Q4 2023 Fiverr International Ltd Earnings Call
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Operator: Good day, and thank you for standing by. Welcome to the Fiverr Q4 and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode.
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Good day, and thank you for standing by.
Speaker Change: Welcome to the Fiverr Q4, and full year 2023 earnings conference call.
Speaker Change: At this time all participants are in a listen only mode.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jinjin Qian, EVP, Strategic Finance. Please go ahead.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session you will need to press star one on your telephone.
Speaker Change: You will then hear an automated message advising her hand is raised to withdraw your question. Please press star one again.
Speaker Change: Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand, the conference over to your speaker today.
Speaker Change: Jingjing Chen E V P strategic finance. Please go ahead.
Jinjin Qian: Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the fourth quarter that ended December 31st, 2020. Joining me on the call today are Micha 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 that these statements are based on our current expectations and assumptions as of today, and Fiverr assumes no obligation to update or revise, A discussion of some of the important risk factors that could cause actual results to differ materially from any forward-looking statement can be found under the risk factors section in Fiverr's most recent Form 20-F and other findings with the SEC.
Jingjing Chen: 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 2023.
Jingjing Chen: Joining me on the call today are me, how Kaufman founder and CEO and Ofer Katz, President and CFO.
Speaker Change: Before we start I'd like to remind you that during this call. We may make forward looking statements and that these statements are based on our current expectations and assumptions as of today and Fiverr assumes no obligation to update or revise them.
Ofer Katz: 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 and most recent form 20-F and other filings with the SEC.
Jinjin Qian: During this call, we'll be referring to some key performance metrics and non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA Margin. Further explanation and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the earnings release we issued today and in our shareholder letter, each of which is available on our website at investors.fiverr.com. And now, I'll turn the call over to you.
Ofer Katz: During this call we'll be referring to some key performance metrics are non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin.
Ofer Katz: Further exploration at 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 and all shareholder letter each of which is available on our website at investors dark fiber dot com.
Speaker Change: And now I'll turn the call over to meet her.
Jinjin Qian: Thank you, Jinjin. Good morning, everyone, and thank you for joining us. We entered 2023 with a backdrop of a challenging macroeconomic environment, weak SMB sentiment, and waves of layoffs and hiring freezes across. It was also a year of increasing geopolitical uncertainties with the ongoing war in Ukraine and the onset of war in the Middle East. The entire Fiverr team showed extraordinary resilience against these tough conditions and delivered strong execution towards the strategic priorities set at the beginning of the year. For 2023, revenue grew 7% to $361 million, and adjusted EBITDA was $59 million, representing an adjusted EBITDA margin of 16%, both ahead of the targets we set at the beginning of this year. Fiverr continues to operate one of the best in class business models and expands its market share in the freelancer industry.
Meet: Thank you Ginger and good morning, everyone and thank you for joining us.
Meet Her: We entered 2023 with a backdrop of challenging macroeconomic environment weak SMB sentiment and waves of layoffs and hiring freezes across industries.
Meet Her: He was also a year of increasing geopolitical uncertainties with the ongoing war in Ukraine, and the onset of war in the Middle East.
Meet Her: The entire fiber team showed extraordinary resilience against these tough conditions and delivered strong execution towards the strategic priorities set at the beginning of the year.
Meet Her: For 2023 revenue grew 7% to $361 million and adjusted EBITDA was $59 million, representing adjusted EBITDA margin of 16%. Both ahead of the targets we set at the beginning of the year.
Meet Her: Fiber continues to operate one of the best in class business models and expand its market share in freelancer industry.
Jinjin Qian: Overall, GMV on the platform grew 1% year over year at a time when U.S. job openings are down 19% and professional staffing is down 6% year over year. We continue to focus on upmarket initiatives in both acquisition and product, resulting in 4% year-over-year growth in buyers with over $500 annual spend and 6% year-over-year growth in overall spend per buyer. We also expanded our take rate by 160 basis points, reaching an overall take rate of 31.8%, as both seller monetization programs experienced significant growth. Our strategy of going upmarket, investing in AI, and complex services. And expanding value-added products really paid off and helped us drive growth in this macro environment. 2023 was also an exciting year as Gen AI pushed artificial intelligence to new frontiers. Early in January last year, we were the first in the market to launch a dedicated AI services vertical, creating a hub of businesses to hire AI talent.
Meet Her: Overall GMP on the platform grew 1% year over year.
Meet Her: When U S job openings are down, 19% and professional staffing is down 6% year over year.
Meet Her: We continue to focus on upmarket initiatives in both acquisition and product, resulting in 4% year over year growth in buyers with over $500 annual spend and 6% year over year growth in overall spend per buyer.
Meet Her: We also expanded our take rate by 160 basis points reached.
Meet Her: Reaching an overall take rate of 31, 8%.
Meet Her: Both seller monetization programs experienced significant growth.
Meet Her: Our strategy of going upmarket investing in AI and complex services and expanding value added product really paid off and helped us drive growth in this macro environment.
Meet Her: 2023 was also an exciting year as Jenny I pushed artificial intelligence to new phones.
Meet Her: Early in January last year, we were the first in the market to launch a dedicated AI services vertical, creating a hub of businesses to hire AI talent.
Micha Kaufman: Throughout the year, we continue to see tremendous demand for those services, with searches that contain AI-related keywords on our market base growing sevenfold in 2023 compared to 2020. Overall, we estimate AI will create a net positive impact of 4% on our business in 2023 as we see a category mix shift from simple services such as translation and voiceover to more complex services such as mobile app development, e-commerce management, or financial consulting. In 2023, complex services represented nearly one third of our market base, a significant step up from 2022. Moreover, they are typically larger projects and longer duration with an average transaction size 30% higher than those of simple services.
Meet Her: Throughout the year, we continued to see tremendous demand for those services, which searches that contain AI related keywords in our market base growing seven four in 2023 compared to 2022.
Meet Her: Overall, we estimate AI created a net positive impact of 4% to our business in 2023.
Meet Her: We see a category mix shift from simple services, such as translation and voice over to more complex services, such as mobile App development E Commerce management or financial consulting.
Meet Her: In 2023 complex services represented nearly one third of our market base.
Meet Her: <unk> step up from 2022.
Meet Her: Moreover, they are typically larger projects and longer duration with an average transaction size is 30% higher than dose of simple services.
Micha Kaufman: Clicking on these numbers, we believe that the opportunities created by emerging technology far outweigh the jobs they replace. However, human talent continues to be an essential part of unlocking the potential of new technologies. We're also seeing a shift into more sophisticated, highly skilled, and longer duration categories with bigger addressable markets. As the data shows, our market base is built to benefit from these technologies and labor market changes. Unlike single vertical solutions with higher exposure to disruptive technologies and trend changes, Fiverr has developed a proprietary horizontal platform with hundreds of verticals quickly leaning into the ever-changing needs of industry demand. All in all, we believe AI will be a multi-year tailwind for us to drive growth and innovation.
Meet Her: Double clicking on these numbers, we believe that the opportunities created by emerging technologies.
Meet Her: Our outweigh the job as they replace.
Meet Her: Human talent continues to be an essential part of unlocking the potential of new technology.
Meet Her: We are also seeing a shift into more sophisticated highly skilled and longer duration category with the bigger addressable market.
Meet Her: If the data shows our market base is built to benefit from these technologies and labor market changes.
Meet Her: Unlike single vertical solutions with higher exposure to disruptive technologies and training changes.
Meet Her: Fiber has developed a proprietary horizontal platform with hundreds of verticals quickly leaning into the ever changing industry demand needs and trends.
Meet Her: All in all we believe AI will be a multiyear tailwind for us to drive growth and innovation.
Micha Kaufman: In 2023, we also made significant investments in AI that drove improvements in our overall product. We optimized our product and R&D organization and changed to a biannual product release cycle in order to significantly accelerate product velocity and focus on strategic priorities rather than incremental. Our recent winter product release in January culminated these efforts in the second half of 2023 and revamped almost every part of our platform with an AI-first approach, from search to personalization, from supply quality to seller engagement.
Meet Her: In 2023, we also made significant investments in AI that drove improvement in our overall platform.
Meet Her: We optimize our product and R&D organization and changed to a biannual product release cycle in <unk>.
Meet Her: Order to significantly accelerate product velocity and focus on strategic priorities rather than incremental features.
Meet Her: Our recent winter product release in January culminated these efforts in the second half of 2023 and revamped almost every part of our platform with an AI first approach from search to personally vision from supply quality to salary engagement.
Micha Kaufman: We believe these projects not only helped us drive growth last year but also laid the foundation for the future. As we enter 2024, we will build upon the progress we have made in 2023 and focus on investing in driving growth acceleration of the underlying business. The strategic priorities for 2024 are.
Meet Her: We believe these projects not only helped us drive growth last year, but also laid the foundation for future growth.
Meet Her: As we enter 2024.
Meet Her: We will build upon the progress we have made in 'twenty joined three and focus on investing in driving growth acceleration of the underlying business.
Meet Her: The strategic priorities for 2024 are.
Micha Kaufman: First, continue growing our market share in complex service categories. In 2023, complex services were growing at 29% year-over-year, significantly faster than the overall market, and a big acceleration from 12% in 2022. This year, we are doubling down on this opportunity and have identified a number of verticals with high growth potential. We will build experiences tailored to these verticals and deploy more targeted go-to-market strategies for them. The second priority is to continue pushing the market by further expanding offerings in the Fiverr business. On Fiverr Pro, our flagship business product, we are opening ways for clients to match with talent, whether it's through a high-touch point of contact from a customer success manager or AI-assisted brief and match functionality, or manage services through initiatives such as project partners.
Meet Her: First continue growing our market share into complex service categories.
Meet Her: In 2023 complex services or growing its 29% year over year significantly faster than the overall market and a big acceleration from 12% in 2022.
Meet Her: This year, we are doubling down on this opportunity.
Meet Her: And have identified a number of verticals with high growth potential.
Meet Her: We will build experiences.
Meet Her: Tailored to these verticals and deploy more targeted go to market strategies for them.
Meet Her: The second priority is to continue pushing upmarket by further expanding offering in fiber business solutions.
Meet Her: On fiber pro our flagship business product, we are opening ways for clients to match with talent, whether it's through high touch point of contact from a customer success manager or AI assistant brief in March functionality or managed services through initiatives such as project.
Micha Kaufman: For Fiverr Enterprise, we have redesigned our pricing and go-to-market strategy to drive more talent sourcing and engagement volume. We believe helping businesses with skill gaps and their hiring needs is a much stronger value proposition and creates more durable, longer-term relationships than the talent management software alone. Early signals in December and January already show encouraging logo acquisition, and we are aggressively working to complete onboarding and ramp up. Last but not least, Fiverr Certified now has dozens of partners, and we are working closely with them to integrate our solutions into their environments. While the Fiverr Marketbase is built as a standardized catalog business to drive speed and cost efficiency, Fiverr Business Solutions is built as a suite of offerings to meet the needs of large customers.
Meet Her: Partner.
Meet Her: For fiber enterprise, we have redesigned our pricing and go to market strategy to drive more talent sourcing and engagement volume.
Meet Her: We believe helping businesses with skill gaps and theyre hiring need is a much stronger value proposition and create more durable longer term relationships then the talent management software alone.
Meet Her: Early signals in December and January already show encouraging logo acquisition, and we are aggressively working to complete onboarding and ramp up usage.
Meet Her: Last but not least fiber certified now has dozens of partners and we are working closely with them to integrate our solutions into their client flows.
Meet Her: While the fiber market base is built as a standardized catalog business to drive speed and cost efficiency five year business solutions is build a suite of offerings to meet any needs over large customers.
Micha Kaufman: We believe this two-pronged approach gives us tremendous competitive leverage in growing market share across the spectrum of the addressable market. Our third strategic priority is to continue developing proprietary AI applications unique to our market base to enhance the overall customer experience. The winter product release we discussed just now gives you a flavor of that, but there is so much more. We are barely scratching the surface here.
Meet Her: We believe this two pronged approach gives us tremendous competitive leverage in growing market share across the spectrum of the addressable market.
Meet Her: Our third strategic priority is to continue developing proprietary AI applications unique to our market base to enhance the overall customer experience.
Meet Her: The winter product release, we discussed just now.
Meet Her: To give you a flavor of that but there's so much more to do we.
Meet Her: We are barely scratching the surface here.
Micha Kaufman: And the beauty is that all three priorities will drive a positive flywheel between each other to propel our business into the future. I'm very excited about our 2024 roadmap and firmly believe there's a significant growth runway ahead of us. With that, I'll turn the call over to Ofer, who will walk you through some financial highlights. Thank you, Micha, and good morning, everyone.
Meet Her: And the beauty is that all three priorities will drive a positive flywheel among each other to propel our business into the future.
Meet Her: I am very excited about our 2024, our roadmap and firmly believe there is a significant growth runway ahead of us.
Meet Her: With that I'll turn the call to Ofer, who will walk you through some financial highlights.
Ofer Katz: Thank you, Matt and good morning, everyone.
Ofer Katz: We finished the year with strong execution as we strengthened our marketplace and invested heavily in AI and moving up market, while successfully maintaining our operational excellence. Revenue for the fourth quarter of 2023 was $91.5 million, representing a year-over-year growth of 10.1%. Adjusted EBITDA was 16.1 million, or 17.6% of adjusted EBITDA margin.
Ofer Katz: We finished the year with the solid execution as we strengthened our marketplace and invested heavily into AI and moving upmarket.
Ofer Katz: While successfully maintaining our operational excellence.
Ofer Katz: Revenue for the fourth quarter of 2023 was $91 5 million.
Ofer Katz: Representing <unk>.
Ofer Katz: <unk> growth obtain 1%.
Ofer Katz: Adjusted EBITDA was $16 1 million or 17, 6% and adjusted EBITA margin.
Ofer Katz: Both were in line with our expectations. For the full year, our revenue increased 7.1% to $361.4 million. We also doubled our adjusted EBITDA to $59,000..2 million, or 16.4% of adjusted EBITDA margin, and we are pleased to have achieved annual gap profitability for the first time in the company's history. Our strong free cash flow generation, together with a healthy balance sheet, puts us in a great financial trend to navigate this macro environment, continue pursuing growth, and maximize long-term shareholder value. Our annual active buyer.
Ofer Katz: Both were in line with our expectation.
Ofer Katz: For the full year, our revenue increased seven 1% to $361 4 million.
Ofer Katz: We also doubled our adjusted EBITDA to 59.
Ofer Katz: $2 million or 16, 4% and adjusted EBITA margin and we are pleased to have achieved annual GAAP profitability for the first time in the company's history.
Ofer Katz: Our strong free cash flow generation.
Ofer Katz: With a healthy balance sheet.
Ofer Katz: With that in a great financial strength to navigate this macro environment.
Ofer Katz: Continue pursuing growth and maximize long term shareholder value.
Ofer Katz: Our annual active buyer.
Ofer Katz: We're at 4.1 million, and the center buyer improved to 278 up 6% year over year as we ramp up our marketing efforts on targeting higher-value buyers. Accelerating our upmarket investment, we continue to make significant progress this quarter. In our Fiverr Business Solution, as we added new features to Fiverr Pro, signed up several new partners to our Fiverr Certified Solution, and onboarded over a dozen new clients to Fiverr MPC, we saw the effort we made last year pay off, as the average spent per buyer for the 2023 cohort was 13% higher than the 2022 cohort in its first year.
Ofer Katz: At $4 $1 million in spend per buyer improved to 278 up 6% year over year as we ramp up our marketing efforts on targeting higher value buyer and accelerating our upmarket investment.
Ofer Katz: We continued to make significant progress this quarter.
Ofer Katz: Our fiber business solution as we added new features to fiber Pearl sign up several new partners to our pilot certified solution and on boarded over a dozen new clients to fiber enterprise.
Ofer Katz: We sold the effort, we made last year to pay off.
Ofer Katz: As the average spend per buyer for 2023 cohort was 13% higher than the 22 cohort.
Ofer Katz: Our unit economics remains strong as the ROI for performance marketing was slightly over three months, while our three-year lifetime value-to-CAC exceeded over 3x. We expect to maintain strong market efficiency as we focus on investing in higher value buyers. Claude Spence-Capa.
Ofer Katz: First pillar.
Ofer Katz: Our unit economics remain strong as DIY for performance marketing was slightly over three months.
Ofer Katz: While our three lifetime value to CAC exceeded over three X.
Ofer Katz: We expect to maintain strong market efficiency as we focus on investing in higher value buyer.
Ofer Katz: Take rate for the fourth quarter was 31.8%, representing a year-over-year expansion of 160 basis points driven by significant growth in our seller monetization programs, promoted gigs, and seller plus. Our expansion effort in this program has led revenue from promoted gigs to increase 80% year-over-year, and revenue from SellerPlus to climb over 2.5x in 2023 compared to 2022. We believe both programs have plenty of growth runways ahead. Now on to guidance for the full year of 2024. We expect revenue to be in the range of $379 to $387 million, representing a year-over-year growth of five to seven percent. Adjusted EBITDA is expected to be in the range of $65 to $73 million, representing an adjusted EBITDA margin of 18% at midterm.
Ofer Katz: With Claude spend capacity.
Ofer Katz: Take rate for the fourth quarter was 31, 8%.
Ofer Katz: Representing <unk>.
Ofer Katz: Expansion of 160 basis points, driven by significant growth in our seller monetization program promoted gigs and filler plus.
Ofer Katz: Our expansion effort in this program have led revenue from promoted gigs to increased 80% year over him and the revenue from seller plus to climb over two five X in 2023 compared to 2022.
Ofer Katz: We believe both programs have plenty of growth runway ahead.
Ofer Katz: Now onto guidance for the full year of 2024.
Ofer Katz: We expect revenue to be in the range of $379 million to $387 million.
Ofer Katz: Representing.
Ofer Katz: <unk> growth of 5% to 7%.
Ofer Katz: Adjusted EBITDA is expected to be in the range of $65 million to $73 million.
Ofer Katz: Representing an adjusted EBITDA margin of 18% at the midpoint.
Ofer Katz: For the first quarter of 2024, revenue is expected to be $91.5 to $93.5 million, representing year-over-year growth of four to six percent. Adjusted EBITDA is expected to be 12.5 to 14.5 million, representing an adjusted EBITDA margin of 15% at the midterm.
Ofer Katz: For the first quarter of 2024 revenue is expected to be 91, five to $93 5 million.
Ofer Katz: Presenting even got rated growth a 4% to 6%.
Ofer Katz: Adjusted EBITDA is expected to be 12, five to $14 5 million, representing an adjusted EBITA margin of 15% at the midpoint.
Ofer Katz: I'd like to provide some additional color and context behind this guide for Q1 and for the full list. Unpacking the Revenue Guidance. We expect revenue growth in 2024 will be driven by accelerating GMV growth combined with a moderate expansion of fake news. GMV growth is expected to accelerate by 1% to 2% in 2024 compared to 2023.
Ofer Katz: I'd like to provide some additional color and context behind this guide for Q1 and for the full year.
Ofer Katz: And taking the revenue guidance.
Ofer Katz: We expect the revenue growth in 'twenty 'twenty, four will be driven by accelerating <unk> growth.
Ofer Katz: Combined by a moderate expansion uptake rate.
Ofer Katz: <unk> is expected to accelerate by a 1% to 2% in 2024 compared to 2023.
Ofer Katz: Primarily driven by market share expansion in complex services, going up market, and investment in AI. We also expect our spender buyers to accelerate, while active buyers to continue similar trends as in 2020. We will take a balanced approach to driving profitable growth and expect adjusted EBITDA to continue progress toward our long-term target of $25.6 billion. It is important to note that revenue growth remains our top priority.
Operator: At the same time, we expect to make steady, measurable annual growth in driving adjusted EBITDA expansion for the next several years. Remain confident in our strategic priority and financial fortitude. The best market opportunity ahead fuels our optimism, and we are trying to emerge from this challenging economic period as an even stronger and more profitable company. With that.
Ofer Katz: Mmm.
Ofer Katz: And even stronger and more profitable company with that we.
Operator: We will now turn the call over to the operator for questions. Thank you, and as a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker Change: We will now turn the call over to the operator for questions.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one wondering your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again please.
Eric J. Sheridan: Please stand by while we compile the Q&A roster. And our first question will come from Eric Sheridan of Goldman Sachs. Your line is open.
Speaker Change: Please stay on by will be compiled to Q&A roster.
Speaker Change: And our first question will come from Eric Sheridan from Goldman Sachs. Your line is open.
Micha Kaufman: Thanks so much for taking the time to answer the question. Maybe if I could just ask one big picture question? Obviously, very clear about the current macro environment. Talk a little bit about how you plan on balancing incremental profitability and managing through this macro environment in the short term, but not sort of missing the longer-term dynamic of wanting to capture growth and being ready to pivot and capitalize on the opportunity when and if the macro environment does get better. So just a little better color on sort of striking that balance in terms of the way you frame this year and the way you're executing in the early part of 2024. Thanks so much, guys. Yeah, good morning, Eric.
Eric J. Sheridan: Thanks, So much for taking my question, maybe if I could just ask one big picture, one obviously very clear on the current macro environment talk a little bit about how you plan on balancing incremental profitability and managing through this macro environment, the short term, but not sort of missing the longer term dynamic.
Eric J. Sheridan: Wanting to capture growth and being ready to pivot and capitalize on the opportunity when and if the macro environment does get better. So just better color on through a striking that balance in terms of the way you frame this year and the way you were executing in the early part of 2024. Thanks, So much guys.
Speaker Change: Yeah. Good morning, Eric Thanks for the question.
Eric J. Sheridan:
Speaker Change: So so yes.
Speaker Change: Growth does remain a top priority for us and I think that what we've been demonstrating is that's when macro is challenging we're able to continue growing while optimizing our efficiency.
Micha Kaufman: Thanks for the question. Thank you. So yes, growth does remain a top priority for us. And I think that what we've been demonstrating is that when macro is challenging, we're able to continue growing while optimizing our efficiency and creating a very strong cash position and remaining very opportunistic about the possibility of growth in the future. So doubling down on those opportunities is also always something that we do.
Speaker Change: And and and create a very strong cash position of being remaining very optimistic about the possibility of a growth in the future. So doubling down on those on those opportunities is also is always something that we do it is it is important to say as well that were uhm investing in acquiring.
Speaker Change: Hi value buyers those buyers spend more with us and remained logar with us and support the expansion in categories. What we call. The the more complex categories that are that are outgrowing.
Micha Kaufman: It is it is important to say as well that we're investing in acquiring high value buyers. Those buyers spend more with us and remain longer with us and support the expansion in categories, what we call the more complex categories that are that are outgrowing the more simpler categories. And I think that when when the market rebound.
Speaker Change: The more simpler categories.
Speaker Change: And I think that when when the market rebounds, and you're gonna see more engagements also coming from lower market segment like micro businesses.
Micha Kaufman: And you're going to see more engagement also coming from lower market segments. Like micro businesses will be there to capitalize on that growth and be able to double down and grow faster on them. In the meantime, we're improving every aspect of our business. And I think that we've demonstrated that we've been doing that very well. Great, thank you.
Speaker Change: Will be there to capitalize on that growth and be able to double down and grow faster on them in the meantime, we're improving every aspect of our business throughout and I think that we've we've demonstrated that we've been doing that very steadily.
Speaker Change: Great. Thank you.
Ronald V. Josey: Thank you. And our next question will come from Ron Josey from Citi. Your line is open.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: And our next question will come from <unk> from City. Your line is open.
Micha Kaufman: Great, thanks for taking the questions. Maybe to build off of Eric's questions, Micha, you know, we definitely saw relatively stable cohort behavior, I think, from existing buyers at 23, and certainly strength in more complex projects, and AI is a talent. Maybe dig down a little bit more on just that top-line growth. I understand you balance top-line growth with profitability, but I would love to hear more about your plans around verticals and products just to grow newer cohorts then and to build up that up-market sort of muscle based on all these new products that are being launched. And then, Ofer, I did have a question, you know, with guidance calling for just continued strong margins. Talk just about how you view Fiverr's balance sheet here. Any update on the capital? Thanks so much, Ron. Just a quick note on Ofer. Ofer had an unplanned dental treatment this morning, so we had him for the opening comment, but I think I'll spare him from having to talk further.
Speaker Change: Thanks for taking the questions maybe to build off of Eric's questions Me you know.
Speaker Change: We definitely saw relatively stable cohort behavior, I think from existing buyers and twenty-three and and certainly strength and more complex projects and analyze the talent.
Speaker Change: Maybe dig down a little bit more on just that top line growth as I understand you're balanced top line with profitability, but would love to hear more about your plans around vertical and products just to grow newer cohorts, Ben and to build up that market sort of muscle based on all these new products that are being launched and then over I I did have a question you know with guidance.
Speaker Change: Calling for just continued strong margins talk just about how you view fibrous balance sheet here any update on capital capital allocation plans. Thank you.
Speaker Change: Thanks, So much wrong, just a quick note on Oh, no for Oh fraud and.
Speaker Change: An unplanned dental treatment. This morning, so we had him for the opening comments, but I think I'll I'll spare them from having to talk further we obviously have changing ginger in with me.
Speaker Change: To to answer with a question.
Speaker Change:
Speaker Change: So for your first question on on on cohort so.
Speaker Change: So as as we said in the opening in the opening Coleman.
Micha Kaufman: We obviously have Jinjin with me, um, to uh, to answer with a Yes, So, for your first question on cohort. So, as we said in the opening comments, you know, we are seeing a mixed shift in simple, simple categories, where there's more impact of macro coming from less spend from smaller businesses and a slight impact from technological shifts and automations, while at the same time, we have cohorts that are coming to us for the more complex categories that are spending significantly more and are engaging more with us. So we do see some softness in cohorts that we called out as of the second half of 2022. And that lasted throughout 2023.
Speaker Change: You.
Speaker Change: We are seeing a mix shift on on simple simple categories, where there is more impact of macro coming from less spend from a smaller businesses and slightly input from <unk>.
Speaker Change: No logical shifts and automations, while at the same time, we have cohorts that are coming to us for the more complex categories that are spending significantly more and are engaging more with us. So we we do see some softness.
Speaker Change: Cohorts that we called out <unk>. The second half of 2022, <unk> dot lasted throughout 2023, and and actually macro isn't changing so we're not calling any change to macro at the same time, we have identified a number of categories that are growing.
Micha Kaufman: And actually, macro isn't changing. So we're not calling any change to macro. At the same time, we have identified a number of categories that are growing much, much faster. Therefore, we're doubling down on these categories. And that, with the focus on high-value buyers, those who have the spend capacity and are interested and are onboarding into Fiverr into these categories, allows us to actually improve cohort behavior. And you see that from the numbers, the 13% increase in spend in the last year by these cohorts.
Speaker Change: Much much faster.
Speaker Change: And therefore, we're doubling down on these categories and not with the focus on on on high value buyers, those who have to spend capacity and are interested in our own boarding into fiber into these categories allows us to actually improve cohort behavior and and you see that from the <unk>.
Speaker Change: Numbers, though 13% increasing spending the last year by these cohorts.
Micha Kaufman: As to your second question. Thank you. On capital allocation, look, we've generated over $80 million of free cash flow this year. And, obviously, we have a very strong balance sheet.
Speaker Change: As to your second question.
Speaker Change:
Speaker Change: On on on on capital allocation look we you know, we we've generated over $80 million of free cash flow. This year and obviously, we have a very strong balance sheet. So financially you are in a very well positioned as we continue to generate free cash flow and and <unk>.
Micha Kaufman: So financially, we are in a very good position. As we continue to generate free cash flow and increase cash on our balance sheet, we are having active discussions with the board on our capital allocation, including the use of excess cash for equity buybacks. It is worth reiterating that growth continues to be a top priority for us, and we see opportunities for both organic and inorganic growth. And our top of mind is to be very disciplined in making these decisions and really focus on delivering returns to our shareholders and maximizing long-term shareholder value. Great, thank you, Micha. Thank you, Ronald.
Speaker Change: Aris cash on our balance sheet, we are having active discussions with the board and are a capital a location, including the use of the excess cash for equity buybacks.
Speaker Change: It is worth reiterating that growth continues to be a top priority for us and.
Speaker Change: We see opportunities for both organic and inorganic in our top of mind it used to be very disciplined and making these decisions and and really focus on delivering returns to our shareholders and maximizing longterm shareholder value.
Speaker Change: Alright, Thank you <unk>. Thank you Ron.
Speaker Change: Thank you.
Speaker Change: And our next question will come from Dot N from J P. Morgan Your line is open.
Micha Kaufman: Thank you. And our next question will come from Doug Anmuth from J.P. Morgan. Your line is open. Great, thanks for taking the question. It's Wes. I'm Sir Doug.
Dot N: Great. Thanks for taking the question. It's two f's answered dog, it's good to see a I already contributed to growth even though it's really early honestly just kind of strapped scratching the surface just kind of where do you see some of the longer term opportunities or maybe places in the business you couldn't really leaning a lot further with AI and dry positive impact.
Doug Anmuth: It's good to see AI already contributing to growth, even though it's really early. You mentioned just kind of scratching the surface. Just kind of where do you see some of the longer-term opportunities or maybe places in the business you can really lean in a lot further with AI and drive positive impact? Hey, good morning.
Speaker Change: Okay. Good morning, Thanks for the the question.
Speaker Change: So it is as we made clear Ah both in the shareholder letter and are opening <unk> for us and I think that what we've identified is there is a difference between what we called simple categories or tasks anymore.
Micha Kaufman: Thanks for the question. As we made clear, both in the shareholder letter and our opening comments, AI is a net positive. And I think that what we've identified is there is a difference between what we call simple categories or tasks and more complex ones.
Speaker Change: <unk>.
Speaker Change: In the complex group it it's really.
Micha Kaufman: And in the complex group, it's really those categories that require human intervention and human input in order to produce a satisfactory result for the customer. And in these categories, we're seeing growth that goes well beyond the overall growth that we're seeing. And really, the simple ones are, such as where technology can actually do pretty much the entire work.
Speaker Change: Those categories that require human intervention and human input in order to produce a satisfactory resolve the customer.
Speaker Change: And in these categories, we're seeing we're seeing growth that goes well beyond the overall growth.
Speaker Change: We're seeing.
Speaker Change: And and really simple ones are <unk>.
Speaker Change: Such where technology cannot proceed do pretty much doing her work.
Micha Kaufman: In those cases, they're usually associated with lower prices and shorter-term engagement. So, so essentially, we're really focusing on these more complex services, doubling down on these categories. And we think that these categories have the potential to drive very nice growth, and the larger they become, the more growth they'll drive. At the same time, we're using AI across the entire marketplace, the entire experience. You know, the searching experience, matching, personalization, the way our customers are doing briefings, the way our sellers are attending to customer needs. So, essentially, powering every aspect of the experience and making it better and more efficient.
Speaker Change: Which in in those cases, there usually associated with with lower prices and and and shorter time engagements.
Speaker Change: So so essentially essentially we're we're really focusing on these on these more complex services doubling download these categories and we think that these categories have the potential of driving driving very nice growth and and the the larger or they become them or growth.
Speaker Change: The Bush.
Speaker Change: At the same time, we're using or using a I across the entire market based the entire experience.
Speaker Change: You know the searching experienced matching first thing <unk> the way our customers are doing briefing. The way are sellers are attending to to customer needs. So essentially powering every aspect of the the <unk>.
Speaker Change: <unk> and making it better and more efficient.
Micha Kaufman: And what we've done with the winter product release is just a first step. It's a big step, but it's a first step in pretty much integrating AI into every aspect of the experience and the product. And we'll continue doing so throughout the year and probably in the next years to come. Again, it is presenting us with some superpowers that didn't exist before and allow us to really turbocharge the experience. And so I think that both from a product standpoint and also from a market-based standpoint, AI is going to be a multi-year tail. Great, thanks so much.
Speaker Change: And you know what we've done with the winter product really easy is just a first step it's a it's a it's a big step, but it's a first step.
Speaker Change: In in pretty much integrating AI in every aspect of of of the experienced in the product and will continue doing so throughout the year and <unk> probably in the next yours to come again, you know it.
Speaker Change: It it is presenting with some superpowers that didn't exist before and allow allow us to allow us to really turbocharge the experiencing.
Speaker Change: And so I think that both from a product standpoint.
Speaker Change: But also from a market based 10 point AI is going to be a multiyear tailwind for us.
Speaker Change: Great. Thank you so much.
Andrew M. Boone: Thank you. And our next question will come from Andrew Boone from J&P Securities. Your line is open.
Speaker Change: Thank you.
Speaker Change: And our next question will come from <unk> from JMP Securities. Your line is Hilton.
Micha Kaufman: Thank you so much for taking my questions. I wanted to ask specifically about the simple services GMB and the fact that it was down 28% in 2023. Can we tie that into the 2024 guide and just talk about your expectations for the simplest services and the ability for them to stay on the platform? Hey, Andrew.
JMP Securities: Thanks, So much for taking my questions I wanted to ask specifically about the simple services Janet being a factor is down 28% in 2023 can we tie that into the 2024 guide and just talk about your expectation for the simplest services and the ability for them to stay on the platform.
Speaker Change: Hi, Andrew Thanks for the question.
Speaker Change:
Speaker Change: <unk> just as just as a correction.
Andrew: The simple the the simple services are down in teens, not 28 per cent.
Micha Kaufman: Thanks for the question. So just as a correction, the simple services are down in teens, not 28%. Um, so it is smaller than you indicated.
Andrew:
Speaker Change: So so it's it's it is it is a smaller than than you indicated.
Micha Kaufman: Everything that we've put in the model is tied into the guidance. So, whatever we see, including those, uh, uh, that, uh, decreased in simple services is definitely in there's a makeshift right, and so, as we've demonstrated, the increase in the complex categories far outweighs the decrease in simple services. And so, as we think about guidance, and as we think about AI becoming a multi-year tailwind, all of that is being tied into. Sorry about that. I misread it.
Speaker Change: Everything that we've put in the model is tied into the guidance.
Speaker Change: So so whatever we see including those dot decrease.
Speaker Change: In in simple services.
Speaker Change: He's is is definitely in there's a there's a mix shift right and so is we've demonstrated.
Speaker Change: The increase in the complex categories far outweigh the the decreasing simple services.
Speaker Change: And and so as we think about the guidance and as we think about AI, becoming a.
Micha Kaufman: Apologies. And then I wanted to ask about the changes in enterprise that you're making. How is the change in enterprise changing how you interact with business, and how is that relating back to increased usage of the platform? Thanks.
Speaker Change: Multi your tailwind all of that is being being tied into the guidance.
Speaker Change: Sorry about that I I misread apologise and then I wanted to ask about the changes in enterprise that you're making.
Speaker Change: Uhm.
Speaker Change: How is how is the change in enterprise changing how you interact with business and how is that related back to increase usage with black. Thanks. So much.
Micha Kaufman: Thank you. So, essentially, what we've done with enterprises, we've created a new pricing package that really emphasizes the value we provide on talent sourcing and is built for encouraging long-term engagement. So under this new pricing package, clients do not pay additional fees to have access to the talent management system if they source and hire a certain number of freelancers. If they don't use enough, then the minimum fee will kick in. So these changes have allowed us to really expand and onboard more customers. That's a much quicker onboarding process.
Speaker Change: Thank you so so essentially what what we've done with we'd enterprises, we we've created a new pricing package.
Speaker Change: <unk> emphasizes the value we provide on talon sourcing.
Speaker Change: And are built for an encouraging longterm engagements so under this new pricing package client.
Speaker Change: Do not be additional fees to have access to content management system, if the source and hire a certain number of freelancers.
Speaker Change: He didn't use enough that a minimum fee will kick in <unk>.
Speaker Change: So these changes of of allowed us to really expand.
Speaker Change: And onboard more customers into it.
Speaker Change: Does that much quicker onboarding done.
Speaker Change: Alright, thank you.
Matthew F. Farrell: Thank you. And our next question will come from Matt Farrell of Piper Sandler. Your line is open.
Speaker Change: Thank you.
Speaker Change: And our next question will come from <unk> from Piper Sandler Your line is open.
Jinjin Qian: Hey guys, thanks for letting me ask a question. My first one is a bit more near term, you know, Q1 here is a little softer compared to normal seasonality, but you called out the macro is really not changing in any material way. We'd love just to hear kind of what's been going on in Q1 from, you know, a puts and takes perspective that kind of drove the initial guide for the quarter. Hey, Matt. This is Jinjin.
Piper Sandler: Hey, guys. Thanks for letting me ask a question my first of all it is a bit more near term Q1 here is a little softer compared to normal seasonality, but you called out the macro really not changing.
Piper Sandler: In any material way would love just to hear kind of what's been going on in Q1 from you know puts and takes perspective that kind of drove the initial guide for the quarter.
Jinjin Qian: I'll take this question. Yeah, so nothing specific to call out for Q1. Like we mentioned earlier, we have not really seen a rebound in the macro. That said, you know, we do believe that we can drive growth even under this macro. This is why, you know, for the full year guidance, we are expecting to accelerate our GMV growth this year. And, and, and, and Miha has talked about this, when you look at the strategic priorities we set for 2024, you know, we noticed a few big areas and, and that is really, you know, going to help us accelerate GMV growth. And on the take rate side, you know, we already command over 30% take rate, which is really industry leading and speaks to the unique value proposition we provide for 2024.
Piper Sandler: Hey Man. This is singing I'll take this question yeah. So nothing specific to call out for Q1 like we mentioned earlier, we have not really seen a rebound in the macro that said.
Singing: We do believe that we can drive growth even under this macro this is why it all for you see for the full year guidance, we are expecting to accelerate our G. M. Negroes you know this year.
Singing: <unk> and <unk> you know when you look at the strategic priorities. We set for 2024, we noticed a few big areas and and that is really.
Singing: Going to help us drive Jim exploration and on the take right side. You know we already command you know over 30 per cent takeaway, which is really industry, leading speaks to the unique value proposition that we provide for 2024, we expect to continue expanding take <unk>.
Jinjin Qian: We expect to continue expanding take rates, but at a more moderate pace compared to 23, mainly due to 23, we had, you know, a pretty substantial expansion for the two monetization programs. So, for 24, we expect to continue growing take rates, but it could be more moderated. So these two pieces kind of go together into kind of the guide for Q1. Thanks, and then, you hit on kind of continuing to be on path for that long-term 25% adjusted EBITDA margin, obviously kind of optimizing here in the near term, but would love just any more insight, you know, as we maybe, you know, is that a couple more years timeline? How should we be thinking about that?
Singing: <unk>, but add a more moderate pace compared to twenty-three mainly due to twenty-three we had you know a pretty substantial.
Singing: Essential expansion for the two monetization programs. So the 20th floor, we expect to continue grow take right, but could be more moderated uhm. So.
Singing: These two pieces kind of go together into kind of the guide for Q1 in 24.
Speaker Change: Thanks, and then.
Singing: You hit on kind of continuing.
Singing: Continuing to be unpack for that long term 25 per cent adjusted EBITDA margin.
Singing: Obviously kind of optimizing here in the near term, but would love just any more inside you know as we may be you know is that a couple more years timeline, how should we be taking that and what are the major libraries from here you know from the 2024 guide to get to that 25% number bank.
Jinjin Qian: And what are the major levers from here, you know, from the 2024 guide to get to that 25% number? Thanks. Yeah, so I think for us, growth continues to be the priority. So we are going to continue to drive growth while managing expenses very diligently and making very steady and consistent progress over the long term. So we're not giving a specific timeline for reaching 25% at this time, but as you can see, we're not far away from it. And we are going to continue making steady annual progress. Thanks.
Speaker Change: Yeah, So I think we.
Speaker Change: You know for for US growth is continues to be the priority. So we are going to continue to drive growth, while managing expense very diligently and making very steady and consistent progress toward this long term. So we're not.
Speaker Change: You know, giving a specific timeline for reaching 25 per cent at the time, but as you can see why not you know far away from it and we are going to continue making you know steady annual progress towards it.
Singing: Thanks.
Jason Helfstein: Thank you. And our next question will come from Jason Helfstein from Oppenheimer & Co. Your line is open.
Speaker Change: Thank you.
Singing: And our next question will come from Jason <unk> from Oppenheimer income per line is Hilton.
Jason Helfstein: Thanks. It's kind of like a two-part question, but on the same theme. So, you've given us data showing that TROI, marketing efficiency still remains healthy. When we look at the cohort data, just maybe help us out. How much do you think about it? How much are we looking at, like, obviously, the visual, right?
Jason: Thanks, and you kind of like a two part question, but on the same theme. So you've given us data show on T. R. L Y Martinez efficiency still remains healthy when we look at the cohort data.
Jason: Just maybe help with how do you think about it how much is we're looking at like obviously visual but they kind of you know cohort change from kind of running off the COVID-19 benefit to just.
Jason Helfstein: But the kind of, you know, cohort change from kind of running off the COVID benefit to just. You know, general weak macro weakness among certain customers. And then, as you're thinking about the guy,
Jason: General week natural weakness among certain customers and then as your thinking about the guy.
Jason Helfstein: You know, I think most of us sit here and say, okay, you know, a good, a large percent of your business is smaller businesses that are interest rate sensitive. Um, as interest rates come down, they should be willing to spend more. Like, how do you just think about that dynamic? Because you're thinking about your guide.
Jason: I think most of us sit here and say, Okay you know.
Singing: A good a large percent of your business is smaller businesses that are interest rate sensitive.
Singing: As interest rates come down they should we want to spend more like how do you just think about that dynamic as you were thinking about your guide.
Jason Helfstein: You know, relative to the other things that are in your control, right? Moving up the market, new products, taking ratings, et cetera. So just maybe unpack that.
Singing: Relative to the other things that are in your control like moving at market new products take ready et cetera. So just maybe unpack that so kind of the the burn off of the Covid benefit and then kind of how you're thinking about particularly small business smaller business customers, who are probably more directly impacted by changing and just wrote site.
Micha Kaufman: So kind of the burn off of the coven benefit and then kind of how you're thinking about particularly small business, smaller business customers who are probably more directly impacted by changing interest rates. Thanks, Jason. Good morning.
Speaker Change: Thanks, Jason Good morning.
Micha Kaufman: So essentially, I think we mentioned this a few times. Right now, we're not seeing any macro change. And obviously, when it does change, there is going to be an upside. And we're going to be there to capture it.
Jason: Yeah. So it sounds like I think I think we mentioned this you know.
Speaker Change: A few times right now, we're not seeing any macro change and obviously.
Jason: When he does changed or there's going to be an upside and we're gonna be there to capture it in you know the D. A.
Micha Kaufman: And, you know, the incredibly powerful marketing machine that we've developed over the years is ready to fire up. So, you know, capturing that opportunity is not going to be an issue. That said, since we're not seeing any of these changes as of now, and we'll be super happy to share it with all of you once we do see it, we're focusing on the things that we can control, which is why we've been focusing more on high-value buyers, those who spend more, on spend per buyer in general, knowing that inactive buyers, as an example, we're not gonna see the same type of growth In an easier macro environment, usually, if you look historically, what you see is you see a more balanced growth between active buyer and spend per buyer because we're able to grow both of them. Right now, we're obviously focusing on the things that we can control, which is really focusing on the more complex services, the higher-value customers, and optimizing to acquire as effectively as possible in those areas. I think, again, from a brand perspective, Fiverr is the leading brand in the world in this space.
Jason: Incredibly powerful marketing machine that we've that we've developed.
Jason: Developed over the years is is is ready and fire up. So so you know capturing that opportunity is not is not there'll be an issue.
Jason: Uhm that's it since we're not seeing any of these changes as of now and will be Super happy too huh to share to share it with all of you. Once once we do see it we're focusing on the things that we that we can control, which is which is why we've been focusing more owen.
Jason: High value buyers, those who spend more on <unk> in general knowing that knowing that an octave buyers. As an example, we're we're not going to see the the same type of growth in a in a in a in an easier macro environment usually.
Jason: If you look historically, what you see as you see a more balanced growth between <unk>, because we are able to grow both of them right. Now, we're obviously focusing on the things that we that we can control, which is which is really focusing on the more complex services. The the high.
Jason: <unk> value, our customers and optimizing to acquire as as as as effective as as possible.
Jason: In in those areas I think again from a from a brand perspective fiber is the leading brand in the world in this space. So once the sentiment is going to change I think that there is this is just going to add to the great tailwind that we're experiencing from AI right now.
Micha Kaufman: So once the sentiment changes, I think that this is just going to add to the great tailwind that we're experiencing from AI. And just to be clear, your guys, as soon as you know, pick up in macro, through the entire year, or is there something to pick up at some point? No, no, no. It does not. He does not factor in any hopefulness around macro rebounds.
Jason: And just to be clear your guys' assumed you know pick up in macro.
Jason: The entire year or <unk> no no no correct. It does not it does not factoring any.
Jason: Hopefulness around the macro rebound.
Micha Kaufman: Thank you. Our next question will come from Kunal Madhukar from UBS. Your line is open. Thank you for taking my questions. A couple, if I could.
Speaker Change: Thank you thank.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question will come from <unk> <unk>. Your line is open.
Speaker Change: Alright. Thank you for taking my questions a couple if I could one on the complex services <unk> wanted to understand buyer behavior and seller behavior in terms of repeats and very you're seeing the command prompt.
Kunal Madhukar: One, on the complex services side, I wanted to understand buyer behavior and seller behavior in terms of repeats and where you're seeing the demand from, and are the sellers that are supplying the complex services new to the platform? Are there people that have retooled their skill sets and are now supplying complex services? And then on the take rate side, for these complex services, with the ASP kind of increasing, you're probably going head-to-head with Upwork. So can you talk about take rate trends and price? Thank you. Yeah, thanks for the questions. So first of all, to touch on complex services. Complex services are really categorized where human skills are essential to deliver a satisfactory outcome. You know, even when AI can be used to improve the efficiency of some aspects of these projects.
Speaker Change: Are the centers that are supplying the complex services are these new to the platform or the people that have three total debt.
Speaker Change: <unk> and a dollar supplying complex services and then on the Undertaker tight for these complex services.
Speaker Change: <unk> with the S. P cannot increasing your property going up more head to head with upwards.
Speaker Change: So can you talk about take returns and pricing.
Speaker Change: Thank you.
Speaker Change: Yeah. Thanks for the questions. So so first of all to to.
Speaker Change: To touch on complex services <unk>.
Speaker Change: <unk> services are really categorize where where human skills are essential to deliver a satisfactory outcome you know even even when a I can be used to <unk> to improve the efficiency of some aspects of these projects.
Micha Kaufman: All right. So essentially, what we're seeing there is, by definition, the buyers who come to purchase these customers have a typically longer duration of projects. So, in essence, the type of relationship that they develop with our platform is longer, and that also influences their repeat and their retention over time.
Speaker Change: Alright so.
Speaker Change: So we essentially.
Speaker Change: What we're seeing there is by definition the the buyers who come to purchase these customers have a typically longer duration of project.
Speaker Change: So in essence, the the type of relationship that they develop with our platform <unk>.
Speaker Change: And in that also influence their their repeat and they're they're retention overtime.
Micha Kaufman: Thank you. Thank you. Thank you. As to the sellers, a lot of them are existing, and some are new.
Speaker Change: No.
Speaker Change:
Speaker Change: As to the seller's a lot of them are are existing summer new I mean, we're adding tremendous amount of of of talent to our platform every month every quarter.
Micha Kaufman: I mean, we're adding a tremendous amount of talent to our platform every month, every quarter. But, you know, as you can imagine, these sellers are mostly relevant for higher quality. So, you know, you can see segments like pro sellers. So I think that this is really helpful for these sellers to really expand their earnings on Fiverr, which also creates retention of talent as well as engagement. So, from those two aspects, you know, it's definitely a move into the right direction. Listen, I think, you know, I think the way we look at competition is really that most of the competition is offline. We're not focusing on any specific company in a, you know, each, you know, each company in its space of its own, its own way and, you know, way of doing business.
Speaker Change: But you know as as <unk> as you can imagine. These sellers are you know mostly relevant for a higher quality. So you know you can see segments like Pearl sellers.
Speaker Change:
Speaker Change: So so I think that this is you know really helpful for the sellers to really expand their earnings on fiber, which also create you know retention of talent as well and their engagement. So so I think that's <unk> from those two aspects you know it's it's definitely.
Speaker Change: Ah Ah move into the right direction.
Speaker Change:
Speaker Change: Mister <unk>.
Speaker Change: <unk> I think.
Speaker Change: The way we look at the competition is really that most of of of of of the physician is offline.
Speaker Change: Not focusing on any specific company in each you know each company in the space of its own it's it's own way and you know way of doing business.
Micha Kaufman: Ours is really to try to do more of the transformation from offline activity, the work that companies are doing with talent, with agencies, and really transform it online. You know, we're really confident with the approach of tackling the entire addressable market with both the market base and the Fiverr business solution. Thank you for your questions. Thank you. And our next question will come from Brad Erickson from RBC Capital Markets. Your line is open.
Speaker Change:
Speaker Change: It's really to try to do more of the transformation from the offline activity.
Speaker Change: The work that companies are doing with talent with agencies and and really transform it's to to the online.
Speaker Change: <unk> you know what.
Speaker Change: We're really confident with the approach of tackle the entire addressable market with with both the <unk> and the fiber business solutions.
Speaker Change: Thanks for the question.
Speaker Change: Thank you.
Speaker Change: Next question will come from Brad Erickson from RBC capital Markets Carolina Hilton.
Brad Erickson: You guys, thanks. I guess first, you mentioned your outperformance relative to, you know, like, job openings and staffing and stuff like that. Yeah, maybe just remind us, if you could, what are the kind of key types of capacity you think Fiverr is really replacing or augmenting? Kind of supplementing, you think about the secular aspect of this, the digital freelancer opportunity. And I guess, like, what should investors focus on as kind of the more acute drivers, whether it's like business formation, just kind of the general health of the SMB, job openings, etc. That's the first one. And then second, just the housekeeping for Jinjin; sorry about Ofer's teeth.
Brad Erickson: Hey, guys. Thanks, I guess first you mentioned, you're outperformance relative to you know like job openings and staffing and stuff like that.
Brad Erickson: Yeah, maybe just remind us if you <unk> what are the kind of key types of capacity you think five years really replacing here augmenting or.
Brad Erickson: Supplementing you think about the secular aspect of this the digital freelancer opportunity and I guess like what should investors focus on is kind of a more acute drivers whether it's like business formation, just kind of general health of the S. M b job openings et cetera.
Brad Erickson: That's the first one and then second just a housekeeping for Ginger.
Speaker Change: <unk>, sorry about overs teeth.
Micha Kaufman: Just stock-based comp, what's embedded in the guidance, and just generally how to think about stock-based comp, I guess, maybe as like a percentage of revenue, for example, going forward. Thanks. Morning, Brad.
Speaker Change: Stock based comp what's embedded in the guidance and just generally how to think about stock-based comp I guess, maybe it was like a percentage of revenue for example, going forward. Thanks.
Micha Kaufman: Thanks for the questions. It's for the first one, you know, I think. First, what we're really optimizing for is this offline drone. So, freelancers, you know, in general, are addressing things like skill gaps, cost efficiency, and issues of scaling up or down very rapidly without the complexities that come with full-time hiring.
Speaker Change: Morning, Brown, thanks for the questions. So.
As for the first one you.
Speaker Change: You know I I think so first or really optimizing for this offline too online alright. So.
Speaker Change: Uhm, so freelancers in general are addressing things like skill gaps.
Micha Kaufman: Cost efficiency.
Speaker Change: Issues of Oh scale scaling scaling up or down very rapidly without the complexities of of that that comes with full time hiring and and what we're doing is we're really doing this but in a hyper efficient model.
Micha Kaufman: And what we're doing is we're really doing this, but in a hyper-efficient model online. So we make the actual process. That is taking, on average, many, many weeks for companies. We're changing that to a really simple interaction that takes just minutes. So I think that by, by really, covering this entire spectrum from the small needs of micro businesses to very sophisticated needs for more sophisticated and large customers, we're actually helping to transform this offline business to online. Now, in terms of what investors should focus on, you know, we're trying to ourselves to look for proxies, and one of the interesting things that we saw is that it is hard to find a proxy other than the actual numbers that we're seeing on our budget.
Micha Kaufman: Online so so we make the <unk> the.
Micha Kaufman: The actual process that is taking on average many many weeks for companies or.
Micha Kaufman: Or changing <unk> really simple interaction that takes minutes.
Micha Kaufman: So I think the <unk> bye bye.
Micha Kaufman: By really.
Micha Kaufman: Covering this entire spectrum from you know small needs of micro businesses to very sophisticated needs four or more sophisticated and large customers, we're actually helping to transform this.
Micha Kaufman: This offline too online.
Micha Kaufman: Now in terms of what investors should should focus on.
Micha Kaufman: You know, we're trying to ourselves to look for proxies and one of the interesting things that that we we saw that is that there is.
Micha Kaufman: It is hard to find a proxy other than the actual numbers that we're seeing on our platform, meaning new business formation is not necessarily an indication that those businesses have this bank capacity.
Micha Kaufman: Meaning, new business formation is not necessarily an indication that those businesses have the spending capacity. Sometimes new business formation is tied to job cuts or people that need to replace or create new businesses. It doesn't mean that this is going to immediately lead to more spending. I think that, if anything, the cost of borrowing is probably a decent proxy.
Micha Kaufman: Sometimes new business formation is tied with job cuts or or people that need to need to replace or create new businesses. It doesn't mean that this is going to immediately lead two two more spending.
Micha Kaufman: That is anything cost of borough.
Micha Kaufman: Because when you think about that, you know, smaller businesses who need to borrow money to invest in growth have a harder time in this economy. And if you're a business that is already generating capital, then you can reinvest without worrying. So, this is why I think we called it out pretty much in the past year and a half. The fact that we're seeing parity between mid-size, large-size enterprise business and small and micro business. Uh. And the lower, those lower cohorts of smaller businesses have a harder time than the larger ones.
Micha Kaufman: He's probably a decent proxy.
Micha Kaufman: Because when you think about it at you know smaller businesses, who need to borrow money to invest in growth of a harder time in this economy.
Micha Kaufman: And if you're a business that is already generating capital than you can reinvest without worrying money. So so this is why I think we called out.
Micha Kaufman: Pretty much in the past year and a half the fact that we're <unk>, we're seeing party between <unk>.
Micha Kaufman: Mid size large size enterprise business, and small and micro businesses.
Micha Kaufman: Oh.
Micha Kaufman: And and and the lower those lower cohorts of smaller businesses have a harder time than the large one.
Micha Kaufman: As we've demonstrated, the fact that there is a pretty massive decrease in job openings doesn't mean that we're not growing. So we're seeing, and we're showing, we're demonstrating an opposite trend. So it's really hard to find these these these folks.
Micha Kaufman: As we've demonstrated the fact that there is a.
Micha Kaufman: A pretty massive decrease in job openings doesn't mean that we're outgrowing. So we're seeing and we're showing we're demonstrating an opposite trend so.
Micha Kaufman: So it's really hard to find to find these these these policy.
Jinjin Qian: Jinjin you want to take the, Yeah, so, SBC is an elevated level, as we mentioned before, because of the accounting treatment that is booked at cost and it's tied to a high stock price during COVID. And so, from a modeling perspective, you know, this is going to take, you know, four years to vest those, you know, RSUs and options. And so, for modeling this year, it'll be, you know, similar to last year's level from a dollar perspective. But, as a percentage of revenue, it'll come down slightly. And as we finish the four-year vesting period, you know, we do expect that percentage revenue will step down more substantially. Great, thank you.
Speaker Change: Ginger and you wanted to take the.
Jinjin Qian: Yeah. So S. P. C. You know we S. P. C is elevated level as we mentioned before because of the accounting treatment that is booked at causative tied with a high stock price during COVID-19 and so from a modeling perspective, you know this is gonna to.
Jinjin Qian: Take.
Jinjin Qian: Four years to vest those you know our issues and options and so for modeling. This year it'll be you know similar to last year's level from a dollar perspectives all as a percentage of revenue it'll come down slightly and as we finished the for your best thing and we do expect.
Jinjin Qian: You know that percentage revenue will you know more substantially stepping down.
Speaker Change: Great. Thank you.
Bernie Mcternan: Thank you. And our next question will come from Bernie McTernan from Needham & Company. Your line is open.
Speaker Change: Thank you.
Bernie Mcternan: And our next question comes from burning Mctiernan from Needham and company. Your line is open.
Micha Kaufman: Great, thanks for taking the questions. I really appreciate all the color and data on the complex versus simple declines. I want to follow up on that, just what was the shape of complex growth and simple declines throughout the year? I just wanted to get a sense in terms of whether trends were stabilizing or accelerating in any direction. Use that to forecast 24. And then on the third bucket, the neutral, any specific examples you could provide in terms of what those gigs are predominantly?
Micha Kaufman: Great. Thanks for taking the questions Uhm really appreciate all the the color and data on the complex for simple declines.
Micha Kaufman: Our growth.
Micha Kaufman: I want to follow up on it just what was the shape of complex growth and simple it declines throughout the year just wanted to get a sense in terms of if trends were stabilizing are accelerating any direction just as we.
Micha Kaufman: Use that to to forecast 24, and then on the on the third bucket. The neutral any specific examples you can provide in terms of what those gigs are predominantly in over time do you think the growth will will move more like simple or complex or really stay kind of flat.
Micha Kaufman: And over time, do you think the growth will move more like simple or complex or really stay kind of flat? Thanks, Bernie. Nothing really specific to comment on in terms of shape.
Speaker Change: Thanks, Bernie nothing really specific to to comment on on.
Micha Kaufman: Right. We're not, we can't call any, any difference across, across the year, and it seems to be steady. We have a full year of analysis that is showing that. You know, obviously, we'll need to see how the future shapes up, but this is what we can call for now, in terms of the, you know, the neutral bucket; essentially, these are categories that are not being affected.
Micha Kaufman: On on shape.
Micha Kaufman: Right.
Micha Kaufman: We're we're not we can't call any any difference across across the year and it's it seems to be a steady we have a full year of analysis that is showing that.
Micha Kaufman: You know, obviously, we'll need to see how the future shapes up but this is this is what we can call for now in terms of the you know the neutral bucket.
Micha Kaufman: Essentially these are categories that are not being affected so so essentially there trends have have nothing to do with with with with the AI inbox. So we we don't we don't see any material train trend changes due to do two AI weather.
Micha Kaufman: So essentially, their trends have nothing to do with the AI impact. So we don't see any material trend changes due to AI, whether because AI is not involved in it, or because it's just not impacted. So as to your second part of the question, will growth move to simple or complex? I think I think that, at some point, every transformation, every technological transformation may plateau at some point, but we don't we don't think that this is going to happen anytime soon. So our assumption is that some of the simple tasks are going to continue to be automated, which, by the way, is nothing new. I mean, it happened before. Even before AI, automation was a part of our lives.
Micha Kaufman: Because AI is not involved in it or because it's not just not impacting it.
Micha Kaufman: Yeah.
Micha Kaufman:
Micha Kaufman: So.
Micha Kaufman: To your second part of the question will will growth move too simple or complex.
Speaker Change: I think I think that's it.
Micha Kaufman: At some point every transformation every technological transformation may plateau at some point, but we don't Ah. We don't think that this is gonna happen anytime soon so our assumption is that.
Micha Kaufman: Some of some of the simple <unk> are gonna be continued to be automated which by the way is nothing new.
Micha Kaufman: I mean, it's happened before even before a I <unk> automation as being a part of our lives.
Micha Kaufman: And definitely, the more complex services are where I think the growth potential definitely lies. This is why, you know, we called out the fact that we're going to double down on these categories. I understand. Thank you. And our next question will come from Marvin Fong from BTIG. Your line is now open. Great. Good morning. Thanks for taking my question. So, two for me.
Micha Kaufman: And and definitely the the more complex services is is where I think the growth potential definitely lives. This is why we called out the fact that work at all.
Marvin Fong: Double down on on these on these categories and services.
Marvin Fong: Understood. Thank you.
Marvin Fong: Thank you.
Marvin Fong: And our next question will come from Marvin song from B T I T Caroline of Hamilton.
Marvin Fong: Oh, great. Good morning, Thanks for taking my question. So it's a two for me. So I will first burst on enterprise great to see adding over a dozen clients. They're just be interested if there was any additional color you could add about you know the pipeline that you see for this this cohort and.
Marvin Fong: So, first, that's on enterprise. You know, great to see adding over a dozen clients there. Just be interested if there was any additional color you could add about, you know, the pipeline that you see for this cohort, and can you speak to any, you know, what kind of size of the clients that are adopting this? Are they, you know, 500 plus employees or, or, or, you know, thousands plus employee kind of organizations, a very large organization?
Marvin Fong: <unk> can you speak to any you know, what's the what kind of size of the of the of the clients are adopting this or they.
Marvin Fong: 500, plus employees or or or you know thousands plus employee kind of organizations that very large organizations.
Micha Kaufman: And then second question, just more of a housekeeping question, but I love to see the disclosure about AI being 4%. But I was just curious if, you know, since AI didn't really manifest itself until sort of, let's call it May or June, you know, was the percentage in the back half of the year actually higher? And you know, or maybe you could kind of speak to the fourth quarter, you know, what was the impact just in that quarter, just trying to get a sense of, you know, maybe what we're seeing currently. So thanks a lot. Thanks for the questions. So on the first one, on the dozen clients we've added to enterprise. So in Q4, you know, we acquired three multinational enterprise clients, including two in the tech space and one in the manufacturing industry. And we also added about 10 mid-sized enterprises, including a few media companies. And just to give you some color on size, when we talk about large versus mid-sized, we categorize it below or above 3,000 employees. That, hopefully, is giving you some color.
Marvin Fong: And then the second question is more of a housekeeping question, but you know love to see the disclosure about being 4% [noise].
Micha Kaufman: Of.
Micha Kaufman: T M P, but just curious if.
Micha Kaufman: A I didn't really manifest itself until sort of it let's call. It may or June was the what's the percentage in the in the back half of the year actually higher and or maybe could I speak to you know fourth quarter. You know what was the impact just in that quartered trying to get a sense of maybe.
Micha Kaufman: What we're seeing currently so thanks a lot.
Micha Kaufman: Thanks for the questions. So so on the first one on on the dozen client we we've added to enterprise. So in in in queue for you know, we we acquired.
Micha Kaufman: Three a multinational enterprise client, including two in the tech space and one in the manufacturing industry and we also added about 10 midsized enterprises.
Micha Kaufman: Including a few media companies and just to give you a color on size. When you know when when we talk about a large you know versus mid size, we cut a variety of eight below or above 3000 employees.
Micha Kaufman: That that hopefully is giving you is giving you a color.
Micha Kaufman: Um, on the second part of your question, Um, you will. You know, we've been responding to the changes or the announcements of AI. I mean, ChargePT was announced in November of 2022.
Micha Kaufman:
Speaker Change: On on the second part of of your question.
Micha Kaufman:
Micha Kaufman: Well.
Micha Kaufman: You know, we we've been responding to the changes or the announcements of a I mean charged with you was announced November of 2022.
Micha Kaufman: So as far as we've seen, the impact of Stardate at the... Back end of 2022. In the beginning of 2023, we were already with about 20 or 30 categories that were dealing with AI-related services. So for us, it's really a full-year effect. That said, obviously, categories are very dynamic on the market base and outside of the market base that demands those, and they've been developing throughout the year. But we have been talking about the net positive impact of AI throughout the year.
Micha Kaufman: So as far as we've seen the impact of started started at the at the <unk>.
Micha Kaufman: End of 2022.
Micha Kaufman: In the beginning of 2023, we were already with with about 20 or 30 categories.
Micha Kaufman: That we're dealing with AI related services. So for US. It's it's really it's really a a full.
Micha Kaufman: Full year effect.
Micha Kaufman: <unk> the categories are very dynamic on the market base and outside of the Mark base that demand for those and they've been developing throughout the year.
Micha Kaufman: But but we've been you know we.
Micha Kaufman: We we we have been talking about the nets positive impact of AI throughout the year and and this is just our our opportunity to wrap up on 2023 from a full year perspective.
Micha Kaufman: And this is just our opportunity to wrap up on 2023 from a full year perspective and really call and put an actual number on it. Okay, that's fair. Thanks so much, Neal. Appreciate it. Thanks, everyone. Thank you. And our next question will come from Rohit Kulkarni from Roth MKM.
Kunal Madhukar: In in in really calling and putting in an actual number on it.
Kunal Madhukar: Okay, that's fair.
Kunal Madhukar: Thanks, so much I appreciate it thanks, everyone. Thank you.
Kunal Madhukar: Thank you.
Kunal Madhukar: And our next question.
Kunal Madhukar: Will come from <unk> Kulkarni from Roth and Cam Your line is open.
Kunal Madhukar: Your line is open. Hey, thank you. Thank you for the extra color on GMB growth and the underlying layers. I guess just on metrics and how they affect your guidance for GMB. Anything you could provide to unpack a little bit more with regard to the trend in active buyers and spend per buyer as we think ahead, and how that stacks up to help you accelerate GMB? Yeah, thanks for the question. So, essentially, I think, as to opportunistic buyers, what we're seeing is what we've seen so far, meaning because of macro, there isn't any noticeable improvement. In terms of our ability to increase those numbers in terms of quantity, and therefore, we are focused on the quality of those active buyers, which is everything we said about the high-value buyers.
Speaker Change: Hey that thank you. Thank you for the extra color on G M b grow within the the underlying layers.
Kunal Madhukar: Just on matrix Uhm and how the effect.
Kunal Madhukar: Effective guidance for G. M V anything you could provide to unpack a little bit more with regards to.
Kunal Madhukar:
Kunal Madhukar: An active buyers and <unk> as we think ahead, how that stacks up to help you activate G M b.
Speaker Change: Yeah. Thanks for the question.
Kunal Madhukar: So essentially I think.
Kunal Madhukar: Is too active buyers.
Kunal Madhukar: What we're seeing is what we've seen so far meaning because of macro there isn't any noticeable improvement in terms of our ability to to increase those numbers in terms of quantity and therefore, we are focused on the <unk>.
Kunal Madhukar: Quite a few of those those active virus, which is everything we said about the high value buyers and and obviously if you. If you continue to to track those numbers you see that the the percentage that they contribute continues to increase steadily.
Kunal Madhukar: And obviously, if you continue to track those numbers, you see that the percentage that they contribute continues to increase steadily. So, active buyer is going to be, there will be similar trends as in 2023, and spend per buyer will accelerate in your, you know, year over year growth in comparison to 2023. So, so, our really focus on it is going to continue. You know, if you just, you know, calling out the contribution of higher-value buyers, those who spend more than $500 with us, that cohort grew 4% year over year in 2023, which is, you know, which is significantly higher than the overall active buyer growth. Yeah, so that's, that's how we view it. About $125,000.
Kunal Madhukar: So so <unk>, it's gonna be it's gonna be similar trends as in 2023.
Kunal Madhukar: And it's been provider will accelerate in your.
Kunal Madhukar: Know your over your growth in in comparison to 2023. So so so hour I'll really our focus on it is going to continue.
Kunal Madhukar: You know if you're just calling out you know the contribution of of higher value buyers, those who spend more than $500 with us.
Kunal Madhukar: <unk>, you know, 4% year over year in 2023, which is.
Kunal Madhukar: Which which is significantly higher than the overall occupier growth.
Kunal Madhukar:
Speaker Change: Yeah. So that that's that's how that's how we view twenty-three about 124 sorry.
Micha Kaufman: Okay, okay. That's very helpful, Kallur. Thank you very much. And then I guess I know there were a bunch of questions on this new disclosure around simple versus complex versus marketplace mix that you have. I think just on that, probably, as far as the mix going forward, anything noteworthy that you're assuming with regard to complex services, that probably could be a bigger proportion of GMB going forward. And as a sub question to that would be, are there any pricing or take rate differences, as in material differences? Hey, hey, Rohit. This is Jinjin. Yeah, so I think definitely, I think we mentioned in the shareholder letter as well, you know, complex services in 23 is already almost a third of our marketplace in terms of GME contribution and much higher than, you know, simple services, which is around 23%. And, yeah, given the growth rate, right? Twenty-nine percent year over year growth is a big step up in terms of the overall percentage of GME coming from those complex services, and we do expect that contribution to continue to grow in the coming years. And are there any noticeable differences in take rate, Jinjin, or anything?
Speaker Change: Okay. Okay, yeah that that's that's very helpful. Thank you very.
Speaker Change: Very much and then I guess I know there were a bunch of questions on this new disclosure around the simple what's this complex, which is marketplace mix that you have I think oh.
Jinjin Qian: Just on on that probably like as far as the mix going forward anything noteworthy that you're assuming I'm, assuming with regards to.
Jinjin Qian: <unk> services that probably could be a bigger proportion of G. M b going forward and as a sub question to that would be are there any pricing or take with the.
Micha Kaufman:
Jinjin Qian: Differences material differences across those three categories of G M B.
Micha Kaufman: Hey.
Jinjin Qian: Hey, this is Jean Jean Yeah. So I think definitely I think we mentioned in English on the letter as well you know complex services in 23 is already almost a third of our marketplace in terms of Jamie contribution.
Jinjin Qian: And much higher than you know the Cinco services, which is around 23 per cent.
Jinjin Qian: And and yeah, given the growth rate by 29% year over year growth you know it is a big step up in terms of the overall percentage of Jeremy coming from those contact services and we do expect that contributions continue to grow you know in the coming year.
Jinjin Qian: In any noticeable differences and decorate Ginger L. R. And then yeah that's <unk>.
Jinjin Qian: Yeah, that's right. Yeah, so take rates, nothing really, you know, is different. You know, we, you know, our entire marketplace takes a very consistent, like just uniform take rates across the board. So. Yeah, so 20% from the center side and then 5.5% from the buyer side.
Jinjin Qian: Well, yeah, so I'll take right nothing really you know.
Jinjin Qian: <unk> <unk>.
Jinjin Qian: You know I'll anytime I can play. This takes you know very consistent like just uniform take rates across the board.
Jinjin Qian: So yeah. So 20 per cent from you know the center side, and then find out five and half per cent in front of the buyers that there's no difference in terms of the transactions.
Jinjin Qian: There's no difference. Okay, thank you very much. Thank you. And I am showing no further questions from our phone lines, and I'd like to turn the conference back over to Micha Kaufman for any closing remarks. Thank you, Crystal, and thank you everyone for joining us today. We look forward to an exciting and successful year and hope to see you in person soon. Thank you. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
Speaker Change: Okay. Thank you very much.
Jinjin Qian: Thank you.
Micha Kaufman: And I am showing no further questions from our phone lines and I'd like to turn the conference back over to me, how Kaufman for any closing remarks.
Micha Kaufman: Thank you Chrystal and thank you everyone for joining US today, we look forward to an exciting and successful year and hope to see you in person soon.
Jinjin Qian: Thank you have a great day.
Jinjin Qian: Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect everyone has a wonderful day.
Jinjin Qian: [music].