Hello everyone and thank you for joining the Fiverr Q3 fiscal 2021 Earnings conference call. My name is Doris and I will be moderating your call today, though I'll hand you over to your host Jinjin Qian. I would like to remind you if you'd like to ask a question during the Q&A session at the end of the call. If you have joined us online, please use the request to speak flag icon. Please unmute yourself lock key before asking a question. I now have the pleasure of handing you over to Jinjin Qian. Please go ahead.

Thank you, operator. And good morning, everyone. Thank you for joining us at Fiverr's Earnings Conference Call for the Third Quarter ended September 30th, 2021. Joining me on the call today are Micha Kaufman, founder and CEO and Ofer Katz president and the CFO. Before we start, I would like to remind you that during this call, we may make forward-looking statements and that these statements are based on current expectations and assumptions as of today. And Fiverr assumes no obligation to update or revise them. A discussion on 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 Factors section in Fiverr's most recent Form 20-F and other filings with SEC. During this call, we'll be referring to the 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 we issued today. And our shareholder letter, each of which is available on our website at investors.fiverr.com. And now I will turn the call over to Micha.

Good morning, everyone, and thank you for joining us on the call today. We are very excited to talk to you about recent developments at Fiverr. Q3 turned out to be a very strong quarter with revenue growing 42% year-over-year above the high-end of our guidance. All KPIs, including active buyers buyer intake rates performed really well too. Our business, including the traffic to our platform improved from the hyper seasonality that we experienced in the earlier part of Q3. This is by no means to say that the uncertainty, and impact of COVID is over. However, the strength and resilience of our business once more powered us through these volatile times. We believe the secular trends over work and the need for digital transformation are here to stay well beyond the pandemic. Businesses need to stay competitive in their talent strategy to be adoptive in their ever-changing digital landscape, to creatively address the skilled labor shortage and to be nimble and efficient in execution. Fiber with our vast catalog are resilient community investing cloud services and product experience continues to empower freelancers and businesses across the world in achieving these goals. I'm very proud of the entire Fiber team in delivering strong results quarter-after-quarter. So we can invest aggressively in long-term initiatives. So today, want to spend some time talking to you about how we envision the future of work, and how we're putting a few important pieces in place as we plan the next 10 years of Fiverr. After that, Ofer will provide more color on the quarter. When we consider the total addressable market, it is important to note that the majority of freelancing still happens offline. We believe offline channels will continue to be a big part of how businesses gets connected with freelancers, just like…

Thank you, Micha. And good morning, everyone. We are excited to deliver another quarter of excellent results as medium of businesses continued to come to Fiverr to client and purchase digital services. Revenue for Q3 was 74.3 million, up 42% year-over-year, driven by a 33% growth on 20% growth on , and a 140 basis points expansion on pay grade. This is especially impressive considering the 88% growth we had in Q3 last year, translating to a 166% revenue growth on a two-year basis. That they could decrease was driven by EBITDA impact from the 50 basis point increase in service shave the continued expansion of seller tools, including Promoted Gigs and Seller Plus as well as additional contribution from ClearVoice, Fiverr Learn and Fiverr workspace. We continue to move up market with high-value buyers, now representing 62% of coal marketplace revenue up from 57% in Q3 last year. The growth contribution from high-value buyers is driven by two factors. First, the number of high-value buyers grew significantly faster than the overall buyer growth. Second, the average spend per buyer for high-value buyers is many times more than average marketplace than per buyer. Repeat buyers those who joined Fiverr over a year ago, contributed to 58% of revenue and core marketplace, up from 55% in 2020. Our older cohorts continue to spend at elevated levels compared to pre -pandemic. And we continue to see recent cohort in 2020 and 2021 to form better than a typical cohort in previous years. Adjusted EBITDA for the quarter was 7.3 million representing adjusted EBITDA margin of 9.8%, an improvement of a 180 basis points over Q3 last year. We have continued to improve our operating leverage and our ability to generate consistent positive adjusted EBITDA while growing our top-line at a significant pace,…

So if you would like to ask a question, please press star 441 on your telephone keypad. Please note you'll wait a couple of seconds for all attendees to register the question. Our first question comes from Nick, Jonathan CTP's go ahead, Nick.

Great. Thanks for taking the questions. I guess, two -- around the acquisitions one, can you touch on what the impact of 4Q guide is from the acquisitions this quarter, just so we can try to tease out what's organic and what's additive from CreativeLive live in Stoke Talent. And then the second question, maybe taking a step back. How should we think about Stoke Talent and in terms your of strategy to go more up market, does this go further than the larger SMB that you were focused on, can Stoke Talent start to attract enterprise clients. Maybe called Fortune 500-type client. Thanks.

Hey Nick on the first part of the question, on the fourth-quarter guide, you shouldn't assume any impact, not time they poke line on the bottom line the two companies are considerably small. And the overall revenue and expenses are not material to where we are today. And then as for your second part of the question about still essentially, as we said in the opening remarks, Stoke is mostly serving customers who are spending over $100,000 a year on their freelancing engagement, which if you compare that to the average spend per buyer on fiver, you understand that there's a market gap. This is definitely serving as a way for us to engage with much larger types of customers those types of customers often times bring their existing freelancers into those platforms but overtime and they need access to additional freelancers, which we can serve through our market base and be able to serve that specifically worked. this works very well with Fiver business as well. So we definitely think that this is extremely strategic its a young Company just starting but the pace of growth is very nice and we're very excited about it.

Great. Thanks for taking the questions.

Thank you.

Our next question comes from Doug Anmuth from JPMorgan. Please go ahead, Doug.

Great. Thanks for taking the questions. Hope you guys are doing well. Maybe first just on take rate, 140 basis points of increase year-over-year offer. I know you mentioned basically a third of that. Sounds like it's coming from the increase in service fees, but can you help us understand kind of the other 100 bps plus across Promoted Gigs and Seller Plus and ClearVoice some of the other things you mentioned there. And then also how you think about where take rate can go over time and then also just I know hyper seasonality, you kind of talked about getting through perhaps the worst of it, things getting better. Just I know you're not guiding to 2022, but as you look towards next year, or you just curious to get your early thoughts around just whether it's seasonality you think kind of returns to a more and more type of position there. Thanks.

So on the part of the question. So yes, I think this is on the answer I'm going to be pretty consistent to the answer we gave previously due to the change we did on the services and the rest is relying on the other services we are promoting, which are the higher take rate. One good example is the Promoted Gigs. Second example is the Seller Plus that's we initiate

two or three quarters ago. So this type of add-on services, whether it's on the supply side or on the demand side is and this is increasing the take rate. As these services are becoming more popular and adopted by the audience, we anticipate the take rate will increase for the time being. So that, again, consistent with what we've seen and since went public take rate is growing moderately quarter-over-quarter we anticipate this is the case for the next few quarters.

Regarding the hyper-seasonality, so essentially, on -- we've been talking about this since previous quarter. So hyper-seasonality started in the second half of May. I think the worst 12 it was July and it stabilized in August with a moderate improvement in September and October. This is what we're seeing. Okay. So our point is that it's still early to say that the COVID impact is behind us and hyper-seasonality is over, with the upcoming holiday season could be a little different this year. Many people didn't get to visit their families last year. I think we've seen from reports of travel and earn airline that this is going to be slightly increased this year. But we think that the unwinding of COVID will continue throughout the next few quarters. The good news for us is that the business fundamentals are very, very strong. We're -- we have a huge -- the business is going extremely well. Cohort behavior is better than it was pre -- pre COVID. So on a normal, we're saying is we should be a little bit cautious about how we view the next few quarters because these are stays in maybe the unblinding COVID and some uncertainty should be built into it.

Okay, that's helpful. Maybe just one more to follow up. You mentioned creative live. Obviously expands the e-learning capabilities here. Just curious what other key investments you think you need to make in that direction as you lean into professional training, more. Yeah.

So creative live, it's really a way for us to take the program that we started with Fiver Learn Box forward without being thousands of high-quality classes in both strong assets in product and contribution. It really gave you have beyond MRD. As we said, we want to provide opportunity for commented people to advance their careers and translate their learning and training into work achievement. So the integration of creative livelihood, what we're doing is extremely important. As we think about working and getting into new verticals the ability to create training programs that would allow professionals to get into those verticals we think is critical in these solution and this allows us to create 360 ecosystem that takes care of many different aspects. And so I think how good the creative lives that the pilots of team that built this product of the year, it’s an extremely important asset for us in this strategy.

Great. Thank you bro.

Our next question comes from Jason Helfstein from Oppenheimer please go ahead Jason.

Thanks for taking a question. I guess, one, how are you thinking about the impact of the acquisition or how should we think about it? I mean, clearly there's product behind that, either product acquisitions, but how fast do you think you can integrate them and then we potentially see the impact on the business? Is that maybe more of a '23 impact or could we actually see some in '22? And then from a -- given there's a lot of discussion about kind of leaving tech jobs because of burnout. Are you seeing more of these people effectively laborers like joining your marketplace and just how are you thinking about that over the next six to 12 months Thanks.

Jason. Good morning. The impact of the acquisition, I think -- I think you're right. I think the impact should be expected in 2023 it's obviously going to take a few quarters moving integration. Definitely so expect to have a very meaningful impact in the coming quarters. As to what we're seeing with employees leaving their jobs. I think that in a sense what we're seeing, there is the great resignation, but people don't just resign they need to assume new jobs. And I think that this is more a rotation than just resignation. And I think people yes, some people are burned out, some people are just rethinking their careers and this is a good opportunity. Some people rethink how they want to have work life balance We have been seeing a steady -- steady increase in freelancing in general. So yes more people are engaging in freelancing but I think this is not largely driven by debt because this is more of a rotation. And because about you're seeing -- you're seeing salary inflation and all of that because people to leave job, it creates a lot of demand for new talent, which creates opportunity for that talent to demand higher salaries. So it's kind of a cycle that feeds itself. We're not sensing like a massive, massive change. I think that most of the resigns are actually being reemployed by other tech companies. It's just a way to make a change. Thank you.

Our next question comes from? Bernie much turn-in from didn't need to? go ahead. Bernie.

Hey, thanks for Chris on for Bernie. Paydowns morning. There's still Cabot sales force and would that sales force as they sell into those businesses doing over a 100,000 in revenue, would that help your SMB business? Is that kind of could there be an add-on effect there? Is that the right way to think about it?

So yes. Stoke does have a handful thin markets, circles that compliment partners you EPO, together with they take marketing, inbound. I think Stoke is -- is a very early stage Company, grows really fast. Yet to be said, it's still early to see how, how we developed. In the next few quarters. so that's the plan on VSMB business and I think Niko (ph) mentioned it earlier, it can take some time to productize the synergy to combine between, between these total and Fiverr business, which is where we're are heading.

Yes. So just a little comment on what was said, the need to create a holistic solution for businesses. So. businesses come to us and new with Fiverr Business for their purposes, and they may have other freelancers that they have previous relationships with, the Stoke platform should serve these customers very well. So this is, this is a great channel in adding large customers into the stoke, into the Stoke product. A lot of Stoke growth has been organic and yes, in combination with

sales efforts, both inbound and outbound. But generally speaking, is Ofer Savi it's a young Company. We would just doesn't. Customers at this point. We're very happy to see that the growth is going extremely, extremely well. And we'll be happy to provide more details on that business in the upcoming quarters.

Our next question comes from strat Ericsson from RBC Capital Markets. Please go ahead, Brad.

Just a couple from me. First for Stoke. Can you just talk about the mechanics there that you envision when you think about bringing an enterprise onboard. And then like you said, transitioning their offline freelancing activity to the online world. What does that look like? How hard is it? Is there a basic assumption when you sign up for Stoke that they want to bring everything online or is that not how it works?

So thanks for the questions. As we always said, the majority of freelancing activity about 95% of it is a fan, which means that it's, it's mostly based on word of mouth and reference from people. So when people are looking for talented three months to work with, they use their networks mostly, to get in touch with them and overtime businesses are being groups or cohorts of freelancers that the organization is used -- as used before, and they become a resource for the organization. What's Stoke provides is a way to standardize that relationship because there's so many difficult touch point in having the entire very diverse group of freelancers, agencies, studios, work with an organization. While keeping the same, the same compliance level and managing budget, and managing communication and so forth. And Silk really allows these organizations to standardize. But the reality is that organizations over time needs more and more comment to engage with. So sure they can use their previous networks to try and source these freelancers. Or now, because we're integrating Stoke and Fiver, they can be enjoyed the fact that we have an amazing one of the largest pools of talent in the world. And we can help them top into that talent and work with that talent, the way they are working with. At the end of the day, if we think about the future, there's going to be multiple ways to engage with freelancers. Fiverr wants to solve for all of them. We don't care how you -- what's your preferred way of working freelancers, we want to be able to provide a simple, intuitive, easy-to-use solution for that. And the idea is that we're going to integrate all of these solutions into one ecosystem and Stoke plays a great role in doing that. So bridging deal flying to the online. Stoke is just another incredible way for us to do so and obviously it's focusing on larger types of customers that have their own groups or freelancers that they have relationships with.

Got it. And then maybe just a follow-up. You mentioned a couple of times here this morning that we still have may have a few quarters as we hopefully come out of COVID, which creates some uncertainty and caution. Can you just help us reconcile why that would be? It seems like that would be a good thing for Fiverr, particularly given that we don't have to worry about hyper seasonality, it would seem just so -- maybe just a little more help there would be great.

So the beside the hyper seasonality, the fact that we're lapping a very strong growth of our active buyers during the last few quarters since the way we calculate active buyers is on a full-quarter basis of activity. What we anticipate in terms of modeling is that we'll see some headwind in active buyer growth for the next few quarter sales, so that -- that's -- that's the main place where we anticipate the headwind, as we look -- as we look to the future.

That's great. Thanks.

Hey, Our next question comes from Rohit Kulkarni from MKM Partners. Please go ahead Rohit.

Great. Thanks. A couple of questions. One on marketing and any early signs of success from the brand marketing campaign that you could share. And as part of marketing has a lot of internet companies are facing uncertainty with user acquisition, traffic acquisition and whatnot. As part of your buyer and traffic acquisition, are you seeing any of that given the way you spend your marketing dollars? And then I have a follow-up.

Thanks for the question. Yes, we have launched a new brand and we're doing -- we're launching its multichannel. So to combinational TV digital out-of-home. and we're doing it multi-country, U.S. U.K. Australia, Germany. It depends on what we're seeing from the campaigns so far, are it was just launched, are assuming positive. So we're very happy with it then. And as we always said, the strategy of binding brand marketing and performance marketing is key to what we -- what we're doing. In terms of what we're seeing as trends in buyer acquisition. I think that the performance speaks for itself, meaning, the time to return on investment hasn't been longer. It's about a quarter the lifetime value of our customers is increasing all the time. Essentially, we're not just buying more cohorts for customers, but the customers that we acquire are actually spending more with us over time and their contribution to the overall revenues of Fiverr increasing, increasing pretty much of the I mean, when you look at high-value buyers, they're contributing 62% of our revenues, which is 500 basis points more than last year, which is a very significant growth. So what we're seeing is we're seeing that we're able to maintain the efficiency of our marketing both the combination of brand and performance is do we target higher lifetime value buyers, which we're very, very happy with.

A follow-up on. the hyper seasonality and going to travel. The issues that you're excited bike in August as an are you assuming any kind of change in behavior or kind of any change in linearity of typical F4Q. As you get into the late December period. Perhaps there is going to be more travel this year than even 2019. Even so, I'm wondering if your guidance for 4Q resumes, any change in how buyers or sellers might behave later in December.

So again, I think that there is some level of course, as we are baking into the guidance is based. And my point about this was that we may in the upcoming holiday season a little different than previous years. And I've explained it by saying that I think at least last year, a lot of people, if you think the US as an example, the holiday season is a great opportunity for family few night, right? And make a trip and spend time together. Last year this was impossible. I think this year it's probably going to be slightly higher than previous years. And maybe the holiday season could be slightly longer than usual. I mean, people taking time off a little bit earlier than usual. But again, I'm speculating and we want to do is just to say that we may see some different behaviors. We have seen seasonality different this year. I think. It's not just, many businesses reported about this to the market. And so just want to be cautious, but all of what we're saying here, when we said that the seasonality is more moderate. It’s not at this point season it's not hyper seasonality, at least in September or October. and we've baked that into the guidance. So hopefully that provides more color.

It definitely does. Thank you,

concluded and will hand back to the management team for any final remarks.

Thank you. Thank you, everyone for spending your morning with us. Have a great day and we'll talk to you soon. Thank you.

This conclude the conference call. Thank you for joining. You now can disconnect your lines.