Upwork Inc.

Good day and thank you for standing by. Welcome to the Upwork second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to speaker today, Evan Barboza. Vice President of Investor Relations, please go ahead.

Thank you. Welcome to Upwork's discussion of its second quarter 2023 financial results. Joining me today are Hayden Brown, Upwork's President and Chief Executive Officer, and Erica Gessert, Upwork's Chief Financial Officer. Following management's prepared remarks, we'll be happy to take your questions. But first, I'll review the Safe Harbor Statement. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. Forward-looking statements include all statements other than statements of historical fact. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statements. For discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC website and on our investor relations website, as well as the risks and other important factors discussed in today's shareholder letter. Additional information will also be set forth in our quarterly report on Form 10-Q for the three months ended June 30th, 2023. In addition, Reference will be made to certain non-GAAP financial measures. Information regarding a reconciliation of non-GAAP to GAAP measures can be found in the shareholder letter that was issued this afternoon on our investor relations website at investors.upwork.com. As always, unless otherwise noted, reported figures are rounded and comparisons of the second quarter of 2023 are to the second quarter of 2022. All financial measures are GAAP unless cited as non-GAAP. Now it's time to call over to Hayden.

Thanks, Evan. Thank you all for joining us today. In the second quarter of 2023, we made strong progress on delivering innovative solutions for our customers and driving durable, profitable growth. We achieved better than expected results across our financial goals while making significant strides in generative AI and growth across our business. This resulted in second quarter 2023 revenue of $168.6 million, up 7% from a year ago, and adjusted EBITDA of $14.4 million. Erica will go into greater detail on our financial results later in the call. As we discussed in our first quarter earnings materials, we moved quickly to adapt to the macroeconomic environment by reducing costs, primarily in brand marketing and through reductions to our workforce. Throughout the quarter, we identified and implemented supplemental cost savings measures including an additional reduction of brand marketing investments, deprioritization of lower return on investment vendor expenses and consulting projects, and reassessment of hiring plans to focus on our most important strategic initiatives. We expect to continue to identify new areas of efficiency within our organization and at the same time continue to invest prudently in the focused areas of growth that we see across the business. One of the most important and diverse growth opportunities for Upwork is in the AI space, and we are delivering on this opportunity by serving clients with a singular destination for sourcing the full breadth of AI-focused talent they need, premiering new AI-powered features for discovering and matching with expert talent across every category of work, and ensuring talent on Upwork have access to the most modern generative AI tools to supercharge their productivity and quality of work. Collectively, these steps move our customers closer to unlocking the magic of Upwork to accomplish more than they ever thought possible. We continue to see clients come to Upwork for the professionals and solutions they need to execute on their most ambitious AI initiatives. Hiring talent spanning roles from prompt engineers and AI model trainers to researchers, data annotators, and code checkers. Outstanding growth in this category of work continued in the second quarter as AI was the fastest growing category in Upwork in the first half of 2023. In fact, generative AI job posts on our platform were up more than 10x while related searches were up more than 15x when comparing the second quarter of 2023 to the fourth quarter of 2022. Over the past few weeks, we unveiled the first of many generative AI innovations in our ecosystem, which we expect to further accelerate our momentum in this flourishing space. On July 11th, we launched a new centralized AI services hub that connects clients to highly skilled AI-focused talent, features partnerships with leading AI providers, and highlights resources and tools for businesses and talent looking to boost their work with AI. We further advanced this priority through a partnership with OpenAI announced earlier this week, establishing OpenAI experts on Upwork. This program provides OpenAI customers and other businesses access to highly skilled, pre-vetted, independent professionals deeply experienced with the OpenAI platform so they can bring the power of OpenAI technologies to their products, solutions, and projects just as Upwork has. OpenAI is leveraging talent from the Upwork marketplace to support its own innovation and growth and quickly saw the value in helping its customers connect to talent on Upwork, leading to the new partnership. In the second quarter, we implemented changes to our sales team and strategy, generating improved productivity and increased revenue while reducing staffing and expenses. We grew our enterprise customer base, adding notable new enterprise clients like MasterCard, RR Donnelly, and Las Vegas Sands during the quarter, and enterprise revenue grew 16% year over year. We have continued strong conviction in the long-term opportunity and our ability to execute on our enterprise strategy. and took a significant step in driving that strategy forward with the appointment of Zoe Diamatti as our new general manager of enterprise in the second quarter. Zoe brings a wealth of experience in building businesses and go-to-market strategies, and we are thrilled to gain her leadership of this important growth vector for Upwork. We are pleased with the rapid progress we have made against our priorities of driving durable, profitable growth innovating to make Upwork the preeminent destination for AI-related talent and work, and driving growth within our enterprise business during a time of change. Our confidence in the long-term growth opportunity for Upwork is unwavering. We are proud of the advancements we made in the second quarter and our stellar team members who executed them, and we are excited about the future. I'll now turn the call over to Erica to discuss our financial results.