Q2 2023 Upwork Inc Earnings Call

August 2, 2023

Good day, and thank you for standing by walking to the upward second quarter 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question answer session.

Last question during the session you will need to press star one on your telephone you were then here.

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Please be advised that today's conference is being recorded.

I'd like to hand, the conference over to Speaker today, Evan Barbosa, Vice President of Investor Relations. Please go ahead.

Thank you welcome to upwards discussion of its second quarter 2023 financial results. Joining me today are Hayden Brown, <unk>, President and Chief Executive Officer, and Eric Gessert upward 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 laws.

Looking statements include all statements other than statements of historical fact this.

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.

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 and on our Investor Relations website as well as the risks and other important factors discussed in today's shareholder letter.

All information will also be set forth in our quarterly report on Form 10-Q for the three months ended June 32023.

In addition reference will be made to certain non-GAAP financial measures information regarding a 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 that upward dot com.

As always unless otherwise noted reported figures are rounded and comparisons of the second quarter of 2023 or to the second quarter of 2022, all financial measures are GAAP unless cited as non-GAAP now I'll turn the call over to Hayden.

Thanks, Kevin and thank you all for joining us today.

In the second quarter of 2023, we made strong progress on delivering innovative solutions for our customers and driving terrible profitable growth.

We achieved better than expected results across our financial goals, while making significant strides in generative AI and growth across our business.

This resulted in second quarter of 2023 revenue of $168 6 million up 7% from a year ago, and adjusted EBITDA of $14 4 million.

Eric will go into greater detail on our financial results later in the call.

As we discussed in our first quarter earnings material, we moved quickly to adapt to the macroeconomic environment by reducing costs, primarily in brand marketing and through reductions to our workforce.

Throughout the quarter, we identified and implemented supplemental cost savings measures, including an additional reduction of brand marketing investments de prioritization of lower return on investment vendor expenses and consulting projects and reassessment of hiring plan to focus on our most important strategic initiatives.

We expect to continue to identify new areas of efficiency within our organization and at the same time continue to invest prudently in our focused areas of growth that we see across the business.

One of the most important and diverse growth opportunities for upward is in the AI space and we are delivering on this opportunity by serving clients with the singular destination for sourcing the full breadth of AI focused talent they need premiering new AI powered features for discovering and Matt.

With expert talent across every category of work.

And ensuring talent on a park have access to the most modern generative AI tool to supercharge that productivity and quality of work.

Collectively these steps move our customers closer to unlocking the magic of upward to accomplish more than they ever thought possible.

We continue to see clients come to upward for the professional and solutions they need to execute on their most ambitious AI initiatives.

Irene talent spanning roles from prompt engineers and AI model trainers to researchers data Annotators Agco checkers.

Outstanding growth in this category of work continued in the second quarter as AI with the fastest growing category up work in the first half of 2023.

In fact, degenerative AI job posts on our platform were up more than 10 X while related searches were up more than 15 F. When comparing the second quarter of 2023 to the fourth quarter of 2022.

Over the past few weeks, we unveiled the first of many generative AI innovations in our ecosystem, which we expect to further accelerate our momentum and that's flourishing space.

On July 11, we launched a new centralized AI services hub that connects clients to highly skilled AI focused talent fees.

Features partnerships with leading AI providers and highlights resources and tools for businesses and talent looking to boost their work with AI.

We further advance this priority through a partnership with open AI announced earlier this week, establishing open AI experts on a park.

This program provides opening up customers and other businesses access to highly skilled prevented independent professionals deeply experienced with the open platform. So they can bring the power of open AI technologies to their products solutions and project just as our forecast.

Open AI is leveraging talent from the upper marketplace can support its own innovation and growth and quickly saw the value in helping its customers connect to talent on up work leading to the new partnership.

In the second quarter, we implemented changes to our sales team and strategy generating improved productivity and increase revenue, while reducing staffing and expenses.

We grew our enterprise customer base, adding notable new enterprise clients like Mastercard R. R Donnelley and Las Vegas Sands during the quarter and enterprise revenue grew 16% year over year.

We have continued strong conviction in the long term opportunity and our ability to execute on our enterprise strategy and took a significant step in driving that strategy forward with the appointment of <unk> as our new general manager of enterprise in the second quarter.

He brings a wealth of experience in building businesses and go to market strategies and we are thrilled to gain her leadership of this important growth vector for our park.

We are pleased with the rapid progress we've made against our priorities of driving durable profitable growth innovating to make upward the preeminent destination for AI related talent and work.

And driving growth within our enterprise business during a time of change.

Our confidence in our long term growth opportunity for upward is unwavering we are.

Proud of the advancements we made in the second quarter and our stellar team members, who executed them and we're excited about the future.

I'll now turn the call over to Erica to discuss our financial results.

Thanks, David.

Hello, everyone. It's great to be here for my second earnings call. After about three months on the job.

Today, I will discuss our financial results for the second quarter of 2023, as well as our revenue and adjusted EBITDA guidance for the third quarter and updated guidance for the full year 2023, which we included in our shareholder letter issued today.

GSV again exceeded $1 billion in the second quarter.

Revenue grew 7% year over year to $168 $6 million in the second quarter with marketplace revenue of $156 6 million.

Representing a year every year increase of 9%.

Managed services revenue was down 5% year over year to $12 billion, well enterprise revenue, which is reported as a part of marketplace revenue was up by 16% to $14 3 million.

Total revenue growth was primarily driven by pricing changes related to the shift to our current marketplace offering in April 2022.

As well as other platform monetization strategy associated with Peanuts, and the implementation of the contract initiation fee in the quarter.

We believe that many of these monetization strategies like moving to a simplified single rate pricing structure for freelancers.

And removing rebates for freelancer bids on contracts have helped to simplify and improve our customers experiences on our platform.

Total take rate in the second quarter was 16, 3% up from 16.0% in the first quarter of 2023 and from 15.0% in the second quarter of 2022.

Active clients grew 2% year over year in the second quarter to 822000.

Active client growth was driven by a year over year increase in our retain currently.

We offset by relatively flat new client acquisition.

<unk> proactive premium increased 2% year over year to $4987.

non-GAAP gross profit was $128 2 million for the second quarter.

<unk> and non-GAAP gross margin of 76% compared to 74% in the second quarter of 2022.

non-GAAP operating expenses for the second quarter were $115 7 million or 69% of revenue compared to 77% in Q2 of 2022.

Total operating expenses in Q2 were down 4% compared to a year ago.

This reduction is the result of cost saving measures. We took at the management team in Q2 to reduce spend and lower aro activity and reinvest in innovation and growth.

non-GAAP R&D expense in the quarter increased by 24%, while sales and marketing and G&A expense lines were both down significantly year over year.

Transaction losses also had notable year over year and sequential improvement.

Provision for transaction losses was down 62% compared to a year ago.

This strong result is due to the stellar work of our Friday luck teams and reducing both charged back rates and the rates of fraudulent activity on our platform, which also resulted in a reduction in fraud protection fees paid to our third party vendor.

non-GAAP net income was $13 $5 million in the second quarter compared to non-GAAP net loss of $4 7 million in the second quarter of 2022.

Our non-GAAP net income per basic and diluted share with Tencent in the second quarter as compared to non-GAAP net loss per basic and diluted share of enforcement in the second quarter of 2022.

Adjusted EBITDA was $14 $4 million in the second quarter compared to an adjusted EBITDA loss of $1 $9 million in the second quarter of 2022.

Our strong adjusted EBITDA over performance is a direct result of aggressive management action to reduce costs across the business, particularly in sales and marketing and in G&A to fund growth.

Adjusted EBITDA margin was 9% in the second quarter of 2023 compared to adjusted EBITDA margin of negative 1% in the second quarter of 2022.

Second quarter 2023, adjusted EBITDA includes approximately $2 5 million of nonrecurring severance related costs.

Turning now to guidance.

We are guiding third quarter revenue to be between $165 million and $170 million and we are raising our full year revenue guidance to be between $665 million and $675 million, representing 8% year over year growth at the midpoint.

We are raising our revenue guidance, primarily due to the success of our simplified pricing structure and other platform monetization in prison.

We expect third quarter, adjusted EBITDA to be between 14 million and $17 million, which represents an adjusted EBITDA margin of eight 5% to 10%.

We expect the cost savings actions, we took earlier in the second quarter, along with additional cost saving measures taken throughout the quarter to yield incremental benefits over the remainder of 2023.

Because of these actions and our improved revenue outlook, we are raising our full year 2023, adjusted EBITDA guidance to be between 50 million and $55 million.

Which represents an adjusted EBITDA margin of between seven and eight 1%.

With this guidance, we are now expecting adjusted EBITDA in 2023 to be more than double that of any years since we went public.

We also expect to generate positive free cash flow going forward.

Before I turn it over for questions I'd like to provide a few reflections on my first quarter at work.

I came into this business excited about the strength of our perks two sided network the power and potential of our enterprise strategy and the extraordinary enablement power to our business in the islands.

Having now been here for a quarter my excitement continues to grow.

That work is in a strong position to be able to invest in growth profitably grow free cash flow.

And to be at the forefront of one of the greatest technological developments and work enablement of our time.

We have a fantastic management team and a wonderful dedicated workforce that has proven our ability to execute on our plans quickly and effectively.

The leadership team and I will continue to focus on innovation and cost discipline and identifying the highest ROI investments to generate durable profitable growth and shareholder value.

Thank you and we'll now turn the call over to your questions.

To ask a question. Please press star one one on your telephone and wait for your name to be announced to enjoy a question. Please press star one again please.

Please standby will compile the Q&A roster.

Okay.

One moment for our first question.

Our first question will come flying with.

Eric Sheridan from Goldman Sachs. Your line is open.

Thank you so much for taking my questions. Maybe first obviously, there's been a fairly volatile macro environment, you've got to deal with in the last couple of quarters could you take a step back for us and help us better characterize what you're seeing in the broader macro environment in enterprise activity levels and how that's impacting the business today versus maybe.

Three or six months ago, and with some of the reorganization and refocus within the company that you highlighted during the remarks can you also bring that back to talking about client acquisition activity and or elements of retained clients spend protein clients and how we should think about some of the trajectory around those.

<unk>.

Through the remainder of the year. Thanks, so much.

Thanks, Eric.

In terms of the macro question I'd say, we did not see major changes in Q2 and how clients are navigating.

Environment is this quarter versus the prior quarter. It was really a quarter with some mixed market signals and I'd say for enterprises, specifically the part of the business you are asking about which is obviously a smaller part of our business, but you saw corporations, we're still showing you know.

Sales cycle elongation in some budgetary caution.

And at the same time, our own execution really did continue to improve throughout the quarter. You know we made our changes on the sales team side in May and we drove notable productivity improvements throughout the quarter, which were really showing through in the increased outlook that we have for the remainder of the year as well as the numbers we had for the quarter. So we saw 16%.

Rose and enterprise revenue the expansion of enterprise logos with the addition of 19 new accounts in the second quarter, including really great names like Mastercard R. R. Donnelley revenue per account manager, our AAM and our team was up 100% quarter over quarter and land team productivity was up 13% quarter over quarter.

With only one month of the quarter really fully operating with our optimized new model.

I would say, even though the quarter itself didn't have different kind.

Kind of macro environment, our execution was a lot.

It was continuing to improve and I think that gives us a lot of confidence that we don't need to wait for a different macro environment to continue to drive really great performance. In this part of the business I'll hand, it to Eric to talk more about some of the active client trends you were mentioning I guess sure. Thanks, Hayden and hi, Eric just to follow up actually on the Haynes last point too I would just add that.

Our updated guidance doesn't contemplate any change to the macro environment and we havent really included that in the guidance I think we.

We still are sort of not you know our guidance does not tethered to macroeconomic changes.

Depending upon the execution and kind of improvements that we're seeing in the business I'm actually quite fun.

If we look at you know 10 clients retain claims are up four.

<unk>, 4% year over year, and and and and I would say a.

Client acquisition point of view actually shut down very very slightly sequentially less than 1% and if you recall three quarters ago, I think it's really transition to a more value oriented acquisition approach.

Ensuring that we adhere to a very very strict L. T v's threshold from the acquisition and so that value versus volume approach as is reflected in these acquisition numbers.

Obviously, our active client number is a trailing 12 month metrics. So.

That activity is it shows up in these numbers and we're also obviously you're still lapping really strong growth on the trailing 12 months comp.

I just also note inactive clients our enterprise client base continues to grow very steadily.

Both year over year and quarter over quarter.

Great. Thank you.

One moment for our next question.

And our next question comes from the line of Andrew Boone from JMP Securities. Your line is open.

Thank you so much for taking my questions I wanted to go and ask about AI, it's really nice to their product announcement. This quarter in terms of the AI hub. What are you guys hearing from clients what are they asking for and then Additionally have you guys seen any headwinds across many other categories.

Sure since you asked about client demand I'd say, we're really seeing it.

<unk> growth in the area of AI itself.

<unk> AI job posts are up more than 1000% related searches are up more than 500% this quarter versus Q4 of 2022 and so the commentary we're hearing from clients is.

As much as these tools are exciting they really need help from talent to implement them into their business solutions.

And that's what they're coming to us for that talent, they're also willing to pay a premium for that talent wages for generative AI related jobs come in at 50% premium over other related jobs in the marketplace. So.

Bigger picture for us on generative AI is really around robust demand from clients for the right talent to do this work and more broadly.

Eagerness to see the productivity gains from from talent around this so talent are adopting AI tools and pretty much every category that we serve across the 125 plus categories on the site and this is driving increased productivity better outcomes for clients.

Wages as I mentioned and virtually no negative impact in the vast majority of categories that we serve so this is a really exciting story for us.

That makes a lot of sense and then I wanted to ask about just the second half EBITDA guidance.

You guys had a significant beat here in <unk> and it's it certainly brought up in terms of the rest of the year, but maybe there could have been more can you just speak to whether there is conservatism there or what else is kind of being factored into the EBITDA guide for the back half. Thank you so much.

Yes, sure I'll take that one Andrew.

So if you could kind of unpack our EBITDA guidance. It does contemplate kind of steady margin.

Margin improvement kind of quarter, one quarter through the rest of the year last quarter, we talked about the fact that we.

Specced into kind of ex figure approaching that 15% EBITDA margin. This this this guidance still honors that expectation that includes that.

And I'd say.

We are because we've identified quite a few areas for cost savings and we're going to continue to run I would say kind of a thoughtful and multi quarter approach to identifying cost savings.

But we're also a topline growth business right and we want to make sure that we continue to invest in topline growth as well as continue to steadily improve EBITDA margin. So we're going to balance those and we're going to continue to look at or get organic opportunities for reinvestment in the business as we go just considering how great. The opportunity is ahead of us.

Its Hayden just highlighted and the AI for it.

Thank you.

One moment for our next question.

And our next question comes from the line.

Matt Farrell from Piper Sandler Your line is open.

Thanks, guys and congrats on the really strong results with my first question I wanted to jump into the enterprise business. It grew nicely in Q2, and you talked about exiting the quarter with some really strong execution I think previously you had talked about.

A push out in terms of the return of normalized dynamics.

Is there any update on that have reached it how should we be thinking about trends there and maybe a quick second one on enterprise.

The enterprise clients. There are the early adopters of AI on the upward platform or is it broadly across the client base.

Sure Matt Thanks.

In terms of the normalized dynamics, I think youre, referring to clients.

Clients were kind of moving through the different phases of adjusting to the macro situation.

It has kind of been unfolding in the last few quarters I'd say in terms of updates.

As I mentioned previously I would say Q2 didn't look a lot different than Q1 in terms of where customers are in navigating the macro it was a quarter of mixed signals and so I wouldn't say there is a really different characterization, but what was different for us was our own execution against that backdrop and so what are our conclusion is is.

We're getting better at.

Meeting customers, where they are driving performance through the sales cycle kind of regardless of where they are in any of those three phases of adjusting and where they are in this macro environment and I think that's really the good news for US in terms of your second question around enterprise clients and AI, we're seeing demand from customers across business sizes small businesses medium.

Large all of them are interested and leaning into and trying to find talent to help them in these different AI categories and also outside of just AI specific categories. Looking for talent you are being more productive because they are augmenting their normal work flows with AI tools.

In their work. So again this is a compensation across the board and something that's happening regardless of client size.

And we're just again, helping clients figure this out as they go on supplying them with the tools they need with the different strategies.

I'd just add one point on the enterprise revenue line I'm, just from a kind of financial recognition point of view.

Q3, you'll see a little bit of a dynamic of a.

Between the managed services and enterprise revenue line because.

Because we did see in Q2, one of our customers moved to a managed services contract. So it's.

In combination those two lines will grow in aggregate, but there'll be a little bit of movement between the life and this is just.

Whatever.

And upon what the client wants to desktop.

Product set for them.

And maybe for my second question, you've shown some really nice upside on profitability and you kind of reiterated that 15% for Q4.

Is there any reason why that 15% adjusted EBITDA margin shouldn't be the new floor.

For profitability moving forward and I guess, what would be something that would prompt you could take a material step back in terms of profitability from that 15% model. Thanks.

Yeah sure. So one of the dynamics, we highlighted last quarter just in terms of our kind of the quarterly dynamic of our of our margin.

Tonnage is Q4 does tend to be kind of a higher watermark for us from an EBITDA margin per percentage point of view with Q1 being a little bit lower so there could be some variability kind of sequentially. When we come from Q4 into Q1 next year, but we are very very focused on continually showing margin improvement along with topline growth.

So I think you can also expect that dynamic.

For the full year.

Thank you one moment our next question.

Yeah.

Our next question will come from the line of Rohit Kulkarni from Roth.

Your line is open.

Hey, Thank you couple of questions supposed to just the observations and impact from the pricing structure change maybe just talk about what are you seeing from the behavior of Lord GSV versus high GSV clients are clearly GSV is growing.

About what expectations, so probably there's a positive kind of.

Impact from there, but just talk about <unk>.

The clients are reacting to that.

Declines will move from 514 began booking in terms of retention of how good pricing good change.

So as a reminder, with the change that we.

Announced and started to rollout through Q2, all future talent and most of our newer existing talent.

Or seeing or will see a reduced fee, which is really positive in terms of it enables them to set more competitive rates when they've been on FERC and that in turn unlocks more demand for their services and increases their chances of winning contracts.

So we do see that lower talent fees do contribute to this virtuous cycle in our marketplace that encourage clients to bring more jobs to upward and result in more opportunities for talent.

In terms of your specific question around behavior impacts around these changes for lower GSV or higher just be spending clients I would say that all of the changes that we've rolled out so far have gone extremely smoothly and we've seen both sides of the marketplace, including the cohorts that you're referring to.

Digesting the change and adopting it very much in line with our expectations.

And net net it has been a benefit for both our marketplace customers and shareholders. So theres really nothing so.

Uprising or different in terms of how customers are.

Responding to these changes so far I mean, we're monitoring this extremely closely but so far it's been very positive.

Okay fantastic.

And then just in terms of.

This profitability and free cash flow that that's really.

What do you think that you'll be cash flow positive and any specific new uses of cash but you think you may have in terms of investments or any other oh. It means that you think you could deploy once youre cash flow positive and continue to debate trip with gosh.

Yes sure. Thanks for the question.

So look I mean look I'm I'm very focused on the quarter and I'm I'm I'm very very focused on taking a disciplined approach to thinking through capital allocation.

The nice thing is is at the same time right now given where interest rates are we're making.

Pretty good returns on our cash balances.

But we will be cash flow positive, we anticipate being cash flow positive on an ongoing basis.

And so we're running a disciplined process internally myself Hayden and the rest of the management team and considering all of our options.

Well as I said continue to invest in organic growth.

In a profitable way and we want to you want to drive topline growth. While also showing strong EBITDA margins. So that's going to be part of our strategy.

There are obviously inorganic growth opportunities available, but we're always going to balance the expected return there with other opportunities and our ability to return capital to shareholders or drive shareholder value. So.

We're going through a process right now all of these things are in the consideration set and we'll we'll keep you updated but shareholder returns are top of mind and very important to us.

Great, Okay, well very nice quarter, guys, Thanks, Rick and thanks, everybody.

One moment for our next question.

And our next question is from Ron Josey from Citi. Your line is open.

Great. Thanks for taking the question hidden I wanted to maybe take a step back and just say, we're now a quarter or two post some of the changes internally between the risk and the change in sales we hired Joey just talk to us internally about how our mortgage position, we're clearly seeing better results here, but just curious on the internal structure, where things are we've recovered.

As we move forward here sort of what's your expected. Thank you.

Thanks, Ron.

One quarter instance, these changes you know it's always been here.

Not that long and yet I still fantastic about how we're positioned I think.

The things we did in Q1 at the end of.

Q1 was challenging.

In terms of you know, it's always hard to make these decisions and execute them certainly with the team, but they really have set us up for our commitment to durable profitable growth I think the team has taken them extremely well executed really well through the quarter and I think everyone. Here is just so excited about what we're building there. So excited about what we're executing on in the <unk>.

Prize space, whereas always leadership and also so excited about what we're doing leaning into our opportunity around generative AI. I mean this is something that is touching every facet of our business in a really positive way. So I think the energy and the enthusiasm around both what we're doing and how we're doing it with our current structure and leadership.

Couldn't be better. So we're excited you know some of these things will play out over different time horizons, certainly not everything is overnight, but we do feel that we have.

Some degree of control over our destiny here in terms of how we're driving performance.

That's great. Thank you Ed.

Thank you.

One moment.

Our next question.

Yeah.

And our next question will come from the line of Brent Thill from Jefferies. Your line is open.

Hi. Thank you. This is John Byun on behalf of Brent Thill too.

Two questions. So obviously it is a big focus I want to see if you can maybe provide some color on how to quantify the impact contribution I know if there's a way to think about.

In terms of GSV contribution and how that compares to other categories.

And then secondly.

The topline GSP, maybe bottoming, but wanted to see how you're thinking about the path to returning to double digit.

Once we get past some of these pricing changes and normalization. Thank you.

Sure I'd say, John in terms of quantifying the impact of.

Just the contribution related to AI search.

Some of the things I shared earlier around the really strong growth we've seen in the categories related to generative AI specifically is off of a smaller base. So we are building from a smaller base there, but it isn't a really positive impact and I think just to pause and think about.

That opportunity for us as a business.

I think it's important understand that our the trends here are.

<unk> for us in the sense of you know.

We are in a structural advantage as the space continues to grow both at generative AI needs from clients continue to expand it specifically for the talent.

Is doing generative work and as every category that we service more than 125 today and growing are touched by the productivity benefits of these tools and Thats for two reasons. One is freelancers have a natural incentive to adopt the best tools and technologies in their field at a faster rate versus the captive.

Employees that are inside companies, because freelancers depend on their skills and expertise to put food on the table every single day of the week and this means that upper talent is pushing super hard all the time to be out there on the forefront of these tools and technologies without us having to do anything and companies are continuing to face this choice between going and getting their internal employees.

To upskill versus going to upward in finding talent that is already there the best in breed using these tools and being the most productive so I think what youre going to see as you know today, the GSV contribution related to AI specific.

Work is is somewhat small but over time every categories on our platform is going to touch AI in some way and advantaged by the fact that companies are turning to us to get that talent that is using these tools and technologies. Because this is a talent that's the most hungry and working the hardest to be out there delivering those gains.

For clients.

Terms of some of your other Jesse I'll turn it over here, maybe I'll take the second part, which is really I think asking about the outlook for GSV. Obviously, we don't we don't guide on GSV.

It has a few timing elements and when it's recognized but maybe I can just give you a little bit of a flavor. We're obviously guiding for 'twenty 'twenty four right now so our guidance through the rest of the year.

So I'd say first and foremost the GSP line is as you all know very well all year long as you're lapping extraordinarily strong growth over the past two years on this line in particular between Q2 2020 in Q2 train ride to GSE nearly doubled so obviously, we're still kind of lapping that growth. So.

Given this we're expecting kind of pretty much steady as she goes on a year over year basis throughout the rest of the year, but I would also note that our guidance doesn't contemplate any changes in the current trajectory in GSV and like I said earlier or changes to the macro environment overall.

Thank you.

Yes.

Thank you.

Once again as a reminder, that spar one one for questions are one one.

One moment for our next question.

Okay.

Our next question from flying off the finals.

Chris from Needham Your line is open.

Hi, Thank you for taking my questions just wanted to ask about the opening of our partnership could you just give us a little more detail there, maybe who approached whom is there any exclusivity there just any more details. Thank you.

Sure. This is such an exciting partnership because.

It's.

Really the first of its kind in our category and something very unique that came out of the work that open AI was already doing using up work as a provider of talent for their own business and their own growth. So they've been using up our talent.

<unk> been working together with them to provide them with the talent that they have needed to build their own business and out of those conversations came this idea of us providing the talent.

But their own customers or frankly, desperate foreign couldnt find anywhere else to actually execute on implementations of open AI technologies and really putting those to work in the ecosystem in ways that were really important for their end customers. So that was something that we are very excited to work together to put together with them and as part of it.

It's not just about providing the talent.

It's also about the talent being very carefully vetted and proven in the space that opening I served in that their customers are looking for and on an ongoing basis. A park is able to provide dynamic signals to open AI as customers and other businesses, who are coming for that talent because of our value propositions.

Around things like reputation work history. All of these things that have a living value that are not a degree that someone got even six months ago that might be stale. Because this technology is moving so quickly and so I think that some of the things that as we are working with open high they found really appealing with what we were able to bring to the table in terms of high quality better talent with <unk>.

Very current skills and expertise both today and moving forward that could really serve their customers.

So this is an important partnership for sure and it's also the first of many that we expect to do in this space, we're talking to a number of other providers, who have similar needs to bring our platform of talent to their end customers to really deliver on the solutions that they're trying to enable for their ecosystem. So this is definitely a big opt.

Unity for Us and one we're very excited to have been able to do with our partner.

So that's great. Thank you.

Thank you.

I would now like to turn the conference back to Evan for any closing remarks.

Thanks on behalf of the entire upper team. Thank you for joining us today and thank you for your interest in upward.

Any clarification there have any follow up questions. Please do not hesitate to reach out to me at Investor <unk>.

<unk> Dot Com this concludes our call.

Okay.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

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Good day, and thank you for standing by and welcome to the <unk> second quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question answer session.

Last question during the session you will need to press star one on your telephone.

Unlimited message advisor hammers race to withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to speak today, Evan Barbosa, Vice President of Investor Relations. Please go ahead.

Thank you welcome to upward <unk> discussion of its second quarter 2023 financial results. Joining me today are Hayden Brown, <unk>, President and Chief Executive Officer, and Eric Gessert upward 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 laws forward.

Forward looking statements include all statements other than statements of historical fact.

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.

Formation will also be set forth in our quarterly report on Form 10-Q for the three months ended June 32023.

In addition reference will be made to certain non-GAAP financial measures.

Formation regarding a 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 that upward dotcom.

Thanks, Kevin and thank you all for joining us today.

In the second quarter of 2023, we made strong progress on delivering innovative solutions for our customers and driving durable profitable growth.

We achieved better than expected results across our financial goals, while making significant strides in generative AI and growth across our business.

This resulted in second quarter of 2023 revenue of $168 6 million up 7% from a year ago, and adjusted EBITDA of $14 4 million.

Eric I will go into greater detail on our financial results later in the call.

We expect that to continue to identify new areas of efficiency within our organization and at the same time continue to invest prudently in the focused areas of growth that we see across the business.

One of the most important and diverse growth opportunities for upward is in the AI space and we are delivering on this opportunity by serving clients with a singular destination for sourcing the full breadth of AI focused talent they need premiering new AI powered features for discovering and Matt.

<unk> with expert talent across every category of work.

And ensuring talent on our pork have access to the most modern generative AI tool to supercharge their productivity and quality of work.

Collectively these steps move our customers closer to unlocking the magic of up work to accomplish more than they ever thought possible.

We continue to see clients come to upward for the professional and solutions they need to execute on their most ambitious AI initiatives.

Hiring talent spanning roles from prompt engineers and AI model trainers to researchers data Annotators and co checkers.

Outstanding growth in this category of work continued in the second quarter as AI was our fastest growing category up work in the first half of 2023 and.

In fact, degenerative AI job posts on our platform were up more than 10 X while related searches were up more than 15 acts when comparing the second quarter of 2023 to the fourth quarter of 2022.

Over the past few weeks, we unveiled the first of many generative AI innovations in our ecosystem, which we expect to further accelerate our momentum in this flourishing space.

On July 11, we launched a new centralized AI services hub that connects clients to highly skilled AI focused talent fees.

Teachers partnerships with leading AI providers and highlights resources and tools for businesses and talent looking to boost their work with AI.

We further advance this priority through a partnership with open AI announced earlier this week, establishing open AI expert on our pork.

This program provides open AI customers and other businesses access to highly skilled pre vetted independent professionals deeply experienced with the open platform. So they can bring the power of open AI technologies to their product solutions and project just as our forecast.

Open AI is leveraging talent from the upward marketplace to support its own innovation and growth and quickly solid value in helping its customers connect to talent, an up work leading to the new partnership.

In the second quarter, we implemented changes to our sales team and strategy generating improved productivity and increase revenue, while reducing staffing and expenses.

Grew our enterprise customer base, adding notable new enterprise clients like Mastercard R. R Donnelley and Las Vegas Sands during the quarter and enterprise revenue grew 16% year over year.

Though he brings a wealth of experience in building businesses and go to market strategies and we are thrilled to gain her leadership of this important growth vector for our park.

We are pleased with the rapid progress we have made against our priorities of driving durable profitable growth innovating to make upward the preeminent destination for AI related talent and work and driving growth within our enterprise business during a time of change.

Our confidence in our long term growth opportunity for upward is unwavering. We are proud of the advancements we made in the second quarter and our stellar team members, who executed them and we're excited about the future.

I'll now turn the call over to Erica to discuss our financial results.

Thanks, David and Hello, everyone.

Right to be here for my second earnings call after about three months on the job.

GSV again exceeded $1 billion in the second quarter.

Revenue grew 7% year over year to $168 6 million in the second quarter with marketplace revenue of $156 6 million.

Representing a year over year increase of 9%.

Managed services revenue was down 5% year over year to $12 million, while enterprise revenue, which is reported as apartment marketplace revenue was up by 16% to $14 3 million.

Total revenue growth was primarily driven by pricing changes related to the shift to our current marketplace offering in April 2022.

As well as other platform monetization strategies associated with connect and the implementation of a contract initiation fee in the quarter.

We believe that many of these monetization strategies like moving to a simplified single rate pricing structure for freelancers.

And removing rebates for freelancer based on context have helped to simplify and improve our customers experiences on our platform.

Total take rate in the second quarter was 16, 3% up from 16% in the first quarter of 2023 and from $15 zero percent in the second quarter of 2022.

Active clients grew 2% year over year in the second quarter to 822000.

Active client growth was driven by a year over year increase in our retain current partially offset by relatively flat new client acquisition.

<unk> increased 2% year over year to $4987.

non-GAAP gross profit was $128 2 million for the second quarter.

<unk> and non-GAAP gross margin of 76% compared to 74% in the second quarter of 2022.

non-GAAP operating expenses for the second quarter were $115 7 million or.

Or 69% of revenue compared to 77% in Q2 of 2022.

Total operating expenses in Q2 were down 4% compared to a year ago.

This reduction is the result of cost saving measures. We took at the management team in Q2 to reduce spend and lower aro activity and reinvest in innovation and growth.

non-GAAP R&D expense in the quarter increased by 24%, while sales and marketing and G&A expense lines were both down significantly year over year.

Transaction losses also had notable year over year and sequential improvement.

Provision for three investment losses was down 62% compared to a year ago.

This strong result is due to the stellar work of our fraud and lock teams and reducing both chargeback rates and the rates of fraudulent activity on our platform, which also resulted in a reduction in fraud protection fees paid to our third party vendor.

non-GAAP net income was $13 $5 million in the second quarter compared to non-GAAP net loss of $4 7 million in the second quarter of 2022.

Our non-GAAP net income per basic and diluted share with Tencent music.

Second quarter as compared to non-GAAP net loss per basic and diluted share of enforcement in the second quarter 2022.

Adjusted EBITDA was $14 4 million in the second quarter compared to an adjusted EBITDA loss of $1 9 million in the second quarter of 2022.

Our strong adjusted EBITDA over performance is the direct result of aggressive management action to reduce costs across the business.

Particularly in sales and marketing and in G&A to fund growth.

Adjusted EBITDA margin was 9% in the second quarter of 2023 compared to adjusted EBITDA margin of negative 1% in the second quarter of 2022.

Second quarter 2023, adjusted EBITDA includes approximately $2 5 million of nonrecurring severance related costs.

Turning now to guidance.

We are guiding third quarter revenue to be between $165 million and $170 million and we are raising our full year revenue guidance to be between $665 million and $675 million.

Representing 8% year over year growth at the midpoint.

We are raising our revenue guidance, primarily due to the success of our simplified pricing structure and other platform monetization improvement.

We expect third quarter, adjusted EBITDA to be between 14 million and $17 million, which represents an adjusted EBITDA margin of eight 5% to 10%.

Because of these actions and our improved revenue outlook, we are raising our full year 2023, adjusted EBITDA guidance to be between 50 million and $55 million.

Which represents an adjusted EBITDA margin of between seven and eight 1%.

With this guidance, we are now expecting adjusted EBITDA in 2023 to be more than double that of any year. Since we went public.

We also expect to generate positive free cash flow going forward.

Before I turn it over for questions I'd like to provide a few reflections on my first quarter at work.

I came into this business excited about the strength of our perks two sided network the power and potential of our enterprise strategy and the extraordinary enablement power to our business.

Right.

Having now been here for a quarter my excitement continues to grow.

<unk> is in a strong position to be able to invest in growth profitably grow free cash flow.

And to be at the forefront of one of the greatest technological developments in the work enablement of our time.

We have a fantastic management team and a wonderful dedicated workforce that has proven our ability to execute on our plans quickly and effectively.

Hayden the leadership team and I will continue to focus on innovation and cost discipline and on identifying the highest ROI investments to generate durable profitable growth and shareholder value.

Thank you and we'll now turn the call over to your questions.

To ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby will compile the Q&A roster.

Okay.

One moment for our first question.

Our first question will come from line of Eric Sheridan from Goldman Sachs. Your line is open.

Were six months ago, and with some of the reorganization and refocus within the company that you highlighted during the remarks can you also bring that back to talking about client acquisition activity.

Elements of retained clients and spend per retain clients and how we should think about some of the trajectory around those metrics.

Through the remainder of the year. Thanks, so much.

Thanks, Eric.

In terms of the macro question I would say, we did not see major changes in Q2, and how clients are navigating the environment in this quarter versus the prior quarter. It was really a quarter with some mixed market signals and I'd say for enterprises, specifically the part of the business you are asking about.

It is obviously a smaller part of our business, but you saw corporations, we're still showing.

Sales cycle elongation, some budgetary caution.

And at the same time, our own execution really did continue to improve throughout the quarter. We made our changes on the sales team side in May and we drove notable productivity improvements throughout the quarter, which were really showing through in the increased outlook that we have for the remainder of the year as well as the numbers we had for the quarter. So we saw 16%.

Growth in enterprise revenue the expansion of enterprise logos with the addition of 19 new accounts in the second quarter, including really great names like Mastercard RR Donnelley.

New per account manager, our AAM and our team was up 100% quarter over quarter and land team productivity was up 13% quarter over quarter.

With only one month of the quarter really fully operating with our optimized new model.

So I would say, even though the quarter itself didn't have different.

Kind of macro environment, our execution was a lot.

With continuing to improve and I think that gives us a lot of confidence that we don't need to wait for a different macro environment to continue to drive really great performance. In this part of the business I'll hand, it to Eric to talk more about some of the active client trends you were mentioning yes, sure. Thanks, Hayden and hi, Eric just to follow up actually on the Hayden glass point <unk> I would just add that.

Our updated guidance doesn't contemplate any change to the macro environment and we havent really included that in the guidance I think we.

We feel we're sort of not our guidance does not tethered to macroeconomic changes and really dependent upon the execution and kind of improvements that we're seeing in the business on the October trends.

If we look at 10 clients retain clients are up for.

<unk>, 4% year over year and and.

And I would say.

From a client acquisition point of view actually shut down very very slightly sequentially less than 1% and if you recall three quarters ago.

That business really transitioned to a more value oriented acquisition approach.

Really ensuring that we adhere to a very very strict LTV threshold from the acquisition and so that value versus volume of purchase is reflected in these acquisition numbers.

Obviously, our active client number is a trailing 12 month metric so.

That activity is sure.

Shows up in these numbers and we're also obviously still having really strong growth on the trailing 12 months comp.

Also note electric clients, our enterprise client base continues to grow very steadily.

Both year over year and quarter over quarter.

Great. Thank you.

Yes.

Moment for our next question.

And our next question comes from the line of Andrew Boone from JMP Securities. Your line is open.

Thank you so much for taking my questions I wanted to go and ask about AI, it's really nice to their product announcement. This quarter in terms of the AI hub. What are you guys hearing from clients what are they asking for and then Additionally, as you guys see any headwinds across many other categories.

Sure since you asked about client demand I'd say, we're really seeing.

Explosive growth in the area of AI itself.

Generative AI job posts are up more than 1000% related searches are up more than 500% this quarter versus Q4 of 2022 and so the commentary we're hearing from clients is as.

As much as these tools are exciting they really need help from talent to implement them.

Their business solutions.

Thats, where theyre coming to us for that talent, they're also willing to pay a premium for that talent wages for generative AI related jobs come in at a 50% premium over other related jobs in the marketplace. So.

Kind of bigger picture for us on generative AI is really around robust demand from clients for the right talent to do this work.

And more broadly.

And eagerness to see the productivity gains from from talent around this so talent are adopting AI tools in pretty much every category that we serve across 125 plus categories on the site.

And this is driving increased productivity better outcomes for clients.

Higher wages as I mentioned and virtually no negative impacts in the vast majority of categories that we serve so this is a really exciting story for us.

That makes a lot of sense and then I wanted to ask about just second half EBITDA guidance you guys had a significant beat here in <unk>.

Certainly brought up in terms of the rest of the year, but maybe there could have been more can you just speak to whether there is conservatism there or what else is kind of being factored into the EBITDA guide for the back half. Thank you so much.

Yes, sure I'll take that one Andrew.

Andrew.

So if you could kind of unpack our EBITDA guidance. It does contemplate kind of steady margin EBITDA margin improvement kind of quarter upon quarter through the rest of the year last quarter, we talked about the fact that we expect it to kind of exit the year approaching that 15% EBITDA margin. This this guidance still honors that.

It includes it.

We are because we've identified quite a few areas for cost savings and we're going to continue to run I would say kind of a thoughtful and multi quarter approach to identifying cost savings.

But we're also a topline growth business right and we want to make sure that we continue to invest in topline growth as well as continue to steadily improve EBITDA margins. So we're going to balance both and we're going to continue to look at our.

Organic opportunities for reinvestment in the business as we go just considering how great. The opportunity is ahead of us as Hayden just highlighted and the AI for it.

Yeah.

Thank you.

One moment for our next question.

And our next question comes from the line.

Ferro from Piper Sandler Your line is open.

A push out in terms of the return of normalized dynamics.

Is there any update on that have we reached that how should we be thinking about from there and maybe a quick second one on enterprise.

The enterprise Heartlands third are the early adopters of AI on the upward platform or is it broadly across the client base.

Sure Matt Thanks.

In terms of the normalized I know, Mike I think youre, referring to climb.

Clients were kind of moving through the different phases of adjusting to the macro situation.

It has kind of been unfolding the last few quarters I'd say in terms of updates.

As I mentioned previously I would say Q2 didn't look a lot different in Q1 in terms of where customers are in navigating the macro it was a quarter of mixed signals and so I wouldn't say there is a really different characterization, but what was different for us was our own execution against that backdrop and so what are our conclusion is is.

We're getting better at.

In their work. So again this is a compensation across the board and something that's happening regardless of client size.

And we're just again, helping clients figure this out as they go on supplying them with the tools they need with these different strategies.

I'd just add one point on the enterprise revenue line.

Just from a kind of financial recognition point of view.

Q3, youll see a little bit of a dynamic.

Dynamic.

Between the managed services and enterprise revenue line, because we did see in Q2, one of our customers moved to a managed services contract. So in combination those two lines will grow in aggregate, but there'll be a little bit of movement between the life and this is just.

What are dependent upon what the client wants to desktop.

Product set for them.

Yeah.

And maybe for my second question.

Sean some really nice upside on profitability and you kind of reiterated that 15% for Q4.

Is there any reason why that 15% adjusted EBITDA margin should be the new floor for profitability moving forward and I guess, what would be something that would prompt you could take a material step back in terms of profitability from that 15% model. Thanks.

Yeah sure. So one of the dynamics, we highlighted last quarter just in terms of our kind of the quarterly dynamic of our of our margin.

Percentage is Q4 does tend to be kind of a higher watermark for us from an EBITDA margin per percentage point of view with Q1 being a little bit lower so there could be some variability kind of sequentially. When we come from Q4 into Q1 next year, but we are very very focused on continually showing margin improvement along with top line.

Growth. So I think you can also expect that dynamic for.

For the for the full year.

Thank you one moment our next question.

Okay.

Our next question will come from the line of Rohit Kulkarni from Ross Your line is open.

Hey, Thank you couple of questions supposed to just the observations and impact from the pricing structure change maybe just talk.

Talk about what are you seeing from the behavior of Lord GSV versus high GSV clients. So clearly GSV is growing.

Above our expectation so probably if it is positive.

The impact from there, but just talk about how.

The clients are reacting to that.

Revenue declines will move from five <unk> in terms of retention of how good pricing good change.

So as a reminder, with the change that we.

Announced and started to rollout through Q2, all future talent and most of our newer existing talent.

Are seeing or will see a reduced fee, which is really positive in terms of it enables them to set more competitive rates when they've been on FERC and that in turn unlocks more demand for their services and increases our chances of winning contracts.

So we do see that lower talent fees do contribute to this virtuous cycle in our marketplace that encourages clients to bring more jobs to upward and result in more opportunities for talent.

Digesting the change and adopting it very much in line with our expectations.

And net net this has been a benefit for both our marketplace customers and shareholders. So theres really nothing.

Surprising or different in terms of how customers are.

We're responding to these changes so far I mean, we're monitoring this extremely closely but so far it's been very positive.

Okay fantastic.

Then just in terms of.

Profitability and free cash flow bad debts.

Very cool.

Think that you'll be cash flow positive any specific.

New uses of cash, but you think you may have in terms of investments.

Any other.

It means that you think you could deploy once your throat cash flow positive and continue to generate cash.

Yes sure. Thanks for the question.

So look I mean look I am very focused on the quarter and I'm very very focused on taking a disciplined approach to thinking through your capital allocation. You know the nice thing is is at the same time right now given where interest rates are we're making.

Pretty good returns on our cash balances.

But we will be cash flow positive, we anticipate being cash flow positive on an ongoing basis.

And so we're running a disciplined kind of process internally myself Hayden and the rest of the management team and considering all of our options.

Well as I said continue to invest in organic growth.

In a profitable way and we want to you want to drive topline growth. While also showing strong EBITDA margins. So that's going to be part of our strategy.

There are obviously inorganic growth opportunities available, but we're always going to balance the expected return there with other opportunities.

<unk> and our ability to return capital to shareholders to drive shareholder value. So.

We're going through a process right now all of these things are in the consideration set and we'll we'll keep you updated but shareholder returns are top of mind and very important to us.

Great, Okay, well very nice quarter, guys, Thanks, Rick and thanks, everybody.

One moment for our next question.

And our next question is from Ron Josey from Citi. Your line is open.

Great. Thanks for taking the question hidden I wanted to maybe take a step back and just say, we're now a quarter or two post some of the changes internally between the risk and the change in sales we hired Zoe just talk to us internally about how our mortgage position, we're clearly seeing better results here, but just curious on the internal structure, where things are we've recovered.

As we move forward here sort of what to expect thank you.

Thanks, Ron.

One quarter instance, these changes it's always been here not that long and yet I still and Tastic about how we're positioned I think.

The things we did in Q1 at the end of.

Q1 was challenging.

Couldn't be better. So we're excited some of these things will play out over different time horizons, certainly not everything is overnight, but we do feel that we have.

Some degree of control over our destiny here in terms of how we're driving performance.

That's great. Thank you Ed.

Thank you.

Okay.

One moment.

Our next question.

Okay.

And our next question will come from the line of Brent Thill from Jefferies. Your line is open.

Hi. Thank you. This is John Byun on behalf of Brent Thill too.

Two questions. So obviously it is a big focus I wonder if you can maybe provide some color on how to quantify the impact contribution I know if there's a way to think about.

In terms of GSV contribution and how that compares to other categories.

And then secondly.

Yeah.

The topline GSP, maybe bottoming, but wanted to see how you're thinking about the path to return to double digit, especially once we get past some of these pricing changes and normalization. Thank you.

Sure I'd say, John in terms of quantifying the impact of.

Just the contribution related to AI.

Really some of the things I shared earlier around the really strong growth. We've seen in the category is related to generative AI specifically is off of a smaller base. So we're building from a smaller base there, but it is a really positive impact and I think just to pause and think about.

That opportunity for us as a business.

I think it's important understand that our trends here are profound for us in the sense of you know.

We are in a structural advantage as the space continues to grow both at generative AI needs from clients continue to expand it specifically for the talent that is doing generative work and as every category that we service more than 125 today and growing are touched by the productivity benefits of these tools.

And Thats for two reasons, one is freelancers have and natural incentive to adopt the best tools and technologies in their field at a faster rate versus the captive employees that are inside companies because freelancers depend on their skills and expertise to put food on the table every single day of the week and this means that upper talent is pushing super hard all the time.

To be out there on the forefront of these tools and technologies without us having to do anything and companies are continuing to face this choice between going and getting their internal employees to upskill versus going to upward in finding talent that is already there the best in breed using these tools and being the most productive.

So I think what youre going to see as you know today, the GSV contribution related to AI specific.

Work is somewhat small but over time every categories on our platform is going to touch AI in some way and advantaged by the fact that companies are turning to us to get that talent that is using these tools and technologies. Because this is a talent that's the most hungry and working the hardest to be out there delivering those gains.

For clients.

In terms of some of your other Jesse I'll turn it over to Ed maybe I'll take the second part, which is really I think asking about the outlook for GSV. Obviously, we don't we don't guide on GSV.

So I would say.

First and foremost the GSP line is as you all know very well all.

All year long as you're lapping extraordinarily strong growth over the past two years on this line in particular between Q2 2020 in Q2 trade ratio GSV nearly doubled so obviously, we're still kind of lapping that growth. So given this we're expecting kind of pretty much steady as she goes on a year over year basis throughout the rest of the year.

But I would also note that our guidance doesn't contemplate any changes in the current trajectory in DSV.

Like I said earlier or changes to the macro environment overall.

Thank you.

And once again as a reminder, that spar one one for questions are 111.

One moment for our next question.

Okay.

Our next question comes from the line of the finals.

Chris from Needham Your line is open.

Hi, Thank you for taking my questions I just wanted to ask about the open AI partnership could you just give us a little more detail there maybe.

Approached whom is there any exclusivity there just any more details. Thank you.

Sure. This is such an exciting partnership because.

It's.

Really the first of its kind in our category and something very unique that came out of the work that open AI was already doing using up work as a provider of talent for their own business on their own growth so they've been using up our talent.

<unk> been working together with them to provide them with the talent that they've needed to build their own business and out of those conversations came this idea of us providing the talent.

It's not just about providing the talent.

It's also about the talent being very carefully vetted and proven in the space that open air Serv and that their customers are looking for and on an ongoing basis. I'll Park is able to provide dynamic signals to open AI as customers and other business thats, where coming for that talent because of our value propositions.

Around things like reputation work history. All of these things that have a living value that are not a degree that someone got even six months ago that might be stale. Because this technology is moving so quickly and so I think that some of the things that as we are working with <unk>. They found really appealing was what we were able to bring to the table in terms of high quality vetted talent with it.

Very current skills and expertise both today and moving forward that can really serve their customers.

Unity for Us and one we're very excited to have been able to do with our partner.

No that's great. Thank you.

Thank you.

I would now like to turn the conference back to Evan for any closing remarks.

Thanks on behalf of the entire upper team. Thank you for joining us today and thank you for your interest in upward.

Any clarification there have any follow up questions. Please do not hesitate to reach out to me at Investor work.

<unk> Dot Com this concludes our call.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

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