Earnings call transcript Q4 2022

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Operator

Thank you for standing by, and welcome to Upwork's Fourth Quarter 2022 Earnings Call. [Operator Instructions]. I would now like to hand the call over to VP, Investor Relations, Evan Barbosa. Please go ahead.

Evan Barbosa

Thank you. of quarter discussion XXXX full Upwork's results. financial to its and fourth year Welcome today Brown, is Chief discussion the Leading Hayden Executive Upwork's Officer. and President

your review Following But prepared remarks, be to management's we'll first, safe the take I'll harbor statement. happy questions.

statements future may are under are variety to performance, laws. but call, securities our are statements of statements to and a make rather this business related risks, assumptions. During not federal These we that forward-looking guarantees uncertainties of subject

from expectations materially in Our any actual differ results statements. reflected forward-looking could

statements addition, impacts invasion and and in and forward-looking business COVID-XX In suspend our rapidly. of pandemic current are and and to our related of the Russia's COVID-XX regarding our Ukraine taken operations impacts future actions any Russia's the decision current and we invasion the statements Russia business and and of that on changing future and have Belarus of control are Ukraine matters pandemic beyond to to in response

of shareholder For SEC website important refer Relations filings discussed and the on material other actual the factors available as to on today's our important a our please well our affect risks in website and Investor results, discussion letter. risks could SEC that other as factors and

forth Additional December for the report XX, in information year XXXX, be will on also set ended annual our Form XX-K when filed.

shareholder found the Information reconciliation of our investors.upwork.com. a in regarding non-GAAP on Relations that reference addition, measures. this website measures to be at will can GAAP financial In Investor was afternoon be non-GAAP made to issued letter

XXXX full are XXXX. of the to quarter are of otherwise the comparisons unless the and non-GAAP. cited fourth and XXXX GAAP year fourth the full to or always, as or reported year -- measures figures to XXXX comparisons All unless rounded As noted, quarter of of

call over the turn Hayden. to I'll Now

Hayden Brown

innovate, our executing thank we earnings new joining of Project meaningful work In including marketplace. progress We for dynamic our new Evan, to XXXX innovative Consultations our and environment, Upward pricing. a Thanks, evangelize you made Tiers, quarter the and Plan delivered strategy call. features, our and us client in all Catalog on for for fourth Marketplace products Academy today XXXX, scale and face Project Client and

our delivered investment and our strengthening measurable continued Enterprise results. marketing brand in We Suite,

it innovations and talent productive their and investments, more these Upwork. Through and we to made clients relationships easier and and for on work manage connect

$XXX full XXXX, year For grew grew reach year-over-year revenue to and the reach $X.X XX% million. GSV XX% year-over-year billion to

in negative Our full year EBITDA million. adjusted $X at came

exceed trends that retention grew GSV during million. the macroeconomic of caution quarter XX% demonstrated continuation again billion and and year-over-year EBITDA $XXX.X trends Fourth budgeting reached once million. In fourth year-over-year revenue fourth XXXX, to We quarter to third softer to customer across $X quarter. leading adjusted The base. we reach client our $X.X of grew a X% acquisition observed and in the the cycle, planning corporate saw quarter

hiring budgets headwind This from first in uncertain behavior see grapple sequence costs will the onset and is In or of as overall phase, budgets. a in seen uncertainty we they moving companies reduce may environments, weakness. freeze phases. we of through consistent This typically with have experience which is past customers the companies their a when macroeconomic macroeconomic reducing with our

a such phase, headwind confidence can start to second As they the in have resources others further. our they from hire, they This we the more our when offer. characteristically the gathers turning solution shows Upwork, In being and to move a flexibility the to redeploy than structures phase is because This we into improvement, have their of signs as more manner as typically a budget best the definitive deliver returns. and solutions seek efficient companies realign shifted momentum where tailwind. when cost final companies speed up is to of economy to ramp and aggressively

moving customers second see their our many first are phase, some with budgets, we realigning of phase. the the into in Today,

the Although of ahead is have this us. dynamic creating near-term on our our numbers, in opportunity headwinds we eyes

taking for we the and benefit Upwork access the proactive full skilled, can offer global cost-effective, with third needs. and phases companies steps to workforce provide are meet to We highly to position as solutions flexible rapid talent second their

continue all want we end-to-end Upwork. XX are as to all we full-time more customers than To expertise the only solutions existing of launch, is to opportunity but do the advance set the long-term freelance Earlier now journey worker largest started our for form next the to marketplace to is well offerings world's for, years a ahead work working Upworks' relationships ways customers week, This evolution in to and trusted alike. of our bringing marketplace clients to hiring. to clients work new we known enterprise capture the solutions support not we global step customers, announced classification on us, bear enable Upwork our of to the from marketplace. With that and the available innovate solution in our to technology so to to as our XXXX full-time hiring expand this via complete this

offering both Upwork is work than that they work interested solution from first-of-its-kind of natural around XX,XXX existing affords vet, see who and and progression quickly and extension and Addressing more strategic both of our all businesses mission a and supports work behaviors talent global talent work and This natural skills. the end-to-end the hire work marketplace easily, together our on in full-time are world expansion today. and we further a choice clients and enables how pay find, to flexibility cost-effectively full-time in delivers

brand priority. been awareness and have companies previously been managers ourselves campaign of introduce an the many hiring a who to has not on to Embarking Upwork aware ongoing

a our been and companies understand value audience Our awareness managers goal has raise proposition. ensure broad and to across hiring unaided compelling that

about educate solutions. are companies to we and costs, their scrutinizing right them As our increasingly the is now time resources internal believe

segment a launch the the XXX%. Now launched the grown in large target third With more quarter in with we than XXXX, chosen are our the Is represent large our We the awareness the saw TAM, and among quarter From September We businesses, with growth top-of-mind thus impact we in recall, campaign Work is brand to we growing new awareness, XX% the XXXX, on a unaided XX%, of of category. fourth which on mentioned in among first businesses, increasing measurement by campaign, brand measures of our of which brand ad progress audience, being XX% which we expected. results grew which seen awareness messaging greater more unaided has September far. pleased How than have campaign, than biggest Since our awareness This

brand at media macroeconomic XXXX Looking moving spend in changed rapidly, to approximately XX% climate we and by also year ahead, the are reduce XXXX. recognize our we to compared the working has

future. in the in date, Given this are business-impacting campaigns sets unaided about and this investment to we to tailored as as to strong marketing reduction have to metrics and achieve growth continued customer- goals us on deployed to awareness impacts able the realities targeting respond this insights focus and area our make while data measurability testing new in how significant to while our overall evolve and delivering driving well that room This is are our we the investment giving more make and in outcomes still mature. data-informed macroeconomic XXXX, in costs campaigns decisions we continue efficiency approach investment our our into downstream with seeking as strongly

revenue business, Enterprise our In year-over-year. grew XX%

enhancements reports features increase XX% and corporations their talent continued and cycle flexible activity made budgeting new our on In changes performance late-stage reports. through of the deals ramping into educating quarter, by this in our customers their make XXXX prospects signed approval progress they pushing also the user We extend resulted the customers these the fourth and enterprise to saw in and changes. to the in In sales delayed as average an we workflows, fourth new as nearly we we in as quarter, year, the work processes. length sales including and and force launched XX clients, approval unprecedented

source HTC, in Lucid evolving of JLL, and environment. Maaco, them included Our to workforce help talent new both Sweetwater this to The the Motors Sound, decision real as cost enterprise of companies Upwork we efficiency Upwork we quality talent as through use on the these solve testament provide. their have to who bring is needs well to value clients Upwork high-quality companies turned leading a and the work through like ease of

We growing experienced are enterprise making sales internal the quarter. strong progress last pains operational addressing we

elongated cycles in productivity track deterioration recently, them a on the team our our normalize enterprise enterprise to full sales as and with reps' and and performance clear Our expect momentum we macroeconomic see started efforts late see improvement reaccelerate as with have the XXXX. even the environment, We land be Upwork. experienced of activity to the ever further quarter remains the attractive in has fourth Barring quarter, gap in as third on the we path fuel productivity by for at opportunity into our sales the believe of to we funnel top expect move of close XXXX. back we to to

and we we the opportunities a things that of In the make can and nimble proceeding manner on may balanced ready while focusing most to arise. that XXXX, are control in any being

been With functional a opportunities each a return structure, outcomes For significant business our growth all purely times with a a that of represented portfolio example, made unit incremental change on we and investments set to business by have reallocate customer fragmented concentrated we this key business helmed in a of able delivering from to of unit organizational resources laser-focused more at strategically opportunities. our broader, composition. to leader areas, in resources attractive framework, and organizational new from December, moving a to more

ourselves set accountability organization. As throughout up we the and a future the result, agility increased for efficiency, have with

is achieving margin long-term focused we a adjusted excess our regard disciplined points targeting We to and our basis increase goal of per of XXXX as management, adjusted to of year profitability toward margin leverage, XX% to XXXX our to operating expense target with growth. on EBITDA communicated hundred our increasing remain are strategy and our growth critical of cost previously of few EBITDA aim operating progress A committed remain in EBITDA adjusted part in to revenue an XX%. by our we

offense, entering We the to of opportunity on ready capture us. ahead XXXX are

and marketplace continue turn uniquely benefit With about customers in evangelize full world's We and our where we'll in steadfast are as as long-term Upwork learn they customers and beyond. and to and remain and we XXXX Upwork work vision, to for work solutions, talent the innovate, range are of leading our to their needs. cost-effective meet positioned scale

open your the now will questions. call to We

Operator

Instructions]. [Operator

of of Our Piper the comes Sandler. first line question Matt from Farrell

Matthew Farrell

each understand us to first kind push into about the can guidance help phase from year. that move the process, of mentioned what to how the perspective? are phase. the we thinking the embedded And some of do You macro you're moving And is is there phase another many customers transition that are planning in one Maybe second throughout phase customers to as in still transition a from the but amid uncertain macro? Upwork anything just

Hayden Brown

Sure.

first our frame how think questions. which help will me formulated Let we those answer Matt, guidance, I

we in about a in in retention coming half than we've we year. the we certain as gate, year last of that of in and back thought half saw customers seen see trends back we informed trends and in So slower with some did the the line a would cases, out of softening normal and of see acquisition this year, year, how last the

have thinking we a we're are to So trends is, the and QX the that how that pushed customers and some elongated looking on into lot spend QX And things right budgets, from is in business them baked to coming getting uncertainty really has now. and reevaluating in that talking at levels customers, guidance year showed with view of macro deals informing things QX. QX been seeing and that ahead, the of kind our up really based about into their the like our for ahead

think, the first for we some of of still that terms do phase but that into the some outweighed is some more transitioning headwinds by, customers. phase, see seen from solution customers I Upwork we've heavily, leaning second with this to In the

that a And that few to control, so what the can asked addressed One sales we're as about, issues really the is on you side doing we've outcomes by doing were we things. of the do here going in flow a And work it's at back those last the but of the end the little top already year for happened. us to take to time funnel. has through, holding

to doing spend thing is actively expansion, of evaluating we're where and accounts on The are the that attention focusing constantly time sales our second the have highest the on we spend which team and and probability effort.

cost and And this message we around our the benefit at the when spreading our value and offer sales a aspects options, then really the marketing of proposition time Upwork's our doesn't the our at know those invest brand And resonant customers, are to is on activity are overall, Upwork. that moment laser-focused marketing agility so get this is in reasons landscape. because in that most year that's this of we target can savings one they market just from something continuing

things get how to what Upwork the them can of the customers this those of solution and into little Phase all connect help Phase of being a seeing So X, environment. out Upwork be can in scared from offer environment X

Matthew Farrell

how feedback expansion of And both perspective? we into based hiring. this this your on XXXX earlier And maybe a should sense has makes from the What initial the on week from a moving impacting mission. and about follow-up buyers a announcement your talent? full-time lot think It been financial

Hayden Brown

really to something our we've we've customers I X this really hands option opening over we -- And seen we a work say they're year-to-date since to option, million positive those is to already demand strong want on that earlier, around. We've this contract interested mentioned mentioned reception they be the client been we've release, types to raised from think we've and hire gotten also with their This posted progressively part of seen talent in side opportunities. seen as in over jobs customers. up XX,XXX of

really positive. the already, reception So has been

quite as do some Upwork or been of something have trying our larger case to been with I either the in for doing think some customers time, customers, they of this. this see they've

FTE-type with And relationships progress of times a at into to converted needing do and these and because is, in that do play customers payroll natural longer-term come so that the this a they is be us something relationships. way, and projects familiar to where for extension places to we

days In would offering impact XXXX, terms in in the what terms numbers. that early of of of we that really like for our -- it's look

about say for outlook so on that And than upside things I'd in existing that year based would expect the today offering. know we from we our really is this business more specific that

seen but those well a it through well. I here for offerings reception, new take in that the think as numbers get that flow be may strong does to past to case and we've our time the

Operator

Andrew question JMP comes Securities. the Boone from of next Our of line

Andrew Boone

hiring. go Hayden, I want to back full-time to

just with additional core on-ramp about marketplace, think about think As the How full-time for more talk about we with you and hiring, clients? catalog, you just a just versus with more we that? offering can product upsells into complete how about think existing cross-sells an this clients do as

net think else as understood This can anything the tag is second adds adds just macro. through of that's just think along for exact kind thought, you that is then quarter? softness as about that and net help across And quarter there about run with us place you the in the we is the taking -- But XXXX? can a

Hayden Brown

Andrew. Sure,

next we around of in work. on I'd world's the giving marketplace is of the to say couple hire talent shared all ways really delivering want the want clients offering, that the they us terms that definitely and just they years this vision ways becoming all step of the to and of ago full-time a In the work

base of talent well and customers were essentially at client Upwork front our new the that considered we And not outset absolutely this part of something putting right might have opportunities our this to into and have before in didn't as as we to existing strategy. cross-sell market acquisition as because as offering have so both going that we you're this who them

first really what on leverage is we'll out more focus the such around things, customers the that be around customers, is on going certainly, which marketplace. are building already a customers there's we our opportunity, than our to existing moving those and for when I'd time think term near with do have right. is new this those can opportunities and eyes channels we of for new opportunity in just the But of our say because rich both both existing

there in adds We've impacting the for the terms a of seen the metrics. quarter, in net last headwinds year, some the performance marketing In -- things a of those particularly of business. area couple few certainly, acquisition are

actually that half knowing due aspects of year. channels the would performance largely was other moving of seen, have marketing and well, was strategy, one some know to softer environment, really performed in around we The realign know we but to at what just back we us to really didn't what our been last than issues now that available that we've

business lapping clients And issues that had as there's of the from through in have aggregate, as that to is around some been larger in we've very eligible really flowing had more were you active we customer metric. cohorts of a other meaning this around that a now recently, larger strong quarters. acquisition customers just kind base XX-month trailing tailwinds smaller And factors previous churn. know, The cohorts that's

the are on key those some things I'd highlight of So there.

about. comps more offering acquisition We both like be lapping new as as well are with challenging full-time just the focused things on But more to even successful year be talked this we getting we client existing there. will customers

Operator

Our comes of Josey next Citi. Ron from the question of line

Ronald Josey

want ask more sales. just enterprise around bit a to the little Hayden, I

the land of of Upwork, hiring then to about, in basically for efficiency? your last to products just this quarters in the get and building time you And new call think awareness marketing so we're been X team seeing we're saying it execution here. overall fully talking end productive takes about and now XQ. brand some mode, to you talked about to it, we've up X and year, I by hit letter, able the you're to -- needs mentioned by Is the be

little along as Just coming how is Upwork talk in all embark us bit awareness initiatives. in about more you a these to do overall

Hayden Brown

the X are newly deployed Yes. touched There's that that count that Thanks, we team which helpful QX I'd land reps in ramped have unpack a those and say still bit. function business. say, the the cycle. report, a you It's Ron. also really those and is there What I'd new to it's number, The to fully that of side, reps on drive a land enterprise expected that And function operational expand. middle really hired customer our and little through kind pieces is reflected sales our is, the there's the And now the been will at fixes the our have of of by of ramping, improvements. of QX, into this returning year. end which flow be we land

also that of are still closing macro, contracting we've pushed seen very at elongation deals, But of is there that's we number large seeing a stage we is in deals QX. -- there, and are out into then And demand number closing seeing our product. this for what a in QX the what from

And would things that's These we macro all will this outcome any just happening, those fully as sales team things need conditions. close our and our make cycle, faster for do driving so that is of mean And we things And to underscore we we adapting that deals will I changes process that not like our roll dependent environment. is QX. to to by this business. through new expect are in can on productive our achieve are that through that team specific

the the of kind hand, success drivers expand other our deals. closing it. bit One more X land does the coming in new have is little business the from of of On team a

pullback numbers hiring in the of we little productivity impacting that for some just seeing some then and as a are accounts. have done And there of much need QX wasn't a because resulted concerns And customer macro, little budgetary softer year, so bit hadn't team certain against. in to execute is cases we earlier they where and that they manage, that to the the in in bit that

intact, that that driving signals the biggest the opportunities, demand which in view on the in we're have are in the accounts even our is are And So all the very with very execute seeing, if continue a revenue that, activity opportunity tempered. that bit enterprise this to supports is long-term near-term of we strong market. focused really against much the growth more still area

measurability some question, cohorts an second on us I would about we're your I say insights really year our over to the strategies awareness around media see giving effect acquisition the we've is, are that strengths us put how even the did was more think, build the from campaigns the to think audiences that care is To plus, improvements of overall, year continue we awareness which I that we giving about of that deploying, us confidence last for to the those we that customer the place optimize in this positive have course been perspective. most. important developing, on those on brand across really a and And that creative different

these And knew year where time see the we play numbers to in in we're out. exciting the to client awareness strategy, are think, funnel. around in we efficient some as over how is a side media and have with I also by what's, about broader to marketing are so sales and about our while XX%, translating lot into awareness execute brand more continuing a to bringing umbrella time. that visibility more of goals our other deeper continue is going brand productive all And bigger which executed coming would take and efforts this us is able all the sets be campaigns our performance those mature of data on a to down profitability objectives that them data and make we as investment This achieving give to to business, marketing bring in to into the line

Operator

line question Eric Goldman Sheridan the next from of comes Sachs. of Our

Eric Sheridan

or in Phase there where be the of maybe was a the any X in or about of type we backdrop, type how there that was after maybe keeping in should We business. Phase framing as be and of business really geographies, call got mix phases certain a quick thinking out With get either to the follow-up standpoint And economy X differences you we for appreciate XXXX? should I've the differential into impact between mind a certain we around deeper that that pockets the the that. want as little impact from then behavior

Hayden Brown

in QX, did more the of Sure, more concentrated it largely contracting it into impact and did where but more see noticeable the because business then Europe. noticeable Eric. continued the prolonged. business, Enterprise saw being was in say it slowdown we the was new in And also see of I'd being QX the we was not Europe that trends the just of again terms but -- of softness in amongst although that in in U.S., part on the that SMB cycle noted earlier, our deals phase deal as more

elements the we or slightly of different with were in kind some a are those of a that QX. that saw of key nuances saw continuation what So maybe few we

Eric Sheridan

brand of thinking and you're the some that from on of been and proven clients think more get side? Phase side. offensive have the on return marketing about Ron's should maybe quickly more How brand the neutral should sort if leaning the marketing X you on we about beyond? balanced marketing the being into there and going to we an sort you that good question brand on into turn maybe stance out elements marketing back follow-up And How you to ability going see about a feel stance, highlighting X moving from back of of on be to just some from the tested

Hayden Brown

on reach are that to reach is feel now that We at want investment that year. with and are going making the this we're we're the with levels stance the the audience we seeking that an we the investments frequency us it to deploying that ability offensive give to we

comfortable now think area. that I very the in opportunity seizing I'm So that are we right

much I we'll be of in progression us put will the have garnered will will be registered because think and to this we'll happening now the quarters next might position some around is the a who through insights become and different the relates also before be at of and of metrics year that we how about where able these customers what's few active. stronger what and and ad of with connect more an traffic have existing together awareness to registrations reactivation see end that

be we is much informed All experimentation and framework to have of to that going the this more the year. us that for due measurement

of strong of precisely And the very make dots in so call more around for to connect right position going a a year, we'll around be at end is then this that level even the ROI forward. point, the investment what at and business the

Operator

question comes Brent line of Thill of Jefferies. from next Our the

John Byun

little at you Byun maybe Brent a regarding John Thill. for macro is I and had for from so or This growth standpoint. embedded I XX% guided in a looking in year. it QX bit more guidance the what's to mean details, XX% and full the

assuming around plan And that, QX? you're you'll of of the the But how progression. a about in details the marketplace and how terms contribution in anniversarying all dynamics at year. from throughout be of any hiring, macro wondering like full-time fairly it think seems to flat So the couple client

Hayden Brown

John. Sure,

types the seeing of being were baked million $XX $XX year, to at trends that million see guidance and would the ahead. in see outlook that same year, middle and half which can around the I the we're what we into by all negative our that now that level terms what of ones of last of from saw. in Similar So inform year inform we today impact of we're last we basically, expectations that half of is, what to in is what's very much that think, you'll the the -- we looking the trends kind back last happened year to we using of, macro informed for year, back are outlook of anticipated in recall, last the the

behaving out at are level the a spending And the have would where includes of so of they year, period, et they are coming how in that customers impacted holiday cetera. been nonmacroeconomic

as well well guidance what the going our like through years as It's the change. trends as doing drive have the forward. any things macro that see site information specific current more of based from is not of year in so we our we So the baking terms on things condition many to how be plans to arc tend as will in seasonality, we business in

jumping to out question literally that a product. wouldn't contributor in we we're year. the I make door. expecting revenue sure And specifically, be to days to It's to will to optimize your about a We've we're rather very continue about the back-end. this at just customers it to this got this the looking meaningful do To here full-time be early need lot that than experience, the really assumptions say what

around So specific in look our baking one drivers year. mix of the the more not pieces of as entire we anything that. business the It's of really this very at

Operator

next comes from ROTH the of question Rohit Partners. of Our Kulkarni MKM line

Rohit Kulkarni

a org this unit to reorg on functional Just a a from structure. question business

you maybe And now? year? having Just why next year, observable like just over achieve last out draw your what late thinking in to do hope the sorts results there, of reorg from done this

Hayden Brown

be a an I And with leaders of sales marketing to something both contemplating most of discrete different outcomes, these business those over realized levers, full ownership this very in it's charge accountability for as and, parts long year effectively drive cost cetera. revenue we business. look been their et drive putting last exciting whether levers, we've have that This to components time, of we the leaders Yes. product, of at levers time stack we effective could to more is made, how And change business.

across us And independence alignment delivering to for really us structure us kind of giving for different big key be what intended is I forward internally than how to risk-taking, against. And a we're the and of priority priorities this those in ultimately, resources we're and a think, areas. to deploying around So the a it's really more leaders picture-owning areas. model. gives different is the we business it big efficient a with greater business be drive gave in chance functional they respective Certainly, that key in kind had forward-thinking shift as their move

to the was right do this So time it.

and to enterprise in this mix, we're to leaders felt we're looked and total I especially is time that we more like a of different customers at SMB, just different think product the responsibility give as types business. the I and the into ownership between picture heading serving complex different

Rohit Kulkarni

follow-up start and while that change take on incremental seeing you are to that we price you because pricing that the so, stabilize feel you to there point do from the you get rate seeing. GSV that And and change a point the would Is trend in just future? did hope Okay. are a seeing the the the at pricing trend GSV that, pricing leverage? we the that Was your did? at headwind headwind starts if point, start of diminish the to what or And you're increase some

Hayden Brown

Sure.

seen the line successful, the GSV a definitely rate we terms do in gotten even change, headwind outcomes see, side of as we in receiving. features higher working we of on a Customers very we've that revenue time and the although marketplace, business. for has a were overall anniversary that benefit uptick yielded better big for a a the our have of pricing for is the change some So higher functionality take period feel them, they're that was this with expectations. The and pricing until

of what situation change of once anniversary April something we be fade expect observation we that in overall, change. kind the of will we've change, new that coming last that year, the do kind seen that So the the and I was GSV think, will that. of around out will headwind We is saw which pricing a with late of that be out

Operator

Markets. question next the comes of line of from Capital RBC Reich Our Logan

Logan Reich

be probably would would one as could intelligence. lot just a you're long-term you through artificial be on view want the some a that result tailwind business a up like intelligence advent as intelligence? or just for that gotten of basis. categories one on do that of long-term artificial Obviously, more AI also buzz recently. So a there the ChatGPT categories to basis, a On and sense Just a headwind some get how quick of of of thinking more pop fulfilled a how has artificial given

Hayden Brown

Yes.

is of and our for customers I'm our about exciting far that in terms AI a highlight to that I going of are how in excited impact the the so view in certainly, for things outweigh the here Upwork, particular business. couple our Our and opportunities risks. opportunities it's customers and

incredible get be are we're they So one of that's these is tremendous is seeing these leveraging leveraging effective tools Upwork why all applications talent in available what think to work, terms how tools better talent, we faster and value. come the for, and in at on I already can with talent talent, our line can in to more today, do. cheaper already And that see, productivity they're their a just is Upwork that and with that which and but people make them better, what looking

AI The to stages to developing, kind so of headline They that do second building and the is are infrastructure companies the work are all one those commercializing related news need that talented is do models. of see of the much deploying workers days. platforms these of that and the subject of skilled the we

notable ways with and companies need, we in this we as talent entire AI Because through on to growing. a the to to in go already that is is, them continue these variety that as market actually themselves. of models with smart as all can so happen. the the the And work space, models people are this There make workflows work expand don't serving needed -- they this and build

their that AI to need whether offering they applications into The that or I their to third customers, new this for that the websites opportunity are integrating ways services, and about talent tools into work am is has them going these companies it's of they're again, and serve and excited do integration around at already solutions forward. market. as another tailoring And this Upwork do customizing, is where to being in some and market talent of adopted can lot the happening activity a the integrating continue scale work deploying place this the

that well post months. on the the I seen website we X,XXX% of searches alone our for in last grow months X,XXX% we've couple last AI-related as job growing services in as think X noted

technology. impact think, that just the way of kind of business I positively is beginning, this our So next our take this and of many navigating customers as very advantage will Upwork of they're frontier ways can the that this

Operator

Our Ripps line comes of the Maria of question from next Canaccord.

Maria Ripps

back about of sort point different wanted I your go So of phases to to recovery. just

the second at phase, if that characteristics I are have And clients common verticals And you or even the of so are sort perhaps that quick there look any represented moved then have a into follow-up. group? in that

Hayden Brown

Maria, tech-enabled -- We do anything at I broadly. clustering Upwork, there's or trend industry terms in a wouldn't that. by serve do that say, like businesses see we of activity specific

so the we macro. parts see business different impacted And be of through the

and and that in about. we of are navigating in are talked comfortable time. Some a turbulent X, Phase others they're spend as leaning more ready to more. they're They're kind And

their that, that I companies is cuts base kind stages both and company-specific it's seen because And evident simultaneously of at of hasn't different look data of -- those kind the of through own is wouldn't right of demarcation like are pace moment. -- are now. that you It as things that, even at like behavior. that this moving things clear been there's So at very determining lines seems customer different say of the our it in things industry,

industry. So we're it not by really seeing

Maria Ripps

opportunities then on of and Can maybe spend brand spend color secondly, reduce to all appreciate other this understanding year just spend And prioritizing you're of year. Got the brand brand sort relative sort this you're I how that about you about thinking talk sort to versus targeting investment year? last it. of

Hayden Brown

as sales for the our Sure. market. market the we've of whether the that headroom performance our channels, that advantage of awareness brand brings more market We take ourselves think the and awareness space can team, et digital driver created then cetera, spend marketing, marketing, it's and other because other kinds, up umbrella pick that about of in

right meant all those of the that something deploying we're to as in is a underpinning strategy that's now lift activity kind reason, it So other for business.

think what if or to them proposition have would evaluation. else. in at majority we brand think to and And or shared best conversation and will of we companies of aren't results Upwork up offer. we a be it brand spend resonate belief I then. with aware because some But reason where make we'll right of clearly, we we the we year I prioritized I it the profitability around that return later something have is the our getting unexpected this from think due yet aren't unforeseen will have the value of absolutely because look trade-offs else are the or is mean and brand be the of just moment others area a that now, when for I for something that things, and and the aware vast is

connect and will that dots and marketing harder work our sales of have those have in product environment them then we all awareness. and of to we So for more of work rest when that the

Operator

from of BTIG. comes Marvin of Fong Our next question the line

Marvin Fong

A couple of questions.

for guidance first Just revenue on the XX% XXXX.

just to relative kind at Just enterprise guess. maybe lens Do guidance. expect the your year-on-year? you're those to markets if weak it them could how about about wondering we maybe similarly color thinking you is SMB. X outgrow to all going would of But both versus of through end SMB, look be Obviously, of just enterprise you some add

Hayden Brown

up so comfortable pick or rocky get twitch down when the then slow part of Sure. twitch they I'd conditions say part are are they the and faster faster our faster conditions the business. business, Enterprises once change. SMBs tend once to of slower get

the we different improvements operations like and flow-through So on they environment. of things timing behave the and last But slightly through issues still I made call earlier news from things getting seeing we lot is good year that us arc. in more that. demand ramped the the mentioned reps are A the are in a of strong

for different line some numbers what the from both will grow with on grow baking But each I in on why in heading end these side. year are they based sides, So we're that's way trends of the this an the right year. to we're expectation will think both seeing and business are both in that and the we and dynamics now, parts of there seeing that's a last

basically we're our to So based date. done some everything expecting on that and execution consistency there we've

Marvin Fong

just That's topic. like my great. And second on the returning to then that -- question, my net next adds, question

you active were the that, them leaving since recapture about metric, to sequentially what of not decline them just really could you churn out, does follow-up maybe sorry really business the the and that see you're a first quarter And that appreciate just I giving platform? I the that. I us sort us I do then just been mean us, curious and is for that can was to really you've you able clients to that future? they this as tell think in the for reasons go? who dissect experimenters are we're client clients didn't tell if history the much

Hayden Brown

client their mean smaller more simplify on of have to last large I'd customers. are relative you we smaller sure. lower very acquisition that Yes, to is reason contribute number, -- very do go ability cohorts But kind to to XX to that try acquisition the been creates the the in rather that periods cohorts the cohorts active recent months we when the this more -- so adds net quarter-over-quarter our I back in acquisition reason over that or mix. say terms with base to large had of healthy the of recently,

do seen changes have time, are customers episodic meaningful more different we churn site, -- wouldn't look behavior. at look churn as periods our we at in display -- it's that kind as measuring on -- concerning, I say of you of And over then

so may see say and they for the you customer to that dormant -- months, customer come a like because they X we it's lost X with multiple not case needs have back of and X might hard then months, whatever it's go kind or And when be. come back months,

existing lapped sure continuing obviously then and offer have reexcited coming to of may driving might in that doing things think put customers terms the get efforts them. Upwork, solution, engagement we users from we're we in can about year full-time have or product those healthy. not our our can be with this That's acquisition make I in part that them of So that things they things hiring, known with strategy to cohorts to continue that's terms that that forgotten lot a where customer like of

Operator

of of line Bernie comes Our final from McTernan the Needham question & Company.

Bernard McTernan

the just to is it? instead incremental end-to-end Just lastly, confidence the of hiring, cannibalizing solution the that on this for going full-time I you marketplace business or what be the provides talent to to guess

Hayden Brown

think matters, Bernie. it don't I

better something customers, solutions think that customers part we're is continue we're into that if of job and are better, to needs previous the to we meets to then I better. can than innovate superior offer giving giving faster, that to where solutions the that's our spaces really their

situation. we So type It's them gives this alternative. think as this look of at much a don't I cannibalization is It more an additive.

will thing, a in didn't Previously, solution to do to space. this Some will have in X them to talking a want They different ways. customers. to be of want range need of all we some other. the time do for people people X this We perfect see met a needs that have in lot

do. we Now

if some And and it certainly, on think win. overall. as move that over a offering, then But this way was in is worked X take Upwork I additive a relationship previously people this we so see to that

Operator

over call Thank you. this At to for back management closing turn to time, the remarks. like I'd

Evan Barbosa

you your Upwork. in thank On and thank team, for joining interest behalf for you entire the of us today, Upwork

any call. or to If please need me any to not do follow-up This you clarifications questions, have hesitate at investor@upwork.com. concludes reach our out

Operator

you for participating. Thank

disconnect. now may You

Upwork (UPWK) 15 Feb 232022 Q4 Earnings call transcript