UPWK - Earnings call 1 2023

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Operator

Thank you for standing by, and welcome to Upwork's First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded.

I would now like to turn the conference over to your host, Mr. Evan Barbosa, Vice President of Investor Relations. Please go ahead, sir.

Evan Barbosa

you. Thank discussion quarter Upwork's financial its of to XXXX first results. Welcome

Upwork's today Upwork's Chief are me President Chief Hayden Officer. Gessert, Joining Erica Brown, and and Executive Financial Officer;

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

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

risks, performance Forward-looking uncertainties a are not statements historical fact. statements These to include all assumptions. subject of and statements but future other variety are than of statements of rather guarantees

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

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

in Additional quarterly months March information XX, our XXXX, the report on set also filed. X be XX-Q for ended will when forth Form

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

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

Now I'll turn over to the call Hayden.

Hayden Brown

joining for first our earnings today all us Evan, and thank for you Thanks, quarter XXXX call.

thrilled Gessert. like started to I I'm Upwork. take to introduce results, we moment last would new of to our to role Erica week, her dive She our into Erica Before you all welcome a new and CFO, to

is before Officer, of Analytics. Finance had and extensive team. She SVP and and previously Erica a record served joins she of tremendous PayPal, addition us our as that, operational to excellence track Chief an financial has Transformation driving from and where

Erica Gessert

and Thank you, everyone. Hayden, hello,

and to history. saying deeply vision, I'm inspired by me by such growth the mission company's tremendous ahead the delighted Upwork's I'm important compelled potential time by us. join in at Let and Upwork start of an I'm

energizing. on has a environment been At to business the Hayden very to making business, week companies going environment. in the clearly the for I've There's and busy team lot many decisions weekend, here My by a so been the now. first the right affecting and and and their this impressed just we're not but macroeconomic immune difficult in responsible commitment

lot ahead spent forward key to organization business and Upwork a our time relationship the opportunity I leadership of team the of with and profitability the past lot growth profitable well but diving analysts with details key investors, on partnering and week us, the growth. the as and significant, continuing work Hayden over of engaging important There's a committed long-term I and our is into initiatives. of positioned rest of look to other our stakeholders. sustainable as and and transparent the delivering well is with

it over hand Hayden. I'll Now to back

Hayden Brown

and marketplace. with Erica. looking our partnering Thanks, forward you scale continue to we to evangelize innovate, work as I'm

adjusted straight GSV of quarter. $XXX.X first first negative billion growth XX% and the the EBITDA exceeding in year-over-year We we our saw better-than-expected first swiftly economy impact the with to and the moving customers spent of realities as We adapt delivered We revenue quarter million for quarter million. quarter quarter $X further to $X.X had to fifth business. XXXX our of new first a

$XX the in Upwork, billion We on freelancer surpassed in years. only an earnings $XX doubled from exciting first milestone X quarter, lifetime also in which billion

and beyond. clients Upwork. hundreds billion achieve business of high-value milestone relationships thousands on earnings diverse, with a to next to the this long-term This happening We're well talent $XX highly platform trusted skilled day testament work every build of our the on abundance milestone as the of as incredibly is in of building freelancer which

in the our growth both saw At expectations certain measures which progress profitability. revenue customers take accelerate marketplace. be metrics X-part our of top reduction and most large the Upwork framework. of increase opportunity our profitability unanticipated proactively via to our to same due and remainder line and to outlook year businesses significantly cost profitability growth caused intentionally aggressively lower continues in are time, a for Enterprise we self-service the The pronounced and some with long-term uncertainty, to and to we was and significant, the goals ahead client towards macroeconomic advance moving This deterioration us our

and profitable to to running reduction, First, considerable Steps our commitment reduced efficient our and pause taken an a we members. include brand hiring unwavering plans We positions efficient, business. have our in approximately by workforce investment, XX% vendor-related on full-time reduced our operations second reduction employees team building streamline XXX of revisions to a roles lean and expenses. our of of independent also have remain or half organization. workforce media We a

our our XXXX. the indefinitely working media for than the reducing of $XX second We're plan in reduction a prior half investment more XX% brand media of by also second versus brand and representing million half pausing the spend XXXX, of

done team increasing and brand our our has phenomenal unaided awareness, customers. resonating is brand job Our with campaign a

into into translate when this brand the prioritizing However, see current conversion environment, in not awareness time. continue macroeconomic visibility we have we do the client to at exactly investment enough will

million deliver measures in savings annualized are $XX the XXXX. drive million of net to $XX over expected approximately announced cost total, savings In cost of net today and

a EBITDA X% quarter representing guidance costs. margin, second of $X approximately EBITDA to million, of adjusted Our to $X adjusted includes million XXXX severance-related $X X% nonrecurring

approximately would our to XXXX These a course us adjusted XXXX put for returns. on costs, severance-related of our actions X%. with to quarter to have commitment growth fourth adjusted XX% and strong EBITDA deliver expected margin durable Excluding X% be these to quarter remaining consistent margin invest drive EBITDA nonrecurring while second ongoing

new cost CFO Erica our in as during operations our Gessert, on optionality who continue to first and agility focus thrilled are quarter. the discipline, Our announce will we cost under

next about more will We settles and into over the as Erica quarters role. the targets share our outlook several long-term

also of forward leadership our to Officer new end Solao were team. Sunita pleased We as her quarter and People to people after Chief announce our shortly look

growth our portfolio. to main focused be priority, on and a optimizing now. we major areas are Second, right X continues Growth

last our the Catalog improvements years, expansions, we including Suite, integral and our the lineup addition announced Consultations Enterprise Project solution to with and our few new enhancements like hiring. product considerably bolstered end-to-end full-time key Over of recently to support products

a our hiring spend, retention. and capable for space, lifetime know category of our destination client and opportunity offer is singular As serving we to the critical of customers full the value their breadth leader needs in work that

than in team drive the product means adoption more position product to lineup, to with scope R&D, of going are This deeper work. portfolio our on focus the customers. a strong and deliver Now that will our we are narrowing and have our such even a robust of which experiences broader rather the we we delightful projects

be focus continues to AI. us major for Another area generative

We for AI-related are preeminent a establishing the Upwork finding as range specialized of hiring and generative option for skilled work. full talent

pursuing identified and of unique this our multiple have our development, and clients and own dimensions We talent, for research opportunity partnerships. are through own teams product

work, time To continued related related new the AI The this average the number of reflect we over technology demand, total generative the bringing and talent increased number demand updating implementations search more to in quarter supply Marketplace over generative posts skills to than increased queries weekly weekly of to of exciting generative to our X,XXX% job quarter AI and to period. serve tools to engineers catalog first explosive categories average new XXX. work AI the for on and compared and same like the fourth continue Upwork project added over roles of climb. related Both XXX% of categories prompt Talent have to number and and XXXX

new and customers been by experiences made have innovating AI and teams development possible and generative our interfaces large own language testing Our also technology models. for

posting transforming testing like generative customer answered. receiving and are core questions having started, for AI-powered jobs, support We experiences solutions getting

around We are to bring Upwork we the serve. the on talent working technologies benefits these of new every category to in clock

going a us for for we cost-saving it We be power to emergence a committed and its and Generative harnessing advantage know mainstream efficiency. force clients, excited. exploring the into has tool and that and AI's fully talent multiplying is are to

expand sales cycle like client we And key could spend of new our some this for length, in of to Enterprise we XXXX. achieve land XXXX, in in trends third, suggested These in where fourth indicators included productivity client the environment. goals close metrics expected In or growth retention tuning our our customers. strength quarter quarter-over-quarter rates, levels deal sales win macro and stability from largest spend approach and

did not the in early in expectations materialize, our the shifted Those these second and first expectations. quarter in quarter metrics and headwinds

footing. back changes in that today put So accordingly sound we've acted on personnel economic our sales team announcing

be He will building stay in and He this is role second the stepping today's GM Chief point end of Sales contributed our part current to changes, will so As our and advisory Enterprise, Officer a the Gilpin, an through leaving quarter. has of Eric business strong legacy. team and on much down.

time drive sales the We're strategy, our refine with best. team our focus targets. on line key our to back productivity where are the stronger using opportunity we products also have, and ROI of leaner reps data about We insights insights this areas results in will testing in to environment our in bringing with productive and quarter analyzing first spent our and our performing identify sales those the most

and X-part as In notes. we framework, principal to objectives, of first allocation. repurchased on a quarter, the To structure the amount at $XXX convertible support discount our continue underscored outstanding we capital our in in million over senior focus

we confidence continue that business intact. to some given turbulence manner of the nimble a Despite the long-term operate face, proactive our and continue our to short-term be massive we in opportunities

at rate. continue our we to demonstrate, moderate results As a more albeit grow, financial

and at Our and and to continue growth here actions progressively the be profitability on and with environment. and are to in capitalize unlock the spend delivering prudent we recovery now, will durable the taking established aimed in sound, our macroeconomic position investments as strategy we disciplined business

control, and our work are to and XXXX, diverse pool evangelizing marketplace we needs. can that innovating, solutions scaling on talent deep of workforce unparalleled exceptionally focused work cost-effective, things skilled a and we an delivers Throughout the meet customers' global

open to now your questions. We'll you. the Thank call

Operator

first comes question Instructions] from Goldman Eric [Operator Sachs. line of the of Sheridan Our

Eric Sheridan

Maybe I could. X, if

versus we And at be over should efficiency the the of elements one. increased profitability medium then to stay versus initiatives eventually allowing will medium-sized might back program, redeploying reinvesting of bottom it terms larger and your terms the the there in of and or still growth of there clients versus a of First, you you're seeing more you're the growth, why contrast where small- of could be seeing on impact behavior behind the to the of the some line in how very long think macroeconomic possibly we philosophically margin and drop clients and about seeing larger the growth some larger clients that clients your good of term?

Hayden Brown

with had the To Others unlocked our Thanks, maintaining existing an clear is opportunity be business. themselves those that larger the our Enterprise this couple they've or their It's Eric. the that's that in us, trends spend your And for the spend offering. us normal on clear customers that and over some macro environment, And through spend. that. time this under seen might of layoffs way expanding feeling or them this in with we be TAM. us that cuts definitely months the have things their question in might again, translates evident, is feel going really we've last whereas, excited still reducing of they the of macro like spend instead Enterprise environment, just seen pressure. first environment. in we've would as of customers And maintaining expanding ordinary around a the are they side some that through size are emerging, budgets about really of of budget budgetary our with really for But

business more So and outlook in in than half reduction the to for has been showing of that Enterprise this year. our our contributed guidance through has

outside talked average do of side contributed marketplace this smaller really spend the less trending what has the where and of macro, client to incredibly normally guidance resilient. probably see is that we business, the we in well business per while would our smaller been we about On see our outlook. than takedown much some And customers, they've

rightsizing that investing right our see and so sales and places returns in our can like of changed. in the has business. a the has demonstrating now are what us are in we've To changed, to take good that we your some the second and always this not excited which on we're drive margins have priorities where that line, where we question again that R&D we been line see very profitable in thinking around we effort about growth about driving are bottom things this and But can environment. That reordered growth in of environment, really committed profitable based philosophically

with So a take where would good we I business, is think year think do XX% early exiting in this margin, at think, beyond. what can and approximate we but say XXXX of EBITDA it's QX this I indicator we to

Operator

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

Sang-Jin Byun

a get the side, This were maybe is John weak, Thill. on was macro saw the other as in how And that a Brent I mentioned trends were you QX, industries. little different mean but great. what Byun April maybe color way more what maybe geography. I just wondering could different by in follow-up, some talk be then about you of wanted or would versus for any you seeing industry by to bit you tech if about

Hayden Brown

layoffs. tech we industry in a in of that we've of John, show impact QX, goes QX earlier seen -- or our some say, think more We've end XXXX. the at industry seen see tech in of and customers in did trends, what the terms of through from sector, more and towards seen than we've with even prominently the geo of the terms I'd large, an of through I industry

vendors So companies tech evident, a Upwork. bit as see adopters we our although and some that strongest of was still great of more

And larger they but and have So that of outlook. in by with than has no pain opportunity means feeling into customers I environment, this the was factored gone past. the we more that evident away, quarter our think our that this are

positive time, categories AI. post job on At a gen the in growth terms huge demand activity our we same of did of lot see technical for with site in and

talent with tech again, landscape think, job of client serve categories across regardless saw talent. I buyers XXx in companies. XXX% searches the that and type that the the posts we something those those increase so quarter-to-quarter for in that's for And And industry of in of a we increase of

is So to of we and technical think in variety to very ways, serve be going technical both a talent continue I customers enduring. which

From think continued has of trend base to where a more customer the perspective, I to an be the last QX, economic slowdown QX in think, that see U.S. I year QX, than side late we of geo of in the European felt, kind started true. has customers on the client

wouldn't than there a more the clients. that separation in was than European-based continued new clients our to have So U.S. currently. recently noticeable be bit stronger I But say

Operator

next comes Bank Our from Schindler the Nat question line of of of America.

Nat Schindler

they a last and interesting AI X The out. before by this CEO predictions other it see market thinking of of could replaced but IBM like lot XX% jobs recently next came the are about people, of AI years. said heard of in we've that that days. Obviously, kinds back-office an in the disruption in one from was And X just the people all

who companies What the be help competitors, you of that back-office But would offline have contractors often in think work happens the what do or that you do find work. side, staffing side, lot AI other a one be the online this labor as category. called you short-term and evolves? entire to on industry, can On contract would

Hayden Brown

Yes. Matt, for thank question. the you

AI. a that. through strategies, this window. the we are think advent as the I pandemic, a their that's we're out working and companies AI advent started absolutely now happening need IBM the that environment interesting old gone and really remote I all change we rethinking this And workplace be with frankly, part it's mean sea before the announcement know because, and ways Even the from work, of with to are in right of of we've the workforce

with and different and a workforce us for actually to the for work, have about company strategy conversation the opening really how that who to they really The and is shift to work employees a conversation AI tools because like they rethinking is IBM lot redesign company deliver. harder a just a work, project-based huge strategic need past, model deliver when fractional it like what their and into work, done, to including that full-time getting having is from a the about Upwork technology get in was how weren't we to big a is workplace to that need work fact and thinking and

the savings, that conversation offer the for flexibility, world rethinking the working where model and of on-demand about old with a a having to models that world IBMs should alternative window, now and how things and can shifting we we have them. cost the us are we of they are staffing In AI really help lot with and the models the them models be employee easier is to old the full-time out it

the entire and So future. for tools shifting critical is opening thinking think in is about [ what now their advent delivered ] Upwork of the companies I that an and work really for how are

Operator

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

Matthew Farrell

to move the spending profitability? the to entirely the term the picture couple the accelerated over longer made the due I brand now the the quarters? fit almost in potentially the And does looking you path half what the spend reinstitute for that maybe to market of into where at are spending macro. guess You second cut been to brand brand size we've last scale you have that and

Hayden Brown

of in don't phenomenal marketing awareness. our a year, at we end released increasing visibility that saw when this campaign and we mode to this exactly moment, XX% We of awareness deal have deliver see decision-makers going translate will particularly the amongst companies done things at questions in the the team start on. that because Matt, the kind think conversion, unaided we've business are into just how now, I job of trying last they're some ask increase that they're overall our the later has into environment, of of enough brand to about awareness a with cutting since client in building cut been we budgets, really this

question think is So good one. a I your

on us, returns we drive think from in around a elevate some targeted channels time, of audiences we and as got we that over in can awareness ways marketing environment well the immediate-term strong brand that us. with right really more to are growth the to performance our our meantime, other deliver invest as know this for we about then well see on we've for results execute also brand where opportunities can can perspective back question that deliver I this we some of and the knowing other come more doing and

Matthew Farrell

And maybe a second question.

You fee all to in the announced dynamic. thinking change? about rate or we take we simplified XXXX, in a uptick marketplace move structure due should the to the tailwinds about more as guess take change as fee rate and we the through XXXX marketplace I the the be how think structure

Hayden Brown

Sure.

both kind value I value have health we're making year. incentives at in last a driving on saw year end the perspective foremost, the an we platform probably for and think are similar of and and we client the that rate something we're the marketplace I'd are of that business. founded creating unlocking because take And from we really expectations right around we're day, the expansion to demand-constrained ensuring first capturing the that are we're changes pricing this what around, demand and underscore

year this making -- to year. pricing changes so last of the the both And and we're that's all really needs

Operator

the comes RBC Brad from Capital. Erickson of line Our next question of

Logan Reich

Erica. one Brad. Maybe for for is Logan This on

to on next you've been be months? XX are the working about in business for kind big as what of a things you'll month X Just and now, the in initiatives the

Erica Gessert

a you, to now, just Yes, sure, actually opportunity in, right really an surface do less month. had I'm X And scratching feel little meet I've on to so you. like a But to here. I just day Logan. Nice dig correct than the although I'm

macroeconomic and and want team. I of first my map my business. environment obviously, foremost, the from in X not just I I broader in emphasize dig to prepared growth First which I to see immune of the learning of we're strategy this into remarks, in the want kind said do the days, as business many. the road

my in mind, the business. this But diminishes that by no opportunity for ahead means,

tremendous, the we I sure and is order can together the a those dig growth. bottom management make growth that into But think right -- top working profitable we're the that it's right this of produce going and to are now, be line in to opportunities responsible both we absolutely I'm with rest making to moves team company. growth show and really

I'm work going I think as to that with a map to that. to all and we be working the conviction here have road management on everyone deliver team,

Logan Reich

said then little And quick the obviously, one follow-up. was weak. SMB have a guys that, bit past, In just you Great.

return they're I called growth guys environment. think to a also to last specifically and quarter, I mentioned in bit on to quicker the little react out saw you that them changes active macro clients. you

any there terms are you to customer larger is the of what sort inflecting terms guys the SMB of relative in of in So you're seeing signs seeing weakness?

Hayden Brown

delta job volume right a The contracts the of this this SMBs, I when the like is macro. or shows now. even of quarter quarter, basically client the be that on seem side larger more because between at we or bit think interesting on It's terms postings been right that versus even expectations we've activity difference to our look in last the And customers resiliency the business impacted site. through it it who the the has seen not you're

of at where been place published in the and to see so talent. factors Talent and become a has spend macro wage there's that that's that some only The some lot Marketplace you also GSV of attributable our fact surprised pressure of the can the the scale think the for numbers. pressures we per which And contract our somewhat been see the in just or I has client, we've just per

driving talent ecosystem. people a in SMB getting And clients for this are which quality are because done clients, that finding that activity attractive is great seeing value, and very competitive, marketplace great it's great so and that they're work

which seeing and quicker of great. that in those terms now we we're strength SMBs, as So responded and is some switch. activity, fast volume They year, have there last said,

Operator

of next the of McTernan Needham. line comes question Our Bernie from

Bernard McTernan

I guess AI bit Hayden, I counterintuitive. who a people is, looking can demand for jobs do think,

as of part having is many think not hire people. I the to allure AI of

can just from you're describe perspective? So you maybe demand what the seeing

Hayden Brown

Sure.

We've think data like we can this in analytics, we're and seeing is will of imagine as XX% which that In some science environment. job I categories area, that the new postings example. do and categories, to got saw growing definitely over are [indiscernible] that platform, you one XXX XX% modeling other are to and growth why been AI-based areas us in get year-over-year sequentially relevant to including implement, adding categories the very some also undertaking and skills job which to work. the work that people train

I a So it. think that's piece of

I drop additional also in we the have think is like which would this for in new then area, categories this area other we thing job I that tail sequential point, going category, a actually as writing, And think, even is be this mention off your we you in quarter-over-quarter. tiny. it's for more But saw mean risk. to It's might at pretty I category growth to today. very the small us

solutions I just using value that's impacts delivering in negative platform, think where is the serve, this would we as I category we talent better more look their today. seeing interesting And work to they're the any things better AI happening the see So and across every from their workflows. we tools AI some clients. now augment in much are And for pretty is underscore, of we're not

access happen and their to insight to but improving getting are extent from the improving give for clients think potentially tools them work help buying and again can to we we the I happening, come what into also because that can the just tools clients That's that's so that. our be to them, outcomes, to using, also like things the that prices back give And satisfaction that platform again. them driving

happening, with a all plus. So that's think of I that

this of complex then jobs on on thing I'd today and XX% platform. the final GSV projects comes from And the our actually is add longer,

altogether. displacing think I augmenting so work thing again, is work more the here over than we see the time So AI the

about that's for excited So we're very going to customers. unlock what our

really AI opportunity. lot directly the as exciting embedding think executing well fronts of the this as talent with functionality I into to a using the we're all us advantage of site, directly on tools take

Operator

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

Marvin Fong

I previous guess build some questions. to just on

that, on a fee or So the the change question think, change I starting rate commission take today. is

guess definition, X% the are a since by cutoff. your relationships tier I that's $XX,XXX valuable So most

increase. the fee the be bit seeing about guess the change your some down So simpler, And some most they'll the I projects higher might pressure be structure. maybe into trade-off just that fee from from deeper of -- thought a might your drill your see and a -- process fee of potential structure valuable in

Hayden Brown

Marvin, the tier go the doesn't year. for into their this actually already change the folks of projects are with existing that at until X% effect end

rolled off those endpoint reached a there's good contracts have So relationships happens. may or for contracts, and of lot any relationships time natural a period already those grace really before anyway. of before impact that a that or And probably

think what So I of about. you're derisk part helps asking that

we've back and I thoughtfulness XXXX, pricing this with we we care kind in data of think approach of the that extreme we've And monitored previous based which pricing, many was a on this our have a to our going platform. the we on flat seen years change data other lot over side, had examined XX% the fee. and what in

than And benefit and has based and freelancers positive which understand did they pricing sure that that also and huge impact a and customers, stimulate that want, new in for further at done data paid drives jobs dynamics terms they're it conclude will the for fee #X really we thing both the paid. that behaviors, testing client X actually structure the really care simpler, and that around and and talent the they has is unlock the is flat are how get majority work a of demand, that the making those sure pricing that for the experimentation to making people Like relationships things doing. vast all about we've on looking and which incentives more of other reducing get

takes fee and data at that So a both for we with relationships looking that a front together that years the to of on have is at of are XX that very switching relationships the earning that understanding to puts at level, the $XX,XXX the positive level all around risk confident this, long term. based the end for X many marketplace from get the of structure, the and taken onetime very XX XX we all for deep the change and definitely to

Marvin Fong

us you you've imagine pinpoint, but makes build revenue about guidance. factored a then And you stand-alone I it already in questions Would just neutral? to -- if That for you're all guidance? full the all Great. is so, that and year as sense. a AI, or that negative to perfect AI this on difficult giving And be say annual your positive, phenomenon will at

Hayden Brown

AI not at because full the seeing year all guidance any that our we're impact not of into factor on business. did

I outweigh think sorry, the here. -- opportunity the benefits for sure outweigh negatives the

so anything of guidance think but the we're in specific didn't that. we're advantage the the through we And future, things tailwinds into as factor the I take we're this, executing excited around to executing and that

Operator

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

Andrew Boone

back what like is on on that of there. of a little on as the Can get sounds the about You there? put we the vision out talked R&D. in kind And emphasized being the Can to there going changes other you for product what's longer-term us us flesh understand, changes map bit the significant you being the Enterprise versus and transformation, then your help focus road Enterprise help sales it maybe and narrowing on side force, understand what are letter that about burner?

Hayden Brown

Sure.

fantastic cover in out years. the going over we're substantially And this the a robust last just portfolio use taking Marketplace. breadth cases adoption -- So rather product terms in really going hone product of quality we're adding across the X-plus now serving on have we're that deeper customers our driving and products lineup. the and opportunity R&D products broader we the Work with for We really new side, that built on and for really the to customers of than to

sunset evaluate sure feature/functionality our to are the deeper go portfolio and month focused places continue delivering other I And continue quarters continue we again, opportunity on for the really really as where drive the product think have to resources that the and where that's make will best performance next go exercise to So through products, those us. of to, results. over in and aspects to can we continue we we that

So we're capturing that's X of side. part the R&D on what

those obviously, all from of this call, the product opportunity on in areas And that's moving we part portfolio into are exciting key a AI, X is as with we well. happening our And big about map resources less work which opportunities. talked road places, exciting and around

sales this amazing portfolio, side, a -- again, areas on opportunity long-term is. high-value that is Enterprise of have really the into this and shifting for us. is our team we most high-performing and On The focus what the huge is just data

us easy take evident pretty today that to it's team to for and our them opportunities. So leaner and redirect those we have high-performing

the long-term the marketplace have world XXX, whether really And and We a think come vision self-service time. can Microsofts into larger with best-in-class scale offering our up start graduate continue always others, into unchanged. Enterprise and who over to customers, of know Fortune we here offering the it's is the customers absolutely compelling and done so I as our we to serve

the not the about in some of our changing is strategy that go broadly It focus or are sales evident. to areas it's this team more So places the tuning after environment macro the about of most efforts vision. and speaking, the

is for is tailored diminished the broadly The are nothing market. approach tuning be really So about but unchanged, this the we to opportunity. strategy

Operator

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

Jake Hallac

touch just on This Jake the on I is to wanted full-time opportunity. for Ron.

Now of clients? give that on of offering could offering anything pushing macro the change and terms kind whether update of adoption this in, reception an you in on quarter to headwinds us we're a that

Hayden Brown

Absolutely. The lineup that -- offering quarter full-time that ago. mentioned, continues we a to launched something just be I a our product part of key as

do as Talent a things piece our Enterprise now Upwork which offering interested positive. in as to side in the of We of was are only that customers from use very contract-to-hire, like something strong the and adoption in current both solutions available the terms So which customers. intrigued like talent signals payrolling on they see that things that marketplace reception, Marketplace, historically well to side the can was very client

that only I'd is it But note a quarter end. also

that would expected of to that new offering something not would with is given historically have this do be And so time tune, type we of socialize, this to always take that our knew most us. something that ramp, customers to to

of been that I a wouldn't accustomed type things there's base say a more It's historically types about headwinds. so And offering to other of customer anything about notable us. macro to from getting and that this socializing new has introducing

very continue that. excited we're to So pursuing

Operator

ROTH. Rohit question the line And from the of of last comes Kulkarni

Rohit Kulkarni

talk the On like the year, visibility today year. of the the you revenue about maybe rest that for or the have beginning where you of level of were the confidence at versus outlook the

phase X and about these and talked your in phases cutting first customers, you're budgets in still the that and hiring cost phase. freezing being You

for that X there second about feel a given the So more time at just of months to were year. just do to kick of the X talk confident probably have that the well as you visibility the beginning you maybe you is bit year little remaining in, how the phase versus where the as about

Hayden Brown

quarter a end the we're year, of closer Well, to Rohit. the

I a third about to months more now or having still we than targets we say and second talked did X first the definitely sitting And we of phase. what's rather are perspective than little a I'd is So that more that have we phase customers visibility moved our changed guess have in larger ago. that

we So have that is more information previously. that didn't

in seasonality think of about we we where terms our from the kind we of the year see removed be in platform. have we half normal non-macro where year due to ordinary impacted of back rest out, seasonally what the In our that business shaking the outlook had of a previous on that the the would things guidance expectations year see we our stronger was I would

effects revised expect see the that of year. a more these that the impacted half half in Phase second seasonal in our do the We with the behavior in of of macro now the So year. in versus X in second QX QX last and we'll year trough what versus the that we're relative in But is dynamics we year I to the our a pricing see environment, QX. of customers on lapping see last because to around normal outlook, not by -- the to and changes of step-up what based rollout we the perspective had shift seeing in, in do expect think

getting we improvement now a the I'll did things that didn't remove bake normal we're in getting the see in what specific from absent we perspective better, seasonality macro. would outlook also macro but we things seeing worse or our note, about

Rohit Kulkarni

of would better adopters Okay. AI. that That's and internally this tech early is helpful. structurally, and going is into on first leg tools AI AI guess companies the And then there those would come the that a of most question just efficiency be debate discipline. more I growing efficiency, drive of to to drive

productivity thoughts you Upwork, you your talk applying be maybe a AI do broadly, now, about -- your about a profitable Is that. So structurally think AI internal specifically company could Upwork Do on where just to gains, are speaking, for for from just there more customers? or feel X year years much you internally? not adopting if not

Hayden Brown

tools real. gains think And certainly, these huge for company. testing very as every the a I is because tech been we've productivity new This us are well opportunity and

and, layering to their and developer things that to as engineers I unlocked in it outlook and I can try who CEO to to or mean satisfaction. in doing they're use unleashed how be tell tell be skills tools you excited business and frankly, X their conversations exciting has X expertise exactly improve work. can't think out, about really these on ] but improve efficiency can pushing their years you [ how we our out it's I also that engineers so these I profitability really And responsibility that will of on the into tools, other extremely every translate of kind me

I So what as the going questions you're do productive, then about teams our there's resources to be up. with that freeing think more you big get do

are move But will to taking of us excited so think questions be And huge those navigate of is really again, it. AI a all forward. we're opportunity, I as and that advantage we

Operator

Evan Barbosa call Thank does the the to any conclude closing you. over back I remarks. for That can call. turn

Evan Barbosa

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

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

Operator

you conference. you. all Ladies for participating. today's and Thank gentlemen, this conclude Thank does

You may now great a Have disconnect. day.

Upwork (UPWK) 3 May 232023 Q1 Earnings call transcript