Fiverr International Ltd. Aktie

Good day, and welcome to the Fiverr International Limited Q3 2026 Earnings Conference Call.

[Operator Instructions]

Please note, this event is being recorded. I would now like to turn the conference over to Emily Greenstein, Senior IR Manager. 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 30, 2026.

Joining me on the call today are Micha Kaufman, Founder and CEO, and Esti Dadon, 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 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 Factors 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 measures is 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.

Thank you, Emily. Good morning, everyone, and thank you for joining us.

Let me start with the headline. Q3 came in ahead of our guidance. We delivered revenue of $90.9 million, above the top end of the $80 million to $88 million range we gave you in July.

Adjusted EBITDA was $14.5 million, a 16% margin, also well above our range. The beat was led by our services business, where AutoDS and our e-commerce offering performed better than expected, and the momentum is carrying into Q4, along with tight cost management across the company.

Three months ago, we told you we would run this business with discipline through a hard transition. This quarter, we did exactly that. This quarter is also a good reminder of how we run Fiverr.

We are one business with diversified lines of revenue and profit, and we manage it as one to make the top line as large and fast-growing as possible and as profitable as possible.

Within that, we are working to turn around our marketplace, and that is exactly what the transformation I'm about to walk you through is for.

Esti will walk through the details, but I want to use my time on 2 things: what is changing in how work gets found and how we plan to win in the new world.

What is changing? For 17 years, Fiverr built one of the best performance marketing engines on the Internet on top of search. That world is changing fast.

More and more journeys now start and end inside an AI assistant. Organic clicks are falling across the web and acquisition costs are rising for everyone who depends on them.

We expect that pressure on marketplace traffic to continue into 2027. But here is what has not changed. The work still needs people. AI is automating simple tasks, and the work that remains is more complex and more valuable.

That work needs a human who owns the outcome. Our top talent community remains highly engaged. This year alone, we hosted 62 events with more than 3,500 freelancers.

Most of them are top talent. Put simply, this is not a talent problem. It is a funnel problem, and funnels can be rebuilt. So how are we going to do it? Our North Star is unchanged: to become the most trusted platform for high-value, high-trust work.

Let me show you the progress across our 4 pillars. First, our push upmarket. High-value work now represents 16% of completed projects' gross order amount on a trailing 12-month basis, up from 15% last quarter.

And we continue to see businesses bring us multiphase mission-critical work. For example, a London-based private investment firm that manages institutional real estate assets came to us to build an end-to-end digital operations system.

They assembled a team of senior engineers through Fiverr and worked alongside them directly from start to finish. An outdoor recreation equipment manufacturer is building a real-time 3D design engine, so both consumers and commercial buyers can configure large play installations before they order them.

It has to carry real-world compliance logic, safety zones, material libraries, and parametric constraints. And our freelance team is optimizing close to 300 3D assets to render fast in a browser.

A European packaging and industrial manufacturer is replacing its legacy systems with a single enterprise e-commerce platform that ties together sales, real-time inventory, and fulfillment.

A Fiverr Pro team is working through continuous cycles with the client's own leadership. These are not one-off gigs. They are exactly the engagements we are building Fiverr for.

Second, matching. In an agentic world, an AI agent does not want 20 options. It wants the right one. Our knowledge graph ranks talent on what they actually delivered, not on who got clicked.

It performs 3.3 million skill extractions a month across roughly 70,000 distinct hard skills, and every order makes it sharper. The results are already showing higher gross order value, more orders per buyer, fewer cancellations, and fewer support tickets.

Third, the work platform. In Q3, we launched Mira, our AI headhunter. Mira turns a vague brief into a clear scope and a precise match. Early results are encouraging.

A Mira introduction converts at the same rate as a normal conversation on Fiverr, and the median order value for the headhunter experience is 5x larger.

Among first-time matches, cancellations on Mira work run about 1/4 lower. Every brief makes Mira and the Knowledge Graph smarter.

In 2027, Mira is expected to run across the full journey from the first conversation to order management, including mobile.

Fourth, our growth engines. This is where the new funnel is being built. We launched our first public APIs, CLIs, and MCP integrations with Fiverr, now live inside Claud and ChatGPT.

AI-sourced GMV for first-time buyers grew approximately 64% from last quarter. Where this goes is a full agentic experience. An agent finds the talent, scopes the work, places the order, and pays for it without ever leaving the assistant.

Whether a business arrives through a browser or an AI agent, it should find one place to get serious work done. One leadership update. As you know, Jinjin was planning to relocate to Israel, where our Chief Business Officer role is based.

She decided moving her family isn't the right step for them right now, so she stepped down. We respect that decision and thank her for her contribution.

The search for her successor is well advanced, and we expect to announce our new Chief Business Officer soon. In the meantime, Esti and I are running the business directly.

To take a step back, the search era built Fiverr; the AI era is where we intend to lead. We have the talent, the data, the balance sheet, and the focus to get there.

With that, I'll turn it over to Esti for the financial details.

Thank you, Micha. Q3 was a stronger-than-expected quarter where our operational discipline and strategic execution shone.

Both revenue and adjusted EBITDA came in above the guidance range we gave in July, and we are raising our full-year guidance for both revenue and adjusted EBITDA.

Today, I will review our third quarter results, update you on our cost structure and balance sheet, and share our fourth quarter and full-year 2026 guidance, along with some early color on 2027.

Third quarter revenue was $90.9 million, down 15.8% year-over-year, reflecting the continued shift away from low-value transactional work and the search-driven traffic pressure Micha described.

This was partly offset by the increase in services revenue. Adjusted EBITDA was $14.5 million, a 16% margin.

Two things drove that outperformance: a strong quarter in our e-commerce services and the cost discipline we have built into how we run the company, including tight management of discretionary spend, internal AI efficiencies, and a balanced approach to marketing.

Q3 marketplace revenue was $55.4 million, down 24.7% year-over-year, driven by 2.4 million active buyers, $373 in average spend per buyer, and a 28.2% marketplace take rate.

Spend per buyer rose 12.9% year-over-year, driven by an ongoing mix shift across the marketplace from low-value transactional projects to $1,000-plus projects.

The 25.8% decline in active buyers on a TTM basis was mainly due to the ongoing compression in low-value transactional work as well as the continued traffic and demand pressure from shifts in search that continued through Q3.

At the end of Q3, projects at or above $1,000 represented 16% of completed projects' gross order amount on a TTM basis. Programming and tech and graphics and design were the strongest verticals for completed $1,000-plus projects, both up mid-teens year-over-year.

Growth rates in these verticals slowed in Q3 due to top-of-funnel issues related to SEO disruption. Services revenue was $35.5 million, up 3.4% year-over-year and accounted for 39% of total revenue.

The upside was led by AutoDS, where a major e-commerce campaign launched in late August. The campaign is performing extremely well and is expected to continue through the rest of the year.

This is a good example of why we manage Fiverr as a whole, not as separate segments of revenue and profit.

Non-GAAP operating expenses were $62.2 million, down from $66.7 million a year ago and from $65.3 million last quarter, with the largest savings in R&D and sales and marketing.

We will continue to run a lean organization through Q4 and into 2027, and we expect operating expenses to be lower year-over-year in 2027. We ended the quarter with $316.2 million in cash and investments and generated $9.4 million in free cash flow.

Our capital allocation priorities are straightforward. First, funding the transformation that positions our marketplace for how work is found in the AI era.

Second, keeping strategic and financial flexibility in a fast-moving environment. A strong balance sheet is a real advantage right now, and we intend to keep it that way.

Now for guidance. For the full year 2026, we are raising our revenue guidance to $374 million to $380 million, up from $356 million to $372 million last quarter.

We are also raising our adjusted EBITDA guidance to $61 million to $65 million, a 16.7% margin at the midpoint and up from $52 million to $62 million last quarter.

For the fourth quarter, we expect revenue of $80 million to $86 million and adjusted EBITDA of $6 million to $10 million. That outlook includes continued strength from our e-commerce business, offset by the continued decline in marketplace traffic we have discussed.

We are 2 quarters into the transformation. We expect the shift from search to AI-driven discovery to drive a steeper decline in marketplace traffic through 2027.

We will meet that with lower operating expenses and continued discipline. That said, while we anticipate lower year-over-year OpEx in 2027, the reduction is expected to be offset by the ongoing traffic and demand headwinds, resulting in downward pressure on 2027 adjusted EBITDA margin.

We will provide full 2027 guidance on our fourth quarter call. To wrap up, we beat on revenue and profit. We raised the year on both, and we did it while lowering our cost base.

We are running a lean, disciplined company, and we are moving through this transformation with a strong balance sheet and a clear plan.

With that, we will turn the call over to the operator for questions.

[Operator Instructions]

The first question is from the line of Ron Josey with Citi.

This is Jake on for Ron. Micha, I just wanted to double-check on the fourth pillar, the growth engine. You mentioned AI-sourced GMV for first-time buyers grew 64% quarter-over-quarter.

Just talk to us about what you're seeing from buyers who arrived through those channels. And how do you think about the path for AI-sourced work to become a more meaningful share of new buyer acquisition over the next few quarters?

And then I had a follow-up.

Jake, thanks for the question. I will start maybe by saying that we're witnessing something that is no less than an earthquake on the Internet or the web as we know it.

And I've been talking about this for over a year. And I think that we're starting to see this. The Internet, as we've known it for the past 20-plus years, is going away. And it's going to completely change. It's dying.

It used to be that customers searched for things, then clicked on links. Then came to destination platforms or websites, then made a decision or an exploration, and finally placed an order or an option.

All of the layers that I've described right now are going to disappear. And there is a changing in the interest of customers between the discovery layer and the focus on the actual output.

This is changing the complete economics of search. And I think that we've seen that with the latest earnings from Google. And I believe that this is going to have a domino effect on every possible business we know now, including fiber.

No one is immune. There have been businesses that have been built over the past 20 years, and this includes all of the Magnificent 7 as well, but definitely all of the other companies, ourselves included, where right now, what we should be focusing on is that we don't have 20 years to get adjusted to this new reality.

I don't know if we have a year, but all of us need to accelerate and understand that the way customers are going to interact is getting appended. And as a result, I've called out the focus that Fiverr is putting on these new experiences, these new channels.

I've called out the fact that we're live on ChatGPT and Claude and hopefully soon on Gemini as well. And the idea is to provide customers, without leaving the convenience of their agents, the full experience.

We don't expect them to continue using the Internet as they used to. And it's very important that we emphasize the first-principles moats that we've accumulated over the years to make sure that their experience is optimized for the best output.

Now where I call this an earthquake is because unlike before, agents don't have brand loyalty. If you, as a customer, send your agent to purchase something, that agent is not loyal to Amazon or Walmart or your local business. They're loyal to the business that is going to maximize the output.

And we can talk about what it means. But the reality is that everything is changing, and the entire discovery, search, link, ads- all of this is completely changing.

As I've said, I've called it out more than a year ago. And I'm not sure I'm such a prophet, but it's more about the fact that as a marketplace, we're super sensitive to changes.

And this is why we called out that the way we do business, like everybody else, like the booking business or the e-commerce business or the SaaS business, has treated Google Search as the Internet. And this is what we optimized for, which means SEO and SEM.

SEO is going away. Because there's less traffic coming to traditional search and more coming to LLMs, which increases the ad density, which means that ads are now more expensive, which means that their efficiency is going down.

Now, if you think about what's going on in LLMs, and I'm coming back to your question about AI customers that are generating GMV through LLMs, what we're seeing is, yes, at the amount level, and this is prior to us releasing the MCP and API, which just happened.

But prior to that, what we're seeing is we're seeing less traffic coming from LLMs, but we're seeing a higher quality traffic because these are customers that have had experiences with their agents, so they come with a better, more formed intent to us.

Now we don't even expect them to come to us. We expect to bring fiber to them inside their agents and ultimately allow their agents to be autonomous in working with fiber. This is why we think that this is so important.

Obviously, I'm happy to talk about this further, but I'll stop here.

Just pivoting a little bit on services. AutoDS is driving momentum here. Just talk to us about what's driving that e-commerce demand?

How durable do you think it is? And then maybe how you think about services as a growth engine going forward?

Sure. I mentioned in my opening comments; I've sent a clear message. Fiverr thinks about its business as a whole.

Now, some vectors in our business are growing. Make no mistake, AutoDS and the team that joined Fiverr a couple of years ago are killing it. They're doing extremely well.

Yes, we're seeing some weaknesses, and we explain why on our marketplace and what we do to mitigate that. But we think about the business as a whole. And therefore, the opportunities that we have to increase businesses and grow businesses faster and contribute the top line into the bottom line- this is where we double click.

And I recommend our shareholders look at it the same way. It's a whole business with different avenues of opportunities. And those who have an opportunity to grow, we grow as fast as possible.

The next question is from the line of Bernie McTernan with Needham.

This is Stefanos Crist on for Bernie. I wanted to follow up on AutoDS. I believe there was something similar in the first quarter this year where there was a marketing campaign that drove the beat and that pulled forward revenue.

Is that similar to what's happening this quarter? And if not, can you just walk us through the dynamic there? Like, are revenues supposed to be lumpy? Are they just driven by these campaigns?

Any more color there would be great.

Absolutely. So as I said earlier, AutoDS is growing extremely well. Within our e-commerce business that AutoDS and its team are leading, there are a number of initiatives that are working really well.

So first, their software solution for e-commerce stores is doing extremely well. They've created AI tools that help those store owners generate content that is growing extremely well.

And on top of that, we are very successful, fortunately, at running very efficient marketing and capturing marketing opportunities very efficiently that are also contributing to growth.

So again, it's a mix of different things. It's not relying on just one leg, but actually a multi-vector growth opportunity that the team is capturing very well.

Yes. And I'll add that the campaign that we referred to started in late August, and it was very successful and better than expected. And it's a partnership with a large e-commerce player, and we expect that to continue into Q4.

So that's what led us to be able to update our guidance on the top line.

And then on the LLM partnerships, I think you mentioned ChatGPT and Claude.

Can you just talk about the economic model there? What's the take rate? Who owns the customer? And I know it's early, but how do you expect to handle repeat buyers?

Yes. So the economics are unchanged. We are thinking about those integrations as the new top of the funnel, which is, as I've said before at the beginning, very focused on the outcome and very, very friendly to the agent of the customer.

It is not changing the model. It is true that we've been one of the first 100 brands to also get exposure to advertising on ChatGPT, and I've called out some initial information there, but I think it's very early on that model, and it is probably going to be embraced by other LLM providers.

But the main thought around this is we want to meet the customers where they are. And they're shifting from their usual browsing experience and search and clicking links into an outcome-based experience where they anticipate receiving the entire experience without leaving their agent.

And by the way, rightfully so. And that is why we're doing these integrations, these deep integrations with all major foundational models and agents.

The next question is from the line of Marvin Fong with BTIG.

Maybe to start with on Mira. You talked about expanding that in 2027. Should we expect that to apply to all your categories and traffic by then?

Or how is that exposure going to kind of phase in in 2027?

Thanks, Marvin. So the idea behind Mira is the understanding that there are fundamentally 2 ways to experience working with the talent.

One is a discovery layer. And that allows customers to do more on their own when they think about picking the right talent or the right service and the right price and everything.

The other is an approach that you should think of as a headhunter. A headhunter really does a lot of the work of qualifying the 2 sides of a transaction.

For clients, it's qualifying talent. But for talent, it is qualifying that the client that stands across from them is the right client for the services that they offer. This saves both sides a tremendous amount of hassle and time.

Now, headhunting is not necessarily the right experience for everyone. And for us, it's really important to surface Mira for the right customers at the right time.

Now, because we've developed the knowledge graph and we collect a tremendous amount of information about both the clients and, obviously, about the talent, we can do very bespoke types of matching. And this is what Mira really focuses on.

So as we introduce this, we've begun slowly to ensure that the quality is actually getting delivered. And the way we measure it is we measure it by success and success is getting measured by the happiness of the fulfillment that we can deliver.

Once we saw that this was actually outperforming everything else we've created in the space of headhunting or sophisticated matching, we started expanding it across entry points.

Again, we want to be very cautious because if you introduce Mira to the wrong person, it's like introducing a headhunter for someone who doesn't want headhunting; you don't get the right results.

So our expectation over 2027 is continue expanding this offering as we learn and we qualify which clients Mira is great for. And that's exactly what we're doing.

We're seeing some expansion right now. It's very successful, and we'll continue scaling this over time.

And a follow-up question on the quarter: the third quarter, the spend per buyer, it remains very strong here. But on a dollar basis, I guess, sequentially, it rose $5.

That's maybe a bit less than in recent quarters, and I know you called out the growth in the higher-value projects, but could you just square those 2 metrics?

Are we seeing some weakness somewhere else in the spend per buyer metrics?

Yes. Thanks, Marvin. So spend per buyer is growing because we're seeing higher 100-plus projects. We said now it's 16% of our GOA.

But that being said, the traffic headwinds that Micha described are affecting the entire marketplace. So what we're seeing is, and what we're expecting is, the spend per buyer to continue to grow.

However, there would be some effect on the entire transactions, so it would be on a slower base.

The next question is from the line of Jason Holstein with Oppenheimer.

This is Julian on for Jason. You've outlined a number of initiatives to adapt to how AI is changing the top of the funnel.

How should we think about those efforts translating into improved acquisition trends in 2027? And then I have a follow-up.

Julian, thanks for the question. The answer is it's very hard to tell. When you think about AI integrations, there is no blueprint for how this is done. There is no best practice on how this is done.

As I've said at the beginning, agents do not have brand loyalty. They don't care. So you need to optimize for things that they do care about. I'm not going to go into the details for obvious reasons, but it's uncharted territory, much like doing SEO 20-something years ago was uncharted.

So it's very hard to extrapolate what the implications of this on the top funnel is going to be. Now, as I've also said, the traffic that we're seeing coming from agents is increasing.

The business is increasing, and the quality is increasing. And building on that, we're making it much simpler for those agents to actually perform actions on behalf of the clients, their owners on fiber.

We are full steam ahead on this. So whenever I have something specific, or at least solid enough to make some projections, I promise to share those with the market.

And then I know you guys have already discussed AI agents a lot during this call, but could you try to like size what the opportunity here is for the top of the funnel?

And then over what time frame do you think this could really grow? Is this just like a '28, 2030 type of thing? Or is this more imminent?

Well, the necessary speed is yesterday. The horizon is harder to anticipate. Now look, I've called out this domino effect. And it's actually much more complex than we can get into in such a short call.

But essentially, it is changing pretty much everything when you think about the movement from top of funnel to the discovery or the destination experiences.

Even if you think about things like booking a hotel or shopping for something. Everything is changing to the outcome, not the experience that gets you there.

The same applies to software. You don't care as much about the software that is doing the job. You are only focused on the output regardless of what happens behind the scenes.

So this is going to change the software, including the enterprise software space as well. Now, the rates of change, unlike 20 years ago, are extremely fast, which means that the ability to offset these changes is very complex.

I'll give you an example. Think about Microsoft and their dominance in enterprise software. Now, if they put a lot of emphasis on Copilot as a channel for customers, and Copilot can actually deliver the output, then it's going to be harder to sell enterprise software because you care less about the software; you care more about what the software can output.

Can you offset by crazy growth on Copilot on the decrease on enterprise software decline or potential decline? I don't know. Each brand would have to figure out how to do this.

So the urgency of doing this is immediate. The horizon of how fast customers are going to embrace these new types of experiences and funnels is unknown, but the assumption is it's going to happen very fast.

And again, you see Meta with Muse, and you see Instinct. And then you see the announcement of Anthropic with Duo, and you see ChatGPT with Dots. And there's a long line of agents that should do things on behalf of their users.

This is going to happen extremely, extremely fast. That is the assumption, which makes it very urgent to act on and realize that the entire ecosystem is changing.

And definitely, by the way, the ad space. Please again, agents don't care about ads. They don't click on ads. The click to destination has 0 meaning; they want to get to the output, to the result.

So it sounds bombastic, but again, I've been talking about this for over a year, and it is happening super, super fast as we've just seen in the past 2, 3 days.

The next question is from the line of Matt Condon with Citizens.

My first one: can you talk about what you're currently seeing as far as the SEO disruption?

My point is, have we seen any sort of stabilization after an impact? Or are you continuing to see trends worsen here for SEO? And then, Micha, my second question: I know we've put on AI agents a bunch, but just another follow-up here.

Just as they continue to handle the discovery and purchase process for buyers, how are you thinking about the potential implications for Fiverr's direct customer relationships, as buyers are increasingly transacting with third-party agents rather than going to Fiverr directly?

Does that create a risk of losing brand affinity and customer loyalty over time and change the marketplace into an even more transactional type of marketplace versus something that people come back to time and time again?

Thanks, Mat. So on SEO, traditional SEO, or the impact of SEO, is decreasing to the point where it's going to be dead very, very soon.

And the reason is that when you have less traffic coming to traditional search, or the traffic that comes to traditional search wants the Gemini component, wants the AI component rather than the links, there's a need to increase ad density. I think we heard that coming from the largest share search engine.

When there is very high ad density, there's no space for organic results. And so the impact of SEO is likely to decrease to the point where it's no longer important.

Now, we used to think I say used to think this was just 6 or 12 months ago that GEO was going to replace SEO, which means generative engine optimization.

But I don't think that this is the case at all because, again, what agents want to do is to provide outcomes for their users. They don't want to replace search by having search done within their LLMs because customers are not interested in getting the search inside LLMs and then going to destinations.

They want everything in the same place. And therefore, the integrations need to be much tighter and the understanding that the agent is actually doing the work on behalf of the customer.

You asked a question about brand. And I already think that I talked about this. I think that brand loyalty is changing. And yes, it is a very high risk because agents don't care and they don't have brand loyalty.

Therefore, you should surface the differentiating layer into the agent layer. Luckily, over the past 17 years, we've built a long list of these moats that I kept talking about in that context. And sure, it's going to be harder because it's not going to be dependent on brand loyalty.

But if you use your asset correctly, then you are likely to get the output chosen by the agent with your platform. I think all brands have to play that game, understanding that the powers are changing in this ecosystem.

But we started, and we're doing this, and I'm confident that the assets, the data assets, the fact that we have so much nuanced transactional understanding, the fact that we know how to guide how a project should be managed and orchestrated, the fact that we know where the importance of human judgment is within that ecosystem, the trust, the quality, the reliable fulfillment- all of these are increasingly important sources of differentiation.

And so we believe that this transition could happen significantly faster than previous transformations on the Internet. And this is why it's critical to play in that game as aggressively as possible, as fast as possible.

We'll take our last question from Brianna Kanju with UBS.

This is Brianna Kanju on for Josh Chan. A couple of questions on my end. First, can you talk through how Marketplace trended in Q3 versus expectations?

And a follow-up to that, when you say steeper decline in marketplace, does it mean steeper than expected even 3 months ago? And can you go into more detail on why that may be?

Yes. So in the last quarter, we called out the traffic headwinds, and we saw those coming into effect in Q3.

So it was within our expectation, our expectation first-quarter range, and it was there. What we are seeing is continuing in Q4, and we expect that traffic deterioration to continue and to increase by the end of the year and also towards 2027.

And that's the reason we're investing in all the things that Micha just talked about: opening these new traffic channels, the transformation that we are undertaking, and upgrading our marketplace in order to support high-value transactions. So all of these are actually being done in order to solve those trends that we are seeing.

And then I guess a follow-up. On capital allocation, I know a lot of investments being made on the platform, but curious if more M&A is appealing at all right now, for example, like with AutoDS?

M&A is not on the table now. Our focus is investing in the transformation.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you, Maria, for moderating today's call, and thank you to everyone who dialed in. Wishing you all a great day, and look forward to chatting with you later.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Fiverr Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Emily Greenstein, Senior Investor Relations Manager. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the second quarter that ended June 30, 2026. Joining me on the call today are Micha Kaufman, Founder and CEO; and Esti Levy Dadon, 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 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 Factors 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 measures is 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.

Thank you, Emily. Good morning, everyone, and thank you for joining us. Q2 was a transitional quarter, reflecting an ongoing compression in high-volume, low-value transactional work driven by accelerating AI adoption.

As LLMs continue to evolve rapidly, we're seeing our customers accelerate their adoption of AI and workflow automation. Today, high-value work represents 15% of our completed projects' gross order value and is expected to continue growing while the transactional base that makes up the remainder continues to compress. That mix is why the strength of the high-value business is not yet visible in our headline numbers and why every investment we are making is aimed at shifting it.

So based on this, there are 2 reasons we are excited about the upmarket shift: the ability to attract untapped demand, and the opportunity associated with projects between our current spend per buyer and high-end projects.

Over the last few weeks, we've seen clear deceleration in overall marketplace traffic and demand, a trend that has carried over into Q3. We believe that recent model updates across various LLMs are a contributing factor behind this softness and are confronting these headwinds head on. We are not competing for that work. Instead, we are aggressively executing our push upmarket towards the higher-value work where demand is growing.

Navigating this structural shift requires intense financial discipline and thoughtful capital allocation, which Esti will unpack shortly. We have both the team and balance sheet to execute through this transition, and our focus is to deploy our resources where they generate the highest long-term return. Fiverr's multiyear transformation is fundamentally about moving from a transaction-oriented marketplace to a trusted end-to-end work platform for high-end, high-value projects.

Put simply, AI is automating simple tasks and Fiverr is moving toward larger, longer-duration projects where AI deployment meets human judgment, strategic partnership and accountability. This is a profound evolution in how the work on our platform is matched, delivered and managed. Transformations of this magnitude require patience. We expect the financial impact to build over several quarters, but our North Star remains unchanged: positioning Fiverr as the ultimate destination for high-end high-trust work. And while the financials will take time to catch up, I believe that the underlying operational metrics are proving our strategy.

Let me illustrate that across the 4 strategic pillars we outlined in our shareholder letter. First, our push upmarket continues to validate our strategy. Clients completing projects valued at over $1,000 continued to grow this quarter at 13% year-over-year on a trailing 12-month basis. While the macro environment is volatile for smaller buyers, we see areas of strength in our high-value buyers, particularly around programming and tech and graphics and design. Clients completing projects over $1,000 in programming and tech grew 34% year-over-year, while graphics and design grew 25% year-over-year on a gross order amount and TTM basis.

From an AI services vertical perspective, we're seeing a clear evolution in how clients deploy AI with us. In commercial video and content generation, clients are using AI to scale their performance marketing. Demand for AI user-generated content video ads surged 265%, while AI video ads rose 63%. Businesses aren't just experimenting. They are actively using freelancers to produce commercial-grade media at a fraction of traditional agency costs.

In technical integration and agentic workflows, buyers are moving past basic chatbots toward complex production setups. Search volume for AI voice agents jumped 49%. AI mobile app development rose 92% and AI website development grew 39%. The biggest opportunity here is the shift from generic AI to what I call personal AI, AI built into the specific workflows of a specific business. Businesses, both tech and traditional, understand that automating their businesses is not a nice-to-have decision, but a do-or-die decision to stay competitive.

These are demand signals from our own marketplace. And as foundational AI models get more powerful, the execution gap widens. Businesses need skilled talent to orchestrate these tools into functional revenue-generating outcomes.

This quarter, we also continued to see businesses come to us for those multiphase mission-critical projects. For example, one, a growing distributor that recently used a multidisciplinary freelance team on our platform to architect their entire B2B wholesale inventory and logistics ecosystem. This isn't just custom code; it's deep operational software running their day-to-day supply chain, ultimately setting up for a Phase 2 rollout of a retail POS.

Two, a manufacturer replacing a decade-old legacy system with a ground-up rebuild of their custom 3D design software. By tapping into top-tier engineering talent on Fiverr, they're integrating their new ERP system and driving a complete digital transformation.

Lastly, an entrepreneur building a stadium access platform complete with secure ticketing and automated post-event photo monetization. By coordinating multiple APIs and webhooks across payments, storage and analytics, our freelance talent is delivering complex integration-heavy consumer platforms at scale. This is where the market is headed, and our target remains this segment of long-duration, high-value engagements.

Our second pillar focuses on systematically upgrading our matching infrastructure to make trust and quality native to the user experience. We are leveraging our proprietary Knowledge Graph to capture incredibly nuanced client intent across 4 vectors: the client, the talent, the scope and the order itself.

We recently began development of live talent skill-extraction capabilities. And based on early testing results of over 450 mismatch events, we were able to structurally resolve as high as 58% of conversation skill mismatches, directly tackling a major pain point for high-value order cancellations.

Additionally, our newly developed Graph Neural Network model, which helps improve matching capabilities, showed a 7% decrease in cancellation rates for dynamic matching compared to our current model in initial tests.

Our third pillar is about moving Fiverr beyond passive matching into an active comprehensive work platform. We are building a standardized fulfillment layer engineered to dynamically safeguard project success. Phase 1 of this framework is now live in production. It is currently evaluating transactional quality, reaching as high as a verified 91% precision rate across over 84% of completed projects in our initial testing.

This architecture is designed to give us real-time telemetry and sentiment signals. It allows us to track project health, mitigate friction points before order completion and create the exact infrastructure needed to seamlessly integrate our marketplace with advanced agentic business workflows.

Our fourth pillar centers on expanding our growth engines to attract the right kind of demand. We have moved our advanced semantic onboarding models and corporate KYC initiatives into production. These systems capture deep corporate profile data the moment a business joins and route that demand directly to our highest-performing talent. Our development test results drove an 8% lift in new customer conversion.

We are also opening up new highly targeted acquisition channels. In June, we launched a dedicated discovery campaign targeting e-commerce merchants looking to scale their TikTok shops. Our goal is to capture higher-value merchants, including Amazon FBA and Shopify merchants and funnel them into repeatable long-term service journeys on Fiverr.

To close, we are repositioning Fiverr deliberately to where the value is higher-end, high-trust work where human expertise, project orchestration and accountability are irreplaceable. The operational signals across our strategic pillars tell us we are on the right track, and our job now is to translate those signals into durable financial performance.

Backed by our balance sheet and focused execution, we are building the foundation for our next chapter while remaining disciplined in how we allocate capital.

With that, I'll turn it over to Esti for the financial details.

Thank you, Micha. Today, I'll review our second quarter financial performance and provide additional visibility into the ongoing marketplace transition and update on capital allocation as well as third quarter and full year 2026 financial guidance.

Starting with the results. Second quarter revenue was $97.8 million, down 10% year-over-year due to a decline in low-value transactional work. Adjusted EBITDA was $17.5 million, down 18.3% year-over-year and representing an adjusted EBITDA margin of 17.9% as margins declined 180 basis points from a year earlier.

Margin pressure was limited by the proactive steps the team has taken to maintain a lean organization, including our continued efforts in discretionary expense management, internal AI efficiencies and balanced marketing.

Turning to our revenue segments. Q2 marketplace revenue was $63.1 million, declining 15.5% year-over-year, driven by 2.7 million active buyers, $368 in spend per buyer and a 28% marketplace take rate. The 22% year-over-year decline in active buyer was mainly due to the ongoing compression in low-value transactional work. Low-value transactional work currently represents the majority of our marketplace and is decelerating at a faster and stronger rate than the growth associated with our high-value work.

Additionally, as Micha noted, in recent weeks, we observed a noticeable deceleration in marketplace traffic and demand, which has carried into Q3 and is expected to continue for the foreseeable future. These traffic and demand trends impact the entire marketplace. This pressure was broad-based across simple categories in all verticals.

Transaction volume was down 10% or more year-over-year across the majority of projects under $1,000 on a TTM basis. Writing and translation saw the steepest decline at more than 24%. Spend per buyer increased 15.6% year-over-year, driven by the ongoing mix shift across the marketplace from low-value transactional projects to $1,000-plus projects. At the end of Q2, projects at or above $1,000 represented 15% of completed projects' gross order amount on a TTM basis.

Programming and tech and graphic and design represented the fastest-growing verticals of completed $1,000-plus projects with both increasing over 25% year-over-year on a TTM basis. On the other hand, services revenue in Q2 was $34.6 million, up 2% year-over-year and accounted for 35% of total revenue.

Services revenue continued to grow but at a lower rate compared to last quarter. The deceleration is expected to continue into H2 and exit the year with a double-digit decline. The drivers for the deceleration include softening demand from influencer campaigns and drop-shipping as well as weakness in Fiverr Ads and Seller Plus. Services revenue is also negatively impacted by the lower expectations around marketplace growth, given the traffic and demand issues we have discussed.

Now on capital allocation. Our capital allocation priorities are guided by a disciplined and balanced framework. First, funding the organic transformation investments required to reposition towards high-value work; second, maintaining strategic and financial flexibility in the dynamic AI automation environment; and third, evaluating opportunities to generate value for shareholders, including further repurchases.

In the current environment, maintaining a strong balance sheet represents the most responsible path forward. Our healthy financial position provides valuable flexibility as we continue to run a lean organization focused on cost discipline and maintaining profitability. At the same time, we recognize that capital allocation is a critical component of value creation.

We finished the quarter with a total cash and investment balance of $308.5 million and generated $13.6 million in free cash flow. Given the uncertainty, full year free cash flow is expected to be lower than the previous 2 years. We are operating in a dynamic environment, and we will constantly evaluate where we deploy our capital for the highest return.

That also applies to how we invest in our transformation and related growth opportunities. A primary focus will be on executing appropriate cost discipline so we can continue to generate profit and free cash flow.

Now moving to financial guidance. Our revised guidance for the third quarter and full year 2026 reflects the AI-related demand and traffic headwinds observed in recent weeks, which has continued into Q3, impacting our entire marketplace, ongoing weakness in categories most exposed to AI automation and declining services revenue.

We now expect that meaningful financial impacts from our transformation will require at least 6 quarters to materialize. For the third quarter of 2026, revenue is expected to be between $80 million to $88 million, representing year-over-year growth of negative 26% to negative 18%, and adjusted EBITDA between $8 million to $12 million, representing an adjusted EBITDA margin of 11.9% at the midpoint.

For the full year 2026, we expect revenue to be in the range of $356 million to $372 million, representing a year-over-year growth of negative 17% to negative 14% and adjusted EBITDA in the range of $52 million to $62 million, representing an adjusted EBITDA margin of 15.7% at the midpoint.

While our updated outlook reflects our view of the current operating reality and the extended time line for our transformation, we are leaning into this moment with discipline, stabilizing the core marketplace, shifting towards high-value work at a faster pace, preserving flexibility and allocating capital with a focus on long-term value creation.

With that, we'll now turn the call over to the operator for questions.

[Operator Instructions] The first question today comes from Eric Sheridan with Goldman Sachs.

Maybe 2, if I could. Just drilling down on the 6-quarter transition period, can you give us a little bit of more granularity about what is it about either business mix or the headwinds and tailwinds you see in the business today that underpin some of the framing of the duration of the transition across that type of time period? And then the second would be, you highlighted the recent update to various LLMs as a contributing factor to the weakness. What exactly are you seeing out of those LLMs? And how is that sort of manifesting in these headwinds, if we can get a little bit more detail there as well?

Eric, thanks for the questions. As for the first one, the answer is yes, it's mostly headwinds, which really impact our preparation or estimation of how long this transformation is going to take. That's mainly what's influencing this. And as Esti mentioned in the opening comments, we run a very lean organization at the minimal size that is required to move very, very fast. So we're now a much smaller organization that we used to do as we've done the restructuring, but the pace in which we move is much, much faster.

Given the fact that we assume the trends that we started seeing in the couple of -- the last couple of weeks of Q2 going into Q3, the assumption is they'll continue, and this will be the time that we feel the transformation is going to take.

Now I did mention the impact of a few of the LLM models. And again, between those LLMs, obviously, there's different types of usage, and there are some models that are more impactful or step function versus those who are just adding some improvements. But the really interesting thing is that it's not just the LLMs themselves or the specific models, but it is how those LLMs are being integrated into other client experiences.

I think most noticeable is how Gemini is being integrated into the experience of search on Google. And so it exposes more people to LLM experiences, which, by churn, obviously impacts the traffic that we're getting. So traffic used to come only from search, then it became LLMs as well. And now it's becoming hybrids of LLMs and traditional search, which essentially lowers the volume of traffic, which we called out as one of the major headwinds.

The next question comes from Ron Josey with Citi.

Micha, just a quick follow-up on Eric's question on the time line and the 6 quarters. Just can you give us some idea or steps that perhaps we can look into or watch in terms of this transition to see just the progression as we go to higher-value projects upmarket? And then to that, as we do get to higher-value projects and given the foundation model will get more powerful, just talk to us about the talent on Fiverr's marketplace and the ability to basically answer or deliver these higher-value projects.

Thanks for the questions, Ron. So I'll start with the first one, the transformation itself. So we've been calling out in the opening remarks what we're actually building there and what are the early signals that we've seen from tests, and those signals are -- or those tests are being deployed more widely, which is why we expect to get more impact out of them.

So this transformation is really about the matching part of our proprietary Knowledge Graph. And as we said, the initial deployment of seller skill extraction, which addresses about 58% of mismatches and a model that decreases by 7%, the high-value constellations, these are really impactful numbers. And since they've been running on tests, they're being deployed widely on production.

The product has now an end-to-end fulfillment layer and the Phase 1 of it is live. And it's evaluating the quality of transactions with 91% precision across 84% of the completed projects. The go-to-market transformation, again, we've developed and tested go-to-market -- new go-to-market, and I've mentioned TikTok as an example, which drove 8% increase in new customer conversion, again, deploying this at a larger scale.

And obviously, we do all of this through keeping this operational excellence and making critical investments to strengthen the high-end talent flywheel and focus on improving market quality, prioritizing high-value work and executing with very strong financial discipline as we do this.

Now when we look at -- and this is the second part of your question, when we look at the type of skills, a part of what we're doing in going much faster upmarket means that we're doing -- we're both cleaning our talent pool from unnecessary, those who don't have demand for low skills, which is really important because they occupy space on the marketplace. And on the other end, defining the necessary skills, ensuring that we -- if we're missing in some place, the right talent to tackle these needs -- these client needs, we have that talent. And if not, we onboard them very, very fast. And we started calling some of these product types and categories.

But I think the overarching message here is we're not talking about very specific small AI deployments for our clients. Our clients are interested in AI integration. They want to improve the competitiveness and the efficiency of their entire business, not just put a customer support agent. They want to integrate their entire business workflows. That requires highly skilled professionals that can assess and understand the actual business needs and understand how to create multiple agents that are tailored for that specific business so they can extract the most out of this AI transformation that, as I said, is not a nice-to-have, but a do-or-die for businesses because the first businesses that are going to do this are going to be more efficient and going to be more competitive.

The next question comes from Jason Helfstein with Oppenheimer.

So just kind of thinking about the kind of financial outlook. I mean you made the point you already run a very lean organization, as you said. I guess what's the right way to think about EBITDA and free cash flow next year? I mean, obviously, you're not giving us guidance. But if revenue is down next year, are there other cost actions you can still take? And then I guess, how far along are you in just deploying AI internally for your business and kind of automation in the organization? And if you want to put those 2 together as kind of one answer, but that's the question.

Thank you, Jason. So our revised guidance for EBITDA reflects, first, the issues that we're seeing on traffic and that affects the bottom line. However, as you know, we took some reduction cost initiatives in previous quarters that help us to support EBITDA. In addition, as we see traffic issues, we also adjust our marketing spend as we did before, and we will continue to assess that if needed.

We are protecting our R&D spend because that supports the transformation. And this is our #1 priority to be able to go through this transformation and also continue to be profitable. So we should think about this. During the transformation, this would be a priority: continue to generate cash.

We continue to run the organization and continue to be with cost discipline, especially about discretionary costs, marketing, as I said. But again, the focus is going through the transformation.

Yes. And to answer your second question, essentially, the first half of the year was putting all of this infrastructure together and running multiple tests, and I've called out some of them, to prove that doing so is actually significantly improving the $1,000 transactions and the right clients.

What we're going to do in the second half of the year is deploy some of these solutions at scale and continue to work on new things that we feel are going to impact and accelerate the ability to drive a quality experience, better conversion and optimize for higher spend of those customers.

I would just add on the free cash flow. So free cash flow follows EBITDA. So you should expect the guidance of the EBITDA should be the range for the guidance for the free cash flow. And as I said, we are aiming to continue to be profitable, and that means also to continue to generate cash.

The next question comes from Nat Schindler with Scotiabank.

Micha, this is kind of a big-picture question. For years, you guys have said that really the move to AI is not such a threat because you are basically just a marketplace for freelancers and freelancers are the most adaptable people in the entire economy. They very rapidly change to what is necessary and the jobs that need to be done. And as a marketplace, you really don't care what those jobs are, you can just provide the connection point. And that's a really compelling argument.

But then in February, it seems like the release of Claude was kind of a watershed moment. And the world is now really doing more and more things without touching these freelancers in a sense, and that's why the revenue seems to be declining as much as it is. I get the transformation and I get the need that companies will have for people to help them do these transitions. But how can you be confident that in 6 quarters, there aren't going to be more watershed moments where this gets worse and this gets more and more that you can do more and more with less than you need and the freelancers will face their first time where even their renowned adaptability just isn't enough?

Thanks for the question. First of all, I should say we stand behind everything we said. And it is true, and it still is true. What I think we are seeing, and this is also why this requires additional time for this transformation to be highly successful, is the fact that very similar to previous transformations, technology transformations or industrial transformations before, the rate in which some skills get compressed versus the rate of the creation of new skills is not the same.

The creation of new skills, the orientation of our clients to understand how do they navigate this new world, putting names to skills, ensuring that talent is qualified to tackle those needs is a cycle, and they don't happen at the same rate. But we are seeing this because we have deep expertise in this economy. We constantly have discussions with clients. We're seeing developments in the market. And it takes time but they actually realize that this is, as I said, not a nice-to-have; it's not a choice.

It's like 30 years ago when people thought that having a website was optional. It took time for businesses to understand that if they don't have an online presence, they are going to start losing some of their businesses to their competitors. The same applies for AI, but it takes time for businesses to understand exactly what they need. It's still true freelancers are in the forefront of this curve. They do understand that. They obtain these skills fast. But as I said, it's not the same rate of the compression that we're seeing.

And also because the high end is still a small portion of our business, the growth that we're seeing there, in some cases, very high growth, is being masked by the compression in the low end. But this increase gives us the confidence that this transformation is the right thing, and we should be very committed to it, and the early signals that we've seen from our testing is showing this and that's why we move full force, fire on all cylinders, to make that transformation as fast as possible.

And just to follow up on that, as you make a transition to the high end, and it sounds like the high end is evolving to even higher end than previous discussions of high end, is that moving you more into just being a staffing placement company where you're doing [indiscernible] as opposed to what you have been so long and been so capable at as being a marketplace for completed business services? Because it's very hard to define and limit a scope of project in a single listing; this is a, "I need someone who has this ability." But are you just totally changing what you are in that respect?

Yes. So I've addressed this also in previous calls. And the way we think about Fiverr and our role in this ecosystem is to be very focused on the project and the outcome-based work. So for us, identifying the need and, in some cases, helping the client better qualify that need, then understand through the Knowledge Graph, who's the exact most qualified talent and, in some cases, multiple talents to address and be able to achieve and fulfill that goal, making that matching, but also, as I said, taking a larger portion in the fulfillment of this actual outcome-based result is the function. And that is what defines us and where we focus. And this allows us to be very, very agile in this.

The next question comes from Bernie McTernan with Needham.

This is Stefanos Crist for Bernie. So the projects above $1,000 or 15% of GOV, what mix do you expect that to be to offset the decline in the legacy low-value work? And then just on capital allocation, are there any assets out there that can help accelerate your plans? Or are you only focused on internal investment?

Okay. Thank you, Stefanos. So while the 15% is -- seems small, but you need to -- currently, our spend per buyer is at $368. So we have a lot of room to grow with the $1,000. Now it will take time, as we said, we are changing fundamentally our platform. It comes with, as Micha mentioned, a lot of the talent, the matching, the orders, of course, the go-to-market. Now it will take time. However, we see the opportunity both within the marketplace, within our current buyers and also as we go with new go-to-market. So one example is the TikTok example, but we are planning, of course, additional partnerships and additional go-to channels.

As for our capital allocation, so our primary focus is definitely going through the transformation, and we're investing on that. On the M&A side, nothing to call out. We are always opportunistic. But again, top priority is to do the transformation within the platform. We said we're going to invest in R&D. In order to do that, we have the sufficient staff, and we will run lean organization while doing that, as Micha said. So we're going to do it fast, but with a lean organization and not planning currently doing inorganic.

The next question comes from Brad Erickson with RBC Capital Markets.

I just want to go back a little on the paper trail of the weakness, if I could. And I realize it's hard to know 100% for certain. But you mentioned Google's distribution was kind of integrating LLMs into search and being a driver of the weakness, which makes sense. But I'm just curious if there's a component from some of these more recent powerful model releases. So I guess the question is like is this kind of a marketing issue where Google is making people more aware of these tools being available and they're using them? Or is it more just that like newer models are just making it easier to do kind of a wider range of things? Or if it's both, I guess just curious which of those 2 do you feel like you're seeing more of lately?

Yes. Thank you for the question. The weakness of demand and traffic comes from Google, but it has also, as I've mentioned, the impact of integrating LLM or AI summaries in the Google search. So by definition, for some customers, they would go directly into the LLM instead of clicking on either paid or organic links. And I think it's very visible, the fact that the majority of links anyway are paid.

So the organic is actually getting squeezed down, which means that the impact of SEO is going down. And this is why we and probably every other company is making also an investment in GEO, or generative engine optimization, to make sure that we are inside those LLMs and we are. The click-through in LLM in general is obviously smaller than it is on search. All of these factors actually create headwinds on traffic.

The same goes for other models. Sometimes it's the introduction of newer tools. That could be in the case of Claude Code or Claude Design or Claude Cowork. And right now, we have Kimi coming in and a Chinese alternative that is coming in to compete, and sometimes it's upgrade of a newer model on ChatGPT. But our assumption is that these models are going to continue developing and competing with each other and, depending on their usage and their integration and other things, might influence traffic.

That said, and I'm not going to repeat that, the actual needs of the clients that we're aiming for is not being addressed by just using one of these tools. It requires very, very deep integration of agentic solutions that are well beyond reach for the vast, vast majority of businesses. Even high-tech businesses, and I know this from first-hand experience, are not having an easy time creating a more agentic organization. So it's hard for such a sophisticated company like Fiverr, and I've been talking to many other companies, it is 1,000x more complex for traditional businesses. And therefore, they will need help, and they will need this idea of human in the loop.

Got it. And then just bigger picture, you have such a great lens into the world of models and harnesses and so forth. I'm just curious, like, could you just maybe rest a second and give us a little bit of your thinking around just the open-source topic. And in particular, we won't talk frontier specifically, of course, but just software looking to find any way to build a moat, lock their customers in versus working with open models. What are -- how are you kind of thinking holistically about that? And I don't mean -- certainly for your business, but also just how your customers compete at that level. How do you kind of think about that?

Right now, if you think about it, most companies in the world, and I'm excluding maybe the forefront AI companies, are still pretty much behind. If you look at highly sophisticated companies like ours, the type of challenges that we obsess over is inference, for example, because there's now almost endless amount of different models, each one slightly better in different tasks. But there's also a question of how fast do you need it? So by introducing latency, you can actually pay less for the same model, assuming you don't need the answer or the output right away.

So for us, as an example, it's not just how do you extract the most out of a certain model, but how do you use multiple models for -- from multiple foundations to actually maximize the task or the skill that you're trying to solve and also bake price into it because you might use very advanced models that cost a lot, Stable costs twice than Sonic. But for many, many different tasks, it's simply not needed.

And so [ throttling ] between those, dealing with inference is one of the big topics right now. But as I said, I think that this is way, way too advanced for businesses that are tackling much more basic needs. But even those businesses understand that the deployment of AI is not free, meaning when you deploy AI, it's not one and done. Running agentic environment has a cost, and they want to be aware of it. And some of the things that our experts are doing is helping customers ensure that they don't overspend for the wrong things.

This is why it's so complex. This is why I keep telling that this is beyond the capabilities of most businesses and why they need help with it. I think the question of open source or not open source is not a big difference. Open source just allows for the foundational companies to harvest data faster so they can make it slightly cheaper. But we're all working for foundational companies anyway. So if it's good enough, you should probably pay less for it.

The next question comes from Matt Condon with Citizens Bank.

My first one, I just want to go back to this traffic question. Are you seeing a significant deterioration in your payback periods in other channels? I'm specifically thinking about is this isolated to SEO or Google traffic? Or are you seeing your other channels also deteriorating your performance? And then my second question is would you ever consider dynamic pricing or any changes in pricing to try and spur demand across the marketplace? Or is that just not a focus for you guys?

Thanks for the question. So essentially, the situation, if we look at Google as an example. So first of all, the fact that there's less customers coming to Google is impacting the amount of traffic that Google has in its hands to advertise for, meaning that they increase advertising density, which means that there's more competition for each placement, which means that the cost of acquisition is higher.

All of this influences the efficiency of marketing. which is why we take a multichannel approach, which is why we're investing in GEO to increase the organic traffic from LLM channels. And it is showing great results. But on the click-through, it's still small. We were also one of the first advertising partners on ChatGPT. But it is still very early days. It reminds us when we started working of the early days of working with Google. It takes time to build up. They're figuring out, we're figuring out the strategy, but we are taking proactive measures.

And so what we want to make sure is we want to make sure that the investment that we're doing, this transformation, in the matching infrastructure and the fulfillment workflow is exactly enabling Fiverr to seamlessly integrate into agentic workflow down the road so that we can give more of our core experiences and core solutions inside these LLM or whatever they become, experiences, to entertain the customers where they are.

The next question comes from Marvin Fong with BTIG.

Two, if I may. So first one, maybe bigger picture. With these increasing sophistication of the projects that you're targeting, I mean, do you feel like your current suite of services, Fiverr Business, Fiverr Pro is enough to address sort of this coming landscape? Or do you -- are you looking at producing additional service channels for your clients to create something a little bit more comprehensive perhaps?

And then second question, just a little more focus -- on the services revenue, you called out that Seller Plus would be down. And I'm just kind of curious, is that because freelancers are canceling their subscriptions? Or is it that the actual pool of freelancers is kind of shrinking on the side? If you could just kind of provide some insight on what's going on, on the freelancer side with respect to services, that would be great.

Thanks for the questions. So as we're doing this transformation, we're basically rebuilding a lot of the core functionality and the core product from the ground up. I've called what we're doing with the Knowledge Graph, what we're doing with the end-to-end fulfillment layer, the matching engine and the type of experiences that we expect to provide our customers that are better than the best AI out there in the market.

I don't want to go into those details because this is being built and is going to be tested and deployed throughout the year. We're working very hard to make sure that those clients that we focus on receive the best experience that they can get to ensure that they achieve their outcome. And we're building new tools. Again, we're not getting into talking about these tools, and they're being built, but we are refining the platform to ensure that this is exactly the case.

And as for your second question about services revenue, so services revenue and the seller monetization is affected of the traffic of the marketplace. As the traffic headwinds that we saw in recent weeks affect the ads and the Seller Plus, so we expect that also to be continued in H2. In addition, in services revenue, we saw some headwinds also on AutoDS, and that's also been included into our H2 guidance for services revenue.

The next question comes from Josh Chan with UBS.

I guess 2 questions. First, I guess, as you do this transition, standing here, I guess, how much of your talent or customer base do you feel like has to switch out or cycle through to complete the transition? And how do you know how to acquire the right talent and right customer for the next phase? And then the second part is, when you give the 6 quarters, I guess, estimation, what's the starting point of that 6 quarters? And then as you deploy the solutions that you're testing, should you see some improvement in the trends even during that period?

Josh, thanks for the question. So when -- I think I made that comment earlier, which is we're both cleaning up the lower end parts of our talent that we feel has lower demand to make sure that we optimize the display layer of our market base and allow our clients to find what they're looking for easier. The rest goes for the high-end talent. As I said, identifying the skills on demand and, in some cases, defining them, helping give those skills names, is really important.

Then it's about qualifying them. We said in many, many earnings calls that Fiverr's -- one of our biggest moats is the fact that we've been the largest transactional marketplace in the world. And we've collected so many data points that using them in the right way, which is how we build a Knowledge Graph that contains a very deep understanding of the client and their needs and understanding the actual description in the desired outcome and pairing them with the right talent that can address exactly that.

And since we have such a rich data of actual transactions where we have high level of trust of the talent that we have, the matching becomes much more efficient, resulting in much happier outcomes, which then also drives higher retention and higher spend.

And Josh, as for your second question, so the 6 quarters, it's starting now. And yes, of course, as Micha described, although we're still at the beginning of the period, we have some initial things that we're seeing that are encouraging. And definitely, we'll share more as we go to show all of the progress.

This concludes our question-and-answer session. I would like to turn the conference back over to Micha Kaufman for any closing remarks.

Thanks so much. Thank you, Chloe, for moderating this call, and thank you, everyone, for calling in. And I wish you a great day, and we'll talk soon.

Thank you. The conference has now concluded. Thanks for attending today's presentation. You may now disconnect.

All right. We're going to go ahead and get going. I'm Doug Anmuth, JPMorgan Internet analyst. We're pleased to have with us Fiverr's CFO, Esti Levy Dadon; and Chief Business Officer, Jinjin Qian. Fiverr is a global marketplace that connects freelancers and businesses for digital services in more than 750 skilled categories. In the past 12 months, almost 3 million customers bought a wide range of services from freelancers working in over 150 countries. Esti recently became CFO in March and has been in several finance roles at Fiverr since 2016, most recently as EVP of Finance. And Jinjin recently became Chief Business Officer in March and has been in several roles at Fiverr since 2018, most recently as EVP of Strategic Finance. So welcome.

Thanks for having us.

All right. Maybe we'll start kind of big picture. You talk about the U.S. freelance market is nearly $250 billion of TAM and then including international, it should be much bigger. AI is also reshaping the nature of work as it expands kind of project ambition and compresses task duration. But how do you think about the TAM evolving in an AI-enabled economy?

It's an interesting question because, as you said, AI is really changing the nature of work and the skill landscape across the talent. We see the simple jobs on the marketplaces getting less demand, whereas there's explosive demand in AI-related services and complex projects as human is needed for more sophisticated strategic outcome-based work. I would say from a long-term perspective, there's definitely going to be continued growth in the TAM because the work is going to become more fragmented as human gets plugged into the agentic workflow. And freelancers offer this tremendous amount of flexibility, elasticity and also helping SMBs stay at the forefront of the technology. So we definitely believe there's a significant growth runway for the role of freelancers and the role of Fiverr.

Okay. Great. What are -- when you think about kind of TAM and how that expands and evolves, what are some of the key friction points that remain to unlock this opportunity, particularly as you transition from kind of a transactional marketplace to a more kind of trusted work platform?

I think there are a few things. One is the platform was built like over a decade ago, where it was really optimized for simple like voiceover, blog post writing type of jobs. And as jobs get more complex, we are going through this transformation to really upgrade the underlying data infrastructure and the matching infrastructure to enable a more sophisticated matching between the skills and the talent. That's one.

Second is as any technology shift, you are going to see demand of the new skills leads the supply of the skills, especially we're talking about this drastic shift. So we definitely see a lot of AI-related needs there where the freelancers are going through this upskilling, adapting to the new and -- adopting the new workflow, all of that. And as a platform, we're helping them to go through this transition as well. So you are going to see this mismatching timing. But overall, I think it's a huge opportunity because every time you have supply skill gaps and shortage, this is where marketplace really plays a role in empowering both sides.

Okay. Great. So the company has made some key leadership changes as well as undergone a fairly significant restructuring over the past several months. Maybe you can just talk about how the changes sharpen accountability, accelerate decision-making as you execute this transformation.

Yes. I think we've been kind of going through upmarket for a few years now, and we've seen lots of progress in terms of upselling our existing customer base. That said, we realize that the world is changing much faster and to really become more relevant, we have to take a more drastic step and really lean into the opportunity in a more aggressive way. And that's kind of why we did the changes both from the execution standpoint, also from a strategic pivot perspective to really be more focused into empowering the complex projects and the high skill talent.

And how do you think about kind of the right size for the organization?

I think we're in a pretty good spot right now. Obviously, every organization is going through this AI adoption and becoming AI native. I think there's a lot of opportunities as we see it. And I think we're -- we kind of did the right transition, and we are always kind of the first to do these transitions in the market and really very focused on transitioning the workflows internally and also getting the talent that we needed to be there. Yes, very excited.

Yes, we removed some of the management layers so we can move fast. So what we're seeing now that when the team is focused and smaller, we can actually move faster and execute more.

Got it. Okay. So let's just dig into the kind of transformation more, which you've talked about as kind of multiyear and built around like 4 key pillars. And I think those are matching and product and go-to-market and then operational excellence. So maybe you can talk about how we should think about progress here over the next several quarters. And if you could kind of give us an update on where you are on each of those.

Sure. So we are only 2 months into this. We're just getting started. But already, I think we're already seeing a lot of focus and momentum into this transformation. On the matching side, like I said, it's really focused on the underlying brain of the marketplace where we are building a comprehensive knowledge graph to really capture all the data that as a transactional marketplace, the proprietary data we have. Historically, we know we're only scratching the surface of unlocking the potential for data. But now we are extracting the information from those unstructured data to enable the matching algorithms to really increase the conversion and the satisfaction rate from matching both sides. So that's on the matching.

On the products, we see a lot of success with the dynamic matching and managed services product. We are doing a lot of the upgrade on the product experience from enabling higher complex jobs to collaboration services to also enable the talent to be able to onboard and manage their business in a more sophisticated way because now when we were talking about high-scale talent, their need is very different from the less sophisticated freelancers. So that's on the product. And on the go-to-market, we are doing many different things, opening new channels that historically we don't do much, things like account-based marketing. We're doing more social listening. We're being more creative, leaning into more targeted efforts to drive high-value projects to Fiverr compared to historically a more broad focused volume-driven business. And then lastly, operational excellence is all about applying AI across org from customer support to production to data. So there's a lot of projects there to unlock productivity.

Got it. Okay. Let's dig into a few of those a little more. Just on matching, you kind of talked about transitioning from traditional search to agentic matching. What does that mean? How far along are you in that vision?

It's all about ultra personalization, right? Think about the traditional search is a pretty average experience and you optimize based on keywords and impressions. Now in the agentic workflow, you almost have this one-on-one kind of chat with ChatGPT where every conversation is contextual, every conversation is personalized. And we are trying to leverage that LLM capability into the matching because if you think about it, the amount of unlock you can do with the service marketplace is significantly larger with the physical goods because when you're trying to hire someone, it's very subjective. It's very contextual versus if you're buying iPhone, it's a standardized product. So we do see that LLM is a huge enabler for a service marketplace for us to really take it to the next level.

And because we have the -- so the transactions are happening in our platform. So we have a lot of data now. And now with agentic, you can actually better understand and do the right matching because you really know the buyer from past experience if you had and the TAM definitely from past experience that you have. So together with agentic, the matching is much better.

Okay. And then on go-to-market, you've talked about expanding into more AI-native distribution channels and enterprise partnerships. Maybe you can just talk about how you're thinking about integrations with LLM platforms? And is there anything meaningful coming out of that LLM source traffic kind of contributing at the top of the funnel today?

Yes. We are investing a lot into the Geo technologies. And we've seen kind of really encouraging results in the last few months where like there's a lot of know-how into how to impact LLM organic search to really increase the relevancy and increase the brand awareness in the LLM channel. So this is one area of investment. Second is we are one of the first partners to kind of participate in the ChatGPT like paid programs.

So we're also testing. And obviously, I think it's very early for OpenAI. A lot of the infrastructure is in the process of getting built out. But like I said, we want to be kind of ahead of the curve and really be there. And from an integration perspective, there's a lot of ongoing dialogue. I think this is a space where it's very dynamic. I would say most players, we haven't seen like significant traffic coming from these channels yet just because everything is so new and early. But down the road, definitely, it will be a very important kind of channel.

Okay. All right. Let's shift gears a little bit. Marketplace revenue has remained under some pressure, right, broader softness just in the SMB -- with SMB sentiment. And competition has recently called out some slowdown just around tariffs, energy prices, high interest rates. What are you seeing just in terms of macro kind of year-to-date?

Yes. I think definitely both SMB and macro has been under pressure. We kind of called this out last quarter. I think we kind of always see this a little ahead of other players in the market. So nothing kind of new to call out since the beginning of the year. I think we've -- it stayed relatively stable, and we're kind of executing according to the plan laid out from the beginning of the year. But definitely, we saw similar trends kind of earlier.

Okay. And then when you think about kind of how you're projecting revenue growth for '26 or revenue, which is down some. How do we think about how much is kind of more self-imposed from the transformation that you're undergoing and like deprioritization of low-end work versus some of those macro characteristics?

I think we're trying to be very disciplined on the transformation. I think part of the deprioritization is investing less into kind of the local optimization of the low end, but doesn't mean we're doing things to hurt the existing business. Quite the contrary, we're trying to be very disciplined and let the -- what works continue to work and drive majority of the company efforts into developing and investing into the future opportunity. We -- when we gave the guidance at the beginning of the year, we kind of factor in kind of a wider range of the guide to factor in the uncertainty in the macro. But overall, I think the guidance methodology and kind of the visibility we have into the year remains pretty consistent to what we did in prior years.

Okay. Let's talk more about AI. Just obviously, the impact remains kind of just key debate for investors. How are you seeing clients engage in terms of AI-related work? And any color just on how AI-related GMV is trending?

It's trending really healthily. I think after the initial AI, I would say, craze, I think we're seeing more and more customers realize that the human talent is needed for them to implement AI and really unlock the business impact of AI. And we see customers take what they did on AI platforms and come to Fiverr to find experts to finish -- get them to the finish line. So across the board, from AI development to automation workflows, all of that is like very popular, triple-digit growth, high double-digit growth.

Okay. And are there particular categories or services where you're seeing overall traction stand out more?

Yes. I think AI development is kind of one of the bigger categories within AI. Automation, all the Zapier, Make very popular. A lot of the content creation, also popular. marketing, another area, SEO, GEO, marketing copies and marketing automation, all very popular.

Okay. And then just in terms of agents, how do you think about implementing agents on both the buyer side and then also for freelancers to improve the overall experience?

I think agents are -- today, it's everywhere. We haven't really done a lot of integrations, but we know both sides are deeply plugging into all these agent tools. For us, I think agent is what I call in the collaboration product pillars, right, where it is an important layer to enable workflows and enable our buyers and sellers to work with each other more efficiently. But it's not the core moat of the marketplace, which lies within the human connections and then agent could be useful top-of-the-funnel tools. It could be useful retention and monetization tools. But we have to -- it has to anchor around the core human connection, which is Fiverr's core proposition in the AI world.

Okay. All right. Let's talk about just top line drivers a little bit. We talked a little bit just about GMV. We are seeing active buyers decline, but offset by strong growth in spend per buyer. And I know the transactions above $1,000 grew double digits in 1Q. Maybe you can just talk about kind of what that path looks like for high-value work to become a larger portion of GMV.

Yes. We are already seeing GMV from over $1,000 growing double digit year-over-year. And the goal is through this transformation, they are going to become a majority part of the business. From a buyer perspective, I think the metrics will be under pressure in the near term just because from a buyer count perspective, we've got substantially -- we're carrying kind of a large population who's kind of focused on the smaller side. That said, I think as we go through this journey, we will provide more clarity on what we're seeing in terms of the larger buyers and larger projects that will hopefully give more color to investors on kind of the trends and the trajectory we're seeing there.

Okay. And what are some of the key investments that are required? Just when you think about kind of increasing that mix of $1,000-plus jobs, what are the key investments you need to make on your side?

I think it's around the core pillars we talk about, the underlying brain, which is the matching, the experience layer, which is the product and then the go-to-market, which is how do we scale with strong unit economics. I think these 3 layers will together get us there.

Okay. Services revenue grew north of 50% last year, but we know it's going to exit at a low single-digit growth rate in '26. Maybe you can just talk about that path and kind of trajectory through the course of the year.

Yes. We do expect the services revenue growth rate to come down Q2 and then continue into second half of the year, largely because of the lapping of the acquisitions and also just the lapping of some of the investment we did last year around the modernization programs, which we did a lot of expansion last year. And this year, this is not going to be the core of the transformation. Yes, I think overall, really focused on driving GMV reacceleration and high-value projects acceleration with the plan.

Okay. And then can you just talk about current Seller Plus subscription penetration, how you think about kind of where you are today? How much room there could be as you drive more value for sellers?

It's a really healthy program. I think it's kind of -- we had a really nice ramp in the last 2 years. I would say it's at a good spot where we've got a very core strategic seller pools who are very active in the program. Now I think it's kind of into a more relatively mature and stable growth at this stage compared to the previous kind of early expansion period. So expect the program to continue to be healthy and -- but it wouldn't kind of ramp at the same rate compared to previous years.

Okay. All right. And then I guess just as we think about '26, we know this kind of transformational year, positioning for growth in '27. I know it's early, but any kind of view on what normalized growth looks like on the other side?

I wish I can give you a golden number. But obviously, you've known us for a long time and you've known me for a long time. I think growth is always top priority and us, really driving growth is top of mind. And I think labor market is an area where the TAM is so large, and we're going through the shift. So we really believe we're -- we have a unique right to win here and kind of really investing into that. So definitely not going to grow at the current rate.

Okay. Let's talk about profitability a little bit. So you've guided to 18% EBITDA margins at the midpoint for '26, the core business at around 20% and then a couple of points of drag just around transformation investments. Maybe you can just talk more about some of those investment areas and kind of how you think about overall margin trajectory.

Yes. So I think in 2026, as you said, this is the transformational year. So investing on all of the pillars that Jinjin said, it's -- so it's mainly about hiring that will pick up during the year. Generally speaking, the marketplace is healthy, is generating healthy cash flow. Now as for the future, we plan to invest in the transformation, but also to be very cautious on the bottom line. So not to sacrifice the bottom line in the future, but -- and invest in the top line, as I said, very disciplined.

Okay. You've previously talked about -- you kind of previously targeted 25% margins in '27, but I know that was a little while ago. I guess just any -- again, kind of early, but any view on just how you think about what the right long-term margin framework is?

So 25% is still the long-term EBITDA target. But given the transformation that we're going through, it will take us more time to get there, but it's still definitely the target.

Okay. All right. And then just thinking about capital allocation, I think you have about $60 million remaining on the buyback authorization. You have been active in different quarters recently, but maybe you can talk about kind of thought process there.

Yes. So from a capital allocation perspective, so #1 priority is growth of the business and investment in the business and being able to execute the transformation. We believe this would really bring the highest value in the long term. We've been doing buyback in the past. We have an authorization, as you said, $60 million. So we'll continue to do that, but in a thoughtful manner. And then on the M&A side, from a capital allocation perspective, we're always opportunistic, but nothing currently to call out. Only if something makes sense to us and support the strategy, we'll go for it.

Okay. And then just on -- going back to AI for a minute. Just when you think about how AI is changing how companies work, what stands out to you just in terms of some of the limitations around traditional staffing and hiring models that you're kind of ultimately much better equipped to handle?

Yes. I think we kind of pioneered this outcome-based, project-based hiring many years ago. And in some argument, like we're kind of ahead of the market. Now with agentic, I think everyone has talked about this outcome-based and which is really fitting into kind of Fiverr's model. And if you think about the future agentic workflow, you're going to have agents doing 80% of the work and human gets plugged into the 20%. You have agent, agent and a human comes in and then agent continues. So the outcome-based like model that Fiverr has is much more seamlessly can get plugged into this agentic workflow, where we see the scope of work, we see the price, we see the efficiency and the quality. And that gets us really aligned with agentic workflow, which is very hard if you think about job board or the traditional hiring process. Yes, that's definitely -- and then the data we have is -- we kind of build this wealth of transaction data is almost the training data with evaluation with it. So like this is part of what we are investing with this transformation is to unlock that potential.

And to create the upmarket flywheel that worked for us for the low transactions, so to recreate that in more complex work.

Okay. Got it. Okay. And then maybe just last one. Anything that you think is maybe misunderstood or kind of underappreciated either about the company or the opportunity in the industry?

I think there's this general fear about AI is going to take over all of our jobs and you don't need human anymore. I think this is probably overdone in my opinion, because at the end of the day, for any business to succeed, if everyone have the same access to the same AI models and human is still the differentiation. So we really hold that view, and we are starting to really see it from the activities on the marketplace. So I think this is a part that market doesn't fully give us credit for.

Thank you to JPM for the forum. I've looked at the sector quite a bit. I have a number of questions, one of which is we're living now in a siloed world where countries are putting up borders. It seems to me it might make -- increase the value of accessing labor markets synthetically through marketplaces like yours where we can find specialist pools of labor around the world. So I was wondering whether that's -- it seems to me that would be probably a net positive rather than a net negative in a siloed world. And then I was also interested in -- so that's the first question.

The second question was interested in how you add value to the labor pools that you address. So whether you offer them services, benefits, other things that they need, particularly in the independent employment market as well as getting people paid, whether you link in with good companies like Wise, Revolut, so in order to efficiently pay people in different currencies as you're, I would assume, inherently sort of a multicurrency, multi-country business model.

Yes, definitely. I think Doug said in the introduction, so we are global marketplace. We cover almost every corner of the world. And over half of our transactions are cross-border. And it's not always from developing -- developed countries higher in developing. There's the other way around as well, depending on the use cases. So we do see a very dynamic cross-border kind of a marketplace. On the payment side, I think we cover a basket of currencies, and we really enable both the customers to pay in their local dollars -- local currency and also the freelancers to get paid in their local currencies. And we provide quite a few range of like financial products to help them manage their business better.

We've also done a lot of learning and education for the community. I think community is a big part of how Fiverr is different. We have local communities in, I think, dozens of cities who runs like hundreds of events annually to -- especially at a confusing time like now, like we -- freelancers are very lonely professionals, right? They don't really have a company. They don't have teams. So Fiverr is kind of their "home" like we help them navigate the current environment. We have on the benefit side, I think we -- there's a lot of future opportunities. We do some partnerships and providing like insurance benefits. But I think this is an opportunity where the whole industry really is going through. There's a lot of opportunity to do more for the freelancers. I think especially in the U.S., I think not much. It's hard to be a freelancer. So...

Would you consider dealing with private company like Deel where you bolt on with them or [indiscernible] partner?

We -- Deel is not super relevant for us because they do more EOR, like long-term contractors, EOR, like helping right enterprises to set up like external offices. Our freelancer engagement are more on demand. So they actually directly pay through Fiverr, like we don't necessarily need Deel because we don't issue kind of payrolls. Deel is more like a payroll provider.

PEO.

Right. Like we don't -- like for our use cases, we don't necessarily need PEO.

Why not the micro...

It's a long question. So right now, we don't help -- we don't do long-term contractors currently. The most use case on Fiverr is very on-demand project-based, few weeks kind of -- think about Uber. You can plug in, plug out any week of the -- day of the week. So this is the primary use case.

All right. I think we're going to wrap up there. Thank you, Jinjin. Thank you, Esti.

Thank you for having us.

Good morning, and welcome to the Fiverr First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to turn the conference over to Ms. Emily Greenstein. Thank you, and over to you.

Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the first quarter that ended March 31, 2026. Joining me on the call today are Micha Kaufman, Founder and CEO; and Esti Levy Dadon, 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 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 Factors 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 measures is 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.

Thank you, Emily. Good morning, everyone, and thank you for joining us. Let me start with the headline. Q1 was a solid quarter of execution with both revenue and adjusted EBITDA coming in at the high end of our guidance range. Esti will walk through the details shortly, but the underlying message is this, we are focused on executing the strategic transformation while being methodical in managing the existing business across both top and bottom lines.

Maintaining financial discipline and transparency throughout this transformation is critical, and we are committed to doing that consistently and credibly. Let me now turn to the transformation or as we mentioned last quarter, we are in the early stages of a multiyear journey to reposition Fiverr from a transaction-oriented marketplace into a trusted work platform for complex high-value outcomes.

This is not a cosmetic shift. It is a fundamental evolution of how work is matched, delivered and orchestrated on our platform. Our North Star is clear: to become the most trusted platform for completing high-value, high-trust work. This means enabling businesses and talent and increasingly AI-driven workflows to collaborate effectively on complex outcomes.

Two months into the transformation, the early signals across all pillars of this transformation are consistent with our plan. First, we are strengthening the high-end talent flywheel and expanding into more complex, higher-value projects.

Projects over $1,000 continue to grow at a strong double-digit rate with clients completing $1,000-plus projects, up 18% year-over-year. We are also seeing increasing participation from talent delivering these engagements. What's important here is not just the growth. It's the nature of the work. We are seeing businesses come to Fiverr not for isolated tasks, but for multiphase mission-critical projects.

For example, one, a global health care company is working with talent on Fiverr to produce over 30 multilingual animated assets for a product launch with ongoing spend across multiple engagements. Two, a C2C sports platform in New Zealand built a full mobile application through multiple development phases on Fiverr. Three, a European entrepreneur is building an AI-enabled invoicing SaaS platform to comply with regional regulatory standards.

These are not one-off gigs. They are sustained high-value engagements that require coordination, iteration and trust. This is exactly the segment we are targeting and exactly where the market is moving towards more strategic outcome-based engagements. Second, we are investing heavily in matching infrastructure and experience. This is our main differentiator and the key to driving trust and quality, which are the core primitives of the market.

Our research and internal data confirm this. The primary differentiator in hiring platforms is not price. It is talent, quality and trust. Historically, Fiverr has won on ease of use and speed. Winning upmarket means extending that advantage into quality and trust, and that is exactly what our infrastructure investments are designed to deliver. That is why we are rebuilding our matching infrastructure from the ground up.

We are moving from keyword-based matching to context-aware, outcome-driven matching powered by a knowledge graph that captures not just who the talent is, but what they have delivered in what context and with what results. At the same time, we are shifting ranking from optimizing for conversion to optimizing for expected project success and buyer satisfaction.

The data is already moving. Recent tests in Fiverr Pro show mismatch rates down nearly 10%, and we are consistently seeing higher value engagements, leading to stronger repeat behavior. These are the early proof points of a durable trust mode. Third, we are evolving Fiverr into a comprehensive work platform. Today, most high-value projects on Fiverr run on infrastructure built for a different era of the platform. We are addressing this by building an end-to-end fulfillment layer that includes visibility into project progress, early detection of risk, structured feedback loops and active orchestration by Fiverr.

This is a fundamental shift in responsibility and perception of responsibility. We are becoming an active partner for our clients and talent, not just a passive connector. Over time, this infrastructure will also allow Fiverr to integrate seamlessly into agentic workflows, where AI handles coordination and humans provide judgment and accountability.

Fourth, we are expanding our go-to-market capabilities to scale more aggressively into high-value work. We are now building 3 new growth engines. First, talent-led growth engine, driving high-quality demand directly to high-performing freelancers. Second, industry-led growth engine, building tailored experiences for specific industries such as e-commerce and early-stage start-up companies. And third, partner-led distribution, embedding Fiverr directly into workflows and platforms where high-value demand already exists. These initiatives expand beyond traditional performance marketing and are designed to create scalable, durable growth engines aligned with our upmarket strategy.

Finally, we are improving execution across the organization. We are optimizing production workflows through better telemetry, identifying bottlenecks and increasing discipline in delivery. At the same time, we are rebuilding how work is executed with AI agents at the center and human judgment where it matters most.

This approach enables faster decision-making, reduces handoffs, improves product quality and drives efficiency across the organization. Mastering this as a company will also allow us to generate a reusable blueprint for our customers and talent to replicate and enjoy.

Stepping back, the fundamental dynamics of this market are moving in our direction. AI is increasing, not reducing, the complexity of matching the right talent to the right work. The demand for trusted outcome-based platforms is not a future possibility. It is already showing up in our data, in our customer examples and in the infrastructure we are building.

Fiverr has a differentiated model, a compounding data advantage built on real transaction outcomes and an end-to-end platform that no point solution can easily replicate. We are executing with urgency and discipline, and we are confident in where this leads. With that, I'll turn it over to Esti for the financial details.

Thank you, Micha, and good morning, everyone. We delivered a strong first quarter with both top and bottom lines exceeding the midpoint of our guidance. Revenue was $105.5 million, down 1.6% year-over-year, reflecting continued growth in high-value work, offset by headwinds in low-value transactional activity on the marketplace alongside a continued growth of service revenue. Adjusted EBITDA was $22.6 million, up 16.3% year-over-year and representing an adjusted EBITDA margin of 21%. This is an improvement of 330 basis points from a year earlier as we continue to execute with strong financial discipline.

Turning to our revenue segments. Q1 marketplace revenue was $67.1 million, driven by 2.9 million active buyers, $356 in spend per buyer and a 27.7% marketplace take rate. The continued momentum in our upmarket strategy and shift towards more complex engagement is clearly showing in our cohort behavior with spend per buyer growth of 15% year-over-year.

Projects over $1,000 grew at a strong double-digit rate, driven by 18% growth in clients completing these engagements. This growth is coming from both new adoption and repeat behavior as buyer expand into larger use cases, along with increased usage of dynamic matching and managed services.

Looking ahead, macro conditions remain largely unchanged. Based on current trends, we expect marketplace growth for the remainder of the year and on a full year basis to track broadly in line with Q1 performance. Service revenue in Q1 was $38.4 million, up 30% year-over-year and accounted for 36% of total revenue. Services revenue came in slightly higher than expected as AutoDS ran a successful campaign at the start of the year, pulling certain user sign-ups and revenue forward from Q2 to Q1.

Overall, our expectation for services revenue for this year remain largely unchanged with growth moderation in Q2 and continuing into the second half of the year. As Micha mentioned, 2026 is a transformational year for us as we make critical foundational investments to strengthen our high-end talent flywheel. Our decisions are centered on improving marketplace quality and trust, prioritizing high-value work and driving more focused execution with strong financial discipline.

On capital allocation, we continue to take a disciplined and balanced approach. Our strong balance sheet allows us to invest in growth, returning capital to shareholders and remain opportunistic on M&A. We generated $21 million in free cash flow in Q1, and we expect to continue executing our buyback program in a thoughtful manner. As of March 31, 2026, we had $59.5 million remaining under the current authorization.

Now on to guidance. For the full year 2026, we expect revenue to be in the range of $380 million to $420 million, representing a year-over-year growth of negative 12% to negative 3%. We are raising our full year adjusted EBITDA guidance and now expect it to be in the range of $64 million to $80 million, representing an adjusted EBITDA margin of 18% at the midpoint.

For the second quarter of 2026, revenue is expected to be between $95 million to $103 million, representing year-over-year growth of negative 13% to negative 5%. Adjusted EBITDA is expected to be between $16 million to $20 million, representing an adjusted EBITDA margin of 18% at the midpoint.

Our revenue outlook reflects solid execution in Q1 and the continued uncertainty in the market conditions. Our adjusted EBITDA guidance reflects the strength of our core marketplace profitability and our continued commitment in maintaining disciplined margin profile while investing in the transformation.

As we look at the rest of the year, we are staying focused on our core priorities, driving progress in higher-value work, improving trust and quality and building scalable growth engine. We believe these are the right indicators to evaluate the business as we transition to the next phase. With that, we will now turn the call over to the operator for questions.

[Operator Instructions] We have the first question from the line of Eric Sheridan from Goldman Sachs.

Maybe 2, if I could. One, just coming back to the transformation strategy. I want to know a little bit more about the duration of sort of completion of what you call sort of the infrastructure layer and putting the pieces in place, and how we should be thinking about when you exit that phase of the transformation and some of the execution shifts more predominantly to go-to-market or what the mix is of building blocks relative to execution on the transformation strategy, that would be one.

And then the second one would just be, you talked a little bit about partners and evolving the go-to-market strategy. I want to know if you could go a little bit deeper in terms of what those types of partners might look like and what market opportunity they might open up that maybe you're under-indexed to today?

Essentially, the transformation is an ongoing process, and since we just started it mid last quarter, we are anticipating to see results over the remainder of the year with more emphasis, because it takes time between the things that we develop and release until they show up in the numbers, to see this more in the second half of the year and definitely towards the end of the year. And as we said, we will continue to be transparent on what we're seeing and the progress there.

As the transformation, my belief is that the entire market is in a transformational moment where every business needs to adapt to a new reality where AI plays a critical game, not in just making products better and more efficient, but also being able to connect with agentic realities where agents are actually using the platform. This is not limited to this year, I think that this is going to be a transformation that every business out there will have to implement in the coming years.

It's very similar in my mind to the digital transformation when businesses went from the offline to the online and now are seeing a new reality. Now we are already seeing some initial signals that we called out in the opening remarks of areas where that transformation has started, and we started rolling out experiments and new products and how they influence a higher quality matching and focuses on better conversion and better retention around high-end talent and larger scopes.

So over the next few quarters, we will continue to report on what we're seeing. The progress, and obviously, the more history we have in doing this, the results should accumulate. And as we said, this is going to be a turnaround year where the next years are going to be years of growth.

In terms of the other question regarding partners and go-to-market strategy. Again, we very much focus on this idea of human-in-the-loop partners where the requirement for a skilled talent network to make judgment calls on AI's work and on calibrating models and checking integrity and ensuring accuracy is paramount, and I think that this is an area where Fiverr can play a major role.

That together with agents that we're developing to automate some of this work to make sure that the experts are actually focusing only on things that humans need to focus is a very important and critical role in what we're doing. It is still early, there's a lot of AI automation use cases. We're running successful pilots with some initial customers, and we see that there's a lot of demand for Fiverr to become a fulfillment partner for SMBs to adopt automation. So again, early in the process, but we will have more things to call out in future quarters.

We have the next question from the line of Jason Helfstein from Oppenheimer.

Kind of like a 2-part question, but on the same theme, so obviously, you've had a front row seat to this whole evolution of how agents are evolving the business. As you're seeing kind of even these more cutting-edge frontier models coming out, how is that further evolving your view on kind of how both you will leverage this technology, how your companies -- how your customers will leverage it?

And then there's also been discussion among investors that AI agents are like lowering the barriers to new business creation. There's like more -- new domains coming online, I think a record number of apps being submitted to the app stores. I guess like how do you think about that, like is that a positive for Fiverr or a negative for Fiverr? Can you leverage that? Just kind of broadly all bring those topics together.

So essentially, the way we're thinking about how agents are becoming a part of what we're doing, essentially, agents are very much learning from human -- skilled people on how to run workflows much, much faster, much more efficient, 24/7. But at the same time, a lot of what agents are doing require ongoing judgment.

And it's much like everything else with AI. Everybody has the access to the same AI which means that also everybody has access to the same agents that are available out there. Just having access to this technology doesn't give you a competitive edge, it just flattens everything and it -- maybe it elevates the floor. But on top of what agents are doing and how you create skills for agents, how you create workflows that combine multiple skills, multiple agents, that is an art.

And that is what a lot of companies are actually focusing in and providing their employees, their expert skills onto agents. Now in the case of businesses, not all businesses have the talent to actually train an agent and oversee what the agent is doing and providing judgment and calibration and fine-tuning.

We see this on Fiverr. The implementation of agents across our system internally require tremendous amount of calibration to overcome hallucinations, inaccuracies or just moderate execution. So definitely, the role of an expert, of an employee, of a freelancer is changing, but it is highlighting the uniqueness of what they can build, bring to the table to provide an advantage.

Now, when we think about lowering the barriers, or agents lowering the barriers for business creation, this is amazing news for us. I've seen lately staggering numbers on the launches of new products in recent months. I believe April was the highest month with over 19,000 new announcements on product and company releases.

On the one hand, the signal to noise is extremely complex because it makes everybody a builder, but building something gives you nothing. It's all about the deployment, it's all about taking you to the market. It's getting noticed, it's validating and then it's scaling. These tasks are largely unresolved yet by AI.

Can AI help in this? Yes. But generically speaking, because it provides the same help for everybody else, again, flattening everything. What gives you that competitive edge when you create something or you almost create something and you want to improve it and then you want to deploy it and then you want to scale it, this is where experts come in.

Now the reason why I believe that this is not still showing up in the numbers is this is a transformative period. I remember the digital transformation from 2000. It took time for businesses to understand that if you don't have a website, you're going to be out of business over time. The same goes with AI, and the same goes with experts that need to come with AI to make your AI or your execution better than your competitors.

And I think that we're in the early innings. It's going to take some time. But all in all, I actually think that this is really a great upside for us. And when I look at the marketplace, we see AI consulting, business formation, all grow really strong double digit. So this, to me, I think it's an early sign of what would come.

Also AI-related categories continue to be super strong. AI development up 118% year-over-year. Marketing automation, also growing really strong double digits, and I can go into -- my answer is really long, so I'll stop here, but I can give more color around this.

I guess it hasn't automated us doing this earnings process yet, but maybe someday.

We have the next question from the line of Ron Josey from Citi.

Automation is the future, right? Can't wait. I wanted to ask a little bit more -- 2 questions. First is on just attracting the talent to the marketplace as we go to more upmarket projects -- upmarket and towards these multiphase projects. We're clearly seeing continued strength on spend per buyer. We're seeing that growth reaccelerate. So talk to us just about the talent on the marketplace as we go more upmarket and these multiphase projects.

And then one of the things that struck me, matching is a key part of the marketplace. And I think I heard the team talk about mismatch rates being down 10%. So during this transformation era, talk to us just about the ability to continue to execute on some of the key tenets of the marketplace like dynamic matching and the results that you're seeing.

On the first question, talent is super important. As we know from research, quality is core and the ability to match quality, drive quality perception is super critical, and this is very much in the center of this transformation for us. Now getting access or getting talent to the platform has never been an issue. Actually, we always had, I would say, an abundance of talent.

What we're more adamant right now is really understanding on the meta skill level, what does it mean to be a talent and for what type of customer and what type of an outcome, and creating this skill graph is super critical. In other words, what this means is, a, we're more picky about talent. But two, by improving the algorithm, improving the matching, we can create -- we can anticipate better outcomes, better happiness, and as a result, we also anticipate better retention in our customers.

Those are the key things. So when we call out the reduction in mismatch, this is key because this actually means -- and it's like hiring for any job, right? Some people that you hire turn out to be amazing, some you later on figure out that there is something that you missed or they missed, which makes the match not optimal. We don't want to tolerate this. And we actually think that if there's one huge advantage based on data that we've accumulated over 16 years, billions of interactions, tens of millions of transactions, is being able to take that data and actually make matching like anything that was done before by anyone.

And this is a reason to win, this is a reason to exist. So we're putting a lot of pressure there and seeing numbers, seeing the amount of actual matches that were mismatched in hindsight, getting down is a very positive signal, and we're far from that. We're just starting right now. And obviously, over time, as we accumulate more signals, deeper signals, we will continue sharing it with you guys.

We have the next question from the line of Bernie McTernan from Needham.

This is Stefanos Crist calling in for Bernie. I wanted to follow up on Ron's question on the matching, could you maybe give us any more details on what a baseline mismatch rate is or maybe what the revenue impact is of that 10% reduction? And then I also wanted to ask on the AutoDS pull forward, could you talk about what went right with that campaign? And is the pull forward just a dynamic of annual subscriptions? Or is there anything else?

In terms of matching, we haven't publicly shared any specific numbers, but with this transformation, we're really focusing on trust and quality as core primitives, so to us, mismatch is really about making sure that we have this deep understanding of what are the things that will drive a perfect match between a customer with their specific circumstances and needs and the very specific skill and validated experience of a talent to do this task, okay?

And again, as we move forward to do this restructure and refocus, we are going to be able to provide more color, more specific color as we really focus on those KPIs. And this nuanced understanding is super important. It's not just driving revenue today, but it is driving the flywheel and driving the repeat rate.

Now on the AutoDS, essentially, we had a very strong influencer campaign that we found great timing to do. In Q1 -- essentially, we were kind of focusing this on Q2, but we were able to actually execute this slightly earlier, not something that we plan to replicate, but -- which is baked into the numbers, which that has drove strong sign-ups at the beginning of the year, okay? So we called it out because this was a great opportunity for us to move something from Q2 to Q1 and do it earlier.

We have the next question from the line of Doug Anmuth from JPMorgan.

I have 2. Micha, can you just talk about where you are in terms of hiring AI native personnel within your own company and how you're thinking about that? And then Esti, can you just help us bridge the EBITDA margins from the 21% in 1Q to the 18% or so for the full year?

In terms of hiring AI native, we're on track. We continue to do this, and it's -- obviously, the -- I think the competition over talent is pretty brutal, but we've added incredible people into the team. And what's interesting is that if you really can find, identify and attract the right people, it's really different than it used to be before in terms of the amount of people that you need to do this because essentially, those are really AI natives are very much what I found in common, and I actually wrote about this. It is really this idea that they have this founder mentality, this entrepreneur mentality. And what's really common around them is that they're 10xers.

Essentially, there are people that can do 10x, and a lot of what they do is really put up these systems, these agents, these workflows and be able to connect them for the rest of the company and continue evolving this, tweaking, calibrating, validating. It's incredible. And this is really, I think, also points to future corporates being leaner, smaller, but having people that can actually multiply the work. And talent strategy is important, not just for us, but for all companies, top of mind, in my opinion. I'll let Esti address the EBITDA question.

So as for the 18% full year margin guide, so that actually reflects the hiring and the investment that we're doing in the transformation, and that picks up over time during the year, so it's consistent with our expectation at the beginning of the year. As you know, overall, we're very committed to execute the transformation and -- but that is with a strong financial discipline, so we are planning to execute that together with higher profitability and to continue to generate healthy cash flow.

We have the next question from the line of Brad Erickson from RBC Capital Markets.

I guess all this transformation talk, larger buyers, et cetera, I wonder, do you think about adjusting the economics or take rates or pricing or how you merchandise your services at all to kind of serve that type of customer? And then along those same lines, what would you say you want to kind of be signaling here this morning on overall marketing intensity as you pursue, again, this kind of maybe different customer profile than you have historically?

As for the first question, there's nothing to call out at the moment. The -- what we see from the dynamics is as expected. I don't want to speculate on future models. Obviously, it's a very dynamic company. We look at it all the time, but I don't have anything to call out at the moment. In terms of similar to the market with the customer profile and marketing, so we gave some example of use cases in the prepared remarks, and these types of examples are rising. That portion of the business is growing. It is taking a larger size of our overall activity, and as it continues to grow, it will drive the business for growth.

Now as we create more efficient, higher trust, higher quality solutions with everything I've outlined, again, I'm happy to go through it, but I was pretty long in my opening remarks about what we're doing with the transformation. What we're doing with acquiring customers, with creating the flywheel will become more efficient, allowing us to also invest more aggressively in marketing to feed this flywheel as it grows.

That's the plan. This is why we said at the beginning of the year, and I'm reiterating this, we're building ourselves for growth in the next couple of years. And this is really important and the foundational work that we're doing is not -- are not buzzwords, it is really the essence of the business.

We have the next question from the line of Matt Condon from Citizens Bank.

My first question is just on as we look at the green shoots that you're seeing in success moving into more complex projects, can you just talk about what you're seeing today as far as the product launches or go-to-market that's really driving that success in the transactions of $1,000-plus growing, clients purchasing projects $1,000-plus growing?

And then my second question is just you talked in the letter a lot about this comprehensive work platform, can you just talk about the specific products that you are really focused on today is really enabling that end-to-end platform, as you called it?

The truth is we're only 2 months into the transformation, so what we've progressed so far is not big product launch yet. What we're doing is really dealing with the fundamentals of the business, the infrastructure of the business, the data infrastructure, the matching algorithm, the quality improvements, all of these. It's not really about new product launches, but it is very much about how we enhance everything we do. In some cases, we completely rewrite those solutions.

Now we -- I called out job post as an example, dynamic matching, managed services, and they're driving large engagements on Fiverr. And we highlighted a few examples in the prepared remarks, but more broadly, we're seeing a clear shift in how customers use the platform. These products are fundamentally changing Fiverr from a place to complete isolated task into a platform to execute multiphase high-value projects.

So again, 2 months into it, it's not about shiny, new launches and creating promises. It's about going back to the basics and making sure that we provide a level of service, a quality of service that is unmatched. That is the focus, and this is where we're starting to see the numbers provide signals.

Does that answer your question, Matt?

Yes, that's great. I just had another question just on the comprehensive work platform, just the end-to-end platform that you're launching, like what are the capabilities that you really need to launch to enable this end-to-end service?

Sorry for skipping this. So on the product front, we talked about investing in an end-to-end fulfilling layer, which we think is key to identifying and increasing the value of Fiverr as an active partner in ensuring that the customers and the talent is engaging efficiently, and if there's anything in the process that we need to identify to course correct, we're there.

This is really important because as you go to more bespoke, more complex types of projects, being there and being a part of that transaction and making sure that you understand the scope, you understand the progress, you can create transparency. You identify early on if things are on track or are deviating from track is super important. And this is a whole new layer that we are creating, and it's important as we think about changing the perception of Fiverr as a high-end solution for high-end scope and talent.

And as we -- I can talk about those core pillars. I just don't want to reiterate the -- my opening comments, but it's all about the matching and the brain behind things. It's about the product itself. It's about the go-to-market and how we entertain, how we engage with customers, and it's all about this idea of operational excellence where we're creating this extremely high execution capability, which we want to also provide for our customers.

The learnings that we have as a team on how to be more efficient, where do you need to have a human-in-the-loop and where can Fiverr help with both providing you with the right tech, but also with the human-in-the-loop is critical. And all of these learnings are transforming from our internal execution into the tools that we are and we will provide for our customers and for talent.

We have a last question from the line of Josh Chan from UBS.

I guess with your move upmarket, what's the profile of the customer that you're ultimately targeting? You mentioned projects above $1,000, so is that the benchmark of what you're targeting? And then secondly, on free cash flow, could you talk about whether the Q1 level of free cash flow is roughly sustainable for the rest of the year and then your willingness to more aggressively buy back the stock at these levels?

So in terms of focus, it's still largely focused on SMBs, probably larger than the micro businesses, but still SMBs. There's a lot of untapped demand, both into larger customers and larger use cases. If every business and definitely midsized businesses and up are building their own new tech stack that includes agents, APIs, MCPs, all of these use cases require a tremendous amount of validation to check accuracy, integrity, compliance, security, all these things require the mix of both technology and human-in-the-loop to continue calibrating, validating, in some cases, building, fixing.

Those are areas that Fiverr is a perfect fit. And so we'll see those -- more of these use cases as we continue exploring this. But largely speaking, it's SMBs. And the projects of $1,000 and more is a proxy, it's a way to identify the spend capacity and willingness on digital services, and so that has provided us with a good point. Now it's $1,000 and above, and within our marketplace, we have everything in ranges of hundreds to tens and sometimes hundreds of thousands of dollars on transactions. But that's kind of a reference point to help us identify the seriousness and willingness to invest in your business.

As for cash flow, we generated $21 million free cash flow in Q1, and we plan to continue to generate strong cash flow and to be consistent and disciplined on capital allocation. Obviously, our capital allocation priorities remain the same. First and foremost, we are investing in the business, and we will continue to invest in the transformation and generating cash flow. Now as for buyback, we have authorization of $59.5 million, and we will use it and act on that thoughtfully over time.

This concludes our question-and-answer session. I would like to turn the conference back to the management for any closing remarks.

Thank you, Marin, for moderating the call today. And for everyone joining, wishing you a great day and looking forward to speaking soon.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Fiverr Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Emily Greenstein, Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the fourth quarter that ended December 31, 2025. Joining me on the call today are Micha Kaufman, Founder and CEO; and Ofer Katz, President and 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 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 Factors 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 measures is 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.

Thank you, Emily. Good morning, everyone, and thank you for joining us. Let me start simply, 2025 was an execution year, and we delivered. Revenue grew 10%, accelerating from 8% in 2024. Adjusted EBITDA reached $92 million, up 23% year-over-year with a 21% margin. We met the revenue and profitability targets we set at the beginning of the year while continuing to generate strong cash flow. Importantly, we achieved this while repositioning the business for where the market is headed. Products like Dynamic Matching and managed services are enabling us to expand into larger, more complex projects and drive sustainable wallet share growth. Spend per buyer increased 13% year-over-year, accelerating from 9% in 2024. Buyers spending over $10,000 annually grew 7% and GMV from projects over $1,000 increased 23%. These are not just product milestones. They reflect a broader shift in how businesses engage with talent.

As many of you saw in the shareholder letter we published this morning, following the restructuring we undertook a few months ago, we have since developed and begun executing a comprehensive multiyear plan to transform Fiverr from a transaction-oriented marketplace into a trusted work platform, one that enables businesses, AI models and agents to collaborate with talent on complex, high-value outcomes through intelligent matching, integrated workflows, end-to-end orchestration and fulfillment and durable trust. Before I go deeper into that transformation, it's important to step back and understand the broader environment that led us here and why we believe this is the moment to act decisively. There's a prevailing narrative that AI eliminates labor. That framing is incomplete.

What AI actually does to work is, one, it compresses task duration. What took weeks now takes days. Two, it expands project ambition. When execution becomes cheaper, scope grows and the number of projects grows exponentially. Three, it democratizes capability. Individuals can operate with domain expertise beyond their original knowledge base. The result is not less work. It is more ambitious work. Human talent remains essential. What changes is where value resides in context, judgment, orchestration, trust and ownership of outcomes. There will be displacement in lower-value transactional work. We are already seeing that dynamic. At the same time, demand for higher-value specialized work is accelerating at a healthy double-digit rate. As work becomes more nuanced and complex, matching talent becomes harder, not easier. That makes Fiverr's core mission of connecting businesses with the right human talent more relevant than ever.

Looking ahead, much of the workflow will become human in the loop. Hiring decisions will increasingly be influenced and in some cases, initiated by AI agents. In that environment, traditional resume-driven hiring models become inefficient and unreliable. Precision matching contextual data and outcome history becomes critical. So what does this mean for Fiverr? First, we see a significant opportunity. Today, projects over $1,000 represent less than 15% of marketplace GMV, yet they are growing 23% year-over-year. With focused execution, we believe this segment will become a materially larger contributor to our business. We are prioritizing 2 categories of high-value work. The first is complex orchestrated engagement requiring collaboration between businesses, talent and Fiverr. For example, through managed services, we support a Georgia-based automotive technology company with ongoing multilingual UGC production for the Canadian market, coordinating multiple creators each month.

This reflects growing demand for scalable, always-on creative production powered by global talent. The second is AI-native work building the AI-enabled economy. For example, we are partnering with AI model safety companies to provide domain experts who help identify vulnerabilities in foundational models. In another partnership, we are enabling enterprises to build AI workflows automation through white label solution that allows them to deploy AI agents quickly and cost effectively. In one case, we streamlined a historical case discovery workflow across Salesforce and Jira, reducing knowledge gaps and improving support efficiency. What would have required 2 weeks of internal implementation was delivered in 1.5 days at the cost of $6,000, reducing deployment time by roughly 90%. These examples illustrate where the market is moving and where Fiverr is leaning in.

Fiverr has a strong right to win in this AI-enabled talent economy. First, the future of work is human in the loop. Scarcity lies in high-quality human expertise, not AI agents. Fiverr operates one of the largest global talent networks and has deep expertise managing liquidity, quality and engagement at scale. Second, our end-to-end transaction model is built around outcomes. That structure integrates naturally into AI-enabled workflows and eliminates much of the friction inherent in traditional hiring system. Third, our data is a durable advantage. Over 16 years, we have captured not only millions of transactions, but the contextual relationship between buyers and sellers, what was delivered in what context and with what results. That depth of data enables precision matching in increasingly complex environments.

Capturing this opportunity is why we are making foundational investments across data infrastructure, back-end system and product experience, accelerating Fiverr's evolution into a fully AI-native talent platform. While we have made steady progress over the years, the velocity of AI innovation requires us to move faster and more decisively. A few months ago, we initiated a company-wide restructuring to accelerate this shift. We have since developed a multiyear execution plan built around 4 pillars: the first is matching, building advanced semantic and reasoning layer powered by proprietary data to enable AI-native talent matching. The second is product, transforming the experience across matching, fulfillment, collaboration and talent management. The third is go-to-market, expanding into enterprise and AI-native distribution channels with scalable growth engines. The fourth is operational excellence, becoming an AI-native organization across engineering, product and operations.

We expect tangible impact within 4 to 6 quarters, including a stronger high-value work flywheel and proven AI native growth loops. These milestones will position us for meaningful revenue expansion in the years ahead. Let me be clear, this is the moment to lean in. AI is not shrinking the market for human talent. It is reshaping access and expanding ambition. Platforms that own the intelligent matching layer between business demand and human capability will capture significant value. Fiverr has the assets, infrastructure and strategic clarity to lead in that environment. 2026 will be a transformational year, positioning us for accelerated growth in 2027 and beyond. Before I turn it over to Ofer, I want to acknowledge that today marks his final earnings call as CFO.

Ofer will continue as President, focusing on strategic investments and M&A as we execute this next chapter. Esti, after 10 years at Fiverr and 4 years as EVP Finance, will assume the CFO role. Her deep institutional knowledge and disciplined financial leadership provide important continuity as we execute through this transformation. Jinjin, after 7 years leading IR and strategy, will step into a newly created Chief Business Officer role, overseeing revenue, talent, fulfillment and business operations. As part of this transition, she will be relocating with her husband and 2 young children from San Francisco to Tel Aviv to take on this expanded responsibility. I'm truly excited about our expanded leadership team that will strengthen our ability to execute with focus and velocity as we move forward. With that, I'll turn it over to Ofer for the financial details.

Thank you, Micha, and good morning, everyone. I'm excited about the transformation we are undertaking and very happy to welcome Esti and Jinjin into their expanded leadership role. The work ahead is ambitious, but across the management team and the broader organization, there is a strong alignment, clarity and conviction on the direction we are taking. Most importantly, there is a shared sense of purpose that ties us back to Fiverr's founding 16 years ago. That shared sense of purpose brings tremendous focus, energy and confidence as we enter 2026. With that, let's turn to financial highlights. As we wrap up 2025, we delivered fourth quarter revenue of $107.2 million, up 3% year-over-year, while achieving record adjusted EBITDA and adjusted EBITDA margin.

Adjusted EBITDA for Q4 was $26.5 million, representing an adjusted EBITDA margin of 25%, an improvement of 470 basis points from a year earlier. We continue to generate healthy cash flow with $21.8 million of free cash flow in Q4 '25. We had a convertible note with a principal amount of $460 million, which was fully repaid during Q4 '25. We continue to execute a disciplined, thoughtful capital allocation strategy, and our strong balance sheet allow us to invest in growth, return capital to shareholders and remain opportunistic on the M&A front. Diving into our Q4 results. In Q4, marketplace revenue was $71.5 million, driven by 3.1 million active buyers, $342 in spend per buyer and a 27.7% marketplace take rate. Growth in this segment continues to be influenced by broader softness in the SMB sentiment and muted freelancer hiring demand.

More importantly, we continue to see diverse trends on the marketplace between low-end transaction and high-value work. GMV from transaction over $1,000 grew 22.8% year-over-year in Q4 and continued to accelerate. Looking ahead, we expect elevated volatility in marketplace revenue this year compared to last year as the transformational work we are doing intentionally deprioritize effort to optimize low-end transactions, which today represent the majority of the marketplace. As we make progress towards strengthening our flywheel for high-value and AI native work, we expect this focus area to become a larger portion of our overall business, which will lead to reacceleration of this segment. Services revenue in Q4 was $35.6 million, representing year-over-year growth of 18% and accounting for 33% of our total revenue in Q4.

The upside was driven by the continued strength in Fiverr ads, subscriptions and e-commerce solutions. For 2026, we expect more moderate growth in service revenue as the impact from the AutoDS acquisition normalize and the pace of expansion for Fiverr Ads and Seller Plus moderates compared to 2025. As Micha mentioned, 2026 will be a transformational year with critical conventional investment across data infrastructure, matching technology and product experience to strengthen our high-end talent flywheel. It is important to note that we are committed to executing the plan with strong financial discipline. The structural profitability of our core marketplace remains strong and is expected to stay north of 20% as we retain significant control to maintain the health and the profitability of the business.

At the same time, we will use a portion of the cash generated to fund the transformational work ahead. We expect that to impact the adjusted EBITDA by approximately 200 basis points in 2026. On capital allocation, we maintain a disciplined approach and expect to continue executing our buyback program in a balanced manner. As of December 31, 2025, we have $67.5 million left on the current authorization. Now on to guidance. For the full year 2026, we expect revenue to be in the range of $380 million to $420 million, representing year-over-year growth of negative 12% to negative 3%. Adjusted EBITDA is expected to be in the range of $60 million to $80 million, representing an adjusted EBITDA margin of 18% at the midpoint.

For the first quarter of 2026, revenue is expected to be between $100 million and $108 million, representing year-over-year growth of negative 7% to 1%. Adjusted EBITDA is expected to be $19 million to $23 million, representing an adjusted EBITDA margin of 20% at the midpoint. The wider-than-normal revenue guidance for the full year and the first quarter reflects the elevated uncertainty as we execute our transformational plan focused on high-value work alongside evolving market conditions. On the adjusted EBITDA side, the updated guidance for this year reflects the revenue trends we see as well as the impact from the investment into foundational works. That said, we do not expect structural change to the core business unit economics, and we expect our ability to drive increasing leverage for the marketplace business model remains intact. With that, we'll now turn the call over to the operator for questions.

[Operator Instructions] First question comes from Ron Josey with Citi.

I had 2, please. Micha, you talked about an execution plan around matching product, go-to-market and operations. And given the progress, I think, that we've seen around managed services and Dynamic Matching, just talk to us about how you see these investments in those 4 core areas sort of unfold? Meaning do you have more work to do on the product before we start investing in enterprise go-to-market? Any insights there would be helpful as we think about this multi-quarter transition. And then Micha, over the balance sheet, we ended the year with approximately $300 million in cash. I know we've mentioned M&A a few times on the call and Ofer's new role. Talk to us about what you're looking for maybe on M&A or just overall capital allocation.

Thank you, Ron, for the questions. So essentially, the way we're thinking about the investment is really to deprioritize low-end and low-value transactions and focus most of our investment in high-end, high skilled, larger scope projects, a segment that is currently under 15% of our revenues, and we think it should and it will contribute much more to bring us back to GMV growth. That's what 2026 is all about. It's about making that turn so that 2027 and beyond will be growth years. Now bear in mind that the nature of the transactions that are happening on our platform are changing. And we're running a platform that has been built over 16 years. Some parts of it need to be rebuilt. Some parts of it need to be reinvested in and aligned into this new reality.

As I've said in my opening comments, the matching portion of it has to deal with the more nuanced needs of businesses today. So we need to calibrate this and make sure that we maximize the usage of our very deep data assets in order to do this. The same goes for product. When we think about the entire matching and fulfillment management, we need to understand that larger projects require more sophisticated fulfillment and collaboration and matching capabilities, also understanding that on the demand side, we may not just see companies and human beings, but also AI agents that can actually take care or find benefit from using our platform.

When we think about go-to-market, again, in this case, we are expanding our go-to-market flywheel. So first of all, is the high-value projects of work. And then there's the aspect of AI native use cases. And I've given a few examples in my opening comments in our letter to shareholders where we see more and more businesses and foundational companies that are building more AI models and more agents and all of them require human in the loop to continue calibrating, ensuring their security, their integrity and overall being able to make them customer ready. And we're seeing more businesses that are coming to Fiverr because we probably have the largest and widest scale talent in the world on our platform. And so adjusting for all of these new needs will help us accelerate that portion or that segment of the market, which we feel is the most durable and most sustainable to ensure that we can continue growing for many years ahead.

Ron, on the M&A front, I will start by saying that we have $300 million, but the amount of cash is growing and expected to grow throughout the quarters. And then we continue to be highly disciplined in the way we utilize this cash, looking for tuck-ins and then large transaction at the same time. Of course, we're looking to going up market and any M&A should support this high end and flywheel, as Micha mentioned earlier.

The next question comes from Eric Sheridan with Goldman Sachs.

Just want to come back to the theme of deprioritization of the lower end as you realign the platform. How should we think that manifests itself in financials as we move deeper into the year? Are there any elements of things that will impact the OpEx line as you sort of pare back investments in the lower end of the market or elements where there could be more volatility than usual as we think about either the first half versus second half dynamic as you sort of reposition the business for the longer term?

Eric, thanks for the question. So when we think about the deprioritization, it's really to ensure that the majority of our resources are directed in growing the segment that, as we demonstrated, have grown significantly over last year and make sure that it becomes a much larger portion of our market. As a reminder, when you look at the low skills and small scope, a lot of that is being replaced with AI solutions. And still, that is a large portion that contributes to Fiverr growth. In that segment, we are seeing a decline. And we've been talking about this, and we don't foresee that, that decline is going to slow down. The assumption is that with the newer developments around AI, this will continue to be the case.

And so that centralization in our business has to change. And therefore, we're shifting those resources into ensuring that the high-end portion of our business that has been growing will become a larger portion of our overall GMV contribution. That is extremely important, and we want to make sure that we put every available resource towards that. But we're very committed to execute this transformation with very high degree of financial discipline. So we're going to protect the core business to continue generating healthy cash flow. And we talked about the structural profitability of core business to stay north of 20%. I hope this answers your question.

The next question comes from Bernie McTernan with Needham & Company.

Maybe just 2 for me. How should we expect the margin profile of the company to look after Fiverr Forward is done or completed or some progress on? Is this going to be a higher-margin company or a lower-margin company than before? And then how does Fiverr Go fit into this? Are you seeing Fiverr Go help higher-value transactions already? Or just interested in terms of -- if this is still a key product going forward?

I think on the margin profile, so we are going to see some lower margin in terms of EBITDA in the short term. We anticipate the long-term EBITDA to go back to the 25% long-term EBITDA shortly after. In terms of gross margin, I think it's going to remain the same. It's all about the profile of investments, investing a little bit more into R&D, which is why we anticipate some pressure on the margin in short term.

Bernie, on your question about Go, so essentially, a lot of what we built into Go has already been integrated into several aspects of our product. And when we talk about the investments that we're doing in the product side as one of the pillars of this year, a lot of what we've taken from Go and how it can help buyers and sellers communicate more effectively, scope their work, the nuanced understanding of exactly what they need and what is the most suitable talent for the task is going to be integrated further into the product. So we're not we're not focusing on Go as a product by itself, but actually taking the assets that we've developed for that project and integrating them into the customer experience.

The next question comes from Jason Helfstein with Oppenheimer.

This is Chad on for Jason. It seems like you're taking one step back for kind of 2 steps forward. You're cutting a lot of costs out of the business with the restructuring. Is that having a bigger impact on revenue in '26 than maybe you previously thought? And then how should we think about OpEx growth in 2026? Do you have to invest more in the business or -- that's it.

Thanks for the question, Chad. So on the first question, the answer is no. The revenue is not impacted by restructuring. It reflects the ongoing trends on the marketplace, meaning lower end versus higher end, lower end seeing a decrease, higher end seeing an increase. And again, going back to our strategy, the entire idea is to double down on high end and make it grow faster and make it become a more meaningful contributor to our GMV growth.

We've been talking about this for a couple of quarters. What we've seen is an elevated sense of urgency to move faster, which is why a lot of the strategic -- the multiyear strategic plan that we have is all about that. And we said that once the high end is going to become a more meaningful contributor to GMV, GMV will go back to growth. And again, we're seeing this with double-digit percentage growth in transaction over $1,000. And so we're doubling down on that. So again, the reflection is just ongoing trends of what we're seeing in the low scale versus high end.

Then on the second part on the OpEx, I think that -- we think that the core business will continue to deliver a 20% plus margin. The portion of what we will reinvest into the business on the transformational work.

The impact of that is going to be around 2 percentage points. And I think it's also worth noting that due to recent appreciation of Israeli shekel to U.S. dollar, FX have added over $10 million of headwind on EBITDA -- on EBITDA guidance for the year.

The next question comes from Marvin Fong with BTIG.

Congrats to Jinjin and Esti. My first question, you talked about returning to growth in 2027. And I just wanted to understand that commentary a bit better. So are you expecting the high-value work to reach a majority of the marketplace by 2027, even in maybe a single quarter of 2027? Or when do you actually expect the majority of the marketplace to be high-end work? And then I have a follow-up.

Thanks for the question. So there's a GMV mix shift. High-value growth will continue to grow and become a bigger portion of the total market base. And this will lead to GMV inflection. And as we said both in the letter to shareholders and in the opening comments, that change is also going to allow us potentially over the year to start giving the market, the signals that we're seeing. Right now, the metrics that we're reporting is going to remain intact. But over time, we want to put more emphasis on what's strategic and what we feel is going to drive the sustainable growth of the business over the coming years. We haven't guided specifically for that, and we're not talking about percentage. And mathematically, even before it gets to the majority, it will drive GMV growth. But this is the plan, and we expect to see signals over the coming quarters to let us know that the investment there is actually accelerating the growth of that segment.

Got it. Okay. That's great. And then my second question, I would just like to double-click more. I think you mentioned or we've been talking about go-to-market and distribution channels. And so I'd like to talk about both enterprise a little bit more. Is there anything structurally you're doing to either the offering or the way you intake enterprises or approach enterprises that's going to change maybe a more formalized enterprise segment? And then in the shareholder letter, you talked about one of the measurable signs of progress would be one -- at least one AI native distribution channel contributing to GMV. I just would love to understand, is that a specific partnership you're developing there? Or do you just kind of expect the growth of those channels for at least one of them, presumably ChatGPT or Gemini to just naturally become a large distribution channel for you?

Thank you. The reason why we didn't call out specifics was deliberate. But it's -- the expectation is based on existing proof of concepts that we're having with AI model companies and enterprises, and we believe that when the product can deliver their needs at scale, this could be a very strong contributor for the growth. And so when we think about in the same aspect on our enterprise. And we've given some qualitative examples, again, both in the shareholder letter and in the opening remarks, and I've called out the example of the partnership that we have with an AI model safety company to provide domain experts who help identify vulnerabilities in foundational models.

And in another partnership, enabling enterprise to build AI workflow automation through white label solutions that allow them to deploy AI agents quickly and cost effectively. And again, this is all a part of the fact that AI enables many more businesses to build more and to build more ambitiously. Along with that building, there's a lot of support that they need. There's a lot of calibration and fine-tuning. There's very specific types of expertise that are required to take those products and those solutions and make sure that their integrity is high. They're coming to us with it, and we believe that we can create meaningful flywheel around these opportunities.

The next question comes from Nat Schindler with Scotiabank.

Yes, Micha and Ofer, can you help me understand -- I'm a little confused. I understand deprioritizing the lower end of the market. But I'm trying to figure out, is there any products you're not going to actually even be selling, any services from your service business that you're just not going to sell to them anymore? Because I'm trying to understand why you think revenue will get worse as the year progresses. So your revenue declines exceed as you go down as you go forward. I understand investing it might take a little while to turn -- to really build the enterprise business further. But I'm trying to understand what you're seeing in quarters 2, 3 and 4 that make them worse than quarter 1 on revenue.

Essentially, we're not killing any of our products. It's -- what we're mostly deprioritizing is the continuing optimization of these products in favor of developing the types of product experiences and the underlying technologies and infrastructure to address the higher-end project. So this in and of itself should not be a driver for decline. And it's not about the types of services or products that we're discontinuing because we're not discontinuing anything. We're just making sure that after the restructure, we have the vast majority of our resources to invest in the higher end and higher skilled types of services for the larger types of customers that are spending more with us and accelerate the growth that we're seeing there even further.

Okay. I still am a little unclear on them what signal you're reading that things are going to decline more in the back half of the year than in the front half.

So we've seen some decline in simple services across the board. There are areas where we're seeing slightly higher decrease than others. For example, within programming, we're seeing the simple side of programming, things like simple website building, accelerating the decline as a result of vibe coding and simplistic types of coding-related solution. But on the same side, we are seeing areas where we're seeing growth, like digital marketing is one of them where we're seeing nice growth in services. So the idea is not to discontinue anything. And by the way, we've called out these changes over the past few quarters.

As an example, writing and translation was heavily impacted by AI, down 20% over the year. And we've seen this for a while. We've seen the same under the vertical music and audio is also impacted, but slightly less in the teens range, primarily because voice over is a meaningful portion of the music and audio vertical. So there's anecdotal areas. Again, the decline that we're seeing there is mostly in the very simplistic low skill related types of services. And this is not our focus now. That transformation is going to continue happening, and that's fine. The function that we're focusing on is the one-of-a-kind way for us to deal with high-end, high-value transactions, utilizing all the data that we've collected over the past 16 years and the incredible talent bench that we have with us today.

The next question comes from Josh Chan with UBS.

Sorry about that. Apologies for that. I guess maybe following up on the prior question a little. I guess if you take your full year guidance, it's less than 4x your Q1 revenue guidance. And so I guess what's the -- conceptually, why does the rest of the year kind of step down from Q1, I guess? What are you seeing that's worse? And then my second question is, is there a way for you to frame for us what free cash flow can be in 2026, maybe from a conversion perspective versus EBITDA, something like that?

I think on the first part, I think the combination of the trends we are seeing in Q4, together with the transformation that has been discussed is creating some uncertainty in terms of the 2026. And under those circumstances, we are guiding for a wider range.

Yes. And on the second one, the free cash flow, it largely follows EBITDA. And we've guided for a midpoint EBITDA of 18%, 20% plus on the core business and 200 basis point impact from the investment that we're doing in the restructuring.

The next question comes from Matt Condon with Citizens.

First is just on, I think you said in the shareholder letter, you're building the marketplace for more reoccurring work. Can you just talk about the products and functionalities that you need to launch to enable this reoccurring nature of work? And then I wanted to ask a follow-up on an earlier question is just given where the stock is trading, just can you talk about the prioritization of buybacks versus M&A?

Thanks for the question. So essentially, it's all about putting trust and quality at the forefront. And we're meaningfully upgrade our data infrastructure, matching algo product in order to achieve that. And those are the most important components of being able to optimize for recurring work. And also the fact that we're modernizing our platform allows the usage, as I said, of not just human customers, but also agents within the platform. A lot of it is about how we build this infrastructure and how we ensure the quality and the happiness of the entire fulfillment cycle, which have been one of our biggest moats.

The fact that the work actually happens on the platform is being documented and being tracked, allows us to understand the right path or route in which work is done to be able to actively intervene in cases where it's less than great. All of these are indicators from our data for recurring usage of our platform. The second one was on buyback. We have a continued disciplined and balanced capital allocation, investing growth while continuing to utilize our buyback authorization to return capital to shareholders. As of December, there's $67.5 million left on our authorization. And as Ofer mentioned earlier, we'll continue to be optimistic on M&A -- opportunistic, I'm sorry.

The next question comes from Brad Erickson with RBC.

This is Audrey, on for Brad. First, new business formations has been growing pretty solidly, but that doesn't seem to be lining up with parts of your business. Is that just because there's really no connection there? Or what is the disconnect you would say if there is one? And then second, in the new world of changes at the top of funnel, how big should SMB as a percentage of revenue or marketplace GMV relative to where it's been in the past? Any reasons why it should be structurally higher or lower?

Thank you for the question. Business formation only impacts a small part of our catalog that's focused on the very early-stage companies. So I wouldn't read too much into that aspect or the correlation between the 2.

I think that regarding the second part -- don't anticipate any change -- SMB is part of the GMV.

The next question comes from Rohit Kulkarni with ROTH Capital Partners.

A couple of questions. One is just on this doubling down on high-value things that you'll be doing going forward. Where do you see the heaviest lift next 12, 18 months? Is it you need to attract more supply where that is capable of doing these high-value things? Do you think you already have the supply? Or is this a function of building the product and then getting more and more high-value buyers?

And then kind of as you do this transition into more higher value and better matching, is there a scenario where the services revenue or the attach rate of services to marketplace has a different algorithm given higher-value gigs may not need as much ads or there may not be any need for as many subscriptions to sellers who are trying to get signed up for more long-term contracts as such. So how do you feel longer term that mix between the core marketplace and value-added services could look like versus where we are today?

Thanks for the questions. So on the first one, it's really very much around the data infrastructure, the matching algorithm that prioritizes quality and trust. And it's really all about the customer satisfaction and retention. In terms of talent, it differs between categories, and it changes over time because we see more and more types of skills coming in demand. In most cases, it's very easy for us because we've been doing this for 16 years to make sure that we have the right talent. We haven't seen any pockets of shortage in talent. But in any case, we're always equipped to fill any shortage in a very short amount of time.

As the go-to-market, we see that an opportunity, expanding channels from existing channels into AI native channels, building the enterprise partnerships, as we've talked earlier in the call and targeted growth loops for specific use cases. As to your second part of the question, services revenue will continue to be a growth driver for us this year. That said, the pace of growth will be more moderated this year because most of the efforts this year will be foundational to improve the marketplace moat and enable high-end flywheel. That said, service revenue has a long growth runway long term as we enable every aspect of the talent need and lots of service expansion opportunities down the road.

This concludes our question-and-answer session. I would like to turn the conference back over to Micha Kaufman for any closing remarks.

Thanks, Megan, for moderating the call today and for everyone who has joined us this morning. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Thank you for standing by. At this time, I would like to welcome everyone to the Fiverr Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would like to now turn the conference over to Jinjin Qian. 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 30, 2025. Joining me on the call today are Micha Kaufman, Founder and CEO; and Esti Levy Dadon, EVP, Finance.

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 Factors section in Fiverr's most recent Form 20-F and other filings with the SEC.

During this call, we will 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 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 Micha.

Thank you, Jinjin. Good morning, everyone, and thank you for joining us. We delivered another strong quarter with solid performance across the business. In Q3 '25, revenue grew 8% year-over-year, and we achieved a record high adjusted EBITDA margin of 22%. This is a clear reflection of our disciplined execution and the inherent leverage in our market-based model. Over the past several years, we've consistently prioritizing moving upmarket and investing in product innovation to support more complex use cases and larger customers.

Q3 results clearly demonstrate our success on both fronts. Spend per buyer increased 12% year-over-year, our strongest growth rate since the COVID era and off a much higher base. Not only are we seeing wallet share expansion across the broader buyer base, but more importantly, thanks to the adoption of dynamic matching and managed services, we are witnessing strong growth among projects that are significantly larger than the average marketplace transaction.

In Q3, GMV for Dynamic Matching grew 22% year-over-year with 15% of job briefs having a budget of over $1,000 and an average order value of $2,200. Managed Services is capturing even larger and more sophisticated engagements with a minimum budget of $3,000. In Q3, Managed Services GMV grew 65% year-over-year with average product size reaching $17,000. The success of these offerings marks a meaningful evolution in Fiverr's value proposition. We're no longer just a platform for fast, lightweight freelance tasks. We are increasingly becoming a trusted partner for businesses executing highly specialized multistage projects that often require depth of talent and orchestration.

Another area where we are seeing tremendous growth is AI-related services. As AI is increasingly reshaping how work is delivered and being implemented across industries, demand continues to surge in areas such as AI agents, workflow automation, and vibe coding. Fiverr freelancers have become an essential partner for SMBs looking to turn AI, from potential into performance. This demand is directly reflected in the Programming and Tech vertical, which grew 14% year-over-year in Q3. We believe that this AI transformation cycle mirrors an early stage of the digital transformation and could provide a multiyear tailwind for broader tech investment. To lean into this secular tailwind, we are doubling down on our investment in AI-related categories from growing specialized talent communities and launching tailored AI solutions to expanding our go-to-market channels through strategic partnerships. Our ambition is to position Fiverr as the go-to destination for finding top-tier AI talent and deploying applied AI solutions.

Despite a macro environment that remains uneven, we're seeing positive signals and gaining market share. Labor markets continue to show mixed trends and broader hiring recovery remains elusive. However, our growth strategy, which centers around upmarket expansion and AI enablement is built on long-term macro-agnostic trends. We believe these are the right bets to get us back on track for GMV acceleration regardless of macroeconomic scenarios.

In that context, we announced a strategic restructuring in September to streamline our organization, sharpen our product focus, and accelerate our evolution into AI-first company. This means accelerating investments in building an AI-native team, upgrading our tech infrastructure to drive faster AI integration and operational efficiency and reimagining our marketplace with an AI integrated experience. From a product perspective, this transformation is anchored on 4 key pillars:

One, strengthening our go-to-market execution. We're expanding our generative engine optimization, GEO, capabilities, integrating our catalog into native AI channels and building AI-powered catalog management systems. We're also investing in partnerships that drive growth across AI-related verticals.

Two, building the next Gen AI-powered buyer experience. This includes expanding LLM-powered workflows across the buyer journey, advancing our Know Your Customer, KYC, capabilities through data and product innovation and investing in customer success to deepen trust.

Three, evolving our matching technology. As we serve more upmarket clients and more complex projects, we're transitioning from traditional search to agentic matching, delivering a recruiting-like experience that surpasses human performance through deeper data, richer context, and advanced reasoning.

Four, investing in talent and the talent community. Talent is at the heart of the entire marketplace experience. In a world where AI is rapidly transforming how work is done, our priority is to build a high-quality, trusted talent ecosystem. This means supporting human-in-the-loop workflows, creating pathways for professional growth and deepening our commitment to long-term community engagement.

I am truly excited about the opportunities ahead and the strength of the roadmap we have built. As we enter the final stretch of the year, we remain laser-focused on execution. Our momentum in AI and upmarket expansion gives me confidence in the foundation we've built. I look forward to sharing more about our 2026 roadmap in our next call.

With that, I'll turn it over to Esti.

Thank you, Micha, and good morning, everyone.

We delivered a strong third quarter, with both top and bottom lines exceeding the midpoint of our guidance. Revenue for the third quarter was $107.9 million, up 8% year-over-year. We also achieved record adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA for Q3 was $24.2 million, representing an adjusted EBITDA margin of 22%, an improvement of 260 basis points from a year earlier. We continue to generate strong cash flow, with free cash flow totaling $29.1 million in Q3. The strategic restructuring, combined with our continued discipline in expense management, contributed to strong profitability and robust cash flow generation. As always, we remain focused on balancing between growth and profitability, while maintaining discipline in capital allocation.

Q3 saw solid performance across both our Marketplace and Services segments. Marketplace revenue was $73.6 million, driven by 3.3 million active buyers, $330 in spend per buyer, and 27.6% marketplace take rate. Within the Marketplace segment, we saw strong momentum driven by the tailwinds in AI-related categories and the success of our expanded Managed Services and Dynamic Matching. These channels continue to fuel higher-value, complex projects, which in turn result in higher average transaction values and increased in share of customer spending. We continue to believe the structural tailwinds within the Marketplace segment, particularly around AI and upmarket adoption, will help offset broader economic headwinds and serve as a sustained growth driver.

Services revenue was $34.3 million, representing a year-over-year growth of 40% and accounting for 32% of our total revenue in Q3. The upside was driven by Fiverr Go increasing adoption of Seller Plus, which saw 20% year-over-year growth. Fiverr Ads maintained double-digit growth as a result of ad load expansion, and AutoDS benefited from enhanced synergies with Fiverr and continued success with the Shopify partnership. Looking ahead, we expect Services revenue growth to moderate as we lap the 1-year anniversary of the acquisition, but to maintain healthy double-digit revenue growth. We continue to expect Services revenue to represent a little over 30% of total revenue for the full year 2025.

Now onto guidance. For the full year 2025, we expect revenue to be in the range of $428 million to $436 million, representing year-over-year growth of 9% to 11%. We are raising our full-year adjusted EBITDA guidance and now expect it to be in the range of $88 million to $93 million, representing an adjusted EBITDA margin of 21% at the midpoint. For the fourth quarter of 2025, revenue is expected to be between $104.3 million to $112.3 million, representing a year-over-year growth of 1% to 8%. The wider-than-normal revenue guidance for the fourth quarter reflects the elevated uncertainty in macro environment with mixed signals. Adjusted EBITDA is expected to be $23.9 million to $27.9 million, representing an adjusted EBITDA margin of 24% at the midpoint.

During Q3, we announced a strategic restructuring plan, which resulted in a streamlined headcount and enhanced operational efficiency. These efforts contributed to the increased adjusted EBITDA guidance in Q4. While the pace of EBITDA improvement in Q4 should not be viewed as a steady-state cadence, profitability, margin expansion, and cash flow will remain key priorities for us, even as we redeploy some of our cost base savings into selective, high-impact investments in AI, and upmarket initiatives in 2026. We remain committed to our accelerated schedule to reach the long-term adjusted EBITDA margin of 25% in 2026.

With that, we'll now turn the call over to the operator for questions.

[Operator Instructions] Your first question comes from Ron Josey with Citi.

This is Jake on for Ron. Micha, I wanted to double-click on how you're reimagining the marketplace to be AI first, specifically the pillars around evolving the buyer experience and improving matching. Could you just double-click and help us better understand your vision here and why you believe Fiverr is uniquely positioned to be AI first?

Thank you for the question. I should clarify that Ofer is with us on the line. He's having a sore throat. So this is why Esti was coming with the opening remarks. But in case we have questions, he will be happy to answer them. As to your question, look, I think what AI is giving us is the ability to change the way people express themselves. And you see that in the market, the way search is being augmented or replaced by prompting, it gives us an opportunity to extract more -- a more accurate representation of the actual need from the customer, which in turn gives us better tools to be able to accurately match in a very precise manner the right expert to the right mission.

The same applies for more complex projects that sometimes require multi-talent and sometimes require an orchestration of those multi-talent into the end result. So this is just one example, which is very robust because the primary function that customers are using is the browsing and searching. And this is the most fundamental thing that we can use AI for. The same applies for the rest of our solutions like the dynamic matching, as an example, the project management, and so forth. And I've alluded to it in my opening remarks with everything I said about the matching capabilities, the Know Your Customer aspects. And we're already reaping the benefits or starting to reap the benefits of this being able to deliver much better matching to our customers that, in turn, result in larger types of projects and with higher satisfaction.

Ofer, I hope you feel better. Just one quick follow-up for you or Esti. Kind of given the wider 4Q revenue guidance, could you just touch on the key assumptions that would get you to the low end versus the high end, maybe specifically around GMV trends?

So this is Ofer. Thank you for the concern. The assumptions for the remainder of the year is that the revenue coming from Services will continue to grow. While the revenue coming from Marketplace dependent on GMV trend that currently seem to be flat, might decline by single digit. The assumption is that the trend that we have been seeing in the last quarter will continue into the fourth quarter. And based on the high volatility of the market in the last few quarters, we kept the guidance range wide to take into consideration that.

Your next question comes from Jason Helfstein with Oppenheimer.

Obviously, the spend per buyer increase was nice. I think you highlighted that this really wasn't from like the SMB, but just the ability to move into more advanced projects and does show you more than a company. I guess how does the reorganization tie into the ability to ever get back like the SMB opportunity? Like is the assumption now that you are -- you've reorganized the business to focus on higher-value jobs, and hey, if SMBs ever come back, that's great, but like there's no assumption. Like do you think there's like just -- it's been so long since we've seen SMB demand that we just shouldn't assume that it ever comes back? Or any broad thoughts about that?

Right now, since the dynamics in the macro economy that we've seen hasn't changed materially, then we don't assume those changes. And while we see the Fed has started to lower interest rates, which could be constructive for SMBs, we also continue to see weak job data across full-time and staffing sectors. So the macroeconomic conditions are still highly uncertain, to say the least.

So when we think about our guidance or how it's being made off, it really assumes no change in the macro front. We talked about it in the full year basis that services will be a little over 30% and of the 2025 revenue. So that will give you some idea of how we think about the marketplace versus services revenue. But overall, we continue to expect the marketplace revenue to be flat or low single-digit decline and services revenue to exit the year with double-digit growth. And that assumes no improvement in the SMB side.

That said, when we look at everything that has to do with the upmarket, meaning the larger types of customers, and the larger types of projects, this is where we do see an improvement, absolutely. And that contribution is very noticeable. And as much as that portion of the business becomes larger, the contribution is going to be larger, which means that by definition, the return to growth in active buyers is going to happen, period. We've been saying that for multiple quarters, and we're seeing this. So it converges to that point, okay? That is the assumption. That's the framework. And this is what we're seeing happening in reality.

Your next question comes from Doug Anmuth with JPMorgan.

I have 2, Micha. Can you just talk, I guess, first, just about the key investments you need to make in '26 to transform into an AI-first company? And how should we think about timing as you kind of progress along this shift? And then, I guess, secondly, can you talk more about the drivers of spend per buyer in the 12% growth? Kind of like beneath the hood, what are you seeing in terms of changes in types of projects and how buyers are really engaging with the platform?

So thanks for the questions, Doug. So the investment that we're doing is, one, on talent. And I think that this is true for everyone. Finding AI natives on the talent side within the company is one area of focus. The second is the improvements that we're introducing to our infrastructure. So some of the benefits of being able to use new development, coding, design, marketing allows us not to just put more people on problems or building things on our infrastructure, but actually finding new ways of moving much, much faster without paying the price of working on a 15-year-old infrastructure.

The third is the marketplace experience. On everything we do, and we've highlighted things like dynamic matching and project management and orchestration. And we've highlighted also the aspects of having a much more nuanced and much more accurate matching technology and KYC. And I've mentioned those 4 pillars, which is the go-to-market with the investment in LLM engines, GEO and partnerships, the buyer experience, the matching and the talent. So across all of these areas that I've mentioned, these are the areas that we're putting focus. And the approach is AI-first mentality, meaning we want to make sure that we maximize the new possibilities that AI gives us both internally in how we work and how we develop and how we execute, but both in how we can make AI more involved in our core business to make that core business better.

As to your second question about the spend per buyer, I think that this is -- when we think about spend per buyer, there are catalysts for it. And some of it is the ability to identify categories that are now growing, some of which thanks to our move upmarket and some of which is because of the technological transformation of AI. Now I've given some examples for it. Programming and tech vertical is one of them, which has a much, much higher project size, dynamic matching and its contribution and the fact that 15% of them are from briefs that are above $1,000, managed services that have grown 65% year-over-year with an average size of $17,000. So these are very, very different from our average transaction size of services. And we continue to drive very healthy deal flow on managed services. So the nature of these projects is very strategic, not just tactical. And there are a few examples, if you are interested in more examples in the shareholder letter.

[Operator Instructions] Our next question comes from Matt Condon with Citizens.

Just with these product catalysts across AI and moving upmarket and potentially decoupling you from the macro environment. Just what is your confidence level that these products can actually return the marketplace business to growth in 2026 as you just more deeply integrate them? And then my second question is just on AI displacing some of the commoditized jobs at the lower end of the market. Just have we seen those plateau at this point and become less of a headwind going forward? And just the placement of those types of jobs, is it less today than it was, say, a year ago?

Thank you for the question. So as these AI-driven products or needs grow, they grow much faster than the average. And so -- and the more they become a bigger portion of the total, they are driving us to change direction and go back to growth. We're seeing that. Still, it takes time for those types of customers and those types of projects to become the majority of our business. But as they grow, we are, by definition, going back to growth. And we see that, we see that on a constant basis, and you're seeing the numbers grow every time we meet here every quarter and they become larger and larger.

Today, transactions over $200 is already the majority. They're over 50% of our market base, and they're growing double digit. And transactions over $1,000 is growing in the 20s year-over-year and more than 10% of the marketplace already. So this gives you some idea that they are already meaningful in the marketplace, and they continue growing, and this is where we draw our confidence from.

The second part of your question about the job displacing, I've addressed that many times. The jobs that are being displaced are the very, very simplistic types of jobs. All of us are using AI for 2 years plus. We know its limitations. There's a lot of limitations to what AI can do to its accuracy and to its quality. And customers understand that as well. And they are -- we've seen a lot of our customers and talent, by the way, using AI. But the more they use it, the more they understand its limitations and their ability to trust the outcome to be production-ready and business ready.

And so the things that we have seen being displaced are very low skill types of services. Those types of services have been very small in size anyway. So the fact that they are being displaced is not a big deal. The more we invest in larger projects, the more we grow. That's the bottom line. And this is where AI doesn't replace human beings. It doesn't replace human talent and high skills.

Your next question comes from Josh Chan with UBS.

I just have 2 questions today. The first one is on your comment about macro uncertainty. I was just wondering, the macro has obviously been choppy for a while. So are you seeing anything different now than before that kind of led you to make that comment and that wider guidance? And then the second question is on, could you just talk about the phasing of the restructuring benefits? To what extent some of the benefits are coming into Q4 and how that kind of layers into the rest of 2026?

This is Ofer. On the first question, on the contrary, there is no change in macro, which is why we have kept the guidance pretty wide. And on the second question, definitely, there will be a bigger impact after restructuring into Q4. But as we look into next year, we do plan to fill up the lines with some of the needed talent so that I would expect next year to improve in terms of EBITDA, but not to the same cadence as we are expected to see as of Q4.

Your last question comes from Marvin Fong with BTIG.

I hope you feel better as well. Question, I don't want to be -- cover ground that we previously did, but I think I'd like to ask it just kind of on a category basis, you called out the 14% growth in programming and tech. I just would like to know if other major categories are, how are they benefiting from AI? Are you seeing the same trends? So perhaps you could comment on like design, creative, I think that's another large category for you. But any other major categories you'd like to kind of call out and how AI might be a tailwind for that?

And then second question, just on the move upmarket, obviously, really great traction there. And I was wondering if there were other unlocks that you can do? Are you satisfied with the product suite or in the next 12 months, what are some new features that you might be able to launch to address other parts of the ecosystem. So for example, 1099 versus W-2, anything along those lines would be great.

Thanks for the question. So to highlight some of the areas where we're seeing growth. So programming and tech is growing fast, and it's becoming a very meaningful category with about 20% of our business. Alongside programming and tech, we have digital marketing, video and animation, which are also growing very strong. Some of it is due to AI and the possibility of bringing highly skilled people that know how to extract the most out of AI, which is kind of the case I mentioned where you have customers sometimes trying to use AI, understanding its limitation and their limitations is not being experts in how to make the most out of it, and they come to us in these cases, and we're seeing this as a very prominent case in these verticals.

And also the nature of how customers come to us is very different from 2 years ago or even a year ago. So they -- in many cases, they come more educated. They do a little bit of work on their own. They're not clueless. They can better express their needs, which also changes the basic function of what we do, which is less of explaining them what they need, but more trying to address that need by giving them a really strong and very accurate high-quality match.

As we think about the move up market, there is a lot to do. And I've already highlighted both in my opening remarks and in some of the answers and in the shareholder letter, some of these areas. But just to reiterate some of them, today, many customers are already enjoying dynamic matching and managed services, but many more don't yet know that Fiverr can do these projects that are in the tens of thousands of dollars. So there is a lot of opportunity that we can unlock there.

At the same time, there is the LLM channels, which are another example of areas to invest in where the traditional search or the fact that Google was the Internet up until a few years ago, and now they're not playing there alone. There are also other ways to explore the Internet and a lot of it is going to LLMs, creates a challenge, which we prefer to look as an opportunity. And we're seeing how the LLM channels at the top of funnel is contributing more and more into the top of funnel traffic, which also makes us more motivated to continue investing along those areas.

And lastly, I would say that is maybe to reiterate what I said before, which is customers are more accurate in how they share their needs. They're more explicit, which is good news for us because now we have more to work with and be able to match them with this incredible base of unbelievable talent that we have on our platform so that we can address their needs.

That concludes our Q&A session. I would like to now turn the call back over to Micha Kaufman for closing remarks.

Thank you, Moore, again for moderating this conference. And thank you, everyone, for participating. Wishing you a great day, and talk to all of you soon.

This concludes today's call. Thank you for attending. You may now disconnect. And have a wonderful rest of your day.