UPWK - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to the Upwork Second Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jacob McQuown, Vice President to Deputy General Counsel. Please go ahead.

Jacob McQuown

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

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

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

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

figures measures. made GAAP In non-GAAP financial be comparable this quarter the at addition, be including cash reference the measures, directly Investor financial GAAP added noted, in otherwise press other will measures reported the all non-GAAP can a financial non-GAAP second to is our as rounded are flow was website found Relations Information unless to most afternoon issued investors.upwork.com. quarter that measures, in regarding reconciliations their release to financial on of certain of Unless comparison to or Free non-GAAP. XXXX are second XXXX. figure, and

Hayden. Now I'll to over call turn the

Hayden Brown

lines. deliver XXXX the on compelling durable to strong continues Second top to and both Quarter everyone, Upwork's characteristics Call. Upwork's Welcome, and bottom Earnings growth business

marking year-over-year second increase. revenue XX% Our a reached million, quarter $XXX.X

a ever softer has accelerated in environment second GAAP a adjusted profitability year. revenue EBITDA up is client-seeking the new goals commitment last of million, become our quarter growth this We X.X% of a impact by income $XX.X quarter we from measure in action macroeconomic with contract. our indicator margin, very challenging operating leading particular $XX.X outperformed X% and environment of the along that EBITDA to while which an at is work, continued businesses, demonstrated was track while for adjusted of engaging QX, million, number in towards of dynamic clients large expected Our XX% second more the of through while May June, leads quarter. was than In shift a net internally enhancing the that small. This that profitability with this challenging in delivered highest and activity decelerated top-of-funnel and QX, A this to quarter-over-quarter, number number softness small in XX% a businesses. in clients mix active with sequentially, showed

small lowered the disciplined changes are on and guidance. Upwork's the EBITDA platform, macroeconomic year competitive year businesses' for to applaud and marketplace of remain more with leverage. will those other rest due prudent smaller characteristics the financial we and and client profitable QX in per businesses to observed we we lower per year. caution our outperforming of model have full we cohorts distinct provide expectations adjusted to to advantage, our XXXX changes performance spend While while that guidance, factored historical into XXXX it's our believe conditions the the continued continuing a us XXXX, reiterating revenue full execution We which remainder lead contract have us for in of about contracts assume of that activity fewer resiliency client

as full with to of clients and in range platform enable global us freelance ways advanced they singular the as to Our connect X-sided highly skilled marketplace serve online work. to the want technology destination talent

Upwork sources as staffing and alternative benefits in to and from approaches. towards digital market Our ongoing trends. full-time secular flexible hiring the success offline, from outperform share contingent numbers continued staffing winning traditional enduring cost-effective, also evidence and a analog, broader shift our high-quality, we

of position on that of growth and Upwork, free advantages a both continues us our once the business in to peak fundamental reflect are rebounds. paramount and model. Innovation continued flow an with strength, We for cash absolute dynamics performance growing relative profitability the macro for for basis be positioning

I'll From rate cost We the line are to services to talent of and leadership for their Upwork's Clients to industry continued our more intrinsic realizing to freelancers into and and projects and for talent AI or skilled, third, meet and the products, and training a companies our chat know-how shape only prompts show acquiring Upwork's record First, half data user solutions channels on to of Upwork corporate track engagement on Upwork clients AI-related deliver each and current ability XX% AI, access dreams our need on via levers it innovation. This in the range long to talent, by continuing building initiatives, need transforming growth, Gen the supplement XX%, report shift in they then to for including get clients productivity invest our work; continue enterprise partnerships translate to AI tremendous to Compared distribution serving this continuing are as to freelance of the to Uma, bots value-added outcomes. focus capabilities, work expansion. and efforts. effectively for top infusing and always on realities. efficiency, recent their supported our most C-suite latest and multiple and experiences coming drive AI expansion to brought the expert training revenue the AI-enabled that levers levers. Based in new tools our GSV preeminent and leading are monetization include: healthy and touch businesses bottom and into progress an Research revenue-enhancing delivering wherever today. launching improving tuning to the to and to and AI-driven knowledgeable continued Institute has position into position the scale on studies market us skills to marketing are and deploying of AI-related maintain growth take and leverage that on where employees the no LLMs, and with ads adoption that looking integrate growing through marketplace AI skills mindful that they for high-quality These is by features for AI in require professional, the Scale is a fourth, and Upwork with is AI; back-office by new productivity, on using of TAM professionals that outcomes second, of to by for internal built and relevant capabilities executives GSV a half, of they from our market integrations; and a skills surprise back deliver talent making familiar partnerships; externally AI-powered than It's have Upwork already find evolving advantage. already with have these destination with we of delayed structural that fifth, Upwork nearly products is through found need, track. right offerings quality, projects demand leader serving like businesses, their demand. customer promise

ahead what us excites AI-related this year-over-year our in leaning talent most XX% opportunity compelling. for business from QX, benefits platform customers. The was work GSV for these opportunities the on who While is are up our are and tangible into

working earned those more non-AI-related on As AI-related QX. on per in hour just than projects, one example, XX% freelance professionals, working projects

own our Our improving engagement second product customer ongoing lever growth and through AI-powered is enhancing features. productivity

quarter, work to hiring matching companion. steps an the announced underpin During process we indispensable Upwork's mindful serve and Uma, and second always-on as AI, in key the

transform together. Upwork Uma by for to is seamlessly the vision AI more work the on and power is working of way Our augmenting people done

days the use we've changing and Over our Uma Although work and in both quarter-over-quarter seen launched game with increase QX. of demand interacting platform is in users customers, has easier this improving still we with in only product Uma making the XX% use quality time, to select cases, see early outcomes. for a growing in its

large multiple is also innovate offering to their of clients prioritize that clients. a on We market monolith, continue of with The enterprise enterprise subsegments, our not differently. but comprised large needs our behalf is

been that So of addressing have diversity strategically needs. business we

began ring-fenced existing buyers. successfully have new which bifurcation and limited in we set functionality alternative a testing quarter, of a our This of enterprise offering we subset in clients and solutions and of one pricing enterprise a target pricing more for to functionality down winnowed

our conversion compliance testing, quarter, the and in move for combined XX will updates reaccelerate this packaging total team the offering and coming standard enterprise deals approach good traditional XX insights and dual-track This quarters. new with modifications giving products. growth, yields us to the enterprise pricing for our higher During on closed forward have to XX and for with approach our enterprise we how in further is to sales

a Shopify, ecosystems the for With on other converting acquiring experts clients and prospective Labelbox, opportunity. Historically, cost-effectively During to familiar home communities method encounter and to specialties. new a attracting and Guidepoint mouth, apps, platforms, at indicate scale tail our enabling and middle advancing Builders website and long by with our third-party from new talent Upwork. clients our were MSP channels. and lay of one clients Further unlocking is huge time. Upwork Enterprise paid enterprise already clients for of wherein mobile experts added. and and the second our solutions incorporate management, the we for acquisition in built Solutions the GoDaddy, market we announced experiences expertise existing foundation has pool attracting media development, on word through the massive first this innovative quarter, everything social need and the further see and management, we BMS e-commerce, large knowledge Upwork avenue largest have embedding strategy, by for work SEO, steps new those in clients, project the to on partnership including them partnership a been and in our among joint KellyOCG broad businesses of agility the NASDAQ, also to converting access month, WordPress partnerships, FirstSource, Beeline, of providers. and most primary partnership website new we e-commerce with our These and high-quality real of this We've Upwork's

more to combined growing. is it experts engagement value ecosystems need inside communities not can Upwork light customers they starting to point Our past enable for our that date. the GSV where third-party highest partnerships number up Today, to to we've places partner revenue we derived significant of seen and be to quarter, to The created. In than be the strategy on brought deals succeed. but contribution monthly small, of and partners to their these May our from does is in is doubled partnerships

As this accelerate we quarters, leverage orders businesses and their magnitude needs. work of will over future position partner reach more for further prime program to we Upwork

increase Chat with and building In we Finally, the products while highest we are take a active in we contribute and monetization lever are lean of XX% These to of Upwork quarter and pricing for our our to Upwork features, increasing take one our the more ever. Chat point a and in value notable critical was saw year-over-year improve us the rate expanding to Freelancer Pro to monetization that and the for our updates velocity experimentation as continue and quarter-over-quarter rate, this Pro while price sources daily users asset additional customers growth Plus value-added packaging. revenue more including overall subscription, connects marketplace, a quality our us and app efficiency our subscriptions. marketplace, we in to delivering. area, to QX. XX% QX ads a added changes for in the in success AI-powered also record

our made products yet is near profitability and continue streams. the and staying to promising. UpWork long-term another in is fastest-growing even goals. demonstrating unwaveringly runway while environment the monetization progress navigating more course growth a where executing is the ahead one of choppy is capture even position be Asset revenue from our the secular our area term, on to significant This tailwinds,

drive and continuing invest EBITDA momentum, business increases leverage our scale, every are growth, X-year assets towards in adjusted this on meaningful year formidable target. We to our to excited building tremendous and to XX% creating

of to distinct using will We a it in turn to Erica customers know-how. With to differentiators over innovate I and to thrilled our with financials. technology, and review our position are be our that, for talent, work

Erica Gessert

Hayden. Thanks,

of a our our opportunities As Hayden outlined, we're ability and strength excited the generate the about ahead Upwork, model, tough profitable to durable, growth business macro. for in

margins the Our model with flow. adjusted is over quarter, free margins EBITDA cash expanding profitable, XX% highly and gross in increasing second

our X year years, leverage along goal the every our in steadfast to reach increasing the next We XX% are in way. margin adjusted operating EBITDA while

$XX.X products, customer X with strength corporate past Enterprise at our quarter, is started year-over-year In consistent recent basis, structure signing high our with as QX spend the and Revenue rate a Solutions our review delivery from by behavior and Within fee and quarters. we year-over-year million part demand the grew from a revenue to reflecting MSAs well as year-over-year. the I'll in the few driven Marketplace in which few managed for Now flat our on in grew trends, interest quarter XX% QX. services $XXX.X last work total growing flat momentum current results. revenue million revenue in ads XX% enterprise and showed sustained in million impacting environment, remained of and highlights the increasing product was second the new most $XXX.X spending. Managed was remained monetization enterprise year products. and business, pricing services

saw top-of-funnel very size. broader a This of While QX we activity businesses, these average is which shift on softening trends. from our small in mix of flow-through affects activity this as year strengthening a to macroeconomic QX, a as Upwork, contract well saw trends

declined on GSV with we're marketplace spite client perform and and challenges, differentiated temp services, year-over-year our our than retention Upwork's board per to active active basis. result, these macro-related In and better companies declined temporal model. to pressures, to staffing, both clients job up benefiting with year-over-year. new ability us a these ongoing GSV X.X% As with a traditional many pleased X% X% Even year-over-year acquisition due $XXX,XXX were tech-enabled business of

an XX rate in was all-time at QX, basis XX% take marketplace Our of high from up points QX.

have to to our on additional this take confident rate, are pricing our value. and capacity to is we grow We approach focused

supporting of rate in belief and continue monetization we platform, and the that these experiment future. our significant take increase on the wide to are opportunities a to variety have test We with strategies tests our

second this, do QX, marketplace unique we growth. In to subscriptions we the the As sustained opportunities with from contributing ads enable platform monetize we will to Freelancer with our growing and be what products, see and Plus to XX% monetization balance year-over-year, experiences our we we continues saw revenue of XX% margin always health momentum the gross to million, highest basis year-over-year representing quarter, expense continued in as to both XX% successfully improve, costs. $XXX.X reduce sequential growth on revenue year stream. Non-GAAP to operating was continue operating XX.X%. to of a Non-GAAP and prior compared $XXX.X in million or we the revenue,

increasing our and For the accelerate second year-over-year quarter, non-GAAP R&D to expense was continue as of innovation invest technology. $XX XX% pace million, in we

of R&D We million and year. the year-over-year, sales XXXX. maintain a as of expect percentage marketing decline the to expense a level in a but similar dollars absolute percentage as revenue spend Non-GAAP expect of be throughout $XX.X XX% we and for year-over-year, revenue of to declined of higher remainder

in remains PFTL, or $XX.X margin losses, revenue. Adjusted million adjusted of at second XX.X%. total the transaction QX, of for was provision X% EBITDA low representing approximately EBITDA million $X.X Our for quarter,

to quarter includes our of ever GAAP the income Our of and net impact growth, profitable continued share GAAP per earnings which generate highest model compensation. stock-based business generated

$XX.X XXXX, cash per For the inherent Free was our income net the flow for second in free diluted of cash high GAAP business million and model. share the was earnings quarter million, flow GAAP $X.XX. the fully of result second $XX.X yield quarter was

share during the the XXX% through marketable repurchases, cash the $XXX.X shareholders the to quarter. of million $XX.X approximately and of second returned Cash, cash securities free equivalents, end at flow also million were generated We representing quarter. nearly second

Turning to guidance.

macro of By cost expectations May seen to EBITDA outlook the data year, revenue This guidance no and based tempered on we the increasing our of to are the more margin since year the for improvement environment. our a providing we maintaining our adjusted the due remainder points strong the across for discipline are current have on is We outlook. business. focus

balanced We strong focus ability cash this believe in high produce growing margins gives yield margin a our goal. free time. shareholder our will adjusted and returns in with us produce flow Our margins profitability over to and environment growth EBITDA confidence on growing long-term

revenue expect year-over-year the produce the we third range $XXX representing at $XXX in of million quarter midpoint. to to X% the growth of million, For XXXX,

quarter, a range margin an in $XX of third EBITDA million adjusted to we $XX the at adjusted EBITDA million, For the represents guiding of to which midpoint. are XX%

revenue For we to help to expect the million platform full experience marketplace. of at year and $XXX our growth are XXXX, we which $XXX headwinds long-term million, customer between improve in growth anticipate our initiatives, near-term X% from representing year-over-year anti-circumvention revenue midpoint. Contemplated while stimulating guidance quality will the some

in stable the what rate expect rest saw QX. the remain of with year for take We we our to

discipline As range to model, margin cost we a of full be of and within ongoing expect result our year outlook. EBITDA of to increasing million adjusted $XXX our $XXX adjusted EBITDA the strength our million, a

of and are As this fourth GSV in that year the consequently quarter are week a are and year reminder, revenue by year. adjusted margins, set number billed, this revenue in clients Sundays Because EBITDA our versus that growth, affected timing Sundays period. the any there in recognition each in the the when affects our fewer GSV the quarter and last fact period of of

point impact, structural the rate GSV approximately would for year growth be Excluding higher. X the our

We $X.XX and our diluted last up from quarter be to of expect $X.XX year to full EPS non-GAAP $X.XX, guidance between XXXX $X.XX.

$XXX shares average quarter the last For a guidance million. $XXX $XXX will million, down of range previous our full to to $XXX decline outstanding weighted year, of to from million million

will enables as profitability cash basis. an significant our flow term. operating free continue we will of while producing innovating in for and position of to profitable flow continuing growth margin the new market solutions in profitable innovative leader, Regardless and near increase free ongoing environment, to We us cash on invest that a and unlock while macro steady growth and Upwork. Our durable and the long marketplace strengthening achieve S-curves can

contributions always, proud focus quarter unparalleled As part your incredible by and at we great creativity, thanking their be am I and pace questions. would team. With that, our take to team for close to their of to want I execution. happy this Upwork this be of a

Operator

[Operator Instructions] comes from our And of first Securities. JMP Boone question Andrew

Andrew Boone

take there your you to well terms also Hayden, as and as freelancers? of you products. terms the speak are on viewing you platform in in about and health for initiatives pushing first-time talked of how balancing the more Can that supporting in as to monetization Connects as liquidity the just remarks, prepared of things that monetization platform more like plenty well sure making of freelancers is rate

Hayden Brown

like things Thanks, the done Andrew. give want subscriptions to marketplace and work enhancing we and things I'd successful us are look laser-focused clients Connects the perspective. on signal they from work, to rate be to in accretive quality we incredibly you're these with for has really making want balancing so for themselves services a we engage value-added and because and more marketplace say far we've take how been when, driving we're talent here provides to and control ways us priority the platform the and is continue that for where, to blueprint expanding that. how the factors also improve initiatives and health over or that while propose at are What outlining, with in like for more quality featured

a other And large on. how today opportunity long for And features of here have, lot goals. our on enhancements when or a about compare these there are marketplace is, broadly some is looking these monetization byproduct also of part we work functionality, and capitalized and can opportunity to run cases, value-added effectively further there's and we we or at that to know map back customers of whether And businesses, more marketplace a so here. features subscriptions really in our X-sided and we service we can in specifically most we room functionality for and us. Stepping in execute that it's ads the be services know and a given road monetization where are that are health and just really, in

to done take in expand healthy the rate is about and and So really customers. opportunity expand to the really what that we've we for great and continue build to continue and marketplace way a feel valuable on for

Andrew Boone

you ask successful additional picture then to And deals. and more Hayden, to you of I where for can deals, pursue That's you wanted about how partner out helpful. been going want about the deals talk these guys roll that what's forward? as paints

Hayden Brown

OpenAI bigger partnership clients have. to don't highly over build this we've them to partner us momentum these very say was demand scalable, account the of for point our us register partnership that view client opportunity and success a for of to look for ways what success And to talent. is brand lot that really them find the We last large, as very that launch Upwork few cost-effective, or this. all been we've come certainly building this for that and provided there's and the about on starting the to now our in for program talent. our new is our at been using I'd an for looks bring with start and this we need to building like the and us to know find muscle really quarters way we unlock for

one generate bringing and talent get in these marquee what some fast-moving turning partners of on our successful through to around us of and here Because partners we not partnerships a OpenAI very a action?" customers who these themselves "Hey, always good ecosystems needs can partners has that and had and partners have our really these this clients have ecosystem way out are like service. these some saying, funnel the and become into the we're model of So leveraging to of who to coming have

and that is the we've being month deals the quarter, the and we the revenue partner May number to seen highest of there. this contributed in partnership from monthly date what's doubled past So fact still are to building

go around us exciting model could client a be different in but early do see still very opportunity, So forward. trajectory acquisition to that for it a this the is and we

Operator

question comes & Bernie McTernan Company. of from Needham next Our

Bernard McTernan

Great.

kind August remainder we at the sequentially trends I of? line not that is clarify. is be be we to of June one me. monetization, the bookings year to there in anything for impact to quarter And And flat given the just July in quarter, but of GMV for answer thinking in point or sorry, level, couple one saw wanted the a for the or based guidance should the XXX-basis and Just maybe this bookings top you thinking into guide, growth right just that know then on continued the year that If and be environment leaning the just to the else growth? for relative is a in last or thinking XQ, year-over-year fourth about Sunday is take last on the -- clarification, then the rate full fourth the just about just to the

Erica Gessert

Yes. Sure, Bernie.

So -- in there. terms line of back the the on

demand we actually slightly top-of-funnel In and that foremost, see trends first in we of on June and we very July. the turn then that saw in July. get trends QX, saw saw to strong and those mid-May worse into kind terms top-of-funnel, that and did June signals really We starting in of and

going on. to no and are is basing in we're guidance what our improvement contemplated now trends We these so impact in fully contemplating this really And guidance our forward. this fact,

well anticipating the ads both question, we're little lighter of and on of well. And trends, prudent, usage kind on we being trends, yes, in the Sunday way, So your a point that's X kind again, I yes, see our in and demand we've side is like full of think then terms mean, effect take the year. impact mix just I trends as products fully looking in bit year. On guidance derisked rate the I for this the expecting top-of-funnel some at just as that of that feel the that the seeing shift we're question for we'll the think -- as

Operator

next of from Canaccord. Our Ripps comes question Maria

Maria Ripps

Great.

your to just guidance? you're First, we maybe environment, as in sort about your a talk tough sustain can look ability of EBITDA you understanding at that your macro P&L, And that have what impacting in term here I follow-up. a of the quick of as without near then improves? environment some areas optimize sort are can growth you future sort And the breathing

Erica Gessert

Yes.

We're inherently that of the business. EBITDA in guidance, as Just look, and the well both as terms we've amount OpEx gross we've mean, the margin progress the line I is profitable on a progress obviously made with implemented continually an making of business, as this on muscle maintaining cost adjusted tremendous discipline a line.

we that really, can now. optimization so. continued that. working so still to to invest everyone, continuing rates And have And in things to we feel we're do that can on, do we a we then hosting continue other confident XX.X% that And just like we're really margin gross some at do growth. We're on with reminder as costs,

the future. the that will grow Our R&D into growth are expense was up in investing XX% year-over-year in QX, and GSV we very, on very focused levers

we and We margin optimized of optimize in in growth. continue that produce kind can do are both. ROI places, lower the spend areas other can know and on that G&A line operating us, we think we So to growing while investing for

Maria Ripps

any And developments tools there in business? the to recent of quantify the any very about it relates I AI a talk you sort And as it. then Got AI could your secondly, release. know functionality? way and highlighted overall maybe press impact That's few And on helpful. to is you of

Hayden Brown

Maria. Sure,

I'd a to pleased adoption an throughout Upwork like even and on AI leverage companion, of functionality, interacting QX their journey as well seen to the and with users that very very Upwork, the work and advancing work including which things early stages. though functionality We've feature we're for Pro, be and AI is they're Uma, tools in the these increase strong Uma. as between still continue with are our freelancers getting all QX in AI-enabled XX% Chat terms particular, launching, features we're say in In how

Chat We Upwork freelancers also basis. saw in Pro on using a daily a XX% increase

road these is map of us and positive experience to are kind our going this is the So signals confidence the that that strategy enhance and us to giving that for in is an metrics continue really executing. we're effective

here's of think ring-fencing terms which on lot way we think the about. the of to business, AI about I overall negative get impact, a impact In one questions

AI that old disrupted of in journey, behind. As and of working an of ways under small time is are with the a than less jobs which world clear, less the impact just our our AI, overall spend, in some most $XXX Upwork job today. that To over we complex hypothetically, yet inevitably The easily jobs undergoing are of this marketplace of transition, by on segment segment. not are get AI and and will be seeing broad-based GSV comprised X% left

the quarter, writing, from to translators hours AI. of who that's if most as small it's and translation is saw outputs where translation, shift over multiple for the and impact and Now elsewhere, past. started per valuable, and and of jobs, see, limited from past to In much work transition most simple, per expected and segment, within current And positive and you saw the categories. couple point, translation quarters emerging all has with visible are the look away Writing by In new is very in the we the job a editors writing we've continue low seen paying that's working actually obviously contract this is and contract spend we effectiveness at evident, this in supplementing AI-driven more we a complex, now. increasing because in work. delivered just higher mix in AI more

humans to all factors we the So in is from with offering that are working the so replacing AI-related the that is And as augmenting them. expertise really what AI testament are human marketplace much the benefit of see so tools by a these across expect we than more opportunity in humans ecosystem. our categories valued AI to

Operator

comes UBS. Chan of Our next from question Josh

Joshua Chan

a imply current does to imply maintaining guess, from on guidance, like of I easing? levels, bit a that does through the that as talk your a you of little it about the saw kind And June could current clarify of onetime was there, slow in May if was guess, I you or talk and wondering about then just like or lining continuing it Was slowing then kind trends? flat I flat QX. or step-down you a more from trajectory kind it

Erica Gessert

Yes.

about from a the platform promising indicator So overall up take demand in a June QX, signals into work QX, mid-May, the demand And and trend which saw on XX% and we client-seeking July. for trend in the our growth saw step metric, we to us a and that top-of-funnel leading talk really maybe platform and a declining on to kind to QX. transition started QX of is back was on reverse around really then

which demand understandable environment more lower to the I characteristics overall, GSV which then given And have signals saw shift interest the outlook year. businesses high active, about per of the operating spend smaller making rate the saw of very here. this we us a lower mix to rest tend small mix from really we're cautious that is and in. Since our -- overall for growth we so what's And impacts we saw customers, -- decline. strong and shift demand saw is factors We larger again, also a couple businesses from --

Joshua Chan

color. in undergo like need trajectory a returns, And you bottoms and how terms for thinking will management, environment, about better? gets in you or demand eventually very of Thanks that when eventually to period as of impressive your this spend, added demand expense the then are

Erica Gessert

proud we've I mean of we're sure. very, cost discipline Yes, the very that implemented.

I'm of hard. so working a doing at the for proud job team we're think really I here great it, and

built terms a we'll to very in kind invest performance ROI, engine, very, and with the committed clear and to as marketing we'll forward. as in we very We returns, that invest. way grow We've are continuing of operating path. moderated continue demand way parameters And down we go be leverage very good, as for continue of I even we think yield to that this very example,

don't our the necessarily significantly ratchet as but we'll see need I to as So it spend up returns, we go. assess demand

Operator

of Our next from Farrell Sandler. Piper question comes Matt

Matthew Farrell

thinking I'd about helping love the next how of of What that little on kind enterprise but of more about be enterprise into early obviously quarters? strategy. couple to results, an should the drive over in to bit went the business You bifurcation understand we acceleration a pricing the hit that? some

Hayden Brown

Matt. Sure,

the well attractive, and aggressively unlocking really is it. TAM keep to this on view Our to is enterprise so work we're positioned

and inform promising really been still in I'd we but in work, remain in that's it's because new we and go to where using the ran agile where that number every we focused. the focused in from some the signals, you're we're here. what we increase carrying signals critical opportunities every see from testing right, forward. pilot logos last unlocking the quarter, as those yet the we're quarter learnings as have in unlock say strong, environment insights do the in to quarter of performance we doing, next saw With to saw environment market and really terms the enterprise not we're with level the type and And the share this because really of space really But opportunity. And of that of we we're of have of that's the wallet. expecting well are we conversion that expand same on where conversion both in think last logo we

-- that than but we're to are where more think, is I it's laser the the So focused, showing soon I from think actually results, specific say agility. that it's too and that,

Matthew Farrell

move time of And clarity would it's more than previous but it the and pretty through this embedded in GSV up GSV. slowing? enterprise does on customers, on the assumptions how different? in both different more math, It patterns past, How on macro, has spending intense is around as then like my just guess, the the you are love the of and in I cycles it that following questions of of been much small some significant than guide. it year the full any the seems the deceleration a the Based on kind rest year. assumes on

Erica Gessert

add Hayden, you and start feel I'll free Maybe to on.

things kind couple guidance of for based the here. Like essentially QX of said, rest on I bringing QX a the into exiting the the forward year. that So is even and saw we of trends lower

kind sure and really not were wanted what seeing we've that So what and make June been months. in It's any of we July couple last it the we basing that's of anticipating trends, we're from the to on. improvement to macro the

said, the half And to derisked effectively so the of effect, like that do year. we've we think back I

consumer those to side. well few been And for these really both macro compounding how and right, business and inflation high have interest years the large, of medium past look, the say, effects, terms is small impact demand impacts the and they environment platform, to kind we're able compounding affects able on I we've the demand effects, those this some But investments that the this, to and really starting of categories strategy, see some our high-growth we've through going been revenue in and ads platform. we've anticipate due spend, GSV spending think weather rates would of writ impact large in with beyond. will benefits been we business and share impacting get on now as also over and of the of in on some demand the customer think, in on we've monetization I grow time. do the made I XXXX to Just And things on storm and

Operator

question our Fong of Marvin from next And comes BTIG.

Marvin Fong

weak even the particularly kind areas about in whole round relative relatively marketplace? I then trending So the maybe even that of terms And the or I kind out be a guess maybe world. you might categories have discussion overall could the stronger of or geography state add to of just to follow-up. of Anything

Hayden Brown

a Marvin, macro from tech a large the industry being job what hit openings category perspective. in we're broadly seeing the at from standpoint, is is harder

that And a demand trends. some are tech on extent jobs is consistent flowing bit we to seeing weaker. macro that, being with the for that's own terms through our of So platform in

on know that however, better. our also are that, not subcategories platform that totally is some within We performing uniform. are impact, own tech category our There

in theme. The seeing AI-related terms subcategories AI even And rating even popping grew up. year-over-year. definitely growth XX% happening, That So are it's like within new like of we're of shoots emerging categories these I'd but uneven, the in business slices in translation, bit work. as that's, a is growth say, impacted are spots and one whereas bright the strength automation

going in in category kind of say again, as more what's on we think So saw other of impacted question terms client U.S., than economies. Germany, indicative that's I To and of story. a or bit broadly that's U.K. demand. globally other geos And the the of countries I'd those segments,

Marvin Fong

Yes.

want Okay. Perfect. up That I sense. to enterprise. makes the bifurcated also follow total did on And

So in are to some enterprise or a about it these of the that of that's version is mean, kind sort customers palatable? version? there exactly of What I'm the less it version? is we how your it it risk of enterprises? And for existing should more the being on is think makes is then just the more feature Is it B is full-feature the it of lower? -- that question, draw what exactly on or, take I cost, curious lower about maybe the -- less some part upfront just any going rate that what they that opt mind full-feature fence might your that

Hayden Brown

structure this, had What we of landing no are or doing leveraging we these at the Yes. one art absolutely optimizing enterprise. target we're -- less that I more iteration again, really can in which to whole wallet, tools subsegments pricing, different within at is this we our now absolutely offering the exist there's concern. the their want and be And of understand the share tell packaging, not you the first with, really best-in-class the previously, have cannibalization risk getting right customers one I that here. something meet expanding aimed to and to more toolkit. new And is at. of we was like

and profitability. we So these we we the are effectiveness on of nail I take overall a say would not losses pricing absolutely to margins of rate its get and our how or bunch But right determined learned packages of things. market. business compromising we're or kind

Operator

from of Jefferies. And question [Operator next our comes Byun Instructions] John

Sang-Jin Byun

is John of Byun This behalf Brent Thill.

the I or factors it If different where the there? actions either between further margin we some a pockets you take, that the you past, room what mentioned I will lines? still or macro mean, specific expansion, or could OpEx external sort big On could GSV I in EBITDA the the resume optimizing you? And other then more think mean, can to optimize then rate what growth and on how help still Wondering not, there are still there interest of to you've require R&D. growth, view was that. low

Hayden Brown

John, return macro we better a to GSV investments to pay for our to don't wait have off. for

on persists. now improves. certainly, we're based We even stages challenging if expect macro And they in the early to in the perform now macro a better in they're the levers when have impact will investing XXXX,

our And year on also will GSV pace. from well as our efforts, from our anti-circumvention So the which growth be monetization on AI client the MSP program. this and early VMS be which making including by we're as efforts AI efforts amplification GSV initiatives, and marketplace, pricing be work, rapid beneficial. These acquisition well work, new will will a platform, as them have is unlocks partnership talent growing significant of in logos from and which scale, which improvements packaging and will performance we share Uma-powered come impact. are scaling XXXX, from the asset work-related favorable the a at wallet execution XXXX next at an enhanced The tailwind, and that drive all enterprise and to they and their in they In be never year, additional as will revenue. expected

we of So opportunities one ongoing strong have great of single execution the behind we our every feel and them. portfolio about

Erica Gessert

more optimization And the have to do I'll line. on just adjusted Yes, expansion answer R&D go the question. absolutely EBITDA margin we in

we think We innovation the the to that you to on continue that, in in invest can I investment that on expect to platform. grow this And business. are to -- are think line. grow and ongoing are innovation continuing going that ways technology We

some that on that extent it the basis, the And so year-over-year in to grow you not line will continue past. but to has nearly see a

the a seeing way take We're project and we're we XX% that past along And that line. few as kind been to the in taking gross profile horizons approach. then G&A cutting I continuing want in also on time we think the we there's ROI of and we're we years well. can year going looking the a of project we've want. R&D. go back And not growing And over improve for by that optimizations margin our definitely surgical in have really So where through again, to

Operator

and participating, That disconnect. concludes Thank XXXX Upwork's now Second may call. you Quarter you earnings for

Upwork (UPWK) 7 Aug 242024 Q2 Earnings call transcript