Fiverr (FVRR) Q4 2025 Earnings Call Transcript

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Date

Wednesday, Feb. 18, 2026 at 8:30 a.m. ET

Call participants

• Chief Executive Officer — Micha Kaufman
• President (former Chief Financial Officer) — Ofer Katz
• Chief Financial Officer — Esti Levy Dadon
• Chief Business Officer — Jinjin Qian

Takeaways

• Revenue -- $107.2 million for the quarter, up 3% year over year.
• Full-year revenue growth -- 10%, accelerating from an 8% increase in the prior year.
• Adjusted EBITDA -- $26.5 million for the quarter with a 25% margin, representing a 470 basis-point margin improvement from a year earlier.
• Full-year adjusted EBITDA -- $92 million, up 23% with a 21% margin.
• Marketplace revenue -- $71.5 million for the quarter, based on 3.1 million active buyers, $342 spend per buyer, and a 27.7% take rate.
• Spend per buyer -- $342, rising 13% year over year from a 9% increase the previous year.
• High-value buyer growth -- Buyers spending more than $10,000 annually grew 7%.
• GMV from projects over $1,000 -- Up 22.8% year over year for the quarter and 23% for the full year, but these projects represent less than 15% of marketplace GMV.
• Service revenue -- $35.6 million for the quarter, up 18%, accounting for 33% of total revenue.
• Free cash flow -- $21.8 million generated in the quarter.
• Convertible note repayment -- $460 million principal amount repaid in the quarter.
• Cash balance -- Approximately $300 million at year-end with $67.5 million remaining on the current share buyback authorization as of Dec. 31, 2025.
• Full-year 2026 revenue guidance -- $380 million to $420 million, equating to negative 12% to negative 3% growth.
• Full-year 2026 adjusted EBITDA guidance -- $60 million to $80 million, with an 18% margin at the midpoint.
• Q1 2026 guidance -- Revenue expected between $101 million and $108 million (negative 7% to 1% growth), adjusted EBITDA between $19 million and $23 million (20% margin midpoint).
• Margin outlook -- Management expects a 200 basis-point reduction in adjusted EBITDA margin in 2026 due to transformational investments.
• Marketplace revenue outlook -- "We expect elevated volatility in marketplace revenue this year compared to last year" due to the deprioritization of low-end transactions.
• FX impact -- Recent appreciation of the Israeli shekel to the US dollar has created "over $10 million of headwind on EBITDA guidance for the year."
• Leadership changes -- Ofer Katz will transition from CFO to President, Esti Levy Dadon will become CFO, and Jinjin Qian will become Chief Business Officer, overseeing revenue, talent, fulfillment, and business operations.
• Strategic transformation -- Management outlined a four-pillar transformation focused on AI-native talent matching, product overhaul, go-to-market expansion, and operational excellence, with expected "tangible impact within four to six quarters."
• Deprioritization of low-end transactions -- The company is intentionally shifting resources away from lower-value, transactional work to focus on high-value, complex engagements and AI-native business, aligning with observable declines in categories such as writing and translation (down 20% year over year) and music and audio (down “in the teens range”).
• Product integration -- Features and learnings from Fiverr Go are now being integrated into the broader product platform rather than offered as a standalone product.
• M&A and buybacks -- The capital allocation plan continues to balance buybacks (“$67.5 million left on the current authorization”) and “tuck-ins and larger transactions” for M&A focused on enhancing the high-value segment.

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Risks

• Management projected elevated volatility in marketplace revenue this year due to strategic deprioritization of low-end transactions that represent a majority of the marketplace.
• Full-year 2026 guidance anticipates revenue decline of negative 12% to negative 3%, reflecting lower expectations as the company transitions business mix.
• Adjusted EBITDA guidance incorporates a 200 basis-point margin headwind from increased investment in transformational initiatives.
• The company cited an "over $10 million of headwind on EBITDA guidance for the year" due to recent appreciation of the Israeli shekel against the US dollar.

Summary

Fiverr International (NYSE:FVRR) reported 3% year over year quarterly revenue growth and a 25% adjusted EBITDA margin but issued full-year 2026 guidance calling for a revenue decline of up to 12% and lower margins while executing a multiyear transformation focused on high-value and AI-native projects. The company is explicitly reallocating resources toward complex enterprise and AI-driven work, shifting away from declining low-skill service categories where AI adoption has accelerated revenue contraction. Management provided transparency on leadership transitions and confirmed continued capital allocation to buybacks and opportunistic M&A to support growth in targeted areas.

• Services revenue accounted for a third of total quarterly revenue, driven by "continued strength in Fiverr Ads, subscriptions, and e-commerce solutions."
• Recurring and high-spend customer cohorts increased, as buyers spending over $10,000 annually grew 7%, and spending per buyer grew 13% year over year, accelerating from 9% in the prior period.
• GMV from high-value projects over $1,000 comprises less than 15% of the marketplace but expanded by 23% year over year, with management targeting this area as a future growth engine.
• CFO transition to Esti Levy Dadon and the new Chief Business Officer role for Jinjin Qian indicate a broader operational reorganization aligned to the multiyear transformation strategy.
• Management stated, "2026 will be a transformational year, positioning us for accelerated growth in 2027 and beyond," but expects immediate financial headwinds as the shift toward higher-value work ramps up.

Industry glossary

• GMV (Gross Merchandise Value): The total value of all transactions processed through Fiverr International's platform prior to subtracting fees or take rate.
• Take rate: The percentage of GMV retained by Fiverr International as revenue for facilitating transactions.
• Fiverr Go: Previously a standalone product, now a set of tools and features incorporated into Fiverr International's platform to improve project scoping, communication, and talent matching.
• AI-native work: Projects or workflows enabled by artificial intelligence requiring human oversight or expertise, particularly in model safety, workflow automation, or content refinement.
• Marketplace: Fiverr International's core platform segment facilitating direct connections and transactions between buyers and freelancers.

Full Conference Call Transcript

Micha Kaufman: Thank you, Emily. Good morning, everyone, and thank you for joining us. Let me start simply. 2025 was an execution year, and we delivered. Revenue grew 10%, accelerating from 8% in 2024. Adjusted EBITDA reached $92,000,000, up 23% year over year with a 21% margin. We met the revenue and profitability targets we set at the beginning of the year while continuing to generate strong cash flow. Importantly, we achieved this while repositioning the business for where the market is headed. Products like dynamic matching and managed services are enabling us to expand into larger, more complex projects and drive sustainable wallet share growth. Spend per buyer increased 13% year over year, accelerating from 9% in 2024.

Buyers spending over $10,000 annually grew 7%, and GMV from projects over $1,000 increased 23%. These are not just product milestones. They reflect a broader shift in how businesses engage with talent. As many of you saw in the shareholder letter we published this morning, following the restructuring we undertook a few months ago, we have since developed and begun executing a comprehensive multiyear plan to transform Fiverr International Ltd. from a transaction-oriented marketplace into a trusted work platform, one that enables businesses, AI models, and agents to collaborate with talent on complex, high-value outcomes through intelligent matching, integrated workflows, end-to-end orchestration and fulfillment, and durable trust.

Before I go deeper into that transformation, it is important to step back and understand the broader environment that led us here and why we believe this is the moment to act decisively. There is a prevailing narrative that AI eliminates labor. That framing is incomplete. What AI actually does to work is one, it compresses task duration. What took weeks now takes days. Two, it expands project ambition. When execution becomes cheaper, scope grows.

Operator: Scope grows.

Micha Kaufman: And the number of projects grows exponentially. Three, it democratizes capability. Individuals can operate with domain expertise beyond their original knowledge base. The result is not less work. It is more ambitious work. Human talent remains essential. What changes is where value resides: in context, judgment, orchestration, trust, and ownership of outcomes. There will be displacement in lower value transactional work. We are already seeing that dynamic. At the same time, demand for higher value specialized work is accelerating at a healthy double-digit rate. As work becomes more nuanced and complex, matching talent becomes harder, not easier. That makes Fiverr International Ltd.'s core mission of connecting businesses with the right human talent more relevant than ever.

Looking ahead, much of the workflow will become human-in-the-loop. Hiring decisions will increasingly be influenced and, in some cases, initiated by AI agents. In that environment, traditional resume-driven hiring models become inefficient and unreliable. Precision matching, contextual data, and outcomes become critical. So what does this mean for Fiverr International Ltd.? First, we see a significant opportunity. Today, projects over $1,000 represent less than 15% of marketplace GMV, yet they are growing 23% year over year. With focused execution, we believe this segment will become a materially larger contributor to our business. We are prioritizing two categories of high-value work. The first is complex, orchestrated engagements requiring collaboration between businesses, talent, and Fiverr International Ltd.

For example, through managed services, we support a Georgia-based automotive technology company with ongoing multilingual UGC production for the Canadian market, coordinating multiple creators each month. This reflects growing demand for scalable, always-on creative production powered by global talent. The second is AI-native work building the AI-enabled economy. For example, we are partnering with AI model safety companies to provide domain experts who help identify vulnerabilities in foundational models. In another partnership, we are enabling enterprises to build AI workflows automation through a white-labeled solution that allows them to deploy AI agents quickly and cost effectively. In one case, we streamlined a historical case discovery workflow in Salesforce and Jira, reducing knowledge gaps and improving support efficiency.

What would have required two weeks of internal implementation was delivered in one and a half days at the cost of $6,000, reducing deployment time by roughly 90%. These examples illustrate where the market is moving and where Fiverr International Ltd. is leaning in. Fiverr International Ltd. has a strong right to win in this AI-enabled talent economy. First, the future of work is human-in-the-loop. Scarcity lies in high-quality human expertise, not AI agents. Fiverr International Ltd. operates one of the largest global talent networks and has deep expertise managing liquidity, quality, and engagement at scale. Second, our end-to-end transaction model is built around outcomes.

That structure integrates naturally into AI-enabled workflows and eliminates much of the friction inherent in traditional hiring systems. Third, our data is a durable advantage. Over sixteen years, we have captured not only millions of transactions, but the contextual relationship between buyers and sellers: what was delivered, in what context, and with what results. That depth of data enables precision matching in an increasingly complex environment. Capturing this opportunity is why we are making foundational investments across data infrastructure, back-end systems, and product experience, accelerating Fiverr International Ltd.'s evolution into a fully AI-native talent platform. While we have made steady progress over the years, the velocity of AI innovation requires us to move faster and more decisively.

A few months ago, we initiated a company-wide effort to accelerate this shift. We have since developed a multiyear execution plan built around four pillars. The first is matching, building advanced semantic and reasoning layers powered by proprietary data to enable AI-native talent matching. The second is product, transforming the experience across match, fulfillment, collaboration, and talent management. The third is go-to-market, expanding into enterprise and AI-native distribution channels with scalable growth engines. The fourth is operational excellence, becoming an AI-native organization across engineering, product, and operations. We expect tangible impact within four to six quarters, including a stronger high-value work flywheel and proven AI-native growth loops. These milestones will position us for meaningful revenue expansion in the years ahead.

Let me be clear. This is the moment to lean in. AI is not shrinking the market for human talent. It is reshaping access and expanding ambition. Platforms that own the intelligent matching layer between business demand and human capability will capture significant value. Fiverr International Ltd. has the assets, infrastructure, and strategic clarity to lead in that environment. 2026 will be a transformational year, positioning us for accelerated growth in 2027 and beyond. Before I turn it over to Ofer, I want to acknowledge that today marks his final earnings call as CFO. Ofer will continue as President focusing on strategic investments and M&A as we execute this next chapter.

Esti Levy Dadon, after ten years at Fiverr International Ltd., and four years as EVP Finance, will assume the CFO role. Her deep institutional knowledge and disciplined financial leadership provide important continuity as we execute through this transformation. Jinjin Qian, after seven years leading IR and strategy, will step into a newly created Chief Business Officer role overseeing revenue, talent, fulfillment, and business operations. As part of this transition, she will be relocating her husband and two young children from San Francisco to Tel Aviv to take on this expanded responsibility. I am truly excited about our expanded leadership team that will strengthen our ability to execute with focus and velocity as we move forward.

I will now turn the call over to Ofer for the financial details. Thank you, Micha, and good morning, everyone.

Ofer Katz: I am excited about the transformation we are undertaking and very happy to welcome Esti and Jinjin into their expanded leadership roles. The work ahead is ambitious, but across the management team and the broader organization, there is strong alignment, clarity, and conviction on the direction we are taking. Most importantly, there is a shared sense of purpose that ties us back to Fiverr International Ltd.'s founding sixteen years ago. That shared sense of purpose brings tremendous focus, energy, and confidence as we enter 2026. With that, let us turn to financial highlights. As we wrap up 2025, we delivered fourth quarter revenue of $107,200,000, up 3% year over year, while achieving record adjusted EBITDA and adjusted EBITDA margin.

Adjusted EBITDA for Q4 was $26,500,000, representing an adjusted EBITDA margin of 25%, an improvement of 470 basis points from a year earlier. We continue to generate healthy cash flow with $21,800,000 of free cash flow in Q4 2025. We had a convertible note with a principal amount of $460,000,000 which was fully repaid during Q4 2025. We continue to execute a disciplined, thoughtful capital allocation strategy, and our strong balance sheet allows us to invest in growth, return capital to shareholders,

Micha Kaufman: and remain opportunistic

Ofer Katz: at the M&A front. Diving into our Q4 results, in Q4, Marketplace revenue was $71,500,000, driven by 3,100,000 active buyers, $342 in spend per buyer, and a 27.7% marketplace take rate. Growth in this segment continues to be influenced by broader softness in the SMB sentiment and muted freelancer hiring demand. More importantly, we continue to see diverse trends on the marketplace between low-end transactions and high-value work. GMV from transactions over $1,000 grew 22.8% year over year in Q4 and continued to accelerate.

Looking ahead, we expect elevated volatility in marketplace revenue this year compared to last year, as the transformational work we are doing intentionally deprioritizes efforts to optimize low-end transactions, which today represent the majority of the marketplace. As we make progress towards strengthening our flywheel for high-value and AI-native work, we expect this focus area to become a larger portion of our overall business and lead to reacceleration of this segment. Services revenue in Q4 was $35,600,000, representing year-over-year growth of 18% and accounting for 33% of our total revenue in Q4. The upside was driven by the continued strength in Fiverr Ads, subscriptions, and e-commerce solutions.

For 2026, we expect more moderate growth in service revenue as the impact from the AutoBS acquisition normalizes and the pace of expansion for Fiverr Ads and Seller Plus moderates compared to 2025. As Micha mentioned, 2026 will be a transformational year with critical conventional investment across data infrastructure, core technology, and product experience to strengthen our high-end talent flywheel. It is important to note we are committed to executing this plan with strong financial discipline. The structural profitability of our core marketplace remains strong and is expected to stay north of 20% as we retain significant control to maintain the health and the profitability of the business.

At the same time, we will use a portion of the cash generated to fund the transformational work ahead. We expect that to impact the adjusted EBITDA by approximately 200 basis points in 2026. On capital allocation, we maintain a disciplined approach and expect to continue executing our buyback program in a balanced manner. As of 12/31/2025, we have $67,500,000 left on the current authorization. Now on to guidance. For the full year 2026, we expect revenue to be in the range of $380,000,000 to $420,000,000, representing year-over-year growth of negative 12% to negative 3%. Adjusted EBITDA is expected to be in the range of $60,000,000 to $80,000,000, representing an adjusted EBITDA margin of 18% at the midpoint.

For the first quarter of 2026, revenue is expected to be between $101,000,000 to $108,000,000, representing year-over-year growth of negative 7% to 1%. Adjusted EBITDA is expected to be $19,000,000 to $23,000,000, representing an adjusted EBITDA margin of 20% at the midpoint. The wider-than-normal revenue guidance for the full year and the first quarter reflects the elevated uncertainty as we execute our transformational plan focused on high-value work alongside evolving market conditions. On the adjusted EBITDA side, the updated guidance for this year reflects the revenue trend we see as well as the impact from the investment into foundational works.

That said, we do not expect factual change to the core business unit economics, and we expect our ability to drive and strengthen leverage on the marketplace business model remains intact. With that, we will now turn the call over to the Operator for questions.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Ronald Josey with Citi. Please go ahead.

Micha Kaufman: Great. Thanks for taking the question and the insights on the call. I had two, please. Micha, you talked about product, go-to-market, and operations, and talked about an execution plan around matching given the progress, I think, that we have seen around managed services and dynamic matching,

Ronald Josey: just talk to us about how you see these investments in those four core areas sort of unfold. Meaning, do you have more work to do on product before we start investing in enterprise go-to-market? Any insights there would be helpful as we think about this multi-quarter transition. And then Ofer, over the balance sheet, we ended the year with approximately $300,000,000 in cash. I know we have mentioned M&A few times on the call and Ofer in your new role. Talk to us about what you are looking for maybe on M&A or just overall capital allocation. Thank you.

Micha Kaufman: Thank you, Ron, for the questions. Good morning.

Ofer Katz: So

Micha Kaufman: essentially, the way we are thinking about the investment is really to deprioritize low-end and low-value transactions and focus most of our investment in high-end, high-skilled, larger scope projects, a segment that is currently under 15% of our

Ofer Katz: revenues.

Micha Kaufman: And we think it should and it will contribute much more to bring us back to GMV growth. That is what 2026 is all about: making that turn so that 2027 and beyond will be growth

Ronald Josey: years.

Micha Kaufman: Now, bear in mind that the nature of the transactions that are happening on our platform are changing, and we are running a platform that has been built over sixteen years. Some parts of it need to be rebuilt, some parts of it need to be reinvested in and aligned into this new reality. As I have said in my opening comments, the matching portion of it has to deal with the more nuanced needs of businesses today, so we need to calibrate this and make sure that we maximize the usage of our very deep data asset in order to do this. The same goes for product.

When we think about the entire matching and fulfillment management, we need to understand that larger projects require more sophisticated fulfillment and collaboration and matching capabilities, also understanding that on the demand side, we may not just see companies and human beings, but also AI agents that can actually take care of or find benefit from using our platform. When we think about go-to-market,

Ofer Katz: again, in this case,

Micha Kaufman: we are expanding our go-to-market flywheels. So first of all is the high-value project outworking, then is the aspect of AI-native use cases, and I have given a few examples in my opening comments and in our letter to shareholders, where we see more and more businesses and foundational companies that are building more AI models and more agents, and all of them require human-in-the-loop to continue calibrating, ensuring their security, their integrity, and overall being able to make them customer-ready. And we are seeing more businesses that are coming to Fiverr International Ltd. because we probably have the largest and widest-scale talent in the world on our platform.

And so adjusting for all of these new needs will help us accelerate that portion or that segment of the market, which we feel is the most durable and most sustainable to ensure that we can continue growing for many years ahead.

Ofer Katz: Ron, on the M&A front, I will start by saying that we have $300,000,000, but the amount of cash is growing and expected to grow throughout the quarters. And then, you know, we continue to be highly disciplined in the way we utilize this cash, looking for tuck-ins and then larger transactions

Micha Kaufman: at the same time.

Ofer Katz: Of course, we are looking to grow in the market and any M&A should support

Micha Kaufman: support this high-end

Ofer Katz: and flywheel as Micha mentioned

Ronald Josey: earlier. Great. Thanks, Micha. Thanks, Ofer.

Micha Kaufman: Thank you, Ron.

Operator: The next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Ofer Katz: Thanks so much for taking the question. Just want to come back to the theme of deep

Eric Sheridan: prioritization of the lower end as you realign the platform. How should we think that manifests itself in financials as we move deeper into the year? Are there any elements of things that will impact the OpEx line as you sort of pare back investments in the lower end of the market or elements where there could be more volatility than usual as we think about either the first half or second half dynamic as you sort of reposition the business for the longer term? Thanks so much.

Micha Kaufman: Good morning, Eric. Thanks for the question. So when we think about the deprioritization, it is really to ensure that the majority of our resources are directed in growing the segment that, as we demonstrated, has grown significantly over last year, and to make sure that it becomes a much larger portion of our market. As a reminder, when you look at the low skills and small scope, a lot of that is being replaced

Ofer Katz: with AI solutions,

Micha Kaufman: and still, that is a large portion that contributes to Fiverr International Ltd.'s growth. In that segment, we are seeing a decline, and we have been talking about this, and we do not foresee that decline is going to slow down. The assumption is that with the newer developments around AI, this will continue to be the case. And so

Ronald Josey: that centralization

Micha Kaufman: in our business has to change. And, therefore, we are shifting those resources into ensuring that the high-end portion of our business that has been growing will become a larger portion of our overall GMV contribution. That is extremely important, and we want to make sure that we put every available resource towards that. But we are very committed to execute this transformation with a very high degree of financial discipline. So we are going to protect the core business to continue generating healthy cash flow, and we talked about the structural profitability of the core business to stay north of 20%. I hope this answers your question.

Eric Sheridan: That is helpful. Thank you.

Micha Kaufman: Thank you, Eric.

Operator: The next question comes from Bernard Jerome McTernan with Needham and Company. Please go ahead.

Micha Kaufman: Great. Thanks for taking the questions. Maybe just two for me. How should we expect the margin profile of the company to look after Fiverr International Ltd. 4 is done or complete or some progress on it? Is this going to be a higher margin company or lower margin company than before? And then how does Fiverr Go fit into this? Are you seeing Fiverr Go help higher value transactions already or just interested in terms of if this is still a key product going forward? Thank you.

Ofer Katz: I think on the margin profile, we are going to see some lower margin in terms of EBITDA in the short term, but we anticipate the long-term EBITDA

Micha Kaufman: to go back to the

Ofer Katz: 25 long-term EBITDA shortly after. In terms of gross margin, I think it is going to remain the same. It is all about the profile of investment, and that is putting a little bit more into R&D, which is why we anticipate some pressure on the margin. I am sure.

Micha Kaufman: Bernie, on your question about Go, essentially, a lot of what we built into Go has already been integrated into several aspects of our product. And when we talk about the investment that we are doing in the product side, that is one of the pillars of this year. A lot of what we have taken from Go and how it can help buyers and sellers communicate more effectively, scope their work, the nuanced understanding of exactly what they need and what is the most suitable talent for the task, is going to be integrated further

Ofer Katz: into the product.

Micha Kaufman: So we are not focusing on Go as a product by itself, but actually taking the assets

Ofer Katz: that we have developed for that project

Micha Kaufman: and integrating them into the customer experience. Understood. Makes sense. Thank you both.

Operator: The next question comes from Jason Helfstein with Oppenheimer. Please go ahead.

Micha Kaufman: This is Chad on for Jason. You know, it seems like taking one step back for kind of two steps forward. You are cutting a lot of cost out of the business with the restructuring. Is that having a bigger impact on revenue in 2026 than maybe you previously thought?

Eric Sheridan: And then how should we think about OpEx growth in 2026?

Micha Kaufman: Do you have to invest more in the business? Or, you know, that is it. Thank you. Thanks for the question, Chad. So on the first question, the answer is no. The revenue is not impacted by restructuring. It reflects the ongoing trends on the marketplace, meaning lower end versus higher end, lower end seeing a decrease, higher end seeing an increase. And, again, going back to our strategy, the entire idea is to double down on high end and to make it grow faster and make it become a more meaningful contributor to our GMV growth. We have been talking about this for a couple of quarters.

What we have seen is an elevated sense of urgency to move faster, which is why a lot of the strategic, the multiyear strategic plan that we have is all about that. And we said that once the high end is going to become a more meaningful contributor to GMV, GMV will go back to growth. And, again, we are seeing this with double-digit percentage growth in transactions over $1,000, and so we are doubling down on that. So, again, the reflection is just ongoing trends of what we are seeing in the low-skill versus high end.

Ofer Katz: Then on the second part, on the OpEx, in fact, we think that the core business will continue to deliver a 20% plus margin. The portion of what we will reinvest into the business on the transformational work,

Micha Kaufman: the impact of that is going to be around two percentage points.

Ofer Katz: And I think it is

Micha Kaufman: I think it is also worth noting that due to recent appreciation of Israeli shekel to US dollar, FX has added over $10,000,000 of headwind on EBITDA guidance for the year.

Operator: The next question comes from Marvin Fong with BTIG. Please go ahead.

Eric Sheridan: Great. Thanks for taking my questions, and congrats to Jinjin and Esti.

Micha Kaufman: My first question talked about returning to growth in 2027.

Marvin Fong: And I just wanted to understand that commentary a bit better. So are you expecting the high-value work to reach a majority of the marketplace by 2027, even in maybe a single quarter of 2027? Or when do you actually expect the majority of the marketplace to be high-end work? And then I have a follow-up.

Micha Kaufman: Morning, Marvin. Thanks for the question. So there is a GMV mix shift. High-value growth will continue to grow and become a bigger portion of total marketplace, and this will lead to GMV inflection. And as we said both in the letter to shareholders and in the opening comments, that change is also going to allow us potentially, over the year, to start giving the market the signals that we are seeing. Right now, the metrics that we are reporting are going to remain intact, but over time, we want to put more emphasis on what is strategic and what we feel is going to drive the sustainable growth of the business over the coming years.

We have not guided specifically for that, and we are not talking about percentage. And mathematically, even before it gets to the majority, it will drive GMV growth. But this is the plan, and we expect to see signals over the coming quarters to let us know that the investment there is actually accelerating the growth of that segment.

Ronald Josey: Mhmm.

Marvin Fong: Got it. Okay. That is great. Thank you for that. And then my second question, I would just like to double click more. I think you mentioned, or we have been talking about go-to-market and distribution channels. And so I would like to talk about both enterprise a little bit more. Is there anything structurally you are doing to either the offering or the way you intake enterprises or approach enterprises that is going to change maybe a more formalized enterprise segment? And then in the shareholder letter, you talked about one of the measurable signs of progress would be at least one AI-native distribution channel contributing to GMV.

I just would love to understand, is that a specific partnership you are developing there, or you just kind of expect the growth of those channels for at least one of them, presumably ChatGPT or Gemini, to just naturally become a large distribution channel for you.

Micha Kaufman: Thank you. The reason why we did not call out

Marvin Fong: specifics was

Micha Kaufman: deliberate.

Eric Sheridan: But

Micha Kaufman: the expectation is based on existing

Ofer Katz: proof of concepts

Micha Kaufman: that we are having with AI model companies and enterprises, and we believe

Ofer Katz: that when

Micha Kaufman: the product can deliver their needs at scale,

Ofer Katz: this could be

Micha Kaufman: a very strong contributor for the growth. And so when we think of it, we think about, in the same aspect, our enterprise. And we have given some

Ofer Katz: some qualitative examples

Micha Kaufman: again, both in the shareholder letter and in the opening remarks, and I have called out the example of the partnership that we have with an AI model safety company to provide domain experts who help identify vulnerabilities in foundational models. And in another partnership, you know, enabling enterprise to build AI workflow automation through a white-label solution that allows them to deploy AI agents

Ofer Katz: quickly and cost effectively.

Micha Kaufman: And, again, this is all a part of the fact that AI enables many more businesses to build more and to build more ambitiously. Along with that building, there is a lot of support that they need. There is a lot of calibration and fine-tuning. There are very specific types of expertise that are required to take those products and those solutions and make sure that their integrity is high. They are coming to us with it, and we believe that we can create a meaningful flywheel around these opportunities.

Marvin Fong: Got it. Thanks so much. Appreciate it.

Ofer Katz: Thank you.

Operator: The next question comes from Matthew Condon with Citizens. Please go ahead.

Marvin Fong: Yes, Micha and Ofer, you help me understand. I am a little confused. Market. I understand deprioritizing the lower end of the market.

Andrew Boone: But I am trying to figure out, is there any products you are not going to actually even be selling? Any services from your service business that you are just not going to sell to them anymore? Because I am trying to understand why you think revenue will get worse as the year progresses. So your revenue declines exceed as you go down as you go forward. I understand investing in might take a little while to turn and to really build the enterprise business further, but I am trying to understand what you are seeing in quarters two, three, and four that make them worse than quarter one on revenue.

Micha Kaufman: Morning, Nat. Essentially, we are not killing any of our products.

Marvin Fong: It is

Andrew Boone: what we are mostly

Micha Kaufman: deprioritizing is the continuing

Ofer Katz: optimization

Micha Kaufman: of these products in favor

Ofer Katz: of developing

Micha Kaufman: the types of product experiences and the underlying technologies and infrastructure to address the higher-end project. So this in and of itself should not be a driver for decline. And it is not about the types of services or products that we are discontinuing because we are not discontinuing anything. We are just making sure that after the restructure, we have the vast majority of our resources

Ofer Katz: to invest

Micha Kaufman: in the higher-end and higher-skilled

Marvin Fong: types

Micha Kaufman: of services for the larger types of customers that are spending more with us and accelerate the growth that we are seeing there even further. Okay.

Andrew Boone: I still am a little unclear on, then, what signal you are reading that things are going to decline more in the back half of the year than in the front.

Micha Kaufman: So we have seen some decline in simple services across the board. There are areas where we are seeing slightly higher decrease than others. For example, within programming, we are seeing the simple side of programming, like things like simple website building, accelerating the decline as a result of AI code and simplistic types of coding-related solutions. But on the same side, we are seeing areas where we are seeing growth.

Ronald Josey: Like digital marketing is one of them. We are seeing nice

Micha Kaufman: growth in services. So the idea is not to discontinue anything and, by the way, we have called out these changes over the past few quarters as an example. Writing and translation was heavily impacted by AI, down 20% year over year, and we have seen this for a while. We have seen the same under the vertical music and audio. It is also impacted but slightly less, in the teens range, primarily because voiceover is a meaningful portion of the music and audio vertical. So there are

Marvin Fong: anecdotal

Micha Kaufman: areas. Again, the decline that we are seeing there is mostly in the very simplistic, low-skill-related types of services. And this is not our focus now. That transformation is going to continue happening, and that is fine. The function that we are focusing on is the one-of-a-kind way for us to deal with high-end, high-value transactions

Ofer Katz: utilizing all the data that we have collected over the

Micha Kaufman: past sixteen years and the incredible talent bench that we have with us today.

Ofer Katz: Thank you.

Operator: The next question comes from Joshua K. Chan with UBS. Please go ahead. Josh, you may be muted.

Micha Kaufman: Sorry about that. Hey. Good morning, Micha, Ofer. Apologies for that.

Eric Sheridan: I guess, maybe following up on the prior question a little,

Joshua K. Chan: I guess if you take your full-year guidance, it is less than 4x your Q1 revenue guidance. And so I guess what is the conceptually why does the rest of the year kind of step down from Q1? What are you seeing that is worse? And then my second question is, is there a way for you to frame for us what free cash flow can be in 2026, you know, maybe from a conversion perspective versus EBITDA, something like that? Thank you.

Ofer Katz: I think on the first part, think the combination of the trends we are seeing in Q4, together with the confirmation that has been discussed,

Joshua K. Chan: are creating

Ofer Katz: some uncertainty in terms of 2026, and those circumstances are guiding for

Andrew Boone: a wider

Marvin Fong: a wider range.

Ofer Katz: Yeah. And on

Micha Kaufman: the second one, the free cash flow largely follows EBITDA. And we have guided for a midpoint EBITDA of 18%, 20% plus on the core business, and 200 basis point impact from the investment that we are doing in the restructuring.

Joshua K. Chan: Okay. Great. Thank you for the color.

Operator: The next question comes from Matthew Condon with Citizens. Please go ahead.

Micha Kaufman: Thank you so much for taking my questions. My first one is just on, you know, we think you said in the shareholder letter, you are building the marketplace for more recurring work. Can you just talk about the products and functionalities that you need to launch to enable this recurring nature of work? And then I wanted to ask a follow-up on an earlier question is just given where the stock is trading, just can you talk about the prioritization of buybacks versus M&A? Thank you so much.

Marvin Fong: Thanks for the question. So, essentially, it is all about

Micha Kaufman: putting trust and quality at the forefront.

Joshua K. Chan: And we are meaningfully upgrading our data infrastructure, matching algorithm, and product in order to achieve that. And those are the most important

Marvin Fong: components

Micha Kaufman: of being able

Joshua K. Chan: to

Micha Kaufman: optimize for recurring work, and also the fact that we are modernizing our platform allows the usage, as I have said, of not just human customers, but also agents within the platform. A lot of it is about how we build this infrastructure and how we ensure

Marvin Fong: the quality and the happiness of the

Micha Kaufman: entire fulfillment cycle, which has been one of our biggest moats. The fact that the work happens on the platform, is being documented, and being tracked allows us to understand the right path or route in which work is done to be able to actively intervene in cases where it is less than great. All of these are indicators from our data for recurring usage of our platform. The second one was on buyback. We have a continued disciplined and balanced capital allocation, invest in growth while continuing to utilize our buyback authorization to return capital to shareholders. As of December, there is $67.5 million left on our authorization.

And as Ofer mentioned earlier, we will continue to be opportunistic on M&A. Thank you very much.

Operator: The next question comes from Bradley D. Erickson with RBC. Please go ahead. Hey. Thanks. This is Audrey on for Brad. First, new business formations have been growing pretty solidly, but that does not seem to be lining up with parts of your business. Is that just because there is really no connection there, or what is the disconnect you would say if there is one? And then second, in the new world of changes to the top of funnel, how big should S&M be as a percentage of revenue or marketplace GMV relative to where it has been in the past? Any reasons why it should be structurally higher or lower? Thanks.

Micha Kaufman: Thank you for the question. Business formation only impacts a small part of our catalog that is focused on the very early-stage companies, so I would not read too much into that aspect or the correlation between the two.

Ofer Katz: I think as regarding the second part,

Marvin Fong: we do not anticipate any change.

Emily Greenstein: Okay. Thank you.

Operator: The next question comes from Rohit Rangnath Kulkarni with ROTH Capital Partners. Please go ahead.

Ofer Katz: Hey, thanks. A couple of questions. One is just on this doubling down on high-value things that you will be doing going forward, where do you see the heaviest lift next twelve to eighteen months? Is it you need to attract more supply who is capable of doing these high-value things? Do you think you already have the

Rohit Rangnath Kulkarni: supply, or is this a function of building the product and then getting more and more high-value buyers? And then as you do this transition into more high-value and better match, is there a scenario where the services revenue or the attached rate of services to market has a different algorithm given higher value gigs may not need as much ads or there may not be any need for as many subscriptions to sellers who are trying to get signed up for more long-term contracts as such? So how do you feel longer term that mix between the core marketplace and value-added services could look like versus where we are today? Thanks.

Micha Kaufman: Morning, Rohit. Thanks for the questions. So on the first one, it is really very much around the data infrastructure, the matching algorithm that prioritizes quality and trust, and it is really all about the customer satisfaction and retention. In terms of talent, it differs between categories, and it changes over time because we see more and more types of skills coming in demand. In most cases, it is very easy for us, because we have been doing this for sixteen years, to make sure that we have the right talent. We have not seen any pockets of shortage in talent, but in any case, we are always equipped to fill any shortage in a very short amount of time.

As to go-to-market, we see that as an opportunity, expanding channels from existing channels into AI-native channels, building the enterprise partnerships as we have talked earlier in the call, in targeted growth loops for specific use cases. As to your second part of the question, services revenue will continue to be a growth driver for us this year. That said, the pace of growth will be more moderated this year because most of the efforts this year will be foundational to improve the marketplace moat and enable the high-end flywheel.

Ofer Katz: That said, service revenue has a long

Micha Kaufman: long-term growth runway as we enable every aspect of the talent's need, and there are lots of service expansion opportunities down the road.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Micha Kaufman for any closing remarks.

Andrew Boone: Thanks, Megan, for moderating the

Micha Kaufman: call today and for everyone who has joined us this morning. Have a great day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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