and Belarus, beginning on March seven.
All active contracts between talent and clients and new countries on <unk> or.
Our implementation of these changes and related efforts has been undertaken to strengthen our team and our customer relationships.
Liver on our brand promise and reinforce our community ties even during a difficult time.
To support how long in Ukraine, we reoriented, our product roadmap to quickly launch features to support and protect their livelihoods, including away to donate directly to talent Tia project catalog with no talent fees, no intermediaries and no expectations for the work to be completed waiving any potential negative.
Impact on pounds job success scores with also important so they can preserve their hardware upfront reputations, even if they are currently unable to work.
We provide a faster access to funds to expedited payment and launched a feature for freelancers to easily and quickly let clients know about their safety and work status.
Our park has a long legacy in Ukraine with deep roots going back to the founding days of our company.
Thousands of talent clients and our own team members, who call Ukraine home.
To ensure we are honoring that history and supporting our people, we donated $1 million to direct relief international and establish a $100000 matching program for donations from our own team to provide humanitarian support to the Ukrainian population.
The second truth highlighted by the crisis has been the resilience of the talent on upward.
And our work marketplace model in the face of disruption.
We have seen relatively muted impact from the crisis on our business in the first quarter estimating that revenue lost directly attributed to the warrant was approximately $1 million.
We have all been in awe of the resilience of the Ukrainian people over the past two months.
And we have seen a microcosm of this resilience on the upward platform.
Even as offices may be shuttered and people forced to move from place to place. The fact that talent can take their upward work with them anywhere is never more valuable than right now.
Cranium professionals are logging on to our park to work and support their families at the highest levels we have seen.
Registration in Ukraine reached record numbers and the number of Ukraine based talent, earning for the first time on a park jumped to more than two times pre invasion levels.
Additionally, the unique scale and heterogeneity of our platform offers its own type of resilience from disruption and.
An ecosystem containing over 90 category work and over 10000 skills.
Globally distributed talent pool, engaging and over 3 million jobs annually are each a testament to the strength of the marketplace.
Pleased with the business continuity, we have been able to deliver through this crisis for talent and clients alike.
Our metrics across the business remains strong for example, we've seen no noticeable impact to our jobs fill rates since the start of the crisis.
The third true emerging from the crisis has been the increased relevance of competitive advantages of our business around trust.
Ft in security, which had been made even more relevant as the world changes.
Business priorities evolve.
This difficult heartbreaking warm.
Has crystallized our clients' need for a partner and trusted advisor with a shared set of values that can fulfill their remote talent needs through a diversified highly scaled global talent pool able to withstand volatility.
Dynamic world.
We've heard from customers. During this crisis that they trust upward as a destination for high quality remote knowledge workers and an increasingly low trust fragmented global economy.
They require peace of mind, knowing upper offer solutions safeguards and talent they can trust.
They rely on us for comprehensive solutions that enhance their own flexibility stability business continuity and resiliency.
This is a unique attribute of our market category leadership, and which we will continue to invest.
Organizations demand for a solution that powers their talent access growth digital transformation cost savings and agility has not abated, whether clients want to hire in their country globally in a specific time zone near or far they need.
Need powerful secure digital platform that matches and delivers talent. They can trust with the exact skills to get the job done.
Meanwhile, talent across the globe continue to demand the freedom and flexibility to work on their terms and in ways that can fill their needs from small to large projects and from freelance to full time work along with assurances that they will get expediently paid for the great work they deliver.
In sum this quarter has illuminated and reinforced a number of upwards longstanding strength and most formidable attributes including established trust.
People centric mentality in action.
Possible stewardship for small and large customers alike.
Bedfast decision, making and unparalleled resilience.
These strengths propelled customers to spend $1 billion in GSV on upward in the first quarter of this year.
We will also continue to serve as anchors of our offering and promise to customers.
They will uniquely equipped to successfully innovate evangelize and scale the worlds work marketplace.
<unk> underpin our ability to deliver profitable growth.
It will permeate our leadership in the global movement to re imagine work.
Thank you for joining us on this journey.
I'll now open the call to your questions.
Thank you and as a reminder to ask a question simply press star one on your telephone to withdraw your question press the pound or hash key.
Your first question comes from Eric Sheridan with Goldman Sachs. Please go ahead.
Thank you so much for taking the question maybe two if I can last quarter, we talked a lot about investments you wanted to make against our long term opportunity set you see.
Can we revisit that and understood better what youre seeing in terms of the marketing and brand investments youre, making in the business today and how we should be thinking about the yield over the return on those investments over the long run and similar with respect to continue with the ramp the sales portion of the productivity you look at it from a sales force in the years ahead. Thanks, so much.
Sure. We believe that the time continues to be right now to really lean into the opportunity we have in the ecosystem.
As we look out across our client and talent opportunity. When we know that we still have the single digit unaided brand awareness and yet customers are finding more and more value on our platform every day, we see that with the increasing in GSV per client, we see that in our enterprise sales team continuing to actually exceeded our goal.
<unk> in terms of number of new accounts landed a quarter and per year.
So we know that the demand is there and we know that we're getting really get better everyday actually at serving that demand with our marketplace.
And yet the vast majority of customers still don't know about us we've seen some really nice promising signs I mentioned, the 20% increase in client traffic, 24% increase in registrations from clients relative to Q3 of last year before we started the brand investment. So we think that the opportunity is both there and it is now.
Now in this critical time around the war for talent and we're seeing results in terms of the numbers starting to peek through although it is definitely early days and we know that some of these investments around brand for example will take multiple quarters to fully see and measure the ROI around Jeff might want to provide a little bit more on some of the when we're thinking about the government's framework.
On that investment.
Sure I'd add on the sales front.
Were also executing well against our hiring plans as we indicated before we.
Expect to double the size of the account exec by end of 2022, we're well on track to do that.
And on the brand front, we're going to take the same approach that we have with other areas of investment that we're looking to make sure that we deliver an IRR comfortably above our whack.
And obviously brand has its own unique challenges that.
Cause the ability to do that to be a little bit more elongated.
But we're bringing that same mindset that we want to make sure we drive unaided brand awareness and that converts to real business outcomes.
And monitoring the early signals that we can so that we can pivot and optimize as quickly as we can but we also need to bring patients to the to the investment opportunity.
Thanks Sarah.
Thank you.
Thank you. Your next question comes from Bernie Mcternan with <unk> <unk> Company. Please go ahead.
Thank you for taking the questions maybe just to start on guidance I was just wondering if you could maybe talk through the moving pieces of providing the revenue guidance for the year, but not the EBITDA guidance for what we should be thinking about in terms of.
Range of possible outcomes when it comes to cost.
Sure so with respect to our annual revenue guidance.
First off.
The rest of the business outside the impacted region continues to perform well so the change from our previous guidance to our new guidance is purely a reflection of the impact of the war in Ukraine.
Two key dynamics, so we look at that kind of.
We will influence where we where we net out one is the level of substitution that we see of contracts that were in place with talent in the region.
And if there for Russia and Belarus.
To the extent those freelancers don't move outside the region, what happens with the client activity in the future and we don't yet have data we will get better data. Once the may 1st termination date occurs that may take months or quarters to really get a good sense for how clients will respond but thats. The first big variable. The second is what happened.
With respect to Ukraine, obviously, it's a volatile dynamic.
We have limited visibility into that but once we have substitution data from Russia, and Belarus will be able to hone in hopefully on the potential range of outcomes for Ukraine, and narrow our our revenue guidance in the future with respect to EBITDA. We just we just thought it was too early to provide an update on our guidance.
There will continue to monitor our investments as we get better.
Better sense for the substitution dynamic and are able to narrowed the revenue outcome.
We'll likely update the EBITDA reinstate the EBITDA guidance at that point in time, but once again, we're committed to achieving a long term EBITDA target of 30% to 35% and we will have good discipline on our investments in the interim.
Thanks Brendan.
And then just a follow up some encouraging commentary on the new client acquisition exceeding record levels in the first quarter.
I was just hoping you could dive into what's driving this whether it's project catalog the macro the brand marketing coming through and then on the other side of it.
Net adds were at record levels, So what youre seeing on the churn front and if charge maybe peak in the first half of the year and get better in the second half of the year is that the right way to think about it. Thank you.
Sure I'll start.
So with respect to the record acquisition I think it is a combination of.
The various things you mentioned, so both performance marketing performing well brand marketing kicking off.
Catalog, representing a larger portion of new acquisitions than.
And a year ago or whatnot.
And.
So we're very pleased to see that we achieved a record number.
The deceleration in the year over year growth rates of <unk>.
Active clients is a bit of a tricky.
Ricky one.
Primarily because that's a trailing 12 month metric and so that deceleration is largely driven by the strength in the acquisition that we had a year ago essentially you have a larger portion of the denominator that is from newly acquired clients.
And the churn rate of newly acquired clients is always higher than it is for tenured accounts. So because it represented a larger mix a year ago and in that denominator.
The acquisition strength that we saw a year ago is creating a headwind in our overall growth rates now.
The good news is that the churn levels for those different cohorts.
Our absolutely operating within normal historical ranges and it's just a function of that kind of mix shift.
Thank you very much understood. Thanks, Jeff.
Thank you. Your next question comes from Maria <unk> with Canaccord. Please go ahead.
Great. Thanks, so much for taking my questions first maybe just to follow up on your guidance sort of understanding that it's still too early to know the level of substitution for contracts in Russia, and Ukraine and I. Appreciate all the color there, but could you maybe talk to us about sort of what kind of assumptions around the impact broadly embedded in your Q2 and full year.
Outlook.
Sure. So at a high level, we really looked at a range of potential outcomes. Both for the substitution that we could see in Russia and Belarus.
And then what might happen in Ukraine.
And those went into a variety of those scenarios ran to informing both what we might see on each of those.
As we mentioned, we're really pleased that while after we saw a drop in business activity in Ukraine at the start of the war it bounced back to 90% of pre invasion levels.
Really hard to predict exactly where that goes from here.
So we just looked at a variety of assumptions to inform both that and the substitution and the other point I want to Echo again is.
We while we have very limited data right now in the substitution front, we think that we will begin getting more as soon as the contracts terminate on may 1st.
But it may take those months and quarters, depending upon how clients respond.
Part of the platform is that clients have great relationships with these for your answers.
And they're not quick to move to new ones necessarily they have vested interest in those relationships and so just like just like we saw with our existing freelancers on the platform.
So we don't know how long it will take but we imagine that will be in a much better position on next quarters call to provide more context on that.
Got it that's very helpful. And then maybe can you talk about your <unk> business outside of the region.
For the other 75% of that business have you seen the engagement per freelance increasing did those freelancers have the capacity to take on more projects and sort of how do you. How are you thinking about your ability to attract more talent across web and mobile.
Other regions.
Surely I can jump in on that one.
Seen a lot of strength in that Bellevue MST category I think the fact that our fill rates didn't move down at all even though a substantial portion of talent all of the top from Russian borrowings became essentially invisible. After we made the shift earlier in the quarter I think that really speaks to the fact that.
Talent from all over the World are very active in that category Oliver Europe Asia.
Et cetera, so we've seen our clients equally successful in continuing to hire.
At the same rate in that category find the quality of talent in that category that they were looking at before the conflict. Even today. So that's I think a microcosm there and then stepping back and looking at talent.
Talent globally.
Our business has always been driven by word of mouth on the pump side, we don't do any direct marketing to talent and yet we still have essentially a surplus of talent relative to client demand on the platform because I think.
More and more we see the secular trend where people want to be working flexibly, they want control over their careers entrepreneurship.
High interest.
And our platform offers a great solution for them to rebuild those businesses. So our focus is how do we.
<unk> really build that momentum with more client awareness and close that gap on the awareness side through brand marketing and other investments.
Bring more of that demand to the talent, we have on the platform because that's really where the constraint is in the business. We don't we're not really constrained on the talent side, even today, even having gone through that conflict thus far.
Got it that's very helpful. Thank you both.
Thank you. Your next question comes from Marvin Fong with <unk>. Please go ahead.
Great. Good evening, Thanks for taking my question.
<unk>.
Excuse me my first one.
Again, just on guidance because I think investors are obviously keenly focused on that so.
Could you just kind of.
Discuss further it sounds like Youre adjustment to guidance is entirely due to Ukraine in that region. As you said, so basically our youth.
How confident are you that the.
The rest of the.
Rest of the world.
Business activity will stay a firm given all the stresses in and.
And monetary tightening all of that sounds like a lot of.
A lot of investors are just broadly concerned about the impact of that what's sort of your view.
Relative to your guidance about why you feel confident that thats going to hold in there and then I have a follow up.
Sure. So we haven't yet seen any dynamics.
Play out on the rest of the business, we've been closely monitoring the region.
The periphery of the war zone.
And nothing notable.
Comment on in terms of clear.
Impacts to that region, but we'll continue to pay attention to that because obviously it does represent a risk and the issues that you flagged are also potential risks to the business now we have seen in the past that our business often does well when there's kind of disruption in the economy, whether it is an acceleration of the economy or.
Deceleration of the economy, our value prop resonates with clients and freelancers to help them either expand more quickly or have a more flexible workforce to be able to deal with.
Contraction.
Now clearly as things play out we'll continue to update guidance, but we're not seeing any.
Any dynamics right now that that caused us to change our forecast for the rest of the business.
Great that's great to hear you Jeff.
Follow up on what you were saying about.
Or would you run the shareholder letter about project catalog, 47% of clients.
We made a repeat purchase and.
All of those.
Only 2%.
The total marketplace, 50%, but another kind of like project did either of those any of those metrics surprised you or were those in line with your expectations.
How should we think about that thank you.
Thanks, Marvin I think these are just bigger.
What metrics do you necessarily been forecasting even internally are driving towards but rather represent outputs were really happy to see that validate our overall hypothesis of why a single work marketplace, where customers can come and get work done in a variety of ways to protect catalog through talent Scout drive marketplace, graduating up to our enterprise offerings.
What we're really seeing with those metrics as customers find that success in this case through one of the newer products that we've launched a new entry point for them and then continuing to be very successful in both.
Usage adoption of other ways of working et cetera, which we believe when we launched the strategy.
<unk> 18, plus months ago, we believe that this would drive that type of unlock for customers and it's still early but we are starting to see that with the behavior that we shared and we'll continue building out that single work marketplace, where we can serve very heterogeneous needs that customers have across the differently, Amy just transact and buy services.
Inform these different relationships.
That's great. Thank you I appreciate it.
Thank you. Your next question comes from Matt Farrell with Piper Sandler. Please go ahead.
Thanks, Congratulations on the extremely strong execution in the quarter as you navigated all the moving pieces.
Enterprise side, another impressive set of logos. This quarter what are some of the common themes that you are seeing on why more and more enterprise clients are adopting up work and do you think the current macro and geopolitical environment, It's a potential tailwind for enterprise adoption moving forward.
Thanks, Matt Yeah, I'd say the commentary in terms of what we're seeing on <unk> is the broader secular trend in favor of more flexible work models.
Talent war that companies are really struggling with in terms of running into that ends with their existing legacy ways of sourcing talent operating with talent that are full time employee model.
Models et cetera.
Just wanted to see personal many of our customers and they are waking up to the fact that both to find the workers they need today and to modernize their capabilities to really keep up with where the industry is they need a solution like ours in their toolkit and so that has really been as meeting and our team has been evolving their playbook in terms of landing those accounts.
And it really sophisticated way so that's been great to see on the one hand to your question about the macro environment.
I don't think that a lot of our enterprise customers.
We're telegraphing to us that the war in Ukraine is really strict changing any of those strategies, specifically I think but the overlay is is they really need a trusted partner their forefront.
Forefront in their mind is safety security reliability, having a partner for these important strategies that they know can create that business continuity with and for them and so I think thats, where our leading position in the market.
We see that we have at every layer of our SaaS around vetting talent around having worked protections in guarantees for all parties like Theres just so much that's embedded in our model the trucking safety approach that we have.
All of that comes into play when customers are still needing to pursue these growth strategies and find talent, but are recognizing that the ecosystem in the world is maybe more fraud and more challenging today than it was in the past so I think thats where.
Both bringing to the forefront of our messaging and our solution has been relevant in terms of our shining light on that when it's relevant for our customers.
Thanks, and maybe a follow up for Jeff.
On the EBITDA line.
<unk> that there was.
The shareholder letter that there was a push out in some brand spending was that driven by the crisis itself or was there another dynamic going on that caused some push outs and as we think longer term.
Could you remind us just some of the major drivers.
Push at the EBITDA line from current levels to your long term target over the next couple of years. Thanks.
Thanks, Matt.
Sure. So we mentioned that.
$6 million of brand spend was pushed from Q1 to outer periods.
And so it wasn't it wasn't related to the war was really we hired our new CMO almost waters in early Q1, we had a plan in place before then she is coming in and putting her fingerprints on that plan.
And just moving dollars around in activities around in line with that overall $80 million investment for this year.
In terms of the the long term EBITDA margin target and the key levers to get there.
So they're really across the board so.
From a.
Cost of revenue perspective, we believe that we'll be able to continue drive improvements across a number of fronts, whether thats payments.
<unk> customer support what now we should be able to get leverage in a number of those key areas over the long run.
With the payment with the pricing change that we made this time, we will start to make some progress against that we believe depending upon what clients choose whether or not theyre going to choose.
<unk> or credit card.
Within G&A will continue to bring down that as a percentage of overall revenue on a non-GAAP basis I think it's 13, 14% right now we believe we can get that down to 8% to 10% over the long run just by driving greater efficiencies.
In sales and marketing.
I think right now maybe we're at 48% we continue to believe Theres really attractive opportunities to invest there and we want to do that for as long as we possibly can.
And once once we've kind of.
Not exhausted, but overtime as we.
As we lean into that.
The revenue will accrete to those investments and we'll be able to bring down the overall investment level to closer to 25% level, and then product and mark product in development.
We're the leader right now, we're able to invest more than others and building out the work marketplace, which provides us a great.
A great platform to be able to provide more value to clients and presenters we want to continue to be able to do that but.
But over time, we will be able to.
Gain efficiencies there as the revenue grows.
Good question Matt.
Your next question comes from Andrew Boone with JMP Securities.
Hi, good afternoon. Thanks for taking my questions I've got two on product. So the first just with booster proposals going GAA and understood where just a couple of months in here, but can you talk about the early adoption that you're seeing from freelancers and how they are using the product and just what's the expectation as that relates to the model and then secondly.
The new marketplace pricing plan.
What are the what does the new futures unlock for buyers how do we think about the financial impact as you guys move to the plan.
And just talk about the strategic change of why you guys made that decision. Thanks, so much.
Sure on the southern piece of proposal.
How much has been really excited about this feature because it clearly driving higher win rates for those that end up winning.
Those options and getting to the top of that.
No.
In our applicant tracking system. So the reception has been really positive.
I think awareness is frankly still building amongst.
The whole town population now that we are rolling that out so.
It's still it's still early and we'll be right on that product, but definitely seeing really great signs in terms of the results and the feedback from talent so far.
On the side.
Our pricing structure.
It was really research with our customers that revealed many of them with value and benefit from the futures that happened behind that paywall at the client but plan.
And <unk>.
Some of the examples of that are number one access to premium talent, which is not.
As evident in the EBITDA without that premium plan.
Advance the answer search is another capability that was in the plan in the past.
The ability to invite 30 freelancers to your job posts.
It was another one and then there were a bunch of features kind of related to scaling your usage of fr. Both their upper teen and with your team members and their company so things around reporting options, having coworker teammates and permissions that are much more sophisticated in your account setup.
Activity codes for organizing work and then trying to reports related to that so this was a whole package of features that essentially really help clients at various points in the journey and adopting up work and scaling up work in understanding the full benefits in the ways that they can really makes us a core part of their talent and work strategy and what we saw was.
Clients were not necessarily ready to jump in and pay the upfront subscription to get access to those features but instead one of those features and basically to pay as you go through the take rate and as they adopt and worked with talent on the take rate items at the client fees that they themselves are paying so.
With that shift we are better able to get more of these critical premium features that drive adoption usage and scaling for the clients at the same time as if monetizing it differently through more of the fee structure on the back end rather than upfront with a data around the <unk> prescription.
And a few additional comments.
Benefits from the pricing model were reflected in our both our previous guidance.
We've been working on this for a couple of quarters.
Obviously as reflected in our current guidance.
And at least qualitatively, we expect that it will increase take rate as we've alluded to in the past, it's one of the contributors to that overtime.
And then should also increase gross margin.
As.
It should be a driver of the higher gross margin.
Because of the.
Some clients will be choosy and Bac each option.
Which will bring down payment costs there.
And other clients will be choosing the 5% plan, which will increase margin as well.
Thank you.
Thank you. Your next question comes from Rohit Kulkarni with MK and partners. Please go ahead.
Hey, Thanks, additional take rate and new pricing plan.
To the X 10, you can see.
So the most recent trend in the marketplace take rate so key things into one so marketplace take rate sequentially increased that's encouraging any specific carloads and.
And how sustainable that is and then on the pricing plan, how should we think about the trend line.
The take rate.
What is the direct impact on the change in pricing in the grid and the mix of <unk>.
When you put client that you anticipate.
Sure so.
And take rates in the marketplace take rate you saw a quarter over quarter.
Increase but relatively flat over the last couple of quarters.
The dynamic of that we've had that's been driving the take rate decline over the last nine five this quarter. So has it really been a very positive signal clients spending more with existing freelancers that theyre working with that appears in our client spend.
Per active clients metric.
And as a result of that the agent to the lower price points on the on our pricing tier.
But that trend, we expect will likely continue.
We do think that the upward pressure on take rate will come from.
Growth of enterprise growth of talent Scout growth project catalog as well as this pricing change.
We're not breaking out the exact impact that we're that we're forecasting from the from the pricing change.
And part of it.
It will.
We need to get data to figure out how much what are clients choosing to do so clients that were on the plus plan or the basic plan are they choosing to pair the acs or not.
Impact the numbers a bit but our assumptions on all of that are baked into.
The guidance that we had as well as the previous guidance from before.
Okay.
Was there another question around it.
I guess on guidance.
Again on kind.
Obviously, youre reinstating the guidance or maybe just double click on what you have seen in the last six weeks that gives you more confidence of the visibility into the year and then.
On the guidance.
The reduction is definitely less than 10% so.
The exposure that you have Dr.
<unk> talked about in Ukraine, and Russia.
As has been around that so perhaps.
<unk> any substitution already or does that imply strength in the rest of the business that youre actually raising guidance for the rest of the business and in some way. So anything you can move on.
Yes.
Excellent.
The forecast for the rest of the business largely remains the same versus our prior guidance that had been pulled really the vast preponderance of the impact.
The reduction from our prior annual guidance is due to the impact of the war in Crane.
And what we've seen over the last since the war broke out as activity in Ukraine has been able to continue surprisingly to remain at very high levels and a testament to the to bolt.
The folks in that country as well as the platform's ability to meet their needs and supporting their families.
And so thats been operating about 90% the level that it was before the invasion started now it's hard to know where that will go.
And so are our guidance assumes a range of outcomes in terms of potential impact to that level.
And on the substitution front with respect to Russia, and Belarus, Our guidance also assumes a range of substitution.
And as I said before we don't have great data at this point in time.
Just because the contracts certainly some contracts have ended and some of those some of those clients have moved to a new client to new freelancers, but the majority of them will terminate on May one and we will start to get data in may as to what is the activity that we're seeing from them and then we'll be able to do.
Hopefully after a few months, maybe a couple of quarters, we'll be able to have much better perspective on how that will play out.
Alright.
Thanks, Joe.
Your last question comes from Brent Thill with Jefferies. Please go ahead.
Thanks, Hayden many investors are taking into their forecast a weakening global macro environment and many ask us how upward.
Sustain any any downturn, if you could remind us all in the last downturn how how.
What kind of behavior you saw.
From that side.
Sure, Brian I think the macro environment certainly.
Unclear, what's going to happen exactly by if we look at data points, such as how our business performed in 2008.
That was a really strong period for us and I think that really was evidence of.
The flexibility that our platform offers on both sides I would say, where we are at this moment in the flexibility around working opportunities for talent is so much more relevant and sought after coveted by talent today than ever before and that if people are laid off if theyre looking for different opportunities.
Outbound concern would be a great source of opportunity for people, regardless of the conditions that may come up on the client side.
Our clients are always looking for a variety of things theyre looking for access to skilled talent, they're looking for flexibility in our business model that they can really build in a long term way cost savings and efficiency in terms of how they deploy those resources and how quickly they can send them up and down and again in a tighter economy.
Of more uncertainty we've seen in the past and we would anticipate that those value proposition again become extremely relevant.
They are already but again, just shine a light even more on why those are so critical and valuable for customers going through.
Tougher time, so based on those things based on the performance you saw through the pandemic, which also had echoes of.
Similar time of uncertainty and customers flocking to solutions that give them more options and more flexibility through times of uncertainty.
Feel good that the business is positioned well with fundamental attributes.
That really serve customers through any economic condition.
That's great and just a quick follow up on on the product roadmap.
How are you keeping the engineering.
Roadmaps on track given 30 staff is in those affected regions, what what's the secret sauce here.
Yeah first of all I'm, just so proud of how our team has executed operated through the last eight plus weeks.
Starting with before the complex late last year and early into Q1 preparing for a potential outcome such as what we thought we were hoping that wouldn't happen is that email to customers in January thing.
Here to help me get ready anyway as the team has just done a phenomenal job and as that comes to our internal operations.
We've done a couple of things one is we've been really successful in relocating large number 75% or so of our Russian and Belarusian tons out of Russia, and Belarus, and the bank and continue working with us without any disruption and that is a huge testament to their commitment to FERC and the success that our teams have had in looking at.
Very short timeframe.
Early as it pertains to our.
Talent base in Ukraine, and our many team members there.
<unk> have done an incredible job.
Really wanted to refocus on work. This is somewhat of an outlet for them in a trying time or they can kind of have something that feels more normal and they've been engaging at basically the same levels now are back to the operational capacity with are you seeing in talent basically that we were at before the conflict.
Really incredible but at the same time we.
Doing a lot to make sure that we are bolstered in the event of further disruptions or changes in the environment that includes number one you might have been surprised using our own platform to source talent as needed.
Serve a variety of needs and also have.
Extra staff available in the event that other team members are impacted by the conflict in that being offline for periods of time or other types of effects. So with all of that together I think what I've seen is our team incredibly capable of managing unprecedented disruption delivering new customer value and features throughout the entire timeframe.
And coming out stronger, which makes me so excited about what we're going to do for the rest of the year.
Thanks, Ed.
Thank you and with that we end Q&A and I pass the call back to Evan Barbosa for his final remarks.
On behalf of the entire <unk>. Thank you for joining us today and thank you for your interest in network. If you will.
I need any clarification or have any follow up questions. Please do not hesitate to reach out at <unk>.
Bester upward dot Com this concludes our call.
Thank you for joining you may now disconnect.
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Sure.
Yes.
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