Q4 2022 Fiverr International Ltd Earnings Call

Thank you for your patience and five are key for fiscal 'twenty to 'twenty two earnings conference call will be starting in a few minutes time.

[music].

Thank you all for joining I would like to welcome you to the slide that Q4 fiscal 'twenty two earnings conference call.

My name is breaker and I'll be your event specialist book, writing today's Coke.

After the Speakers' presentation today, we will conduct a question and answer session.

And if you would like to ask a question at this time. Please press star one on your telephone keypad.

If you change your mind I'm glad to withdraw your question. Please press Star then two.

And for greater assistance any point it stars Eli Thank you.

I would now like to hand, the call over to our host for today Tien Tsin, sorry Julien.

May begin when you're ready.

Thank you operator, and good morning, everyone. Thank you for joining us on fibers earnings conference call for the fourth quarter that ended December 31 2022.

Joining me today on the call on me, how Kaufman founder and CEO and Ofer Katz, President and CFO .

Before we start I'd like to remind you that during this call. We may make forward looking statements and these.

These statements are based on current expectations and assumptions as of today and Fiverr 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 fiber most recent form 20-F, and other filings with the SEC.

During this call, we'll be referring to some non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin.

A reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measure is provided in the earnings release, we issued today in our shareholder letter.

Each of which is available on our website at investors thought fiber dot com.

And now I'll turn the call over to my heart.

Thank you Tien tsin, good morning, everyone and thank you for joining us today.

2022 with a unique here.

Our response to the shifting macro environment, resulting in a headwind to the overall freelance demand.

Quickly pivoted the company to tighten our focus on efficiency and profitability.

And entrepreneurialism and knowing how huge long term opportunity is in front of us I must admit this wasn't easy.

But it was absolutely the right thing to do.

Not only does it help us navigate through the macro cycle and maximize long term shareholder value.

But it also brings a new level of energy and velocity across the company. We are more focused on fewer but more impactful projects, making faster decisions and feeling closer as a team.

Okay.

All of these efforts led us to a strong finish in 2022.

Revenue for Q4 was $83 million up 4% in line with our expectations.

We delivered our strongest quarter ever in terms of adjusted EBITDA above the top end of our guidance and representing an adjusted EBITDA margin of 11%.

Active buyers were $4 3 million stable with modest growth, while we reduced overall marketing spend and improved marketing leverage.

We are driving an increasing amount of business from non paid traffic with strong brand awareness and continuing engagement among existing customers.

Repeat customers now represent 63% of our core marketplace revenue compared to 59% in 2021.

Growth of large volume customers also continues to be robust those with an annual spend of $10000 or more grew 29% year over year significantly higher than overall buyer growth.

In 2023, you should expect us to continue strengthening our core business and operating an intensified level of focus and efficiency.

We will continue accelerating our pace towards long term adjusted EBITDA target of 25%.

Given the current macro environment. We believe this would put us in the best position to optimize our overall growth and profitability profile.

The long term secular trends toward remote work and flexible workforce remain intact. So we.

We believe it's just a matter of time for overall freelance demand to rebound.

When that happens, we expect to return to a strong growth trajectory, while being in much more profitable company than before.

The tech industry is also with a unique time with a significant amount of layoffs, among tick and knowledge workers.

Many have turned to freelancing is it temporary or permanent career choice.

Fiber, we are laser focused on making fiber of the best platform for independent talent to build business and earn a living.

Octave sellers in 2020 to reach an all time high with a record level of new sellers joining our platform.

Five years of unique ecommerce platform gives freelancers to freedom inefficiency to take orders from buyers instead of bidding and chasing after job opportunities.

We also operate the largest and most comprehensive digital services capital with over 600 categories at the end of 2022.

In recent years, we expanded our product offerings to include promoted gig sell.

Plus and costs advanced programs to provide freelancers with a dynamic set of advertising membership and finance tools to build their business.

All of these are the reasons why fiber organically a drop the freelancers.

All skills and across the world to our platform and also why we can command and industry, leading take rate of 30%.

Now I want to spend a minute talking about AI.

With the emergence of AI tools, such as touchy PPE. Many have questioned whether fibers business will be impacted or even replaced by AI technology in the future.

I'm actually very excited about the possibilities of AI.

Fiber will uniquely benefit from AI in these aspects first innovation always creates more jobs not less.

The recent AI tools presented to the world in the past few months of demonstrated a significant step function in the evolutionary progress of technology.

As much as these tools of incredible power, what really matters is how humans will make use of these tools to create inspiring creative work for other humans to consume.

As a result, you will bring many new professionals related to AI that we can't even imagine today.

In fact, these tenants are already coming to our platform.

We made a number of public announcements in January to share the volume of interest we see for AI related services and have once again demonstrated our swift response to market demand by introducing a series of new categories to address it.

Second AI tools will bring a lot of productivity improvement to our talent community and fiber is uniquely positioned to democratize and distribute these tools.

Freelancer community, who often lack access and resources to deploy those technologies.

Third digital service is highly fragmented unstructured and complicated so matching buyers and sellers through an E. Commerce model is a fairly difficult product challenge with.

With AI technology, we can unlock the long tail of data, we have and drastically improve the overall search browsing and the matching experience.

We're already working on some of these ideas.

With the macro headlines dominating the investor community. It is sometimes easy to forget how big the opportunity in front of us.

Nearly 40% of the U S workforce are already free answers with certain capacity today and that will reach over 50% by 2025.

Engaging a dynamic workforce that combined full time versus independent workers and onsite versus remote is increasingly becoming top of mind question for businesses of all sizes.

Fiber is highly differentiated from other freelance platform.

We have build a two sided market base with the largest selection of digital services.

Brand that people around the world that the Myer and passionate community of over 4 million businesses in the hundreds of thousands of freelancers in short we have an enviable foundation with scale competitive moat and the best in class business model.

Yes, we are still in the first inning when it comes to unlocking the full potential of fiber.

To do that and especially under the current macro what becomes clear is that we need to give the core market base much more attention and take a more focused approach and prioritize past flawless execution.

We have set three straightforward priorities for 2023.

First improve comparability in the marketplace.

Hundreds of thousands of sellers and millions of services listings, we must deliver world class search and discovery technology to surface exactly the right breadth and depth of inventory tailored to each buyer.

Second create differentiated category experiences.

With so many different types of digital services offered on our market base, some visual and others non visual we need to provide sellers with robust tools to express their talent and their work.

Third improving engagement and retention.

There is tremendous potential to grow our wallet share among our buyers.

And to do that we need to make sure that the fiber brand delivers trust and reliability throughout the buying experience.

Brand awareness for fiber is high and so is our NPS score.

This gives us great strength upon which to build and then we need to continue to build our platform top of mind choice for our borrowers when they have a need.

We are already working with urgency towards executing these initiatives.

In conclusion, we are extremely encouraged by the progress we made last year to strengthen our focus and efficiency within the company.

In 2023, we are confident that our nimble more cost efficient structure can support the work we need to do to win.

We expect to attack exciting growth opportunities, while driving adjusted EBITDA growth at a faster pace than before.

With that I'll turn the call over to Ofer, who will walk you through our financial highlights.

Thank you Lee and good morning, everyone.

We ended 2022 on a strong note.

Revenue of $83 1 million came in higher than our baseline expectations and adjusted EBITDA of $9 4 million or.

11, 3% and margin was above our guidance range.

We took the challenge and opportunity of the macro environment and brought the operational excellence of the company to the next level.

This small because the strongest quarter in terms of adjusted EBITDA, So far in our history.

Just the beginning.

As Michel mentioned.

We'll build on our progress we made on plenty of 'twenty, two and continue to execute with discipline and focus this year.

With the adjustments, we made last year I believe let me finish III as well.

Bring steady improvement in our growth trajectory.

If anything the faith, both our long term profitability targets.

The underlying dynamics of our business continued to show resilience.

I think buyers for Q4, $4 3 million up 1% deals with it.

With the outside of this cohort from the pass through yield going through that initial period amortization.

You are encouraged to see the overall active buyer furnished stabilizing.

At the same time, we are moderating our marketing spend in the current smartphone environment with SMB sentiment is low and the spending appetite limited.

We believe it's important to maintain discipline and efficiency rather than leaning in.

As you can see.

Performance marketing continues to be the strongest around <unk> X.

And while improving our overall sales and marketing expenses as a percentage of revenue.

Going forward, we expect Q1 'twenty three.

To be the throw in terms of occupancy growth and it will improve steadily in the latter half of 2023.

<unk> for Q4 was $262 up 8% the overview.

We continue to make progress and going up market.

The majority of the spend growth and plenty of swimming pool accrual during the first half of the year as.

As the headwind in SMB spending that intensified later in the evening.

Certainly felt across all of our call.

As we mentioned in the shareholders letter in any of the previous year.

Very consistent with our buyer typically increase the spend on the platform from the first half of the year to the second.

As our wallet share of expand overtime.

And as the holiday season drive additional investment.

In 2020, however, alcohol experienced some decline in spend in the second half of it is worth noting that despite the headwinds we continue to see our upmarket initiatives bearing fruit.

Larger wallet share by those who spend over $10000.

<unk> to be the fastest growing segment among our bias.

Looking forward given the lack of concrete timeline of the recovery of SMB sentiment. We believe the expansion of penta buyer would be relatedly muted compared to a typical year and our revenue growth will be contributed by active buyers in penta buyer in a balanced manner.

Takeaway for the quarter was 32% in Q4, representing a yield of interest.

Expansion of 100 basis points.

We continue to believe our take rate will be sustainable with the modest upside over time driven by value added services.

We are seeing healthy growth in both promoted give them filler plus program and we expect to continue doing so in 2023.

Now, let's turn to guidance.

The full year of 2023, we expect revenues to be in the range of $350 million to $365 million.

Representing growth of 4% to 8%.

Adjusted EBITDA is expected to be in the range of $45 million to $55 million.

Representing an adjusted EBITDA margin of 14% at the midpoint.

For the first quarter of 2023 revenue is expected to be eight to $6 five to $88 5 million representing growth of zero to 2%.

EBITDA is expected to be nine to $10 5 million.

Presenting an adjusted EBITA margin of 11% at the midpoint.

Our Q1 and full year guidance reflect the current macro dynamic as well as the visibility we have on our historical cohorts.

<unk> funnel in the current environment.

We believe the first quarter will be the most challenging in terms of the revenue growth rate due to the comparison Q1 'twenty one.

When growth was minimally impacted by macro headwinds.

We expect.

Revenue growth rates to improve over the course of 2023, and we would expect to exit 2023 with double digit revenue growth rate at the midpoint.

So adjusted EBITDA, we expect to build upon the progress we made in 2022.

And continue to focus on cost discipline and operational efficiency.

We're committed to delivering our adjusted EBITDA guidance this year like Atlas of muscle condition, and our revenue 11, we'll achieve this by dynamically adjusting our cost structure throughout the year.

Our marketing unit economy continues to be very healthy and we will continue to be disciplined and expect to drive meaningful leverage on our sales and marketing expense line.

We are entering 2023 with a very confident and.

And we believe we are in a great place in terms of both business and financial tragedy.

Just whether this uncertain period.

The market opportunity in front of us is enormous.

We will emerge out of this macro cycle.

As a stronger and more profitable company and continue our journey towards realizing our future pension.

With that we'll now turn the call over to the operator for questions.

Thank you as a reminder, if you'd like to ask a question. Please press Star then one on your telephone keypad now.

Yeah.

If you change your mind anytime please go staci.

The first question we have comes from the line of.

Ron Josey with Citi. Your line is open.

Great. Thanks for taking the call. The question behind over I wanted to ask just about active buyer and demand trends geographically et cetera. So can you just talk to us about the trends you saw in four Q around active buyers.

Insights on where you saw maybe improving stabilization or demand trends geographically you call it the states or Europe .

And then in your prepared remarks, you talked about one of the few different priorities for this year one of them was around improving comparability in the marketplace given how many sellers and listings you have talk to us about how those might improve just overall demand and the awareness on the marketplace. Thank you guys.

Thanks, Ron.

Good morning, I'll start maybe with the second question.

So what's really important is as you grow a massive catalog is to provide with our potential customers.

The ability to actually shoot faster.

So comparability is all about data, it's about our ability to convert customers better because they spend less time figuring out what is the right service for them.

And given the fact that some of our services, our visual and some are non visual.

The task is pretty complex.

And this is an area, where we invest a lot in because its really improve.

Click through rate and conversion.

<unk> are key to being able to drive more business.

And allow people to find faster what they need.

And Ron This is also on the on the active buyer from.

We think that the.

The main.

In fact, I'm actually buyer.

The macro economy, and we I can I can break down the answer into two different 233 different layers. The first is at.

In facts.

There is less effect.

On the demand.

Which means that we see less and less.

And paid traffic.

Have you can say that.

As soon as there is a few of impression.

We are actually spending a little bit less in performance marketing.

Acquiring a small cohort and maintain overall efficiency.

In terms of DIY as you probably noticed.

And lastly in terms of existing cohort.

SMB, our coosa has some spending.

Which means that.

The appeal of the appeal of a little bit less.

There is a softer retention for alcohol.

So so on top of that I would just add that Colby.

Our mowing the stabilization period.

Which is about to be and.

To address the second part of your question.

The trends we are seeing is of course, a whole cohort. It's not does nothing for us to control. This is where the control to come in terms of the impact which is directly related.

The macro headwind.

Okay. Thank you all for as they give me huh.

Thank you Rob.

The next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead, when you're ready.

Thanks, So much maybe two if I can first following on Ron's question I Wonder if we could just turn to spend per buyer and how we should be thinking about either from a cohort perspective or on a reported basis, how the macro environment sort of will impact that and how you think about the <unk> spend per buyer.

Given the volatility from macro environment going forward over the next couple of quarters and then the second question would be can you talk a little bit about if the macro environment were to stabilize and improve how quickly. We should think about areas of investment that you would want to quickly sort of turn and redeploy capital back into the business to sort of stimulate.

Growth and what those areas might be thanks, so much.

I will stop.

Uh huh.

By trying to address the first question.

Hunter by them.

And I think that it's the first time in the history of FIFO, where we saw the second half.

Central buyer declining.

Comparing the first half.

I'm thinking about 2022.

Still a decline of 3% in the span compelling one.

Previously.

We have seen and improve.

8%.

From from the first half to the second.

But.

To continue this discussion you don't spend per buyer, we present them as it was.

<unk>.

Taking into account.

Buyer who's been modem.

More than the evolution of course led.

To give some other.

<unk>.

I think we mentioned on this call theres less of that.

Buyer, who spend more than $10000 actually.

Grow by 30%.

Then goes to.

High value buyer, those who spend more than 500, they now represent 63% of the business compelling 59, a year ago, So things that in terms of our investment.

And go up going up market.

Initiative.

For clothes growing marketing.

Should we see a very good signal, but these are kind of offset.

By the SMB.

F&B headwind.

Long term.

We learned that Brooklyn weekly.

And by 262 now when we look into into next year.

At least at the beginning.

Some tough comp because of last year.

But going into the second half of the year.

We expect acceleration.

Underpinned by our.

That's what we see in this this is not included.

In our guidance.

Yes.

Thanks for the second question Eric.

So in terms of macro improvement given our E Commerce model, we will benefit from the transfers and benefit the most.

The fact that our underlying business fundamentals remain strong.

Means we will see turn of growth trajectory very quickly much much like we've seen the headwind.

Of course.

One of the first companies in the Mark to reported in terms of investment.

It gives us the opportunity to lean into marketing of course.

And it also the opportunity to.

<unk> and retention as well.

And.

Also obs the support our continuing.

<unk>.

We're pushing as long term initiatives like like fiber business.

Thank you.

Thank you we now have Doug.

J P. Morgan. Please go ahead. Thank you. Thank you Dan.

Thanks, so much for taking the questions. So just following up on the <unk>.

The ability you would record quarterly EBITDA in <unk> and talks about being committed to the accelerated pace of margin expansion. This year can you just talk about some of the key drivers and factors here.

On what's still muted, but an improving revenue growth through the course of the year and then also just related to Eric's question. What are those key investments that you still need to make this year kind of within that construct.

And the accelerated pace of margin expansion. Thanks.

Hey, Doug So I think it's I'll start with discipline.

And the impact.

The cost reduction plan that.

We did mid of last year.

Which is now has a full implication on the P&L.

Jim.

Does this kind of set this and go all the way from.

Operational expenses to head count.

Two marketing.

Two marketing efficiency.

In terms of.

Future.

Future head count reduction there is there isn't any plan for additional head count reductions throughout the year yet to be said if you go back to the way we manage.

Opex in the last few years.

We realize this is a dynamic business.

And we respond.

We are committed to EBITA.

Guide.

Whether we meet the guidance whether there is some.

Tough.

Or more.

Intensive headwind.

Things that we do have some flexibility in the business.

And the discipline.

<unk> high enough for us to fill the confidence.

For this footprint thing that the EBITA step functions that we are doing this deal.

Is on the path for the long term EBITDA as we originally committed.

We feel really.

Very confident.

Through this period.

Okay.

Kind of a slow growth, we are still able to execute and double the EBITDA.

Yes, and as for Europe .

Second part of the question.

I think.

As mentioned our investment in the core market base.

You mentioned three ones, which are allow us to capture more of the existing trends that we're seeing.

One is the improved comparability search and discovery the differentiated experience.

Given the different types of services and engagement and retention so improving trust.

And meat buyers, where they are on top of that I would mention.

Continuing push or on the go to market on fiber business.

Which is leveraging the market based traffic and user base.

There is lots of work going on on customer segmentation to identify high potential customers.

And bill conversion tools around them.

And we're also building the external partnerships to open up channels and build specific uses.

With partners.

It's a little bit early to talk about.

Something we will be able to talk probably more in the future hopefully in the second half of the year.

So these will allow us to.

As investment.

<unk>.

Side by side with cost discipline to continue pushing the business.

Great. Thank you Bill.

Thank you Doug.

I'll have Jason Husky and humor.

You May proceed with your question.

Thanks, Good morning.

Just two questions one just.

Technically can you just outline.

Just how we should be thinking about the reduced expense growth.

So how much specific leasing and marketing versus R&D versus G&A through the way to kind of parse that.

And then.

Are you.

Do you think about marketing any differently now than you did in kind of pre COVID-19 and 2020.

Is it the same playbook and just adjusting spending levels or are you do anything differently because youre seeing.

Different.

Behavior different services or different behavior from high spend buyers versus low spend buyers just some color there. Thank you.

Jason on the first question.

Of course.

The Opex leverage is mostly on the SMN <unk>.

So the marketing.

With some flavor from RMB.

In June and G&A, but it's mostly about us as a magazine.

Yes, and on the marketing what I'll say is one our marketing is very adaptive meaning that on a regular basis.

We.

Check.

Many strategies depending on trends.

That we see in the market, sometimes it's different categories, depending on the time of year.

Sometimes it's just the emergence of new categories.

What we're doing now is really maximizing or keeping the efficiency of our marketing.

Cost changes.

The overall top of funnel in terms of demand for freelancing is changing what we're doing is we're diverting.

Budget between different channels.

And between brand marketing and performance marketing as needed, but I think that if you look at the.

The overall cost or the time to return on investment when our marketing you see that it keeps being extremely attractive and were able to maintain that despite the fact that the market is very very different and we achieved that by being highly dynamic and employing a lot of marketing automation technology.

We have developed throughout the year.

Okay.

Thank you.

Yes.

Our next question comes from.

Danny.

Anthony <unk> company. Please go ahead when you're ready.

Thanks.

Thanks for taking the questions maybe to start just double digit revenue growth guidance to exit the year does that imply anything for an improvement in the macro and then second just on AI. We get this question a lot just whether it's a friend or faux for Fiverr.

Long term, how do you think AI will impact the UK use case for freelance talent and do you guys have an estimate for what percent of the gigs on your platform could be impacted by thank you.

Hey, Manny.

First question.

And thinking about how we guide.

For 2023 with the assumption that.

The first quarter is going to be most challenging in terms of growth.

Because of two reasons the first call.

Hello.

But also because of that.

Utilization of <unk>.

Wow.

Great.

Looking into the end.

Yes, we do we do expect double digit.

And the guidance.

As a whole.

It doesn't include.

And the rebound.

What will change in the macro environment.

And such event, we had them.

Definitely be one of the first company to to enjoy.

To see the impact.

The.

Combination of the <unk>.

Healthiness of the business.

The ability to stay really really fast when there is an opportunity.

Unmatched.

Interesting.

So thats.

Maintaining a very healthy business.

Pretty good stability.

The stability.

Scenario gives us very good heads up.

One time would change but in terms of 2023 guidance. It doesn't include.

Such rebounds swing up existing Montreal economy.

Let me address that.

Question about.

About AI.

So when I think about AI AI is definitely more from <unk>.

Being a techno optimists.

I think that technology.

It can be there for the benefit of the quantity.

Oh great.

And in general what.

Think about AI, it's definitely a step function in computing.

So really what's interesting.

Human use these tools to produce new thing.

And that could be around writing that could be around.

Graphic design that could be about video editing and many other fields.

That there is a natural evolutionary step between generations I mean, when I'm looking about.

The amount of job.

That path through generations for my.

Grandfather to my father or from my father's generation to mind, obviously, some jobs become obsolete.

But my view is that the new jobs created will far exceed those impacted by AI and <unk>.

If you think about AI, specifically, it's already generating.

<unk> of jobs in just draining AI.

And then it's about optimizing in it and then it's about creating use cases for it.

And what we're seeing in the marketplace right now is that there is a new cohort that is growing very very fast.

AI expert.

Because even though the output that AI is producing.

Very impressive probably what you and I can produce with it is pretty mediocre into.

And to really get to breath, taking result, you need experts that know how to operate these tools.

So I'm very excited about AI and right now, we're mostly enjoying the upside of being <unk>.

Probably the first market base in the world.

To include these new progression and being the first place in the World, where you can find and access these professions and we see the increased demand for those professional so we're very happy with us.

Okay.

Thank you, we now have Matt <unk> with Piper Sandler. Please go ahead, when you're ready.

Thanks, guys. Congrats on the really strong results here difficult environment.

Maybe just to focus in a little bit more on the move up market, how have conversations or momentum with potential customers changed.

To start the year budget cycle climate flushed out in Q4 is there some hesitancy around stepping in and are spending more right now with these larger buyers or are they leaning in to leverage your platform amid the uncertainty.

Hey, good morning. Thanks for the question. So right now what we're seeing is these cohorts are not really being impacted by macro at least within what we're seeing and maybe it is because that historically fiber has been more of an SMB market.

Now getting into the mid market the customers that we have are only finding more ways of finding fiber and therefore, we called out the fact that those types of customers those who spend over $10000 are growing and representing a very nice percentage.

All of our business. So for now at least we're seeing less of a headwind on that and given the fact that is still the majority of our businesses micro and small businesses.

They are a little bit more hesitant and cautious about about spending because of because of macro.

And maybe one.

On innovation.

Guys have continued to innovate and introduce new products. Despite pulling back on some of the spending in certain areas as of late.

How should we think about the cadence of innovation or upgrades or updates rolling out in 2023, just given the backdrop that we're in thanks.

And I think in my I believe that in my opening remarks, I said that what we're seeing is we're actually seeing our velocity going up.

Able to work faster, but we do it more focus.

Meaning that we peak.

Projects that we believe can present more of a step function.

And we pushed harder and faster.

These projects so if anything as a machine we operate much better right now.

Despite the fact that we've been.

We've had to focus on optimizing and being very disciplined about.

The cost structure.

Thank you.

Now have Brad Erickson of RBC capital markets. Your line is open.

Hey, Thanks for taking the question. This is Logan on for Brad.

Just another one on the <unk>.

Like what is the early searches you guys see from buyers reflect in one of the problems, they're trying to solve and then.

What are the biggest efficiency opportunities do you guys anticipate or are seeing with freelancers, thus far and any impacts.

On the model from AI.

2023 sites.

I think we're now at a pretty early stage of what we can tell about this and I think it's.

It's much more of an exploration.

Than anything else.

We're seeing is we're seeing obviously, we're seeing increased demand for AI artist.

We're seeing more demand for AI developers that develop tools around those new technologies, whether that is GPT or other technologies relating to.

Writing graphic design.

So and so forth.

On top of it given the fact that that technology is far from being perfect.

Around writing there is a lot of.

Issues around Copywriting and the accuracy of content.

So theres a lot of talk checking services around this and I think that this is this is really important.

And the same goes for any other type of content generated by AI.

<unk> requires.

Human research.

Both to get the perfect result, but also to ensure that it is accurate.

And meet the customer demands.

So we're seeing a list of categories that are being created extremely fast and I think that this is one of the strengths of fiber being able to be quick swift on responding to things that were invented yesterday and offering those those services.

And I think that this is this is this is a lot of our power lies in the us.

Okay.

Thank you. Our last question comes from the line of Angie Payne JMP Securities. Please go ahead, when you're ready.

Thanks, so much for taking my questions I'm going to try three.

So can you talk about the cohorts for 2023, how should we think about just the stabilization. There is it does it in real time as it now kind of at a level, where you expect that to be steady going forward.

You're investing in TB in Germany can you provide a real time update on Europe , and anything you're thinking about there and then lastly, we heard a little bit less about fiber business this quarter.

Is there any update that you want to provide there. Thanks so much.

Yes.

Yes.

No.

I will start with the with the cohort.

And distinguished quote them too.

<unk>.

On Mueller co hope in future cohort and what is included in the guidance.

This is the kind of platform so.

Alcohol.

We.

Experienced the uplift.

The COVID-19.

<unk> also experienced the headwind.

The muscle.

Macro change.

Joining us Knoxville.

Phil.

Lending more than pre COVID-19, but less than.

Less than what we've seen.

Top of the Covid.

This cohort Fabian.

And we anticipate them to be loyal and continue to spend them as they need more services.

The cohort who join us during the Covid period didn't enjoy the uplift.

Hence the retention is a little bit lower.

And this is kind of the model as we produce new cohort.

Into the into the foreseeable future.

So that's our model was always when we guide as always to guide based on what we know.

And what we know as of now.

What I, just said in terms of retention and behavior.

This is.

Give us.

<unk>.

Unfortunately, <unk> opportunity because we do believe that.

We do believe the macro.

Will rebound at some point.

In fact, even with this kind of behavior, we are still.

Profitable.

Very strong CLI ability to acquire.

And with things that there is a lot of underlying asset <unk> that would mature when it comes time.

And bring us to the net.

So but in terms of what we have seen in cohort one we anticipate the things I think that that's kind of the picture of the kind of what we are seeing now.

Andrew Let me address that.

It's about Germany and fiber business.

So in terms of the investment in Germany.

We're more focused.

In our international expansion. This year, so we're focused on Germany, and the non English market in UK and the English countries.

We did work around transitioning the past years and now it's more about growing local audience and providing product optimization.

That are tailored to the local customers.

And they are.

Purchase preference and demand.

And we continue to invest in brand and awareness, we mentioned a few campaigns and PR activities. We did recently in our shareholder letter as well.

Referring to rise.

Two more details there.

Terms of fiber business I think I addressed that in previous question.

Maybe and said that fiber business.

Is where are we continuing to push the.

Going upmarket strategy.

We're leveraging the market base, our traffic and user base.

And as I've mentioned, there is work done around customer segmentation.

Identify those high potential customers.

And build those conversion tools.

Those customers.

No I.

I briefly mentioned the fact that.

We're building external partnerships.

Which we believe can open up channels and build specific use cases.

Partners, then I said that.

We'll be happy to provide more information about that hopefully in the second half of the year.

I would maybe close by saying that our fiber business continues to be.

Our focus and priority for us there's lots of investment going into it.

We're seeing strong early signs.

And.

And with continued robust growth in large volume customers.

So.

We continue to be very excited and put put investment towards it.

Thank you.

Alright, thank you.

Thank you I would now like to turn it back to you.

Dr Krishnan for closing remarks.

Thank you Bruce.

I appreciate the moderation today and thank you everyone for spending your morning with us.

We look forward to speaking to all of you soon have a great day.

Okay.

Thank you for joining that does conclude today's call. You may have you may now disconnect your lines and please have a lucky day.

Yeah.