Fiverr International Ltd.

Hello everyone and welcome to the Fiverr Q4 Fiscal 2021 Earnings for Conference call. My name is Charlie and I'll be coordinating the call today. You will have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on your telephone keypad. I'll now hand over to your host, Jinjin Kian, Head of Investor Relations to begin. Jinjin, please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the fourth quarter ended December 31st, 2021. Joining me on the call today are Miha Kaufman, founder and CEO, and OfferCard president and CFO. Before we start, I'd like to remind you that during this call, we may make forward-looking statements and that these statements are based on our current expectations and assumptions as of today, and Fiverr assumes no obligation to update or revise them. A discussion of some of the important risk factors that could cause actual results to differ materially from any forward-looking statements can be found under the risk factor section in Fiverr's most recent Form 20-F and other filings for the FDC. During this call, we'll be referring to some non-GAAP financial measures. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures are provided in the earnings release issued today. and our shareholder letter, each of which is available on our website at investors.cyber.com. And now, I will turn the call over to Neha.

Thanks, Jinjin. Good morning, everyone, and thanks for joining us on the call today. 2021 was a remarkable year for us. It was a year of significant growth in terms of both revenue and profitability. For a full year 2021, Revenue was $298 million, representing a 57% year-over-year growth and a 178% growth on a two-year basis. We hit $1 billion in annual GMV for the first time ever. We also generated an adjusted EBITDA of $23 million in 2021, implying an adjusted EBITDA margin of 7.7% compared to 4.8% just a year ago and a negative 16.8% two years ago. Our results continue to demonstrate our ability to not only deliver superior growth rates, but also profitable growth. We are committed to our disciplined approach in prioritizing growth while making progress towards our long-term profitability targets. 2021 was also significant in terms of important investment we made towards our future. We substantially grew fiber business To become a marketplace of fully vetted talent made it easier for customers to join it and created automatic segmentation mechanisms to offer Fiverr business to the most relevant audience. We established the Seller Tools Group to focus on building the Seller ecosystem, including the launch of Seller Plus. We successfully integrated Endco, a company we acquired, and turned it into Fiverr Workspace. and we continued expansion of product gigs. We launched partnerships with leading B2B vendors to build co-branded section of our marketplace with expert sellers offering a variety of vendor specific services to their customers. Leveraging the creative talent pool from working not working, we are building the next gen AI powered creative service platform to allow brands to assemble top quality creative teams in just a few places. We acquired Creative Life, further strengthening our professional development content library to expand our learning and development module for freelancers. We acquired the freelance management system Stoke Talent to expand our addressable market by enabling offline freelancer relationships for our customers as well. Last but not least, we continue to expand our international presence with non-English speaking countries now contributing to 32% of our total revenue. All of these investments are essential building blocks towards our long-term vision of becoming an all-in-one talent cloud solution for businesses of all sizes. Fiverr has turned 12 today. Having started Fiverr at the beginning of the 2010s, gives us a good perspective of the changes that we are all witnessing. The way people work is going through a fundamental transformation right now. On one hand, you've got more people leaving their jobs than ever before. People are not simply leaving one company to join another, but rather leaving the traditional workforce altogether. Based on a recent survey we conducted, 54% of HR professionals and hiring managers said that people who have left their companies end up working for themselves as freelancers or start their own businesses. On the other hand, businesses are struggling to attract and retain talent for the long term. The time they take to hire full-time employees continues to increase, and they face massive skill gaps to stay competitive in an ever-changing technology landscape. What this means is is that businesses must go through a substantial change in how they think about working with talent in their workforce infrastructure in the next few years. This feels to me a lot like the shift companies had to go through when they moved their on-site hosted computing capabilities to cloud computing in the past 15 years. I remember back in the day when building a startup required you to first set up your own local computing capabilities and data centers host your own servers, and go through massive installation and configuration headaches. Only then could you actually start building what you really wanted to build. Then very quickly, your servers got outdated, slowed down, and ran out of space. So there was the ongoing need for maintenance and updates. It was very expensive, very inefficient, and most important of all, very few companies in the world had the resources to be able to set up and regularly upgrade to the best computing power with the latest technology. Cloud computing completely changed all of that. Not only is it easier, cheaper, and faster to set up with a minimum ongoing maintenance overhead, but also it empowers businesses of all sizes, big or small, and businesses of all industries, tech companies or not, to utilize the latest computing technology directly from the cloud. When you think about the workforce, it's very much the same. The challenges that businesses face with a static full-time workforce, such as a slow hiring process, being expensive to maintain and retain, the lack of flexibility, and being hard to keep up with the latest skills are very similar to the challenges of on-premise IT infrastructure. By leveraging Fiverr's talent cloud solution, businesses can not only become more nimble and cost efficient, but also be able to access the best talent on the project by project basis. Whether that project is simple and quick or complex and more long-term. And for our industry, it is even more powerful because on the other side of the solution, we are dealing with talent instead of servers. This means that at the same time we're building this talent cloud solution, we're also providing talent across the world with more opportunities, better opportunities, empowering them to pursue the work they love and to enjoy the lifestyle that they dream of. That is a world worth building. We believe the opportunity of talent cloud migration will continue to grow and evolve and it will substantially expand our overall addressable market in the coming years. We are not only empowering a transition from offline to online freelancers, but also the transition from a static workforce to a dynamic talent cloud solution. We envision a future where companies will keep a smaller team that focuses on core competency while leveraging the talent cloud solution for the execution of most projects. We've seen this already happen with Hollywood studios. In the early 1920s, studios owned the entire filmmaking process from creation to filming to distribution. Over time, they have switched to a system where their workforce primarily consists of freelancers. Ad hoc teams are assembled on a project-by-product basis and this band-aid, after the project is completed, it streamlines the operation and focuses resources on generating the best outcome rather than managerial overhead. This is where we're heading, building a platform to help businesses develop and execute a robust talent cloud solution. As we celebrate Fiverr's 12th birthday, and as we kick off this new year, the team and I could not be more excited about the journey we are embarking on. As I mentioned at the beginning of my remarks, a lot of work has already gone into building this Talent Cloud platform. The fact that we've grown so much in the past two years allows us to substantially accelerate our pace of investment in our vision, while at the same time, march towards a long-term profitability model. We are more excited than ever, and for all the reasons I laid out, believe that we are still in the very early stages of our journey. We expect to remain disciplined with our financial strategy and continue executing in a consistent manner. With that, I'll turn the call to Ofer, who will share some financial highlights. Ofer?

Thank you, Micha, for these inspiring remarks, and good morning, everyone. Q4 was strong quarter across all dimensions. Revenue was 79.8 million, Up 43% year-over-year, driven by 23% growth on active buyer, 80% on spender buyer, and a 210 basis point expansion on take rate. During the quarter, we saw that seasonality trends were largely normalized with strong engagements during weekdays and quieter days during weekends and holidays. E-commerce-related categories continue to be very strong in our marketplace as businesses invest in content, marketing, and web development to lean into the holiday shopping season. We also saw strong trends from emerging technologies such as blockchain, crypto, and NFT. Their democratization of how digital skills such as creative or digital marketing could be monetized creates a huge opportunity for the freelancer on our platform and the freelancer economy in general. Pfizer, once again, is at the forefront of recognizing this technological trend and empowering our community to grow and thrive. We are also very happy to see the continued momentum in our cohort retention. For the second year in a row, we see that mature cohorts experience over 110% year-over-year retention. For a new cohort in 2019 and 2020, we are also seeing better revenue retention trends compared to historical cohorts at a similar life stage. We are very encouraged to see that the outsized cohorts we acquired during the pandemic are at least as good as, if not better than, our older cohort. While the data trend is still early, we do believe that our work in quality retention and category expansion has paid off. We continue to enjoy high customer satisfaction score. As of December 31st, 2021, our NPS for buyer is 67 and NPS for seller is 80. Our strong retention trends also reflect the macro tailwind of how businesses are embracing the freelancer resource and increasing their adoption. The higher revenue retention across our cohort also has compounding impact on the overall lifetime value of our buyer base, which allows us to invest more into the top of the family. And by requisition, organic channels continue to be very strong and benefited from the significant growth in the unaided brand awareness among our target customers. We also continue to be highly efficient with our performance marketing investment. TRI for Q4 was approximately four months. We were able to keep our marketing dollar highly efficient as we focused on driving higher quality buyers, increasing our ability to retain buyers, and expanding the spend level, as well as continue channel diversification and improving automation. We launched our new out-of-home campaign in January in New York. We are also accelerating our investment in TV for both traditional and programmatic channels. We are committed to do data-driven and disciplined approach to drive growth and marketing efficiency, and we expect to continue improving sales and marketing leverage on a year-over-year basis. Now to guidance. For the first quarter of 2022, revenue is expected to be 85 to 87 million, representing year-over-year growth 24 to 27%. Adjusted EBITDA is expected to be 1.5 to 3.5 million, implying a Q1 adjusted EBITDA margin of 2.9% at the midpoint. For full year 2022, we expect revenue to be in the range of 373 to 379 million, representing year-over-year growth of 25 to 27%. Adjusted EBITDA is expected to be in the range of 27 to 33 million, representing an adjusted EBITDA margin of 8% at the midpoint. Given the unusual growth spikes we experienced last year, I'd like to provide additional color on the cadence of our business outlook implied in our 2022 guidance. We expect a top comp in the early part of 2021 will weigh on the growth rate during the first half of 2022, and that growth will accelerate in the second half of the year. We expect active buyers to grow in the high single digits and central buyers to grow in teens in terms of year-over-year growth rate for the full year of 2022. Take rate is expected to be steady with modest upsides. As Micha mentioned, the opportunity to empower the talent cloud migration is big and we have strong roadmap to build Fiverr Talent Cloud solution. We will continue investing in those initiatives in 2022. Growth continues to be our top priority. At the same time, we are committed to take disciplined approach to continue generating leverage and progressing towards our long-term EBITDA margin target. With that, we now turn the call over to the operator for questions.

Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure you are muted locally. Our first question comes from Doug Anness of JP Morgan. Doug, your line is now open.

Thank you for taking the questions. I, too, first was just hoping you could talk more about the drivers of the take rate upside. I know you mentioned the price increase, but was curious about promoted gigs and the impact there, and then also CreativeLive and Stoked Talent as well, if there's any way to quantify there, kind of what you saw in 4Q and then going forward, and how do we think about the sustainability or future expansion of take rate? So that's kind of one big question. And then the second question, we do get an increasing number of questions just around competition and new offerings from Upwork and LinkedIn, a huge market here for sure. Just so you could comment on whether you're seeing any changes in the competitive landscape. Thank you.

Hey, good morning, Doug. Thanks for the question. So as for the first one, I think you pretty much said it. The combination of added value services and products that we've been introducing throughout last year and this year have been contributing to the increasing efficiency of our take rate. So essentially, the growth of promoted gigs, what we're doing with subscriptions and milestone payments are FX products and so forth, all in all, continue to contribute. And this is why we said in the past that there is, as we continue evolving the business, there's a modest opportunity to continue increasing the take rate.

Yeah, I would only add the Seller Plus program that monetize on the seller side. It's a subscription offering that Micha mentioned earlier. So I think that, you know, for the other companies you mentioned, services you mentioned like Stoke, those are currently not material, didn't contribute yet to the take rate. I think the fundamental are definitely promoted gig that is expanding, deployed by most seller and contributing more seller plus program, 5LM. These are the evaluative services that contribute most to the take rate. And as for your question about the sustainability, we do believe and we said that the guidance that this take rate certainly represents what we are heading with potential for modest upside. throughout the year.

I'll take your question on competition. At least for the time being, we continue to see the offline market is our biggest opportunity and therefore also our biggest competitor. The updates or our tracking of companies like LinkedIn and Upwork hasn't demonstrated that their business is impacting ours We obviously continue to track it, but at this point, we haven't seen any impact on our business.

Okay. Thank you both. Appreciate it. Thank you.

Thank you for your questions, Doug. Our next question comes from Matt Farrell of Piper Sandler. Matt, your line is now open.

Hey, guys. Congratulations on the strong results and the guidance. and appreciate the additional color on 2022 trends from a buyer and spend perspective. Could you just maybe provide some more color on the visibility you have for the year, particularly as we may have some more fits and starts and just seasonality changing as we enter the new normal, hopefully pretty soon?

Hey, good morning. Sure. You know, I'll repeat what we said in the past on how we think about guiding for the future and how we think about the business for the future. We always guide based on what we know, meaning that we don't factor in any black swan events and these types of events into our guidance and how we think about the business. What we've seen from or during Q4 and into the year has been much more of a normalized or stabilized business that reminds us as more of the pre-pandemic trends. It's hard to say, I mean, it's hard to say what would happen if there's going to be another variant or if this one is going to be more aggressive. What we've seen from the last one has been that the impact opening and closing up of markets due to Omicron has been minimal and hasn't been affecting us beyond normal baseline, which is good. And in terms of guidance, as I've said, we're not factoring any wishful thinking or any unseen or unforecasted macro events into it.

And this is also in terms of visibility, we saw this all the way that the fundamental of the business remains very steady. And it goes to retention. We mentioned that on the shareholders letter. Retention for all cohorts is higher than 110% throughout the period and as of now. The level of confidence that we have in terms of visibility is pretty strong. I would add the efficiency on the marketing side. Our ability to invest in a very unique unit economy environment of high returns in a short period, an ability to acquire high-value buyers, those fundamentals remain and give us the confidence with the ability to predict into the next few quarters.

Thank you for that clarity. And then as we exit the pandemic here, hopefully very, very soon, Can you kind of talk about where we are in the adoption curve of freelancing relative to where we were just two years ago? And how should we be thinking about that progress around the adoption curve moving forward? I think you have mentioned a 5% penetration of online in the past. Is that number the same or have we moved a bit forward? Thank you. Yeah.

So essentially, I think we have moved forward. However, the overall freelancing market is continuing to grow. So the percentage, even if the percentage doesn't change that much, the overall activity is changing because the adoption of freelancing in general and just freelancing by itself is going to be about 50% of American workforce by 2030. So that as a cohort is in massive growth. And skill shortage is very high. We know that. And I think more and more businesses understand now after the pandemic that the remote work model works very well. And if it works well for your full-time employees, it could work very well for freelancing experts. And that is essentially what we're seeing companies doing. We think that, again, this is happening more offline than online. But I think that as we offer more robust solutions for the online, and this is why we talked about this idea of a talent cloud, and as we make it more available and more easy to integrate, then more companies are going to do that. I think that By definition, if half of the talent in the U.S. is not available for full-time hire, companies are going to be forced to work with this talent in creative ways. And I think that the platform that we're building is exactly addressing this need in a very efficient manner.

Thanks again, and congrats on the solid execution.

Thank you.

Thank you for your questions. As a reminder, if you wish to submit a question, please press star followed by one on your telephone keypad now. Our next question comes from Eric Sheridan of Goldman Sachs. Eric, your line is now open.

so much guys for taking the question hope all's well with everyone on the team maybe two if I can um first in terms of new product introductions and acquisitions that were done over the 2020 and 2021 time period is it can you give us a sense of some of the exit velocity of some of those efforts 21 into 22 so we can understand sort of where you decided to build or buy and how that's projecting sort of momentum into the business into 22 that's question number one, and then number two, sticking with the cloud computing analogy you used in your prepared remarks, as you think about going upscale into larger and larger enterprises, how should we be thinking about investments that have to be made either on the go-to-market strategy or the product side to address bigger pools of opportunity in large enterprises? Thank you.

Good morning, Eric, and thanks for the question. So in terms of your question about new products, building versus acquiring, essentially, as we said in the opening remarks, all of these acquisitions and products that we've either built or acquired are setting up the building blocks for what we refer to as the talent cloud. And these are solutions that we figured out if we should actually build or acquire if there is what we thought to be best-in-class solution that is highly synergic and easy to integrate with the Fiverr solution. So on that, I think that the acquisition that we've done recently, maybe with the latest with Stoke Talent is really a component that we felt was very strategic for us. We understand that the majority of freelancing activity with customers is being done directly and mostly offline. And it was very important for us to be able to capture those relationships and augment to them with the talent that we have on the platform. So in that, I think that we had the basic argument whether we should build this technology or actually integrate something that was already ready. And I think that from a go-to-market standpoint, we wanted to reach the market as fast as possible. And we're very, very excited about that. In terms of your question about the cloud solution and how that impacts the go-to-market strategy, we're doing a lot of work on buyer segmentation, as well as consolidating customer base first on the backend, and then we'll develop more holistic approach down the road. Through Fiverr Business, we've been able to experiment quite a lot on doing a combination of brand marketing with performance marketing with segmentation to identify the right customers to point into Fiverr Business for which Fiverr Business is the best solution. And then pairing them up with success managers that can actually ensure their successful usage of our platform and therefore further engaging with a larger portion of that organization. So I think that that experience has been very successful, and definitely we are going to develop a more holistic approach down the road.

Perfect. Thank you for your questions. Our next question comes from Andrew Boone of JMP Securities. Andrew, your line is now open.

Hi, guys. Thanks for checking my questions. I have two, please. You've mentioned a couple times the opportunity with offline projects. Workspaces clearly start to address that. But can you talk about the offline opportunity more broadly? Does that need to move online, or are there other ways for you to address it?

Good morning, Andrew. I think you mentioned that you had two questions, or would you like me to address the first one?

I was going to follow up on the second one. I'd rather say I have to follow up.

No problem. Essentially, I think that a lot of the challenges that come with working offline with freelancers is that there's lack of standardization in how freelancers are being integrated into organizations. And our studies showed that in most organizations, if you ask an organization how many freelancers they actually employ, they don't know the answer for that because it's oftentimes very department-based or project-based. And that creates tremendous amount of challenges and exposure in terms of work misclassification and compliance, governance, budget management, And just being able to share resources across the organization to understand across different departments who are the talent experts that the organization has good experience working with. So this is a tremendous opportunity to put order in. And I think that this is exactly the idea of this freelancing management system. or the company-soaked talent that we've acquired and how we're thinking about how to integrate that. But if you think about the number one challenge in general for companies, it's access to talent, basically. So sometimes they have access to talent and they just need a system to run that talent in an efficient manner without breaking budget or compliance or governance. And sometimes they need additional talent and they need access to it. And I think that the merge of these systems, the freelancing management system and the market-based solutions and the managed services solutions that we offer, offers this 360 solution that we called the Talent Cloud. So some of it is going to be moving the offline to the online, and some of it is just putting order in the way companies engage with freelancers, whether it's offline or online.

That makes sense. My second question is thinking more about curation on the marketplace, right? So Fiverr Choice, Fiverr Inspire, Promotive Listings, all help you do that. But can you talk about just your progress in terms of better matching buyers and sellers and just curation more broadly on the marketplace? Thanks so much.

Absolutely. So first of all, quality is a main point of focus for us. And you've mentioned some of the solutions and the way we tag or slice and dice the catalog. What we've done with Fiverr Pro and now with Fiverr Business is actually focusing for the more advanced business customers on a fully vetted supply. And within Fiverr business, it's the top 1% of supply that Fiverr has in every category. But it's not only that, it's the ability to understand metadata that is related to every project that is being done on the platform and use that information to create better matches. Because since all the transactions are actually happening on the Fiverr platform, we're able to track hundreds of data points about every transaction and the smallest details of every transaction. And that allows us to actually help make better matches. For example, if we know that a certain professional is offering services and is extreme focused is in a specific industry, if we know that a customer is coming from that industry, we can use that information to create a better match. So it's a combination of vetting and data and segmentation and personalization of these matches to create the right segments of both supply and demand.

All right, thank you.

Thank you for your questions, Andrew. Our next question comes from Jason Hellstein of Oppenheimer. Jason, your line is now open.

Thanks. I'll ask two questions. So one, just on the kind of the topics being discussed, so you're basically talking about offering a cloud product for businesses. Do you think about pricing that differently? You know, could that, does it, do they have to hire workers through that software or And then when you think about that, typically an enterprise sale is more expensive than, you know, what you've historically focused on. And so like, how should we think about maybe marketing becoming less efficient as you move up market with a SaaS-like product? And then secondly, one of the concerns that we've heard in addition to competition, and you've talked about that, is just, you know, are freelancers leaving the freelance market to become full-time employees? You know, we don't have evidence of that, but it's a concern we've heard from investors, so curious to get your take on that. Thanks.

Good morning, Jason. Thanks for the question. I'll start maybe with the second one, and the answer is no, it's the other round. If anything, we're seeing the other trend, which is full-time employees who are actually leaving their jobs not to rejoin another company, but to but to go independent, either becoming freelancers or starting their own businesses. As to your first question, I think we spoke about this in previous earnings as well. Over time, we may introduce different pricing and different models. Even now, there are aspects of our business that are transactional. and other businesses that are more SaaS-based. They're still pretty small, which is why we're not reporting them separately. But essentially, we do think that in a holistic 360 solution of the talent cloud, there is room to have different pricing models based on if you're doing it transaction-based or the usage of software. As to the cost of enterprise sales, I think that so far we have demonstrated that we can go up market without unloading or loading expenses and by that compromising or ruining the efficiency of our marketing. now that we're much more focused on high-value buyers and larger businesses, this hasn't changed the efficiency of our marketing. And the same goes for success managers or inside sales. But obviously, and we're still doing work on buyer segmentation, but I think that so far we haven't seen a decrease in that efficiency. And when we'll reach the point where we actually target enterprise, then we'll do whatever is necessary to do that.

And Jason, just to augment on Micha, I think that on the pricing model, there is no intent to reduce take rates on transaction. So like I mentioned earlier, we do believe in Intent to sustain the take rate for the long run. Then on the freelancer living at the freelancer market to become FTE, I would refer to the shareholders letter both for the case study and then for the data related to the seller earning on the marketplace with those who earn much. now responsible for 50% more of the business last year. So we see freelancers that use Fiverr as a channel to generate work actually using us much more, generating more revenue or more income on their site. So we don't see any slowdown neither on the joining of a new seller or they're earning on the marketplace. On the contrary.

Thank you. Thank you for your questions, Jason. As a reminder, if you wish to submit a question, please press star followed by one on your telephone keypad now. Our next question comes from Bernie McTernan of Needham & Co. Bernie, your line is now open.

Great. Thanks for taking the questions. Two for me. Discussion in the release on leaning into brand marketing spend. Can you talk about how big those investments have been and what's contemplated in the 2022 guide and how you evaluate the ROI on that spend? And then second, mentioned in the release strong trends and demand for 3D given the rise of NFTs, crypto and Roblox. Do you have to do anything to make sure that you have enough supply on the platform to meet that kind of demand or does the marketplace just organically figure that out itself?

Good morning, Bernie. Thanks for the question. As to the first question about brand marketing, essentially, we don't provide a breakdown between brand marketing and performance marketing. We always say that performance marketing is the larger portion. And the way we use it is in a combination where brand marketing and performance marketing are complementary to each other. taking everything from awareness consideration to conversion. And obviously, the more efficient you are on brand marketing, the more efficient you become on your performance marketing as well, because it's not the first time that your customers are being exposed to your brand. There's many ways of measuring brand marketing. And oftentimes, I mean, It's a very basic method, but oftentimes if you test a brand marketing in a specific location, you can actually measure the baseline performance of that location versus the time in which you run your brand marketing to look at the delta, and that's your impact. But I think that the overall impact of that is thinking about a brand as a long-term investment We've been investing in brand equity for years, and we have grown our unaided brand awareness significantly in the past few years, and that shows in the investment that the investment have paid off. As to your question about the NFT, in most cases, generally speaking, supply comes to us 100% organically. So we don't need to fuel supply. And in the case of NFT, that has been pretty much the case. There's tremendous amount of quality in our catalog. And we do invest more in focusing on the quality, the catalog and how it's structured, market-based integrity to ensure that we have a high quality experience. But in terms of supply, I think that we have definitely enough supply to meet the increasing demand in those services.

Understood. Thank you. And just one follow-up, if I could, beginning a few inbound questions on the gross margin. It sounds like there was some hiring that was done to catch up to support teams in the fourth quarter. Is this fourth quarter gross margin the right way to think about 2022?

We do have some catch-up coming into as we speak. So we believe there will be a short in gross margin of approximately 1% throughout the year. Thank you.

Thank you for your questions. We'll now take our last question from Brad Erickson of RBC Capital Markets. Brad, your line is now open.

Hi. I guess a couple for Ofer, just following up on sort of what's baked into the guide. On the take rate specifically, you've said a few times and in the letter that the assumption is effectively flat with some upside. So just to clarify, do we assume that flat assumption is what's baked into the guide and the modest upside you mentioned would be upside to those numbers? If you could just clarify that. And then on the sales and marketing leverage, call it out in the letter. You've talked about it on this call that, you know, you expect to continue to see that, um, this year. And then I think you also said that you're going to accelerate some of those investments in brand and programmatic channels. Maybe if you could just help us with sort of what the offset is there between those two comments. Thanks.

Uh, thank you, Brad. So, um, um, and the, uh, and the first question, um, As we expand promoted gigs and then expand other services like SellerPlus, we do believe that because of the nature of this revenue, they are going to contribute a little bit more to the overall take rate. Again, we're trying to be solid, make sure that everyone understands that there's an upside, but yet it's going to be moderated. So throughout 2021, as a recall, we have changed or updated the service fee that, you know, it created a trigger to the overall take rate. This is not going to happen again. So this is why we want to make sure that we understand that there's a flat with some modus improved to take rate. not beyond. And then on the question on the sales and marketing, yes, we do expect to see leverage. We have seen that throughout the last few years on a quarterly basis. There is a very clear path for us to enjoy the leverage of scale. As the business grows, we are able to maintain growth. while investing more dollars, but percentage-wise of revenues, sales and marketing is declining. We expect to continue this trend throughout the year.

Got it. And then maybe one follow-up, if I could, one last one. I think there have been a few questions around the changes in freelancer supply given the great resignation and all that stuff. Do you think the business is seeing... more or less tailwinds from the fact that, you know, corporates not having enough labor in place and seeing maybe bigger buyer activity out of that, any sort of like a mix shift that might be visible from a large enterprise standpoint. I know you haven't talked about it, but obviously it seems like everyone is hiring and just curious if that may be a tailwind you're seeing at the moment as well. Thanks.

Yeah. So I think, I think that it's a great point. And, And this, I think, is baked into the behavior of cohorts that are coming from larger businesses, larger organizations, and their ability and willingness to spend more and be more engaged on the platform. So we're definitely seeing that. A part of it is great resignation, and other parts is just shortage in general. There's more businesses. There's more need for talent. And therefore, I think that companies are looking for freelancers as a viable solution. And now, after the pandemic, working remotely has become a norm and something that most organizations can do as a standard thing. So definitely a tailwind for us.

Got it. That's great. Thank you.

Thank you. Thank you for your questions, Brad. At this time, we have no further questions, so I'll hand back over to Miha Kaufman for any closing remarks.

Thank you, Charlie, for managing this call, and thank you, everyone, for participating in the call today. We look forward to speaking with all of you soon. Have a great day.

Thank you all for joining today's call. You may now disconnect your lines and have a lovely day.