Q4 2025 Fiverr International Ltd Earnings Call

February 18, 2026

Speaker #2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone.

Speaker #2: To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Emily Greenstein, Investor Relations.

Speaker #2: Please go ahead. Thank you, Operator, and good morning, everyone. Thank you for joining us on Fiverr's Earnings Conference Call for the fourth quarter that ended December 31st, 2025.

Emily Greenstein: Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the Q4 that ended 31 December 2025. Joining me on the call today are Micha Kaufman, Founder and CEO, and Ofer Katz, President and CFO. Before we start, I would 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. 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 Fiverr's most recent Form 20-F and other filings with the SEC.

Emily Greenstein: Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's Earnings Conference Call for the Q4 that ended 31 December 2025. Joining me on the call today are Micha Kaufman, Founder and CEO, and Ofer Katz, President and CFO. Before we start, I would 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. 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 Fiverr's most recent Form 20-F and other filings with the SEC.

Speaker #2: Joining me on the call today are Micha Kaufman, Founder and CEO, and Ofer Katz, President and CFO. Before we start, I would 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.

Speaker #2: 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 Fiverr's most recent Form 20F and other filings with the SEC.

Speaker #2: During this call, we'll be referring to some key performance metrics and non-gap financial measures, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow.

Emily Greenstein: During this call, we'll be referring to some key performance metrics and non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow. Further explanation and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the earnings release we issued today, and our shareholder letter, each of which is available on our website at investors.fiverr.com. Now I will turn the call over to Micha.

Emily Greenstein: During this call, we'll be referring to some key performance metrics and non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow. Further explanation and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the earnings release we issued today, and our shareholder letter, each of which is available on our website at investors.fiverr.com. Now I will turn the call over to Micha.

Speaker #2: Further explanation and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the earnings release we issued today and our shareholder letter, each of which is available on our website at investors.fiverr.com.

Speaker #2: And now, I will turn the call over to Micha.

Speaker #3: Thank you, Emily. Good morning, everyone, and thank you for joining us. Let me start simply. 2025 was an execution year and we delivered. Revenue grew 10%, accelerating from 8% in 2024.

Micha Kaufman: Thank you, Emily. Good morning, everyone, and thank you for joining us. Let me start simply. 2025 was an execution year, and we delivered. Revenue grew 10%, accelerating from 8% in 2024. Adjusted EBITDA reached $92 million, up 23% year-over-year, with a 21% margin. We met the revenue and profitability targets we set at the beginning of the year while continuing to generate strong cash flow. Importantly, we achieved this while repositioning the business for where the market is headed. Products like Dynamic Matching and Managed Services are enabling us to expand into larger, more complex projects and drive sustainable wallet share growth. Spend Per Buyer increased 13% year-over-year, accelerating from 9% in 2024. Buyers spending over $10,000 annually grew 7%, and GMV from projects over $1,000 increased 23%.

Speaker #3: Adjusted EBITDA reached 92 million, up 23% year over year, with a 21% margin. We met the revenue and profitability targets we set at the beginning of the year while continuing to generate strong cash flow.

Speaker #3: Importantly, we achieved this while repositioning the business for where the market is headed. Products like dynamic matching and managed services are enabling us to expand into larger and more complex projects and drive sustainable wallet share growth.

Speaker #3: Spend per buyer increased 13% year over year, accelerating from 9% in 2024. Buyers' spending over $10,000 annually grew 7% and GMV from projects over 1,000 dollars increased 23%.

Speaker #3: These are not just product milestones. They reflect a broader shift in how businesses engage with talent. As many of you saw in the Shareholder Letter we published this morning, following the restructuring we undertook a few months ago, we have since developed and begun executing a comprehensive multi-year plan to transform Fiverr from a transaction-oriented marketplace into a trusted work platform.

Micha Kaufman: These are not just product milestones. They reflect a broader shift in how businesses engage with talent. As many of you saw in the shareholder letter we published this morning, following the restructuring we undertook a few months ago, we have since developed and begun executing a comprehensive multi-year plan to transform Fiverr from a transaction-oriented marketplace into a trusted work platform, one that enables businesses, AI models, and agents to collaborate with talent on complex, high-value outcomes through intelligent matching, integrated workflows, end-to-end orchestration, fulfillment, and durable trust. Before I go deeper into that transformation, it's important to step back and understand the broader environment that led us here and why we believe this is the moment to act decisively. There is a prevailing narrative that AI eliminates labor. That framing is incomplete. What AI actually does to work is, one, it compresses task duration.

Speaker #3: One that enables businesses' AI models and agents to collaborate with talent on complex, high-value outcomes through intelligent matching, integrated workflows, end-to-end orchestration and fulfillment, and durable trust.

Speaker #3: Before I go deeper, into that transformation, it's important to step back and understand the broader environment that led us here and why we believe this is the moment to act decisively.

Speaker #3: There's a prevailing narrative that AI eliminates labor. That framing is incomplete. What AI actually does to work is, one, it compresses task duration. What took weeks now takes days.

Micha Kaufman: What took weeks now takes days. 2, it expands project ambition. When execution becomes cheaper, scope grows, and the number of projects grows exponentially. 3, it democratizes capability. Individuals can operate with domain expertise beyond their original knowledge base. The result is not less work; it is more ambitious work. Human talent remains essential. What changes is where value resides: in context, judgment, orchestration, trust, and ownership of outcomes. There will be displacement in lower value transactional work. We are already seeing that dynamic. At the same time, demand for higher value specialized work is accelerating at a healthy double-digit rate. As work becomes more nuanced and complex, matching talent becomes harder, not easier. That makes Fiverr's core mission of connecting businesses with the right human talent more relevant than ever. Looking ahead, much of the workflow will become human in the loop.

Speaker #3: Two, it expands project ambition. When execution becomes cheaper, scope grows, and the number of projects grows exponentially. Three, it democratizes capability. Individuals can operate with domain expertise beyond their original knowledge base.

Speaker #3: The result is not less work. It is more ambitious work. Human talent remains essential. What changes is where value resides. In context, judgment, orchestration, trust, and ownership of outcomes.

Speaker #3: There will be displacement in lower-value transactional work. We are already seeing that dynamic. At the same time, demand for higher-value specialized work is accelerating at a healthy double-digit rate.

Speaker #3: As work becomes more nuanced and complex, matching talent becomes harder, not easier. That makes Fiverr's core mission of connecting businesses with the right human talent more relevant than ever.

Speaker #3: Looking ahead, much of the workflow will become human-in-the-loop. Hiring decisions will increasingly be influenced and, in some cases, initiated by AI agents. In that environment, traditional resume-driven hiring models become inefficient and unreliable.

Micha Kaufman: Hiring decisions will increasingly be influenced, and in some cases, initiated by AI agents. In that environment, traditional resume-driven hiring models become inefficient and unreliable. Precision matching, contextual data, and outcome history becomes critical. So what does this mean for Fiverr? First, we see a significant opportunity. Today, projects over $1,000 represent less than 15% of marketplace GMV, yet they are growing 23% year-over-year. With focused execution, we believe this segment will become a materially larger contributor to our business. We are prioritizing two categories of high-value work. The first is complex, orchestrated engagement, requiring collaboration between businesses, talent, and Fiverr. For example, through managed services, we support a Georgia-based automotive technology company with ongoing multilingual UGC production for the Canadian market, coordinating multiple creators each month. This reflects growing demand for scalable, always-on creative production, powered by global talent.

Speaker #3: Precision matching of contextual data and outcome history becomes critical. So, what does this mean for Fiverr? First, we see a significant opportunity. Today, projects over $1,000 represent less than 15% of marketplace GMV.

Speaker #3: Yet they are growing 23% year over year. With focused execution, we believe this segment will become a materially larger contributor to our business. We are prioritizing two categories of high-value work.

Speaker #3: The first is complex, orchestrated, engagement-requiring collaboration between businesses, talent, and Fiverr. For example, through managed services, we support a Georgia-based automotive technology company with ongoing multilingual UGC production for the Canadian market, coordinating multiple creators each month.

Speaker #3: This reflects growing demand for scalable, always-on creator production powered by global talent. The second is AI-native work building the AI-enabled economy. For example, we are partnering with AI model safety companies to provide domain experts who help identify vulnerabilities in foundational models.

Micha Kaufman: The second is AI native work, building the AI-enabled economy. For example, we are partnering with AI model safety companies to provide domain experts who help identify vulnerabilities in foundational models. In another partnership, we are enabling enterprises to build AI workflow automation through white-label solution that allows them to deploy AI agents quickly and cost-effectively. In one case, we streamlined a historical case discovery workflow across Salesforce and Jira, reducing knowledge gaps and improving support efficiency. What would have required 2 weeks of internal implementation was delivered in 1.5 days at the cost of $6,000, reducing deployment time by roughly 90%. These examples illustrate where the market is moving and where Fiverr is leaning in. Fiverr has a strong right to win in this AI-enabled talent economy. First, the future of work is human in the loop.

Speaker #3: In another partnership, we are enabling enterprises to build AI workflow automation through a white-labeled solution that allows them to deploy AI agents quickly and cost-effectively.

Speaker #3: In one case, we streamlined a historical case discovery workflow across Salesforce and Jira, reducing knowledge gaps and improving supportive efficiency. What would have required two weeks of internal implementation was delivered in one and a half days at the cost of $6,000, reducing deployment time by roughly 90%.

Speaker #3: These examples illustrate where the market is moving and where Fiverr is leaning in. Fiverr has a strong right to win in this AI-enabled talent economy.

Speaker #3: First, the future of work is human-in-the-loop. Scarcity lies in high-quality human expertise, not AI agents. Fiverr operates one of the largest global talent networks and has deep expertise managing liquidity, quality, and engagement at scale.

Micha Kaufman: Scarcity lies in high-quality human expertise, not AI agents. Fiverr operates one of the largest global talent networks and has deep expertise managing liquidity, quality, and engagement at scale. Second, our end-to-end transaction model is built around outcomes. That structure integrates naturally into AI-enabled workflows and eliminates much of the friction inherent in traditional hiring system. Third, our data is a durable advantage. Over 16 years, we have captured not only millions of transactions, but the contextual relationship between buyers and sellers, what was delivered, in what context, and with what results. That depth of data enables precision matching in increasingly complex environments. Capturing this opportunity is why we are making foundational investments across data infrastructure, back-end system, and product experience, accelerating Fiverr's evolution into a fully AI native talent platform.

Speaker #3: Second, our end-to-end transaction model is built around outcomes. That structure integrates naturally into AI-enabled workflows and eliminates much of the friction inherent in traditional hiring system.

Speaker #3: Third, our data is a durable advantage. Over 16 years, we have captured not only millions of transactions but the contextual relationship between buyers and sellers, what was delivered, in what context, and with what results.

Speaker #3: That depth of data enables precision matching in increasingly complex environments. Capturing this opportunity is why we are making foundational investments across data infrastructure backend system and product experience accelerating Fiverr's evolution into a fully AI-native talent platform.

Speaker #3: While we have made steady progress over the years, the velocity of AI innovation requires us to move faster and more decisively. A few months ago, we initiated a company-wide restructuring to accelerate this shift.

Micha Kaufman: While we have made steady progress over the years, the velocity of AI innovation requires us to move faster and more decisively. A few months ago, we initiated a company-wide restructuring to accelerate this shift. We have since developed a multi-year execution plan built around 4 pillars. The first is matching, building advanced semantic and reasoning layer, powered by proprietary data to enable AI-native talent matching. The second is product, transforming the experience across matching, fulfillment, collaboration, and talent management.... The third is go-to-market, expanding into enterprise and AI-native distribution channels with scalable growth engines. The fourth is operational excellence, becoming an AI-native organization across engineering, product, and operations. We expect tangible impact within 4 to 6 quarters, including a stronger, high-value work flywheel and proven AI-native growth loops. These milestones will position us for meaningful revenue expansion in the years ahead.

Speaker #3: We have since developed a multi-year execution plan built around four pillars. The first is matching. Building advanced semantic and reasoning layer powered by proprietary data to enable AI-native talent matching.

Speaker #3: The second is product. Transforming the experience across matching, fulfillment, collaboration, and talent management. The third is go-to-market. Expanding into enterprise and AI-native distribution channels with scalable growth engines.

Speaker #3: The fourth is operational excellence, becoming an AI-native organization across engineering, product, and operations. We expect tangible impact within four to six quarters including a stronger high-value work flywheel and proven AI-native growth loops.

Speaker #3: These milestones will position us for meaningful revenue expansion in the years ahead. Let me be clear: this is the moment to lean in. AI is not shrinking the market for human talent.

Micha Kaufman: Let me be clear, this is the moment to lean in. AI is not shrinking the market for human talent. It is reshaping access and expanding ambition. Platforms that own the intelligent matching layer between business demand and human capability will capture significant value. Fiverr has the assets, infrastructure, and strategic clarity to lead in that environment. 2026 will be a transformational year, positioning us for accelerated growth in 2027 and beyond. Before I turn it over to Ofer, I want to acknowledge that today marks his final earnings call as CFO. Ofer will continue as president, focusing on strategic investments and M&A as we execute this next chapter. Esti, after 10 years at Fiverr and 4 years as EVP Finance, will assume the CFO role. Her deep institutional knowledge and disciplined financial leadership provide important continuity as we execute through this transformation.

Speaker #3: It is reshaping access and expanding ambition. Platforms that own the intelligent matching layer between business demand and human capability will capture significant value. Fiverr has the assets, infrastructure, and strategic clarity to lead in that environment.

Speaker #3: 2026 will be a transformational year positioning us for accelerated growth in 2027 and beyond. Before I turn it over to Offer, I want to acknowledge that today marks his final earnings goal as CFO.

Speaker #3: Ofer will continue as president, focusing on strategic investments and M&A as we execute this next chapter. Esti, after 10 years at Fiverr and four years as EVP Finance, will assume the CFO role.

Speaker #3: Her deep institutional knowledge and disciplined financial leadership provide important continuity as we execute through this transformation. Jinjin after seven years leading IR and strategy will step into a newly created chief business officer role overseeing revenue, talent, fulfillment, and business operations.

Micha Kaufman: Jinjin, after 7 years leading IR and strategy, will step into a newly created chief business officer role, overseeing revenue, talent, fulfillment, and business operations. As part of this transition, she will be relocating with her husband and 2 young children from San Francisco to Tel Aviv to take on this expanded responsibility. I'm truly excited about our expanded leadership team that will strengthen our ability to execute with focus and velocity as we move forward. With that, I'll turn it over to Ofer for the financial details.

Speaker #3: As part of this transition, she will be relocating with her husband and two young children from San Francisco to Tel Aviv to take on this expanded responsibility.

Speaker #3: I'm truly excited about our expanded leadership team that will strengthen our ability to execute with focus and velocity as we move forward. With that, I'll turn it over to Offer for the financial details.

Speaker #2: Thank you, Micha, and good morning, everyone. I'm excited about the transformation we are undertaking and very happy to welcome Esti and Jinjin into their expanded leadership roles.

Ofer Katz: Thank you, Micha, and good morning, everyone. I'm excited about the transformation we are undertaking and very happy to welcome Esti and Jinjin into their expanded leadership roles. The work ahead is ambitious, but across the management team and the broader organization, there is a strong alignment, clarity, and conviction on the direction we are taking. Most importantly, there is a shared sense of purpose that ties us back to Fiverr's founding 16 years ago. That shared sense of purpose brings tremendous focus, energy, and confidence as we enter 2026. With that, let's turn to financial highlights. As we wrap up 2025, we delivered Q4 revenue at $107.2 million, up 3% year-over-year, while achieving record adjusted EBITDA and adjusted EBITDA margin.

Speaker #2: The work ahead is ambitious but across the management team, and the broader organization, there is a strong alignment, clarity, and conviction under direction we are taking.

Speaker #2: Most importantly, there is a shared sense of purpose that ties us back to Fiverr's founding 16 years ago. That shared sense of purpose brings tremendous focus, energy, and confidence as we enter 2026.

Speaker #2: With that, let's turn to financial highlights. As we wrap up 2025 with a leader fourth-quarter revenue of $107.2 million, up 3% year over year, while achieving record adjusted EBITDA and adjusted EBITDA margin, adjusted EBITDA for Q4 was 26.5 million, representing an adjusted EBITDA margin of 25% and improvement of 470 basis points from a year earlier.

Ofer Katz: Adjusted EBITDA for Q4 was $26.5 million, representing an Adjusted EBITDA margin of 25%, an improvement of 470 basis points from a year earlier. We continue to generate healthy cash flow with $21.8 million of free cash flow in Q4 2025. We had a convertible note with a principal amount of $460 million, which was fully repaid during Q4 2025. We continue to execute a disciplined, thoughtful capital allocation strategy, and our strong balance sheet allow us to invest in growth, return capital to shareholders, and remain opportunistic on the M&A front. Diving into our Q4 results. In Q4, Marketplace Revenue was $71.5 million, driven by 3.1 million Active Buyers, $342 in Spend Per Buyer, and a 27.7% Marketplace Take Rate.

Speaker #2: We continue to generate healthy cash flow with 21.8 million of free cash flow in Q4, '25. We had a convertible note with a principal amount of $460 million, which was fully repaid during Q4, '25.

Speaker #2: We continue to execute a disciplined, thoughtful capital allocation strategy, and our strong balance sheet allows us to invest in growth, return capital to shareholders, and remain opportunistic on the M&A front.

Speaker #2: Diving into our Q4 results. In Q4, marketplace revenue was $71.5 million, driven by $3.1 million active buyers; $342 in spend per buyer; and at $27.7% marketplace take rate.

Speaker #2: Growth in this segment continues to be influenced by broader softness in the SMB sentiment and muted freelancer hiring demand. More importantly, we continue to see diverse trends on the marketplace between low-end transactions and high-value work.

Ofer Katz: Growth in this segment continues to be influenced by broader softness in the SMB sentiment and muted freelancer hiring demand. More importantly, we continue to see diverse trends on the marketplace between low-end transactions and high-value work. GMV from transactions over $1,000 grew 22.8% year-over-year in Q4 and continued to accelerate. Looking ahead, we expect elevated volatility in marketplace revenue this year compared to last year, as the transformational work we are doing intentionally deprioritizes effort to optimize low-end transactions, which today represent the majority of the marketplace. As we make progress towards strengthening our flywheel for high-value and AI-native work, we expect this focus area to become a larger portion of our overall business, which will lead to reacceleration of this segment.

Speaker #2: GMV from transactions over $1,000 grew 22.8% year over year in Q4 and continued to accelerate. Looking ahead, we expect elevated volatility in marketplace revenue this year compared to last year, as the transformational work we are doing intentionally deprioritizes effort to optimize low-end transactions, which today represent the majority of the marketplace.

Speaker #2: As we make progress towards strengthening our flywheel for high-value and AI-native work, we expect this focus area to become a larger portion of our overall business which will lead to re-acceleration of this segment.

Speaker #2: Services revenue in Q4 was 35.6 million representing year over year growth of 18% and accounting for 33% of our total revenue in Q4. The upside was driven by the continued strength in Fiverr ads, subscriptions, and e-commerce solutions.

Ofer Katz: Services revenue in Q4 was $35.6 million, representing year-over-year growth of 18% and accounting for 33% of our total revenue in Q4. The upside was driven by the continued strength in Fiverr Ads, subscriptions, and e-commerce solutions. For 2026, we expect more moderate growth in service revenue as the impact from the AutoDS acquisition normalize and the pace of expansion for Fiverr Ads and Seller Plus moderates compared to 2025. As Micha mentioned, 2026 will be a transformational year with critical conventional investment across data infrastructure, matching technology, and product experience to strengthen our high-end talent flywheel. It is important to note that we are committed to executing this plan with strong financial discipline.

Speaker #2: For 2026, we expect more moderate growth in service revenue as the impact from the auto-DS acquisition normalized and the pace of expansion for Fiverr ads and Seller Plus moderates compared to 2025.

Speaker #2: As Micha mentioned, 2026 will be a transformational year with critical foundational investment across data infrastructure, matching technology, and product experience to strengthen our high-end talent flywheel.

Speaker #2: It is important to note that we are committed to executing this plan with strong financial discipline. The structural profitability of our core marketplace remains strong and is expected to stay north of 20% as we retain significant control to maintain the health and the profitability of the business.

Ofer Katz: The structural profitability of our core marketplace remains strong and is expected to stay north of 20%, as we retain significant control to maintain the health and the profitability of the business. At the same time, we will use a portion of the cash generated to fund the transformational work ahead. We expect that to impact the Adjusted EBITDA by approximately 200 basis points in 2026. On capital allocation, we maintain a disciplined approach and expect to continue executing our buyback program in a balanced manner. As of 31 December 2025, we have $67.5 million left on the current authorization. Now on to guidance. For the full year 2026, we expect revenue to be in the range of $380 to 420 million, representing year-over-year growth at -12% to -3%.

Speaker #2: At the same time, we will use a portion of the cash generated to fund the transformational work ahead. We expect that to impact the adjusted EBITDA by approximately $200 basis points in 2026.

Speaker #2: On capital allocation, we maintain a disciplined approach and expect to continue executing our buyback program in a balanced manner. As of December 31, 2025, we have $67.5 million left on the current authorization.

Speaker #2: Now onto guidance. For the full year 2026, we expect revenue to be in the range of $380 to $420 million representing year over year growth of negative 12 to negative 3%.

Speaker #2: Adjusted EBITDA is expected to be in the range of 60 to 80 million representing an adjusted EBITDA margin of 18% at the midpoint. For the first quarter of 2026, revenue is expected to be between $100 and $108 million representing year over year growth of negative 7 to 1%.

Ofer Katz: Adjusted EBITDA is expected to be in the range of $60 to 80 million, representing an Adjusted EBITDA margin of 18% at the midpoint. For Q1 2026, revenue is expected to be between $100 and 108 million, representing year-over-year growth at -7% to 1%. Adjusted EBITDA is expected to be $19 to 23 million, representing an Adjusted EBITDA margin of 20% at the midpoint. The wider than normal revenue guidance for the full year and the first quarter reflects the elevated uncertainty as we execute our transformational plan, focused on high value work alongside evolving market conditions. On the Adjusted EBITDA side, the updated guidance for this year reflects the revenue trend we see, as well as the impact from the investment into foundational works.

Speaker #2: Adjusted EBITDA is expected to be 19 to 23 million representing an adjusted EBITDA margin of 20% at the midpoint. The wider than normal revenue guidance for the full year and the first quarter reflects the elevated uncertainty as we execute our transformational plan focused on high-value work alongside evolving market conditions.

Speaker #2: On the adjusted EBITDA side, the updated guidance for this year reflects the revenue trends we see, as well as the impact from the investment into foundational works.

Speaker #2: That said, we do not expect structural change to the core business unit economics and we expect our ability to drive and strengthen leverage for the marketplace business model remains intact.

Ofer Katz: That said, we do not expect structural change to the core business unit economics, and we expect our ability to drive and strengthen leverage for the marketplace business model remains intact. With that, we'll now turn the call over to the operator for questions.

Speaker #2: With that, we now turn the call over to the operator for questions.

Speaker #1: We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Ron Josey with Citi. Please go ahead.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker #1: The first question comes from Ron Josie with Citi. Please go ahead.

Speaker #3: Great. Thanks for taking the question and the insights on the call. I had two, please. Micha, you talked about an execution plan around matching product, go-to-market, and operations.

Jake: Great. Thanks for taking the question and the insights on the call. I had two, please. Micha, you talked about an execution plan around matching product, go-to-market and operations. And given the progress, I think that we've seen around managed services and dynamic matching, just talk to us about how you see these investments in those four core areas sort of unfold. Meaning, do you have more work to do on the product before we start investing in enterprise go-to-market? Any insights there would be helpful as we think about this multi-quarter transition. And then, Micha, and over the balance sheet, you know, we ended the year with approximately $300 million in cash. I know we've mentioned M&A a few times on the call and Ofer, in your new role.

Ronald Josey: Great. Thanks for taking the question and the insights on the call. I had two, please. Micha, you talked about an execution plan around matching product, go-to-market and operations. And given the progress, I think that we've seen around managed services and dynamic matching, just talk to us about how you see these investments in those four core areas sort of unfold. Meaning, do you have more work to do on the product before we start investing in enterprise go-to-market? Any insights there would be helpful as we think about this multi-quarter transition. And then, Micha, and over the balance sheet, you know, we ended the year with approximately $300 million in cash. I know we've mentioned M&A a few times on the call and Ofer, in your new role.

Speaker #3: And given the progress, I think that we've seen around managed services and dynamic matching, just talk to us about how you see these investments in those four core areas sort of unfold.

Speaker #3: Meaning, do you have more work to do on the product before we start investing in enterprise go-to-market? Any insights there would be helpful as we think about this multi-quarter transition.

Speaker #3: And then Micha, an over-the-balance sheet, we ended the year with approximately a few hundred million in cash. I know we've mentioned M&A a few times on the call and over in your new role.

Speaker #3: Talk to us about what you're looking for, maybe in M&A, or just overall capital allocation. Thank you.

Jake: Talk to us about what you're looking for, maybe on M&A or just overall capital allocation? Thank you.

Ronald Josey: Talk to us about what you're looking for, maybe on M&A or just overall capital allocation? Thank you.

Speaker #4: Thank you, Ron, for the questions, and good morning. So essentially, the way we're thinking about the investment is really to deprioritize low-end and low-value transactions and focus most of our investment in high-end, high-skilled, larger-scope projects.

Ofer Katz: Thank you, Ron, for the questions, and good morning. So essentially, the way we're thinking about the investment is really to deprioritize low-end and low-value transactions and focus most of our investment in high-end, high-skilled, and larger scope projects. A segment that is currently under 15% of our revenues, and we think it should, and it will contribute much more to bring us back to GMV growth. That's what 2026 is all about. It's about making that turn so that 2027 and beyond will be growth years. Now, bear in mind that the nature of the transactions that are happening on our platform are changing.

Speaker #4: A segment that is currently under 15% of our revenues and we think it should and it will contribute much more to bring us back to GMV growth.

Speaker #4: That's what 2026 is all about. It's about making that turn so that 2027 and beyond will be growth years. Now, bear in mind that the nature of the transactions that are happening on our platform are changing.

Speaker #4: And we're running a platform that has been built over 16 years; some parts of it need to be rebuilt, some parts of it need to be reinvested in, and aligned into this new reality.

Micha Kaufman: ... We're running a platform that has been built over 16 years. Some parts of it need to be rebuilt, some parts of it need to be reinvested in, and aligned into this new reality. As I've said in my opening comments, the matching portion of it has to deal with the more nuanced needs of businesses today. So we need to calibrate this and make sure that we maximize the usage of our very deep data asset in order to do this. The same goes for product. When we think about the entire matching and fulfillment management, we need to understand that larger projects require more sophisticated fulfillment, collaboration, and matching capabilities.

Micha Kaufman: We're running a platform that has been built over 16 years. Some parts of it need to be rebuilt, some parts of it need to be reinvested in, and aligned into this new reality. As I've said in my opening comments, the matching portion of it has to deal with the more nuanced needs of businesses today. So we need to calibrate this and make sure that we maximize the usage of our very deep data asset in order to do this. The same goes for product. When we think about the entire matching and fulfillment management, we need to understand that larger projects require more sophisticated fulfillment, collaboration, and matching capabilities.

Speaker #4: As I've said in my opening comments, the matching portion of it has to deal with the more nuanced needs of businesses today. So we need to calibrate this and make sure that we maximize the usage of our very deep data asset in order to do this.

Speaker #4: The same goes for product. When we think about the entire matching and fulfillment management, we need to understand that larger projects require more sophisticated fulfillment and collaboration and matching capabilities.

Speaker #4: Also understanding that on the demand side, we may not just see companies and human beings, but also AI agents that can actually take care or find benefit from using our platform.

Micha Kaufman: Also understanding that on the demand side, we may not just see companies and human beings, but also AI agents that can actually take care or find benefit from using our platform. When we think about go-to market, in this case, we are expanding our go-to-market flywheels. First of all, is the high value project of work, and then is the aspect of AI native use cases. I've given a few examples in my opening comments in our letter to shareholders, where we see more and more businesses and foundational companies that are building more AI models and more agents, and all of them require human in the loop to continue calibrating, ensuring their security, their integrity, and overall, being able to make them customer ready.

Speaker #4: When we think about go-to-market, again, in this case, we are expanding our go-to-market flywheels. So first of all is the high-value projects of work.

Speaker #4: And then there's the aspect of AI-native use cases and I've given a few examples in my opening comments in our letter to shareholders. Where we see more and more businesses and foundational companies that are building more AI models and more agents and all of them require human-in-the-loop to continue calibrating, ensuring their security, their integrity, and overall being able to make them customer-ready.

Speaker #4: And we're seeing more businesses that are coming to Fiverr, because we probably have the largest and widest-scale talent in the world on our platform.

Micha Kaufman: And we're seeing more businesses that are coming to Fiverr, because we probably have the largest and widest scale talent in the world on our platform. And so adjusting for all of these new needs will help us accelerate that portion or that segment of the market, which we feel is the most durable and most sustainable, to ensure that we can continue growing for many years ahead.

Speaker #4: And so adjusting for all of these new needs will help us accelerate that portion or that segment of the market, which we feel is the most durable and more sustainable to ensure that we can continue growing for many years ahead.

Speaker #5: Hi, Ron. On the M&A front, I'll start by saying that we have $300 million, but the amount of cash is growing and expected to grow throughout the quarters.

Ofer Katz: Ron, on the M&A front, we'll start by saying that we have $300 million, but the amount of cash is growing and expected to grow throughout the quarters. Then, you know, we continue to be highly disciplined the way we utilize this cash, looking for tuck-ins and then large transactions at the same time. Of course, we look into going upmarket, and any M&A should support this high-end and flywheel, as Micha mentioned earlier.

Speaker #5: And then we continue to be highly disciplined in the way we utilize this cash. Looking for tuck-ins and then loud transaction at the same time.

Speaker #5: Of course, we're looking to go in a market. And any M&A should support this high-end and flywheel as Micha mentioned.

Speaker #3: Great. Thanks, Micha. Thanks, Oliver.

Eric Sheridan: Great. Thanks, Micha. Thanks, Ofer.

Ronald Josey: Great. Thanks, Micha. Thanks, Ofer.

Speaker #4: Thank you, Ron.

Micha Kaufman: Thank you, Ron.

Speaker #1: The next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Operator: The next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Speaker #6: Thanks so much for taking the question. Just want to come back to the theme of deprioritization of the lower end as you realign the platform.

Eric Sheridan: Thanks so much for taking the question. Just want to come back to the theme of deprioritization of the lower end as you realign the platform. How should we think that manifests itself in financials as we move deeper into the year? Are there any elements of things that will impact the OpEx line as you sort of pare back investments in the lower end, of the market, or elements where there could be more volatility than usual as we think about either the first half versus second half dynamic, as you sort of reposition the business for the longer term? Thanks so much.

Speaker #6: How should we think that manifests itself in financials as we move deeper into the year? Are there any elements of things that will impact the OPEX line as you sort of pare back investments in the lower end of the market or elements where there could be more volatility than usual as we think about either the first half versus second half dynamic as you sort of reposition the business for the longer term?

Speaker #6: Thanks so much.

Speaker #4: Good morning, Eric. Thanks for the question. So when we think about the deprioritization, it's really to ensure that the majority of our resources are directed in growing the segment that, as we demonstrated, of grown significantly over last year.

Micha Kaufman: Good morning, Eric. Thanks for the question. So when we think about the deprioritization, it is really to ensure that the majority of our resources are directed in growing the segment, that, as we demonstrated, have grown significantly over last year, and to make sure that it becomes a much larger portion of our market. As a reminder, when you look at the low skills and small scope, a lot of that is being replaced with AI solutions, and still that is a large portion that contributes to Fiverr growth. In that segment, we are seeing a decline, and we've been talking about this, and we don't foresee that that decline is gonna slow down. The assumption is that with the newer developments around AI, this will continue to be the case.

Speaker #4: And to make sure that it becomes a much larger portion of our market. As a reminder, when you look at the low-skilled and small-scope a lot of that is being replaced with AI solutions.

Speaker #4: And still, that is a large portion that's contributes to Fiverr growth. In that segment, we are seeing a decline. And we've been talking about this and we don't foresee that that decline is going to slow down.

Speaker #4: The assumption is that with the newer developments around AI, this will continue to be the case. And so that centralization in our business has to change.

Micha Kaufman: And so that centralization in our business has to change, and therefore, we're shifting those resources into ensuring that the high end portion of our business that has been growing, will become a larger portion of our overall GMV contribution. That is extremely important, and we want to make sure that we put every available resource towards that. But we're very committed to execute this transformation with very high degree of financial discipline. So we're going to protect the core business to continue generating healthy cash flow. And we talked about the structural profitability of core business to stay north of 20%. I hope this answers your question.

Speaker #4: And therefore, we're shifting those resources into ensuring that the high-end portion of our business, which has been growing, will become a larger portion of our overall GMV contribution.

Speaker #4: That is extremely important. And we want to make sure that we put every available resource towards that. But we're very committed to execute this transformation with very high degree of financial discipline.

Speaker #4: So we're going to protect the core business to continue generating healthy cash flow. And we talked about the structural profitability of core business to stay north of 20%.

Speaker #4: I hope this answers your question. That's helpful. Thank you.

Operator: That's helpful. Thank you.

Eric Sheridan: That's helpful. Thank you.

Speaker #6: Thank you, Eric.

Micha Kaufman: Thank you, Larry.

Micha Kaufman: Thank you, Eric.

Speaker #1: The next question comes from Bernie McTernan with Needham & Company. Please go ahead.

Operator: The next question comes from Bernie McTernan with Needham and Company. Please go ahead.

Speaker #4: Great. Thanks for taking the questions. Maybe just two for me. How should we expect the margin profile the company to look after Fiverr Forward's done or completed or some progress line?

Marvin Fong: Great. Thanks for taking the questions. Maybe just two for me. How should we expect the margin profile of the company to look, after Fiverr Forward's done or complete or some progress line? Is this gonna be a higher margin company or lower margin company than before? And then how does Fiverr Go fit into this? Are you seeing Fiverr Go help higher value transactions already? Or just interested in terms of if this is still a key product going forward. Thank you.

Bernie McTernan: Great. Thanks for taking the questions. Maybe just two for me. How should we expect the margin profile of the company to look, after Fiverr Forward's done or complete or some progress line? Is this gonna be a higher margin company or lower margin company than before? And then how does Fiverr Go fit into this? Are you seeing Fiverr Go help higher value transactions already? Or just interested in terms of if this is still a key product going forward. Thank you.

Speaker #4: Is this going to be a higher-margin company or a lower-margin company than before? And then, how does Fiverr Go fit into this?

Speaker #4: Are you seeing Fiverr go help higher-value transactions already or just interested in terms of if this is still a key product going forward? Thank you.

Ofer Katz: I think on the margin profile, so we are going to see some lower margin in terms of EBITDA in the short term. But we anticipate the long term EBITDA to go back to the 25 long-term EBITDA shortly after. In terms of our gross margin, I think it's going to remain the same. It's all about the profile of investment, investing a little bit more into R&D, which is why we anticipate some pressure on the margin on short term.

Speaker #5: I think on the margin profile, we are going to see some lower margin in terms of EBITDA in the short term. But we anticipate the long-term EBITDA to go back to the 25% long-term EBITDA margin shortly after.

Speaker #5: In terms of gross margin, I think it's going to remain the same. It's all about the profile of investments and investing a little bit more into R&D, which is why we anticipate some pressure on the margin on the short term.

Micha Kaufman: Bernie, on your question about Go. So essentially, a lot of what we built into Go has already been integrated into several aspects of our product. And when we talk about the investments that we're doing in the product side, as one of the pillars of this year, a lot of what we've taken from Go in how it can help buyers and sellers communicate more effectively, scope their work, the nuanced understanding of exactly what they need and what is the most suitable talent for the task is going to be integrated further into the product. So we're not focusing on Go as a product by itself, but actually taking the assets that we've developed for that project and integrating them into the customer experience.

Speaker #4: Bernie, on your question about goals, essentially, a lot of what we build into goal has already been integrated into several aspects of our product.

Speaker #4: And when we talk about the investment that we're doing in the product side as one of the pillars of this year, a lot of what we've taken from goal in how it can help buyers and sellers communicate more effectively scope their work, the nuanced understanding of exactly what they need and what is the most suitable talent for the task is going to be integrated further into the product so we're not focusing on goal as a product by itself, but actually taking the assets that we've developed for that project and integrating them into the customer experience.

Speaker #4: Understood. Makes sense. Thank you both.

Marvin Fong: Understood. Makes sense. Thank you both.

Bernie McTernan: Understood. Makes sense. Thank you both.

Speaker #1: The next question comes from Jason Helseni with Oppenheimer. Please go ahead.

Operator: The next question comes from Jason Helfstein with Oppenheimer. Please go ahead.

Speaker #4: Hey, thanks. This is Chad on for Jason. It seems like you're taking one step back for kind of two steps forward. You're cutting a lot of cost out of the business with the restructuring.

Jason Helfstein: Hey, thanks. This is Chad on for Jason. You know, it seems like you're taking one step back for kind of two steps forward. You know, you're cutting a lot of cost out of the business with the restructuring. Is that having a bigger impact on revenue in 2026 than maybe you previously thought? And then how should we think about OpEx growth in 2026? Do you have to invest more in the business or, you know, that's it. Thank you.

[Analyst] (Oppenheimer): Hey, thanks. This is Chad on for Jason. You know, it seems like you're taking one step back for kind of two steps forward. You know, you're cutting a lot of cost out of the business with the restructuring. Is that having a bigger impact on revenue in 2026 than maybe you previously thought? And then how should we think about OpEx growth in 2026? Do you have to invest more in the business or, you know, that's it. Thank you.

Speaker #4: Is that having a bigger impact on revenue in '26 than maybe you previously thought? And then how should we think about OPEX growth in 2026?

Speaker #4: Do you have to invest more in the business or that's it? Thank you.

Micha Kaufman: Thanks for the question, Chad. So on the first question, the answer is no. The revenue is not impacted by restructuring. It reflects the ongoing trends on the marketplace, meaning lower end versus higher end. Lower end, seeing a decrease, higher end, seeing an increase. And again, going back to our strategy, the entire idea is to double down on high end and make it grow faster and make it become a more meaningful contributor to our GMV growth. We've been talking about this for a couple of quarters. What we've seen is an elevated sense of urgency to move faster, which is why a lot of the multi-year strategic plan that we have, is all about that. And we said that once the high end is going to become a more meaningful contributor to GMV, GMV will go back to growth.

Speaker #5: Thanks for the question, Chad. So on the first question, the answer is no. The revenue is not impacted by restructuring. It reflects the ongoing trends on the marketplace.

Speaker #5: Meaning lower-end versus higher-end. Lower-end seeing a decrease, higher-end seeing an increase. And again, going back to our strategy, the entire idea is to double down on high-end and make it grow faster and make it become a more meaningful contributor to our GMV growth.

Speaker #5: We've been talking about this for a couple of quarters. What we've seen is an elevated sense of urgency to move faster. Which is why a lot of the multi-year strategic plan that we have is all about that.

Speaker #5: And we said that once the high-end is going to become a more meaningful contributor to GMV, GMV will go back to grow. And again, we're seeing this with double-digit percentage growth in transaction over $1,000.

Micha Kaufman: And again, we're seeing this with double-digit percentage growth in transaction over $1,000. So we're doubling down on that. So again, the reflection is just ongoing trends of what we're seeing in the low skill versus high end.

Speaker #5: And so we're doubling down on that. So again, the reflection is just ongoing trends of what we're seeing in the low-skill versus high-end. Again, on the second part, on the OPEX, I think that we think that the core business will continue to deliver a 20% plus margin.

Ofer Katz: Then on the second part, on the OpEx, I think that we think that the core business will continue to deliver a 20% plus margin. The portion of what we will reinvest into the business on the transformation on both,

Speaker #5: The portion of what we will reinvest into the business on the consummation on both.

Micha Kaufman: The impact of that is going to be around two percentage point. And I think it's also worth noting that due to recent appreciation of Israeli shekel to US dollar, FX have added over $10 million of headwind on EBITDA, you know, on EBITDA guidance for the year.

Speaker #4: The impact of that is going to be around two percentage points. And I think it's also worth noting that due to recent appreciation of Israeli shekel to US dollar, effects of added over 10 million dollars of headwind on EBITDA on EBITDA guidance for the year.

Speaker #1: The next question comes from Marvin Fong with BTIG. Please go ahead.

Operator: The next question comes from Mark, Marvin Fong with BTIG. Please go ahead.

Speaker #4: Great. Good morning. Thanks for taking my questions and congrats to Jinjin in and Esti. My first question talked about returning to growth in 2027.

Marvin Fong: Great, good morning. Thanks for taking my questions and, congrats to Jinjin and Esti. My first question, you know, talked about returning to growth in 2027, and I just wanted to understand that commentary a bit better. So are you expecting the high value work to, to reach a majority of the marketplace by 2027, even in maybe a single quarter of 2027? Or when do you actually expect, you know, the majority of the marketplace to be high-end work? And then I have a follow-up.

Speaker #4: And I just wanted to understand that commentary a bit better. So are you expecting the high-value work to reach a majority of the marketplace by 2027, even in maybe a single quarter of 2027?

Speaker #4: Or when do you actually expect the majority of the marketplace to be high-end work? And then I have a follow-up.

Micha Kaufman: Morning, Marvin. Thanks for the question. So, there's a GMV mix shift. High value growth will continue to grow and become a bigger portion of the total marketplace, and this will lead to GMV inflection. And as we said, both in the letter to shareholder and in the opening comments, that change is also going to allow us, potentially over the year, to start giving the market the signals that we're seeing. Right now, the matrix that we're reporting is going to remain intact, but over time, we wanna put more emphasis on what's strategic and what we feel is going to drive the sustainable growth of the business over the coming years. We haven't guided specifically for that, and we're not talking about percentage, and mathematically, even before it gets to the majority, it will drive GMV growth.

Speaker #2: Morning, Marvin. Thanks for the question. So there's a GMV makeshift high-value growth will continue to grow and become a bigger portion of the total marketplace.

Speaker #2: And this will lead to GMV inflection. And as we said both in the letter to shareholder and in the opening comments, that change is also going to allow us potentially over the year to start giving the market the signals that we're seeing.

Speaker #2: Right now, the matrix that we're reporting is going to remain intact. But over time, we want to put more emphasis on what's strategic and what we feel is going to drive the sustainable growth of the business over the coming years.

Speaker #2: We haven't guided specifically for that, and we're not talking about percentage. And mathematically, even before it gets to the majority, it will drive GMV growth.

Micha Kaufman: But this is the plan, and we expect to see signals over the coming quarters to let us know that the investment there is actually accelerating the growth of that segment.

Speaker #2: But this is the plan, and we expect to see signals over the coming quarters to let us know that the investment there is actually accelerating the growth of that segment.

Micha Kaufman: But this is the plan, and we expect to see signals over the coming quarters to let us know that the investment there is actually accelerating the growth of that segment.

Marvin Fong: Mm-hmm. Got it. Okay, that's great. Thank you for that. And then my second question, I would just like to double-click more. I think you mentioned, or we've been talking about go-to-market and, and distribution channels. And so I'd like to talk about both enterprise a little bit more. Is there any, you know, anything structurally you're doing to either the offering or, the way you, you know, intake enterprises or approach enterprises that's gonna change, maybe a more formalized enterprise, you know, segment? And then in the shareholder letter, you talked about, you know, one of the, the measurable signs of progress would be, one-- at least one AI native distribution channel contributing to GMV.

Speaker #4: Got it. Okay. That's great. Thank you for that. And then my second question, I would just like to double-click more. I think you mentioned or we've been talking about go-to-market and distribution channels.

Marvin Fong: Got it. Okay, that's great. Thank you for that. And then my second question, I would just like to double-click more. I think you mentioned, or we've been talking about go-to-market and, and distribution channels. And so I'd like to talk about both enterprise a little bit more. Is there any, you know, anything structurally you're doing to either the offering or, the way you, you know, intake enterprises or approach enterprises that's gonna change, maybe a more formalized enterprise, you know, segment? And then in the shareholder letter, you talked about, you know, one of the, the measurable signs of progress would be, one-- at least one AI native distribution channel contributing to GMV.

Speaker #4: And so I'd like to talk about both enterprise a little bit more. Is there anything structurally you're doing to either the offering or the way you intake enterprises or approach enterprises that's going to change maybe a more formalized enterprise segment?

Speaker #4: And then in the shareholder letter, you talked about one of the measurable signs of progress would be one, at least one, AI-native distribution channel contributing to GMV.

Marvin Fong: I just would love to understand, you know, is that a specific partnership you're developing there, or do you just kind of expect the growth of those channels to, for at least one of them, presumably ChatGPT or Gemini, to just naturally become, you know, a large distribution channel for you?

Speaker #4: I just would love to understand, is that a specific partnership you're developing there, or do you just kind of expect the growth of those channels to for at least one of them presumably ChatGPT or Gemini to just naturally become a large distribution channel for you?

Micha Kaufman: Thank you. The reason why we didn't call out specifics was deliberate. It's the expectation based on existing proof of concepts that we're having with AI model companies and enterprises. We believe that when the product can deliver their needs at scale, this could be a very strong contributor for the growth. When we think of... We think about in the same aspect, on our enterprise, and we've given some qualitative examples, again, both in the shareholder letter and in the opening remarks. I've called out the example of the partnership that we have with an AI model safety company to provide domain experts who help identify vulnerabilities in foundational models.

Speaker #2: Thank you. The reason why we didn't call out specifics was deliberate. But it's the expectation is based on existing proof of concepts that we're having with AI model companies and enterprises and we believe that when the product can deliver their needs at scale, this could be a very strong contributor for the growth.

Speaker #2: And so when we think of we think about in the same aspect on our enterprise. And we've given some qualitative examples again, both in the shareholder letter and in the opening remarks.

Speaker #2: And I've called out the example of the partnership that we have with an AI model safety company to provide domain experts who help identify vulnerabilities in foundational models.

Speaker #2: And in another partnership, enabling enterprise to build AI workflow automation through white label solutions that allow them to deploy AI agents quickly and cost-effectively.

Micha Kaufman: In another partnership, you know, enabling enterprise to build AI workflow automation through white label solutions that allow them to deploy AI, AI agents quickly and cost effectively. Again, this is all a part of the fact that AI enables many more businesses to build more and to build more ambitiously. Along with that building, there's a lot of support that they need, there's a lot of calibration and fine-tuning. There's very specific types of expertise that are required to take those products and those solutions and make sure that their integrity is high. They're coming to us with it, and we believe that we can create meaningful flywheel around these opportunities.

Speaker #2: And again, this is all a part of the fact that AI enables many more businesses to build more and to build more ambitiously. Along with that building, there's a lot of support that they need; there's a lot of calibration and fine-tuning; there's very specific types of expertise that are required to take those products and those solutions and make sure that they're integrity is high, they're coming to us with it, and we believe that we can create meaningful flywheel around these opportunities.

Speaker #4: Got it. All right. Thanks so much, Micha. Appreciate it.

Operator: Got it. All right. Thanks so much, Micha. Appreciate it.

Marvin Fong: Got it. All right. Thanks so much, Micha. Appreciate it.

Speaker #2: Thank you.

Micha Kaufman: Thank you.

Speaker #1: The next question comes from Nat Shandler with Scotiabank. Please go ahead.

Operator: The next question comes from Nat Schindler with Scotiabank. Please go ahead.

Speaker #3: Yes, Miha. I know for you help me understand. I'm a little confused. I understand the prioritizing the lower end of the market, but I'm trying to figure out, is there any products you're not going to actually even be selling?

Nat Schindler: Yes, Micha and Ofer, you help me understand. I'm a little confused. I understand deprioritizing the lower end of the market, but I'm trying to figure out, is there any products you're not gonna actually even be selling, any services from your service business that you're just not gonna sell to them anymore? Because I'm trying to understand why you think revenue will get worse as the year progresses. So your expected revenue declines as you go forward. I understand investing, and it might take a little while to turn the enterprise and to really build the enterprise business further, but I'm trying to understand what you're seeing in Q2, Q3, and Q4 that make them worse than Q1 on revenue.

Speaker #3: Are there any services from your service business that you're just not going to sell to them anymore? I'm trying to understand why you think revenue will get worse as the year progresses.

Speaker #3: So your revenue declines exceed as you go down, as you go forward. I understand investing, and it might take a little while to turn the to really build the enterprise business further.

Speaker #3: But I'm trying to understand what you're seeing in quarters two, three, and four that make them worse than quarter one on revenue.

Speaker #2: Morning, Nat. Essentially, we're not killing any of our products. It's what we're mostly deprioritizing is the continuing optimization of these products in favor of developing the types of product experiences and the underlying technologies and infrastructure to address the higher-end project.

Micha Kaufman: Morning, Nat. Essentially, we're not, we're not killing any of our products. It's what we're mostly deprioritizing is the continuing optimization of these products in favor of developing the types of product experiences and the underlying technologies and infrastructure to address the higher-end project. So this, in and of itself, should not be a driver for decline. It's not about the types of services or products that we're discontinuing, because we're not discontinuing anything. We're just making sure that after the restructure, we have the vast majority of our resources to invest in the higher end and higher-skilled types of services for the larger types of customers that are spending more with us and accelerate the growth that we're seeing there even further.

Speaker #2: So this in and of itself should not be a driver for decline. And it's not about the types of services or products that we're discontinuing because we're not discontinuing anything.

Speaker #2: We're just making sure that after the restructure, we have the vast majority of our resources to invest in the higher-end and higher-skilled types of services for the larger types of customers that are spending more with us and accelerate the growth that we're seeing there even further.

Speaker #3: Okay. I still am a little unclear on them. What signal you're reading that things are going to decline more in the back half of the year than in the front half?

Nat Schindler: Okay. I still am a little unclear on, then, what signal you're reading that things are going to decline more in the back half of the year than in the front half?

Speaker #2: So we've seen some decline in simple services across the board. There are areas where we're seeing slightly higher decrease than others. For example, within programming, we're seeing the simple side of programming things like simple website building.

Micha Kaufman: So we've seen some decline in simple services across the board. There are areas where we're seeing slightly higher decrease than others. For example, within programming, we're seeing the simple side of programming, things like simple website building, accelerating the decline as a result of vibe coding and simplistic types of coding-related solutions. But on the same side, we are seeing areas where we're seeing growth, like digital marketing is one of them, where we're seeing nice growth in services. So the idea is not to discontinue anything. And by the way, we've called out these changes over the past few quarters. As an example, writing and translation was heavily impacted by AI, down 20% over a year.

Speaker #2: Accelerating the decline as a result of vibe coding, and simplistic types of coding related solutions. But on the same side, we are seeing areas where we're seeing growth.

Speaker #2: Like digital marketing is one of them. We're seeing nice growth in services. So the idea is not to discontinue anything. And by the way, we've called out these changes over the past few quarters as an example.

Speaker #2: Writing and translation was heavily impacted by AI down 20% over a year. And we've seen this for a while. We've seen the same under the vertical music and audio.

Micha Kaufman: We've seen this for a while. We've seen the same under the music and audio vertical, which is also impacted, but slightly less in the teens range, primarily because voice-over is a meaningful portion of the music and audio vertical. So there's anecdotal areas. Again, the decline that we're seeing there is mostly in the very simplistic, low-skill related types of services, and this is not our focus now. That transformation is going to continue happening, and that's fine. The function that we're focusing on is the one-of-a-kind way for us to deal with high-end, high-value transactions, utilizing all the data that we've collected over the past 16 years and the incredible talent bench that we have with us today.

Speaker #2: It's also impacted but slightly less in the teens range primarily because voiceover is a meaningful portion of the music and audio vertical. So there's anecdotal areas again, what the decline that we're seeing there is mostly in the very simplistic low-skill related types of services and this is not our focus now.

Speaker #2: That transformation is going to continue happening and that's fine. The function that we're focusing on is the one-of-a-kind way for us to deal with high-end, high-value transactions utilizing all the data that we've collected over the past 16 years and the incredible talent bench that we have with us today.

Speaker #3: Thank you.

Nat Schindler: Thank you.

Speaker #1: The next question comes from Josh Chan with UBS. Please go ahead. Josh, you may be muted.

Operator: The next question comes from Josh Chan with UBS. Please go ahead. Josh, you may be muted.

Speaker #2: Sorry about that. Hey, good morning, Miha over. Apologies for that. I guess maybe following up on the prior question a little, I guess if you take your full-year guidance, it's less than four times your Q1 revenue guidance.

Kunal Madhukar: Sorry about that. Hey, good morning, Micha, Ofer. Apologies for that. I guess maybe following up on the prior question a little. I guess if you take your full year guidance, it's less than 4 times your Q1 revenue guidance. And so I guess, what's the conceptually, why does the rest of the year kind of step down from Q1, I guess? What are you seeing that's worse?

Josh Chan: Sorry about that. Hey, good morning, Micha, Ofer. Apologies for that. I guess maybe following up on the prior question a little. I guess if you take your full year guidance, it's less than 4 times your Q1 revenue guidance. And so I guess, what's the conceptually, why does the rest of the year kind of step down from Q1, I guess? What are you seeing that's worse?

Speaker #2: And so I guess what's the conceptually why the rest of the year kind of step down from Q1, I guess? What are you seeing that's worse?

Speaker #2: And then my second question is, is there a way for you to frame for us what free cash flow can be in versus EBITDA, something like that.

[Analyst] (Roth MKM): ... And then my second question is, is there a way for you to frame for us what free cash flow can be in 2026, you know, maybe from a conversion perspective versus EBITDA, something like that? Thank you.

Josh Chan: And then my second question is, is there a way for you to frame for us what free cash flow can be in 2026, you know, maybe from a conversion perspective versus EBITDA, something like that? Thank you.

Speaker #2: Thank you.

Speaker #3: I think on the first part, I think the combination of the trends we are seeing in Q4 together with the transformation that has been discussed is creating some uncertainty in terms of the 2026.

Esti Levy Dadon: I think on the first part, I think the combination of the trends we are seeing in Q4, together with the confirmation that has been discussed, is creating some uncertainty in terms of the 2026. And under those circumstances, we are guiding for a wider range.

Ofer Katz: I think on the first part, I think the combination of the trends we are seeing in Q4, together with the confirmation that has been discussed, is creating some uncertainty in terms of the 2026. And under those circumstances, we are guiding for a wider range.

Speaker #3: And under those circumstances, guiding for a wider range.

Speaker #2: Yeah. And on the second one, the free cash flow—it largely follows EBITDA. And we've guided for a midpoint EBITDA of 18%, 20% plus on the core business, and a 200 basis points impact from the investment that we're doing, the restructuring.

Micha Kaufman: Yeah, and on the second one, the free cash flow, it largely follows EBITDA. And we've guided for a midpoint EBITDA of 18%, 20% plus on the core business, and 200 basis point impact from the investment that we're doing, the restructuring.

Speaker #3: Great.

[Analyst] (Roth MKM): Great. Okay, great. Thank you for the color.

Josh Chan: Great. Okay, great. Thank you for the color.

Speaker #2: Okay. Great. Thank you for the color.

Speaker #1: The next question comes from Matt Condon with Citizens. Please go ahead.

Operator: The next question comes from Matt Condon with Citizens. Please go ahead.

Speaker #2: Thank you so much for taking my questions. My question is just on I think you said in the shareholder letter that you're building a marketplace for more reoccurring work.

[Analyst] (Citizens JMP): Thank you so much for taking my questions. My first is just on, you know, I think you said in the, the shareholder letter, you're building the marketplace for more reoccurring work. Can you just talk about the products and functionalities that you need to launch to enable this reoccurring nature of work? And then I, I wanted to ask a follow-up on an earlier question, is just given where the stock is trading, just can you talk about the prioritization of, of buybacks versus M&A? Thank you so much.

Matthew Condon: Thank you so much for taking my questions. My first is just on, you know, I think you said in the, the shareholder letter, you're building the marketplace for more reoccurring work. Can you just talk about the products and functionalities that you need to launch to enable this reoccurring nature of work? And then I, I wanted to ask a follow-up on an earlier question, is just given where the stock is trading, just can you talk about the prioritization of, of buybacks versus M&A? Thank you so much.

Speaker #2: Can you just talk about the products and functionalities that you need to launch to enable this reoccurring nature of work? And then I wanted to ask a follow-up on an earlier question is just given where the stock is trading, just can you talk about the prioritization of buybacks versus M&A?

Speaker #2: Thank you so much.

Micha Kaufman: Thanks for the question. So essentially, it's all about putting trust and quality at the forefront. We're meaningfully upgrade our data infrastructure, matching algo, product in order to achieve that. And those are the most important components of being able to optimize for recurring work. And also the fact that we're modernizing our platform allows the usage, as I've said, of not just human customers, but also agents within the platform. A lot of it is about how we build this infrastructure and how we ensure the quality and the happiness of the entire fulfillment cycle, which have been one of our biggest moats.

Speaker #4: Thanks for the question. So essentially, it's all about putting trust and quality at the forefront. And the more meaningfully we upgrade our data infrastructure and matching Algo product in order to achieve that.

Speaker #4: And those are the most important components of being able to optimize for recurring work. And also the fact that we're modernizing our platform allows the usage, as I've said, of not just human customers, but also agents within the platform.

Speaker #4: A lot of it is about how we build this infrastructure and how we ensure the quality and the happiness of the entire fulfillment cycle which have been one of our biggest moats, the fact that the work actually happens on the platform is being documented and being tracked allows us to understand the right path or route in which work is done to be able to actively intervene in cases where it's less than great all of these are indicators from our data for recurring usage of our platform.

Micha Kaufman: The fact that the work actually happens on the platform, is being documented and being tracked, allows us to understand the right path or route in which work is done, to be able to actively intervene in cases where it's less than great. All of these are indicators from our data for recurring usage of our platform. The second one was on buyback. We have a continued, disciplined and balanced capital allocation. Investing growth while continuing to utilize our buyback authorization to return capital to shareholders. As of December, there's $67.5 million left on our authorization, and as Ofer mentioned earlier, we'll continue to be optimistic on M&A. Opportunistic, I'm sorry.

Speaker #4: The second one was on buyback. We have a continued discipline and balanced capital allocation, investing in growth while continuing to utilize our buyback authorization to return capital to shareholders as of December.

Speaker #4: There's 67 and a half million left on our authorization. And there's an offer mentioned earlier will continue to be optimistic on M&A. Opportunistic, I'm sorry.

Speaker #2: Thank you very much.

[Analyst] (Citizens JMP): Thank you very much.

Matthew Condon: Thank you very much.

Speaker #1: The next question comes from Brad Erickson with RBC. Please go ahead.

Operator: The next question comes from Brad Erickson with RBC. Please go ahead.

Speaker #5: Hey, thanks. This is Audrey on for Brad. First new business formations have been growing pretty solidly, but that doesn't seem to be lining up with parts of your business.

Brad Erickson: Hey, thanks. This is Audrey on for Brad. First, new business formations have been growing pretty solidly, but that doesn't seem to be lining up with parts of your business. Is that just because there's really no connection there? Or what is the disconnect, you would say, if there is one? And then second, in the new world of changes at the top of funnel, how big should S&M be as a percentage of revenue or marketplace GMV relative to where it's been in the past? Any reasons why it should be structurally higher or lower? Thanks.

Speaker #5: Is that just because there's really no connection there? Or what is the disconnect you would say if there is one? And then second, in the new world of changes at the top of funnel, how big should S&M be as a percentage of revenue or marketplace GMV relative to where it's been in the past?

Speaker #5: Any reasons why it should be structurally higher or lower? Thanks.

Speaker #4: I thank you for the question. Business formation only impacts a small part of our catalog that's focused on the very early stage companies so I wouldn't read too much into that aspect or the correlation between the two.

Micha Kaufman: Thank you for the question. Business formation only impacts a small part of our catalog that's focused on the very early stage companies. So I wouldn't read too much into that aspect or the correlation between the two.

Speaker #3: I think that regarding the second part, I don't anticipate any change in the S&M being part of the GMV.

Esti Levy Dadon: I think that regarding the second part, we don't anticipate any change in the S&P. S&P is part of the GMV.

Ofer Katz: I think that regarding the second part, we don't anticipate any change in the S&P. S&P is part of the GMV.

Speaker #5: Okay. Thank you.

Brad Erickson: Okay, thank you.

Speaker #1: The next question comes from Rohit Kulkarni with Roth Capital Partners. Please go ahead.

Operator: The next question comes from Rohit Kulkarni with Roth Capital Partners. Please go ahead.

Speaker #2: Hey, thanks. A couple of questions. One is just on this doubling down on high-value things that you'd be doing going forward. Where do you see the heaviest lift next 12 to 18 months?

[Analyst] (Roth MKM): Hey, thanks. A couple questions. One is just on this doubling down on high value things that you'll be doing going forward. Where do you see the heaviest lift next 12 to 18 months? Is it you need to attract more supply where that is capable of doing these high value things? Do you think you already have the supply or is this a function of building the product and then getting more and more high value buyers? And then kind of as you do this transition into more high value and better matching is there...

Rohit Kulkarni: Hey, thanks. A couple questions. One is just on this doubling down on high value things that you'll be doing going forward. Where do you see the heaviest lift next 12 to 18 months? Is it you need to attract more supply where that is capable of doing these high value things? Do you think you already have the supply or is this a function of building the product and then getting more and more high value buyers? And then kind of as you do this transition into more high value and better matching is there...

Speaker #2: Is it that you need to attract more supply that is capable of doing these high-value things? Do you think you already have the supply, or is this a function of building the product and then getting more and more high-value buyers?

Speaker #2: And then kind of as you do this transition into more high-value and better matching, is there a scenario where the services revenue or the attached rate of services to marketplace has a different algorithm given higher-value gigs may not need as much ads or there may not be any need for as many subscriptions to sellers who are trying to get signed up for more long-term contracts as such?

[Analyst] (Roth MKM): A scenario where, the Services Revenue or the attached rate of Services to Marketplace, has a different, algorithm, given, a higher value, gigs may not, need as much ads, or, there may not be any need for, as many subscriptions to, sellers, who are, trying to, get, signed up for more long-term, contracts as such. So how do you feel, longer term that, that mix between the core Marketplace and value-added Services could, could look like, versus where we are today? Thanks.

Rohit Kulkarni: A scenario where, the Services Revenue or the attached rate of Services to Marketplace, has a different, algorithm, given, a higher value, gigs may not, need as much ads, or, there may not be any need for, as many subscriptions to, sellers, who are, trying to, get, signed up for more long-term, contracts as such. So how do you feel, longer term that, that mix between the core Marketplace and value-added Services could, could look like, versus where we are today? Thanks.

Speaker #2: So how do you feel longer-term that mix between the core marketplace and the value-added services could look like versus where we are today? Thanks.

Speaker #4: Good morning. Rohit. Thanks for the questions. So on the first one, it's really very much around the data infrastructure. The matching algorithm that prioritizes quality and trust.

Micha Kaufman: Morning, Rohit. Thanks for the question. So on the first one, it's really very much around the data infrastructure, the matching algorithm, that prioritizes quality and trust. And it's really all about the customer satisfaction and retention. In terms of talent, it differs between categories, and it changes over time because we see more and more types of skills coming in demand. In most cases, it's very easy for us because we've been doing this for 16 years to make sure that we have the right talent. We haven't seen any pockets of shortage in talent, but in any case, we're always equipped to fill any shortage in a very short amount of time.

Speaker #4: And it's really all about the customer satisfaction and retention. In terms of talent, it differs between categories, and it changes over time because we see more and more types of skills coming in demand in most cases.

Speaker #4: It's very easy for us because we've been doing this for 16 years. To make sure that we have the right talent, we haven't seen any pockets of shortage in talent, but in any case, we're always equipped to fill any shortage in a very short amount of time.

Speaker #4: As the go-to-market, we see that an opportunity is expanding channels from existing channels into AI-native channels. Building the enterprise partnerships, as we've talked about earlier in the call.

Micha Kaufman: As the go-to markets, we see that an opportunity, expanding channels from existing channels into AI-native channels, building the enterprise partnerships, as we've talked earlier in the call, and targeted growth loops for specific use cases. As to your second part of the question, Services revenue will continue to be a growth driver for us this year. That said, the pace of growth will be more moderated this year, because most of the efforts this year will be foundational, you know, to improve the marketplace moat and enable high-end flywheel. That said, Services revenue as a long growth runway, long term, as we enable every aspect of the talent's need and lots of service expansion opportunities down the road.

Speaker #4: And targeted growth loops for specific use cases. As your second part of the question, services revenue will continue to be a growth driver for us this year.

Speaker #4: That said, the pace of growth will be more moderated this year because most of the efforts this year will be found foundational to improve the marketplace moat and enable high-end flywheel.

Speaker #4: That said, services revenue as a long growth runway, long-term, as we enable every aspect of the talent's need and lots of service expansion opportunities down the road.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Micha Kaufman for any closing remarks.

Speaker #1: This concludes our question and answer session. I would like to turn the conference back over to Mia Kaufman for any closing remarks.

Speaker #4: Thanks, Megan, for moderating the call today and for everyone who was joining us this morning. Have a great day.

Micha Kaufman: Thanks, Megan, for moderating the call today and for everyone who was joined us this morning. Have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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