Q1 2022 Fiverr International Ltd Earnings Call
[music].
Hello, everyone and welcome to the <unk> first quarter fiscal Chief often 20 <unk> earnings Conference call My.
My name is Victoria, and I'll be coordinating a cool today, if you'd like to ask a question. During the presentation you might be site by pressing star one on your telephone keypad. If you wish to withdraw your question. Please press star two if you have joined US online. Please press the Red flag icon wants the banks to ask a question. Please ensure that your line is on mute you likely.
I'll now proceed with the highest genco John to begin. Please go ahead.
Thank you operator, and good morning, everyone. Thank you for joining us on fibers earnings conference call for the first quarter ended March 31 2022.
Joining me on the call today are MEO, Kaufman, founder and CEO and offer cost President and CFO .
Before we start I'd like to remind you that during this call. We may make forward looking statements and that these statements are based on current expectations and assumptions as of today.
<unk> assumes no obligation to update or revise them.
A discussion of some of the important risk factors that could cause actual results to differ materially from any forward looking statements can be found under the risk factors section in fibers. Most recent form 20-F, and other filings with the SEC.
During this call, we'll be referring to some non-GAAP financial measure.
A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measure are provided in the earnings release, we issued today and all shareholder letter each of which is available on our website at investors, though fibers dot com.
And now I'll turn the call over to me.
Thanks, Tien tsin.
Good morning, everyone and thanks for joining us today.
The first quarter of 2022 was solid with 27% revenue growth year over year.
There was also the first time in any Q1 that we achieved adjusted EBITDA profitability a quarter when we typically frontload marketing investment.
The quarter started with strong momentum in January and February .
In March the macro landscape shifted in our merchant base is currently seeing the impact.
With higher inflation recovering travel demand and more in person activities spending patterns are shifting for consumers and therefore business spending.
We started to see this shift on our market base in March Hey, Todd has continued into the second quarter.
We are not sure the duration of the shift or the magnitude and are adjusting our guidance range to reflect the uncertainty.
Ofer will walk you through that in a moment.
We're making progress on our goals for the year and continue to invest in fiber business.
While the small business or consumer driven part of our business is feeling the impact of the macro shift fiber business is gaining momentum.
Growth is robust with over 50% growth in accounts year over year, an even higher increase in order value year over year.
Not only are we seeing strong growth in account, but we are also seeing increasing wallet share Paragon is a business account freelancers to their workflows.
Find more category to meet their needs.
We believe the tight labor market provides us with a tremendous opportunity to help businesses leverage their current employees and augment their teams skill sets.
We're focusing our investment in fiber business, because we believe the opportunity ahead I've never been more clear.
Over the last two quarters, we have.
Vetted tens of thousands of quality sellers on the marketplace in order to provide fiber business customers with the top 1% of talent.
We have redesigned the fiber business listing page to focus on eight freelancers instead of a 48 offerings to streamline and humanize the buyer's decision making process.
And this has led to a meaningful increase in conversion, especially for more expensive service offering.
Business buyers want to know and trust, who they are working with and we are now highlighting the freelance along with your offering.
We have added features such as a saved freelancer list that organizations can share between team.
This allows easy reference for repeat buying.
We are starting to re direct marketing investments to target fiber business.
We have added customer success managers to facilitate business account onboarding and provide high touch support if needed on the market base.
The needs of small and medium businesses are more sophisticated than individual offerings, and we are listening to our customers and creating a market base that works for their need for more complex project for more departments throughout the organization.
Fibers market journey is just beginning.
Businesses, we utilize fiber business can gain an advantage over their competitors.
They are able to grow faster by leveraging their employees for essential roles, while outsourcing many talk for freelancers on fiber.
Monitors do not have to go through the process of hiring which is becoming increasingly difficult in today's labor market.
Companies will be able to scale up and down based on their workload without any head count friction.
Margins will better growth faster.
Teams that know how to leverage the fiber market based on pool will have more creative project.
Becoming embedded in our business human capital infrastructure is not a quick task, but does work willing to be on the leading edge of human capital procurement should enjoy a first mover advantage over their competitors.
It is our mission to enable that.
The way human capital its record.
It's early innings, and we are leading the way.
One example is an interior designer team in Germany, we use a three D rendering services on fiber to increase productivity.
Once the design is sketched it's passed onto a freelancer on fiber will turn a floorplan and product listing into a three D visualization of a fully furnished room.
It is all done with a few clicks to order a 100 dollar budget.
And the customer gets a delivery in three days.
Not only does utilizing fiber provides the designer with unmatched speed and value, but more importantly, it allows the designer to spend more time with clients.
This customer is in.
Bedded 40 different fiber for your answers into there are three D workflow and they are constantly placing orders.
Another example is a north American event planner that lost most of their work when Covid lockdowns occurred in a reduced their workforce.
As they're rebuilding it does become problematic to recruit and retain employees.
So the company's human capital strategy is to embed fiber freelancers into their project team.
They have 155 are freelancers that they currently work with across numerous categories.
As each product requires different skill sets the breath of supply on fiber provides them with an unparalleled flexibility.
We believe the use cases are nearly infinite for embedding fibers freelancers into businesses Emperor.
Employees, who know how to utilize the fiber market base will have a major productivity tool that allows employers to leverage their internal workforce many times over.
The contract that are available to businesses on fiber are being expanded to make usage seamless for larger and longer projects.
Milestone payments were recently introduced to facilitate larger projects by enabling progress payments.
Subscriptions are quickly being adopted as both buyers and freelancers find recurring relationships beneficial.
The new five year business landing page encourages business buyers to contact sellers for more complex projects to ensure the scope of the project matches, both parties' expectations.
These efforts will meaningfully expand the ticket size on our market base.
We've done this type of expansion before.
I started the company everything on Fiverr was $5, then we lifted the price cop, so sellers can price their services anywhere.
Then in 2016, we introduced packages.
Allows sellers to offer tiered pricing bundle.
In both cases, our market base experienced a step function leap in the product size and ticket size.
We know this playbook very well and we are running it again now.
We're also investing towards our vision of a talent cloud a holistic solution that utilizes talent as a service.
Our market base today is already serving as a talent cloud solution for small businesses. We know many of our smaller customers leveraged fiber to do everything from product to marketing to operations.
But larger organizations with more sophisticated deliverables require a more comprehensive holistic solution.
Imagine as a marketing manager some days you need someone to help you do a simple video editing.
Other days you need a full fledged television commercial production then there are times you are looking for someone to help you manage content on your social media channel.
With tenants out you don't even need to think about how to allocate and distribute the workflows, but rather just turn to fiber in our system will assemble the team.
Distribute the workflows and take the project to the finish line.
This is the talent as a service we are envisioning leather.
Net art technology do the optimization and customers can focus on growing their businesses.
This is an ambitious vision.
And there was a significant amount of work to do to accomplish our vision.
No one has ever done anything like this.
I think the technology. We are building here is not only cutting edge.
It is also going to provide a sustainable competitive advantage for us and the businesses who embrace it.
We're also unlocking additional addressable market by creating disruptive solutions and significantly increasing freelancer adoption across businesses of all sizes.
We believe these investments will meaningfully drive our future growth and ultimately increase long term shareholder value.
I'm Super proud of everyone on our team was executing towards our vision there.
Their talent and dedication is inspirational.
Our hearts are with our colleagues in Ukraine and their compatriots.
I'm also grateful for our community or businesses, and freelancers, who trust us and help us build the future of work together.
With that let me turn the call over to Ofer, who will share some financial highlights.
Thank you and good morning, everyone.
We believe that a stronger execution in Q1 amid a volatile macro environment.
January and February what is expected in March we started to see the impact that the shifting macro landscape within our marketplace, particularly in Europe .
Revenue came near at the top end of the guidance at $86 7 million up 27% driven.
Driven by 11% growth in active buyer.
17% incentive.
And 240 basis point expansion in the take rate.
Adjusted EBITDA was $3 9 million above the top end of our guidance.
With an adjusted EBITDA margin in the four 5%.
First quarter revenue was a record for us on top of the tremendous growth we had over the past studios.
This scale allows us to be adjusted EBITDA positive in the first quarter for the first time. This early in the year when we typically front loading beckman.
We remain highly efficient with our marketing investment for.
For both brand and performance marketing.
And marketing is a continuing long term investment.
When coupled with high level of customer satisfaction, the awareness build intangible brand equity over time.
We are pleased with how the brand investment are materializing.
We recently conducted a survey that indicated Pfizer had the strongest brand in the U S and the brand awareness.
30% from Q1, 2021.
When we last did the survey.
Our performance marketing ROI.
<unk> was around four months in Q1 about the same as the previous quarter and still well within our 12 months targeted pressure.
As we move upmarket, we're targeting higher lifetime value customers with bigger wallet and better retention potentially allows us to lean into performance marketing a bit more.
Yes.
On a longer term basis for cohort that have been with us for five plus yeah.
We are seeing overall lifetime value to clock up over five times.
For cohort two we acquired at the beginning of Covid, where all.
This thing lifetime value to cut nearly three times in just four years.
The strong unit economics.
Give us the confidence to continue to invest in performance marketing throughout various macroeconomic condition.
As Nick mentioned gone upmarket across the organization.
Our product teams are solving more complex problems and providing more intuitive tool.
But I can tell you that is betting high quality supply and ramping customer support and our upmarket marketing capacity is expanding.
And our operating metrics with the buyers who spend over 500 contribute to 64% of our marketplace upfront.
Percent last quarter and 59% in Q1 'twenty one.
According to a study companies with 20 to 200 employees and 15.
<unk> thousand dollar you on freelancer.
We believe there is a significant potential to grow by a spend level by increasing wallet share from our existing bio <unk>.
And adding high value buyers.
We also continued to invest in category expansion in order to increase cross category HSN and extend our thumb.
I'm pleased that our take rates continue to grind higher with deeper penetration of value added services.
During the quarter from open gift continues to grow and contribute to our take rate expansion.
As we improve seller targeting capabilities and bidding conversion.
The program continued to enjoy strong TV churn as the sale of a pay only when they get a clip.
Listing page.
And the automatic bidding formula set goals to optimize seller alloy.
And plus we continue to all additional feature.
Into the program such as buyer insights and by request application.
The growth of those two program continued to demonstrate our ability to command strong.
By building products, expanding our offering and providing value to our community.
Now, let's turn following guidance, while the second quarter of 2022.
Revenue is expected to be 86 to 87 5 million.
Even though the unit growth of 14% to 16%.
Adjusted EBITDA is expected to be $3 million to $4 million, representing an adjusted EBITDA margin of 4% that treat them.
For the full year of 2022, we now expect revenues to be in the range of 345 to 365 billion representing EBITDA League.
ROE of 16% to 23% adjusted.
Adjusted EBITDA is expected to be in the range of $10 million to $17 million, representing an adjusted EBITDA margin of three 8%.
Paul.
We have reduced and widened our guidance range to reflect the higher permeability.
Changing macro landscape you had discussed at the start of the call.
January and February were solid as expected.
March and April our business was impacted by mix of multiple factors with pure.
Every one of them.
Compared to what we expected at the beginning of the year in March our European revenue was below trend by low double digit in the U S by a few percentage points.
In April .
Europe revenue was further impacted.
Although more moderately in the U S was stable.
As a reminder.
Unit tends to be with it to just under 30% that probably revenue in the U S approximately half.
Our direct exposure to Russia, and Ukraine was less than 1%.
The midpoint of our revenue guidance reflects our current expectation of our business based on the trends we are seeing now.
The high end of our guidance assume an improvement in the macro environment.
A rebound in consumer and business spending.
The low end of our guidance contemplates a continued deterioration in Europe , and moderate contagion and the rest of the world.
At the midpoint, we expect active buyers to grow in the low single digit.
For the full year and be largely flat in Q2, as we lap the large cohort from the first half of last year.
<unk> bio is expected to grow in the low to mid teens, you don't reveal or 2022 with a steady sequential cadence.
Tax rate is expected to be steady with modest upside.
The large improvement so in 2021 should moderate to less than 100 basis points for full year 2022.
On the expense side.
We do not expect.
Only adjust our investment level.
As growth continues to be our top priority, we expect to continue investing in personnel.
Our customer support the engineering and expect modestly lower gross margin and higher R&D as percentage of revenue for the year.
Sales and marketing as a percentage of the forbidden you should improve slightly.
While our steadfast investment project is tempering the progress toward our long term target model, we remain committed to achieving long term adjusted EBITDA margin of 25%.
And our business.
With that we'll now turn the call over to the Yoplait the full question.
Thank you we will now start our Q&A session.
I'd like to ask a question. Please press star followed by one on your telephone keypad.
He joined US online please press the Red flag icon.
And our first question comes from Joe and most at J P. Morgan. Please go ahead. Your line is open.
Thanks for taking the questions.
I just wanted to follow up on the comments related to macro.
I understand I guess, how how you see this kind of playing out and in the business I mean, it sounds like it's really coming from the from the buyer side.
But.
Also I guess, how it splits out between small businesses and.
Some of your very positive comments, just around fiber business and as Youre going.
You know kind of up market and toward bigger businesses as well. Thanks.
Yeah.
Hey, good morning, Doug Thanks for the question.
So essentially I think macro environment.
Largely speaking was probably covered pretty extensively in this earning season I think.
Think from what everybody of obscene.
Seen some softness in Q2, which is a result of a number of different factors.
Would be.
Opening up in the world.
To inflation.
To some uncertainty around the war in Ukraine, and so forth and all of these created these this macro environment.
Now, obviously as a business fiber.
Largely more concentrated in the SMB side of the business smbs are being affected or respond faster to macro changes than larger businesses and this is probably.
So nor demonstrated very well within our product itself, meaning within the market the marketplace itself, where it's largely more smbs than larger organizations, you see a faster and probably slightly larger respond to micro whereas in fiber business, we're seeing a much more.
Moderate or even not seeing any impact it's actually is as a business those businesses. The number of accounts are actually growing much faster than the marketplace itself. So that that's a good sign and as we shift more into high value buyer and into our fiber business accounts.
We think that those macro trends are going to affect us less over time.
We shared we shared some numbers about the fiber business and the growth in our power.
<unk>.
The same goes with the high value buyers, which are growing faster.
And we.
We have accounts that are spending.
Over $10000 with us growing by 90% year over year. So so that portion of the cohort is less affected and obviously, we've seen smaller businesses being more affected and by the way it's not very surprising in hindsight now that all of this effect that's come in because we've seen the reaction also.
Rob the pandemic at the beginning of the pandemic smbs reacted much much stronger than than enterprise as an example, and obviously as a business we benefited from that and now we're seeing it's quite the opposite reaction. Obviously, we think it's temporary these are after shocks of the end of it.
And in some some macro economical.
Impart.
However, there is an uncertainty which is why we've we've created.
The wider range than usual for our guidance too.
Corporate extreme cases of either a micro continues at the same levels or improving over time.
And then just to follow up.
You just talk about your.
The decision and just related to investments to continue along the same path just given the significant growth opportunities that you see in the business and is there a <unk>.
Point, where that could potentially change through the year or you don't really anticipate that.
Right now we don't we don't anticipate the change we have a very solid plan. It is working the fundamentals of the business are great the investment and going up market is the right thing for the long term and we're here for the long term, we haven't changed our our goal to be or to continue to be a pro.
<unk> growth.
And so despite the temporary hiccups of this macro environment, we don't think that it's going to be a right to change course, right now and lose the potential that we have in the in the in the long term.
Bear in mind that even within the SMB business the level of penetration of that fiber houses.
I would assume less than 5% over the potential in the U S alone, there's 30 million smbs.
So the potential of continuing to penetrate the market and then also extending by going into larger businesses is enormous.
And again, what we're seeing right now within the business is just a manifestation of what we're seeing in the macro environment and the fact that works.
No about to finally, lop or completely lop the.
The effect of the pandemic and the outsized cohorts that we had last year.
Hi.
I would like to Oh man.
Going to the.
Fundamental of the business.
All the way from the cohort behavior could be a performance marketing efficiency.
Providing.
That'd be four months CLI.
So thats part of the decision to continue investing.
The ability to keep.
Keep our head in terms of EBITDA.
Maintained profitability.
And build the muscle.
Four corner pocket as we've done in the last of studios.
Great. Thank you both.
Perfect. Thank you so much for your question.
Our next question comes from Jason <unk> from Oppenheimer. Please go ahead.
Thanks, I'll ask two so just to clarify on the on the weakness in the outlook I mean is there a way to kind of separate how much of it is again kind of almost just a return to normal you know COVID-19 hangover.
Hangover or are they the COVID-19 tailwind going away versus actual macro economic weakness that youre seeing in Europe.
And then second I mean, historically you guys have spent a lot of money on marketing and it it's driven growth just obviously this quarter marketing.
No.
You slowed pretty dramatic relative to revenue or just how are you thinking I guess about marketing kind of.
In a weaker period of inflation relative to doing things with pricing.
Or or or.
Other factors that you can kind of drive growth. Thanks.
Good morning, Jason Thanks.
So really.
To your question the weakness comes from mostly macro and on top of them up where we've seen some some higher trends in terms of travel as well, which indicate and usually that's the that's a that's a nice correlation to how are we shouldnt display business. So we're seeing high demand.
For travel.
World is opening up.
And people want to shop offline and want to travel. So that's that's impacting when when you look at the fundamentals of the business. When you look at it as cohort behavior.
It is stronger than pre pandemic.
Maybe not as strong as it was a year ago, but it's definitely stronger we're not back to any pre pandemic levels and it continues to be very healthy so from that perspective.
We think that this is really a.
Driven by our by our macro environment.
Q2 from a seasonal standpoint.
Seasonality baked into it there is oh, there is a long oh holidays in the Muslim World. There is the international days like like mother's day that that's how that has impact so it's it's.
It's usually a quarter with high seasonality and on top of that with the macro this year and with the fact again that were.
Without being outsized cohorts from last year, and we're being measured on a trailing 12 months that that always looks like that in the numbers when you lap it.
But.
But it's worth as we're looking at the fundamentals of the business and the same goes with marketing by the way we've been very consistent in that that may be.
As far as your second question.
As we look at the way marketing complements our organic growth we have been very consistent in that strategy, meaning a we've been investing in our brand and our brand is is growing very very fast we've seen we've seen 30% increasing in.
Unaided and aided brand awareness.
Which is which is great and it is.
Again it it gives us fuel for the fact that we're we're being consistent in the investments in brand and the same goes for our performance marketing.
With the slight change now performance marketing targets more high value buyers, those who have a higher lifetime value.
With us and that is working very well and the fact that we can do.
<unk> smart marketing and drug it also into fiber business allows us to build an up market business that is very cost effective. So right now we're on plan, we're happy with the results.
Obviously like everyone else waiting to understand how this macro environment is going to change.
And working around that uncertainty to keep the business running in the long term plans are.
On time and on schedule.
Thank you.
Okay.
Yeah.
Thank you very much for your question.
Our next question comes from Matt Farrell Piper Sandler. Please go ahead.
Hey, everyone. You've continued to do a nice job with expanding the take rate here and you provided some commentary on how to think about take rate as we move throughout the year, but as I think about longer term what is the real long term target for take rate and how should we kind of think about where.
It could go maybe in two or three years out.
Yeah, Good morning, and thanks for the question Yeah, I think on take rates, we always said that we're not going to rest until it's 100%.
Uh huh.
No but seriously.
I think I think that we're at a good point in terms of take rate.
And I think we've demonstrated that through its not a construction of additional take rate from the transactional aspect, but it's actually additional take rate coming from added value services and products and I think that what we've demonstrated over over the years.
And definitely as a public company since we started reporting is that we have a very wide arsenal.
Different products and offerings that we that we can introduce that would continue supporting the increase in take rate one of them is promoted listings or promoted gig.
Which is which is growing incredibly well. So these types of products as we grow them over time.
Contribute to take rate, we always said that the contribution is going to be moderate. So so we don't.
You know take rate.
Itself is not the growth API.
But we do think that there is potential to continue increasing it in and so far I think we've demonstrated that this is possible, but also win when you go up market and you have new work on much larger types of transactions.
Thanks, and then is there fiber business could you give some qualitative metrics on maybe about the size and the scale of the business today and maybe as a percentage of G. M. B a percentage of revenue, that's contributing and and maybe to piggyback on that question any.
Update on how this Stoke towns acquisition integration is contributing to the dynamics here in the near term. Thanks.
Sure Thanks for the questions.
So yes, so in fiber business, what we said I think a quarter or two ago is that it's already contributing more than 5%.
Of the overall revenues.
Since it's still a small business and what we said is that this is going to be a multiyear investment is it is it transformational.
Part of our business, it's kind of our Oct. Two is it isn't it.
We don't think that this would be it would take time and investment until it becomes a double digit percentage contributor to the business.
And so we're not reporting it separately.
However, we did see.
About the fact that.
Accounts are growing 50% year over year.
And the.
Order or revenue contribution is growing even faster than not.
Some point it becomes a more mature and stable business.
We may start reporting it separately to give more.
The clarity on that business on on Stoke.
Again.
<unk> was acquired at the beginning of the year, we're in the process of integrating.
The first the first portion of integration is due before end of year and really the amazing potential there is the fact that as a.
As a freelance management system, we wanted to connected to the fiber talent pool. So that those customers that are using Stoke is a system to.
Manage their existing relationships with freelancers would you be able to find additional freelancers through dot system. So that phase one and that that should be done before the end of the year. We're working on it very hard and at the same time Stoke as the business is growing again still small, but we're seeing we're seeing customers.
Is that are paying on a yearly level more than a $120000 per account. So so as a business. We believe it's a very healthy business, we're very happy with that acquisition and look forward to completing the integration in telling you guys more about it.
Yes.
Yeah.
Thank you we will now move on to the next question.
And our next question comes from Andrew Boone at JMP Securities. Please go ahead.
Good morning, and thanks for taking my questions.
As we look at active buyers for 122, you guys added 30000 active buyers understood. That's a net number.
Given the slowdown there it sounds like top of funnel was strong can you just help us understand the dynamics of churn and relate that to 2022 as we start to think as we start to think about you guys moving through a covered cohorts. Thanks so much.
Yes. Thank you for the first time I think you mentioned on the.
Thanks, guys.
Perfect.
As we anticipated the first half.
Yeah.
It was slow in terms of new add because of the impact.
Unusual.
Oh, sorry.
At the beginning.
And in 'twenty one.
Because of the.
Normal.
Have you ever upbeat each cohort.
Stabilizing over the first half.
Before me.
Become consistent closer to getting a flat business.
Oh.
Because of this behavior.
Good thing is it's kind of a headwind.
In terms of new.
Our net debt.
We anticipate that.
Headwind.
At the end of the first half.
Yes Hello.
Sounds good.
You add in the second half of the year.
Moving going forward.
The long term.
Okay. That's helpful. Thanks, So much and then as we think about the marketing spend in the move up market can you just help us tactically better understand what changes that you guys focus on longer LTV customers is there anything we should think about in terms of just greater brand spend there versus perm.
<unk>, how do we think about just the shift within marketing and in the strategic move upmarket. Thanks, so much.
I think the point that I was making earlier is that we're able to extend our marketing most of our marketing work to target higher value and more established types of businesses now we do have a sales.
Team most of it as a result of the acquisitions that we've done in that sales team is able to offer the majority of our of our products, including clear voice, the COVID-19 marketing, including Stoke and including fiber business. So the combination of doing brand marketing, which create awareness.
And introduces the different types of products that we have with smart performance marketing that is able to target the right customers in the right channels, including inside sales and success managers and including our sales team.
Allows us to really.
Go up market and maximize the potential and overtime, we're learning how to optimize that process.
And that obviously focuses on customers with higher.
Spending capacity.
More complicated needs, which allows us to offer them a more sophisticated types of offerings that reflect in the <unk>.
Size of their spending and the frequency in which they spend in a number of people within those organizations.
Use this fiber.
And again fiber business is really in the early innings of itself as a product, but it's already demonstrating the debt the debt.
Box changes that we're seeing there in terms of multiples when it comes to two to spend per buyer and that type of activity that we're seeing in those accounts. So so again.
First signals for us Super encouraging we're very happy with this product and it's really in its early early days.
We have many exciting.
Costs are on our roadmap for this year for fiber business.
That's cool.
Okay.
Perfect. Thank you for your question well now move onto our next question, which comes from Brad Erickson at RBC capital markets. Please go ahead.
Hi, Thanks.
I guess first just appreciate the monthly commentary you gave over about.
How things have been tracking sort of pre and post war.
Curious to get a little more color on just kind of the latest views of linearity I think some companies have spoken to seeing <unk>.
<unk> traffic initially after the war began and then maybe a bit of a bounce back thereafter is that kind of generally what you've seen or does the guide reflects maybe a view of a more persistent weakness and then I have a follow up.
Oh this is what we do.
Consistent with what we've been saying I think that during the month of March.
We are seeing.
A more in depth celebration. This has been focused on throughout April have been stable since.
I think the guidance is providing.
<unk> provided.
Why is it.
To capture the amount of uncertainty in the macro economy.
On the low end, we anticipate that this will continue.
On the high end.
We assume that.
The business.
Dan.
The overall production will be back to what we've seen in the past that any of them, which is normal seasonality throughout the second half of it.
That's the kind of the.
What we've been seeing and.
The commentary, we've always been guiding but based on what we've seen.
This has been the case in the past and this indicates this time, we are guiding but from what we're seeing.
The behavior of existing cohort in our ability to attract new cohorts.
Behavior over the phone.
Got it.
Great. Thanks, and then just secondarily last quarter in the shareholder letter I think.
You called out I don't know maybe half a dozen or so categories that were especially strong in the business I Wonder if you could give an update there on just how those are generally ferring relative to the broader business slowdown you're guiding to basically are they are they proving better or worse or kind of in line. Thanks.
Yeah. So there's a there are category swings that are normal.
And that's a part of seasonality. So if you know.
Right now our gaming is one game art in game development.
Content illustration.
Video editing.
Resume travel listing.
So so there is.
Essentially those trends are not a surprise there they are pretty much aligned with what the seasonal trends that we're seeing from time to time and shift there is there is rarely any.
Changes within categories are constant that are here to stay.
And also those those swings are relatively small it's just what we were just highlighting them from time to time, because we think it's interesting in the larger broader of just understanding <unk>.
Client demand.
But there is there is no.
The substantial change in the.
The category mix again from time to time from quarter to quarter, some different highlights around different categories.
That's helpful. Thanks.
Perfect. Thank you Brad good question.
Our last question comes from Eric Sheridan at Goldman Sachs. Please go ahead.
Thanks for taking the question maybe two if I can just squeeze it in quickly in terms of I know, we've talked a little bit about marketing so far on the call, but in terms of where your email marketing to be successful and continue to ramp in the fiber business is there a different cadence in the year and marketing was it different element of like more fixed versus variable.
That we could see in the model going forward just want to understand a little bit how the ships might take place as you move up the stack of the line marketing dollars against fiber business.
I think I've asked this in the past, but when you think about language extension or vertical extension anything on the roadmap you seem to be should be aware of where you see pretty big opportunities for growth going forward by further extension of the platform. Thanks, So much.
Eric Good morning, Thanks for the questions so as to marketing.
I think that what we're doing right now is the right thing in terms of seeing how we can extend marketing to go upmarket with the types of offerings that we have right now we're not planning to do any any substantial changes in our marketing strategy or how we do spending and definitely how we.
Thinking about the efficiency of our marketing and I think that that in tandem with the the work that we're doing on the success management.
The inside sales force.
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He is proving itself to be very efficient overseas, we're finding this overtime, but right now.
We think that that strategy is working very well and we're not we're not planning to change it in terms of language extension.
We're doing a lot of work.
In the past two years.
In the area of machine translation infrastructure.
Search in local languages local currency building local communication and awareness.
All in all I'll say that the the opportunity.
To extend our offerings and go deeper into different languages and different countries is there and we're capturing it so without getting.
Two deep.
Too much deep into our playbook.
It's definitely something that is playing well for us and and definitely helping us establish our presence and increase our presence in multiple countries and again, we think that the same playbook should be should continue to be applied as we grow.
Great. Thanks, so much.
Thank you Eric for your question. This concludes our Q&A session I would now like to pass back over to me have for any final remarks.
Thank you Victoria and thank you everyone for joining the call today have a great rest of the day, we'll see what the upcoming investor events and talk to you next quarter. Thank you.
Perfect. Thank you everybody for joining today's call you may now disconnect.
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