Q2 2024 Upwork Inc Earnings Call

August 7, 2024

Good day and thank you for standing by.

Operator: This is the second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 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, Jacob McCown, Vice President and Deputy General Counsel. Please go ahead.

Operator: Reporter, Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 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, Jacob McQuown, Vice President and Deputy General Counsel. Please go ahead.

Speaker Change: Welcome to the Upwork Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 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, Jacob McCown, Vice President to Deputy General Counsel. Please go ahead.

Jacob McCown: Thank you. Welcome to Upwork's discussion of its second quarter 2024 financial results. Joining me today are Hayden Brown, Upwork's President and Chief Executive Officer, and Erica Gessert, Upwork's Chief Financial Officer. Following their prepared remarks, they will 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-looking statements include all statements other than statements of historical fact.

Jacob McQuown: Thank you. Welcome to Upwork's discussion of its second quarter 2024 financial results. Joining me today are Hayden Brown, Upwork's President and Chief Executive Officer, and Erica Gessert, Upwork's Chief Financial Officer. Following their prepared remarks, they will 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-looking statements include all statements other than statements of historical fact.

Jacob McQuown: 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 statement. 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's website and our Investor Relations website, as well as the risks and other important factors discussed in today's earnings press release.

Jacob McCown: 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 statement. 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's website and our Investor Relations website, as well as the risks and other important factors discussed in today's earnings press conference.

Speaker Change: Following manager's prepared remarks, they will be happy to take your questions. But first, I'll review the Safe Harbor Statement.

Jacob McCown: During this call, we may make statements related to our business that are forward-looking statements under federal securities laws.

Poor 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.

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 our Investor Relations website, as well as the risks and other important factors discussed in today's earnings press release.

Jacob McQuown: Additional information will also be set forth on our Corollary Report on Form 10-Q for the three months ended September 30, 2024. In addition, reference will be made to certain non-GAAP financial measures. Information regarding non-GAAP financial measures, including reconciliations to their most directly comparable GAAP financial measures, can be found in the press release that was issued this afternoon on our investor relations website at investors.upwork.com. Unless otherwise noted, reported figures are rounded in comparisons to the second quarter of 2024 or to the second quarter of 2023. Pre-cash flow is a non-GAAP figure, and all other financial measures are GAAP unless cited as non-GAAP.

Jacob McCown: Additional information will also be set forth in our quarterly report on Form 10-Q for the three months ended September 30, 2024. In addition, reference will be made to certain non-GAAP financial measures. Information regarding non-GAAP financial measures, including reconciliations to their most directly comparable GAAP financial measures, can be found in the press release that was issued this afternoon on our investor relations website at investors.upwork.com. Unless otherwise noted, reported figures are rounded in comparisons to the second quarter of 2024 or to the second quarter of 2023. Pre-cash flow is a non-GAAP figure, and all other financial measures are GAAP unless cited as non-GAAP.

Additional information will also be set forth on our quarterly report on Form 10-Q for the three months ended September 30, 2024.

In addition, reference will be made to certain non-GAAP financial measures. Information regarding non-GAAP financial measures, including reconciliations to their most directly comparable GAAP financial measures, can be found on the press release that was issued this afternoon on our investor relations website at investors.upwork.com.

Unknown Executive: 2nd quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.

Hayden: Unless otherwise noted, reported figures are rounded in comparisons to the second quarter of 2024 or to the second quarter of 2023. Pre-cash flow is a non-GAAP figure, and all other financial measures are GAAP unless cited as non-GAAP . Now, I'll turn the call over to Hayden.

Hayden Brown: Now, I'll turn the call over to Hayden.

Hayden Brown: Welcome, everyone, to Upwork's second quarter 2024 earnings call. Upwork's strong and durable business continues to deliver compelling growth characteristics on both the top and bottom lines. Our second quarter revenue reached $193.1 million, marking a 15% year-over-year increase. Our continued commitment to enhancing profitability was demonstrated by our highest ever quarter of gap net income at $22.2 million, while adjusted EBITDA was $40.8 million, a 21% adjusted EBITDA margin, up from 8.5% in the second quarter of last year.

Hayden: welcome everyone to upward second quarter two thousand and twenty four earnings call

Hayden: Upwork's strong and durable business continues to deliver compelling growth characteristics on both the top and bottom lines.

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

Jacob McQuown: I would now like to hand the comments over to your speaker today, Jacob McQuown, Vice President to Deputy General Counsel. Please go ahead. Thank you.

Hayden: Our second quarter revenue reached $193.1 million, marking a 15% year-over-year increase.

Hayden: Our continued commitment to enhancing profitability was demonstrated by our highest ever quarter of GAAP net income at $22.2 million.

Jacob McQuown: Welcome to Upwork's discussion of its 2nd quarter, 2024 financial results. Joining me today are Hayden Brown, Upwork's President and Chief Executive Officer and Eric Gessert, Upwork's Chief Financial Officer. Following management's prepared remarks, they will be happy to take your questions.

Hayden: While adjusted EBITDA was $40.8 million, a 21% adjusted EBITDA margin, up from 8.5% in the second quarter of last year.

Hayden Brown: We delivered this revenue growth and outperformed our profitability goals while operating in a dynamic macroeconomic environment that has become more challenging for businesses, large and small. This challenging environment shows through with softer top-of-funnel activity than expected in the second quarter. A leading indicator of the softness that we track internally is clients seeking work, which is a measure of the number of clients engaging in an action that leads to a new contract.

Jacob McQuown: But first, I'll review the safe harbor statement. During this call, we mimic statements related to our business that are forward-looking statements under federal securities laws. Forward-looking statements include all statements other than statements of historical fact. These statements are not guarantees of breach of performance, but rather a 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 our investor relations website, as well as the risks and other important factors discussed in today's earnings press release. Additional information will also be set forth on our quarterly report on form 10Q for the three months ended September 30, 2024.

Jacob McCown: We delivered this revenue growth and outperformed our profitability goals while operating in a dynamic macroeconomic environment that has become more challenging for businesses large and small.

Speaker Change: this challenging environment showed through with softer top of funnel activity than expected in the second quarter

Speaker Change: A leading indicator of the softness that we track internally is client-seeking work, which is a measure of the number of clients engaging in an action that leads to a new contract.

Hayden Brown: In Q1, this number accelerated 11% quarter-over-quarter, while in Q2, this number decelerated 6% sequentially, with particular impact in May and June, along with a mixed shift of active clients towards very small businesses, while we applaud the resiliency of smaller businesses outperforming other cohorts on our platform. Small businesses' historical characteristics of lower spend per contract and fewer contracts per client lead us to have more caution about performance expectations for the remainder of the year.

Hayden: In Q1, this number accelerated 11% quarter over quarter, while in Q2, this number decelerated 6% sequentially, with particular impact in May and June , along with a mixed shift of active clients towards very small businesses.

Jacob McQuown: In addition, reference will be made to certain non-gap financial measures. Information regarding non-gap financial measures, including recommendations to their most directly comparable gap financial measures, can be found on the press release that was issued this afternoon on our investor relations website at investors.upwork.com. Unless otherwise noted, reported figures are rounded in comparison to the second quarter of 2024 or to the second quarter of 2023. Precache flow is a non-gap figure and all other financial measures are gap unless cited as non-gap.

Hayden: While we applaud the resiliency of smaller businesses outperforming other cohorts on our platform.

Hayden: Small businesses' historical characteristics of lower spend per contract and fewer contracts per client lead us to have more caution about performance expectations for the remainder of the year.

Hayden Brown: We believe it's prudent to assume that the changes in client activity due to macroeconomic conditions that we observed in Q2 will remain for the rest of 2024, and we have factored those changes into lowered 2024 full-year revenue guidance while reiterating our 2024 full-year adjusted EBITDA guidance. Upwork's profitable marketplace model and our continued disciplined execution provide us with a distinct competitive and financial advantage, which we are continuing to leverage Our advanced technology platform and global two-sided marketplace enable us to serve as the singular online destination to connect highly skilled freelance talent with clients in the full range of ways they want to work.

Hayden Brown: We believe it's prudent to assume that the changes in client activity due to macroeconomic conditions that we observed in Q2 will remain for the rest of 2024, and we have factored those changes into lowered 2024 full-year revenue guidance while reiterating our 2024 full-year adjusted EBITDA guidance. Upwork's Profitable Marketplace Model and our Continued Disciplined Execution provide us with a distinct competitive and financial advantage, Our advanced technology platform and global two-sided marketplace enable us to serve as the singular online destination to connect highly skilled freelance talent with clients in the full range of ways they want to work.

Hayden: We believe it's prudent to assume that the changes in client activity due to macroeconomic conditions that we observe in Q2 will remain for the rest of 2024.

Jacob McQuown: Now I'll turn the call over to Hayden.

Hayden Brown: Welcome everyone to Upwork Second Quarter 2024 earnings call. Upwork's strong and durable business continues to deliver compelling growth characteristics on both the top and bottom lines. Our second quarter revenue reached $193.1 million, marking a 15% year-over-year increase. Our continued commitment to enhancing profitability was demonstrated by our highest ever quarter of gap net income at $22.2 million. While adjusted EBITDA was $40.8 million, a 21% adjusted EBITDA margin, up from 8.5% in the second quarter of last year.

Hayden: and we have factored those changes into lowered 2024 full-year revenue guidance while reiterating our 2024 full-year adjusted EBITDA guidance.

Hayden: Upwork's profitable marketplace model and our continued disciplined execution provide us with a distinct competitive and financial advantage, which we are continuing to leverage.

Hayden: Our advanced technology platform and global two-sided marketplace enable us to serve as the singular online destination to connect highly skilled freelance talent with clients in the full range of ways they want to work.

Hayden Brown: Our numbers also evidence our continued success in winning share from offline, analog, and digital hiring and staffing sources as we outperform broader market trends. Upwork benefits from the ongoing, enduring secular shift toward a high-quality, cost-effective, flexible alternative to traditional full-time and contagious staffing approaches. We are in a position of continued strength, both on an absolute and relative basis, with growing profitability and free cash flow dynamics that reflect the fundamental advantages of our business model.

Hayden Brown: Our numbers also evidence our continued success in winning share from offline, analog, and digital hiring and staffing sources as we outperform broader market trends. Upwork benefits from the ongoing, enduring secular shift toward a high-quality, cost-effective, flexible alternative to traditional full-time and contiguous staffing approaches. We are in a position of continued strength, both on an absolute and relative basis, with growing profitability and free cash flow dynamics that reflect the fundamental advantages of our business model.

Hayden: Our numbers also evidence our continued success in winning share from offline, analog, and digital hiring and staffing sources as we outperform broader market trends.

Hayden Brown: We delivered this revenue growth and outperformed our profitability goals while operating in a dynamic macroeconomic environment that has become more challenging for businesses large and small. This challenging environment shows through with softer top of funnel activity than expected in the second quarter. A leading indicator of the softness that we track internally is client seeking works, which is a measure of the number of clients engaging in an action that leads to a new contract.

Hayden: Upwork benefits from the ongoing, enduring secular shift towards a high-quality, cost-effective, flexible alternative to traditional full-time and contiguous staffing approaches.

Hayden: We are in a position of continued strength, both on an absolute and relative basis, with growing profitability and free cash flow dynamics that reflect the fundamental advantages of our business model.

Hayden Brown: Act. In Q1, this number accelerated 11% quarter of recorder, while in Q2, this number decelerated 6% sequentially with particular impact in May and June, along with a mixed shift of active clients towards very small businesses. While we applaud the resiliency of smaller businesses outperforming other cohorts on our platform, small businesses' historical characteristics of lower spend-for-contract and fewer contracts per client, lead us to have more caution about performance expectations for the remainder of the year.

Hayden Brown: Innovation for growth continues to be paramount for Upwork, positioning us for peak performance once the macro rebounds. We continue to invest in multiple revenue and GSB growth levers to maintain our position as an industry leader and translate that leadership position into top and bottom line growth supported by continued healthy take rate expansion. These levers include, first, acquiring new clients cost effectively and at scale by launching new distribution channels through partnerships. And fifth, continuing to drive marketplace quality, efficiency, and adoption of value-added services via our ads and monetization efforts. I'll touch on progress on each of these GFC and revenue enhancing levers.

Hayden Brown: Innovation for growth continues to be paramount for Upwork, positioning us for peak performance once the macro rebounds. We continue to invest in multiple revenue and GSB growth levers to maintain our position as an industry leader and translate that leadership position into top and bottom line growth supported by continued healthy take rate expansion. These levers include, first, continuing to leverage Upwork's intrinsic ability to shapeshift to wherever the market demand for skills is, with a current focus on making Upwork the preeminent destination for AI talent and work.

Hayden: innovation for growth continues to be paramount for upwork positioning us for peak performance once the macro rebounds

Hayden: we continue to invest in multiple revenue and gc growth levers to maintain our position as an industry leader and translate that leadership position into top and bottom line growth supported by continued healthy takered expansion

Hayden: These levers include, first, continuing to leverage Upwork's intrinsic ability to shapeshift to wherever the market demand for skills is, with a current focus on making Upwork the preeminent destination for AI talent and work.

Hayden Brown: We believe it's prudent to assume that the changes in client activity due to macroeconomic conditions that we observe in Q2 will remain for the rest of 2024, and we have factored those changes into lowered 2024 full-year revenue guidance while reiterating our 2024 full-year adjusted EBITDAQ guidance. Upwork's profitable marketplace model and our continued discipline execution provide us with a distinct competitive and financial advantage which we are continuing to leverage. Our advanced technology platform and global two-sided marketplace enable us to serve as the singular online destination to connect highly skilled freelance talent with clients in the full range of ways as they want to work.

Hayden Brown: Second, improving customer productivity, engagement, and work outcomes in our products by infusing AI-powered features and user experiences built on UMA, Upwork's Mindful AI. Third, our continued expansion into our enterprise TAM through the right products, partnerships, and integrations.

Hayden: Second, improving customer productivity, engagement, and work outcomes in our products by infusing AI-powered features and user experiences built on UMA, Upwork's Mindful AI.

Hayden: Third, our continued expansion into our enterprise TAM through the right products, partnerships, and integrations.

Hayden Brown: Acquiring new clients cost effectively and at scale by launching new distribution channels through partnerships. And fifth, continuing to drive marketplace quality, efficiency, and adoption of value-added services via our ads and monetization efforts. I'll touch on progress for each of these GFC and revenue-enhancing levers.

Hayden: Fourth, acquiring new clients cost-effectively and at scale by launching new distribution channels through partnerships.

Hayden: And fifth, continuing to drive marketplace quality, efficiency, and adoption of value-added services via our ads and monetization efforts.

Hayden: i'll couch on progress for each of these gc and revenue enhancing levers

Hayden Brown: Based on a long track record of serving clients with access to the talent that is always most relevant for the skills they need today, clients are coming to us for professional skills and knowledge and transforming their AI dreams into reality, from building and deploying Gen AI chatbots, to training and tuning data and prompts for LLMs, to delivering marketing or back-office projects to integrate the latest AI-enabled capabilities. Businesses are realizing the need to supplement their internal capabilities and know-how by looking externally to find talent and solutions that deliver on the promise of AI-driven productivity and innovation. This is where Upwork has a tremendous structural advantage. Compared to studies that show only 15% of corporate employees have the AI-related skills and training they need.

Hayden Brown: Our numbers also evidence are continued success in winning share from offline, analog and digital hiring and staffing sources as we outperform broader market trends. Upwork benefits from the ongoing and during secular shift toward the high quality cost-effective, flexible alternative to traditional full-time and contingent staffing approaches. We are in a position of continued strength both on an absolute and relative basis with throwing profitability and free cash flow dynamics that reflect the fundamental advantages of our business model.

Hayden: Based on a long track record of serving clients with access to the talent that is always most relevant for the skills they need today.

Hayden Brown: Clients are coming to us for professional skills and knowledge and transforming their AI dreams into reality, from building and deploying Gen AI chatbots, to training and tuning data and prompts for LLMs, to delivering marketing or back office projects to integrate the latest AI-enabled capabilities. Businesses are realizing the need to supplement their internal capabilities and know-how by looking externally to find talent and solutions that deliver on the promise of AI-driven productivity and innovation. This is where Upwork has a tremendous structural advantage. Compared to studies that show only 15% of corporate employees have the AI-related skills and training they need.

Hayden: Clients are coming to us for professional skills and knowledgeable and transforming their AI dreams into realities.

Hayden: from building and deploying genicat box

Speaker Change: Training and Tuning Data and Prompts for LOMs.

Speaker Change: to delivering marketing or back-office projects that integrate the latest AI-enabled capabilities.

Hayden: Businesses are realizing the need to supplement their internal capabilities and know-how by looking externally to find talent and solutions that deliver on the promise of AI-driven productivity and innovation.

Hayden Brown: Innovation for growth continues to be paramount for upwork, positioning us for peak performance once the macro rebounds. We continue to invest in multiple revenue and GSB growth levers to maintain our position as an industry leader and translate that leadership position into top and bottom line growth supported by continued healthy take rate expansion. These levers include first continuing to leverage upwards intrinsic ability to shape shift to wherever the market demand for skills is with the current focus on making upwork the preeminent destination for AI talent and work second improving customer productivity engagement and work outcomes in our products by infusing AI-powered features and user experiences built on Uma approach mindful AI third are continued expansion into our enterprise plan through the right products, partnerships and integrations.

Hayden Brown: Fourth, acquiring new clients cost effectively in that scale by launching new distribution channels through partnerships. And fifth, continuing to drive marketplace quality efficiency and adoption of value added services via our ads and monetization efforts. I'll touch on progress for each of these GSC and revenue enhancing levers. Based on a long track record of serving clients with access to the talent, it is always most relevant for the skills they need today. Clients are coming to us for professional skills and knowledgeable and transforming their AI dreams into realities.

Hayden: This is where Upwork has a tremendous structural advantage.

Hayden: compared to studies that show only 15% of corporate employees have the AI related skills and training they need.

Hayden Brown: More than half of freelance professionals on Upwork are already familiar with and using AI tools to deliver high-quality outcomes. It's no surprise, then, that a recent report from our Upwork Research Institute found that nearly half, 48 percent, of C-suite executives have already brought in freelancers to get delayed AI-related projects back on track with the expert talent they require for their AI initiatives. And we are evolving our offerings to meet this growing market demand. As just one example, freelance professionals working on AI-related projects earned 47% more per hour than those working on non-AI-related projects in Q2.

Hayden Brown: More than half of freelance professionals on Upwork are already familiar with and using AI tools to deliver high-quality outcomes. It's no surprise, then, that a recent report from our Upwork Research Institute found that nearly half, 48 percent, of C-suite executives have already brought in freelancers to get delayed AI-related projects back on track. Upwork is serving a range of businesses, including leading companies like Scale.ai, with the expert talent they require for their AI initiatives.

Hayden: More than half of freelance professionals on Upwork are already familiar with and using AI tools to deliver high-quality outcomes.

Hayden: It's no surprise then that a recent report from our Upwork Research Institute found that nearly half, 48%, of C-suite executives have already brought in freelancers to get delayed AI-related projects back on track.

Hayden: Upwork is serving a range of businesses, including leading companies like Scale AI, with the expert talent they require for their AI initiatives, and we are evolving our offerings to meet this growing market demand.

Hayden Brown: And we are evolving our offerings to meet this growing market demand. While GSV from AI-related work was up 67% year over year in Q2, what excites us most is the opportunity ahead for this business and our customers. The tangible benefits for talent on our platform who are leaning into these opportunities are compelling. As just one example, freelance professionals working on AI-related projects earned 47 percent more per hour than those working on non-AI-related projects in Q2.

Speaker Change: While GSV from AI related work was up 67% year over year in Q2, what excites us most is the opportunity ahead for this business and our customers.

Hayden: the tangible benefits for talent on our platform who are leaning into these opportunities are compelling

Hayden: As just one example, freelance professionals working on AI-related projects earned 47 percent more per hour than those working on non-AI-related projects in Q2.

Hayden Brown: Our second ongoing growth lever is improving customer productivity and enhancing engagement through our own AI-powered product features. During the second quarter, we announced UMA, Upwork's Mindful AI, to underpin key steps in the hiring and matching process and serve as an always-on, indispensable work companion. Although this product is still in its early days and has launched only in select use cases, we've seen demand growing, with a 23% quarter over quarter increase in users interacting with UMA in Q2.

Hayden Brown: Our second ongoing growth lever is improving customer productivity and enhancing engagement through our own AI-powered product features. During the second quarter, we announced UMA, Upwork's Mindful AI, to underpin key steps in the hiring and matching process and serve as an always-on, indispensable work companion. Our vision for UMA is to transform the way work is done on Upwork by more seamlessly augmenteding the power of people and AI working together. Although this product is still in its early days and has launched only in select use cases, we've seen demand growing with a 23% quarter-over-quarter increase in users interacting with UMA in Q2.

Hayden Brown: From building and deploying Gen AI cat-bots to training and tuning data and prompts for LLM to delivering marketing or back office projects to integrate the latest AI-enabled capabilities. Businesses are realizing the need to supplement their internal capabilities and know-how by looking externally to find talent and solutions that deliver on the promise of AI-driven productivity and innovation. This is where Upwork has a tremendous structural advantage. Compared to studies that show only 15% of corporate employees have the AI-related skills and training they need.

Hayden: Our second ongoing growth lever is improving customer productivity and enhancing engagement through our own AI-powered product features.

Hayden: During the second quarter, we announced UMA, Upwork's Mindful AI, to underpin key steps in the hiring and matching process and serve as an always-on, indispensable work companion.

Hayden: our vision for uma is to transform the way work is done upwork by more seamlessly augmenting the power of people and ai working together

Hayden: Although this product is still in its early days and has launched only in select use cases, we've seen demand growing, with a 23% quarter-over-quarter increase in users interacting with UMA in Q2.

Hayden Brown: More than half of freelance professionals on Upwork are already familiar with and using AI tools to deliver high-quality outcomes. It's no surprise then that a recent report from our Upwork Research Institute found that nearly half 48% of C-suite executives have already brought in freelancers to get delayed AI-related projects back on track. Upwork is serving a range of businesses including leading companies like Scale AI with the expert talent they require for their AI initiatives and we are evolving our offerings to meet the throwing market demand.

Hayden Brown: Over time, we see UMA changing the game for customers, both making our platform easier to use and improving the quality of work outcomes. We also continue to innovate our offerings on behalf of our enterprise clients. The large enterprise market is not a monolith, but is comprised of multiple large subsegments. This quarter, we successfully began testing a new bifurcation of our solutions for enterprise clients and winnowed down a more limited set of functionality and alternative pricing to target a subset of enterprise buyers. During testing, this approach yielded higher total conversion for our sales team, with 46 combined enterprise deals closed in the quarter, 27 for the new offering and 19 for our traditional enterprise standard and compliance product.

Hayden Brown: Over time, we see UMA changing the game for customers, both making our platform easier to use and improving the quality of work outcomes. We also continue to innovate our offerings on behalf of our enterprise clients. The large enterprise market is not a monolith, but is comprised of multiple large subsegments, with clients that prioritize their needs differently. So we have been strategically addressing that diversity of business needs. This quarter, we successfully began testing a new bifurcation of our solutions for enterprise clients, in which we ring sensed existing functionality and pricing in one offering and winnowed down a more limited set of functionality and alternative pricing to target a subset of enterprise buyers. During testing, this approach yielded higher total conversion for our sales team, with 46 combined enterprise deals closed in the quarter. 27 for the new offering and 19 for our traditional enterprise standard and compliance product.

Hayden: Over time.

Hayden: We see UMA changing the game for customers, both making our platform easier to use and improving the quality of work outcomes.

Hayden: We also continue to innovate our offerings on behalf of our enterprise clients.

Hayden: The large enterprise market is not a monolith, but is comprised of multiple large sub-segments, with clients that prioritize their needs differently, so we have been strategically addressing that diversity of business needs.

Hayden: This quarter, we successfully began testing a new bifurcation of our solutions for enterprise clients.

Hayden Brown: While GSV from AI-related work was up 67% year-over-year in Q2, what excites us most is the opportunity ahead for this business and our customers. The tangible benefits for talent on our platform who are leaning into these opportunities are compelling. As just one example, freelance professionals working on AI-related projects earned 47% more per hour than those working on non-AI-related projects in Q2. Our second ongoing growth lever is improving customer productivity and enhancing engagement through our own AI-powered product features.

Hayden: in which we are ringfenced existing functionality and pricing in one offering and win down a more limited set of functionality and alternative pricing to target a subset of enterprise buyers

Hayden: during pesting this approach yields higher total conversion for our sales team with forty-six combined enterprise deals closed in the quarter

Hayden: 27 for the new offering and 19 for our traditional enterprise standard and compliance products.

Hayden Brown: This dual-track approach is giving us good insights on how to move forward with modifications to our pricing and packaging to reaccelerate enterprise growth, and we will have further updates in the coming quarters. During the second quarter, LabelBox, Builders for Source, and GuidePoint were among the new Enterprise Solutions clients we added, further advancing our existing enterprise solutions partnership. This month, we announced a new partnership with Beeline, one of the largest and most familiar BMS providers.

Hayden: This dual-track approach is giving us good insights on how to move forward with modifications to our pricing and packaging to re-accelerate enterprise growth, and we will have further updates in the coming quarters.

Hayden Brown: During the second quarter, we announced Uma Upwork's mindful AI to underpin key steps in the hiring and matching process and serve as an always on indispensable work's companion. Our vision for Uma is to transform the way work is done on Upwork by more seamlessly augmenting the power of people and AI working together. Although this product is still in its early days and has launched only in select use cases, we've seen demand growing.

Hayden: During the second quarter, LabelBox, Builders for Source, and GuidePoint were among the new Enterprise Solutions clients we added.

Hayden: Further advancing our existing Enterprise Solutions Partnerships.

Hayden: This month we announced a new partnership with Beeline, one of the largest and most familiar BMS providers.

Hayden Brown: We've also built on our MSP partnership with Kelly OCG by enabling our first joint clients, including NASDAQ, to incorporate and access the high-quality talent pool we have on Upwork. These steps indicate our agility and further lay the foundation for unlocking this large market opportunity. Historically, Upwork's primary method of acquiring and converting clients has been on our website and mobile apps, attracting them through word of mouth, SEO, and paid acquisition channels.

Hayden: We've also built on our MSP partnership with Kelly OCG by enabling our first joint clients, including NASDAQ, to incorporate and access the high-quality talent pool we have on Upwork.

Hayden Brown: With a 23% quarter over quarter increase in users interacting with Uma in Q2. Over time, we've seen Uma changing the game for customers both making our platform easier to use and improving the quality of work outcomes. We also continue to innovate our offering on behalf of our enterprise clients. The large enterprise market is not a monolith, but it's comprised of multiple large sub segments with clients that prioritize their needs differently. So we've been strategically interesting that diversity of business needs.

Hayden: These steps indicate our agility and further lay the foundation for unlocking this large market opportunity.

Hayden: Historically, Upwork's primary method of acquiring and converting clients has been on our website and mobile apps, attracting them through word of mouth, SEO, and paid acquisition channels.

Hayden Brown: With our broad partnership strategy, we see a new avenue for cost-effectively attracting and converting new clients at scale by embedding Upwork experts and innovative experiences for businesses in the third-party ecosystems where those prospective clients encounter the need for expertise in real time. Upwork is already home to huge communities of experts in everything from GoDaddy, WordPress, and website development to Shopify, e-commerce, and other e-commerce platforms, to social media management, project management, and a massive middle and long tail of knowledge work specialties.

Hayden: With our broad partnership strategy, we see a new avenue for cost-effectively attracting and converting new clients at scale.

Hayden: by embedding Upwork experts and innovative experiences for businesses in the third-party ecosystems where those prospective clients encounter the need for expertise in real time.

Hayden Brown: This quarter, we successfully began testing a new bifurcation of our solutions for enterprise clients in which we ring sensed existing functionality and pricing in one offering and winded down a more limited set of functionality and alternative pricing to target a subset of enterprise buyers. During testing, this approach yields higher total conversion for our sales team with 46 combined enterprise deals closed in the quarter 27 for the new offering and 19 for our traditional enterprise standard and compliance products.

Hayden Brown: Upwork is already home to huge communities of experts in everything from GoDaddy, WordPress, and website development, to Shopify, e-commerce, and other e-commerce platforms, to social media management, project management, and a massive middle and long tail of knowledge work specialties. Our strategy is to light up these communities of experts inside third-party ecosystems, the places where they can enable partners and their customers to succeed. As we further accelerate this partner program over future quarters, we will reach orders of magnitude more businesses in a prime position to leverage Upwork for their work needs.

Hayden: Upwork is already home to huge communities of experts and everything from GoDaddy

Hayden: WordPress and website development to Shopify, e-commerce and other e-commerce platforms to social media management, project management, and a massive middle and long tail of knowledge work specialties.

Hayden Brown: Our strategy is to light up these communities of experts inside third-party ecosystems, the places where they can enable partners and their customers to succeed. The starting point of engagement does not need to be on Upwork for significant value to be created. In the past quarter, we more than doubled our number of partner deals and may have brought the highest monthly revenue derived from partnerships that we've seen to date. Today, partnerships combined with their contribution toward GSE is small, but it is growing.

Hayden: Our strategy is to light up these communities of experts inside third-party ecosystems, the places where they can enable partners and their customers to succeed.

Hayden Brown: This dual track approach is giving us good insights on how to move forward with modifications to our pricing and packaging to re-accelerate enterprise growth and we will have further updates in the coming quarters. During the second quarter, label box, builders per source and guide point or among the new enterprise solutions clients we added. Further advancing our existing enterprise solutions partnerships. This month we announced a new partnership with B-line, one of the largest and most familiar VMS providers.

Hayden: The starting point of engagement does not need to be on Upwork for significant value to be created.

Hayden: In the past quarter, we more than doubled our number of partner deals and May brought the highest monthly revenue derived from partnerships that we've seen to date.

Hayden: Today, partnerships combined to contribution to our GSV is small, but it is growing. As we further accelerate this partner program over future quarters, we will reach orders of magnitude more businesses in prime position to leverage Upwork for their work needs.

Erica Gessert: As we further accelerate this partner program over future quarters, we will reach orders of magnitude more businesses in a prime position to leverage Upwork for their work needs. Finally, a critical lever for us as we continue to lean in to building more value-added sources for customers that improve the overall quality and efficiency of the marketplace, while also expanding our take rate, our ads, and monetization features, including subscriptions. Q2 was a quarter of record experimentation velocity for us in this area, and we saw notable success in updates to our pricing and packaging.

Hayden Brown: We've also built on our MST partnership with Kelly OCG by enabling our first joint clients, including Nasdaq, to incorporate and access the high quality talent pool we have on Upwork. These steps indicate our agility and further lay the foundation for unlocking this large market opportunity. Historically, uppers primary method of acquiring and converting clients has been on our website and mobile apps attracting them through word of mouth, SEO and paid acquisition channels.

Hayden Brown: Finally, a critical lever for us as we continue to lean in to building more value-added sources for customers that improve the overall quality and efficiency of the marketplace, while also expanding our take rate, our ads, and monetization features, including subscriptions.

Hayden: Finally, a critical lever for us as we continue to lean in to building more value-added sources for customers that improve the overall quality and efficiency of the marketplace, while also expanding our take rate, our ads and monetization features, including subscriptions.

Hayden: Q2 was a quarter of record experimentation velocity for us in this area, and we saw notable success in updates to our pricing and packaging.

Erica Gessert: In the marketplace, we added more connections and our AI-powered Upwork Chat Pro app to the Freelancer Plus subscription while increasing our price point to align with the additional value we are delivering. These changes contributed to our highest take rate ever. 75% year-over-year revenue growth in ads and monetization products and a 68% quarter over quarter increase in Upwork Chat Pro daily active users in Q2. As a monetization product, it continues to be one of our fastest growing revenue streams.

Hayden: In the Marketplace, we added more connects and our AI-powered Upwork Chat Pro app to the Freelancer Plus subscription, while increasing our price point to align with the additional value we are delivering.

Hayden Brown: With our broad partnership strategy, we see a new avenue for cost effectively attracting and converting new clients as scale by embedding Upwork experts and innovative experiences for businesses in the third party ecosystems where those prospective clients encounter the need for expertise in real time. Upwork is already home to huge communities of experts and everything from GoDaddy, WordPress and website development to Shopify, BeCommerce and other eCommerce platforms, to social media management, project management and a massive middle and long tail of knowledge work specialties.

Hayden: These changes contribute to our highest take rate ever.

Hayden: 75% year-over-year revenue growth in ads and monetization products, and a 68% quarter-over-quarter increase in Upwork Chat Pro daily active users in Q2.

Hayden: as a mestation products continue to be one of our fastest-growing revenue streets

Erica Gessert: This is another area where the progress made is significant, and yet the runway ahead is even more promising. Upwork is demonstrating our position to capture long-term growth from secular tailwinds, even while navigating a choppy environment in the near term. Staying the course and executing unwaveringly on our profitability goals. We're excited to drive this business to tremendous scale, building on our formidable assets and momentum, continuing to invest in growth, and creating meaningful leverage increases every year towards our 35% five-year adjusted EBITDA target.

Speaker Change: this is another area where the progress made a significant and yet the runway ahead is even more promising

Hayden Brown: Our strategy is to light up these communities of experts inside third party ecosystems, the places where they can enable partners and their customers to succeed. The starting ported engagement does not need to be on-upwork for significant value to be created. In the past quarter, we more than doubled our number of partner deals and may brought the highest monthly revenue to rise from partnerships that we've seen to date. Today, partnerships combined contribution to our GSC is small, but it is growing.

Hayden: Upwork is demonstrating our position to capture long-term growth from secular tailwinds, even while navigating a choppy environment in the near term.

Hayden: Staying the course and executing unwaveringly on our profitability goals.

Hayden: We're excited to drive this business to tremendous scale, building on our formidable assets and momentum.

Hayden: continuing to invest in growth and creating meaningful leverage increases every year towards our 35% five-year adjusted EBITDA target.

Erica Gessert: We are thrilled to be in a position to innovate work with and for our customers using our distinct differentiators of talent, technology, and know-how. With that, I will turn it over to Erica to review our financials.

Hayden Brown: As we further accelerate this partner program over future quarters, we will reach orders of management more businesses and prime position to leverage Upwork for their work needs. Finally, a critical lever for us as we continue to lean in to building more value added sources for customers that improve the overall quality and efficiency of the marketplace, while also expanding our take rate, our ad and monetization features, including subscriptions. Q2 was a quarter of record experimentation velocity for us in this area, and we saw notable success in updates to our pricing and packaging.

Hayden: We are thrilled to be in a position to innovate work with and for our customers using our distinct differentiators of talent, technology, and know-how.

Hayden: With that, I will turn it over to Erica to review our financials.

Erica Gessert: As Hayden outlined, we're excited about the strength of our business model, the opportunities ahead for Upwork, and our ability to generate durable, profitable growth in a tough macroeconomic environment. Our business model is highly profitable, with gross margins over 77% in the second quarter, expanding adjusted EBITDA margins, and increasing free cash. We are steadfast in our goal to reach 35% adjusted EBITDA margin in the next five years while increasing our operating leverage every year along. Now, I'll review a few highlights from our most recent results.

Erica: Thanks, Hayden.

Erica: As Hayden outlined, we're excited about the strength of our business model, the opportunities ahead for Upwork, and our ability to generate durable, profitable growth in a tough macro.

Erica: Our model is highly profitable, with gross margins over 77% in the second quarter, expanding adjusted EBITDA margins, and increasing free cash flow.

Hayden Brown: We are steadfast in our goal to reach 35% adjusted EBITDA margin in the next five years, while increasing our operating leverage every year along. Now, I'll review a few highlights from our most recent results. Within our Enterprise Solutions products, customer spend and behavior remain consistent with Q1 trends and with the current high interest rate environment, which is impacting corporate spending due to our differentiated tech-enabled market. As we do this, we will always balance the opportunities we see to monetize the unique platform experiences we enable with marketplace health. We expect R&D to be higher in absolute dollars year-over-year but decline as a percentage of revenue throughout 2024.

Hayden Brown: In the marketplace, we added more Kness and our AI-powered Upwork Chat Pro app to the freelancer plus subscription, while increasing our price point to a wine with the additional value we are delivering. These changes contribute to our highest take rate ever, 75% year of year revenue growth in ad and monetization products, and a 68% quarter over quarter increase in Upwork Chat Pro daily active users in Q2. Add the monetization products continue to be one of our fastest growing revenue streams.

Hayden: We are steadfast in our goal to reach 35% adjusted EBITDA margin in the next five years while increasing our operating leverage every year along the way.

Erica Gessert: Revenue grew 15% year over year to $193.1 million in the second quarter, and was driven in part by the flat fee pricing structure we started last year, as well as sustained momentum from our ads and monetization. Marketplace revenue was $166.8 million and grew 17% year-over-year. In our enterprise business, total enterprise revenue remained flat at $26.3 million.

Hayden: Now I'll review a few highlights from our most recent results.

Hayden: Revenue grew 15% year-over-year to $193.1 million in the second quarter, and was driven in part by the flat fee pricing structure we started last year, as well as sustained momentum from our ads and monetization products.

Hayden Brown: This is another area where the progress made is significant, and yet the runway ahead is even more promising. Upwork is demonstrating our position to capture long-term growth from secular tailwinds, even while navigating a choppy environment in the near term, staying the course and executing unwaveringly on our profitability goals. We are excited to drive this business to tremendous scale, building on our formidable assets and momentum, continuing to invest in growth, and creating meaningful leverage increases every year towards our 35% five-year adjusted EBITDA target.

Hayden: Marketplace revenue was $166.8 million and grew 17% year-over-year.

Hayden: In our enterprise business, total enterprise revenue remained flat at $26.3 million in Q2.

Erica Gessert: Within our Enterprise Solutions products, customer spend and behavior remain consistent with Q1 trends and with the current high interest rate environment which is impacting corporate spending. Managed services revenue showed strength in the quarter, growing on a year-over-year basis, reflecting increasing demand for work product delivery and the signing of six new managed services MSAs in the past few weeks. Well, Q1 of this year saw strengthening top-of-funnel activity on Upwork. In Q2, we saw a softening of these trends, as well as a mixed shift to very small businesses, which affects our average country.

Erica: Within our Enterprise Solutions products, customer spend and behavior remain consistent with Q1 trends and with the current high interest rate environment which is impacting corporate spending.

Speaker Change: managed services revenue showed strength in the quarter growing on a year-over-year basis reflecting increasing demand for work product delivery and the signing of six new managed services mays in the past vie

Speaker Change: six

Speaker Change: Well Q1 of this year saw strengthening top of funnel activity on Upwork. In Q2 we saw a softening of these trends as well as a mixed shift to very small businesses.

Erica Gessert: This activity is a flow-through from broader macroeconomic conditions. As a result, Upwork's GSV declined 2.7% and GSV per active client declined 5% year-over-year. In spite of these temporary, macro-related challenges, we're pleased with our ongoing ability to perform better than many traditional staffing, temp services, and job boards due to our differentiated tech-enabled market. Even with these pressures, active clients were up 6% year-over-year to 868,000, with both new acquisition and retention benefiting us year over year.

Speaker Change: which affects our average contract size.

Hayden: This activity is a flow-through from broader macroeconomic trends.

Hayden Brown: We are thrilled to be in a position to innovate work with and for our customers using our distinctive differentiators of talent, technology, and know-how.

Speaker Change: As a result, Upwork's GSV declined 2.7% and GSV per active client declined 5% year-over-year.

Hayden: In spite of these temporal, macro-related challenges, we're pleased with our ongoing ability to perform better than many traditional staffing, temp services, and job board companies.

Erica Gessert: With that, I will turn it over to Erica to review our financials. Thanks, Hayden. As Hayden outlined, we're excited about the strengths of our business model, the opportunities ahead for Upwork and our ability to generate durable, profitable growth and a test macro.

Hayden: Due to our differentiated, tech-enabled marketplace business model.

Hayden: Even with these pressures, active clients were up 6% year over year to 868,000, with both new acquisition and retention benefiting us on a year over year basis.

Erica Gessert: Our model is highly profitable, with growth margins over 77% in the second quarter, expanding adjusted EBITDA margins and increasing free cash flow. We are steadfast in our goal to reach 35% adjusted EBITDA margin in the next five years, while increasing our operating leverage every year along the way. Now, I'll review a few highlights from our most recent results. Revenue grew 15% year-over-year to 193.1 million in the second quarter, and was driven in part by the flat fee pricing structure we started last year, as well as sustained momentum from our ads and monetization products.

Erica Gessert: Our marketplace take rate was at an all-time high of 18% in Q2, up 30 basis points from Q1. We are confident we have additional capacity to grow our take, and our approach to this is focused on pricing to value. We continue to test and experiment with a wide variety of monetization strategies on the platform, and these tests are supporting our belief that we have significant opportunities to increase our take rate.

Hayden: Our marketplace take rate was at an all-time high of 18% in Q2, up 30 basis points from Q1.

Hayden: We are confident we have additional capacity to grow our take rate.

Hayden: And our approach to this is focused on pricing to value.

Hayden: We continue to test and experiment with a wide variety of monetization strategies on the platform, and these tests are supporting our belief that we have significant opportunities to increase our take rate in the future.

Erica Gessert: As we do this, we will always balance the opportunities we see to monetize the unique platform experiences we enable with marketplace health. In Q2, we saw sustained momentum from our ads and monetization products, with Freelancer Plus subscriptions growing 28% year-over-year, contributing to what continues to be our highest growth revenue. Non-GAAP gross margin continued to improve both on a year-over-year and sequential basis to 77.6%. Non-GAAP operating expense was $112.2 million in the second quarter, representing 58% of revenue, compared to $115.7 million, or 69% of revenue, in the prior year, as we continue to successfully reduce operating costs.

Hayden: As we do this, we will always balance the opportunities we see to monetize the unique platform experiences we enable with marketplace health and growth.

Erica Gessert: Marketplace revenue was 166.8 million, and grew 17% year-over-year. In our enterprise business, total enterprise revenue remained flat at $26.3 million in Q2. Within our enterprise solutions product, customer spend and behavior remained consistent with Q1 trends, and with the current, high interest rate environment, which is impacting corporate.., for its spending. Managed services revenue should strengthen the quarter, going on a year-over-year basis, reflecting increasing demand for work product delivery, and the signing of six new managed services MSAs in the past few quarters.

Hayden: In Q2, we saw sustained momentum from our ads and monetization products, with FreelancerPlus subscriptions growing 28% year-over-year, contributing to what continues to be our highest growth revenue stream.

Hayden: non-GAAP growth margin continued to improve both on a year-over-year and sequential basis to 77.6%.

Hayden: non-GAAP operating expense was $112.2 million in the second quarter, representing 58% of revenue, compared to $115.7 million, or 69% of revenue, in the prior year, as we continue to successfully reduce operating costs.

Erica Gessert: For the second quarter, non-GAAP R&D expense was $44 million, increasing 21% year over year, as we continue to accelerate our pace of innovation and invest in technology. We expect R&D to be higher in absolute dollars year-over-year, but it will decline as a percentage of revenue throughout 2024. Non-GAAP sales and marketing expense of $43.9 million declined 22% year-over-year, and we expect to maintain a similar level of spend as a percentage of revenue for the remainder of the year. Our provision for transaction losses, or PFTL, remains low at $1.8 million for Q2.

Erica Gessert: While Q1 of this year saw strengthening top of funnel activity on Upwork, in Q2, we saw softening of these trends, as well as a mixed shift to very small businesses, which affects our average contract size. This activity is a flow through from broader macroeconomic trends. As a result, Upwork's GSV declined 2.7%, and GSV Proactive Client declined 5% year-over-year. In spite of these temporal macro-related challenges, we're pleased with our ongoing ability to perform better than many traditional staffing, temp services, and job-borne companies due to our differentiated tech-enabled marketplace business model.

Hayden: For the second quarter, non-GAAP R&D expense was $44 million, increasing 21% year-over-year, as we continue to accelerate our pace of innovation and invest in technology.

Hayden: we expect r d to be higher in absolute dollars year over year the decline as a percentage of revenue throughout two thousand and twenty four

Hayden: non-GAAP sales and marketing expense of $43.9 million declined 22% year-over-year.

Hayden: And we expect to maintain a similar level of spend as a percentage of revenue for the remainder of the year.

Hayden: our provision for transaction losses or pftl remains low at one point eight million dollars q two approximately one percent of total revenue

Erica Gessert: Even with these pressures, Active Clients were up 6% year-over-year to 868,000, with both new acquisition and retention benefiting us on a year-over-year basis. Our marketplace take rate was at an all-time high of 18% in Q2, up 30 basis points from Q1. We are confident we have additional capacity to grow our take rate, and our approach to this is focused on pricing to value. We continue to test and experiment with a wide variety of monetization strategies on the platform, and these testers supporting our beliefs that we have significant opportunities to increase our take rate in the future.

Erica Gessert: Approximately 1% of total. Adjusted EBITDA was $40.8 million in the... Representing an adjusted EBITDA margin of 21.1%. Our profitable business model generated our highest quarter of GAP net income ever and continues to generate GAP earnings per share growth, which includes the impact of stock-based compensation. For the second quarter of 2024, gap net income was $22.2 million, and fully diluted gap earnings per share was $17.5 million. Pre-cash flow for the second quarter was $33.5 million.

Hayden Brown: Approximately 1% of total revenue. Adjusted EBITDA was $40.8 million in the. Turning to guidance, we are providing a more tempered revenue outlook for the remainder of the year, based on the data points we have seen since May and with no expectations of improvement to the current macro. For the full year 2024, we anticipate revenue between $735 to $745 million. Included in our revenue guidance are some near-term headwinds from anti-circumvention initiatives, up from our guidance last quarter of 88 to 92. For the full year, Weighted Average Shares outstanding will decline to a range of 139 to 143 million.

Hayden: Adjusted EBITDA was $40.8 million in the second quarter.

Hayden: Representing adjusted EBITDA margin of 21.1%.

Hayden: Our profitable business model generated our highest quarter of GAP net income ever and continues to generate GAP earnings per share growth, which includes the impact of stock-based compensation.

Hayden: For the second quarter of 2024, gap net income was $22.2 million and fully diluted gap earnings per share was 17 cents.

Erica Gessert: As we do this, we will always balance the opportunities we see to monetize the unique platform experiences we enable with marketplace health and growth. In Q2, we saw sustained momentum from our ads and monetization products, with relancer plus subscriptions growing 28% year-over-year, contributing to what continues to be our highest growth revenue stream. Non-GAP growth margin continued to improve both on a year-over-year and sequential basis to 77.6%. Non-GAP operating expense was $112.2 million in the second quarter, representing 58% of revenue, compared to 115.7 million, or 69% of revenue, in the prior year, as we continue to successfully reduce operating costs.

Hayden: Free cash flow for the second quarter was $33.5 million, the result of the high free cash flow yield inherent in our business model.

Erica Gessert: The result of the high free cash flow yields inherent in the business. We also returned $33.1 million to shareholders through share repurchase, representing nearly 100% of the free cash flow generated. Cash, cash equivalents, and marketable securities were approximately $497.7 million.

Hayden: We also returned $33.1 million to shareholders through share repurchases.

Hayden: Representing nearly 100% of the free cash flow generated during the second quarter.

Hayden: Cash, cash equivalents, and marketable securities were approximately $497.7 million at the end of the second quarter.

Erica Gessert: Turning to guidance, we are providing a more tempered revenue outlook for the remainder of the year based on the data points we have seen since May and with no expectations of improvement in the current macroeconomy. By maintaining our adjusted EBITDA guidance for the year, we are increasing our margin. This is due to the strong focus on cost discipline across. Our ability to produce growing margins in this environment gives us confidence in our long-term adjusted EBITDA margins.

Speaker Change: Turning to guidance, we are providing a more tempered revenue outlook for the remainder of the year based on the data points we have seen since May and no expectations of improvement to the current macro environment.

Speaker Change: by maintaining our adjusted ebitda guidance for the year we are increasing our margin outlet

Hayden: This is due to the strong focus on cost discipline across our business.

Erica Gessert: For the second quarter, non-GAP R&D expense was $44 million, increasing 21% year-over-year, as we continue to accelerate our pace of innovation and invest in technology. We expect R&D to be higher in absolute dollars year-over-year, but decline as a percentage of revenue throughout 2024. Non-GAP sales and marketing expense of $43.9 million declined 22% year-over-year, and we expect to maintain a similar level of spend as a percentage of revenue for the remainder of the year.

Hayden: Our ability to produce growing margins in this environment gives us confidence in our long-term adjusted EBITDA margin goals.

Erica Gessert: We believe our balanced focus on growth and profitability, and growing margins with a high free cash flow yield, will produce strong shareholder return. For the third quarter of 2024, we expect to produce revenue in the range of $179 to $184 million, representing 3% year-over-year growth. For Adjusted EBITDA in the third quarter, we are guiding to a range of $36 to $39 million, which represents an Adjusted EBITDA margin of 20%. For the full year 2024, we anticipate revenue between $735 and $745 million, representing 7% year-over-year growth.

Hayden: We believe our balanced focus on growth and profitability and growing margins with a high free cash flow yield will produce strong shareholder returns over time.

Hayden: For the third quarter of 2024, we expect to produce revenue in the range of $179 to $184 million, representing 3% year-over-year growth to the midpoint.

Hayden: For Adjusted EBITDA in the third quarter, we are guiding to a range of $36 to $39 million, which represents an Adjusted EBITDA margin of 20% at the midpoint.

Erica Gessert: Our provision for transaction losses, or PFTL, remains low at $1.8 million for Q2, approximately 1% of total revenue. Adjusted EBITDA was $40.8 million in the second quarter, representing adjusted EBITDA margin of 21.1%. Our profitable business model generated our highest quarter of GAPnet income ever, and continues to generate GAP earnings for shared growth, which includes the impact of stock-based compensation. For the second quarter of 2024, GAPnet income was $22.2 million. $1,000, and fully diluted gap earnings per share with $0.17.

Hayden: For the full year 2024, we anticipate revenue between $735 to $745 million.

Erica Gessert: Considered in our revenue guidance are some near-term headwinds from anti-circumvention initiatives, which we expect will help to improve customer experience and platform quality while stimulating long-term growth in our market. We expect our take rate for the rest of the year to remain stable with what we saw in. As a result of our ongoing cost discipline and the strength of our model, we expect full-year adjusted EBITDA to be within a range of $140 to $150 million.

Hayden: representing 7% year-over-year growth at the midpoint.

Hayden: Contemplated in our revenue guidance are some near-term headwinds from anti-circumvention initiatives.

Hayden: which we expect will help to improve customer experience and platform quality while stimulating long-term growth of our marketplace.

Hayden: We expect our take rate for the rest of the year to remain stable with what we saw in Q2.

Hayden: as a result of our ongoing cost discipline and the strength of our model we expect full year adjusted ebitda to be within a range of one hundred and forty two hundred fifty million dollars

Erica Gessert: Free cash flow for the second quarter was $33.5 million, the result of the high free cash flow yield inherent in our business model. We also returned $33.1 million to shareholders through share repurchases, representing nearly 100% of the free cash flow generated during the second quarter. Cash equivalents and marketable securities were approximately $497.7 million at the end of the second quarter.

Erica Gessert: Increasing our adjusted EBITDA margin. As a reminder, GSB and revenue growth, and consequently adjusted EBITDA margin, are affected in the fourth quarter of this year by the fact that there are fewer Sundays in the quarter this year versus last year. Because of the timing each week when our clients are billed, the number of Sundays in any set period affects our revenue and GSB recognition for that period. Excluding the structural impact, our GSB growth rate for the year would be approximately 1.0.

Hayden: increasing our adjusted ebitda margin outlook

Hayden: As a reminder, GSB and revenue growth, and consequently adjusted EBITDA margin, are affected in the fourth quarter of this year by the fact that there are fewer Sundays in the quarter this year versus last year.

Hayden: Because of the timing each week when our clients are billed, the number of Sundays in any set period affects our revenue and GSB recognition in that period.

Erica Gessert: Turning to guidance, we are providing a more tempered revenue outlook for the remainder of the year, based on the data points we have seen since May and no expectations of improvement to the current macro environment. By maintaining our adjusted EBITDA guidance for the year, we are increasing our margin outlook. This is due to the strong focus on cost discipline across our business. Our ability to produce growing margins in this environment gives us confidence in our long-term, adjusted EBITDA margin goals.

Hayden: Excluding the structural impact, our GSB growth rate for the year would be approximately one point higher.

Erica Gessert: We expect full-year 2024 non-GAP diluted EPS to be between 90 and 94, up from our guidance last quarter of 88 to 92. For the full year, Weighted Average Shares Outstanding will decline to a range of 139 to 143 million, down from our previous guidance last quarter of 140 to 144.

Hayden: We expect full year 2024 non-GAP diluted EPS to be between 90 and 94 cents.

Hayden: Up from our guidance last quarter of $0.88 to $0.92.

Hayden: For the full year, weighted average shares outstanding will decline to a range of $139 to $143 million, down from our previous guidance last quarter of $140 to $144 million.

Erica Gessert: We believe our balanced focus on growth and profitability and growing margins with a high free cash flow yield will produce strong shareholder returns over time. For the third quarter of 2024, we expect to produce revenue in the range of $179 to $184 million, representing 3% year-to-year growth submit points. For adjusted EBITDA in the third quarter, we are guiding to a range of $36 to $39 million which represents an adjusted EBITDA margin of 20% at the midpoint.

Erica Gessert: Our profitable marketplace enables us to achieve durable, profitable growth in the near and long term. We can increase profitability and free cash flow while continuing to invest in innovative solutions that will unlock new S-curves of growth. Regardless of the macro environment, we will continue innovating and strengthening our position as a market leader while producing steady and significant operating margin and free cash flow on an ongoing basis. As always, I want to close by thanking our incredible team at Upwork for their contributions this quarter and their unparalleled creativity, focus, and pace of execution. I am proud to be a part of this great company. With that, we would be happy to take. Thank you, as a reminder.

Hayden Brown: Our profitable marketplace enables us to achieve durable, profitable growth in the near and long term. As always, I want to close by thanking our incredible team at Upwork. Thank you.

Hayden: Our profitable marketplace enables us to achieve durable, profitable growth in the near and long term.

Hayden: We can increase profitability and free cash flow while continuing to invest in innovative solutions that will unlock new S-curves of growth for Upwork.

Hayden: Regardless of the macro environment, we will continue innovating and strengthening our position as a market leader, while producing steady and significant operating margin and free cash flow on an ongoing basis.

Erica Gessert: For the full year 2024, we anticipate revenue between $735 to $745 million, representing 7% year-over-year growth at the midpoint. Contemplated in our revenue guidance are some near-term headwinds from anti-circumvention initiatives, which we expect will help to improve customer experience and platform quality while stimulating long-term growth of our marketplace. We expect our take rate for the rest of the year to remain stable with what we saw in Q2. As a result of our ongoing cost discipline and the strength of our model, we expect full year-adjusted EBITDA to be within a range of $140 to $150 million, increasing our adjusted EBITDA margin outlook.

Hayden: As always, I want to close by thanking our incredible team at Upwork for their contributions this quarter and their unparalleled creativity, focus, and pace of execution.

Hayden: I am proud to be a part of this great team.

Operator: 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. Please stand by while we compile the Q&A roster. And our first question comes from Andrew Boone of JMP Securities. Your line is open.

Speaker Change: With that, we would be happy to take your questions.

Speaker Change: Thank you. 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. Please stand by while we compile the Q&A roster.

Operator: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Thanks so much.

Speaker Change: and our first question comes from andrewubon of j m p securities so long as open

Erica Gessert: As a reminder, GSB and revenue growth and consequently adjusted EBITDA margin are affected in the fourth quarter of this year by the fact that there are fewer Sundays in the quarter this year versus last year. Because of the timing each week when our clients are billed, the number of Sundays in any set period affects our revenue and GSB recognition in that period. Excluding the structural impact, our GSB growth rate for the year would be approximately one point higher.

Andrew Boone: Thanks so much for taking my questions. Hayden, in your prepared remarks, you talked about the health of the platform in terms of balancing take rate initiatives and monetization products. Can you just speak to that in terms of how you are viewing things like connects and pushing more monetization onto freelancers, as well as also making sure that there's plenty of liquidity for the platform, as well as supporting more first-time freelancers?

Unknown Questioner: Thanks so much for taking my questions. Hayden, in your prepared remarks, you talked about the health of the platform in terms of balancing take rate initiatives.

andrewubon: Thanks so much for taking my questions. Hayden, in your prepared remarks, you talked about the health of the platform in terms of balancing take rate initiatives.

Speaker Change: and monetization products. Can you just speak to that in terms of how you are viewing things like Connect and pushing more monetization onto freelancers, as well as also making sure that there is plenty of liquidity for the platform, as well as supporting more first-time freelancers?

Erica Gessert: We expect full year 2024 non-gap diluted EPS to be between 90 and 94 cents up from our guidance last quarter of 88 to 92 cents. For the full year, weighted average shares outstanding will decline to a range of $139 to $143 million down from our previous guidance last quarter of $140 to $144 million.

Hayden Brown: Thanks, Andrew. I'd say the work we've done so far has been incredibly successful and provides the blueprint for how we want to continue driving in balancing the factors that you're outlining because we are laser focused on expanding take rate while making these initiatives accretive from a marketplace health and quality perspective. What we look at here is things like Connects and subscriptions and value-added services that we're enhancing the platform with are really ways for us to improve signal quality in the marketplace, for us to also give talent and clients more control over when, where, and how they want to engage and be featured or propose themselves with more priority for work, things like that.

Hayden: Thanks, Andrew. I'd say the work we've done so far has been incredibly successful and provides the blueprint for how we want to continue driving in balancing the factors that you're outlining, because we are laser focused on expanding take rate while making these initiatives accretive from a marketplace health and quality perspective.

Erica Gessert: Our profitable marketplace enables us to achieve durable profitable growth in the near and long term. We can increase profitability and free cash flow while continuing to invest in innovative solutions that will unlock new S-curve- of Growth for Upwork. Regardless of the macro environment, we will continue innovating and strengthening our position as a market leader, while producing steady and significant operating margin and pre-cash flow on an ongoing basis.

Hayden Brown: What we look at here is things like Connects and subscriptions and value-added services that we're enhancing the platform with are really ways for us to improve signal quality in the marketplace, for us to also give talent and clients more control over when, where, and how they want to engage and be featured or propose themselves with more priority for work, things like that. And so really, these are features and functionality that, in a large part, are in service of our marketplace health goals. And monetization is, in some cases, just a byproduct of how these work most effectively and can really be capitalized on for customers and for us.

Hayden: What we look at here is things like connects and subscriptions and value-added services that we're enhancing the platform with.

Speaker Change: Really are ways for us to improve signal quality in the marketplace for us to also give

Speaker Change: Talent and Clients

Speaker Change: More control over when, where, and how they want to engage and be featured or propose themselves, you know, with more priority for work, things like that. And so really, these are features and functionality in a large part or are in service of our marketplace health goals.

Erica Gessert: As always, I want to close by thanking our incredible team at Upwork for their contributions this quarter and their unparalleled creativity, focus and pace of execution. I am proud to be a part of this great team.

Hayden Brown: And so really, these are features and functionality that are, to a large extent, in service of our marketplace health goals, and monetization is, in some cases, just a byproduct of how these work most effectively and really can be capitalized on for customers and for us. Stepping back and looking more broadly at the ads and monetization opportunity we have, we know that given where we are today, and when we compare our opportunity to other two-sided marketplace businesses, there is a lot of room for growth here.

Speaker Change: And monetization is, in some cases, just a byproduct of how these work most effectively and really can be capitalized on for customers and for us.

Unknown Executive: With that, we would be happy to take your question. Thank you. 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. Please stand by while we compile the Q&A roster.

Speaker Change: Stepping back and looking more broadly at the ads monetization opportunity we have

Speaker Change: We know that given where we are today and when we compare our opportunity to other two-sided marketplace businesses, there is a lot of run room here. And we also know specifically about features and functionality, whether it's in value-added services or further enhancements to subscriptions.

Hayden Brown: And we also know specifically about features and functionality, whether it's in value-added services or further enhancements to subscriptions, that there's a long roadmap here that we can execute on. So we feel great about the opportunity to continue to expand and build on what we've done and really continue to expand take rate in a way that is really valuable and healthy for the marketplace and for customers.

Andrew Boone: And our first question comes from Andrew Boone of JMP Security, Sri Lanka's Open. Thanks so much for taking my questions. Hayden and your prepared remarks, we talked about the health of the platform in terms of balancing take-rate initiatives and monetization products.

Speaker Change: that there's a long roadmap here that we can execute on. So we feel great about the opportunity to continue to expand and build on what we've done and really continue to expand Take-Away in a way that is really valuable and healthy for the marketplace and for customers.

Speaker Change: That's helpful. And then I wanted to ask about partner deals. Hayden, as you roll out more of these deals, can you talk about what's been successful and how that paints a picture for where you guys want to pursue additional deals going forward? Thanks so much.

Hayden Brown: Can you just speak to that in terms of how you are viewing things like Kinects and pushing more monetization onto freelancers as well as also making sure that there is plenty of liquidity for the platform, as well as supporting more first-time freelancers? Thanks, Andrew. I say the work we've done so far has been incredibly successful and provides the blueprint for how we want to continue driving in balancing the factors that you're outlining, because we are laser focused on expanding take-rate while making these initiatives a creative from a marketplace health and quality perspective.

Unknown Questioner: Can you talk about what's been successful and how that paints a picture for where you guys want to pursue additional deals going forward? Thanks so much.

Hayden Brown: Talk about what's been successful and how that paints a picture for where you guys want to pursue additional deals going forward. Thanks so much. We view the partnership opportunity as very large, and there certainly

Hayden Brown: We view the partnership opportunity as very large, and there are certainly a lot of ways to look at this. OpenAI was our launch partner for this bigger program and really provided the starting point for the momentum that we've been building and that we now have.

Hayden Brown: We view the partnership opportunity as very large, and there's

Hayden: We view the partnership opportunity as very large, and there's certainly a lot of ways to look at this.

Speaker Change: OpenAI was our launch partner for this bigger program and really provided the starting point for the momentum that we've been building and that now we have.

Hayden Brown: I'd say what success looks like for us is really using this partnership muscle that we've been building over the last few quarters to build this highly scalable, very cost-effective new way for us to bring client demand to our talent. And the key for us is that we don't need all of these clients to come and know about our brand or register and start with an account on Upwork for them to find success and for them to find our talent.

Speaker Change: I'd say what success looks like for us is really using this partnership muscle that we've been building over the last few quarters.

Speaker Change: to build this highly scalable, very cost effective new way for us to bring client demand to our talent.

Hayden Brown: What we look at here is things like Kinects and subscriptions and value out of services that we're enhancing the platform with really are ways for us to improve signal quality in the marketplace for us to also give talent and clients more control over when, where, and how they want to engage and be featured or proposed themselves, you know, with more priority for work, things like that. And so, really, these are features and functionality in a large part or are in service of our marketplace health goals.

Speaker Change: And the unlock for us is that we don't need all of these clients to come and know about our brand or register and start with an account on Upwork for them to find success and for them to find our talent.

Hayden Brown: So we're really turning our model around and bringing our talent out into the ecosystem through these partners and leveraging some of these marquee partnerships like the OpenAI one to generate what has become a very successful and fast moving funnel here of partners who are coming to us and saying, "hey, can we get in on some of this action?" Because these partners have ecosystems of clients and customers who themselves have needs that these partners have not always had a good way to serve.

Speaker Change: So we're really turning our model around and bringing our talent out into the ecosystem through these partners.

Speaker Change: And leveraging some of these marquee partnerships like the OpenAI one to generate what has become a very successful and fast-moving funnel here of partners who are coming to us and saying, hey, can we get in on some of this action? Because these partners.

Hayden Brown: And monetization is, in some cases, just a byproduct of how these work most effectively and really can be capitalized on for customers and for us. Stepping back and looking more broadly at the as the monetization opportunity we have, we know that given where we are today, and when we compare our opportunity to other two-sided marketplace businesses, there is a lot of run-room here. And we also know specifically about features and functionality, whether it's in value out of services or further enhancements to subscriptions, that there's a long road map here that we can exit on.

Speaker Change: have ecosystems of clients and customers who themselves have needs that these partners have not always had a good way to service.

Hayden Brown: So this is what's contributed to May being the highest monthly revenue partnership month we've seen to date and the fact that, in the past quarter, we doubled the number of partner deals and are still building from there. So it is still early in the opportunity, but we do see that this could be a very exciting trajectory around client acquisition and a different model for us to go forward.

Speaker Change: So this is what's contributed to May being the highest monthly revenue partnership month we've seen to date and the fact that in the past quarter we doubled the number of partner deals and are still building from there.

Speaker Change: So, it is still early in the opportunity, but we do see that this could be a very exciting trajectory around client acquisition and a different model for us to go forward.

Speaker Change: Thank you.

Hayden Brown: So, we feel great about the opportunity to continue to expand and build on what we've done and really continue to expand take-rate in a way that is really valuable and healthy for the marketplace and for customers. That's helpful.

Speaker Change: Thank you.

Bernie Mcternan: Our next question comes from Bernie McTernan of Niederman Company. Your line is open.

Bernard McTernan: Our next question comes from Bernie McTernan of Niederman Company. Your line is open.

Speaker Change: Our next question comes from Bernie McTernan of Niederman & Company. Your line is open.

Erica Gessert: Great. Thank you very much. Just a couple for me, and maybe we know the answer just based on the guide, but I just wanted to clarify, if the trends that you saw in June continued into July and August at the bookings level, and then the guidance for a take rate to be flat sequentially or for the remainder of the year relative to 2Q, is that just thinking that in this kind of, you know, top line, excuse me, bookings environment, it's not right to be, you know, leaning in on monetization, or is there anything else we should be thinking of?

Hayden Brown: And then I wanted to ask about partner deals. Hayden, as you roll out more of these deals, can you talk about what's been successful and how that takes a picture for where you guys want to pursue additional deals going forward? Thanks so much.

Bernie Mcternan: Great. Thank you very much. Just a couple for me, and maybe we know the answer just based on the guide, but I just wanted to clarify if the trends that you saw in June continued into July and August at the bookings level.

Speaker Change: And then the guidance for a take rate to be flat sequentially or for the remainder of the year relative to 2Q, is that just thinking that in this kind of...

Hayden Brown: We do the partnership opportunity as very large. And there's certainly a lot of ways to look at this. Open A I was our launch partner for this bigger program and really provided the starting point for the momentum that we've been building in that now we have. I'd say what success looks like for us is really using this partnership muscle that we've been building over the last two quarters to build this highly scalable, very cost effective new way for us to bring client demand to our talents.

Speaker Change: You know, top line, excuse me, bookings environment, it's not right to be, you know, leaning in on monetization, or is there anything else we should be thinking of? And then, sorry, one last clarification, just the hundred basis point impact to GMB growth.

Erica Gessert: And then, sorry, one last clarification, just the 100 basis point impact to GMV growth given the one last Sunday in the fourth quarter, is that for the full year or just the fourth quarter? Thank you. Thinking about year-over-year growth. Yeah, sure, Bernie.

Speaker Change: Given the one last Sunday in the fourth quarter. Is that for the full year or just the fourth quarter? Thank you. Thinking about the year-over-year growth.

Erica Gessert: Yes, sure, Bernie. So, in terms of the... Sorry, there's a little feedback on the line there. In terms of the trends that we saw at Top of Funnel, you know, first and foremost, we actually saw very strong Top of Funnel demand signals in Q1, and we really saw that starting to turn in kind of mid-May and then into June and July. We did see those trends get slightly worse in June and July.

Hayden Brown: And the unlock for us is that we don't need all of these clients to come and know about our brand or register and start with an account on Upwork for them to find success and for them to find our talent. So we're really turning our model around and bringing our talent out into the ecosystem through these partners and leveraging, you know, some of these marquee partnerships like the open A I one to generate what has become a very successful and fast moving funnel here of partners who are coming to us and saying, hey, can we do this?

Speaker Change: yes share bernie d interms of this

Erica Gessert: Yes, sure, Bernie. So, in terms of the Sorry, there's a little feedback on the line there. In terms of the trends that we saw at Top of Funnel, you know, first and foremost, we actually saw very strong Top of Funnel demand signals in Q1. And we really saw that starting to turn around kind of in mid May and then into June and July. We did see those trends get slightly worse in June and July.

Speaker Change: In terms of the trends that we saw at Top of Funnel,

Speaker Change: first of fore most we actually saw very strong to of funnealdemand signal in q one and we really start some of that starting to turn and kind of mid-maye then inegen e

Erica Gessert: And so this is really what we're basing our guidance on. We've fully contemplated this impact in our guidance and, in fact, are now contemplating no improvement to these trends going forward. So, in that way, I think we feel like we've fully de-risked our guidance for the year. On your question in terms of the take rate trends, yeah, I mean, I think we're just being prudent again, kind of anticipating the trends that we're seeing and just looking at Top of Funnel trends, both on the demand side, as well as this mixed shift and expecting that we'll see a little bit lighter usage And then on the Sunday effect question, yeah, the one point impact is for the full year.

Speaker Change: We did see those trends get slightly worse in June and July. And so this is really what we're basing our guidance on. We've fully contemplated this impact in our guidance, and in fact, are now contemplating no improvement to these trends going forward. So in that way, I think we feel like we've fully de-risked our guidance for the year.

Hayden Brown: We get in on some of this action because these partners have ecosystems of clients and customers who themselves have needs that these partners have not always had a good way to service. So this is what contributed to may being the highest monthly revenue partnership months we've seen to date and the fact that in the past quarter we doubled the number of partner deals and are still building from there. So it is still early in the opportunity, but we do see that this could be a very exciting trajectory at round client acquisition and a different model for us to go forward.

Erica Gessert: And so this is really what we're basing our guidance on. We've fully contemplated this impact in our guidance and, in fact, are now contemplating no improvement to these trends going forward. So, in that way, I think we feel like we've fully de-risked our guidance for the year. On your question in terms of the take rate trends, yeah, I mean, I think we're just being prudent again, kind of anticipating the trends that we're seeing and just looking at Top of Funnel trends on the demand side as well as this mixed shift and expecting that we'll see a little bit lighter usage in some of And then on the Sunday effect question, yeah, the one point impact is for the full year.

Unknown Executive: Thank you.

Speaker Change: on your question in terms of in terms of the take rattrend i mean i think we're just being prudent again kind of anticipating the trends that we're seeing and just looking at top of ffinall trends both

Speaker Change: On the demand side as well as this mixed shift and expecting that we'll see a little bit lighter usage in some of the ads products as well. And then on the Sunday effect question, the one point impact is for the full year.

Bernard McTernan: Our next question comes from Bernie McTernan of Media Line Company. Your line is open. Great. Thank you very much. Just a couple for me. And maybe we know the answer just based on the guy. We just wanted to clarify if the trends that you saw in June continued into July and August on at the booking level. And then the guidance for take rate to be flat to the quenchedly or further remainder of the year relative to 2Q.

Speaker Change: Got it. Thanks Erica.

Speaker Change: Chair. Chair. Chair.

Speaker Change: Thank you.

Maria Ripps: Our next question comes from Maria Ripps of Canaccord. Your line is open.

Speaker Change: no don't know

Speaker Change: Our next question comes from Maria Ripps of Canaccord. Your line is open.

Erica Gessert: First, sort of understanding that you're operating in a tough macro environment, can you maybe just talk about your ability to sustain your EBITDA guidance? And as we look at your P&L, sort of what are some areas that you can optimize here in the near term without sort of impacting future growth as the environment improves? And then I have a quick follow-up.

Unknown Questioner: First, sort of understanding that you're operating in a tough macro environment, can you maybe just talk about your ability to sustain your EBITDA guidance? And as we look at your P&L, sort of what are some areas that you can optimize here in the near term without sort of impacting future growth as the environment improves? And then I have a quick follow-up.

Maria Ripps: Great. Thanks so much for taking my questions.

Maria Ripps: First, sort of understanding that you're operating in a tough macro environment, can you maybe just talk about your ability to sustain your EBITDA guidance? And as we look at your P&L, sort of what are some areas that you can optimize here in the near term without sort of impacting future growth as the environment improves?

Bernard McTernan: Is that just thinking that in this kind of, you know, top line and excuse me, booking environments, not right to be, you know, leaning in a monetization or is there anything else we should be thinking of? And then, sorry, one last clarification, just the 100 basis point impact to GMV growth, given the one last Sunday in the fourth quarter, is that for the full year or just the fourth quarter? Thank you. What the year will be your growth?

Erica Gessert: Yeah, just in terms of maintaining the Jessedy Bedalla guidance. I mean, look, this is an inherently profitable business, and we've made a tremendous amount of progress with the cost, discipline, and muscle that we've implemented as a business. We're obviously continually making progress, both on the gross margin line and on the OPEX line. And so we feel really, really confident that we can continue to do so. We're at 77.5% gross margin now.

Erica Gessert: Yeah, just in terms of maintaining the Adjusted EBITDA guidance, I mean, look, this is an inherently profitable business, and we've made a tremendous amount of progress with the cost discipline muscle that we've implemented as a business. We're obviously continually making progress both on the gross margin line as well as on the OPEX line, and so we feel really, really confident that we can continue to do so. We're at 77.5% gross margin now, and we do still have some, you know, continued optimization that we can do that we're working on, on rates with hosting costs, other things like that.

Speaker Change: and then I have a quick follow-up.

Speaker Change: Yeah, just in terms of maintaining the adjusted EBITDA guidance. I mean, you know, look, this is an inherently profitable business, and we've made a tremendous amount of progress with the cost discipline muscle that we've implemented as a business.

Erica Gessert: Yeah, sure, Bernie. So in terms of the, sorry, there's a little clue back on the line there. In terms of the trends that we saw, top of funnel. First and foremost, we actually saw very strong top of funnel demand signals in Q1. And we really started starting to turn and kind of mid-May and then into June and July. We did see those trends get slightly worse in June and July. And so this is really what we're basing our guidance on.

Speaker Change: we're obviously continually making progress

Speaker Change: both on the gross margin line as well as on the OPEX line. And so we feel really, really confident that we can continue to do so. We're at 77.5% gross margin now. And we do still have some, you know, continued optimization that we can do that we're working on, on rates with hosting costs, other things like that.

Erica Gessert: And we do still have some continued optimization that we can do that we're working on, on rates with hosting costs, other things like that. And then, you know, just as a reminder to everyone, we're continuing to invest in growth. Our R&D expense was up 21% year over year in Q2, and we are very, very focused on investing in the gross levers that will grow GSB into the future. So we think we know we can do both. We can continue to optimize in areas that are kind of a lower ROI spend for us, optimize on the G&A line and other places, and produce that growing operating margin while investing in growth.

Erica Gessert: And then, you know, just as a reminder to everyone, we're continuing to invest in growth. Our R&D expense was up 21% year over year in Q2, and we are very, very focused on investing in the growth levers that will grow GSB into the future. So we think we know we can do both. We can continue to optimize in areas that are kind of a lower ROI spend for us, optimize on the G&A line and other places, and produce that growing operating margin while investing in growth.

Speaker Change: And then, you know, just as a reminder to everyone, we're continuing to invest in growth. Our R&D expense was up 21% year-over-year in Q2. And we are very, very focused on investing in the growth levers that will grow GSB, you know, into the future.

Erica Gessert: We've fully contemplated this impact and our guidance. And in fact, are now contemplating no improvement to these trends going forward. So in that way, I think we feel like we've fully do restore guidance for the year. On your question in terms of, oh, in terms of the take rate trends. Yeah, I mean, I think we're just being prudent again, kind of anticipating the trends that we're seeing. And just looking at top of funnel trends both on the demand side as well as this mixed shift and expecting that we'll see a little bit lighter usage in some of the ads products as well.

Speaker Change: So, we think we know we can do both. We can continue to optimize in areas that are kind of lower ROI spend for us, optimize on the G&A line and other places, and produce that growing operating margin while investing in growth.

Hayden Brown: Got it. That's very helpful. And then, secondly, could you maybe talk about any recent developments as it relates to AI tools and functionality? And I know you highlighted a few in the press release. And is there any way to sort of quantify the impact of AI on your overall business?

Speaker Change: Got it, that's very helpful. And then secondly, could you maybe talk about any recent developments as it relates to AI tools and functionality? And I know you highlighted a few in the press release. And is there any way to sort of quantify the impact of AI on your overall business?

Erica Gessert: And then on the Sunday effect question, yeah, that's the one point impacted for the full year. Thank you, Eric Sheridan.

Unknown Executive: Thank you.

Hayden Brown: So Maria, in terms of the AI tools and functionality, I'd say we're very pleased with how the features and functionality we're launching, including things like our UMA, AI Work Companion, as well as Upwork Chat Pro, which is an AI-enabled feature for freelancers, in particular, to leverage that throughout the work journey on Upwork, these are all getting very strong adoption and continue to be, you know, advancing, We've seen a 23% increase between Q1 and Q2 in users interacting with UMA, and we also saw a 68% increase in freelancers using Upwork Chat Pro on a daily basis, so these are kind of positive signals that this is an effective strategy for us that is going to continue to enhance the experience and our metrics, and really is giving us confidence in the roadmap that we're executing.

Speaker Change: For Maria, in terms of the AI tools and functionality, I'd say we're very pleased with how

Maria Ripps: Our next question comes from Maria Ripps of Canacorn. Your line is open. Great. Thanks so much for taking my questions. First, sort of understanding that you're up reading in a Dr. McLean environment can maybe just talk about your ability to sustain your EBITDA guidance. And as we look at your panel, sort of what are some areas that you can optimize here in the year, you're without sort of impacting future growth as a environment improves.

Maria Ripps: The features and functionality we're launching, including things like our UMA, AI Work Companion, as well as Upwork Chat Pro, which is an AI-enabled feature.

Speaker Change: for freelancers in particular to leverage that throughout the work journey on Upwork. These are all getting very strong adoption and continue to be.

Speaker Change: We've seen a 23% increase between Q1 and Q2 in users interacting with UMA. We also saw a 68% increase in freelancers using Upwork Chat Pro on a daily basis. Thank you. Thank you. Thank you.

Maria Ripps: And then I have a quick follow up. Yeah, just in terms of maintaining the the adjusted EBITDA guidance, I mean, you know, look, this is an inherently profitable business and we've made a tremendous amount of progress with the cost discipline muscle that we've implemented as a business. We're obviously continually making progress both on the growth margin line as well as on the op-ex line. And so we feel really, really confident that we can continue to do so.

Speaker Change: These are kind of positive signals that this is an effective strategy for us that is going to continue to enhance the experience and our metrics and really is giving us confidence in the roadmap that we're executing.

Hayden Brown: In terms of AI's impact on the overall business, you know, here's one way to think about ring-fencing, you know, the negative impact, which I think we get a lot of questions about, as the world is undergoing, you know, an AI transition. And inevitably, on that journey, some of the old ways of working will get left behind.

Speaker Change: In terms of

Speaker Change: A.I. impact on the overall business.

Speaker Change: You know, here's one way to think about ring fencing.

Speaker Change: The negative impact, which I think we get a lot of questions about, as the world is undergoing, you know, an AI transition.

Maria Ripps: We're at 77.5% growth margin now. And we do still have some, you know, continued optimization that we can do that we're working on on rates with hosting costs, other things like that. And then, you know, just as a reminder to everyone, we're continuing to invest in growth. Our R&D expenses of 21% year-to-year in Q2. And we are very, very focused on investing in the growth levers that will grow GSB, you know, into the future.

Speaker Change: And inevitably, on that journey, some of the old ways of working will get left behind. The segment of jobs in our marketplace that are less complex

Speaker Change: and, hypothetically, most easily disrupted over time.

Hayden Brown: The segment of jobs in our marketplace that are less complex, and, hypothetically, most easily disrupted over time by AI are jobs on Upwork with less than $300 to spend, which comprise just under 5% of our GSP today. To be clear, we are not yet seeing a broad-based AI impact overall in this small job segment. Now, if you look within the small job segment, the current impact of AI is much more limited and is most visible in a couple categories.

Speaker Change: by AI are jobs on Upwork with less than $300 of spend, which comprise just under 5% of our GSV today.

Maria Ripps: So we think we know we can do both. We can continue to optimize in areas that are kind of lower ROI spend for us, optimize on the G&A line and other places and produce that growing operating margin while investing in growth.

Speaker Change: To be clear, we are not yet seeing a broad-based AI impact overall in this small job segment.

Hayden Brown: Now, if you look within this small job segment, the current impact of AI is much more limited and is most visible in a couple categories. Writing and translation are obviously where it's most evident, and that's just as we've expected and seen over multiple quarters now. In writing and translation and elsewhere, we continue to see, at this point, a positive AI-driven mix shift away from simple, you know, very low-paying jobs to complex, more valuable, higher-paying work.

Speaker Change: Now, if you look within this small job segment, the current impact from AI is much more limited and is most visible in a couple categories. Writing and translation is obviously where it's most evident, and that's just as we've expected and seen over multiple quarters now.

Maria Ripps: That's very helpful. And then secondly, quick maybe talk about any recent developments as it relates to AI tools and functionality. And I know you highlighted a few in the in the press release. And is that any way to sort of quantify the impact of AI on your overall business? For Maria, in terms of the AI tools and functionality, I say we're very pleased with how the features and functionality we're launching, including things like our UMA, AI work companion, as well as upper chat pro, which is an AI enabled feature for freelancers in particular to leverage that throughout the work journey on network.

Hayden Brown: Writing and translation is obviously where AI is most evident, and that's just as we've expected and seen over multiple quarters now. In writing and translation and elsewhere, we continue to see, at this point, a positive AI-driven mid-shift away from simple, you know, very low-paying jobs to complex, more valuable, higher-paying work. And this transition has started in the past, and this past quarter, we saw hours per contract in writing, we saw spend per contract in translation all increasing because of the new work that's emerging for editors and translators who are actually working with and supplementing the outputs delivered by AI.

Speaker Change: In writing and translation, and elsewhere, we continue to see

Hayden Brown: At this point, a positive AI-driven makeshift away from simple...

Maria Ripps: You know, very low, low effectiveness jobs.

Hayden Brown: And this transition has started in the past quarter; we saw hours per contract in writing, we saw spend per contract in translation, all increasing because of the new work that's emerging for editors and translators who are actually working with and supplementing the outputs delivered by AI. So, these factors are really a testament to the AI-related opportunity that we expect to benefit from by offering the human expertise that is so valued across all of our categories in the marketplace as humans work with AI tools in the ecosystem. And what we see is AI augmenting humans much more so than replacing them.

Hayden Brown: to complex, more valuable, higher paying work. And this transition has started in the past. And the past quarter, we saw hours per contract in writing, we saw spend per contract in translation, all increasing because of the new work that's emerging.

Maria Ripps: These are all getting very strong adoption and continue to be advancing even though they're still in the early stages. We've seen a 23% increase between Q1 and Q2 in users interacting with UMA. We also saw a 68% increase in freelancers using upper chat pro on a daily basis. So these are kind of positive signals that this is an effective strategy for us that is going to continue to enhance the experience and our metrics and really giving us confidence in the roadmap that we're executing.

Maria Ripps: for editors and translators who are actually working with and supplementing the outputs delivered by AI.

Hayden Brown: So these factors are really a testament to the AI-related opportunity that we expect to benefit from by offering the human expertise that is so valued across all of our categories in the marketplace as humans are working with AI tools in the ecosystem. And what we see is AI augmenting humans much more so than replacing them.

Maria Ripps: So, these factors are really a testament to the AI-related opportunity that we expect to benefit from by offering the human expertise that is so valued across all of our categories in the marketplace as humans are working with AI tools in the ecosystem.

Maria Ripps: And what we see is AI augmenting humans much more so than replacing them.

Maria Ripps: In terms of AI impact on the overall business, you know, here's one way to think about ring sensing, you know, the negative impact, which I think we get a lot of questions about, as the world is undergoing, you know, an AI transition and inevitably on that journey, some of the old ways of working will get left behind. The segment of jobs in market place that are less complex and hypothetically most easily disrupted over time by AI are job and upwork with less than $300 to spend, which comprise just under 5% of our GSE today, to be clear, we are not yet seeing a broad-based AI impact overall in this small job segment.

Maria Ripps: Great. Thank you so much. That's very helpful. Thanks, everyone.

Unknown Executive: Thanks, Brian.

Speaker Change: great thank you so much that's very helpful

Joshua Chan: Thank you. Our next question comes from Josh Chan of UBS. Your line is open.

Josh Chan: Thank you. Our next question comes from Josh Chan of UBS. Your line is open.

Speaker Change: Our next question comes from Josh Chan of UBS. Your line is open.

Erica Gessert: Hi, good afternoon. Thanks for taking my questions. I was wondering if you could talk a little bit more about the trajectory that you saw through Q2. Was it kind of like a one-time step down in May or June and then kind of flat from there? Or was it like a slow easing? And then, I guess just to clarify on your guidance, I guess, does that imply a flatlining from, you know, current levels, or does it imply kind of continuing slowing as you talk about maintaining the current trend? Thank you.

Josh Chan: good afternoon things sort of taking my questions i was wondering if you could talk a little bit more about them the trajectory that you saw through a q two was it kind of like a one time step down in in may or june and then kind of platformfrom there or was it like a slow easing and then i guess just to clarify on your guidance

Unknown Questioner: I guess, does that imply a flatlining from, you know, current levels, or does it imply a kind of continuing slowing as you talk about maintaining the current trend? Thank you.

Speaker Change: I guess, does that imply a flatlining from, you know, current levels, or does it imply kind of continuing slowing as you talk about maintaining the current trend? Thank you.

Erica Gessert: Yeah, so maybe to take a step back and talk about kind of the transition from Q1 to Q2, we saw really promising top of funnel demand in Q1, our client-seeking work metric, which is a leading indicator for us on overall demand on the platform and growth on the platform was up 11% in Q1, and that trend really started to reverse around mid-May, and then we saw a declining trend into June and July. And so, and again, I, you know, we saw a couple of factors here.

Maria Ripps: Now, if you look within this small job segment, the current impact from AI is much more limited and is most visible in a couple categories. Writing in translation is obviously worth most evidence and that's just as you've expected and seen over multiple quarters now. In writing in translation and elsewhere, we continue to see at this point a positive AI driven mixed shift away from simple, you know, very low effectiveness jobs to complex, more valuable, higher paying work.

Speaker Change: Yeah, so maybe to take a step back and talk about kind of the transition from Q1 to Q2. We saw a really promising top of funnel demand signal.

Speaker Change: In Q1, our client-seeking work metric, which is a leading indicator for us on overall demand on the platform and growth on the platform, was up 11% in Q1, and that trend really started to reverse around mid-May, and then we saw a declining trend into June and July .

Erica Gessert: We saw overall demand signals decline, and then we also saw a mixed shift; we saw strong growth from very small businesses and lower demand from larger customers, which is really understandable given the high interest rate environment that we're operating in. Since smaller businesses tend to have lower spend characteristics overall, this mixed shift impacts our GSB per active, which is what's making us more cautious about the outlook for the rest of the year.

Speaker Change: And so, and again, I, you know, we saw a couple of factors here.

Maria Ripps: And this transition has started in the past and the past quarter, we saw hours for contract and writing, we saw spend for contract and translation all increasing because of the new work that's emerging for editors and translators who are actually working with and supplementing the outputs delivered by AI. So these factors are really a testament to the AI really good opportunity that we expect to benefit from by offering the human expertise that is still valued across all of our categories in the marketplace as humans are working with AI tools in the ecosystem. And what we see is AI augmenting humans much more so than replacing them. Great, thank you so much. That's very helpful.

Speaker Change: We saw overall demand signals decline, and then we also saw a mixed shift, we saw strong growth from very small businesses, and lower demand from larger customers, which is really understandable given the high interest rate environment that we're operating in.

Unknown Executive: Thank you.

Speaker Change: Since smaller businesses tend to have lower spend characteristics overall, this mixed shift impacts our GSB per active, which is what's making us more cautious about the outlook for the rest of the year.

Joshua Chan: Yeah, thanks for that color. And then in terms of your expense management, very impressive, you know, in this environment, when demand eventually returns, will you need to undergo a period of added spend? Or how are you thinking about that trajectory as demand eventually bottoms and gets better? Thank you.

Speaker Change: Thanks for that color. And then in terms of your expense management, very impressive, you know, in this environment, when when demand eventually returns, will you need to undergo like a period of

Speaker Change: Added spend or how are you thinking about that trajectory as demand eventually bottoms and gets better? Thank you

Erica Gessert: Yeah, sure. I mean, you know, we're very, very proud of the cost discipline that we've implemented. I think we're doing a great job at it. And I'm really proud of the teams here for working so hard.

Joshua Chan: Our next question comes from Josh Chan of UBS. Your line is open. Hi, good afternoon. Thanks for taking my questions. I was wondering if you could talk a little bit more about the trajectory that you saw through Q2. Was it kind of like a one time step down in in May or June and then kind of flat from there? Or was it like a slow easing and then I guess just to clarify on your guidance, I guess, does that imply a flat lining from, you know, current levels or does it imply kind of continuing slowing as you talk about maintaining the current trend. Thank you.

Speaker Change: Yeah, sure. I mean, you know, we're very, very proud of the cost discipline that we've implemented. I think we're doing a great job at it, and I'm really proud of the teams here for, you know, for working so hard.

Speaker Change: We are very committed to continuing to grow operating leverage as we continue down this path. And even as demand returns,

Speaker Change: You know, I think we'll be very moderated in the way that we invest. We've built a very, very good, for example, performance marketing engine.

Speaker Change: with very, you know, kind of clear parameters in terms of yield and ROI, and we'll continue to invest that way as we go forward. So, I don't necessarily see the need to ratchet up significantly our spend as demand returns, but we'll assess that as we go.

Erica Gessert: Yeah, so maybe to take a step back and talk about kind of the transition from Q1 to Q2, we saw a really promising top of funnel demand in Q1, our client seeking work metric, which is a leading indicator for us on overall demand on the platform and growth on the platform was 11% in Q1. And that trend really started to reverse around mid May and then we saw a declining trend into June and July.

Joshua Chan: Perfect, thank you for your time and the color.

Erica Gessert: We are very committed to continuing to grow operating leverage as we continue down this path. And even as demand returns, you know, I think we'll be very moderate in the way that we invest. We've come, we've built a very, very good, for example, performance marketing engine with very, you know, kind of clear parameters in terms of yield and ROI. And we'll continue to invest in that way as we go forward. So I don't necessarily see the need to significantly ratchet up our spend as demand returns, but we'll assess that as we go. Thank you for your time and the color.

Unknown Questioner: Perfect. Thank you for your time and the color.

Speaker Change: Thank you.

Matthew Farrell: Our next question comes from Matt Farrell of Piper Sandler. Your line is open.

Speaker Change: Our next question comes from Matt Farrell of Piper Sandler. Your line is open.

Unknown Questioner: Thanks for taking my question. I'd love to understand a little bit more about the bifurcation of the enterprise pricing strategy, what kind of went into that? You obviously hit on some early results, but how should we be thinking about that helping to drive, you know, acceleration in the enterprise business over the next couple of quarters?

Hayden Brown: Thanks for taking my question. I'd love to understand a little bit more about the bifurcation of the enterprise pricing strategy, what kind of went into that. You obviously hit on some early results, but how should we be thinking about that helping to drive, you know, acceleration in the enterprise business over the next couple of quarters?

Unknown Questioner: Thanks for taking my question. I'd love to understand a little bit more about the bifurcation of the enterprise pricing strategy, what kind of went into that. You obviously hit on some early results, but how should we be thinking about that helping to drive, you know, acceleration in the enterprise business over the next couple of quarters?

Erica Gessert: And so, and again, I, you know, we saw a couple of factors here, we saw overall demand signals decline. And then we also saw a mixed shift to, we saw strong growth from very small businesses and lower demand from larger customers, which is really understandable, given the high interest rate environment that we're operating in. And since more businesses tend to have lower spend characteristics overall, this mixed shift to impact our GFB be proactive, which is what's making us more cautious about the outlook for the rest of the year.

Matthew Farrell: Sure, Matt. Our view on this is that the Enterprise TAM is so attractive, and we're really positioned well to work aggressively to keep unlocking it. With the pilot we ran in the last quarter, you're right, we saw some promising signals, and we're still in testing and really using the learnings from those signals to inform where we go next from here. I'd say, because of where we are with that work, the insights have been really strong, but we're not yet expecting the same level of performance every quarter in terms of the type of new logo conversion that we saw in the last quarter, carrying forward, but we do think it's critical in this environment and every environment to remain really agile and unlock the market opportunity.

Hayden Brown: Sure, Matt. Our view on this is that the Enterprise TAM is so attractive, and we're really positioned well to work aggressively to keep unlocking it. With the pilot we ran in the last quarter, you're right, we saw some promising signals, and we're still in testing and really using the learnings from those signals to inform where we go next from here. I'd say, because of where we are with that work, the insights have been really strong, but we're not yet expecting the same level of performance every quarter in terms of the type of new logo conversion that we saw in the last quarter.

Hayden Brown: intermet

Hayden Brown: Our view on this is the Enterprise TAM is so attractive and we're really positioned well to work aggressively to keep unlocking it.

Hayden Brown: With the pilot we ran in the last quarter, you're right, we saw some promising signals, and we're still in testing and really using the learnings from those signals to inform where we go next from here. I'd say, because of where we are with that work,

Erica Gessert: Thank you. Thanks for the color color. And then in terms of your expense management, very impressive, you know, in this environment. When demand eventually returns, will you need to undergo like a period of added spend, or how are you thinking about that trajectory as demand eventually bottoms and gets better? Thank you. Yeah, sure. I mean, you know, we're very, very proud of the cost discipline that we've implemented. I think we're doing a great job at it and I'm really proud of the teams here for, you know, for working so hard.

Hayden Brown: The insights have been really strong, but we're not yet expecting the same level of performance.

Hayden Brown: Every quarter in terms of the type of, you know, new logo conversion that we saw in the last quarter carrying forward.

Hayden Brown: But we do think it's critical in this environment and every environment to remain really agile and unlock market opportunity. And that's really what we're focused on doing because we see opportunities both to increase conversion and expand the number of logos in the enterprise space that we have, as well as unlock share of wallet. And that's where we're focused. So it's, I think it's too soon to say more specific than that, but that is absolutely laser focus, and the results, I think, are showing that from the agility.

Hayden Brown: but we do think it's critical in this environment and every environment to remain really agidentile the cking the market opportunity naturally whatwe'refocus on doing because we see opportunities both to increase conversion and expand the number of lobs in the enterprise ace that we have

Matthew Farrell: That's really what we're focused on doing, because we see opportunities both to increase conversion and expand the number of logos in the enterprise space that we have, as well as unlock share of wallet. And that's where we're focused. So, I think it's too soon to say more specific than that, but that is absolutely our laser focus, and the results, I think, are showing that from the agility.

Erica Gessert: We are very committed to continuing to grow operating leverage as we continue down this path. And even as demand returns, you know, I think we'll be very moderated in the way that we invest. We've come, we've built a very, very good, for example, performance marketing engine. With very, you know, kind of clear parameters in terms of yield and ROI, and we'll continue to invest that way as we go forward. So I don't know necessarily see the need to ratchet up significantly our spend is demand returns, but we'll assess that as we go. Perfect. Thank you for your time in the color. Thank you.

Hayden Brown: As well as unlock share of wallet. And that's where we're focused. So it's, I think it's too soon to say more specific than that. But that is absolutely laser focus. And the results I think are showing that from the agility.

Erica Gessert: And then kind of following up on some of the questions on the full-year guide, based on my math, it assumes a pretty significant deceleration in GSV as we move through the rest of the year. I guess how does the macro, both on the small and the enterprise customers, differ, how is it different than previous cycles of slowing? It seems like it's much more intense this time around than it has been in the past, but I would love any more clarity on spending patterns and the assumptions that are embedded in GSV.

Speaker Change: And then kind of following up on some of the questions on the full year guide, based on my math, it assumes a pretty significant deceleration in GSV as we move through the rest of the year. I guess, how does the macro, both on the small and the enterprise customers,

Speaker Change: different, how is it different than previous cycles of slowing? It seems like it's much more intense this time around than it has been in the past, but would love just any more clarity on spending patterns and the assumptions that are embedded in GSB. Thanks.

Matthew Farrell: Our next question comes from Matt Farrell of Piper Sandler. Your line is open. Thanks for taking my question.

Erica Gessert: Maybe I'll start and Hayden, you feel free to add on. So a couple things here, you know, like I said, the guidance is based on essentially bringing forward the kind of lower trends that we saw, you know, exiting Q2 and even into Q3, you know, for the rest of the year. So that's what we're basing it on. It's kind of the June and July trends.

Erica Gessert: Thanks. Maybe I'll start, and Hayden, you feel free to add on. So, a couple of things here.

Hayden Brown: I'd love to understand a little bit more about the bifurcation of the enterprise pricing strategy. What kind of one into that? You obviously hit on some early results, but how should we be thinking about that helping to drive, you know, acceleration in the enterprise business over the next couple of quarters? Sure, Matt. Our view on this is the enterprise tab is so attractive and we're really positioned well to work aggressively to keep unlocking it.

Erica Gessert: Maybe I'll start and Hayden you feel free to add on. So a couple things here, you know, like I like I said, you know, the guidance is based on essentially

Erica Gessert: Bringing forward the kind of lower trends that we saw, you know, exiting Q2 and even into Q3.

Erica Gessert: for the rest of the year. So that's what we're basing it on. It's kind of the June and July trends, and we really wanted to make sure that we were

Hayden Brown: With the pilot, we ran in the last quarter. You're right. We saw the promising signals and we're still testing and really using the learnings from those signals to inform where we go next from here. I'd say because of where we are with that work, the insights have been really strong, but we're not yet expecting the same level of performance every quarter in terms of the type of new logo conversion that we saw in the last quarter.

Hayden Brown: You know, not anticipating any improvement to the macro from what we've been seeing in the last couple of months. And so, like I said, to that effect, we.

Erica Gessert: And we really wanted to make sure that we were not anticipating any improvement in the macro from what we've been seeing in the last couple of months. And so, like I said, to that effect, we do think we've effectively de-risked the back half of the year. Just in terms of, you know, how macro is impacting kind of spending on the platform, I would say, look, you know. So, writ large, high interest rates impact demand for large and medium business, you know, customer spend.

Erica Gessert: And we really wanted to make sure that we were not anticipating any improvement in the macro from what we've been seeing in the last couple of months. And so, like I said, to that effect, we do think we've effectively de-risked the back half of the year. Just in terms of, you know, how macro is impacting kind of spending on the platform, I would say, look, you know, Writ large, high interest rates impact demand for large and medium business customer spend, while inflation impacts demand on the small business and consumer side.

Erica Gessert: We do think we've effectively de-risked the back half of the year.

Erica Gessert: Just in terms of, you know, how macro is impacting kind of spending on the platform, I would say look, you know,

Erica Gessert: Writ large, high interest rates impact demand on the large and medium business, you know, customer spend.

Erica Gessert: Inflation impacts demand on the small and medium-sized business and consumer side. And these both impact GSB, and they have compounding effects, right, over time. And I think we've been able to weather the storm really well for the past few years as we've been going through this. And now we're starting to see, you know, some of those compounding effects, which I think really affect some of the demand on the platform. But, you know, we've been able to grow revenue in this environment due to some of the investments we've made in high-growth categories and, you know, our ads and monetization strategies. And we do anticipate that some of those things will also bring us benefits in 2025 and beyond.

Hayden Brown: But we do think it's critical in this environment and every environment to remain really agile and unlocking the market opportunity and naturally we're focused on doing because we see opportunities both to increase conversion and expand the number of logos in the enterprise space that we have as well as unlock share of wallet. And now we're focused. So it's, I think it's too soon to say more specific than that, but that is absolutely laser focus and the results I think are showing that from the agility.

Erica Gessert: And these both impact GSB, and they have compounding effects, right, over time. And I think we've been able to weather the storm really well for the past few years as we've been going through this, and now we're starting to see some of those compounding effects, I think, really affect some of the demand on the platform. But, you know, we've been able to grow revenue in this environment due to some of the investments we've made in high-growth categories and, you know, our ads and monetization strategies. And we do anticipate that some of those things will also bring us benefits in 2025 and beyond.

Erica Gessert: Inflation impacts demand on the small business and consumer side.

Erica Gessert: And these both impact GSB and they have compounding effects, right, over time. And I think we've been able to weather the storm really well for the past few years as we've been going through this, and now we're starting to see, you know, some of those compounding effects, I think, really, you know, affect some of the demand on the platform.

Erica Gessert: But, you know, we've been able to grow revenue in this environment due to some of the investments we've made in high-growth categories and, you know, our ads and monetization strategies, and we do anticipate that some of those things will, you know, also show us benefits in 2025 and beyond.

Erica Gessert: And then of kind of following up on some of the questions on the full year guide based on my math, it assumes a pretty significant deceleration in GSV as we move through the rest of the year. I guess how does the macro, both on the small and the enterprise customers, different, how is it different than previous cycles of slowing it seems like it's much more intense this time around and it has been in the past, but would love just any more clarity on spending patterns and the assumptions that are embedded in GSV.

Speaker Change: Unknown Executive, Hayden Brown, Erica Gessert

Speaker Change: Thank you.

Marvin Fong: And our next question comes from Marvin Fong of BTIG. Your line is open.

Unknown Questioner: Good evening, thanks for taking my question. So I guess just to kind of maybe round out the whole discussion about the state of the world, you know, anything you can add in terms of categories or even geography areas that might be trending, particularly weak, or maybe even relatively stronger, relative to kind of the overall marketplace. And then I have a follow-up.

Hayden Brown: Good evening. Thanks for taking my question. So I guess just to kind of maybe round out the whole discussion about the state of the world, you know, anything you can add in terms of categories or even geography areas that might be trending, particularly weak or maybe even relatively stronger relative to kind of the overall marketplace. And then I have a follow-up.

Unknown Questioner: Good evening. Thanks for taking my question. So I guess just to kind of maybe round out the whole discussion about about the state of the world, you know, anything you can add in terms of, you know, categories or even geography areas that might be trending.

Erica Gessert: Maybe I'll start and you feel free to add on so a couple things here, you know, like I said, you know, the guidance is based on essentially bringing forward the kind of lower trends that we saw, you know, exiting Q2 and even into Q3, you know, for the rest of the year. So that's what we're, you know, basing it on, it's kind of a June and July trends and we really wanted to make sure that we were, you know, not anticipating any improvement to the macro from what we've been seeing in the last couple of months.

Unknown Questioner: particularly weak or maybe even relatively stronger relative to kind of the overall marketplace. And then I have a follow up.

Hayden Brown: Marvin, what we're seeing is, from a category standpoint, the tech industry broadly, you know, in the macro at large, is being hit harder from a job openings perspective. So, we are seeing that that is flowing through to some extent in terms of demand for tech jobs, and our own platform being a bit weaker, and that's consistent with the macro trend. We also know that that impact, however, is not totally uniform.

Hayden Brown: Marvin, what we're seeing is, from a category standpoint, the tech industry broadly, you know, in the macro at large, is being hit harder from a job openings perspective. So, we are seeing that that is flowing through to some extent in terms of demand for tech jobs on our own platform being a bit weaker. And that's consistent with the macro trend. We would also note that that impact, however, is not totally uniform.

Hayden Brown: Marvin, what we're seeing is, from a category standpoint, the tech industry broadly, you know, in the macro at large, is being hit harder from a job openings perspective.

Hayden Brown: So we are seeing that that is flowing through to some extent in terms of

Marvin Fong: There are some subcategories within our own tech category on our platform that are performing better. So, you know, it's a bit uneven, but that's, I'd say, one theme. The bright spots in terms of categories definitely are the strength in AI-related work. That grew 67% year-over-year, and we're seeing emerging growth in subcategories, even within these AI-impacted slices of the business, like writing and translation, where even as automation is happening, new growth shoots are popping up.

Hayden Brown: Demand for tech jobs on our own platform being a bit weaker, and that's consistent with the macro trend.

Erica Gessert: And so, like I said to that effect, we do think we effectively de-risk the back half of the year. Just in terms of, you know, how macro is impacting kind of spending on the platform. I would say look, you know, writ large, high interest rates impact demand on the large and medium business, you know, customer spend inflation impact demand on the small and small business and consumer side. And these both impact GSV and they have compounding effects right over time.

Hayden Brown: We'd also note that that impact, however, is not totally uniform. There are some subcategories within our own tech category on our platform that are performing better. So, you know, it's a bit uneven, but that's, I'd say, one theme.

Hayden Brown: The bright spots in terms of categories definitely are the strength in AI-related work.

Hayden Brown: There are some subcategories within our own tech category on our platform that are performing better. So, you know, it's a bit uneven, but that's the 1 theme. The bright spots in terms of categories definitely are the strength in AI-related work. That growth is 67% year over year, and we're seeing emerging growth in subcategories, even within these AI-impacted, like, slices of the business, like, writing and translation, whereas even as automation is happening, new growth shoots are popping up.

Hayden Brown: Backers 67% year-over-year, and we're seeing emerging growth in subcategories, even within these AI-impacted slices of the business, like writing and translation, where even as automation is happening, new growth shoots are popping up.

Erica Gessert: And I think we've been able to weather the storm really well for the past few years as we've been going through this and now we're starting to see, you know, some of those compounding effects, I think, really, you know, effects on the demand on the platform. But, you know, we've been able to grow revenue in this environment due to some of the investments we've made in high growth categories and, you know, our as in monetization strategy and we do anticipate that some of those things will, you know, also get share with benefits in 2025 and beyond.

Marvin Fong: So, you know, that's the category story. To the question of geos or other segments, I'd say we saw the U.S., Germany, and the U.K. as a bit more affected than other countries globally in terms of client demand. And again, I think that's indicative of kind of what's going on broadly in those economies.

Hayden Brown: So, you know, that's the category story to the question of geos or other segments. I'd say we saw the US, Germany, and UK as a bit more impacted than other countries globally in terms of client demand. And again, I think that's indicative of kind of what's going on broadly in those economies.

Hayden Brown: So, you know, that's the category story to the question of GEOs.

Unknown Executive: Thank you.

Hayden Brown: or other segments, I'd say we saw US, Germany, and UK as a bit more impacted than other countries globally in terms of client demand. And again, I think that's indicative of kind of what's going on broadly in those economies.

Hayden Brown: Yeah, okay, perfect. That makes total sense. And I did want to also follow up on the, you know, the bifurcated enterprise. So I'm just curious, you know, exactly what it is about, or how should we sort of think about the less, the lower feature version? I mean, what is it that makes it more palatable? Is it, you know, some of maybe the upfront costs or, or is it the take rate being lower?

Unknown Questioner: Yeah, okay, perfect. That makes total sense. And I did want to also follow up on the, you know, the bifurcated enterprise. So I'm just curious, you know, exactly what it is about, or how should we sort of think about the less, the lower feature version? I mean, what is it that makes it more palatable? Is it, you know, some of maybe the upfront costs or, or is it the take rate being lower?

Unknown Questioner: Yeah, okay, perfect. That makes total sense.

Unknown Questioner: I did want to also follow up on the, you know, the bifurcated enterprise. So I'm just curious.

Marvin Fong: And our next question comes from Marvin Fong of BTIG, your line is open. Good evening thanks for taking my question so I guess just to kind of maybe round out the whole discussion about the state of the world, you know, anything you can add in terms of, you know, categories or even geography areas that might be trending particularly weak or maybe even relatively stronger relative to kind of the overall marketplace and then I have a follow-up.

Unknown Questioner: You know, exactly what is it about, or how should we sort of think about the less, the lower feature version? I mean, what is it that makes it more palatable? Is it, you know, some of maybe the upfront costs or?

Hayden Brown: You know, what exactly is it that's going to draw these, you know, these, you know, more on the fence kind of enterprises? And then, just part B of that question, you know, is there any risk in your mind that some of your existing enterprise customers that are on the full featured version might, you know, opt for the less full featured version? Thanks.

Unknown Questioner: You know, what exactly is it that's going to draw these, you know, these, you know, more on the fence kind of enterprises? And then, just part B of that question, you know, is there any risk in your mind that some of your existing enterprise customers that are on the full featured version might, you know, opt for the less full featured version? Thanks.

Unknown Questioner: or is it a take rate being lower, you know, what exactly is it that's going to draw these from.

Unknown Questioner: you know, these, you know, more, more, more on the fence kind of enterprises and then

Unknown Questioner: Just part B of that question, you know,

Unknown Questioner: Is there any risk in your mind that some of your, you know, existing enterprise customers that are on the full-featured version, that they might, you know, opt for the less full-featured version?

Marvin Fong: Marvin, what we're seeing is from a category standpoint, the tech industry broadly, you know, in the macro at large is being hit harder from a job opening perspective. So we are seeing that that is flowing through to some extent in terms of demand for tech jobs, our own platform, being a bit weaker and not consistent with the macro trends. We'd also know that that impact, however, is not totally uniform. There are some subcategories within our own tech category on our platforms that are performing better. So, you know, it's a bit uneven, but that's I'd say one theme.

Marvin Fong: Yeah, I understand the concern. But I can tell you there's no risk of cannibalization here.

Hayden Brown: Yeah, I understand the concern. But I can tell you there's no risk of cannibalization here.

Hayden Brown: Yeah, I understand the concern. I can tell you there's no risk of cannibalization here. What we are doing is really leveraging the art of getting the packaging, the pricing, the whole structure absolutely right to meet, you know, the different subsegments that exist within enterprise. And previously, we had more or less like one offering to target with and now we have.

Hayden Brown: What we are doing is really leveraging the art of getting the packaging, the pricing, the whole structure absolutely right to meet, you know, the different subsegments that exist within an enterprise. And previously, we had more or less like one offering to target, and now we have more tools in our toolkit. And again, we're not done. This was one, you know, first iteration at this, really aimed at optimizing, landing these new customers, and expanding their share of wallet, which is something that we want to be absolutely best in class at.

Marvin Fong: At the bright spots in terms of categories, definitely are the strength in AI related work. That grew 67% year-to-year and we're seeing emerging growth in subcategories, even within these AI impacted like slices of the business like rating and translation, whereas even as automation is happening, new growth growth shoots are popping up. So, you know, that's the category story. To the question of Geo's or other segments, I'd say we saw US, Germany and UK as a bit more impacted and then other countries globally in terms of client demand. And again, I think that's indicative of kind of what's going on broadly in those economies. Yeah, okay, perfect. That makes sense.

Speaker Change: More tools in our toolkit.

Speaker Change: And again, we're not done. This was one, you know, first iteration at this.

Hayden Brown: So we learned a bunch of things. I would say we're not compromising, you know, margins or take rate or any kind of effectiveness of our overall business and its profitability, but we are determined to nail how we get these packages and pricing absolutely right to unlock this market.

Speaker Change: Really aimed at optimizing, landing these new customers and expanding their share of wallet, which is something that we want to be absolutely best in class at. So we learned a bunch of things. I would say we're not compromising margins or take rate or the effectiveness of our overall business and its profitability, but we are determined to nail how we get these packages and pricing absolutely right to unlock this market.

Marvin Fong: That's great. Thanks for the color, Hayden.

Operator: Thank you. And again, if you have a question, please press star 11. And our next question comes from John Byan of Jeffreys. Your line is open.

Speaker Change: That's great. Thanks for the color, Hayden.

Hayden Brown: Sure.

Speaker Change: Thank you and again if you have a question please press star 1 1.

Hayden Brown: And I did want to offer follow up on the, you know, the bifurcated enterprise. So, I'm just curious, you know, exactly what is it about, or how should we sort of think about the lower feature version? I mean, what is it that makes it more palatable? Is it, you know, someone maybe the upfront cost or, or is it a take-rate being lower? You know, what exactly is it that's going to draw all these, you know, more on the sense kind of enterprises?

Hayden Brown: And our next question comes from John Byan of Jeffries. Your line is open.

John Byan: Hi, thank you. This is John Bell on behalf of Brandtel.

John Bell: Hi, thank you. This is John Bell on behalf of Brandtel. You know, on the macro and, you know, GSV growth, in what sort of actions could you take or what could help resume the growth there?

John Byan: You know, on the macro and, you know, GSV growth, what sort of actions could you take or what could help resume the growth there? I mean, will it require a low interest rate or some other either external or specific factor to use? And then on the EBITDA margin for the expansion, I think in the past, you had mentioned that there was still room to optimize in R&D. I'm wondering how you still view that, you know, if not, and where are there still big pockets we can still optimize more between the different opex lines?

Speaker Change: Does, will it require low interest rate or some other?

Hayden Brown: Thank you.

Speaker Change: External or specific factors to you. And then on the EBITDA margin for the expansion, I think in the past you had mentioned that there was still room to optimize in R&D.

Hayden Brown: And then just part via that question, you know, is there any risk in your mind that some of your existing enterprise customers that are on a full feature version that they might, you know, opt for the less, the less whole featured version? Thanks. Yeah, I understand the concern. I can tell you there's no risk of cannibalization here. What we are doing is really leveraging the art of getting the packaging, the pricing, the whole structure, aptly right to meet, you know, the different sub segments that exist within enterprise.

Speaker Change: I'm wondering how you still view that, you know, if not, and where are there still big pockets we can still optimize more between the different aspects of science? Thank you.

Erica Gessert: We don't have to wait for a better macro to return for our GSV investments to pay off. We expect the levers we're investing in now, based on the early stages they're in now, to have impact in 2025, even if a challenging macro persists. And certainly they will perform better when the macro environment improves. So our growth will come from enterprise initiatives, including the pricing and packaging work, which unlocks logos and wallet share, as well as amplifications from the VMS MSP program, the AI and human power performance improvements we're making on our platform, from partnership efforts that drive new client acquisition at scale, and from the scaling of AI talent and work-related GSB in our marketplace, which is growing at a rapid pace.

Speaker Change: Sean, we don't have to wait for a better macro to return for our GSV investments to pay off. We expect the levers we're investing in now, based on the early stages they're in now, to have impact in 2025, even if a challenging macro persists. And certainly they will perform better when the macro improves.

Hayden Brown: What we are doing is really leveraging the art of getting the packaging, the pricing, the whole structure absolutely right to meet, you know, the different subsegments that exist within an enterprise. Previously, we had more or less like one offering to target, and now we have more tools in our toolkit. And again, we're not done. This was one, you know, the first iteration at this, really aimed at optimizing, landing these new customers, and expanding their share of wallet, which is something that we want to be absolutely best in class at.

Hayden Brown: So our growth will come from enterprise initiatives, including the pricing and packaging work, which unlocks logos and wallet share, as well as amplifications from the VMS and MSP program, the AI and human-powered performance improvements we're making on our platform,

Hayden Brown: And previously, we had more or less like one offering to target with and now we have more tools in our toolkit. And again, we're not done. This was one, you know, first iteration at this. Really aimed at optimizing, landing these new customers and expanding their share wallet, which is something that we want to be absolutely best in class that. So we learned a bunch of things. I would say we're not compromising, you know, margins or take-rate or kind of the effectiveness of our overall business and its profitability.

Hayden Brown: from partnership efforts that drive new client acquisition scale

Speaker Change: from the scaling of AI talent and work-related GSV in our marketplace, which is growing at a rapid pace.

Hayden Brown: So we learned a bunch of things. I would say we're not compromising, you know, margins or take rate or any kind of effectiveness of our overall business and its profitability. But we are determined to nail how we get these packages and pricing absolutely right to unlock this market.

Erica Gessert: These efforts are all in their early execution this year, and we never expected them to have a significant 2024 impact. In 2025, they will be beneficial, and they will also be enhanced by the ads and monetization work, which will be an additional tailwind, as well as anti-circumvention efforts, which will be favorable next year on GSB and revenue. So we feel great about our portfolio of opportunities and the ongoing strong execution we have behind every single one of them. And I'll just answer on that

Hayden Brown: These efforts are all in their early execution this year, and we never expected them to have a significant 2024 impact.

Hayden Brown: But we are determined to nail how we get these packages and pricing aptly right to unlock it. Morgan. That's great. Thanks for the color, Hayden. Sure. Thank you. And again, if you have a question, please press star one one.

Hayden Brown: In 2025, they will be beneficial.

Hayden Brown: And they will also be enhanced by the ads and monetization work, which will be an additional tailwind, as well as anti-circumvention efforts.

Unknown Questioner: That's great. Thanks for the color, Hayden.

Speaker Change: which will be favorable next year on GSB and revenue. So we feel great about our portfolio of opportunities and the ongoing strong execution we have behind every single one of them.

John Byan: Thank you. And again, if you have a question, please press star 11. And our next question comes from John Byan of Jeffries. Your line is open.

Unknown Questioner: Hi, thank you. This is John Dion on behalf of Brandtel.

Unknown Questioner: You know, on the macro and, you know, GSV growth, what sort of actions could you take or what could help resume the growth there? Does, will it require a low interest rate or some other either external or specific factors? And then on the EBITDA margin, you know, for the expansion, I think in the past you had mentioned that there was still room to optimize in R&D. I'm wondering how you still view that, if not, and where are there still big pockets we can still optimize more between the different opex lines?

John Bion: And our next question comes from John Bion of Jeffries. Your line is open. Hi, thank you.

Hayden Brown: These efforts are all in their early execution this year, and we never expected them to have a significant 2024 impact. In 2025, they will be beneficial, and they will also be enhanced by the ads and monetization work, which will be an additional tailwind, as well as anti-circumvention efforts, which will be favorable next year on GSB and revenue. So we feel great about our portfolio of opportunities and the ongoing strong execution we have behind every single one of them. And I'll just answer on that

Unknown Questioner: Thank you.

Hayden Brown: And I'll just answer the adjusted EBITDA margin expansion question. Yeah, we absolutely do have more optimization to go in the R&D line. You know, we are continuing to grow that line, and I think you can expect that, you know, we are going to continue to invest in innovation on the platform. We think that ongoing innovation and investment in technology are the ways to grow this business. And so you will see that line continue to grow, you know, some on a year-over-year basis, but not nearly to the extent that it has in the past.

Hayden Brown: We don't have to wait for a better macro to return for our GSV investments to pay off. We expect the levers we're investing in now, based on the early stages they're in now, to have impact in 2025, even if a challenging macro persists. And certainly they will perform better when the macro environment improves. So our growth will come from enterprise initiatives, including the pricing and packaging work, which unlocks logos and wallet share, as well as amplifications from the VMS MSP program, the AI and human power performance improvements we're making on our platform, from partnership efforts that drive new client acquisition at scale, and from the scaling of AI talent and work-related GSB in our marketplace, which is growing at a rapid pace.

Erica Gessert: And I'll just answer the adjusted EBITDA margin expansion question. Yeah, we absolutely do have more optimization to go in the R&D line. You know, we are continuing to grow that line, and I think you can expect that, you know, we are going to continue to invest in innovation on the platform. We think that ongoing innovation and investment in technology are the ways to grow this business. And so you will see that line continue to grow, you know, some on a year-over-year basis, but not nearly to the extent that it has in the past.

Erica Gessert: And I'll just answer on the adjustability of the margin expansion question.

John Bion: This is a John down on the Hefebrensel. You know, on the macro and, you know, just vehicle. In what sort of actions could you take or what could help resume the growth there? I mean, does will require low interest rate or some other external or specific factors to you. And then on the EBITDA margin, you know, full expansion. I think the past you've mentioned that there was still room to optimize in R&D. I'm wondering how you still view that, you know, if not in where are there still big pockets within soft noise more between the different sides.

Erica Gessert: Yeah, we absolutely do have more optimization to go in the R&D line.

Erica Gessert: You know, we are continuing to grow that line, and I think you can expect that, you know, we are going to continue to invest in innovation on the platform.

Erica Gessert: We think that ongoing innovation and investment in technology are the ways to grow this business. And so you will see that line continue to grow, some on a year-over-year basis.

Erica Gessert: So we've been growing over 20% a year, you know, for the past few years in R&D, and we're taking a really surgical approach. We're going, you know, kind of project by project and looking through them and, you know, cutting back where we're not seeing the ROI profile that we want along the time horizons that we want. And again, we also have, you know, optimizations that we can take in, you know, continuing to improve on our growth margin line. And then I think, you know, there's definitely a way to go in G&A as well.

Hayden Brown: So we've been growing over 20% a year for the past few years in R&D, and we're taking a really surgical approach. We're going, you know, kind of project by project and looking through them and, you know, cutting back where we're not seeing the ROI profile that we want along the time horizons that we want. And again, we also have, you know, optimizations that we can take in continuing to improve on our growth margin line. And then I think, you know, there's definitely a way to go in G&A as well.

Erica Gessert: Not nearly to the extent that it has in the past, so we've been growing over 20% a year for the past few years in R&D.

Erica Gessert: And we're taking a really surgical approach. We're going, you know, kind of project by project and looking through and, you know, cutting back where we're not seeing the ROI profile that we want along the time horizons that we want.

Hayden Brown: Thank you. John, we don't have to wait for a better macro to return for our GSV investments to pay off. We expect the leverage we're investing in now based on the early stages there and now to have impact in 2025, even if a challenging macro persists. And certainly they will perform better when the macro improves. So our growth will come from enterprise initiatives, including the pricing and packing work, which unlocks logos and wallet share as well as amplifications from the VMF and MSP program.

Erica Gessert: And again, we also have, you know, optimizations that we can take in, you know, continuing to improve on our growth margin line. And then I think, you know, there's definitely a way to go in GNA as well.

Speaker Change: Thank you.

Operator: That concludes Upwork's second quarter 2024 earnings call. Thank you for participating, and you may now disconnect.

Erica Gessert: That concludes Upwork's second quarter 2024 earnings call.

Speaker Change: Thank you.

Operator: That concludes Upwork's second quarter 2024 earnings call. Thank you for participating and you may now disconnect.

Hayden Brown: The AI and human power performance improvements we're making on our platform from partnership efforts that drive new client acquisition at scale from the scaling of AI talent and work related GSD in our marketplace, which is growing at a rapid pace. These efforts are all in the early execution this year, and we never expected them to have a significant 2024 impact in 2025. They will be beneficial and they will also be enhanced by the as a monetization work, which will be an additional tailwind as well as anti circumvention efforts, which will be favorable next year on GSD and revenue. So we feel great about our portfolio of opportunities and the ongoing strong execution we have behind every single one of them.

Erica Gessert: And I'll just answer on the on the adjustity of a done margin expansion question. Yeah, we absolutely do have more optimization to go on the R&D line. You know, we are continuing to grow that line. I think you can expect that, you know, we are going to continue to invest in on in innovation on the platform. We think that that, you know, ongoing innovation and investment and technology are the ways to grow this business.

Erica Gessert: And so you will see that that line continue to grow, you know, someone on your basis, but not nearly to the extent that it has in the past. So we've been going over 20% of the year, you know, for the past few years in R&D. And we're taking a really surgical approach. We're going, you know, kind of project by project and looking through and, you know, cutting back where we're not seeing the ROI profile that we want along the time horizons that we want.

Speaker Change: Unknown Executive, Hayden Brown, Erica Gessert Unknown Executive, Hayden Brown, Erica Gessert

Unknown Executive: Thank you.

Unknown Executive: That concludes Upwork's second quarter, 2024 earnings call.

Speaker Change: Unknown Executive, Hayden Brown, Erica Gessert Unknown Executive, Hayden Brown, Erica Gessert

Unknown Executive: Thank you for participating and you may now disconnect.

Speaker Change: Unknown Executive, Hayden Brown, Erica Gessert Unknown Executive, Hayden Brown, Erica Gessert

Unknown Executive: Eric Sheridan, Andrew Boone, David Niederman Eric Sheridan, Andrew Boone, David Niederman, Matthew Farrell, Andrew Boone, David Niederman, Andrew Boone, David Niederman, Andrew Boone, David Niederman,[inaudible]

Q2 2024 Upwork Inc Earnings Call

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