Good. Great. Good afternoon, everyone. Thanks for joining us. I'm Bernie McTernan, the internet analyst here at Needham & Company, and my pleasure to be joined by Fiverr, CFO Esti Levy Dadon and Jinjin Qian, Chief Business Officer. Thank you both for joining us.
Thanks for having us.
maybe just to start, can you describe just the Fiverr's current position on just the broader freelance marketplace industry? I mean, there's a bunch of threats and, you know, headwinds and tailwinds out there. How do you see the broader ecosystem at this moment in time?
I think obviously there's a lot of technology changes in the last few years. I think there's obviously a lot of shifts in the labor market given the technology changes in the last few years. I think our conviction of how talent is still going to be as central to any business to leverage AI and have that extra edge to deliver business results doesn't change. I think what AI does is it really elevates the role and skill sets human needs to deliver, and it elevates the bar that a lot of the simple jobs are going to be done by AI. What human needs to do is going to be more nuanced, more strategic, more contextual.
What comes with it is the task of finding talent and matching talent will become more complex because, you know, the skill set is changing and the traditional, you know, testing and all of that would no longer be super relevant. Under that context, I think we are going through a transformation on our side to really update our, you know, tech infrastructure to improve the matching, improve the product experience, and improve the go-to-market to really lean into the opportunity.
We really feel Fiverr has a strong right to win here because of the unique business model and the transaction data we have that allows us to really understand scope of work and skills in a much deeper way compared to other marketplaces in the space. So we're super excited about the opportunity.
Right. 2026 seems like somewhat of an investment year for the company. Can you talk to what Fiverr's investing in and how it's setting yourself up to perform in the coming years?
As I said, we see that there's tremendous amount of growth opportunities in complex projects on Fiverr. They are currently growing double digits, and we think we are only scratching the surface in terms of converting these intent that comes from the marketplace. We are also scratching the surface in terms of building the awareness and the brand perception of Fiverr to be the place to fulfill all these complex jobs.
The transformation comes in kind of, you know, key pillars is, you know, improving the matching infrastructure, what I just described, and also improving the product experiences, whether it's the dynamic matching product, the core search product, and also the collaboration and talent management tools.
Lastly, you know, traditionally, Fiverr's go-to-market strategy is very broad-based and focused on more consumer-centric and smaller jobs. How do we expand that flywheel into the high-end talent marketplace is another focus.
Okay
for go-to-market side.
I definitely wanna touch on moving up the shift to moving up market, but before that, if we can just touch on active customers. That declined in the high teens in the Q1 . Can you just provide us with some color in terms of what you're seeing, either it's at the top of funnel, the conversion, retention, and what needs to happen for this metric to stabilize?
Yeah. I think we talk about complex jobs like those over $1,000 is roughly 15% of the GMV of the marketplace. As you can imagine on the buyer side, it's even more concentrated, right? Smaller buyers, there's a lot more. For us, the transformation is really focused on, you know, leaning into the opportunity of the complex projects and complex buyers. You know, because of the large buyer base we carry, you know, active buyers will be under pressure for the near term because it's just hard to see the impact given the large buyer base we have.
Right.
I think we will, as we go through deeper into this transformation, I think we will definitely provide more transparency and color on kind of the high value buyers that we're leaning to give you guys more color. Overall, from a cohort and retention basis, because of the mix shift on active buyer base, we're actually seeing, you know, better retention trends on the overall because of the mix shift towards a higher quality buyer base.
Got it. Okay. That, that makes sense. On the transactions over $1,000, you said 15% of GMV growing double digits. Can you talk to the go-to-market and how it's different? You allude to, you know, maybe instead of being broad, going more narrow, what the go-to-market difference is for the larger projects versus smaller.
Yeah. On the go-to-market, you know, historically, you know, we attract, you know, very broad traffic, and we kind of farm these high-intent leads, and we enrich them and convert them. We continue to do that, and we've been pretty successful in the last two years, and you see that in the spend per buyer metrics that we provide.
Now, as we want to more aggressively lean into complex jobs, like we want to expand our go-to-market motion, not only, you know, capturing, you know, these high intent in the broader funnel, but also have more creative ways, open new marketing channels, which historically we don't do. For example, things like account-based marketing, things like, you know, more targeted, you know, campaigns for larger projects. We are kind of building additional muscles for us to really open up the funnel.
On the conversion side separately, like we are also doing a lot of efforts to really increase and improve the conversion rates of these higher intent, which will, you know, feed back into the go-to-market engine to allow us to kind of more successfully invest in top-of-funnel traffic.
Okay. Understood. What's the competition like for these larger transactions versus smaller ones you generally typically do well on? Is it like, are you competing with Upwork more or is it still playing in different you know, different playing fields?
I think it really depends. I think if you are talking about the traditional staffing market, we don't really compete there. There are a lot of dollars there, which is long-term contracting going to the MSP world and all of that. We don't compete there, and I think Upwork talks about certain initiatives going in there.
On the on-demand project-based work, you know, we will run into them, but I think our business model is much more superior because we kind of run a more outcome-based approach, which in today's agentic workflow, it fits a lot seamlessly into that agentic workflow. Also from a customer perspective, you know, it's a lot better signal-to-noise ratio when they're looking for a talent. Especially with AI now, you can imagine if you run a traditional RFP model, you're gonna have 10x more noise in the talent pool because everyone can use AI to apply for a job more effectively.
You are gonna have, you know, a lot less, you know, you know, of certain jobs in the pool. I think that both the talent and the companies are feeling a lot more stress kind of finding each other with AI. Fiverr's approach is very, very different, right? We are really understanding the underlying scope of work and the history of the transactions. We don't really run RFP process on Fiverr. I think, you know, we've been preaching this business model for 16 years, and with the AI, I think the world is really going towards our direction.
Right. Okay. Can you talk about the specific investments that you're making in going up market? I believe last earnings call you spoke about the talent-led growth engine, the industry-led growth and tailoring to specific industries, and then the partners plugging into where your clients are too.
I think the talent-led is really I think I kind of alluded to a little bit, you know, we know that among the hundreds of thousands of talent we have, there is a meaningful portion of talent who are high quality, and today they are not getting enough complex jobs from the platform. Fiverr is not their dominant revenue channel or opportunity channel. There's dedicated efforts in really increasing the engagement with the strategic talent pool and really bring them more jobs, and that's kind of the most effective way of engaging talent, is bringing them revenue opportunities. We're building kind of dedicated go-to-market motion for that.
On the industry side, I think as, you know, human skills gets more complex in the AI world, you are gonna have more and more buyers or clients who are not domain experts, right? Like think of if you're like a restaurant owner, and he's not gonna be very fluent in understanding Claude Code and how that's gonna impact my business. How do we build kind of tailored solutions to really speak to kind of individual buyer communities to help them bring real business results by talking their language and helping them with their problems? It could be a CRM problem. It could be a marketing problem.
There's a dedicated kind of go-to-market motion to bring that awareness and adoption within core groups. Lastly, as the partner distribution, I think we did a few things in the past. I think it is an important effort for us to really go up market and distribute our solutions in a much wider net without bringing on a full-on kind of sales force. We think partner is kind of attractive channel to really expand.
What kind of companies should we expect you to partner with here?
I think there are a few types. One is obviously leaning into some of the, you know, AI players. This is where a lot of the spend is happening. Second is leaning into vendors who holds SMB relationships, 'cause SMB is still our core focus and, you know, we can really distribute our solutions through them to the end customer. I think these are kind of the big buckets we're looking into.
Okay. As you go through the talent, industry and partner, which of those three do you think is gonna be most impactful?
I think all of them are going to be very impactful. The time it takes and, you know, the iterations it needs to test to get it to the end is different, right? I think the talent is, like, the most direct, I would say. The partners is the least, you know, it's the longest cycle, right? Because, you know, it takes a lot of efforts on both sides. It's not only Fiverr's kind of commitment, but also partners, which takes time to build relationships and that, and also takes time for the integration, all of that to happen. It takes the most time, I would say.
Right. I would imagine with talent, there's obviously the benefit of retaining that high quality.
Correct
talent if they are given more complex jobs, therefore making more money. Also the business or the clients having a better experience too.
Correct. It kind of feeds into this flywheel that I can kind of accelerate this high-end talent flywheel, which will snowball itself. Through the talent, I'm going to bring more client, which they will need more talent. I kind of manually feeding to this flywheel effect.
Right. Okay. I wanted to ask about marketplace revenue. Where are you seeing the best category performance at this moment in time?
I think, you know, program and tech, digital marketing, design, like videos, are all pretty strong in terms of the high-value projects. I think writing is kind of the other end of the spectrum.
Right
Because it is the most obvious for AI to excel on.
Yeah, yeah. Is it you said, again, like those complex projects going double digits? It was really helpful, it was probably two years ago at this point, when you guys broke out Complex versus Neutral versus Simple GMV. When is Simple gonna get small enough where it’s just not dragging on the business anymore? Like, you talked about writing. I’m sure things like translation, logo design, are those still large enough on the platform? I mean, clearly they’re still large enough on the platform where they’re having an impact, but when do you think we can get to the point where they’re not?
I think it really depends on kind of the, a lot of external factors and the, kind of the speed of things, kind of how trajectory, which is not fully in our control. Given the new strategy, I think the focus is really on how do I accelerate the high-end opportunities. Versus the low-end trajectory is not something I'm, you know, I can predict very well. You know, obviously I have my visibility given the existing trend, but, like, my effort is not going into kind of optimizing the trajectory of the low end.
Right. Okay. How does the marketplace get back to growth? Should investors think about this mix shift of, you know, as complex becomes a bigger part of the story? Should they be thinking about these growth initiatives, maybe excelling that? Like, what's the pathway for, you know, to get back to growth?
I don't have a perfect answer for your question.
You don't have a crystal ball.
I think the trajectory is, like, as we, you know, go a few quarters in, like, hopefully we will be able to provide more color on the signals we see on the high end part. That will be the first layer of giving investors confidence that we are on the right track. From there, you know, once, you know, we reach, you know, a certain volume of the high end to be majority of the marketplace, then you'll see kind of that tipping over on the overall volume. I would say you probably will see that happen on the GMV before it happens on the buyer side.
Right, because.
There's going to be a few, I would say, catalysts down the road.
Okay.
Yeah.
Understood. We're about halfway through, so I'm going to see if there's any questions from the audience or maybe while people are thinking about their questions. Wanted to ask on the macro, what indicators are you most focused on? Is the macro still a headwind at this point? Is it more neutral? How should we think about it?
I think on the SMB spending and sentiment, definitely it's still a headwind. I think with the inflation and oil price, I think the recent oil price, like, it doesn't really help. I think SMBs are definitely still very cash constrained, which impacts their ability to spend on the platform. But for us, I think, you know, we are really investing some of the fundamental shift on the marketplace and we're so small, right? I think if we do the right things. The hope is we don't have to wait for the macro to turn before we can show improvement on how we are capturing, you know, the opportunities on the, on the complex jobs.
Right. Okay. wanted to see if there's any questions for the audience. If not, certainly could keep going here. All right, let's keep going then. Can you talk to the investments that you're making and the matching infrastructure and experience? I mean, that seems, you know, with the, with the talent and the high value investments that you spoke about, but just making sure the right, you know, the right buyer gets the right seller.
Yeah. Like we, you know, I think, like, Fiverr is very unique, right? Because we capture the end-to-end workflow. This is, like, unlike any other talent marketplaces out there. Meaning for us, it's not only customers come and they find the talent, but the work actually happens on the platform from the briefing documents, to the Q&A on the requirements, to the work process, to the draft, edits on the draft, deliver, everything lives on the platform, and all the communication in between.
I think historically, we are only scratching the surface of unlocking the potential of this data. Now we are building a very comprehensive, we're rebuilding the data infrastructure underlying to really unlock the data that's buried in these, all these unstructured kind of conversational data and delivery data and all of that. From that'll really give us ability to understand who did what for whom, when there's new intent coming in, we can match it with a lot more precision. That's on the matching infrastructure. Obviously that also goes on the buyer side in terms of intent capture.
You know, if you've come to Fiverr, you know it's a very kind of a simple, click and search and buy, which works really, really efficient when you're coming to buy a voiceover or you're coming to buy a blog post. When you're coming to build a end-to-end mobile app for a, I don't know, hospital appointment capturing system, then it becomes complicated.
Right? If you only search mobile app, it doesn't capture enough of the intent. If you give me a lot more detail, then I can match you talent who's done something similar, then the matching rate can be a lot higher. I think we're hoping to provide a, you know, this talent experience that goes a lot deeper than, you know, your LinkedIn or Upwork of the world.
Right. What happened with Fiverr Go? I think you guys launched it about a year ago, that kinda sounds like some of the stuff that you're rolling out with Fiverr Go. I remember, you know, at least when it was launched, there was some pretty compelling data about the. You know, conversion rates it was driving, that you had an assistant basically you know, booking transactions at 3:00 A.M in the morning while you were asleep.
Yeah. I think a lot of the technology is based on the learnings and the assets we built there. For example, on the dynamic matching, we're building, like, this briefing capabilities to allow buyers to really describe what they need, and then it kind of builds off of kind of the Neo assets that we built historically. On the dynamic matching similarly, we are building this conversational reasoning and matching engine, which also leans into some of the Fiverr Go insights that we learned.
Okay.
Yeah.
You touched on it, I wanted to just dive a little bit deeper, that fulfillment layer, assuming this is aimed at attacking the upper end of the market. Can you just talk about maybe why now is the right time to give that sellers access to this kind of technology and product?
Yeah. Fulfillment is very critical to the strategy for two reasons. One is, you know, as we put trust and quality at the center of unlocking the up-market, fulfillment gives us the visibility layer of what exactly happened. Think about it similar to your Amazon order, right? That layer tell me exactly what's the status of an order, and it tells me exactly what breaks when things break.
That is very important for us to kind of elevate the trust and quality across the platform, because then I can go solve each of these leakage points effectively. Second, I think fulfillment is very important in terms of capturing the scope of work and giving Fiverr the control and visibility of that. Why is that important? That's essentially what is going to allow me to plug myself into the agentic workflow down the road. Think about, you know, future workflow will be, like, 80% done by agent, right? You're going to have agent, agent, and then human comes in, do a little work, and then agent continues. All of this is going to be outcome based.
Now like, Fiverr's outcome based model really allows me to define requirements and have evaluation system and then plug myself into that workflow, which is very similar to the agentic kind of a system that's built v ersus a traditional recruiting flow, you can't really plug in to that workflow.
Okay.
Yeah.
Does it provide extra data for you guys to be able to harvest and use in other ways?
100%. This is a feedback loop, right? Once I know in a very granular level each step of the work, and then plus the visibility of the status of each step, which is essentially the eval of each step, right, in the agentic. I'm doing it for the agentic workflow as well. It's following the same logic. I can really iterate and know, you know, which seller is good at doing what and exactly what fails, and then I can improve matching, improve this overall happiness. Yeah.
Okay. Understood. We touched on marketplace revenue, but want to make sure we touch on services. It grew 30% in the first quarter. I think there was some pull forward from the second quarter. Can you just talk about those dynamics there?
This is mainly, you know, the e-commerce piece. The AutoDS, they had a very successful campaign at the beginning of the year that drives very strong sign-ups. I don't think our expectation for the full year changes. It's really a pull-forward impact rather than a change of the overall trend.
Maybe asking what that expectation is for services revenue. I mean, that's always a big focus of investors is just seeing that headline take rate that you have is amazing what you're able to command in the marketplace or generate in the marketplace. How should we think about services revenue growth throughout the rest of the year?
I think the growth of services will moderate for the rest of our year because we lap some of the acquisition assets and also because, you know, the focus of this year is to really drive GMV growth for the higher end. We don't expect services to grow at a similar pace compared to last year. It will come down, more substantially, you know, in the second half. That is baked into the guidance.
Okay. Got it. Is the take rate different for these more complex projects versus the, you know, more simple ones?
No.
Same take rate. Okay. Understood. Okay. Maybe moving to margins. Guidance calls for EBITDA margins to be down year-over-year. I mean, that's driven by all this investment that we've been talking about in the platform, getting back to GMV growth. Maybe to start, like in this kind of, maybe top-line environment, how you're thinking about marketing spend this year.
Yeah. First, yes, the EBITDA, as you mentioned, 2026 is a transformational year, right? The unit economics of the marketplace is still strong, we are financing the transformation through that. When we're thinking on the marketing spend, as Jinjin said, we're working on new go-to-market, this is still early days.
What we're leaning into now in our marketing is towards more channels that we can find high-value buyers, so different channels, different audience. From margins perspective, over time, I don't expect that sales and marketing would be higher percentage of revenue over time. On the contrary. As we go through the transformation and as we improve retention and as we improve frequency and satisfactions of buyers, that would be a leverage on the lifetime value. Over time, it will be declining, percent of revenue, but it's not gonna be this year.
Got it. Understood. You spoke to channels, like in finding higher value clients and leaning in on those. How much of experimentation has to go on now? 'Cause I'm assuming you can't just say, "We're gonna target high-value clients-
Yeah
we know exactly where they are.
Yeah.
Can you just talk through that process?
It's very early. We're two months into this. I think you're right. I think investors ask me what are the signals. I don't have signals there because there's a lot of testing and exploration and iteration there, especially for things we haven't really done in the past. The opportunity is there, right? Like, the playbook we're trying to iterate on, we didn't invent it. You know, there are lots of businesses who does this. We're just really learning and trying to really build that muscle.
Okay.
Yeah.
Okay. You know, as you gave some color in terms of how we should think about sales and marketing as a percentage of revenue over the next couple of years, how should we think about EBITDA margins? Maybe remind us of your longer term goals.
Yeah. Our longer term goals is 25%, and that has not changed. That being said, in the next, you know, this year we are investing in transformation because we believe that this is really gonna be, you know, will create the growth in the future. The, long-term target has not changed. Just the pace of it will take some time.
Yep. Okay. understood. Maybe moving on to capital allocation. How should we think about priorities in terms of buybacks, M&A, reinvesting back in the business?
Definitely our biggest priority is doing the transformation. Doing that in this, you know, uncertain times with a strong balance sheet, this is a strong statement for us. From a capital allocation perspective, definitely we're gonna invest in the business and growth of the business. We have authorization of $60 million buyback. We've done in the past buyback, we'll continue to do that in a thoughtful manner. On the M&A side, we're always opportunistic. We are always on the lookout of something that is contributing to our strategy. Nothing to call out now. Definitely if we're looking for something that can work towards accelerating the transformation. If we'll find that, we'll invest in that.
Okay. Makes a lot of sense. Last call here to see if any investors have any questions. But two more for me. There's been a bunch of management changes that have happened. Esti, CFO; Jinjin, Chief Business Officer. We've talked about transformation a couple times. There was a large RIF last year. Can you just talk about maybe company sentiment? Like, does this feel like a startup again? I mean, that's something that Micha spoke about. You know, last September, but maybe just more like the corporate culture at this moment in time.
I think there's definitely new energy in the company with a new strategic focus, and kind of internally we've also had new processes and operational models that really drives the pace of execution. I'll let Esti talk about because she's more on the ground in the office every day.
Yeah, I can definitely say that, you know, people feel the change in their ability to execute first faster and more. You know, things that we couldn't do in the past, now with AI we can do much better, right? Much faster. We know we have so much data on transactions and now the matching to being able to do that together with AI, that's actually. That it excites people. Definitely a startup mode on that the opportunity is out there and the world is changing and also Fiverr is changing, right?
We all think about businesses, getting, you know, with shrink on headcount perspective, but we all know that there are so many things to build, and we believe this can be done with freelancer, and we're building the platform to be there. I feel that's, like, what people are feeling, that we're, like, now adjusting ourself to the new world and we're quite pioneers on that.
Okay, makes sense. Maybe last question from me, you know, if we're sitting here a year from now, what would success look like for Fiverr, and wanna think about through the lens of, A, strategically, then B, financially as well too?
I think strategically, you know, I think the perception and the mechanism and the flywheel, high-end flywheel would be at a very different place. I think we will see that the investments we are doing right now on the back end will become a lot more visible for the customers on the front end. As you know, like, for marketplaces that, like, kick off the speed of the flywheel is the hardest part. Like, once that kicks into motion, I think everything will kind of grow from there. I think strategically that's super important. Financially, I think, you know, I would say you will see signals on the business side before you see, you know, the full top line, bottom line started to show up.
Just because a lot of the other things are mixed and can mask the progress there. This is what we talked about, is I think, you know, financially, hopefully we can show investors a few kind of really encouraging signals by then.
Yeah, also executing without compromising on the bottom line. That's definitely something that we are, you know, very focused on.
Okay. Well, great.
Yeah.
Let's leave it there. Thank you both so much.
Thank you.
Thank you everyone in the audience and people on the webcast. Appreciate it.
Thanks, Bernie, for having us.