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spk09: Thank you all for joining. I would like to welcome you all to the Fiverr Q4 fiscal 2022 earnings conference call. My name is Brika and I'll be your event specialist operating today's call. After the speaker's presentation today, we'll conduct a question and answer session. And if you would like to ask a question at this time, please press star then one on your telephone keypad. If you change your mind and would like to withdraw your question, please press star then two. And for operator assistance at any point, it's star zero. Thank you. I would now like to hand the call over to our host for today, Jinjin. So, Jinjin, you may begin when you're ready.
spk00: Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the fourth quarter that ended December 31st, 2022. Joining me today on the call are Miha Kaufman, founder and CEO, and Ofer Katz, 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 20F and other findings for the SEC. During this call, we'll be referring to some non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margins. A reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measure is provided in the earnings release we issued today in our shareholder letter, each of which is available on our website at investors.fiverr.com. And now, I'll turn the call over to Miha.
spk03: Thank you, Jinjin. Good morning, everyone, and thank you for joining us today. 2022 was a unique year. In response to the shifting macro environment resulting in headwinds to the overall freelance demand, we quickly pivoted the company to tighten our focus on efficiency and profitability. As an entrepreneur, and knowing how huge a long-term opportunity is in front of us, I must admit this wasn't easy. But it was absolutely the right thing to do. Not only does it help us navigate through the macro cycle and maximize long-term shareholder value, but it also brings a new level of energy and velocity across the company. We are more focused on fewer, but more impactful projects, making faster decisions and feeling closer as a team. All these efforts led us to a strong finish in 2022. Revenue for Q4 was $83 million up 4% in line with our expectations. We delivered our strongest quarter ever in terms of adjusted EBITDA above the top end of our guidance and representing an adjusted EBITDA margin of 11%. Active buyers were 4.3 million stable with modest growth while we reduced overall marketing spend and improved marketing leverage. We are driving an increasing amount of business from non-pay traffic with strong brand awareness and continued engagement among existing customers. Repeat customers now represent 63% of our core market-based revenue compared to 59% in 2021. Growth of large wallet customers also continue to be robust Those with an annual spend of $10,000 or more grew 29% year over year, significantly higher than overall buyer growth. In 2023, you should expect us to continue strengthening our core business and operating at an intensified level of focus and efficiency. We will continue accelerating our pace towards long-term adjusted EBITDA target of 25%. Given the current macro environment, we believe this would put us in the best position to optimize our overall growth and profitability profile. The long-term secular trends toward remote work and flexible workforce remain intact, so we believe it's just a matter of time for overall freelance demand to rebound. When that happens, we expect to return to a strong growth trajectory while being a much more profitable company than before. The tech industry is also at a unique time with a significant amount of layoffs among tech and knowledge workers. Many have turned to freelancing as a temporary or permanent career choice. At Fiverr, we are laser focused on making Fiverr the best platform for independent talent to build business and earn a living. Active sellers in 2022 reach an all-time high with a record level of new sellers joining our platform. Fiverr's unique e-commerce platform gives freelancers the freedom and efficiency to take orders from buyers instead of bidding and chasing after job opportunities. We also operate the largest and most comprehensive digital services catalog with over 600 categories at the end of 2022. In recent years, we expanded our product offerings to include promoted gigs, seller plus and cash advanced programs to provide freelancers with a dynamic set of advertising membership and finance tools to build their business. All of these are the reasons why Fiverr organically attract freelancers of all skills and across the world to our platform. and also why we can command an industry-leading take rate of 30%. Now I want to spend a minute talking about AI. With the emergence of AI tools such as ChatGPT, many have questioned whether Fiverr's business will be impacted or even replaced by AI technology in the future. I'm actually very excited about the possibilities of AI. Fiverr will uniquely benefit from AI in these aspects. First, Innovation always creates more jobs, not less. The recent AI tools presented to the world in the past few months have demonstrated a significant step function in the evolutionary progress of technology. However, as much as these tools have incredible power, what really matters is how humans will make use of these tools to create inspiring creative work for other humans to consume. As a result, it will bring many new professionals related to AI that we can't even imagine today. In fact, these talents are already coming to our platform. We made a number of public announcements in January to share the volume of interest we see for AI-related services and have once again demonstrated our swift response to market demand by introducing a series of new categories to address it. Second, AI tools will bring a lot of productivity improvement to our talent community, and Fiverr is uniquely positioned to democratize and distribute these tools to the freelancer community who often lack access and resources to deploy those technologies. Third, digital service is highly fragmented, unstructured, and complicated, so matching buyers and sellers through an e-commerce model is a fairly difficult product challenge. With AI technology, We can unlock the long tail of data we have and drastically improve the overall search, browsing, and matching experience. We are already working on some of these ideas. With the macro headlines dominating the investor community, it is sometimes easy to forget how big the opportunity in front of us is. Nearly 40% of the US workforce are already freelancers of certain capacity today. and that will reach over 50% by 2025. Engaging a dynamic workforce that combines full-time versus independent workers and onsite versus remote is increasingly becoming top of mind question for businesses of all sizes. Fiverr is highly differentiated from other freelance platforms. We have built a two-sided marketplace with the largest selection of digital services a brand that people around the world admire, and a passionate community of over 4 million businesses and hundreds of thousands of freelancers. In short, we have an enviable foundation with scale, competitive modes, and the best-in-class business model. Yet, we are still in the first innings when it comes to unlocking the full potential of Fiverr. To do that, and especially under the current macro, What becomes clear is that we need to give the core marketplace much more attention and take a more focused approach and prioritize fast, flawless execution. We have set three straightforward priorities for 2023. First, improve comparability in the marketplace. With hundreds of thousands of sellers and millions of services listings, we must deliver world-class search and discovery technology to surface exactly the right breadth and depth of inventory tailored to each buyer. Second, create differentiated category experiences. With so many different types of digital services offered on our market base, some visual and others non-visual, we need to provide sellers with robust tools to express their talent and their work. Third, improve engagement and retention. There is tremendous potential to grow our wallet share among our buyers. And to do that, we need to make sure that the Fiverr brand delivers trust and reliability throughout the buying experience. Brand awareness for Fiverr is high, and so is our NPS core. This gives us great strength upon which to build And we need to continue to build our platform as top of mind choice for our buyers when they have a need. We are already working with urgency towards executing these initiatives. In conclusion, we are extremely encouraged by the progress we made last year to strengthen our focus and efficiency within the company. In 2023, we are confident that our nimble, more cost efficient structure can support the work we need to do to win. We expect to attack exciting growth opportunities while driving adjusted EBITDA growth at a faster pace than before. With that, I'll turn the call over to Ofer, who will walk you through our financial highlights.
spk04: Thank you, Mikhail. Good morning, everyone. We ended 2022 on a strong note. Revenue of 83.1 million came in a tag higher than our baseline expectation and adjusted EBITDA of 9.4 million or 11.3% in margin was above our guidance range. We took the challenge and opportunity of the macro environment and brought the operational excellence of the company to the next level. This mark is the strongest quarter in terms of adjusted EBITDA so far in our history, but it's just the beginning. As Micha mentioned, we will build on a progress we made on 2022 and continue to execute with discipline and focus this year. With the adjustment we made last year, I believe 2023 is a year where we bring steady improvement in our growth trajectory while accelerating the pace toward our long-term profitability targets. The underlying dynamic of our business continues to show resilience. Active buyers for Q4 were 4.3 million, up 1% year-over-year. With the outsized cohort from the past two years going through their initial period of stabilization, we are encouraged to see the overall active buyer trend stabilizing. At the same time, we are moderating our marketing spend. In the current macro environment where SMB sentiment is low and our spending appetite limited, we believe it's important to maintain discipline and efficiency rather than leaning in. As you can see, TRI for performance marketing continues to be strong at around 0.9x, and we are improving our overall sales and marketing expenses as a percentage of revenue. Going forward, we expect Q123 to be the throw in terms of active buyer growth, and it will improve steadily in the latter half of 2023. Penter buyer for Q4 was $262, up 8% year-over-year, as we continue to make progress in growing up market. The majority of the spend growth in 2022 occurred in the first half of the year, as the headwind in S&P spending that intensified later in the year was certainly felt across all of our cohorts. As we mentioned in the shareholders' letter, in any of the previous year, It was very consistent that our buyer typically increased their spend on the platform from the first half of the year to the second, as our wallet shares extend over time, and as the holiday season drives additional investments. In 2022, however, all cohorts experienced some decline in spend in the second half of the year. It is worth noting that despite the headwind, we continue to see our upmarket initiatives bearing fruit. Large wallet share buyers, those who spend over $10,000 a year, continue to be the fastest growing segment among our buyers. Looking forward, given the lack of concrete timeline of the recovery of SMB sentiment, we believe the expansion of center buyer would be relatively muted compared to a typical year, and our revenue growth will be contributed by active buyers and center buyer in a balanced manner. Take rate for the quarter. was 30.2% in Q4, representing a year-over-year expansion of 100 basis points. We continue to believe our take rates will be sustainable with the modest upside over time, driven by value-added services. We are seeing healthy growth in both promoted gigs and seller-plus programs, and we expect to continue doing so in 2023. Now, let's turn to guidance. For the full year of 2023, we expect revenue to be in the range of 350 to 365 million, representing year-over-year growth of 4 to 8 percent. Adjusted EBITDA is expected to be in the range of 45 to 55 million, representing an adjusted EBITDA margin of 14 percent at the midpoint. For the first quarter of 2023, Revenue is expected to be 86.5 to 88.5 million, representing year-over-year growth of 0 to 2%. Adjusted EBITDA is expected to be 9 to 10.5 million, representing an adjusted EBITDA margin of 11% at the midpoint. Our Q1 and full year guidance reflects the current macro dynamic as well as the feasibility we have on our historical cohort and acquisition panel in the current environment. We believe the first quarter will be the most challenging in terms of revenue growth rate due to the comparison to Q1-22, when growth was minimally impacted by macro headwinds. We expect the overall revenue growth rate to increase over the course of 2023, and we expect to exit 2023 with double-digit revenue growth rate at the midpoint. For adjusted EBITDA, we expect to build upon the progress we made in 2022 and continue to focus on cost discipline and operational efficiency. We are committed to delivering our adjusted EBITDA guidance this year, regardless of macro condition and our revenue level. We will achieve this by dynamically adjusting our cost structure throughout the year. Our marketing unit economy continues to be very healthy and will continue to be disciplined and expect to drive meaningful leverage on our sales and marketing expense line. To conclude, we are entering 2023 with a great confidence and we believe we are in a great place in terms of both business and financial tragedy in order to weather this uncertain period. The market opportunity in front of us is enormous. We will emerge out of this macro cycle as a stronger and more profitable company and continue our journey towards realizing our future potential. With that, we now turn the call over to the operator for questions.
spk09: Thank you. As a reminder, if you'd like to ask a question, please press star then one on your telephone keypads now. If you change your mind at any time, please press star two. The first question we have comes from the line of Ron Josie of Citi. Your line is open.
spk07: Great. Thanks for taking the call. The question, Mikhail Nofer, I wanted to ask just about active buyer and demand trends and geographically, et cetera. And so can you just talk to us about the trends you saw in 4Q around active buyers, insights on where you saw maybe improving stabilization or demand trends geographically, call it the States or Europe, And then, Micha, in your prepared remarks, you talked about one of the few different priorities for this year. One of them was around improving comparability in the marketplace, given how many sellers and listings you have. Talk to us about how this might improve just overall demand and awareness on the marketplace. Thank you, guys.
spk03: Thanks, Ron, and good morning. I'll start maybe with the second question. So what's really important as you grow a massive catalog is to provide with our potential customers the ability to actually choose faster. So comparability is all about that. It's about our ability to convert customers better because they spend less time figuring out what is the right service for them. And given the fact that some of our services are visual and some are non-visual, the task is pretty complex. And this is an area where we invest a lot in because it really improves click-through rate and conversion, which are key to being able to drive more business and allow people to find faster what they need.
spk04: And Ron, this is also on the active buyer front. We think that the main impact An active buyer is the macro economy. And I can break down the answer into three different layers. The first is that, in fact, there is less of a freelance demand, which means that we see less direct and paid traffic. Having said that, since there is a fewer impression, we are actually spending a little bit less in performance marketing acquiring a smaller cohort and maintain, you know, overall efficiency in terms of DOI, as you probably noticed. And lastly, you know, in terms of existing cohort, you know, SMB are cautious on spending, which means that, you know, they appear a little bit less, and there is a softer retention for old cohort. So on top of that, I would just add that COVID cohorts are now in a stabilization period, which is about to be end. To address the second part of your question, the trend we are seeing is across all cohorts. There's nothing for us to control. This is where the comfort comes in terms of the impact, which is directly related to the macro hesitancy.
spk07: Okay, thank you, Ofer. Thank you, Mipha.
spk14: Thank you, Ron.
spk09: Your next question comes from the line of Eric Sheridan of Goldman Sachs. Please go ahead when you're ready.
spk01: Thanks so much. Maybe two if I can. First, following on Ron's question, I wonder if we could just turn to spend per buyer and how we should be thinking about either from a cohort perspective or as on a reported basis, how the macro environment sort of will impact that and how you think about the arc of spend per buyer given the volatility for the macro environment going forward over the next couple of quarters. And then the second question would be, can you talk a little bit about if the macro environment were to stabilize and improve, how quickly we should think about areas of investment that you would want to quickly sort of turn and redeploy capital back into the business to sort of stimulate growth and what those areas might be. Thanks so much.
spk04: I will start by trying to address the first question on the spent buyer. And I think that, you know, it's the first time in the history of Fiverr where we saw the second half spent buyer declining comparing the first half. And I'm thinking about 2022, we saw a decline of 3% in the spend comparing H1, where previously we have seen an increase of 8% from the first half to the second. But, you know, to continue this discussion, you know, center buyers represent an average spend, taking into account buyers who spend more than the average and, of course, less. To give some other points of data, I think we mentioned on the show this letter that buyers who spend more than $10,000 actually grow by 30%. Same goes to high-value buyers, those who spend more than $500. They now represent 63% of the business, comparing 59 a year ago. So I think that in terms of our investment in going up market, initiatives, in products, but also in marketing, we actually see a very good signal. But these are kind of offset by the SMB headwind on the long tail. And we land at approximately, you know, equal by 252. Now, when we look into next year, I think at least at the beginning, We anticipate some tough comp because of last year, but going into the second half of the year, we expect acceleration on the central buyer. That's what we see, and this is what's included in our guidance.
spk03: Thanks for the second question, Eric. So in terms of macro improvement, given our e-commerce model, will benefit from the trends first and benefit the most. The fact that our underlying business fundamentals remain strong means we will see turn of growth trajectory very quickly, much like we've seen the headwinds first, I think one of the first companies in the market to report it. In terms of investment, it gives us the opportunity to lean into marketing, of course, And also the opportunity to strengthen retention as well. And it also obviously supports our continuing of pushing long-term initiatives like fiber business.
spk14: Thank you.
spk08: Thank you. We now have Doug Anness of J.P. Morgan.
spk09: Please go ahead when you're ready, Doug.
spk02: Thanks so much for taking questions. So just following up on the profitability, you'd record quarterly EBITDA in 4Q and talked about being committed to the accelerated pace of margin expansion this year. Can you just talk about some of the key drivers and factors here on what's still muted but improving revenue growth through the course of the year? And then also just related to Eric's question, what are those key investments that you still need to make this year kind of within that construct of EBITDA? at the accelerated pace of margin expansion. Thanks.
spk04: Hey, Doc. So I think it all starts with discipline and the impact of the cost reduction plan that we did mid of last year, which now has a full implication on the P&L for this year. This kind of discipline go all the way from operational expenses to headcount, to marketing efficiency. In terms of future headcount reduction, there isn't any plan for additional headcount reduction throughout the year. Yet to be said, and if you go back to the way we manage OPEX in the last few years, you know, we realize this is a dynamic business and we respond. You know, we are committed to EBITDA as a guide, whether we meet the guidance or whether there is some tough or more intensive headwind. So I think that we do have some flexibility in the business and the discipline here is high enough for us to feel the confidence for this footprint. I think that the EBITDA step functions that we are doing this year is only a test for the long-term EBITDA as we originally committed. We feel very confident that even through this period of kind of a slow growth, we are still able to execute and double the EBITDA distance.
spk03: Yeah, and as for your second part of the question, I think, you know, as mentioned, our investment in the core marketplace, we've mentioned three ones which allow us to capture more of the existing trends that we're seeing. One is the improved comparability, search and discovery, the differentiated experience, given the different types of services and engagement and retention. So improving trust and meet buyers where they are. On top of that, I would mention the continuing push on go-to-market on Fiverr business, which is leveraging the market-based traffic and user base. There's lots of work going on on customer segmentation to identify high potential customers and build conversion tools around them. And we're also building external partnerships to open up channels and build specific uses with partners. It's a little bit early to talk about that, but something we'll be able to talk probably more in the future, hopefully in the second half of the year. So these will allow us to, as investments, side-by-side with cost discipline to continue pushing the business.
spk02: Great. Thank you both.
spk09: Thank you, Doug. We now have Jason Hofstein from Oakland Hema. You may proceed with your question.
spk12: Thanks. Good morning. I guess two questions. One, just technically, can you just outline just how we should be thinking about the reduced expense growth? So like how much specifically for marketing versus R&D versus G&A through the way to kind of parse that. And then, you know, are you, you know, do you think about marketing any differently now than you did in kind of pre-COVID in 2020? So, you know, is it the same playbook and just adjusting spending levels or are you doing things differently because you're seeing, you know, different, behavior for different services or different behavior from high-spend buyers versus low-spend buyers. Just some color there. Thank you.
spk04: Jason, on the first question, Costa, you know, the OPEX leverage is mostly on the SMM for the marketing. with some flavor from R&D and G&A, but it's mostly about marketing.
spk03: Yeah, and on the marketing, what I would say is, one, our marketing is very adaptive, meaning that on a regular basis, we check and test many strategies depending on trends that we see in the market, Sometimes it's different categories depending on the time of year. And sometimes it's just the emergence of new categories. What we're doing now is really maximizing or keeping the efficiency of our marketing. If cost changes, if the overall top of funnel in terms of demand for freelancing is changing, what we're doing is we're diverting budgets between different channels. and between brand marketing and performance marketing as needed. But I think that if you look at the overall cost or the time to return on investment on our marketing, you see that it keeps being extremely attractive, and we're able to maintain that despite the fact that the market is very, very different. And we achieve that by being highly dynamic and employing a lot of marketing automation technology that we have developed throughout the years.
spk08: Thank you.
spk09: Our next question comes from Bernie McTernan of Needham and Company. Please go ahead when you're ready.
spk13: Thanks for taking the questions. Maybe to start, just the double-digit revenue growth guidance to exit the year, does that imply anything for an improvement in the macro? And then second, just on AI, we get this question a lot, just whether it's a friend or a foe for Fiverr. Long-term, how do you think AI will impact the use case for freelance talent? And do you guys have an estimate for what percent of the gigs on your platform could be impacted by AI? Thank you.
spk04: Hey, Bernie. So on the first question, I think that we guide for 2023 with the assumption that The first quarter is going to be more challenging in terms of growth because of two reasons. The first is comp, both, but also because of the stabilization of all cohorts of the COVID. Looking into the end, yes, we do expect double digits, and the guidance as a whole doesn't include any rebound or change in the macro environment. Such event will happen, will definitely be one of the first companies to enjoy, to see the impact. I think the combination of the healthiness of the business, the ability to scale really fast when there is an opportunity is unmatched in our industry. So that I think, you know, maintaining a very healthy business and pretty good profitability scenario gives us a very good heads up when time will change. But in terms of 2023 guidance, it doesn't include the such, you know, rebound or swing up of the existing macro economies.
spk03: Bernie, let me address the question about AI. So when I think about AI, AI is definitely more front than a foe. And being a techno-optimist, I always think that technology can be there for the benefit of humanity for progress. And in general, what I think about AI is it's definitely a step function in computing. But really what's interesting is how powerful humans use these tools to produce new things. And that could be around writing, that could be around graphic design, that could be about video editing, and many other fields. I think that there's a natural evolutionary step between generations. I mean, when I'm looking about the amount of jobs that pass through generations from my grandfather to my father or from my father's generation to mine, obviously some jobs become obsolete. But my view is that the new jobs created will far exceed those impacted by AI. And actually, if you think about AI specifically, it's already generating thousands of jobs in just training AI. And then it's about optimizing it. And then it's about creating use cases for it. And what we're seeing on the marketplace right now is that there is a new cohort that is growing very, very fast of AI experts. Because even though the output that AI is producing is very impressive, probably what you and I can produce with it is pretty mediocre. And to really get to breathtaking results, you need experts that know how to operate these tools. So I'm very excited about AI. And right now we're mostly enjoying the upside of being probably the first marketplace in the world to include these new professions and being the first place in the world where you can find and access these professions. And we see the increased demand for those professions.
spk14: So we're very happy with that.
spk09: Thank you. We now have Matt Farrell of Piper Sandler. Please go ahead when you're ready.
spk11: Thanks, guys. Congrats on the really strong results here in a difficult environment. Maybe just to focus in a little bit more on the move up market. How have conversations or momentum with potential customers changed to start the year as budget cycles kind of flushed out in Q4? Is there some hesitancy around stepping in or spending more right now with these larger buyers? Or are they leaning in to leverage your platform amid the uncertainties?
spk03: Hey, morning. Thanks for the question. So right now what we're seeing is these cohorts are not really being impacted by macro, at least within what we're seeing. And maybe it is because historically Fiverr has been more of an SMB market and is now getting into the mid-market. The customers that we have are only finding more ways of finding Fiverr, and therefore we called out the fact that Those types of customers, those who spend over $10,000, are growing and representing a very nice percentage of our business. So for now, at least, we're seeing less of headwind on that. And given the fact that still the majority of our businesses, micro and small businesses, they're a little bit more hesitant and cautious about spending because of macros.
spk11: And maybe one on innovation. You know, you guys have continued to innovate and introduce new products, despite pulling back on some of the spending in certain areas as of late. How should we think about the cadence of innovation or upgrades or updates rolling out in 2023, just given the backdrop that we're in? Thanks.
spk03: And I think in my, I believe that in my opening remarks, I said that what we're seeing is we're actually seeing our velocity going up. We're able to work faster, but we do it more focused, meaning that we pick projects that we believe can present more of a step function, and we push harder and faster around these projects. So if anything, as a machine, we operate much better right now. despite the fact that we've had to focus on optimizing and being very disciplined about the cost structure.
spk09: Thank you. We now have Brad Erickson of RBC Capital Markets. Your line is open.
spk10: Hey, thanks for taking the question. This is Logan on for Brad. Just another one on the AI, like what did the early searches you guys see from buyers reflect and what are the problems they're trying to solve? And then just what are the biggest efficiency opportunities you guys anticipate or are seeing with freelancers thus far and any impact on the model from AI in 2023? Thanks.
spk03: I think we're now at the pretty early stage of what we can tell about this. And I think it's much more of an exploration than anything else. What we're seeing is what we're seeing, obviously, we're seeing increased demand for AI artists. We're seeing more demand for AI developers that develop tools around those new technologies, whether that is GPT, or other technologies relating to writing, graphic design, video, and so forth. On top of it, given the fact that the technology is far from being perfect around writing, there's a lot of issues around copywriting and the accuracy of content. So there's a lot of fact checking services around this. And I think that this is really important. And the same goes for any other type of content generated by AI. It requires human research both to get the perfect result, but also to ensure that it is accurate and meets the customer demands. So we're seeing a list of categories that are being created extremely fast. And I think that this is one of the strengths of Fiverr. being able to be quick, swift on responding to things that were invented yesterday and offering those services. And I think that this is a lot of our power lies in that.
spk09: Thank you. Our last question comes from the line of Andrew Boone of JMP Securities. Please go ahead when you're ready.
spk05: Thanks so much for taking my questions. I'm going to try three. So can you talk about the cohorts for 2023? How should we think about just the stabilization there? Is it in real time? Is it now kind of at a level where you expect that to be steady going forward? You're investing in TV in Germany. Can you provide a real time update on Europe and anything you're thinking about there? And then lastly, we heard a little bit less about Fiverr Business this quarter. Is there any update that you want to provide there? Thanks so much.
spk04: So I will start with the cohort and, you know, distinguish cohort into old cohort, newer cohort, and future cohort, and what is included in the guidance as a kind of reference. So all cohorts which experienced the uplift of the COVID also experienced the headwind of the macro change beginning of last year. They're still spending more than pre-COVID, but less than what we've seen at the top of the COVID. This cohort are stable and we anticipate them to be loyal and continue to spend on Fiverr as they need more financial services. The cohort who joined us during the COVID period didn't enjoy the uplift, hence the retention is a little bit lower. And this is kind of the model as we predict new cohort into the foreseeable future. So that our model was always, when we guide, is always to guide based on what we know. And what we know as of now is what I just said in terms of retention and behavior. And this gives us an unfortunate opportunity because we do believe that the macro will rebound at some point. Okay. And in fact, you know, even with this kind of behavior, we are still, you know, profitable, very strong TRI, ability to acquire. And we think that there is a lot of underlying assets here that will mature when come time and bring us to the next level. But in terms of what we are seeing on cohort and what we anticipate, I think that's kind of the picture or this is kind of what we are seeing now.
spk03: Andrew, let me address the question about Germany and fiber business. So in terms of the investment in Germany, we're more focused in our international expansion this year. So we're focused on Germany in the non-English market and UK in the English countries. We did work around translation in the past years, and now it's more about growing local audiences. and providing product optimizations that are tailored to the local customers and their purchase preference and demands. And we continue to invest in brand and awareness. We mentioned a few campaigns and PR activities we did recently in our shareholder letters, so I'm referring you guys to more details there. In terms of Fiverr business, I think I addressed that in previous questions. expand maybe and say that fiber business is where we continue to push the going up market strategy. We're leveraging the market base traffic and user base. And as I've mentioned, there's work done around customer segmentation to identify those high potential customers and build those conversion tools around those customers. And I briefly mentioned the fact that we're building external partnerships, which we believe can open up channels and build specific use cases with partners. And I said that we'll be happy to provide more information about that hopefully in the second half of the year. I would maybe close by saying that, you know, Fiverr business continues to be a focus and priority for us. There's lots of investment going into it. And we're seeing strong early signs and with continued robust growth in large wallet customers. So we continue to be very excited and put investment towards it. Thank you.
spk05: All right, thank you.
spk09: Thank you. I would now like to turn it back to Mika Kruseman for some closing remarks.
spk03: Thank you, Britta. Appreciate the moderation today, and thank you everyone for spending your morning with us. We look forward to speaking to all of you soon.
spk14: Have a great day.
spk09: Thank you all for joining. That does conclude today's call. You may now disconnect your lines and please have a lovely day.
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