Fiverr International Ltd.

Good day and thank you for standing by. Welcome to Fiverr Third Quarter 2024 Earnings Conference Call. At this time, all participants are in the 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'd now like to hand the conference over to your first speaker today, Jingjing Chen, EVP Strategic Finance. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's Earnings Conference Call for the third quarter that ended September 30th, 2024. Joining me on the call today are Mihal 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 20-F and other filings with the SEC. During this call, we'll be referring to some key performance metrics and non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow. Further explanation and 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 and I'll share with you later, each of which is available on our website at .fiverr.com. And now I will turn the call over to Mihal.

Thank you, Jinjin. Good morning, everyone, and thank you for joining us. We delivered a tremendous third quarter with both revenue and adjusted EBITDA exceeding the high end of our guidance range. By successfully executing our strategy to go up market, expand value-added services, and deliver innovative AI-powered experience, we are able to grow a higher quality buyer base, drive robust growth in spend per buyer, and strong expansion in take rate. All of these efforts are clearly paying off, allowing us to accelerate our revenue growth this quarter. This is not an easy task, considering that the entire professional staffing industry is down double digits year over year, and overall SMB sentiment still lingers around historically low levels. The fact that we are able to accelerate our growth under such macro conditions underscores the strength of our vision and strategy and our impeccable ability to execute them. We also continue to deliver steady improvement in adjusted EBITDA and strong cash flow generation. Last quarter, we laid out a three-year target plan for adjusted EBITDA and free cash flow. With strong execution in Q3, I'm confident that we are well on track to deliver these targets. Our strong financial position allows us to aggressively invest in products and technology to drive growth while at the same time returning capital to shareholders and driving shareholder value. Fiverr's strategy has always been to relentlessly focus on creating customer value and building the most beautiful, innovative, and simple-fused products to transform the way people work. One thing that became clearer to me in the last year is that with the emergence of GNI and the promise of AGI, the next generation of products we build must empower our community to fully leverage artificial intelligence. It also became clear to me that in the future, the best work will be done by humans and AI technology together, not humans alone or AI alone. With that in mind, the role of Fiverr must broaden from a talent marketplace to a comprehensive work platform where incredible work happens. This means that every business that comes to Fiverr will have a world-class AI assistant to help them get things done from ideation, scoping, and briefing to product management and workflow automation. It means that they can seamlessly leverage both human talent and machine intelligence to create the most beautiful results. Fiverr has a long history of pioneering the industry with innovative products, and this is what we will do with AI as well. We are already starting to put a few pieces together to build towards this long-term vision. On the buyer side, we are building a new search experience that not only includes more dynamic catalogs, but also incorporates NEO and AI-powered smart matching tool to help customers match with more contextual information. We launched dynamic matching to allow buyers to put together comprehensive briefs with a powerful AI assistant and then get matched with the most relevant freelancer with a tailored proposal. These products allow businesses to fulfill much more complex projects on Fiverr without losing the speed, simplicity, and convenience that they love Fiverr for. Even in the few weeks since we launched these products, we have already seen an enthusiastic reception from our community and promising performance. The projects that come through these products are several times larger than the typical projects on Fiverr, and we believe it has a lot more potential down the road as the awareness and trust of these products grow on the platform. On the talent side, we are building the infrastructure to allow us to more efficiently distribute software tools that integrate with the work that is done on the platform. Some of the tools are built in-house, such as promoted gigs and seller plots. Some of these tools are through acquisitions such as AutoDS, and we believe there will be a lot of opportunities down the road to expand these value-added services through partnerships as well. Lastly, I want to say a few words about Fiverr Pro. As you know, Fiverr Pro is a premium offering we launched to grow our penetration into larger businesses with larger freelancing budgets. We started by providing businesses with collaboration tools, white-glove services, and a fully vetted catalog in order to drive better conversion, engagement, and retention among buyers with the highest lifetime value. Now, with our product expansion into profession, dynamic matching, and hourly contracts, and services such as project management, we are further leaning into these buyers to capture their budgets on long-term freelance engagement. Many of you have asked us what our right to win is in the segment of the addressable market. I want to point out to you two things. First, we have a very large -of-funnel, which allows us to acquire enterprise customers in a super-efficient manner. Most Fortune 500 companies already have employees who are on Fiverr and are using our services. This bottom-up approach allows us to scale with very light sales and account teams. Second is our technology stock. The speed, simplicity, and convenience of Fiverr is fundamentally different from a typical staffing solution. From onboarding to compliance to payments and reporting, Fiverr is so much easier compared to a self-serve solution and so much more cost-effective compared to a managed solution. And as I mentioned before, it is going to get even better as we implement AI capabilities further into our platform. To close, I'm super excited about the many opportunities that are ahead of us. With the strong results in Q3, we are looking forward to wrapping up 2024 on high notes and can't wait to kick off another year of growth and innovation. With that, I'll turn the call over to Ofer, who will share some financial highlights.

Thank you, Michal, and good morning, everyone. I'm pleased to report an exceptional quarter with both top and bottom lines exceeding expectations. Revenue for the third quarter was 99.6 million at 8% ERO per year, representing an acceleration from 6% ERO per year growth in Q2. Adjusted EBITDA for Q3 was 19.7 million, representing an adjusted EBITDA margin of 19.7%, an improvement of 180 basis points from a year earlier. We continue to demonstrate our ability to deliver both growth and profitability improvement despite the macro uncertainty and our commitment to execute with the highest level of consistency, efficiency, and focus. Unpacking the strong results for Q3, we continue to see our effort of growing up markets and expanding value-added products works well. Center buyer was 296 in Q3, representing ERO per year growth of 9%. More buyers are coming to Fiverr for larger and more complex projects. While the active buyer growth was muted, we see continued growth in buyers who spend over $10,000 annually. On the macro level, we've seen some level of stabilization in trends in the volatility we experienced in June and July. However, the overall SMB sentiment remains weak and the overall hiring environment continues to be challenging. We expect GMB will still take some time to recover. In the meantime, we believe our strategy to lean into products, to drive wallet expansion, and our work to unlock new addressable markets continues to be the right strategy to generate growth catalysts. The take rate for Q3 was 33.9%, representing a year of a real improvement of 260 basis points. The continuous trend of promoted gigs, the growth of Seller Plus program, with the newly launched Kickstart program, as well as the strong growth momentum at AutoDS, all contributed to the take rate upside this quarter. As a reminder, FIDAL's take rate consists of two distinctive components. First is Marketplace Commission of approximately 26%. And second is Value-Added Services, an additional approximate 8% take rate. The Marketplace Commission is directly tied with the GMB and the Marketplace and has been relatively stable over the years. The extension of Value-Added products has driven the vast majority of our take rate expansion. As Micha mentioned, FIDAL is increasingly building for a comprehensive work platform that provides not only access to talent, but also a suite of software and AI tools. Take rate expansion continues to be an important growth catalyst for us as we further expand our Value-Added products portfolio. The strong Q3 results also translated into strong cash flow generation. Free cash flow was 10.6 million. Free cash flow excluding one-time escrow payment for contingent consideration was 22.7 million, representing .8% of revenue. Together with balance sheets of over 650 million, we have ample cash to continue investing in product and growth while supporting other capital allocation priorities, including optimizing capital structure, buyback, and M&A. With regard to the outstanding 460 million convertible notes, our objective is to preserve maximum flexibility in this dynamic economic environment. We are confident in managing the capabilities through our strong balance sheets, but we will make the decision as we get closer to maturity. Given the strong execution of Q3, we are raising our full guidance for both revenue and adjusted EBITDA. For the full year 2024, we now expect revenue to be in the range of 388 to 390 million, representing -over-year growth of 7 to 8%. In terms of underlying drivers, we expect central buyers to continue growing at a robust pace, offset by decline in active buyers. We now expect the take rate to increase by approximately 330 basis points -over-year, higher than we had previously anticipated. For adjusted EBITDA, we expect full year 2024 to be in the range of 73 to 75 million, representing an adjusted EBITDA margin of 19 at the midpoint. The updated full year guidance implies Q4 revenue guidance to be in the range of 100.2 to 102.2 million, representing -over-year growth of 9 to 12%. Adjusted EBITDA for Q4 is expected to be 19.5 to 21.5 million, representing adjusted EBITDA margin of .2% at the midpoint. I'm very proud of the exceptional results we delivered in Q3 and believe the strong momentum in Q3 will largely carry forward into Q4. I'm even more excited about what's yet to come in 2025, including an action-packed winter release that's coming up shortly, as well as many pipeline projects that Mika has alluded to in his remarks. With that, we'll now turn the call over to the operator for questions.

Thank you. We will now begin the question and answer session. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. We'll take up this question from the line of Ron Jose from CT. Please ask your question, Ron.

Great. Thanks for taking the question. Hi, Mika. Hi, Ofer. I wanted to follow up on two things. First is, in the letter, you talked about demand trends stabilizing here, but then obviously the broader macro continues to have some challenges, and I think you highlighted hiring and SMB sort of challenges. So just talk just a little bit more about what you meant by stabilization, Mika. I was wondering if maybe that's a newer thing post rates coming down or just any insights on stabilization. And then maybe a bigger question on the buyer base. I was wondering, with all these new products like New Professions Catalog, Dynamic Matching that just launched hourly contracts, that as we attract these newer buyers, I wanted to hear more about the product strategy to keep those buyers, call it, on the platform and how you think about your product catalog to continue driving greater overall higher quality buyers on the platform. Thank you,

guys. Thank you, Ron. Good morning. Thanks for the question. As to the first question, if you recall, in previous earnings, we've mentioned that we've seen some specific volatility around June and July, June, July, August. And I think what we're calling right now is that we've seen September and the beginning of October to be slightly more stable. So there has been some improvement at the top of funnel, but nothing we can call a trend at this point. And just a reminder, we're just a few days away from election. There's a lot of seasonality coming in, things that might create fluctuations in trends. So I wouldn't say that this, we're not calling a new trend. We just called out the fact that after June, July, and August, we've seen some more stabilization and slightly better top of funnel or not. Second question was about the buyer base and the products that we're building. Look, I think, you know, when we think about the types of things that we want to address as we're moving up market and we're entertaining larger customers with higher budgets for freelancing, we know that the things that they usually enjoy is mostly working with agencies offline. And we know that there is, even though the fact that there's, you know, people are accustomed to doing it, they're used to working offline, there are a lot of weak points in doing so. Speed is one, convenience is another, clarity of pricing, of delivery of the project itself. So everything that we're building right now are really tools that are eliminating all the things that customers dislike about working with freelancers or agencies offline and simplifying them and building beautifully simple products for our customers. And if you look at that strategy and how this has been working out for us in the past year or two, you see that those customers are growing, they're growing faster than the overall customer, they're spending more with us, they're sticking for a longer period of time, their retention is better, their spend is better, their frequency is better. And that is why we're investing in these products. And don't forget, I mean, we are one of the, if not the first company that has done a very aggressive move into AI, not just on the catalog side of opening tens of different categories, but how we integrated AI in making our products much more, or much easier to use and much more robust to do a lot of the work that was previously had to do manually. So I think that with the removal of all of these friction, our anticipation is that part, that portion of the business will continue to grow very nicely as it has been growing in recent quarters.

That's super helpful. Thank you, Micha. Thank you.

Thank you. Our next question comes from the line of Bernie McTerny from Uniteham and Company. Please ask your question, Bernie.

Great. Good morning. Thanks for taking the questions. Two for me. First is, with the guidance for revenue acceleration for Q, how should we think about the puts and takes between take rate and GMV growth and is auto having an impact on the revenue acceleration? And then secondly, just on dynamic matching, I know it's only been launched for a few weeks, but can you talk about some of the metrics that you're using to gauge success of the product and does it have any impact on advertising or taking the platform?

Morning, Bernie. You were cutting off a little bit, but I think I got most of the questions. So in terms of guidance, acceleration, look, macro hasn't changed, which means that we're working against a very negative market. If you look at the measures or the trends of SMB sentiment, or you look at the professional staffing market, they're down double digit percentage. So we're already offsetting in our profile, we're offsetting pretty massively on the macro condition. Our view on GMV, we've reiterated it, we've talked about this. I think that within this market, other than just offsetting on these negative trends, we're improving our product and building new products that are creating value for our customers. And those products are working extremely well. Customers are retained and happy to pay for these products because they're adding value for them. And so when you look at the makeup of what allowed us to grow, it's a combination of a somewhat better topofano. It's the tools that we either introduced in the like promoted gigs and seller tools.

It's new

tools, like the addition of AutoDS. And it's higher spend provider because of all of our going up market products. So we feel that as long as the macro would not significantly change, what we're doing now with the offset is the right thing. Obviously, we're pushing ourselves to even perform better. And I think we are. And I think the numbers show it. But the strategy remained very stable, very consistent. We're not zigzagging. We're delivering on the same things that we said we're going to do. And I'm happy to see that those developments are actually paying off for us.

Thank you. Do you have any follow up question, Bernie?

I think you had a second question. Yeah,

on dynamic mapping. I know it's only been a few weeks, but he just talked about some of the metrics you're using to gauge success of your product. And then does it have any impact on advertising or take rate? Just really want to know if it could be take rate dilutive if there's less need to advertise if all the sellers are matched.

Right. It's a good question. So first, as you said, it's very early. What we're seeing from early signs are extremely positive signs. I think that the beauty about this product is it allows customers to be more nuanced, specific and detailed about the types of projects that they need. And it allows them to actually come up and voice much more complex projects within this product. And we're using AI technology to help them create more extensive briefs and then get matched with very, very specific type of talent, which saves them the trouble of actually going through and filtering talent and get tailored proposals. Now, I don't think that because of the nature of these products, I don't foresee definitely not an immediate impact on advertising. And the reality is we haven't seen that. I think that this product by itself is a little bit more relevant for very, very customized types of projects. Whereas our catalog allows our customers to have a ready-made offerings that they can just click and buy. So I don't see this influencing. And the reality is that the promoted gig continues to grow and we're very happy with it.

That's great. Thank you.

Thank you. Our next question comes from the line of Doug and Mus from JP Morgan. Please go ahead, Doug.

Great. Thanks for doing the questions. Can you guys talk about what you're seeing early on with AutoDS and just how you should think about contribution there? And then also if you could talk a little bit more on the business rewards program, how that's increasing spending among some of your larger buyers and then any impact that you're seeing thus far on loyalty as well. Thanks. Morning, Doug. Thanks for the question.

So on AutoDS, I mean, we're very happy with the acquisition. I think, as I mentioned, it is contributing to the take-risk component. And actually, they had a better quarter than anticipated. Look, it's still a small business. So in contribution to the larger picture of Fiverr, it's still small, which is why we're not reporting it separately. But we're happy with the performance. And it's a great addition to the already in-house tools that we've built. I've mentioned them. I mentioned promoted listings. I've mentioned seller plus. Our loyalty programs are really tied in from both sides, from sellers and buyers into a place where we're enabling more engagement, both for our sellers and our buyers, in a way that pays off. And we know that the repeat and sometimes working with same seller, same buyer, is a highly common thing on Fiverr. And these are the types of things that we want to encourage. So we're very happy to see how these programs are shaping up because it's actually rewarding those who are doing it and mostly influencing engagement, which is really important. So retention and engagement are the two matrix of how we measure the success of these

programs. Thank you, Misa.

Thank

you.

Our next question comes from the line of Jason Elstein from Oppenheimer. Please go ahead, Jason.

Thanks. Good afternoon, everybody. I guess good morning, depending on where you are. Can you talk about where you see take rates going long term? Obviously, it's quite strong. The main driver really is, I guess, mixed shift. It's not like this is all headline increases. But I guess, where do you see long term take rates playing out based on where you kind of see the mix of the business over time? Thank you.

Hey, Jason. So this is Ofer. I think that I'm kind of thinking how to address this question because on one hand, we are very satisfied with the growth, the pattern of take rate over the last few years, starting with the basic 26% on the transaction, growing all the way up to 30 plus percent with value added services. But in reality, we do see more room to expand both on existing products. We just launched the Kickstart subscription program for new sellers, which is going really well. But there is more in the pipe. So I think that during this period of volatility and macro headwind, take rate expansion is a key driver for growth. I think that in the future, as we believe, where the market is open and macro turn around and start to expand, I think that the contribution of take rate is still going to be massive, but percentage wise, it's going to be slower. But for the time being, again, with the existing program expansion, but also a new program in the pipe, I think there is a good reason to believe that take rate is going to go higher and modestly over the next year quarter.

Thank

you.

Thank you. Our next question comes from the line of Brett Erickson from RBC Capital Markets. Please go ahead, Brett.

Hi, thanks, guys. Good to chat. First question is, you mentioned the stabilization at the top of the funnel, but clearly some cross currents going on with SMBs and hiring trends and everything. What do you guys need to sort of see to put marketing dollars back to work in the model? Do you need to see kind of over improvement in the macro, or is there anything that's maybe a bit more like in your control that might cause you to lean in on the marketing spend? And then I have a follow up.

Morning, Brad. Thanks for the question. So essentially,

the macro is putting more pressure on SMBs than it is on larger businesses. And therefore, acquiring SMBs is mostly a function of macro. Because right now with the current situation from a LTV to CAC, it doesn't make much more sense to continue investing more than we are. At the same time, when you look at larger businesses, mid-sized businesses to enterprise businesses, and you see the improvement that we've done both on the going up market, but also on their spend on the platform, it does make sense to invest more. And we are. And we are. And we focused our efforts there on high value buyers. And so I think the good news on our end is, and I think I said that before, and it continues to be the case, the top of our funnel contains every type of customer that we need. Yes, there is a little bit of a lesser demand or traffic coming from very small businesses, because they're not having the best time of their lives right now as a business. But we contain everything from small businesses all the way to enterprise businesses, which is good news because it means we don't need to massively invest in having a sales force or having account management to entertain those customers. I think that when that sentiment is going to change, I've called out two sentiments. One is the SMB sentiment, which is not looking well. And the other is professional staffing. And both of these indexes are going down. Offsetting these indexes by just pouring money into the market from our experience is not the most effective, which is why we're not doing it. I think that if we have signs, even the smallest signs that this is changing, the way we do marketing, the marketing automation, the sophistication of our marketing, would allow us to respond to it extremely fast. But I think that I've outlined those. These are the main components for when we can spend more.

Yep, that's great. That makes sense. And then just a housekeeping question, but one that we are getting from investors. Just curious if you can quantify how much you paid for AutoDS. I look at the balance sheet. Goodwill and intangibles ticked up pretty a bit, I guess. I wonder if that's maybe a good way to think about it or any other color you can give there. Thank

you. I think that we're not disclosing these deals. We probably have seen, but there are some items on the financial statement that indicate so that there is some cash flow component. Bear in mind that we did purchase some, we did some actual hire earlier this year. So the I think it's a few thousand of millions of dollars. So you can see that in the financial statement. Got it. That's helpful.

Thanks. Thank you.

Thank you. Our next question comes from the line of Marvin Fong from BTIG. Please go ahead, Marvin.

Good morning. Thanks for taking my questions and congrats on the quarter. Two questions for me. So I would like to just drill down a little bit deeper on going up market. You mentioned in the shareholder letter that things like dynamic matching professions and hourly contracts. Just wondering if you could give us some sense of which of those items you feel is having the most impact. I'm especially interested in hourly contracts, which it seems like unlocking a major portion of the market. Could you provide any color on what you're seeing in terms of early start on how much of your mix is going to hourly contracts? And then I'll have a follow up.

All right. Hey, Marvin. Thanks for the question. So essentially, I think you mentioned yourself, these are extremely new products. And as I've said, what we're seeing there gives us very high confidence that these are going to be very successful products. And the reason is they're dealing with very specific types of needs that Fiverr didn't deal with before. And it was important because as I've said, most customers work with agencies or freelancers offline, and they are used to working in a certain way. And I think that some of these behaviors we didn't capture well. So as an example, if you think about the market-based model, where there's predefined, prepackaged, pre-priced services that are very easy to purchase, if you have a very long ongoing relationship with a freelancer where it's mostly open-ended, because it's not like a project that has an A to Z that is very clear, a start and an end, but it's mostly on an ongoing basis, this is where hourly models come in. And this gives the additional flexibility. Again, these products are super new. What we're seeing there is they're really catering to the types of projects and services that are selling for many thousands of dollars, and are by definition longer in duration. So it's doing exactly what they were designed to do while they're not competing with the other offerings that we have because we're tailoring each of our offering into a specific use case so that for the customers, it's very easy to understand which of our solutions is the best one for

them. Got you. And totally understand these are very new products. Appreciate that answer. My second question is just on the guidance, and I think you mentioned earlier, this is a pretty seasonal quarter, correct me if I'm wrong, but typically a pretty seasonally strong quarter, the fourth quarter. So as we stand here at the end of October, do you feel like you have that visibility into that seasonal ramp, or is it still too early to say and still waiting on seeing that develop and how that plays into your guidance? Thanks a lot.

And I would make the question more interesting by adding the election at the US that makes this quarter even more interesting. So that despite of or on top of the seasonality and the fear with last two weeks, kind of shy in terms of fire attendance and priorities, I would say that we feel we have enough confidence to guide and beyond. We actually increase guidance or improve guidance for the quarter. And this is based on the exit point of last quarter, together with stability of the top of funnel and the strong pipeline and the value of the services. So to address the simple question is yes, we feel we have enough confidence to guide against those trends.

That's great to hear, Ofer. Thanks so much, guys. Thank

you. Thank you. Our next question comes from the line of Rohit Kokani from Rolf Capital Partners. Please go ahead, Rohit.

Hey, thank you. A couple questions. One is just on the cost side of equation. Can you talk about what your hiring plans look like? How have they trended over the last six months and any color that you can provide in terms of what end markets you're feeling about and how that translates into your hiring plans? And then second is just, I know, take rate is something that investors want to get their arms around. But over the last six months, there seems to be a nice step up in how take rate has expanded. Perhaps talk about there are some coincidental factors in terms of how you have expanded up market and that has been successful. With the extent you can provide any more color around what may have led to that kind of slight step up in the expansion and how sustainable that is. Perhaps it's about going up market. Perhaps it's AI or anything else that'd be helpful. Thanks.

Morning, Rohit. Thanks for the question. On the cost side, what I would say is hiring has done in a very disciplined manner. And we've been very disciplined on cost. But we're not shy from hiring where we have needs to further invest in product and in growth. I think we've done it in a very responsible manner. But the other question about take rate, so I would say there aren't any surprises here. And again, I'm very proud of the fact that as management, this company has been very consistent in the way in which we've built the business. And actually, look, if you look at 2024, it's a pretty impressive year. But despite the fact that we had very high pressure on the macro side, SMBs and professional hiring, we've been able to offset a lot of it and continue growing. We've been growing the bottom line, our profitability profile, even faster than we said we will because we had the opportunity. We've done buyback to increase and give more value to our shareholders. We build products that allowed us to go up market very efficiently, which we have, and they're driving the platform higher. We were very fast to respond to the opportunity of AI and made it a net positive for us and a force of growth and ability to continue investing in great products. And we've offered great products and solutions to both our sellers and buyers, and they love them. And this is why they embrace them more, which allows us to increase the volume of people that are using these tools and also increase the exposure of these offerings across our products. There is no magic. It's just consistent hard work that pays off. So to your question, do we think that there is anything coincidental? Or if we think that there's any reason to think that this would not be the trend moving forward, the answer is no. Because as I've said, it's a result of

very

methodical,

hard and consistent work.

Thank you. Do you have any follow-up questions, Rohit?

If I could squeak in a couple one more in terms of capital allocations and debt and buybacks, any latest, excuse me, any updates on the convertible notes as well as the status of any additional share buyback authorization?

I will start by saying that we are lucky or smart to have sufficient cash to fulfill all obligations, including the convertible note, if time kinds by the end of next year. We have the flexibility to decide throughout this period. And to react to market conditions and any opportunity. But again, we have sufficient cash to stand against those liabilities. I think in terms of shareback authorization, we did some shareback this year. I think we are on top of this topic to make sure that we do our best and prioritize the shareholder's value in the long term. So there's nothing to update as of now. But I recommend that you guys stay tuned to see how we react again against the shareholder's value.

Great. Thank you.

Thank you. We'll take our last question today from Josh Chen of UBS. Please go ahead, Josh.

Hi, good afternoon. Thanks for taking my questions and congrats on a good quarter. I've got two questions. One is on the take rate guidance going up. Could you talk about what factors drove you to be able to raise your take rate guidance and what kind of surprised you in that regard? And then secondly, just on auto DS, does that business happen to have a very seasonal dynamic in Q4 with the holidays? I'm just wondering whether revenue contribution is stronger in Q4 than

other quarters. Thank you. Good morning, Josh. Thanks for the question. Take rate

guidance, again, not massive surprises. It's just working. And maybe it's working a little bit better. I called out the fact that auto DS had a slightly better quarter than initially anticipated, which had some contribution. The same goes for our other take rate driving product. So that is why we have the confidence and that's why we guided the way we did. In terms of auto DS, look, every business, including fiber, has seasonality factor. And there is a seasonality factor in Q4 for fiber as well in Q1. And the same goes for any other of our businesses. We're not guiding specifically to any one of our businesses. Again, it's a small contributor at this point. We're happy with how it's growing and it gives us nice contribution, but it's still small. We're not guiding specifically. It's a sauce business, which is in many ways different than a lot of our businesses, which is one of the reasons why we like it and it allows us to extend and proliferate our different offerings. And as Ofer said, we're guiding based on how we're seeing the previous quarter ending, this one starting. And that's it. I don't have that much more color to

add. Okay, great. Thanks for the color and the time. Congratulations, good quarter. Thank you.

Thank you. We have another question from Andrew Boone from JMP Securities. Please ask your question, Andrew.

Thanks so much and good morning. Nika, in the prepared remarks, you talked about the vision of expanding fiber beyond a marketplace and adding more tools for freelancers and I guess users of the platform overall. Can you just expound upon the vision of what you might be going to offer? What does that start to look like? And then in the letter, new cohorts were called out as outperforming COVID cohorts. Can you guys just help us understand COVID cohorts given their size and the importance of what that's been historically for the business, kind of how those are trending? Are you guys seeing stabilization there as we continue to move away from COVID or is macro overwhelming that?

Thanks so much. Yeah, I think, Andrew,

thanks for the question. There isn't that much more I can talk about the vision and this is because of competitive reasons and because of the fact that we do want to keep some nice surprises for our community and for the market. But I think I've alluded enough in where we make our investments and how we think about our products and how we think about this combined opportunity for intelligent machines to work with extremely talented people. I think that around that space, there's a lot to do and we are and I'm super excited and I'm not you know and talk about this more, but I will say that we'll be happy to share news as soon as we have some interesting things to demonstrate. In terms of COVID cohorts, yeah, I mean, yes, they're larger in size, obviously, and we know that. These cohorts are pretty stable at this point. There are a few years into maturity now. And you know, I think it's worth calling out that the efforts that we're doing to focus on high value buyers, we do see that cohorts of the last two years are performing better than COVID cohorts. So it's not just the fact that there's a maturation phase into these COVID cohorts, it's the fact that newer cohorts are different in quality because we focused more on high value,

which

also is something that you see on the spent provider that

is

growing very nicely.

Thank you. Right, thank you. We have

reached the end of the question and answer session. Thank you all very much for your questions and I'll turn the conference back to Mihal for closing comments.

Thank you, Amber. You've been wonderful in running this call. I appreciate that and I appreciate everyone for dialing in and giving us some great questions. Looking forward to talking to you

very soon. Have a great day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.