Q1 2025 Fiverr International Ltd Earnings Call
Reggae guitar playing
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Speaker Change: Good day, and thank you for standing by and welcome to the five at Q1 at 2025 earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: I'll ask a question during the session you will need to press star one on one on your telephone you will then hear an automated message advising Johan is raised and to withdraw. Your question that you can press star one one again please be advised today's conference is being recorded.
Speaker Change: I'd now like to hand, the conference if it's your first speaker today, Ginger and Chin. Please go ahead.
Speaker Change: Thank you operator, and good morning, everyone. Thank you for joining us for fibers earnings conference call for the first quarter that ended March 31 2025.
Howard Kaufman: Joining me on the call today are me, how Kaufman founder and CEO and Ofer Katz, President and CFO.
Howard Kaufman: Before we start I'd like to remind you that during this call. We may make forward looking statements and that these statements are based on our current expectations and assumptions as of today and Fiverr assumes no obligation to update or revise them.
Howard Kaufman: A discussion of some of the important risk factors that could cause actual results to differ materially from any forward looking statements can be found under the risk factors section in fibers. Most recent form 20-F, and other filings with the FTC.
Howard Kaufman: During this call we'll be referring to some key performance metrics are non-GAAP financial measure.
Howard Kaufman: Including adjusted EBITDA, adjusted EBIT margin and free cash flow.
Howard Kaufman: The other explanation and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measure is provided in the earnings release, we issued today no shareholder letter each of which is available on our website at investors dot fiber dot com.
Howard Kaufman: And now I'll turn the call over to me.
Jane: Thank you Jane and good morning, everyone and thank you for joining us.
Jane: I'm pleased to kick off 2025, with a strong first quarter exceeding expectations in both revenue and adjusted EBITDA.
Jane: This performance reflects the strong execution of course market base and services segments.
Jane: I'm proud of how our team has been laser focused on delivering impactful products at the high velocity and driving progress towards our strategic priorities.
Jane: We made good wins with fiber pro this quarter and early signs of fiber go show strong engagement and meaningful conversion improvement.
Jane: I'll talk about both in more detail shortly.
Jane: The past few months have been quite dynamic on the macro front.
Jane: In the World, where we operate however, the overall demand for free hunting has been stable.
Jane: Our business has no direct exposure to tariffs and we believe that fiber is a compelling value proposition offering a competitive edge speed agility and cost effectiveness.
Jane: Come even more attractive businesses navigate an evolving economic climate.
Jane: Our updated guidance reflects our confidence in the business for the remainder of the year.
Jane: The three strategic priorities, we set for this year our.
Jane: Strengthening the market base by going up market expanding value added services as a key growth catalyst and investing in AI to drive long term upside in the business.
Jane: We talked a lot in the past quarters about leaning into value added services to drive growth in the current environment.
Jane: And you can clearly see that through the services revenue disclosure, we started providing last quarter.
Jane: Today I want to talk more about the other two efforts going upmarket NII and how we've made exciting progress in those areas that allowed us to drive incremental volume on our marketplace.
Jane: Since launching fiber poet business solution suite two years ago, we have continued to invest in rounding out the product offerings today.
Jane: To date with fiber probe.
Jane: You can access a premium market base with high quality vetted supply submitted shop request via dynamic matching and we get a short mutual recommended sellers utilized project management to get end to end support for large projects.
Jane: And contact the customer success manager discuss needs directly all of this in addition to the broader market base we operate.
This array of products not only provides a tailored experience for customers based on their needs and preferences, but it also highly effective from business perspective.
Jane: It allows us to efficiently drive buyer conversion via the shortest path and cross pollinate customer leaves between the products. So that we can win customers from the most efficient channel and maximize conversion across the platform.
Jane: Thanks to our efficient enterprise go to market strategy in Q1, we managed to close few large deals in the range of hundreds of thousands of dollars without the need for our capable sales organization with complicated sales process and long sales cycles.
Jane: One of the deals was with a large book publishing company, which utilizes fiber it's freelancers for book editing and proofreading services across English German French and Spanish.
Jane: After finding success on the March base with $15000 spending decline scaled quickly to signed a 200000 dollar engagement through fiber pro to help them with hundreds of children's books.
Jane: He also decided to leverage the project management services to help orchestrate all freelance operations on their behalf.
Jane: Another example is a leading online education company in the U S that transition its Youtube video production to fiber.
Jane: Following a successful proof of concept project supported by our customer success team they recognize the superior value and efficiency of our platform.
Jane: Five years capacity to deliver high quality outcomes at scale with the rapid turnaround is instrumental in scaling their Youtube channel offering a clear advantage over their previous reliance on traditional digital agency.
Jane: These successes are a testament to the power and scalability of the fiber platform for enterprise clients.
Jane: On fiber go.
Jane: Following the landmark launch event in February we've consistently seen.
Jane: Strong engagement, among both sellers and buyers.
Speaker Change: Over 6000 top quality salaries on fiber of activated fiber go and over 200000 buyers of interrupted with a product.
Speaker Change: While still early initial signals around conversion have been highly encouraging.
Speaker Change: For sellers, who activated personal assistant we saw one hour conversion uplift of 56%.
Speaker Change: 14 de conversion uplift of 10% compared to their historical average.
Speaker Change: This means that because personal assistant is always on and can respond to buyers immediately with the ability to reference seller experience suggests pricing and ultimately closed deals it allows sellers to convert meaningfully better and faster.
Speaker Change: We are also thrilled to see buyers actively engaging with the playground to explore and understand the unique offerings of each seller.
Speaker Change: The power of fiber go lives in it's personalized and the humanized model drawing exclusively from each sellers portfolio and history on our platform. This ensures that the generated visuals authentically showcase their style and quality, enabling buyers to make informed decisions with.
Speaker Change: Confidence.
Speaker Change: This also led to amplifying visibility for our most exceptional high caliber sellers.
Speaker Change: While still early these promising signals reinforce our confidence in Gen. AI has transformative potential to elevate the market base experience fundamentally redefining how buyers and sellers connect and collaborate.
Speaker Change: Moving forward, we will continue expanding both category coverage and seller access we.
Speaker Change: We will also strategically integrate the fiber go experience further into our market base broadening its influence early in the buyer journey.
Speaker Change: We are incredibly excited about the momentum we built in Q1 and the trajectory for the rest of the year.
Speaker Change: Our strategic focus on going upmarket expanding value added services and leveraging the power of AI positions us for continued success.
Speaker Change: The innovations we are bringing to the market are not just incremental changes they are fundamental shifts on how work is done.
Speaker Change: And we are leading that change.
Speaker Change: We look forward to sharing the continued progress with you in the coming quarters.
Ofer Katz: With that I'll turn the call over to Ofer.
Ofer Katz: Thank you Carl and good morning, everyone.
Ofer Katz: We deliver an outstanding first quarter with strong execution across the board.
Ofer Katz: Revenue for the first quarter was $107 2 million up 15% the overview.
Ofer Katz: Representing an acceleration from 30%.
Ofer Katz: Growth in Q4.
Ofer Katz: Adjusted EBITA for Q1 was $98 4 million, representing an adjusted EBITDA margin of 18%.
Ofer Katz: An improvement of 100 basis points.
Ofer Katz: Earlier.
Ofer Katz: We continue to generate strong cash flow with free cash flow totaling $27 4 million up 31, 6% year over here.
Ofer Katz: We maintained a disciplined approach to capital allocation.
Ofer Katz: <unk> the use of cash to return capital to our shareholders.
This quarter, our board authorized an additional 100 Canadian for our stock repurchase program under.
Ofer Katz: And then of course, our strong confidence in the long term opportunity of our business and our.
Ofer Katz: We remain committed to delivering shareholder value.
Ofer Katz: Q1 saw solid performance across both marketplace and services segment.
Ofer Katz: Marketplace revenue reached $77 7 million driven by $3 5 million active buyer.
Ofer Katz: $309 of spend per buyer and 27, 7% of marketplace take rate.
Ofer Katz: This growth was driven by ongoing strength of fiber pole, resulting in more robust increase was tempered by them.
Ofer Katz: And further enhanced by multiple log transaction discussed earlier.
Ofer Katz: Historically Q1 tends to be seasonally strong period for marketing investment this quarter. The step up from Q4 is slightly larger than what we have seen the.
Ofer Katz: Case for the last four years.
Ofer Katz: We saw opportunities to lean in more on marketing investment in the beginning of the year, while maintaining our COI approximately five months.
Ofer Katz: This underscores our nimble and data driven go to market strategy is one of our competitive churn that allows us to capitalize on opportunities when they present themselves, especially in a highly dynamic macro environment.
Ofer Katz: That said I don't think we have seen a real inflection in the financing demand environment in our space.
Ofer Katz: From a forward looking perspective, we haven't changed our view on a macro assumption going into our guidance.
Ofer Katz: Services revenue was $29 5 million.
Ofer Katz: <unk> growth.
Ofer Katz: Growth up 94% driven by continued strength in fiber AD seller, plus and also gas.
Ofer Katz: Services revenue represented 27, 5% of our total revenue in Q1, and we expected to reach over 30% for the full year 2025.
Ofer Katz: As Michael mentioned, we have been strong seller engagement for fiber go in the last two months.
Ofer Katz: In addition to the conversion uplift.
Ofer Katz: We expect to see some incremental uplift for setup plus subscription for the second half of the year at.
As most of the level of leverage fiber goes through the bundled subscription offering with fellow plus premium.
Ofer Katz: Now onto guidance.
Ofer Katz: Given the strong performance of Q1.
Ofer Katz: We are raising the low end for both revenue and adjusted EBITA of the full year 2025 guidance.
Ofer Katz: We now expect full year 2020.
Ofer Katz: <unk> revenue to be in the range of 425.
Ofer Katz: 438 million representing year over.
Ofer Katz: Growth up 9% to 12%.
Ofer Katz: Adjusted EBITDA is expected to be in the range of $84 million to $90 million.
Ofer Katz: <unk> and adjusted EBITDA margin of 20% at the midpoint.
Ofer Katz: While the second quarter of 2025 revenue is expected to be $105 million to $109 million.
Ofer Katz: Representing <unk>.
Ofer Katz: Growth of 11% to 15%.
Ofer Katz: Adjusted EBITDA is expected to be 20 to 22 million, representing an adjusted EBITDA margin of 20% at the midpoint.
Ofer Katz: We expect to generate marketing leverage throughout the year.
Ofer Katz: Our R&D expense will grow more modestly for the remainder of the year compared with Q1.
Ofer Katz: We continue to manage the business with the highest level of discipline and efficiency.
Ofer Katz: We are well on track.
Ofer Katz: For one our long term target to reach 25% adjusted EBITDA target in 2027, and delivered 14% CAGR to free cash generation for the three years ending in 2027.
Ofer Katz: To close I am very happy with the strong start in 2025 I.
Ofer Katz: I believe fiber is not only well positioned for today, but it's building our bus foundation for long term sustainable growth and market leadership for years to come.
Ofer Katz: With that we'll now turn the call over to the operator for questions.
Ofer Katz: Thank you.
Speaker Change: To ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again please.
Ofer Katz: Please standby, while we compile the Q&A roster.
Ofer Katz: Thank you we will now take our first question.
Speaker Change: This is from the line of Ron Josey from Citi. Please go ahead.
Speaker Change: Alright, thanks for taking the question.
Speaker Change: I wanted to ask two please one on fiber go and one on just the broader demand environment. So on fiber ago, we're only a few months.
Speaker Change: Great results, thus far are hearing better conversion rates newer largest larger contraction and just sort of better overall.
Speaker Change: Resolved so talk just a little bit more about the progress here, how you see five year ago.
Speaker Change: Sure.
Speaker Change: <unk> five year ago.
Speaker Change: Going throughout the rest of the year in terms of rollout I think you talked about broader categories greater adoption things along those lines is as we're seeing just better well results early on and then just on the macro front Nikai Ofer, you talked about I think a stable demand environment overall and marketplace revenues came in better than our projections here. So would love your insights on <unk>.
Speaker Change: Rivers on on what's going on out there. Thank you.
Speaker Change: Thank you Ron and good morning.
Speaker Change: I'll start with <unk>.
Speaker Change: About fiber go.
Speaker Change: So essentially as we designed fiber and go in our mind. This was a satisfaction confidence and conversion machine.
Speaker Change: Essentially what it does it provides a much better much higher confidence experience for our customers, but it also lowers the operational efforts done by the by the talent freeing more of their time to do actual talent work and.
Speaker Change: And we've done exactly that so what we've done in the past two months since launch is actually check product market fit.
Speaker Change: And I'm happy to report that we have it.
Speaker Change: We're super happy with the results so far the impact on conversion is meaningful.
Speaker Change: And the level of quality that we've seen.
Speaker Change: As Testament by the fact that buyers love the product they love.
Speaker Change: The assistant they love to play with the model it gives them more content to make a decision.
Speaker Change: Is there an sellers love it because it's a conversion machine and it lowers their efforts to convert.
Speaker Change: So this is done and we're happy now we're getting into the scale.
Speaker Change: This is the scale phase.
Speaker Change: And much like in the case of fiber odds.
Speaker Change: I told you that the key to succeeding at scale is maintaining quality.
Speaker Change: So what you expected from us as we expanded fiber adds should be the same expectation that.
Speaker Change: You should have would go meaning that we're going to expand this across many categories.
Speaker Change: Many more segments of sellers back ensuring that as we do this.
Speaker Change: The quality maintained so that the confidence that our community has in in this technology. We will continue to be very very high my expectation is that.
Speaker Change: At the end game of this is going to be a tool that everybody you're going to use.
Speaker Change: It is just killing it.
Speaker Change: And we're super happy with it.
Speaker Change: The second question was.
Speaker Change: On the macro front end.
Speaker Change: I think I think that what we've said.
Speaker Change: Is really that the freelancing demand is stable it kept going up it's not going down we're seeing a pretty pretty steady state at this point and I think that what we've seen in the elevated results in Q1, we saw some pockets of opportunities where it allowed us to drive incremental upside.
Speaker Change: In.
Speaker Change: Specifically, we've done this on the business front.
Speaker Change: With the business solutions and our ability to actually.
Speaker Change: Seasonally Q1 is there is a good quarter.
Speaker Change: This Q1 was even better even better if the opportunity was actually larger than the opportunity in Q in the past to Q1, meaning that this this year, we had better opportunities than we had in the past two years and we leveraged it and I think that this is the beauty about the fiber machine.
Speaker Change: We can be super optimistic.
Speaker Change: Seized every opportunity in real time.
Speaker Change: Exactly what's happened this time.
Speaker Change: We've been discussing.
Speaker Change: It links in there.
Speaker Change: During the past many quarters.
Speaker Change: The investment that we've done in the business solutions side, and this is paying off paying off and it's starting to shape up as a.
Speaker Change: It's really a playbook that allows us not to just identify the right customers and provide them with the right. The right service, but also engage with these customers to make sure that we actually managed to structure a full wallet potential as they grow their business with us.
Michelle: Thank you Michelle.
Michelle: Thank you Ron.
Speaker Change: Thank you.
Speaker Change: Next question comes from the line of Bonnie Mctiernan from Needham <unk> Company. Please go ahead.
Speaker Change: This is the line of Bonnie Tandon from Needham <unk> Company. Your line is open. Please ask your question.
Speaker Change: I think we may have lost maybe jumping to the.
Speaker Change: Your line is on mute Hi can you hear me we can now thank you.
Speaker Change: Hi, This is stefanos crist, calling in for Bernie Thanks for taking our questions.
Speaker Change: Just wanted to touch on five years ago, you talked about seller satisfaction could you maybe just talk about some of the dynamics for buyers. So far thank you.
Speaker Change: Hi, good morning Stefan.
Speaker Change: So so essentially.
Speaker Change: As I was referring to satisfaction I was referring to both buyers and sellers. So the key to launching this with first having the sellers embrace this new solution. So that buyers can enjoy the solution.
Speaker Change: As I've said the initial.
Speaker Change: Results of the embrace are very high and to our satisfaction.
Speaker Change: And what we've seen is that buyers love to use it they love to use it for a few reasons one it's always on.
Speaker Change: So whenever they have a question whenever they want to consult on something when neighbor they won't help.
Speaker Change: <unk> viewing portfolio.
Speaker Change: <unk>.
Speaker Change: Figuring out what the availability of the seller 80 square project is suitable for that seller. They get an instant result, but its not a <unk>.
Speaker Change: Average check books.
Speaker Change: We've invested a tremendous amount of effort.
Speaker Change: In building detector human eyes, these agents and actually give them the voice of the actual seller.
Speaker Change: The voice and the style, but also the entire world of creation and the conversational world on seller, which means that unlike in many other cases, where typically customers don't like Chuck boats in this case.
Speaker Change: Even though we are saying that this is the.
Speaker Change: The AI assistant of the seller some customers don't even realize that they are talking to a machine.
Speaker Change: So much so that they carry complete conversations.
Speaker Change: And there are super happy with it they get instant result.
Speaker Change: Translate into much much higher.
Speaker Change: And much more rapid conversion.
Speaker Change: Obviously sellers love this and they can continue tweaking their agents.
Speaker Change: Agents over time are not going to be just providing the personal assistant services, but there are going to be your business partner <unk>.
Speaker Change: Providing sellers and buyers are taking care of sellers and buyers needs as much as they can do it.
Speaker Change: Improving the seller's performance.
Speaker Change: And improving buyer immediacy and satisfaction.
Speaker Change: That's great. Thank you thank.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Next question is from Jason Health Stein from Oppenheimer. Please go ahead.
Speaker Change: Thanks.
Speaker Change: Everybody. So two questions one how should we think about services revenue growth going forward obviously.
Speaker Change: There is this kind of year on year rate of growth sustainable or should we kind of start to thinking about the business more on a quarter to quarter sequential basis.
Speaker Change: You had some kind of run rate level, and then give me a call.
Speaker Change: You sound a lot more positive overall.
Speaker Change: And then probably the last few quarters in our view.
Speaker Change: So maybe where does that maybe hasn't coming probably maybe go and AI are you actually seeing kind of better business dynamics on the F&B. It doesn't seem like it maybe it's on.
Speaker Change: Some of them more enterprise towards but.
Speaker Change: Maybe some color. Thank you.
Speaker Change: Yeah.
Ofer Katz: Hey, Good morning, Jason Hey, Jason This is ofer on.
Speaker Change: On the first part of the question.
Speaker Change: Definitely services revenue all sustainable.
Speaker Change: And we anticipate them to grow.
Speaker Change: Over the next few quarter.
Speaker Change: And take a bigger portion in terms of percentage of the overall pie.
Speaker Change: I mentioned.
Unbelievable remarks.
Speaker Change: H.
Speaker Change: 30%.
Speaker Change: 30% of the total revenue.
Speaker Change: Driven by the <unk> by the end of the year and this goes to the from the metal panel.
Speaker Change: <unk>.
Speaker Change: Value that we provide throughout the <unk>.
Speaker Change: Yeah.
Speaker Change: Our pipeline of <unk>.
Speaker Change: Multiyear.
Speaker Change: We plan to add up to sell our filler plus.
Speaker Change: Promoted gigs is still expanding.
Speaker Change: And on the bulk shipping the business goes well and expanding.
Speaker Change: <unk>.
Speaker Change: Big audience in more tools. So overall I think that on the service revenue.
Speaker Change: We are confident that we can drive this business forward.
Speaker Change: Yes.
Speaker Change: The second part of your question.
Speaker Change: I'm happy I sound more optimistic even though I felt very optimistic in previous quarters as well.
Speaker Change: I think I think this draws.
Speaker Change: From the fact that we're we're making great progress.
Speaker Change: The investment that we've done in upmarket, which as I've said, we've been talking about this at length for many quarters is shaping up to see great results I love it.
Speaker Change: And the second is go where what we've done with <unk>, we've been experimenting with AI for.
Speaker Change: For a couple of years and I think I think this time, we nailed it.
Speaker Change: And we found something that brings a lot of.
Speaker Change: A lot of benefits.
Speaker Change: For our entire community not just one side of the two sided market base.
Speaker Change: And this.
Speaker Change: Gives us.
Speaker Change: The conviction that this strategy is actually.
Speaker Change: Off and we're seeing that.
Speaker Change: On the large customer side.
Speaker Change: As well.
Speaker Change: Impacting we've laid some of that in our letter to shareholders.
Speaker Change: Thank you.
Speaker Change: We will now take our next question.
Eric Sheridan: This is from Eric Sheridan from Goldman Sachs. Please go ahead.
Eric Sheridan: Thank you so much for taking the question, maybe one big picture and then one on the margin.
Speaker Change: Richard you mentioned in the prepared remarks that given some of the macroeconomic volatility you might see receptivity to more freelance work across the broader economy.
Speaker Change: If you could sort of flesh that out a little bit in terms of the way you think about enterprises potentially moving around more towards being <unk>.
Speaker Change: Sort of adopting the freelance economy and how those conversations might evolve in such an end demand environment that was more volatile and then the margin side.
Speaker Change: Well noted on the comments about marketing and R&D as we progress through this year when we look out to the second half of this year with fiber go having launched are those sort of good run rates to think about marketing ROI and marketing leverage our R&D.
Speaker Change: The source of either leverage or deleverage for more of the medium to long term for the business. Thank you so much.
Speaker Change: I'll take the first part.
Speaker Change: Moving forward the adapting financing what we are seeing is.
Speaker Change: A big transaction.
Speaker Change: Coming from enterprise.
Second for freelancers to complement.
Speaker Change: Both on internal but also new project.
Speaker Change: Hey.
Speaker Change: Expertise or need to augment.
Speaker Change: The existing existing internal team.
Speaker Change: I mean.
Speaker Change: Expertise of scale.
Speaker Change: Or temporary finance.
Speaker Change: It's usually comes with.
Speaker Change: A critical.
Speaker Change: The business made and I think that volatility.
Speaker Change: Volatility in the market.
Speaker Change: It goes across.
Speaker Change: The new technology that comes by.
Speaker Change: And goes across the need to Ohio is that doesn't exist.
Speaker Change: Sometimes it goes across.
Speaker Change: Efficiency challenge that organization.
Speaker Change: And I think that this is ware.
Speaker Change: Fleet on thing.
Speaker Change:
Speaker Change: Can take a bigger part.
Speaker Change: And play a more critical role.
Speaker Change: In the.
Speaker Change: Our employment cycle.
Speaker Change: Hey, maybe maybe.
Speaker Change: Yes.
Speaker Change: Mentioning.
Speaker Change: <unk>.
Speaker Change: The fact that we've been focusing.
Speaker Change: For for many quarters on high value buyers really allowed us to zoom into a sector that is.
Speaker Change: That reduces.
Speaker Change: The exposure to macro we haven't seen as we said we haven't seen any change macro is pretty flat from our perspective at least.
Speaker Change: But the fact that we're entertaining higher value buyers those who have larger wallet in their their projects are more mission critical.
Speaker Change: <unk> allows us to allows us to continue even though macros on improving to continue improving the fundamentals of the business itself.
Eric Sheridan: On the second thought and the second part of the question Eric on the margin side.
Speaker Change: There's definitely more room.
Speaker Change: We are committed to the long term.
Speaker Change: Target.
Speaker Change: There is more room.
Speaker Change: Both in marketing.
Speaker Change: And RMB two.
Speaker Change: To expand into.
Speaker Change: Expanding extend expand EBITDA over the next few quarter.
Speaker Change: I think that the more we rely on existing customer retention improve.
Speaker Change: <unk> are becoming more relying on high value buyer and a big organization.
Speaker Change: We should expect.
Speaker Change: Marketing to become more and more efficient and that's what we've been doing over the last few years.
Speaker Change: And I think that.
Speaker Change: And as the business scale.
Speaker Change: R&D as a percentage of total.
Matthew: Slightly declining again those are trends that Matthew.
Matthew: And one who will track back.
Matthew: Story can figure for the last period, we will see how this is happening.
Matthew: Maybe consistently over time and this is what we expect to happen.
Matthew: In the next three equivalent.
Matthew: Great. Thank you.
Matthew: Do you.
Matthew: Thank you.
Matthew: We'll take the next question.
Speaker Change: And this is from Josh Chan from UBS. Please go ahead.
Josh Chan: Hi, good afternoon, thanks for taking my questions.
Speaker Change: Two quick ones I guess on.
Speaker Change: On the six figure deals that you had signed during the quarter is there a trend to notice in terms of.
Speaker Change: Why the customers first.
Speaker Change: <unk> fiber was there an issue with their existing method of delivery.
Speaker Change: How do they first encounter a fiber et cetera, and then second question.
Speaker Change: On the auto side have you seen any impact from tariffs.
Speaker Change: We're kind of implemented earlier in Q2 and wondering if there's been any impact on that business. Thank you.
Speaker Change: I think.
Speaker Change: Well. Thank you for the question I think the common denominator.
Speaker Change: Sorry. The first question is the fact that.
Speaker Change: This.
Speaker Change: This.
Speaker Change: Customers or type of client.
Speaker Change: Our lending at fire five though.
Speaker Change:
Speaker Change: And what do you have taken on that basis.
Speaker Change: They are either fiver.
Speaker Change: Fitful for freelancers set a third.
Speaker Change: The only thing that has changed is the fact that we manage to find them and communicate to them.
Speaker Change: And unlock.
Speaker Change: The need for high touch on a real time basis, and I think what we've been able to do.
Speaker Change: To create engagement with the relationship that allowed us to expand.
Speaker Change: The trust.
Speaker Change: And with a high touch.
Speaker Change: Our high touch account manager.
Speaker Change: That follow.
Speaker Change: Following our fifth customer, they're able to spend much more.
Speaker Change: On the marketplace I think I think that's.
Speaker Change: That's the one thing that we attended we talked about that over the time I think we've been asked many times that we are having are we planning to build a third fourth and we said no we don't need to we just need.
Speaker Change: To implement the proper funnel that Ken.
Speaker Change: Attached to the appropriate customer now when they land into 500 Thats. The only thing we have been changing.
Speaker Change: It's happening, it's growing and we plan to extend it.
Speaker Change: I think.
Speaker Change: The fact that.
Speaker Change: Customers are actually starting at the scale that allows them to build confidence is actually great and Thats why we moved from our market based strategy to a platform strategy that is much more than just the market base.
Speaker Change: The market base allows us to build the confidence and the relationship so that we can actually dive into much larger and that's the playbook.
Speaker Change: It works, great and actually allows us to engage with customers much easier than doing traditional sales.
Speaker Change: On the second part of the question I don't forget the simple answer.
Speaker Change: Yes, okay great.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: You need to remember that <unk> is a software subscription business right.
Speaker Change: Revenue is more tied to seats and subscriptions rather than volume.
Speaker Change: Which could mitigate volatility so so that's the.
Speaker Change: Longer answer than just no.
Speaker Change: Yes that makes a lot of sense. Thank you so much for the color. Thank you.
Speaker Change: As a reminder, if you would like to ask a question. Please press star one on one on your keypad and wait for your name to be announced that stall one one to ask a question.
Speaker Change: And your next question today is from Andrew Byrne from citizens. Please go ahead.
Speaker Change: We have Andrew <unk> from citizens. Please go ahead your line is open.
Speaker Change: The phone on mute.
Speaker Change: Hi can you guys hear me.
Speaker Change: Now thank you.
Speaker Change: Okay sorry.
Speaker Change: Okay.
Speaker Change: If I think about reinvestment rates for freelancers back to the platform and services revenue, reaching 30% plus on my simple math. It seems that freelancers are reinvesting back in kind of a 20% rate after kind of the marketplace take rate.
Speaker Change: Is there a level that you guys think about in terms of the sustainability of that or when freelancers start to push back in terms of how much they want to reinvest into fiber.
Speaker Change: How do we think about kind of the ROI from the freelancer perspective kind of these new tools and what's required in terms of additional kind of payments there.
Speaker Change: And then if I think about active buyer trends and the smaller portion of the platform that certainly is a drag in terms of overall <unk> can you speak to just the stabilization of that is it starting to asymptote in terms of the point that we should expect larger.
Speaker Change: Customers can be able to overcome that in the back half of the year or how do we think about the smaller portion of that the drag on overall results. Thanks, so much.
Speaker Change: Andrew Thanks for the question.
Speaker Change: Look so first of all I should say or state what's obvious to US there is no pushback and the reason is that when you think about the value added services or whats compounded within the service revenue.
Speaker Change: It's very simple.
Speaker Change: You shouldn't just look at the cost you should look at what the benefit is and basically these are tools, where there is ROI positive for everyone.
Speaker Change: It generates more money than it costs, which is why there is no reason to feel a pushback on it.
Speaker Change: It's a great investment and this is why we've been prudent in how we develop these tools and how we.
Speaker Change: Expanded these tools to make sure that as these tools.
Speaker Change: Work on the larger scale they continued to be a <unk>.
Speaker Change: Creatives and create a ROI positive.
Speaker Change: That's a very very simple.
Speaker Change: Ansari could up to that point.
Speaker Change: I think on the second part of the question on.
Speaker Change: On the active buyer.
Speaker Change: Okay.
Speaker Change: We are definitely pushing up market.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: Acquiring a bigger customer with a higher lifetime value.
Speaker Change: Coming on account of acquiring many small customer with a low.
Speaker Change: Very low lifetime value.
Speaker Change: Alright, thank economically makes sense and Thats why we are doing that.
Speaker Change: And we don't plan.
Speaker Change: To change.
Speaker Change: This type of operation, we are doing that for.
Speaker Change: I think at the last two or three years.
Speaker Change: So so economically makes sense and I think I think bigger customer not only have.
Speaker Change:
Speaker Change: Life time value of deals will have.
Speaker Change: Higher sustainability.
Speaker Change: During this period, but for longer or longer spanned over although they think.
Speaker Change: This is why it makes sense that this is why we're doing that though.
Speaker Change: So as long as macroeconomic doesn't change.
Speaker Change: And allow us to expand.
Speaker Change: Expand our investment in marketing into into different tier.
Speaker Change: You Shouldnt expect chain.
Speaker Change: Change.
Speaker Change: In the.
Speaker Change: In the balance between spend per buyer and active buyer we're going to.
Speaker Change: Investing to spend per buyer going to grow while active buyer is going to decline I think that one may be interest will go down or maybe optimistic up SMB is going to.
Speaker Change: IC channel momentum.
Speaker Change: This is the point of time, but I would expect that spend per buyer is going to grow but active buyer is not going to decline at the same rate.
Speaker Change: It's kind of the timeframe that I would expect to change this dynamic.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: We have one more question.
The last question today is from Marvin Fong from BTG. Please go ahead.
Marvin Fong: Great. Thanks for taking my question.
Marvin Fong: On the sales and marketing opportunity that you saw in the first quarter, but just love to understand a little bit better I mean was that primarily lower CPC.
Marvin Fong: And was that broad base across.
Marvin Fong: The entire business or was it focused on specific verticals and.
Marvin Fong: Apologies, if you've mentioned this but how does that how does that opportunity continued into the second quarter.
Marvin Fong: How does that sort of.
Speaker Change: Disappeared and then second question just on the fiber pro contracts, it's great to see.
Marvin Fong: Developing.
Marvin Fong: I understand that.
Marvin Fong: Typically a monthly subscription.
Marvin Fong: A subscription product.
Marvin Fong: To engage in the sort of longer term contracts.
Marvin Fong: What's sort of be included amortization for for the customer or are you guys, providing even more service.
Marvin Fong: They are different unit economics, any insight there would be great. Thank you.
Marvin Fong: Okay.
Marvin Fong: Hey, Marvin Thanks, the question so yes.
Marvin Fong: Yes, so on the sales and marketing.
Marvin Fong: Then when we see opportunities, we see them and we look for opportunities.
Marvin Fong: On a geo basis.
Marvin Fong: On a channel basis on a category basis and in Q1, we've seen some of these opportunities obviously for obvious reasons im not going to.
Marvin Fong: Be too specific on this but when we see those opportunities as we see them and Thats again thats the beauty of the machine of being able to run thousands of different campaigns with different channels and different mediums for different audiences in different geos. So that when we see that opportunity. We see is that in this.
Marvin Fong: The strategy will country continue throughout the year, including Q2.
Marvin Fong: It was always our opportunity I think it was it was good. It was it was good that we were able to capture this during Q1, which.
Marvin Fong: <unk>.
Marvin Fong: Seasonal standpoint.
Marvin Fong: As always a good time of the year to do this.
Marvin Fong: And the second part.
Marvin Fong: Our approach to.
Marvin Fong: So the pro product.
Marvin Fong: Service.
Marvin Fong: Slightly different those no.
Marvin Fong: Good churn.
Marvin Fong: But you need to spend.
Marvin Fong: Enough money.
Marvin Fong: On the platform in order to be eligible.
Marvin Fong: To use the product and to stay at this level.
Marvin Fong: And there are.
Marvin Fong: Certain elements that we provide them throw that incentive I.
Marvin Fong: <unk>.
Marvin Fong: <unk>.
Marvin Fong: Who joined the program I think the first one the most important one is that there is.
Marvin Fong: Q.
Speaker Change: Group of Stella wholesaler.
Marvin Fong: Well.
Marvin Fong: Buyer of that.
Marvin Fong: Back to.
Marvin Fong: To enjoy a different experience.
Marvin Fong: Communicating of search and engaging different level or a seller.
Marvin Fong:
Marvin Fong: Usually I appreciate the second is.
Marvin Fong: There are certain product and I won't name one, but there are other like hourly.
Marvin Fong: Although our engagements that are available only for <unk>.
Marvin Fong: Or use them at <unk>.
Marvin Fong: So retention program like Ebola program.
Marvin Fong: While certain.
Marvin Fong: <unk> bio.
That's been above a minimal amount of risk.
Marvin Fong: Some reward and lastly, it goes to account management.
Marvin Fong: And high Tech high touch.
Marvin Fong: <unk> says that <unk>.
Marvin Fong: Include.
Marvin Fong: So thing.
Marvin Fong: Other type of a system.
Marvin Fong: And customer.
Marvin Fong: Need in order to allow them at the end to engage father.
Marvin Fong: We play in.
Marvin Fong: Ben.
Marvin Fong: On spend more money on.
Marvin Fong: On the platform so all of those.
Speaker Change: Ah incentive incentivized.
Marvin Fong: By up to.
Speaker Change: To engage too.
Speaker Change: To sign up for the program and retain over a long period and eventually.
Speaker Change: Spend more money on fiber.
Speaker Change: Got it that's great. Thank you both.
Speaker Change: Thank you.
Speaker Change: Thank you and there are no further questions I will now hand, the conference back to me have for closing.
Speaker Change: Thank you Sarah for moderating the call and thank you everyone for joining us. This morning, we look forward to seeing you in the upcoming conferences have a great day.
Speaker Change: Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.
Speaker Change: Okay.
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