Q3 2022 Upwork Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Good day, and thank you for standing by.
Welcome to work Q3, 2022 earnings conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one one on your telephone.
I would now like to hand, the conference over to your speaker for today, Evan Barbosa you may begin.
Right.
Welcome to upward for discussion of the third quarter of 2022.
Leading the discussion today are Hayden brown upwards, president and chief.
And Jeff will cool off works Chief Financial Officer. Following management's prepared remarks, we'll 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 law.
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.
Any statements regarding our current and future impact.
The rush of invasion of Ukraine, and artificial because you've got to suspend business operations in Russia, and Belarus, and the COVID-19 pandemic on our business and current and future impacts of the actions. We have taken in response to questions. Russia's invasion of Ukraine, and the COVID-19 pandemic are forward looking statements relating to matters that are beyond our control and changes.
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 SEC website.
On our Investor Relations website as well as the risks and other important factors discussed in today's shareholder letter.
So information will be will also be set forth in our quarterly report on Form 10-Q for the quarter ended September 32.
2020 215. 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 upward dotcom as well.
Please.
Otherwise noted reported figures are rounded in comparison to the third quarter of 2022 are to the third quarter of 2021.
All measures are GAAP unless cited as non-GAAP now I'll turn the call over to him.
Thanks, Kevin and thank you all for joining us today for our third quarter 2022 earnings call.
As we close the third quarter of 2022 upward has clear indicators that both our business and our value proposition continue to be critical to our customers in times of economic uncertainty.
Revenue grew 24% year over year to $158 6 million.
<unk> grew 14% year over year to exceed $1 billion in the quarter once again and adjusted EBITDA was a loss of $2 9 million.
We're focused on making prudent and sustainable investments in our business to drive steady durable growth.
Even against the backdrop of challenging macroeconomic condition importantly.
Importantly, our customers continue to count on us to enable their critical work and their businesses. During these uncertain times.
We have both pioneer and benefited from the major paradigm shifts around remote work and hybrid workforces.
I'm the mental changes that have shaped the new reality of work as we know it today.
This C change as illustrated by the fact that one course of American workers are now working remote first or mostly remote while 71% of company expects remote work to be part of their standard operations moving forward.
This new work reality opens up a vast opportunity for upward to introduce ourselves to the 90% or more of companies and hiring managers, who have not been aware of or considered up work and to bring them into the fold as customers.
Nowhere has that opportunity been more apparent and central to our priorities and the late September launch of our New brand campaign. This is how we work now.
Appearing across television online video streaming audio digital and social media.
Campaign reinforces our belief that work should unleash human potential instead of limited and emphasizes that now is the time to embrace the new ways of working that have emerged over the past few years.
It targets mainstream prospects clients and talent alike, who largely arent yet aware off work, but like us recognize that the world of work has changed forever.
Our strong business position and resident value proposition allow us to remain on offense.
Evident through both our new brand campaign as well as our amplification of benefits most valuable to our clients flexibility in hiring expert talent at their fingertips operational agility and bottom line.
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Ladies and gentlemen, this is the operator.
I do apologize there would be a slight delay in your conference. Please replaced remain on hold your conference will resume momentarily.
Hello.
Okay can you hear me on this one.
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Can you hear me a welcoming around this phone line.
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Thank you for your patience, ladies and gentlemen.
Peyton you May <unk> you may begin.
I think he just disconnected my line can you hear me.
Yes, we can hear you.
Oh excellent.
Our strong business.
Physician and resident value proposition allow us to remain on offense evidenced through both our new brand campaign as well as our amplification of benefits most valuable to our clients flexibility in hiring expert talent their fingertips operational agility and bottom line savings our solution satisfies the tight budgets that many organizations are implementing amid <unk>.
<unk> uncertainty as clients find that they can realize cost savings upwards of 50% by using upward compared with traditional staffing alternative.
By delivering highly skilled diverse talent from more than 180 countries affordably and quickly clients can have greater flexibility with our cost structure and reduce operating costs through talent innovation.
As a result, we are helping companies improve their EBITDA and generate value added growth while maintaining the optionality that has been shown by Mckinsey research to be vitally important in weathering or even accelerating during economic downturns.
Notable brands that we've welcomed as enterprise clients in the quarter include Anheuser Busch Inbev constellation brands Cushman, <unk> Wakefield items and Marriott International. These companies are leveraging our platform to deliver on their business plan tap new sources of scalable flexible.
<unk> talent and retain our competitive advantage market makers like these new customers contributed to enterprise revenue growing a healthy 41% year over year to $12 5 million in the third quarter.
Coupled with the.
Strong growth of client spending 1 million or more this underscores how our value proposition resonates with enterprise clients.
We continue to invest in innovating the work marketplace with the goal of helping clients and talent to start work more easily on the upward platform and return to up our time after time for a consistent and productive experience.
We deliver critical and differentiated value not just in matching clients and talent, but also in serving as the hub for seamless back office tasks for talent around invoicing and getting paid and equally for clients around contract management and payment activities. We enhance these core experiences in the third quarter.
Debut in improvements to our contract work Graham that reduce friction and allow clients and talent to manage contracts navigate all their contract actions and more easily review weekly billing, earning contracts terms and feedback.
Additionally, we made enhancements to our enterprise suite by enabling multi approver team based approval that support large scale and complex workflows.
And adding more refined search functionality for faster access to our global pool of expert vetted talent, who are ready and preapproved to work with these companies.
Project catalog consultation made available across all 90 plus categories of work during the third quarter continued to drive effective connections in collaboration between clients and talent.
Enhancements this quarter improve the experience, allowing them to confirm scope skills required feasibility and timeline for a potential project driving speed and starting working together with can be 50% faster than on the talent marketplace.
These enhancements also enable customers to establish longer term relationships that go beyond an initial project engagement.
Ultimately this drives elevated client spend on project catalog in fact, 30 day spend by customers, who use consultation is nearly three times, what customers, who only purchase on project catalog spend.
Lastly.
<unk> of talented professionals on our marketplace are adding profile badges that display and validate their expertise through our budding partnership with credibly the market leader in digital workforce, credentialing, enabling talent and clients can match faster and with more confidence equipped with access to <unk>.
Vast supply of talent and job posts and the technological capabilities to engage more effectively and efficiently.
Clients and talent are together defining the new reality of work.
Waving the trail regardless of the economic uncertainty that may persist.
To be sure as we expected since our second quarter earnings our customers are not fully immune to that uncertainty evidenced by the softness we continue to see and some metrics.
Nonetheless revenue impact in the third quarter from these conditions was inline with our previously shared expectations.
We have seen the software client acquisition and retention trends that we observed in the second quarter stabilized in the third quarter with the softness continuing to be more pronounced in Europe , and with small and medium size businesses.
Our enterprise land team also saw elongated sales cycles due to the macroeconomic outlook for a handful of accounts. This caused some operational growing pains resulted in fewer enterprise clients signed in the third quarter than targeted we are remedying the operational growing pains and believe the enterprise opportunity remains as attractive as ever.
For our park. Additionally.
Additionally, we continue to manage our own business with discipline being prudent with resources has always been a guiding principle, a park and as the economic outlook evolves, we have several measures underway, including evaluate aiding our budgets adjusting hiring timing and prioritizing role more aggressively reviewing and reducing.
Vendor spend and ensuring we have a tight operating cadence around cost management with a high degree of visibility and internal partnership toward our goals.
Due to the largely recurring and programmatic nature of the majority of customer activity on our platform. We are able to monitor for changes in behavior as they occur and be nimble in making adjustments to our plans as needed. This gives us further confidence in our ability to manage the business responsibly through a dynamic environment.
We still view this period of macroeconomic uncertainty at a critical time for us to be focused on expanding our position as a market leader in cementing new integral ways of working across the work ecosystem, we see businesses continuing to turn to upward as the always on stores for highly skilled remote workers regardless of their <unk>.
Industry, whether their business need is project based or ongoing where they stand in their workforce transformation or their current economic climate.
We also know that upward fosters a deep diverse and highly skilled talent community across the globe. The world work marketplace remains the center of gravity for these work and career innovators to build trusted lasting relationships and get more done together and we will continue to innovate.
And July and scale it in the fourth quarter and beyond.
Thank you for joining us on this journey before we take your questions I just want to thank Jeff as this will be his last earnings call for our park.
I am incredibly grateful for all his contribution to the company and our Investor community over the last few years his experience and marketplace expertise have positioned <unk> for continued growth and put us in a position of strength for the next chapter best of luck to you Jack on all your future endeavors.
We will now open the call to your questions and thank you for your patience with some of the technical challenges today as well.
Thank you.
As a reminder to ask a question you will need to press star one one on your telephone Nexstar one want to ask the question.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of Bernie Mcternan with Needham <unk> Company. Your line is open.
Great. Thank you for taking the questions maybe just to start on enterprise revenue.
Sequentially was virtually flat so I understand that the top of funnel in gross add problems that were addressed in the shareholder letter, but was there any churn issues or customers downshifting in may be spending less in the quarter and I know you reemphasize, our reiterated doubling the sales force, but do you still have confidence in the 300 million long term target for.
Revenue.
Thanks for the question Bernie I'd say, we do not see any downshifting in terms of <unk>.
<unk> customer spend in fact, we saw really good success with the team growing existing accounts customers leaning into the solution. We referenced it on one of our customers who is not in the top five vendors previously has consumed into the top of the lesson now is close to a $40 million run rate with us. So we really feel good about the trajectory with.
Our existing customers, who are continuing to spend with us expanding spending a lot of cases.
We're not coming on long term targets of the call you know I think that's something we know more normally do in the Q4 call but are continuing to.
Expanded land team on plan and feel really great about the overall opportunity no changes in terms of how we're thinking about that and the team.
Vince venture earlier part of your question has been really good with our enterprise cohort.
Great and then the Investor letter has struck a nice balance of investing for the long term, while also focusing on cost discipline near term with any early indications on how to think about so far the success in the new brand marketing campaigns and what that could mean.
I mean for 'twenty three.
And then just how much leeway there is in some of the other side.
To hit the profitability goals in 'twenty, three assuming the investments in brand marketing to continue.
Sure we are definitely monitoring our brand investment.
Measure ability focus I'm looking at that we knew at the outset as we went into the brand.
Area that this would be a multi quarter journey and we're not out the other side of that yet, but we feel good about the ability to achieve our brand goals in the context of EBITDA profitability next year, and so that will be a continued commitment for us and again, we're excited about the new campaign, we launched a lot of good things happening there.
But next year, we will see that EBITDA profitability, even in the context of achieving our brand goals around awareness.
Great. Thanks for taking the questions.
Absolutely.
Thank you.
And by far our next question.
Our next question comes from the line of Matt Farrell with Piper Sandler Your line is open.
Thanks for taking my question and it was great to work with you Jeff.
I wanted to zero in a little bit on the macro of it sounded like it was in line with expectations for Q3, and I believe you provided the $10 million to $15 million number for the second half.
Is that still the right way to think about Q4 or did it get any worse and.
I guess, how should we be thinking about the macro headwind maybe as we start to look at early 2023 as well.
Sure I'll start, Matt and then definitely Jeff add anything that you want to chime in with but.
I think we definitely did see everything so far from what we can see now in line with the $10 million to $15 million that we previously communicated and that has been you know some softer than normal client acquisition and retention that's <unk>.
Decelerate a bit in Q2, and then stabilized in Q3 and I think we're not seeing right now any indications of further.
Further deceleration or anything that's giving us particular concerns as we look ahead, but we have kind of baked in that full $10 million to $15 million.
For Q3, and Q4, but I think that's really where we've given those guardrails and we feel good that that is the level of visibility around any exposure we have to macro.
From where we said last quarter and consistent with where we see things right now.
Dan just to add onto that match.
Have you noticed that our our guidance for Q4 at the midpoint is roughly in line with the Q3 actuals on the revenue front and normally we would see a bit of a seasonal.
Expansion from Q3 into Q4, so are our macro adjustments to that kind of offsets that normal seasonal.
Seasonal adjustment and with respect to 'twenty Treasury, we're not there yet.
Not commenting on that at the side, but more on that on the Q4 call.
Vinson and this one's for you you've been talking about the next chapter of growth for upward recently could you just provide some more detail on how you how.
How you think that looks and maybe with some of the specific drivers and trends and dynamics, particularly with the with the macro.
Sure you know the next chapter for US is really about continuing to unlock the opportunity we have around our total work marketplace, which is more than just the talent marketplace, which we've had and has been such a source of strength for us historically, but we've been launching new products over the last one and a half two years, we have more innovation.
And the pipeline and we've been making some of these strategic paths around the salesforce in the enterprise expansion, our brand marketing investments and really that's been laid the groundwork over the last few years for this next chapter of cut more customer adoption to the way of work that upper offered them and all the benefits that we offer them. So you know the next chat.
Our head for US is continue to innovate for customers building the awareness in the market that gets us way beyond that so.
10% cohort of customers that know about us today.
And bringing this this model we've been building to a much wider stage.
Thank you.
Please standby for our next question.
Our next question comes from the line of Brad Erickson with RBC. Your line is open.
Hi, it's logging on for Brad.
Just wanted to double click on.
Enterprise looks like you had some internal and external headwinds just wanted to ask.
Where would you say was the most strong headwinds in the quarter and then just on each one any sort of timeline on getting back to where you guys want to be internally and then externally can you guys just kind of unpack fee.
Economic uncertainty and macroeconomic environment, how that's impacted with clients or potential client decision, making thanks.
Thanks, Thanks, Logan iPhone enterprise.
We feel really good about where we are overall again with enterprise revenue up 41% for the quarter again lots of great activity happening, particularly with the expansion side, we did hit a hiccup or with our land team in the quarter and that was actually driven more by internal execution than by the macro although we did see.
Deal cycles elongate for some accounts and that definitely was part of the issue as well, but from an internal execution standpoint, there were some things like our E mail system migration that was happening previously and that impacted our ability to have as many leads in the top of the funnel as we wanted because we had turned off a bunch of marketing campaigns and things like that.
So we feel good that we have our arms around what those execution challenges.
Have you know, we're and have been in and how we're remedying those and are hiring for that team continues to be on track, which is another key piece of the puzzle for us on the land side. So in terms of timeline are you know.
I think it could take a quarter or two it was like a little bit of time for us to get back to where we want to be and again the macro does present, a little bit of uncertainty around exactly what that time frame is.
But we feel good that we have line of sight to showing the drivers that we can control and where that's headed.
In terms of how the macro factors are impacting potential client decisions I think it's really on the one hand, we see in accounts, where they are very excited to be expanding our model now either existing customers or even you know.
Some land customers, where because they have certain other spend constraints. Our model is very appealing, but then on the other side as we talked about with the deal cycles being elongated that is another factor. So we feel a little bit of a mix of that but overall again for existing customers in particular, who already are familiar with our model and are using us we.
Haven't seen the macro be a headwind at all on that base.
Great. Thanks for taking the question.
Thank you.
Please standby for our next question.
Our next question comes from the line of Marvin Fong with <unk>. Your line is open.
Great. Thank you for taking my question.
I appreciated the detail that you provided about project catalog in the consultation.
They're just.
Wondering you cited the.
Significant increase in the spend after 30 days so.
Our our product catalog projects with consultation of the approaching the average project size of all of the talent marketplace.
Or are they still quite a bit smaller and then I have a follow up.
Sure Marvin I think Theres still you know, we still view them as a stepping stone in between what may be catalog and the talent marketplace. The quake. So.
Theyre still in between but there also is like a pretty dynamic space for us. It's a very new product. We just rolled it out across all 90 per categories on the site, though I would emphasize this is very early days, where it with both a very new product and having just launched this across all of our categories and customers is definitely kind of a moving car situation.
Now, which are very excited about because of all the applications, we're seeing where customers are leaning into this product and we're kind of deploying it in a lot of new contact with them.
Okay, Great and my follow up is also on enterprise.
Just wanted to ask the question, perhaps a different way, but are useful confident that these are.
Pod.
Susan that are being elongated are those are you still confident that those will close at the same rate and could you just give us an idea of exactly how long how much longer client for taking too long to make this.
Thank you.
Yeah. Thanks.
We haven't seen the conversion rates changed or different that the different points in our funnels, though the signs are pretty positive there that.
That's not that's not really hitting us it's more just the cycle time than for example, some of the issues. We're seeing is just more approver is being introduced into the process or some companies seem to be going to outside counsel more to get involved in improving their deals because theyre getting more comfort out of that at this time. So it's those types of issues.
And the increase in cycle time on these things is you know, it's it's something that we're seeing but it's not blowing up the process completely. So you know again, we feel like this is an issue where it's not derailing our land our land team in a significant way. This was the minority of the issue in the quarter and pumps and all that is.
Definitely.
Yeah. It was more operational on our side that you know in terms of our Mezz and that is somewhat comforting I mean, it's unfortunate we're not pleased about that result, but it is comforting that a lot of the issues that we saw hampering the man team were more around internal growing pains that we're just working through and we feel good that we can address those issues.
That's great to hear thanks, Hayden and good luck, Jeff on your next endeavor.
Thanks Marvin.
Thank you.
Please standby for our next question.
Our next question comes from the line of Maria Rips with Canaccord. Your line is open.
Great. Thanks for taking my questions first.
First is there anything to call out in terms of retention curves or spend patterns by category or by vertical.
I mean, obviously Tac has been impacted by expense and workforce reductions is that impacting you at all or would you say that sort of what youre seeing is more kind of broad based.
What we're seeing is broad based.
With the <unk> with the caveat that as mentioned you know some of the softening of certain metrics has been more with the F N B's and more in Europe . So.
I would say it's exclusive of that we have been a little bit in the U S and in some cases with larger customers, but it's definitely.
More pronounced with the smaller customers and and in Europe . So that's where we see the differentiation and we're not seeing a real differentiation by sector more business type or any of those other dimensions.
Got it that's very helpful. In terms of cohorts I wouldn't call anything out there either Maria I think you were asking about new customer cohorts mildly there's anything really to note on that dimension.
Got it got it and then secondly, you take rate expanded really nicely both sequentially and year over year and you talked about several drivers behind it.
Should we think about sort of sequential progression from here over the next couple of quarters.
Yeah.
Thanks for the question.
The take rate over last couple of quarters was primarily driven by the pricing change that we implemented in Q2 mid quarter. So you saw that benefits program in Q2 and Q3, that's fully incorporated now so you won't have that benefit we still have the dynamic of ACH.
As our clients continue to find more and more value with us and spend more with the freelancers that they're working with.
The graduate into the lower pricing tiers of our tiered service fee structure, and so that dynamic will continue to play out.
And all of the additional upward pressure on take rate that we've had lasso continue to play out meeting.
Enterprise of cider take rate is growing faster than non enterprise.
And project catalog and talent Scout also have higher take rates. So those will be the offsetting dynamics, we're not providing guidance in terms of where we think take rate will will be in 2023.
But those trends will continue to play out.
For the foreseeable future.
Great. Thank you very much on that Jeff best of luck going forward.
Thank you so much.
Thank you.
Please standby for unexpressed.
Our next question comes from the line of John <unk> with Jefferies. Your line is open.
Hi, Thank you and you said that champion for Brent Thill.
A couple of questions first.
The the enterprise logos that denying the shareholder letter were pretty impressive this quarter.
More recognizable brand names I guess.
Just wondering if there's anything to read through from there or is it just a lot.
Out of these things are maturing.
And if any color you can add to that and then as a follow up.
Thanks, John Yeah, we're excited about those customers to you know I think our business continues to get more recognition. Our sales team is doing a phenomenal job. Despite some of the hiccups, there really making inroads with a lot of great customers. You know we've talked about myriad a be ambev Dun and bradstreet I mean the setup.
Just speaks to the fact that our solution resonates.
Not just with tech companies I think a lot of people in the outside world. Thank all off work as efficient for tech businesses or a certain type of very cutting.
Cutting edge company, but in fact.
We're really I think landing with so many businesses in so many industries, who understand increasingly the value of our model. How this gives them.
The best experience and the best agility cost savings on access to talent that they absolutely need right now whether they are an easier 100 year old business or whether they are a small company just getting started so that I think is really illustrated with some of those logos and the resiliency of our business you know even through some of these in uncertain times.
We are in.
It also illustrates the ability we have to unlock that <unk> dollar Tam that we're going after through incredible companies like those that we landed this quarter.
Great. Thanks, so much that's helpful and then they.
You haven't had a question related to macro and suggest the VA was down sequentially.
There was some mention of some.
And there will be a churn or any.
In the letter, but kind of wanted to see if maybe you could parse it out a little bit.
Between maybe seasonality macro or the I guess, the I guess you pointed to the client buckets. Please planned price changed.
Any color there would be helpful. Thank you.
Yes, you are as you pointed out there's a number of drivers that.
That played out there.
First off.
The macro dynamics that kind of increased in.
Softness throughout Q2, and then kind of stabilize throughout Q3, so that played a bigger role.
Will that played a role in cosmas quarter over quarter decrease.
<unk> Ukraine also the one Ukraine also played a role where.
The implementation of or changes on may 1st or so.
Had a couple of months of impact there.
Or is that a full quarter of impact in Q3, it's a little bit offset by the substitution rate there was increase in substantial improvements there was increasing.
Third were the pricing change, which was right in line with our expectations. It's delivered the features that are gaining more traction to.
Customers were moving those from behind the paywall increased revenue increase take rate.
And as expected we also thought there might be a might be some.
GSV impact.
So we saw a bit a bit from that as well.
And then the math I guess I already mentioned the macro so those are really the key drivers were not providing context in terms of the absolute breakdown of those.
But those are the key reasons why we saw that the decline. In addition to the Q2 to Q3 seasonal dynamic normally is.
He is also a slower quarter over quarter jumped and so when you layer all of those on top of it we ended up with that with that decline.
Okay.
Thanks, very much and wish you the best Jeff.
Thank you much.
Thank you.
Please standby for our next question.
Our next question comes from the line of Rohit Kulkarni with 10-K M Partners. Your line is open.
Oh, Hey, Thank you a couple of questions. One is just on the kind of the shape of a kind of visibility uncertainty that youre seeing.
Through their conversations with their clients with a bus in 60 days or.
Over the past 30 days or has that changed overall is in the rearview mirror a lot of other companies talk about growing uncertainty growing lack of visibility. So how December could look like is not.
I think the whole degree.
A degree of confidence that we can see right now so just just would love to hear what you are hearing.
Love that you're reiterating your guidance, but just wanted to see if there is some change in Macau on a certain deal.
<unk> has evolved and then I have a couple of quick follow ups.
Yes, it should.
Rohit.
You know I don't think that there's been a big change in the last 30 days around.
Their level of certainty, but there isn't a big conversation at every company right now around belt tightening in general and so.
I think where we've taken that in terms of how we've thought about our guidance is we are.
Im expecting that every company as they go through Q4 is going to continue to be.
Very guarded with their spend very measured with their spend and so that is something that you know on the margin we expect.
<unk> again.
Again modestly impact.
And impact our Q4 numbers because you know a lot of times in Q4, that's not the case a lot of times people or more in this like use it or lose it mentality with their budgets and it just kind of a different mentality. So I think that's a.
A temperature that's out there in the environment right now and that's something that we have taken into consideration as we think about how the rest of the year is going to play out.
I think the other dynamic that we hear from our customers is.
Our customers, especially if you think about our enterprise customers and the change agents, who are typically the ones advocating for the upper solution inside those companies and people like the node Karthik U S T.
They're the ones, who are the change agents and they actually see this moment quite often as the.
The moment when suddenly they they can actually forced their agenda a bit more because this is a scarcity moment, which forces everyone in the business to stop and evaluate what are they doing and how are they doing it and isn't the best use of resources. So this is actually the mono and these changes can kind of step to the table onset to the forefront the hey, I have an alternative here.
With up work that actually lets us achieve these objectives differently and it gives them a platform that needed during normal times or kind of Fattier times. They don't have that opportunity in the same way.
So.
Again, it's very hard for us to know how is the whole headwind tailwind pieces of the macro play out for us, but our T J <unk>.
Been hearing from some of them like this was an opportunity where scarcity drives a different type of conversation and advantage for them in promoting the agenda and data.
Advantage of knowledge, they have around our solution and what it can do for their businesses, which is really interesting.
Okay Fantastic and one a question on how kind of the spend per client has there has been certainly growing sequentially as well as any.
Any additional color on top of what you have already the smoothness to the why behind.
How that has been trending is there are there specific going to for new.
Where to go that are driving that or are there specific types of clients that seem to continue to drive those spend per client, which is clearly above and beyond what some of your peers do so wanted to see the why behind that as well as whole sister nimble is that a slow and gradual uptick as such.
Thanks, Ron I. Appreciate the question, it's really been a continuation of the drivers that we've seen in the past one it is very broad based it's yes.
It really is across all categories quarter. There are some categories are growing faster and slower than others, but in general it's fairly broad based and it's primarily driven by.
The relationships between clients and talent continuing to elongate the hours per project continues to get longer.
If you break down the size.
Spend per client into <unk>.
Projects per client hours per project NPL rate.
The hourly rate is.
The rate of increase in hourly.
Spend is basically in line maybe slightly down.
The projects per client continues to be slight a slight driver for really what we've seen over last couple of years, probably is that relationship dynamic which is what our book is all about continues to.
To drive forward as clients and talent by more and more value working together.
Okay, Okay Awesome in bank Jefferies and again now.
Good luck with whatever you do next it was great working with you.
Thank you so much right.
Thank you.
Please standby for her next question.
Our last question comes from the line of Andrew Boone with JMP Securities. Your line is open.
Alright, thanks, so much for taking my questions.
I was offered some really good detail on enterprise, but is there any way you can help us better understand the health of SMB in terms of cohorts or top of funnel traffic.
Thanks, Andrew.
Oh, sorry, I was going to say I think.
S. M. B business is really healthy there hasn't really been any changes of note.
From where we were last quarter, we mentioned that the even the softness we've seen you know has stabilized and some of the metrics that were impacted by the macro and as we've looked at things like our spenders who are.
At over $100000 in spend you know that number was up 32% year over year in terms of people leaning into our solution in a significant way even despite what's going on in the broader environment. So.
We feel really good about that.
Top of funnel.
Again that was the it's somewhat impacted by the macro and we have seen a slight increase in CPC use that.
Our N C. P. As that I think is driven by a couple of things. So we continue to monitor that and optimize our program around acquisitions. So that it is.
Healthy from an ROI perspective.
But the businesses is doing really well and we feel great about.
Where we've been with our growth our acquisition around the work marketplace and bringing customers in through the different new products that we've been innovating from catalog to consultation the talent marketplace continues to be you know a crown jewel for us and we are continuing to innovate new products in the pipeline.
While doing things like growing our sales team to tackle the enterprise opportunity, which includes graduating enterprise customers that come in through that marketplace have a great experience and then already for more than two build build even more programmatic usage. So I think all of that is in a really good place.
We feel good about we're just still in the early innings of unlocking that massive trillion dollar market opportunity with an amazing foundation that we're building on.
Okay.
And then for my second question I wanted to go back to marketing.
I thought the weather you guys frame that historically is that the $80 million of brand spend would basically be judged on the results that you guys are seeing so now that we're at the end of kind of October of this year.
How do you guys think about that spend and the effectiveness that you guys are seeing there. Thanks so much.
Best of luck.
Yeah. Thanks, Andrew I appreciate that thank.
Thank you for that question.
You know I think it's been a great couple of quarters as being the first campaign Gamesome lags and definitely start to move some of the needle on awareness and we're measuring that really carefully as he talked about in our last call. We brought onboard some additional partners with if so then you aim to both increase the efficiency and the measurement capability, we have around that program and with the.
<unk> of this most recent campaign.
We're really trying to make our dollars work harder because this campaign is all about having an even more breakthrough message and creative that really catches people's attention and drive that awareness without even increasing materially the spend level quarter over quarter, but having a bigger and pass through the powerful creative and the messaging around the old rules of work on that.
So we feel that this is a couple of quarters and we have learned a lot. We have used that to drive you know.
Even better creative.
Marketing and messaging through the different channels, we're using and are improving our measurement along the way. So we're getting even better insights that we're putting to work. However continue to adjust that program. So all of that makes us feel great about where we are as we are committed to achieving our brand goals, while achieving EBITDA profitability in 2023.
And I think that's where we know we will continue to measure this program and make dynamic changes as we need to you seeing the results and seeing that we were going to achieve those profitability targets.
Thank you.
Thank you. Thank you. Thank you.
There are no further questions in the queue I would now like to turn the call back over to Abbott for closing remarks.
Thanks on behalf of the entire upper team. Thank you for joining us today and thank you for your interest in our park the Canadian clarifications or have any follow up questions. Please do not hesitate to reach out to me at investor at upward Dot Com. This concludes our call. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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