I consider each an undervalued growth stock, but only one can be the better investment in this comparison.Investors are bearish on these gig economy platforms because of the risks from artificial intelligence.*Stock prices used were the afternoon prices of Oct. 8, 2025. The video was published on Oct. 10, 2025. ...

Core Viewpoint - Fiverr is restructuring to focus on artificial intelligence (AI), resulting in the layoff of 250 employees across various departments [1][3]. Company Strategy - The CEO emphasized the need to accelerate AI integration in all aspects of the business, including coding, marketing, and customer care [2][3]. - Fiverr aims to build a modern, AI-focused infrastructure from the ground up, adopting a startup mentality with speed, agility, and a flatter organizational structure [3][4]. Financial Performance - Fiverr reported a nearly 15% year-over-year increase in revenue, attributed to a surge in demand for AI-related services, such as AI agents and workflow automation [4][5]. - The company reiterated its guidance for the third quarter and the fiscal year, indicating stability in business activities despite the restructuring [4]. Market Position - Fiverr's platform is increasingly relevant as the labor market evolves and AI blurs the lines between products and services, with millions of businesses relying on it to remain competitive [4]. - The company recognizes larger opportunities in AI applications, enterprise budgets, and long-term projects that have yet to be fully explored [4]. Industry Trends - The integration of AI is fundamentally changing interactions between humans and machines, enabling non-technical entrepreneurs to leverage technology effectively [5]. - Fiverr's freelancers play a crucial role in bridging the gap between available AI tools and the real-world problems faced by customers [5].

Core Viewpoint - Upwork Inc. has initiated a $100 million stock buyback program, indicating that the current stock price may be undervalued and that management anticipates further growth potential [2][12]. Financial Performance - Upwork reported a record second quarter with net revenue of $194.9 million, driven by an increase in connections between businesses and labor opportunities [7]. - Free cash flow increased significantly to $65.6 million from $35.5 million year-over-year, enabling reinvestment in growth and shareholder benefits [11]. Market Position and Growth Potential - Upwork has 796,000 active clients, positioning the company well to meet the anticipated demand during the employment rebound in the U.S. [8]. - Recent acquisitions of Bubty and Ascen are expected to expand Upwork's market reach into a total addressable market (TAM) of $650 billion [9]. Future Outlook - Analysts have set a 12-month stock price forecast for Upwork at $18.67, representing a 9.77% upside from the current price of $17.01 [9]. - Management has raised guidance figures for the remainder of 2025, suggesting additional upside potential not yet reflected in the stock price [10]. Investment Efficiency - The company has a return on invested capital rate of 24.9% over the past 12 months, indicating strong compounding potential for the $100 million buyback program [13].

Financial Data and Key Metrics Changes - Upwork reported record Q2 revenue of $194.9 million, a significant increase driven by AI enhancements and client hiring in AI-related work [5][19] - Net income reached $32.7 million, marking a 47% increase year-over-year, and adjusted EBITDA was $57.1 million, resulting in a 29.3% adjusted EBITDA margin [5][26] - The company raised its full-year revenue guidance to a range of $765 million to $775 million, reflecting strong marketplace performance [27][28] Business Line Data and Key Metrics Changes - The Business Plus segment saw a 190% quarter-over-quarter increase in GSV, with active clients growing by 45% [11][54] - Revenue from ads and monetization grew 17% year-over-year, with Connects revenue increasing by 19% and Freelancer Plus subscription revenue by 13% [12][25] - Average GSV per active client rose 5% year-over-year, surpassing $5,000 for the first time since 2022 [20] Market Data and Key Metrics Changes - GSV from AI-related work accelerated to 30% year-over-year growth, up from 25% in the first quarter [9][10] - The number of clients posting AI jobs grew by 38% year-over-year, indicating strong demand for AI services [10] - GSV from prompt engineering grew 51% year-over-year in Q2, showcasing the increasing reliance on AI tools across various categories [10] Company Strategy and Development Direction - The company is focusing on a three-pronged strategy centered on AI, ads and monetization, and enterprise solutions, which is expected to drive GSV growth [18][30] - Two strategic acquisitions were announced to enhance enterprise capabilities, aiming to capture a larger share of the $650 billion contingent workforce market [13][15] - The integration of AI into operations is expected to improve internal efficiency and margin profiles, with over 35% of deployed code now AI-generated [17][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unpredictable macro environment but expressed confidence in the company's initiatives to offset pressures [40] - The company anticipates continued growth in GSV and revenue, particularly from AI-related work and the newly formed enterprise subsidiary [19][24] - The outlook for 2026 is optimistic, driven by multiple growth catalysts and the expected contributions from recent acquisitions [28][30] Other Important Information - Free cash flow for Q2 was $65.6 million, with $38 million used for share buybacks [26] - Non-GAAP gross margin reached 77.8%, reflecting disciplined cost management [25] - The company expects stock-based compensation to be between $60 million and $65 million for the year, indicating efforts to reduce expenses [29] Q&A Session Summary Question: Can you discuss the acquisitions and their integration into Upwork? - Management explained that the acquisitions will enhance Upwork's ability to serve enterprise clients with a comprehensive solution, addressing various contingent work needs [33][34] - The expected revenue contribution from these acquisitions is minor in 2025 but will grow significantly in 2026 [36] Question: How is the macro environment impacting the business? - Management noted that the macro environment remains unpredictable, but the company has successfully offset pressures through AI enablement and strategic initiatives [40] Question: What contributed to the take rate expansion this quarter? - The take rate increased by 50 basis points year-over-year, driven by supply and demand experimentation and growth in monetization products [45][46] Question: How are new customers using the platform? - Business Plus clients are converting faster and spending more than typical marketplace clients, indicating strong demand for the offering [54][55] Question: What is the distinction between the marketplace and enterprise business? - The marketplace serves smaller clients, while the enterprise business targets larger clients with complex needs, supported by the new acquisitions [60][62]

Core Insights - Demand for workers with artificial intelligence skills significantly boosted Fiverr's performance in the second quarter, leading to a nearly 15% year-over-year revenue increase [2][3] Company Performance - Fiverr reported a revenue increase of nearly 15% year-over-year, attributed to a "surging demand" for AI-related services, particularly in AI agents and workflow automation [2] - The company's marketplace business experienced a 2% dip in revenue during the quarter [4] AI Integration and Workforce Dynamics - CEO Micha Kaufman highlighted that AI is transforming human-machine interactions, enabling non-technical entrepreneurs to utilize technology effectively [3] - Fiverr's freelancers are described as "AI native," often ahead of full-time workers in adopting new technologies, which enhances their work outputs [4] Market Strategy and Future Outlook - The company is focusing on AI and targeting high-value buyers to mitigate exposure to economically vulnerable segments [5] - Despite the positive outlook regarding AI integration, the company remains cautious about incorporating these expectations into future guidance due to macroeconomic uncertainties [5] Human Oversight in AI Applications - Research indicates that human oversight is essential in AI tasks, with oversight needed 60% to 100% of the time in goods and services companies, and 50% to 100% for more routine functions like email summaries [6]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $108.6 million, representing a 15% year-over-year growth [14] - Adjusted EBITDA for Q2 was $21.4 million, with an adjusted EBITDA margin of 20%, an improvement of 80 basis points from the previous year [14] - Free cash flow totaled $25 million, up 21% year-over-year [14] Business Line Data and Key Metrics Changes - Marketplace revenue was $74.7 million, driven by 3.4 million active buyers and a spend per buyer of $318 [15] - Services revenue reached $34 million, representing a year-over-year growth of 8431% [16] - Over 50% of GMV on the Marketplace came from transactions over $200, indicating a shift towards larger, more complex projects [16] Market Data and Key Metrics Changes - Strong demand for AI-related services was noted, with categories such as AI agents and workflow automation experiencing five to tenfold growth over the past six months [6][75] - The company is seeing robust growth in key verticals such as programming and tech, digital marketing, and video animation [5][64] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance its marketplace, with plans to integrate Fiverr's talent network into AI-driven workflows [9] - Fiverr aims to expand its value-added services and maintain a balanced approach between growth and profitability [15] - The company is committed to reaching a 25% adjusted EBITDA margin by 2027 and achieving a 40% CAGR in free cash generation for the three years ending in 2027 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the structural tailwinds within the marketplace segment, particularly around AI and upmarket adoption, which are expected to offset broader economic headwinds [16] - The company reiterated its revenue and adjusted EBITDA guidance for the full year 2025, expecting revenue to be in the range of $425 million to $438 million [17] Other Important Information - The company is actively exploring strategic partnerships to enhance its AI capabilities and improve customer experiences [58] - Fiverr Go, an AI assistant for freelancers, has shown strong engagement and conversion uplift [12] Q&A Session Summary Question: What key investments are needed to unlock continued scaling of service revenue? - Management expects service revenue to continue growing at a healthy double-digit rate, driven by value-added services and synergies between AutoDS and Fiverr [23] Question: Can you elaborate on the managed services offering and the progress in upmarket strategy? - Managed services are part of the upmarket strategy, with over 50% of business coming from transactions over $200, indicating a shift towards more sophisticated customer needs [28] Question: How is the balance of supply and demand in the marketplace? - The company is in a good position regarding supply and demand, with AI-native freelancers enhancing service offerings [36] Question: What is the outlook for marketplace growth? - Management believes that efforts around AI and upmarket strategies will lead to growth, even without macroeconomic improvements [38] Question: How does AI impact entry-level jobs and demand for Fiverr services? - AI is elevating the capabilities of entry-level workers, allowing them to perform more complex tasks, which benefits Fiverr's service offerings [42] Question: Can you provide insights on the mix of recurring versus transactional revenue in services? - Services revenue is primarily from promoted gigs, Seller Plus, and AutoDS, with ongoing momentum in all areas [46] Question: What is the visibility on marketplace growth and the mix shift between complex and simple services? - Management is optimistic that the mix shift towards complex services will eventually lead to marketplace growth, despite current macroeconomic conditions [54]

Group 1 - Upwork has historically been a significant source of income for freelancers, with both positive and negative aspects associated with the platform [1] - The analysis emphasizes the importance of observing megatrends and technological advancements to identify investment opportunities [1] - The focus on fundamentals, quality of leadership, and product pipeline is crucial for uncovering potential investments [1] Group 2 - The analyst has experience in evaluating startups and emerging industries, indicating a strong background in assessing new market opportunities [1] - There is a growing interest in macrotrends and futurism, which can influence investment strategies [1] - The analyst's work includes international development and non-profit sectors, showcasing a diverse professional background [1]

Core Insights - Upwork Inc. has reported a significant increase in Gross Services Volume (GSV), reaching $988 million in Q1 2025, exceeding management's expectations [1] - The GSV per active client has shown a year-over-year growth of 3%, marking the first increase in six quarters and the third consecutive sequential rise [1] Client Segmentation - Growth in GSV was observed across all client tiers, with large customers contributing an 11% increase [2] - The Business Plus plan is attracting larger clients who tend to spend more and remain on the platform longer, despite a reduction in broad marketing efforts [4] Product Enhancements and AI Integration - Product improvements, such as enhanced search and talent matching, are driving higher customer spending [2] - AI-related GSV has surged by 25% year over year, with prompt engineering jobs experiencing a 52% growth, leading to 40% higher freelancer earnings [3] Future Growth Potential - Rising GSV per client is more critical than raw user growth, indicating stronger network effects and better unit economics [6] - The early performance of Uma, Upwork's in-platform AI assistant, is promising, contributing to increased proposal volume and faster hiring [5] Market Position and Valuation - Upwork shares have declined over 18% year to date, compared to a 10.5% decline in the industry [7] - The forward price-to-sales ratio for Upwork is 2.29, lower than the industry average and its own five-year average, while Fiverr trades at 2.32 [8]

Core Insights - Upwork Inc. reported strong first-quarter 2025 financial results, exceeding analyst expectations, which led to a notable stock increase [1][2] - The company's performance raises questions about the long-term expansion of the freelance economy and Upwork's potential to benefit from changing work models [1] Financial Performance - Revenue for Q1 2025 rose 1% year-over-year (YOY) to $192.7 million, modestly surpassing estimates [2] - GAAP net income surged to $37.7 million ($0.27 per diluted share), up from $18.4 million ($0.13) a year earlier [3] - Adjusted EBITDA increased by 68% YOY to $56.0 million, with margins expanding from 17% to 29% [3] - Free cash flow more than doubled to $30.8 million [3] - Full-year adjusted EBITDA guidance was raised to $190–$200 million, while revenue forecast remained at $740–$760 million [3] Operational Metrics - Gross Services Volume (GSV) dipped 2.1% YOY to $987.7 million, but GSV per active client rose 3% to $4,912 [4] - Total client base declined 7% to 812,000, indicating deeper engagement and higher spending per user [4] Strategic Initiatives - Upwork's growth was driven by strategic initiatives in artificial intelligence (AI), enterprise solutions, and enhanced monetization [5] - The AI-powered work companion, Uma™, has seen significant user engagement growth, contributing to improved user experience and spending [6] - The Upwork Business Plus client base has grown significantly, with many clients being new to the platform [7] - Diverse monetization strategies, including revenue growth from ads, premium subscriptions, and the sale of "Connects," have yielded positive results [8] Industry Context - Upwork's success reflects a dynamic global labor market increasingly embracing flexible and independent work models [9] - The "Future Workforce Index" indicates that 28% of U.S. skilled knowledge workers operate independently, generating an estimated $1.5 trillion in earnings [9] - The company's mission aligns with the shift towards freelance arrangements, emphasizing the creation of economic opportunities [10] Future Outlook - Upwork's performance serves as an indicator of the broader acceptance of the freelance model among talent and businesses [11] - The positive market reaction to Upwork's earnings report suggests renewed confidence in its ability to capitalize on technological shifts [12] - Trends such as increased remote work adoption and demand for specialized skills provide a supportive macro environment for Upwork [13]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $107.2 million, up 15% year over year, accelerating from 30% year over year growth in Q4 2024 [15] - Adjusted EBITDA for Q1 was $19.4 million, representing an adjusted EBITDA margin of 18%, an improvement of 100 basis points from a year earlier [15] - Free cash flow totaled $27.4 million, up 31.6% year over year [15] Business Line Data and Key Metrics Changes - Marketplace revenue reached $77.7 million, driven by 3.5 million active buyers and a spend per buyer of $3.09, with a marketplace take rate of 27.7% [16] - Services revenue was $29.5 million, representing year over year growth of 94%, driven by Fiverr Ads, SellerPlus, and AutoDS [18] Market Data and Key Metrics Changes - The overall demand for freelancing has been stable, with no direct exposure to tariffs [7] - Fiverr's strategic focus on high-value buyers has allowed the company to maintain growth despite a flat macroeconomic environment [61] Company Strategy and Development Direction - The company has set three strategic priorities for 2025: strengthening the marketplace by going upmarket, expanding value-added services, and investing in AI [8] - Fiverr Pro has been a key growth driver, with successful large deals closed without a traditional sales organization [9] - Fiverr Go has shown strong engagement, with over 6,000 sellers activated and 200,000 buyers interacting with the product [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business for the remainder of the year, raising guidance for both revenue and adjusted EBITDA [19] - The company anticipates services revenue to exceed 30% of total revenue for the full year 2025 [18] - Management noted that the macroeconomic environment remains stable, with no significant changes expected [60] Other Important Information - The Board authorized an additional $100 million for the stock repurchase program, reflecting confidence in long-term opportunities [16] - The company is on track to reach a 25% adjusted EBITDA target by 2027 and aims for a 14% CAGR in free cash generation for the three years ending in 2027 [20] Q&A Session Summary Question: Insights on Fiverr Go and broader demand environment - Management highlighted that Fiverr Go is designed to enhance customer satisfaction and conversion, with strong initial results [27] - The demand for freelancing is stable, with Q1 showing better opportunities than in previous years [31] Question: Dynamics for buyers using Fiverr Go - Buyers appreciate the always-on nature of Fiverr Go, which provides instant results and enhances their confidence in decision-making [42] Question: Sustainability of services revenue growth - Management confirmed that services revenue growth is sustainable and expected to increase as more value-added services are introduced [52] Question: Impact of macroeconomic volatility on freelancing - Management noted that enterprises are increasingly seeking freelancers to complement their internal teams, especially during times of market volatility [59] Question: Sales and marketing opportunities in Q1 - Management indicated that they seized marketing opportunities based on geo, channel, and category analysis, which will continue into Q2 [89] Question: Incentives for Fiverr Pro customers - Fiverr Pro offers a unique experience with high-touch services and exclusive products, incentivizing buyers to engage and spend more [90]