Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $107.9 million, representing an 8% year-over-year growth [10] - Adjusted EBITDA for Q3 was $24.2 million, with an adjusted EBITDA margin of 22%, an improvement of 260 basis points from the previous year [10] - Free cash flow totaled $29.1 million in Q3, indicating strong cash flow generation [10] Business Line Data and Key Metrics Changes - Market-based revenue was $73.6 million, driven by 3.3 million active buyers and a spend per buyer of $330, with a market-based take rate of 27.6% [11] - Service revenue reached $34.3 million, showing a year-over-year growth of 40% and accounting for 32% of total revenue in Q3 [11] - Dynamic matching GMV grew 22% year over year, with 15% of job reads having a budget over $1,000 and an average order value of $2,200 [5] - Managed services GMV grew 65% year over year, with an average product size of $17,000 [5] Market Data and Key Metrics Changes - The programming and tech vertical grew 14% year over year in Q3, reflecting strong demand for AI-related services [6] - The overall market environment remains uneven, with mixed trends in labor markets and hiring recovery [7] Company Strategy and Development Direction - The company is focusing on up-market expansion and AI enablement as part of its growth strategy [7] - A strategic restructuring was announced to streamline operations and enhance focus on AI integration [7] - The transformation is anchored on four key pillars: strengthening go-to-market execution, building a next-gen AI-powered buyer experience, evolving matching technology, and investing in talent [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth strategy despite macroeconomic uncertainties, emphasizing long-term trends that are macro-agnostic [7] - The company aims to reach a long-term adjusted EBITDA margin of 25% by 2026 [13] Other Important Information - The company expects full-year 2025 revenue to be in the range of $428-$436 million, representing a year-over-year growth of 9%-11% [12] - Q4 2025 revenue is expected to be between $104.3 million and $112.3 million, reflecting a year-over-year growth of 1%-8% [13] Q&A Session Summary Question: How is the company reimagining the marketplace to be AI-first? - The CEO highlighted that AI allows for better matching of experts to projects, enhancing customer satisfaction and project complexity [16][18] Question: What are the key assumptions for Q4 revenue guidance? - The company indicated that service revenue will continue to grow, while marketplace revenue will depend on GMV trends, which may see a slight decline [19][20] Question: How does the reorganization affect the SMB opportunity? - The management does not assume a return of SMB demand in the near term, focusing instead on larger projects and clients [23][25] Question: What key investments are needed for 2026 to transform into an AI-first company? - Investments will focus on talent acquisition, infrastructure improvements, and enhancing market-based experiences [28][30] Question: What is the confidence level for returning to growth in the marketplace business in 2026? - The management expressed confidence that AI-driven products will lead to growth, with larger projects becoming a significant portion of the business [35][36] Question: How are other major categories benefiting from AI? - The programming and tech category is growing rapidly, along with digital marketing and video, as customers become more educated and precise in their needs [45][47]

Financial Data and Key Metrics Changes - For the full year 2021, revenue reached $298 million, representing a 57% year-over-year growth and a 178% growth on a two-year basis [4] - The company achieved $1 billion in annual GMV for the first time and generated an adjusted EBITDA of $23 million, implying an adjusted EBITDA margin of 7.7%, compared to 4.8% a year ago and negative 16.8% two years ago [5] Business Line Data and Key Metrics Changes - In Q4 2021, revenue was $79.8 million, up 43% year-over-year, driven by a 23% growth in active buyers and an 80% increase in spending buyers [16] - The company saw a 210 basis points expansion in take rate during the quarter [16] - Mature cohorts experienced over 110% year-over-year retention for the second consecutive year [17] Market Data and Key Metrics Changes - Non-English speaking countries contributed to 32% of total revenue [7] - E-commerce related categories showed strong performance as businesses invested in content and marketing during the holiday season [16] Company Strategy and Development Direction - The company aims to become an all-in-one talent cloud solution for businesses of all sizes, focusing on building a robust seller ecosystem and integrating acquired companies into its platform [6][7] - The management emphasized the importance of transitioning from a static workforce to a dynamic talent cloud solution, similar to the shift from on-premise IT to cloud computing [12][13] Management's Comments on Operating Environment and Future Outlook - The management noted that the way people work is undergoing a fundamental transformation, with more individuals leaving traditional jobs to become freelancers [8][10] - The company expects to remain disciplined with its financial strategy while continuing to invest in growth initiatives [15][22] Other Important Information - The company plans to accelerate investments in brand marketing and performance marketing, with a focus on driving higher quality buyers and improving marketing efficiency [19][70] - The gross margin is expected to see a shortfall of approximately 1% throughout the year due to hiring catch-up [73] Q&A Session Summary Question: Drivers of the take rate upside and competition - The increase in take rate is attributed to added value services and products, including promoted gigs and subscription services [26][28] - The management has not observed any significant impact from competitors like Upwork and LinkedIn on their business [32] Question: Visibility for 2022 trends and adoption curve of freelancing - The company guides based on known factors and has seen a stabilized business reminiscent of pre-pandemic trends [38] - The overall freelancing market is expected to grow, with a significant portion of the American workforce projected to be freelancers by 2030 [42] Question: New product introductions and acquisitions - Recent acquisitions are seen as strategic building blocks for the talent cloud, with a focus on integrating offline freelancer relationships [50][51] Question: Offline opportunity and marketplace curation - The management highlighted the need for standardization in how freelancers are integrated into organizations, addressing both offline and online opportunities [55] - Quality remains a key focus, with efforts to better match buyers and sellers through improved data and segmentation [57] Question: Brand marketing investments and NFT demand - Brand marketing is viewed as a long-term investment, with significant growth in unaided brand awareness [70] - The supply on the platform is expected to meet the rising demand for services related to NFTs and other emerging technologies [72] Question: Gross margin and hiring impacts - The fourth quarter gross margin is expected to reflect a shortfall due to hiring, with a projected 1% decrease throughout the year [73] Question: Tailwinds from labor shortages - The company is experiencing tailwinds from the labor shortage, with increased engagement from larger businesses seeking freelancers [82]

Company Overview and Financial Performance - Fiverr's mission is to change how the world works together[11] - In 2024, Fiverr's revenue reached $391.5 million, with an adjusted EBITDA margin of 19% and GMV of $1.1 billion[12] - This is a significant increase from 2019, where revenue was $107.1 million, with an adjusted EBITDA margin of 16.8% and GMV of $293.5 million[12] Market Opportunity and Business Model - Fiverr estimates a $247 billion U S addressable market across creative, technical, and professional services[27] - The company operates with a marketplace take rate of 27.7% as of Q1 2025[96] - 68% of revenue in 2024 came from repeat buyers[63] Growth Strategies and Future Outlook - Strategic priorities include going upmarket, expanding services, and investing in AI to drive double-digit revenue growth in 2025[55] - The company is targeting a 25% adjusted EBITDA margin by 2027[78] - Fiverr aims to generate $300 million in cumulative free cash flow between 2025 and 2027, representing a 14% free cash flow CAGR from 2024 to 2027[78] Q1 2025 Financial Results - Marketplace revenue for Q1 2025 was $77.7 million with 3.536 million annual active buyers[96] - Services revenue for Q1 2025 was $29.5 million[96]

Core Insights - The freelance economy is rapidly evolving, with Upwork Inc. (UPWK) and Fiverr International (FVRR) at the forefront, each adopting distinct strategies to leverage AI and cater to enterprise clients [1][5] Upwork Overview - Upwork reported record first-quarter results for 2025, with revenues of $193 million, a 1% year-over-year increase, and adjusted EBITDA of $56 million, reflecting a 29% margin [6] - The company is transitioning to an AI-native platform, utilizing its in-house AI assistant, Uma, which has seen a 52% increase in user engagement and a 58% rise in proposal-writing usage [7] - Upwork has access to over 80,000 AI specialists, addressing the talent gap as 63% of employers report a lack of skilled personnel [8] - For 2025, Upwork reaffirmed its revenue target of $740-$760 million and raised its adjusted EBITDA guidance to $190-$200 million, with EPS forecasted at $1.14-$1.18 [10] Fiverr Overview - Fiverr's first-quarter 2025 revenues increased by 15% year-over-year to $107.2 million, with an adjusted EBITDA margin of 18% [11] - The classic marketplace revenue declined by 0.8% to $77.7 million, while service revenues surged by 94% to $29.5 million, now representing 27.5% of total revenues [12] - Fiverr is evolving into a full-service work platform, focusing on larger clients and enhanced tools like Fiverr Pro and Fiverr Go, which are designed to improve buyer-seller interactions [13][15] - The company anticipates full-year revenues between $425-$438 million, with adjusted EBITDA margins expected to reach 20% in 2025 [11] Comparative Analysis - Upwork is positioned as a leader in AI integration within the freelance market, while Fiverr is gaining traction in high-margin services but faces challenges with a shrinking active buyer base [19][20] - Upwork's focus on AI and operational strength makes it a more compelling investment choice, currently rated as a Zacks Rank 1 (Strong Buy), compared to Fiverr's Zacks Rank 3 (Hold) [21]