UPWK - Earnings call 4 2023

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Operator

Good day, and thank you for standing by. Welcome to the Upwork Fourth Quarter and Full Year 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to turn the conference over to David Niederman, Vice President of Investor Relations. Please go ahead.

David Niederman

Thank you. of quarter discussion financial Upwork's to its XXXX fourth 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 Securities safe this Laws. under business call statements happy prepared that review make statement.During will may to management's first, I'll remarks, to Following Federal take related questions. we are But the statements be our forward-looking

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

expectations Our as of in today's website and actual factors available the results other affect could well press differ our risks refer on important discussed material in also results, forward-looking materially important discussion filings Relations from to a actual the that website, SEC as could reflected risks our on statements.For SEC and earnings Investor other factors any and the please our release.

measures or our XXXX on GAAP to [ reported unless figures the to in the be our Hayden. to at quarter Investor of are are afternoon certain call this December of GAAP measures. information reference be to made I'll investors.upwork.com.Unless XX, be set ended turn the can fourth issued XXXX. rounded Additional regarding release in a will press Information forth fourth cited found XXXX.In months the measures ] website Relations otherwise on also annual financial Form All non-GAAP quarter was for X in non-GAAP over will addition, noted, as comparisons non-GAAP.Now, the XX-K that of reconciliation to report financial

Hayden Brown

ads role their and Upwork help and every OpenAI tasks, platform helping Pro, the more partnerships; opened that into already There the work. world's over work XXX,XXX we quarter, built innovative day. customers AI-powered monetization. embedded productivity received XXXX: key serve, independent sign-ups wait experiences the across by and largest critical in modernize and and a areas saw investments; of in ] X than are [ XXX,XXX new them millions work new of AI adapt they clients marketplace, how dividends We played Upwork, we to realities features pay list Year of XX.X% focus demonstrate professionals history. for and adjusted review to Chat do GPT-X full powered Full faster. plans up the accomplishments in world of the the our Fourth to which million.We income I year EBITDA past quarters. year-over-year speak made year, grew for our excited This $XX.X Call. million $XXX.X X our GAAP fourth and reflecting We Upwork's I'm them million, Earnings revenue company's growth XX.X% to momentum $XXX.X and their XXXX adjusted in team, thank disciplined year highest everyone, to of accelerating continued for further was revenue quarter Upwork efforts.XXXX was grew Quarter the success with profitability year-over-year, over of future. the by the possible our and every category growing we boost best Upwork and the wait the work tool experience strong of dedicated gained for work.In Full significant net work to Welcome, a as want list EBITDA challenging result year the and $XX.X solve a is to for million is for to and fourth We've

exciting technology secured are in XXXX Despite from be rate for strong we positive also work higher committed post version results.And are tools our developing with benefit the significantly AI-powered to lastly, a generator objectives the also its tool clients, findings showed of speed completion at in our job boost having has a AI-powered and already short proven proposal it. using a [ first for impact, than tips task mind. for being this using tool available specific of these partnerships that and not those Our forced increasing a improving only to freelancers customers.We major time, constructive further ]

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than While in still early that conviction stronger in the vision ever. journey, my is

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ahead, ability AI for vision. and human-centered how his He our the customer years and enable world's Machine range to Brain using of our greater for learning background Headroom's accelerate Upwork We on we serve look start-up, Andrew our to needs of year, welcomed vision breadth internal forward first, customer of and specialization strategies to X one as computer AI-based are scientists Andrew of customer the our new is block offerings work strategies positions that re-envisioning marketplace. year.As progress work ecosystems. in are innovation. are high-value supercharge leadership win Rabinovich, to readily founder, on guide we also Upwork expand investments. Magic we in focused layer and full solutions year, in via Learning. the is reimagine Headroom, our AI continuing We AI look our and will customers' category leading expanded deep thrive in acquired segments key work known the the building on are: QX, more are already enable experience. diversity executing exciting more Leap to to with fundamentally we This get and opportunity we the our our as in we and to work for Google and done.In our that specialization. to worked coming This These at and AI expertise and team, us to sharing Head the year

a on storefront top-tier feature AI are AI last focus in You've launches early a for most work talent easily machine in connect to subcategory like AI with build steps led categories a makings talent the learning XX% playbook vertical second of help dedicated work organizations other this like Upwork and efforts with clients with via AI on year. innovative direction marketplace.Our hub. in the our our targeted services in the approaches specialization and this platform. the world's us to These partnerships strategy our AI OpenAI, for talent seen more is and across with GSV and consultations take growth continued We

we by among multiple innovations marketplace bold addition customers, third-party pursuing to with evidenced a ongoing talent empower for to leveraging to apps our to third the cutting-edge growth ecosystems year, leverage on foundation will to our for technologies experience.In as to remove tools. partners already profitability on both are features friction are internally access customers.Our we enhance over the and our to own AI features, into launched further distribute talent We our plans is use and This reimagine Upwork strategy developed to ecosystem our partner expand build years. light and that the Upwork newest and

we of a customers continue We value in we the it building will in shift forward XXXX.I progress adjusted providing our to shareholders review to turn Erica an margin on we delivering we'll are profitability, QX, expanding in over we and the in have and enduring and the time.In remain margins more on and monetization in to focus established Upwork guide chapters to for XXXX, that, and this years updates pillars year to come. were to strong EBITDA These ads over year.With the journey, successful will financials. as foundations our look our are to through early that committed I XX.X% unlock

Erica Gessert

promising quickly agility, of financial to generation markets, enter business and efficiencies world rules Thanks, Within events a in to high XXXX. a Hayden. In share with focus opportunities moved I'm and Marked geopolitical more as flow specifics months, uncertainty margin focus the results. and momentum business.Our adjusted XXXX an our identifying strong with volatility a X this EBITDA be capital negative we into the yielding we on adjusted teens. the rapidly. free strong was cash heightened dynamic, game just by across to it tremendous greater on was the in business. year where changed efficiency in profitability from delighted environment success. to our we here We showed business our EBITDA operational for across on tremendous is moved margins of

is starts driven Our growth same engine QX, by performance we saw by working improved in our performance than in client marketing period CAC ever. the XX% new XX% while better our year-over-year. In marketing,

an sales We client with total revenue X% higher-value force. we excellent growth with quarter. helped segments, active client actions were in positive even on outsized drive impact LTV.And in to had QX acquisition year-over-year the and our success also in increase fourth rationalized our have up sales, we able to client which These expect Enterprise to

one XXXX, we flow. expect of clients, XXXX, growth adjusted free in cash market our this strong turned and EBITDA Within into progress, steady year-over-year growth.For producing continue environment year we revenue, the active business in adjusted the to full dynamic

XXXX. we efficiency, conviction confidence exiting based business was quarter, Solutions at year-over-year XXXX. internal this continues with Enterprise highlighted modestly note XX,XXX fourth the XXXX to operating the and business throughout XXXX, that and Enterprise provide revenue. again strong the the that to our million, year for added XXXX total macro revenue even our grow. momentum segment an the Managed million.Turning give in uncertain QX.Our serve of with is We million to new sequential XXXX. compared that to acceleration, ending client quarter XX.X% Fourth reporting growth in clients quarter business versus separately increased quarter flat we was growth impacted clients performance fourth new revenue our was client from Revenue to had of the in of ongoing freelancers, active business positively full week $XXX.X quarter, In acquisition we fourth $X.X to accordance and to in that unit growth and customers of on from again included fourth Enterprise results quarter, growing GSV the payments billion QX Enterprise our for conditions. growing in Enterprise model, us the $XX.X XX.X% are we unit. impacts growth This pipeline which client and additional culture by which new our year-over-year for showed exceeded year I our in part $X in marketing. Only plan in from and XXX,XXX than fourth this timing our was QX beyond.For approximately Services marketplace GSV revenue innovation in year-over-year we've X QX. base strongest client Our to growth $XXX.X of revenue planned XXXX includes economic reflects products and the and of billion want more active now have can both new Marketplace about the comes X/X years. the clients. the active customer revenue, acquisition reactivated Underpinning

growth.I seeing spend we dynamics. on are So also strong moment provide to some a GSV to want organic detail

we in their to shift mix life GSV have newly active cycles. who activated to a to lower this decline early slight is attributable While spend partially client, the in per continue clients see

time. Our spend average increases over on client their platform our

we for year the XX% XXXX XXXX new a both the operating revenue $XXX.X in growth. per this year-over-year the sales $XXX.X of in year. million, associated basis strategy XX% onetime as the million fourth nicely quarter, full million as expense sequential expenses in enhancements margin but R&D of also of was continue $XX.X is gross that expense and So quarter and of XXXX.Non-GAAP increased quarter, discussed. of $XX.X important XX.X% year-over-year. million gross has future declined XXX to year-over-year Hayden XX active innovation non-GAAP our efficient at fourth we revenue to year-over-year the newly Non-GAAP client quarter.Our and of product margin in invest basis, total as G&A projects modestly XX.X% year-over-year, non-GAAP representing some we and X key of XX% losses of expense compared gross declined indicator $XX.X was non-GAAP with QX negative in XX% client provision marketing platform increased from the in non-GAAP basis growth. or And steady increasing year representing of just quarter.Non-GAAP on the margin grew of quarters representing acquisition EBITDA for transaction $X.X year-over-year slightly for margin fourth the a items, comparable improved up $XX.X Full period.For of QX, an off coming growth year-over-year various filled of million positions XX.X% largely XX% executed year XX.X%. the for year-over-year, fourth points fourth the million was X% points quarter, prior was for in fourth of remained revenue. Adjusted GSV full maintained million

model which earlier. is Cash indicative our equivalents quarter, of $XX.X GAAP million, year slightly our timing EBITDA is This translating XXXX, year year includes and that pleased approximately share of of the down adjusted was mentioned payments impact cash that XXst fourth $XXX our million and to freelancers approximately result.We was is in I highest profitable earnings as January $XXX of securities was in stock-based million, million quarter. end $XXX of decline balance to per prior the due the this business the the growing full marketable are more trends client For from ever.Cash, which compensation. to growth, cash of the

and to was the was announce year $X.XX.I'm cash for diluted new For the a flow. disclosure earnings free XXXX, full metric, adjusted the happy fully GAAP fourth per also quarter of $X.XX, it of share XXXX,

starting our report are to cash this We to the reflect and to yield strong metric of commitment growing business. profitability our

of on cash flow was XXXX slide key free further our Please to flow.Turning full for earnings adjusted the Our $XX.X the detail refer presentation calculation year cash to the definition guidance. for free in adjusted million.

range first non-GAAP million to for expect at first a be diluted quarter And XX% of midpoint. million, represents of to of we growth representing to EBITDA expect range the $XX EPS $X.XX between XXXX, EBITDA, year-over-year an adjusted to the adjusted $XXX revenue For $XX the XXXX $X.XX. quarter of midpoint.We $XXX and produce XX% million, which margin of at the million in

a year that the XXXX, million, the of we For a range million, to midpoint.I $XXX to representing want $XXX back moderate calls.Our a expected the half XX% cadence highlight to to for full midpoint. primarily at quarterly is $XXX revenue million range of model business profitable the year-over-year year-over-year change the are discussed growth And EBITDA, of our of guiding have sequential adjusted to lapping $XXX of reflects XX% million profitability margin the representing at growth pricing to the to our This EBITDA of that on slightly adjusted growth. growth in in we commitment is margin and due revenue XXXX. prior of durable

our expanding in past our business offering commitment in our the At conviction our multiple Stock-based We EPS year between top XXXX.As XXXX, look diluted time, produce $X.XX profitable to have be perspective, to for with growth margins.As beyond financial to unit. will Enterprise reacceleration margins to and quarter and to focused durable, range our note marketplace key compensation ability per be business $X.XX. I From continue priorities. dug expected we the line through same over non-GAAP million driving on I've $XX growing innovations full our year, will in approximately in we important be profit driving years. it's growth the of is over a we maintain XXXX to expect into unwavering

for to we our efficiency for as the to streams in take XXXX, growth scale, still want productivity of an value for improvements. basis.I innings.I made our questions. excited Upwork this are is their employees growth innovation.And in early opportunities a increasing and our your progress revenue growth and ongoing have be our have for operating producing thank both committed leverage that, team management to and ongoing new increase happy and journey productivity to we on see for about in through many we'd business and the commitment at and I'm to efficiency ongoing great we planned team shareholders customers, fantastic While our with tireless for XXXX, profitability,

Operator

today question Ripps first [Operator Instructions] from Maria be coming Canaccord. Our will of

Maria Ripps

First, in GSV can year? maybe what's growth this guidance. terms of I your about terms all then your And appreciate Anything of in understand help from guidance contribution rate expansion? you included share color in the maybe us revenue take

Erica Gessert

sure. Yes, Thanks, Maria.

the [ what X% rate in up this take of GSV strategic XX%. XXXX, expect the couple that fee terms contemplating with foremost, ] to all we step in associated environment over economic revenue So and with a broader in growth. think, the expect GSV do I'll which of lot know, long-term.Just in we a saw say to do we year-over-year GSV to XXXX, volatile companies beginning we're the of obviously, confident remaining their did we from for Look, contracts is in of price we're announced XXXX. modest as everyone in pricing that impacts years out coming grow to drive as some our a year, we XXXX.At really growth change in growth in place we're the in well strategy right But in really acquainted have growth the -- to of pretty I flat first

in And from do QX. step into we rate to up QX so expect take

And of good. overall, reflects extraordinarily of ongoing the some change and the really strength we take tailwinds will say, been it just price we -- So And would dynamics rate I that the platform. expect health the XXXX. into from have

Hayden Brown

as about in and that I'd add, that focused beyond, on. we're XXXX think there's GSV levers Maria, we really X growth

with key the led category And mentioned. executing The customers the in us the already winning AI segments in playbook first which of learning one growth really we to subcategory, particular, work with specialization last AI, product which saw the is in and on go-to-market. around year and that XX% machine our you

the the think tremendous that road growth that to year, work to that's is and a AI features. GSV platform will other launching most going on but strategies. start playbook into this also innovating contribute acquire we're around that years.The and focus be map expanding future did building to and opportunity that and So new year, world's ramp I strategy this innovative really there's our company Headroom platform We entire with the QX, accelerating in around our to

we the that But already in We there robust. pipeline have product a really QX. is out number put again,

very to over we're coming that's the excited in So layer about going how years.

Maria Ripps

wondering to talked client sort products the of the ad opportunity take introduce rate secondly, lot on of a about that sort just power things sides expansion? additional driving you maybe both maybe then your to thinking about rate more of on side the of then and expansion But how And like there you've side. And long-term is freelancer Connect new products on are whether drive sort are marketplace? broadly, take pricing the any

Hayden Brown

journey. we're still the and monetization very say in I'd ads early

as we what on side the momentum functionality, which side certainly, exciting client can well. in more think products. we lot the some of very do I those And the you're is we focus with in of suggests a talent on more terms right, and there features XXXX was saw

there. So products, as robust we I evidenced marketplace too, Every seems come the we've to made. build ad that is to can this think have already We healthy by there's we think more believe early and very innings. progress

value the the think, I good robust. have that definitely demonstrated, pricing year.And the leveraging on over the of is a power of looks already is we're success handle of that more changes really marketplace I that what something and think the we This in last have to come terms pricing like pricing So there. the our in offering power, this year course of that

no changes surprises have resounding churn we've changes a those terms with success. adoption, of been the ] of has been line expectations our All in have really made and [ in in resulted rates, There et pricing cetera.

for into value lean create but the opportunities products. types these also to there both continue through customers for to to of shareholders, going we're So

Erica Gessert

nuance ads kind is these have [ there, -- is, one ] just I more products, like be We monetization more which shown the right? nice the Your Boost the reason that's considered we Proposal talk traditional probably multidimensional, product, would and that of had growth. about what really products ads are

some products new Plus offering there. subscription I there's new where props that good our with we're think uptake some lot seeing our with of there's have these more a Freelancer can -- value freelancers of we to And and do also We just really products.

And so that's one revenue of the things kind that gives time. growing of us over confidence these in streams

Operator

And from will Company. question be our coming Bernard McTernan Needham & next of

Bernard McTernan

to in I of bit. terms -- to made marketing you're comments you dig just wanted dig on interesting performance some guys that in the was that pretty seeing. on That return a

so really it's driven macro what really be think and just it's could would to specifics if doing if in tangibles the was or performance in marketing, I wanted you helpful. see and So that I just give changes you're And any latter?

Erica Gessert

driven don't definitely macro at think it's all. I Yes.

down really lot that of performance the CAC optimizing seeing think right? So, is -- ramped and on performance has noted -- we're spend in our I year-over-year. XXXX down XX% benefits Obviously, brand marketing on remarks, we've I our the a our in the multiple engine, time that fronts, we've marketing CAC seeing team we're focused and prepared as spent spend. in

in we're also the ] [ are from SB adding segment. also that kind are we the of higher accessing customers segments We Plus -- -- value coming

performance did together investments reflecting think lot itself of and our And that just a so marketing new the the all fact factors in I building work -- models XXXX. are we these engine

things driving those there. So really combined all are momentum

Bernard McTernan

in just any next is I modeled a explicitly over couple But business terms And color just more give can you other be of go where it then re-excelling just on years? given in that priority. growth know will that change Enterprise, the now. reporting, could bit think a you of the

Hayden Brown

we of Yes. business, integration, really on of which account. expect that the effective. end yield that, our was been particularly business, to go-to-market also expand really XX course about side improvements growth productivity of the at improvements on side, year. business Bernie, extremely spend This the were [indiscernible] did which fluid XXXX good the say XXXX. the given Through despite the to in year focused I the in and on and And And it's year, that drives I'd client of our this might up get you we're we have our in of logos as takes of on driving and have per that definitely longer the focused imagine, addition results, modest QX, been have with the expand through we this and but in year. launches XXXX, continue into as acceleration in this help such and taking efficiency kind of macroenvironment. those all our to highest impacts steps VMS expect And that the feel and December, still a new will drive acceleration partner modest we the year see that

Operator

from Securities. will Boone Andrew Our be question JMP next of coming

Andrew Boone

Marketplace think that any cohorts responding? and accelerate provide XQ. macro about to are more cohorts as Is It's there just underlying a great stable see GSV we how you help XQ can are to from that and

Erica Gessert

emphasize are we to of see we Sundays that some a remarks, of did that, of want in rate because timing as there ended Number QX. the the happens day year-over-year quarter that. of on and do GSV front. on bit benefit the said, we did this are uptick get the view growth year-over-year I a because modest little Sunday. on I in I to did about GSV expecting because XX We point QX payments of talked QX in kind in The In in prepared freelancers one, growth and week in XXXX So see clients from modest GSV. of of a growth -- XXXX, a

in a So bit, a GSV but lesser degree QX, into just moderate we go little we still a expect to as to be growth year. the for up bit do -- to little

Andrew Boone

as the And I potential that to XX%, picture the in to picture we that compare a else the Fiverr Is there of increase think I then big I XX%, about about sense? If I had fee on pricing a for platform thinking is comparison the to relativity question as and broader you at right be Hayden. maybe guys we a anything price continue think should competitors versus about for about platform? of think

Hayden Brown

variety very products those we're on for model, have different relationships really and long-term have and we we with of the Andrew, through which than pricing our that monetize pretty high-value create focused our which is Yes, a here, Fiverr, the customers, we model value we ensuring that mechanisms. is, a aligns

the mentioned and So like in like like I And room full a not monetizing certainly, expansion monetization, to earlier one.However, structure is we're our contemplating fee vehicle our would on attention take which we say that now. changes and as value vehicles we for around rate are ads platform. are for right there through things unlocking early time things different still

and create and place can continue are ways now. this focused great It has good and I And think very job moving a to we in years on the to that really with see been to been we monetize we've that ahead. right able fee. value that also successful extremely did we're value customers, and there year But a be other platform on for doing think dimensions to it's that XX% measure. I

Operator

question next be Kunal coming UBS. Madhukar Our of from will

Kunal Madhukar

clients significantly that that that in is in jobs the rate funds same to revenue deferred of which between do? up your past. ] to -- you total the of went the see want of on extra to housekeeping on free part. different you balance project, jobs the new sheet client I that the versus would the of or of we the from have down question per terms amount in do receivables escrow, week. and the nature I in the cash then then reflects traditional project, be the difference of client of clients?And getting have of and duration which the significantly, added, extra in adjusted the of base terms side. terms measure older in clients any a hour, that Sunday because significantly And But one part new trade up flow [ are understand, went recent that another any compared delta from when held So the One which get and terms freelancers the used is [ ] the went you kind thing

So can that you too? about talk

Hayden Brown

So packed lot a in there.

start So it break down. let me to

that question of from your clients. let's freelancers new the in first So jobs terms with getting start

So GSV the new clients do going clients I say that that any -- driver QX to shift are wouldn't in significant platform wouldn't growth on forward. anticipate for hiring the coming the be a which that strong for. with new there's nice, characterize mix we jobs I

interesting marketing our the in things and of new platform our QX. biggest some I like pretty logos disrupted QX like might some that over actually AI, were general And actually of thought AI-related for Other growth also nice, the but not last think showing get see things to quarters the of the growers. platform.Some persistent we've been are of categories general wisdom we acquisition. by with that that are that one healthy are are sales. legal, growth the -- that dynamics on good, biggest those seeing dynamics categories dynamics seeing in client like couple just we're continue -- things in jobs obviously conventional of And actually

persistent we're the as the quarter, to of client way and that last the you well.In So platform contract with that's a remain project basis, that there.And to terms those the say we the dynamics totals sheet. is my come quarter-to-quarter, per lot -- And slightly on just of flat then point to hour the to on that a to your ever duration question I'm on asked, here. quarter-to-quarter. Rate also time. questions And balance hours of saw at so not per so increased similar consistent pretty ads look overall, trying sequential I average kind over list on seeing just would and total pretty

clarity's it. for free sake and just the So flow why adjustment we cash adjusted did on

is temporary depending because pre-funding client ends our the week of cash may significant First strong flow the the that cash growing on day make but operations reality making the a payments position, free that reason basis.The sure driving we on, of and ongoing week to the are flow and to of day have in that account. which cash escrow committed the -- truly reflecting on from fluctuation of we in adjustment freelancers that to our foremost, quarter we we're is this are an the to

QX week. Sunday.And days in happened this that back ended each quarter when within pre-funding the on that, paid the a is So gets reality then

account. And so to that's balances why our there's up show can quite it a little actually ends compared in bit of fluctuation, and difference corporate cash a what cash in

change. consistent pricing part from and clarifies ongoing revenue, from former -- that we've reduction deferred question.The pricing quarter-to-quarter now basis, revenue that that seeing we're the with tiered on that tiered is fee the this in of hopefully, flat been seeing to an reduction the the So it's recognition change that

Hopefully, So packed covered question. I into for answers a that also I you. hopefully I -- of know everything lot

Kunal Madhukar

I fact, follow In if could up.

when total value does imply of then, revenue number longer-term deferred deferred are going maybe that projects at of that we those kind at look of going projects down? of we projects, look down, if the So kind that the -- revenue is

Hayden Brown

has reason do No. ]. dynamic revenue In past, required that, to That contracts different and versus we longer defer pricing. is tiered that the we revenue declined The -- [ is no we're we that pricing will fee -- new deferred fee because not of were the because of flat required rates, the at because flat with different were prices more to our accurate. price

the not So reiteration. has nothing -- to have it with does it do

Operator

Citi. Josey Ronald next from coming question will of be Our

Ronald Josey

Hayden, products. Maybe, questions then one on and ads X one and on AI higher-level

the Just number that in tools and of Upwork across on we're both and just buyers seeing AI, traction offers freelancers. significant products

just [ term a on is to supply clearly, marketplace? [indiscernible] changing or the of what and percentage ] maybe a given advertising badge then Longer complementary tools.And impact demand us tell on just vibrancy proposals having products, as here. ] comments build aspect and good can think AI your [ revenue those are where overall -- marketplaces? you go That's do ad the just of improving this you can the the on the how So

Hayden Brown

Ron. Sure,

seeing front, On the of we're we've that launching AI the really tools terms talent. the good of traction been so adoption in for far

new Pro, interest which from [ and And with tools seen as are So these always Upwork still talent. we've AI, freelancers other of shifts [indiscernible]a seen this the is to around ] We've skills. tools OpenAI Adobe XXX,XXX an to technologies like lot and shift fastest their has [indiscernible] what trial platform ] technologies, overall, and in getting others, definitely Jasper, [ GPT-X tools previous ramp Chat a sign-ups. up

using productivity And drive to now. metrics quality these of happening adopting eagerly and is what's them around work. performance really right and tools this They're so

year So our indicators even in that on still some the question out there this interesting this question the to an is with we're possible tools going And lot early ad talent though and it's a days our continue second there.To this we're this, best certainly, strategy of are empower thinking it. to pursue about for happening, is your to products, us.

grow have companies lot If they their you or certainly said like of look something it this headroom ads.And XX% [ like so ], FX others, to at like we in I or from revenue Instacart their had a coming they think XX% of business. seems

fact of of the a in of us innings I is. see is opportunity I path offerings think, as well we great and unlocking ahead to are us. new the past can scaling we we us fastest existing that and revenue offerings that year, too think say put grower in customers, early the for sign runway big of up as it's that with more this how runway early is our the both certainly creation that in value the for the hands But the exactly

Operator

Next coming Jefferies. question [indiscernible] will be from of

Unknown Analyst

[indiscernible] for [indiscernible]. is This

on the First question was guidance.

year, full I think. So QX, XX% you said growth XX.X%,

think -- some which to price did about down moves? QX. how the mean, we year, that bit average like you by I XX% curve? about. step have obviously, But that looks a anything would talk should the about there not So lapping the to you about else for to deceleration to I'm is sure other quite than think

Erica Gessert

-- I when of think we pricing Look, pacing in rates see that effect back new of pre-pricing structure probably moving talked XXXX, our change that of flat we that No. think in growth in is half would a introduced May lapping when the back of kind through. about I given terms then we and the

new So nascent yes, we year. growth to that's of view, the [ like and do show which in gotten the of a we build we'll have lot major XXXX.And the got of bit we've really the that kind a kind confident can we've on we're point to I I an launching future.So our of kind on supporting new with that confident rate we've XXXX combination of vectors said, pipeline little other touching of And overall, the the avenues additional of streams dynamic some of back able of in half revenue but more on think half work growth of been feel in revenue we'll think pretty on kind kind we basis. produce in growth ] double-digit and execution be just the of we a of moderation going see back change, some in that growth of and a lot these ongoing

Unknown Analyst

acquisition. cash don't I I on team? Was just question if it talent a statement sheet can don't the know provide mean, the flow of more see the know, any a the you might I acquisition? I kind on intangibles And second revenue balance that? tech $X with was be -- Or on AI talented that just was million associated for then that comment. or

Hayden Brown

it's on about our going But us. excitement exciting and really the the are team accelerating what from meaningful vision data that the and to doing. exciting to and our around about It the vision and comes certainly, see revenue. AI think This the And about roles coming year we're efforts. and because and was Yes. this the about shared excited extremely I like and his of was we talent. controlling be our mean, external his launch what going it's really be around join to machine terms vision this our years [ can defined given -- extremely given this -- was ] leadership not I Magic Andrew team its work, his He we're fact to map more really team's future this was and really yes, we're in to Google assets, learning. us and road Leap expertise

Operator

be Markets. Capital RBC Next question will Brad Erickson coming from of

Bradley Erickson

called of comments, nice So you the also the seeing called first, just success this channel. obviously, 'XX. growth is to the for some out performance out modest going GSV marketing But in then back you

just from just kind that of secondarily, kind I kind of advertising with drive the guess, So maybe Or degree? aggressive of maybe wondering little you then embedded generally, in more pledge expansion to recognize to margin a here. And your mentioned 'XX? not is be some in guidance bit -- why no

for curious the and the intensity going goes marketing sales P&L forward? same within if just So

Hayden Brown

need saw to is really the said, there. new the We we -- performing year. right of the think remind the in marketing performance active think that we step-up more I'll and new a don't now. our new to with But largely acquisition brand QX, Yes, I I we comes organic like XX% we're we pleased drive plan growth we in highest we super increase from we of that just people client in X the our -- want covers on nice half clients in think there that's can unpaid client well, or seen in because Underneath XXXX. optimization not I the mean do first back acquisition in don't extraordinarily had sure. channels. say platform the spend increase just we Look, to I years.And XXXX. we've engine And marketing

have we this. really do behind nice tailwinds So on us some

of this -- future is guidance for years, this the we is profitable business. to all -- planned marketplace business need it's in feel over contemplated at so in our brand time, forward, marketing. highly And marketing the And expenditure year.Going the this point we don't a in reinvest

XX% have now. gross We margins

reinvestments model growth, the we've I into whether committed term the medium as and investments profit to we R&D even see consider be forward over it'd think the that. in margins still back in we I growing brand that think go in flexibility have or to produce And ongoing opportunities to. we the improve

and cash we're feel comfortable of scenarios margins lot profit confident in but there, different both a flow. growing I free with So

Operator

Our ROTH MKM. next question will be coming from of Kulkarni Rohit

Rohit Kulkarni

couple questions. A of

any AI. use the to from do do this could you AI around just couple into near-term in perhaps What of and call GSV this opportunity?And the of guidance client how growth, encouraging then AI emerging on a matching you to contributing are more growth, new Perhaps just you second, around that? why if client growth for row bigger -- feel cases a uptick active there in is kind growth, quarters into on in is about cases? macro tech the First, anecdotes sustainable Upwork what a opportunity where clients. hiring or Maybe XX% out the use talk And you new whatnot? to your tap new embedding any can GSV or

Hayden Brown

Rohit. Sure,

making due that grew was So learning great a on was your it first and really And to, AI, this question, year-over-year, quarter our saw past just result. what to XX% we machine subcategory think, what area last asking clarify, was I in which which things AI year. growing this our investments are the through category, we you're launched in we all this like of services about, hub, was

product, of I talent called from for labeling whether in curation. skilled the in for area is range cases, in AI really in an a where We're partnership.And capitalizing where your make talents benefit and and as places model think focused lot full for models, this curation, use against and just putting of talent a opportunity.Erica it's big efforts can active Enterprise are in accuracy And we're think interesting we all very OpenAI highly as do. for really question. space, partners and partnerships. who imagine.So a of upon, Our are so output marketing, issue for this We're client experts of being been the of area whether in on grow. models, such And really through fact clients of ecosystem we're it's the our there's with marketing sure of who terms to looking can results review this this customers both talent marketplace our that continues on around we've growth weapons Enterprise this people I those and to seeing training control into that data it all and you on comment experts probably variety a because customers can there's ensure we're don't set quality kind leading of there's customers more curating specialized to these might that really

Erica Gessert

the say, Yes. fluid. that -- know I client there's don't macroenvironment remains -- growth, we I look, On that feel active I would think

and Our platform stable are business and growing. very

see layoffs, recent really environment We've already, articulated as of we momentum of a big most we've kind tech us. the as strong seen -- think don't it there. I factor for been So I

still latest attractiveness this shows are a business. even it's signing the growing earnings side, we've of our on releases profitability. think Checkout.com, nice acceleration state our environment.And And I platform, combination environment, focused really marketplace resilience of Enterprise in really, really I even that We the people seen up. the just on really the with of within side our of think keep Instacart, the of others that [indiscernible] logos nice on

easier just of is faster, I really able cheaper, within so And competition add freelancers offer to think environment that's out attractiveness there. the evident even with some than the this being of our

perform So our I this ability good in to feeling about think we're environment.

Operator

next Fong Our is BTIG. coming from question Marvin of

Marvin Fong

first appreciate. Maybe think might I question, maybe listening people

a ] as carrying Just quarter. a picture bigger kind nice [ overview of

standpoint a your kind maybe doing of everything know but like Just verticals underperforming? are other of a category areas perhaps level curious at well what playing are from is maybe I the key like some geography kind software you out business, higher of Just a or called out? AI, how programming? or of

Hayden Brown

Maybe I'll this sure. one. take Yes,

our persistent really XXXX the really I nothing notable -- throughout there's think and been have pretty on steady has been XXXX. into Things geo and pretty front. mix

So not much note to there.

front, the about excited AI. We're momentum category the talked we've really about yes, On there.

in the volume are where in far of And I have wage GSV.Some we of headwinds, see for talked one of the these around type maybe also in software services think and around growth some some ] jobs good answers with -- design. seen in though very, these writing really in categories strong category, fact, be which volume actually would of ChatGPT. accretion headwinds, in there continue year-over-year and the because We QX And underneath that I the about translation, -- headwinds categories kind very category. before type of absolutely just this. to up threatened even some in category the us. categories average people think both job noted interestingly in in per that that But are we've nice these a I even us kind of large marketing, categories also went there's expect other it's hours for quickest advent categories that XX% dynamics see QX, enough, sales writing. -- Software really categories very, getting growers [ seen very bigger the fact, some some my legal, from We've some that see in we interesting jobs disrupted.In the smallest were of these in in

tremendously across a of minuses lot on, it's There's categories. -- just there's pluses diverse I a platform. really do see and sort So going multiple think and we

Marvin Fong

my maybe And other question.

which for I [ performance. is to midpoint, guidance close ] quarter not the dissimilar margin from your fourth Just think the at XX% for year the EBITDA margin

G&A, key bit feeling trying roles. you on to I curious you areas [ more? margins and kind of need the margin just and cited some OpEx -- invest areas you've I So some picture of think might just Or But other understand some any be a on ] [indiscernible] full the the there? don't you there's little the -- puts takes of to for that year,

Erica Gessert

guide rapid on year-over-year Yes, a the sure. both margin year-over-year Yes. very and of strong made a on And obviously, Look, XXXX. progress we're growth we've super basis. year-over-year strong revenue our basis, proud in accretion contemplates

were that and And we again That think AI, similar kind the growth, to the significantly year-over-year we invest really we're makes dynamics think is XXXX we'll we continue by for underlying to how really through R&D. as XXXX the Sales showing years continue committed area We'll balance did pipeline we've line, clear expect down to to with guidance, that we And optimize revenue will were accretion as the be modest do expenses, intend product really in in what emphasizing.Line very to expect have lower all year. operating is because I which from what I this fastest. multiple over all team I marketing really of and exciting. leverage XXXX, as been growth. line than is be about. marching total growth really will our that planned we we will But margin think new that of in really described. and investments and that grow we that sense to we ML quite continue manage of year-over-year, OpEx investment

continue I an to leverage continuing also similarly that well. we in G&A manage item think on performing going extremely performance to optimize.And investing line balance be is that with with to show to basis. managed XXXX ongoing that, marketing significant will in We're growth to operating will

So hopefully that...

Operator

Our next question Sandler. of Matthew is Piper Farrell coming from

Matthew Farrell

strong the Congrats results. on

for one Just me.

in of made thoughts improving you in macro hear particularly the stable side? free year, flow of it QX, around but I from You cash buyback. about the kind we doesn't backdrop more in Would move acquisition, your cash strategy know had just small XXXX. as you really any to look profitability this love the executed the like strong throughout

Hayden Brown

question. sure. Thanks, Matt. Yes, Great

QX. Upwork. one we're muscle our a is obviously the we super stock in very super So close were look, to pleased to new approved buyback the first happy ever first that's Similarly, It's get for for us, absolutely, acquisition. authorized been

we did any not buyback QX. stock So in

and growing same stock position to building to in at of our to continue well think additional our growing also we do buyback that where really can we tuck-in stable the continue believe for to add to our great as sheet to some XXXX that map. balance XXXX.At cash we value present advance talent additional and [ us maybe road as is levels, a identify utilize capability to ] we our should I these do that intend acquisitions opportunities that time, believe our execute However,

we going a are we're out really good there, So there our to active utilize to ROI. for continue with to be opportunities and balance think sheet us

Operator

turn call over would like closing for President back David Go Vice I to ahead. now to of remarks, Relations. the Niederman

David Niederman

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

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

Operator

Thank you all for joining.

now. disconnect may You

Upwork (UPWK) 14 Feb 242023 Q4 Earnings call transcript