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Edited Transcript of FVRR.N earnings conference call or presentation 18-Feb-21 1:30pm GMT

·28 min read

Q4 2020 Fiverr International Ltd Earnings Call Feb 23, 2021 (Thomson StreetEvents) -- Edited Transcript of Fiverr International Ltd earnings conference call or presentation Thursday, February 18, 2021 at 1:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Maya Tracey Fiverr International Ltd. - IR Manager * Micha Kaufman Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board * Ofer Katz Fiverr International Ltd. - President & CFO ================================================================================ Conference Call Participants ================================================================================ * Douglas Till Anmuth JPMorgan Chase & Co, Research Division - MD * Eric James Sheridan UBS Investment Bank, Research Division - MD and Equity Research Internet Analyst * Jason Stuart Helfstein Oppenheimer & Co. Inc., Research Division - MD & Senior Internet Analyst * Michael Ng Goldman Sachs Group, Inc., Research Division - Research Analyst * Nicholas Freeman Jones Citigroup Inc. Exchange Research - Research Analyst * Ronald Victor Josey JMP Securities LLC, Research Division - MD & Equity Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, and welcome to the Fiverr Q4 '20 Earnings Conference Call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Maya Tracey. Please, go ahead. -------------------------------------------------------------------------------- Maya Tracey, Fiverr International Ltd. - IR Manager [2] -------------------------------------------------------------------------------- Thank you, Operator, and Good morning, everyone. Thank you for joining us on Fiverr's Earnings Conference Call for the Fourth Quarter ended December 31, 2020. Please note that this call is being webcast on the Investor Relations section of the company's website. Full details of our results and additional management commentary are available in our shareholder letter, which can be found on the Investor Relations section of our website, at investors.fiverr.com. Joining me on the call today are Micha Kaufman, Founder and CEO; and Ofer Katz, CFO. Before we start, I would like to remind you that certain matters discussed today are forward-looking statements that are subject to risks and uncertainties relating to future events and/or the future financial performance of Fiverr. Actual results could differ materially from those anticipated in these forward-looking statements. A discussion of some of the risk factors that could cause actual results to differ materially from any forward-looking statements can be found on Fiverr's periodic public filings with the U.S. Securities and Exchange Commission, including the important factors discussed under the Risk Factors section in Fiverr's 20-F filed with the SEC. The forward-looking statements in this conference call are based on the current expectations as of today, and Fiverr assumes no obligation to update or revise them whether as a result of new developments or otherwise. During this call, we'll be referring to some non-GAAP financial measures. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures are provided in the earnings release 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. -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [3] -------------------------------------------------------------------------------- Good morning, everyone, and thank you for joining us on the call today. Before I start, I am extremely pleased to be able to announce that Ofer Katz has been promoted to President and CFO of Fiverr. I am especially delighted, as he has not only been with Fiverr since the early days, but is an exceptional CFO, an admired leader and one of my closest and most trusted friends. We had an unbelievable year of strong execution and growth at Fiverr, and Q4 capped off the year with a strong finish. Q4 revenue was $55.9 million, representing a year-over-year growth of 89% and further acceleration from Q3. Looking back, we have now delivered 7 straight quarters of accelerating revenue growth since Fiverr went public in June 2019. This speaks to the resilience of our business model, the consistent execution of our team as well as the tremendous opportunity in the freelancing space we operate in. Active buyers surpassed 3.4 million, representing accelerating growth of 45% year-over-year. Businesses around the world and across all industries continue to turn to Fiverr as they transform their business online and navigate through the remote work environment. At a time when their traditional way of sourcing work and engaging with clients has been disrupted by the pandemic, more and more freelancers see Fiverr as their platform of choice. During 2020, our relationship with our community deepened and flourished. Revenue retention from buyers across all of our mature cohorts from 2018 and earlier increased significantly in 2020 as compared to 2019. They contributed more than just consistent streams of revenue, as they have done previously. Instead, spend level from these cohorts increased, on average, 15% in 2020 compared to 2019. In 2020, we saw more buyers from these existing cohorts coming back to Fiverr, ordering more frequently and purchasing more expensive Gigs as their needs to strengthen their online presence intensified during the pandemic. The 2019 cohort also showed strong revenue retention of over 70%, higher than a typical cohort from Year 1 to Year 2. A study by Qualtrics shows that the impact of COVID-19 has driven small and medium businesses to increase their freelance hiring budget by 56%, and Fiverr was able to capture a meaningful share of that spend. Looking ahead, the impact of COVID-19 should drive a long-term and sustainable tailwind for our business that lasts far beyond the pandemic itself. Businesses of all sizes across all industries are undergoing a paradigm shift as they adopt remote work and optimize workforce distribution. Fiverr's mission to change how the world works together and our business model that enables businesses to access global talent on demand and to collaborate and deliver work through our platform has never been more critical. 2021 got off to an excellent start. We saw record level of traffic and buyer registration in January as the strong momentum of 2020 continued into the new year. We hope you had a chance to see our first Super Bowl commercial a few weeks ago. The ad was viewed by nearly 100 million people on game day and has received extensive media coverage and continues to draw strong engagement on social media. We are extremely excited to bring the Fiverr brand to the forefront of the global stage, and we will continue investing in our brand throughout the rest of this year. The strong momentum that we've seen so far and the continued strength of our cohorts gives us the confidence to provide strong full year 2021 guidance amid continued uncertainty of COVID-19. Our business is resilient, and we believe we will continue to grow at a fast pace under a good, but challenging, macro environment. We believe that the accelerated adoption of digital transformation and remote work will allow us to exit the pandemic stronger than before, and this is reflected in our 2021 revenue growth rate guidance of 46% to 50%, compared to our pre-pandemic 2019 revenue growth rate of 42%. I'm also extremely excited about our road map ahead of us. We have many new initiatives, new products and new opportunities heading into the new year. For the first time in the history of Fiverr, we expect to surpass $2 billion in freelance earnings delivered to our seller community. It is a great and fulfilling achievement for all of us at Fiverr. It is what continues to motivate us and drive us to do more, build better products and create more opportunities for our community. We are also increasingly conscious of our social and corporate responsibilities as our company and our shareholders base grows. We have built out our environmental, social and governance, ESG, processes and framework and will be releasing a comprehensive ESG report in accordance with the SASB standard later this year. Regarding our priorities for 2021, we are focused on continuing to execute on our strategic initiatives, that is, going upmarket, international expansion, and building more value-added products and services, as well as continuing to invest in our brand and marketing. You can expect us to continue to expand our upmarket coverage on both demand and supply fronts. On the demand front, we will focus on Fiverr Business and our integration with WordPress, continuing to roll out milestones and our subscription features. And on the supply front, we will focus on the continued improvement of our catalog infrastructure and the expansion of top creative talents through the acquisition of Working Not Working. International expansion is another key priority for 2021. We will focus on deepening the penetration in existing markets by providing local buyers and sellers with a more culturally integrated experience, catalog and content. And last but not least, Promoted Gigs continued to grow and expand nicely, and we will continue to grow additional value-added services for our sellers on the marketplace. We are incubating additional projects to unlock the synergies with the acquisitions we made with SLT Consulting and Working Not Working. Leveraging Fiverr's technology, we have the vision to build a platform that will allow Fiverr to be an indispensable resource for the marketing teams of large companies. To fulfill that vision, we recently assembled an advisory board that includes CMOs from some of the world's most prominent brands to help us drive the strategy forward. I would like to conclude by saying that 2020 was an unforgettable year on so many levels. At Fiverr, we celebrated 11 years of our existence, and I could not be more proud of what we have achieved or more excited about what lies ahead for us. With that, I'm going to turn the call to Ofer, who will share a few financial highlights. Ofer? -------------------------------------------------------------------------------- Ofer Katz, Fiverr International Ltd. - President & CFO [4] -------------------------------------------------------------------------------- Thank you, Micha, and Good morning, everyone. To reiterate what Micha said, I'm very happy about how we ended 2020 with a strong Q4 on top of 3 amazing quarters. Revenue in the fourth quarter was $55.9 million, up 89% year over year and an acceleration from 88% year over year growth in Q3. Active buyers grew 45% year over year, to 3.4 million, accelerating from 37% year over year growth in Q3. Spend per buyer continued to expand with strong cohort behavior, up 20% year over year to $205. We ended the full year 2020 with revenue of $189.5 million and GMV of nearly $700 million, representing year over year growth of 77% and 74%, respectively. Our marketplace also continues to enjoy a healthy take rate of 27.1%, reflecting the excellent value we create on our platform and our ability to monetize our products and services. With the significant growth of the scale of our marketplace, we achieved a key milestone of reaching positive adjusted EBITDA on a full year basis. Full year 2020 adjusted EBITDA was $9.1 million, up from negative $18 million last year, representing an adjusted EBITDA margin of 4.8%, an increase of 2,160 basis points from 2019. The significant revenue growth in the past year, together with the continued efficiency in sales and marketing and discipline in operating expenses, is what enabled us to reach this important milestone 2 years ahead of our expectations. We will continue to prioritize growth, and at the same time, we expect to make continued progress towards our long-term target model. Now on to guidance. For the first quarter 2021, the revenue is expected to be $63 million to $65 million. This represents year-over-year growth of 84% to 90%. Adjusted EBITDA is expected to be negative $4 million to negative $3 million, which includes the impact of onetime Super Bowl expense of $8 million. Excluding the Super Bowl expense, our guidance implies Q1 adjusted EBITDA margin to be 7% at the midpoint. We are also introducing strong full year 2021 guidance. For the full year 2021, revenue is expected to be in the range of $277 million and $284 million, representing a year over year growth of 46% to 50%. Adjusted EBITDA is expected to be in the range of $16 million to $21 million, representing an adjusted EBITDA margin of 9.6% at the midpoint, excluding the onetime Super Bowl expense. As Micha mentioned, we are very encouraged by the strong trends we see so far this year, both in terms of new buyer acquisition as well as strong cohort behavior for our existing cohorts. Our cohort behavior gives us excellent visibility into 2021 and speaks to the underlying strength of our model. This is a critical year with as much macro uncertainty as we are seeing. As we lap the COVID-19 impact in the second quarter, we expect both active buyers and spend per buyer to become more normalized. We expect our take rate to continue to be strong and steady, with potential for modest upside as we continue to grow value-added services on the platform. The resilience and visibility of our business model forms a strong foundation that allows us to aggressively invest in many longer-term initiatives. Going upmarket continues to be a top priority across Fiverr, and Fiverr Business continues to evolve with additional product features and marketing investments. We are also deepening our efforts around international expansion, with an expanding product team as well as a new linguist team to bring our local offerings to the next level. Lastly, Promoted Gigs are progressing really well. While still very small in terms of revenue contribution, it is growing at a strong pace. We are also exploring opportunities for additional advertising products on our marketplace. With that, we'll now turn the call over to the Operator for questions. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) The first question comes from Michael Ng with Goldman Sachs. -------------------------------------------------------------------------------- Michael Ng, Goldman Sachs Group, Inc., Research Division - Research Analyst [2] -------------------------------------------------------------------------------- I just have a couple on the active buyers. Could you talk a little bit about the drivers of that really strong momentum that you saw in January? And then, did you see that follow through after your Super Bowl commercial in February? And then as a follow-up, could you just talk a little bit more about how we should think about the trajectory of net adds throughout the year? Ofer, you mentioned a normalization in the second quarter. I was just wondering if you might be able to expand on that a little bit. -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [3] -------------------------------------------------------------------------------- Michael, thanks for the questions. So as for active buyers, as we've said, there's 2 factors that are influencing this. One is the momentum, the strong momentum that we've had last year which we've carried into this year in terms of new buyers. And this is thanks to added awareness, both because of the movement to online, the digital transformation and also in the beginning of the year with the Super Bowl ad as well as the increased activity and engagement of our existing customers. Meaning, our existing customers throughout the year have been more active, we said about 15% more active, and that also includes newer cohorts that are joining us. So if you combine those 2, that explains why we're seeing elevated degrees of activity on [our buyers]. -------------------------------------------------------------------------------- Ofer Katz, Fiverr International Ltd. - President & CFO [4] -------------------------------------------------------------------------------- In terms of net adds, prior to the COVID we sold between 100 to 200 net adds quarterly. Post-COVID, in the last 3 quarters, this number grew to approximately 300. We expect that once the lapping period is over in Q2 we'll see more normalized growth of active buyers comparing the period of the last few quarters. -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [5] -------------------------------------------------------------------------------- And just to augment, in other words, if we -- up until Q2, we are comparing post-COVID to pre-COVID. And in Q2, we're going to start lapping that effect. So we're going to compare a Q2 to Q2, which both are within COVID, and this is why we said that we believe that that would be starting to normalize those changes. -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- The next question comes from Doug Anmuth with JPMorgan. -------------------------------------------------------------------------------- Douglas Till Anmuth, JPMorgan Chase & Co, Research Division - MD [7] -------------------------------------------------------------------------------- Congratulations, guys, on a great year during a difficult time. First, just hoping, Micha, you can talk more about some things internally. So your pace of product innovation just seems to be really accelerating when we think about category rollout and Promoted Gigs expanding very quickly. Your efforts in the marketing industry, as well. Could you just talk about some of the things that you're doing internally to really drive that innovation on the product side? And then perhaps, Ofer, just on Promoted Gigs, just curious if there's any more color you can give us on the number of sellers or revenue contribution or just any more kind of data on how that's going so far. -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [8] -------------------------------------------------------------------------------- Thanks for the questions. So as to the first question, you are correct. I think that as a company we are accelerating the pace of releasing new products. Some of it is due to the fact that the team is growing and we're able to execute more. Some of it was contributed to the fact that we've seen some elevated efficiency as we were moving actually to remote work. People were spending less time commuting or just wasting time on their way to and back from the office. And beyond that, I think that the sense of mission that we had during this crisis, understanding that there is a community that relies on us as a company, has invigorated the team with added energy. And lastly, I would say that I think that we've put together processes that allows us to just work more efficiently and do more, knowing that beyond the basic fundamentals of the core business we need to continue innovating, moving very, very fast to ensure our position as a market leader. So I think all of these contributed to the fact that we're able to show more innovation push out of Fiverr. -------------------------------------------------------------------------------- Ofer Katz, Fiverr International Ltd. - President & CFO [9] -------------------------------------------------------------------------------- Then in terms of Promoted Gigs, we actually just opened Promoted Gigs for more than 500 categories today. So up until recently, it was open to a certain number of categories. I think it was 60 categories until recently. Then we expanded the exposure into the entire set of categories. Yet to be said, it's only on the first 4 rows. So that there is a lot of expansion ahead. We are very excited about the progress. We do put a lot of attention into the buyer experience. That's helping the buyer experience as we expand categories and expand to most relevant and more gig listings. I think that there is amazing growth ahead of us. Numbers look great, but still small comparing the entire revenue that we see in the marketplace. So that we look forward to see how this will impact our net revenue and take rate in the coming few quarters. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- The next question comes from Ron Josey with JMP Securities. -------------------------------------------------------------------------------- Ronald Victor Josey, JMP Securities LLC, Research Division - MD & Equity Research Analyst [11] -------------------------------------------------------------------------------- Ofer, congrats on the promotion to president here. I wanted to maybe follow up on Promoted Gigs, to Doug's question, and ask a question on guidance. So first on Promoted Gigs, Ofer, you talked about 500 categories, more ad slots. And Micha, in the letter you talked about $1,900 of work for one seller, on $200 in spend. I'm just wondering if that sort of ROI is what you're seeing across the platform. And any insight on maybe what you're seeing just around demand and demand side where ad load can go. And particularly, I think you talked about increasing seller tools in the letter. So any insights around that. So just expanding on Promoted Gigs. And then over on guidance, if you could help us understand a little bit more about the drivers here, that would be helpful. So obviously, a good amount of new incremental products this year with Promoted Gigs, Fiverr Business, Working Not Working, new platforms. But then I'm also wondering if guidance assumes the same rate of spend growth from, call it, the pre-2018 and, call it, the post-2019 cohort. So any more details on guidance would be helpful. -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [12] -------------------------------------------------------------------------------- Thanks so much, Ron. So as to Promoted Gigs, to complement on what Ofer said, the rate of opening up Promoted Gigs to all categories today has been faster than we anticipated. And that was thanks to the fact that what we're seeing is we're seeing high level of adoption, high level of retention of those who are using it and high levels of satisfaction from the customers that are actually buying through these ad placements. So all of that encourages us to open up, basically, Promoted Gigs to all of our categories. Now it's far from being exhausted in terms of potential because, as Ofer said, it's just the first 4 rows. And this is just on listing pages. So we haven't used a lot of our different assets to put Promoted Gigs on. Now on average, the ROI is extremely positive. In some cases, it's not. So when you look at average, you get everything. But essentially, by the fact that a very, very high, the vast majority of those who are actually using it are continuing to use it because the ROI is positive. In some cases, it's extremely positive. And in some cases, it's marginally positive. But that differs between categories. So it's a very hard question to ask in specific terms because, again, it's operating in 500 categories and the amount of ad placements in each category differs. But all in all, we're very happy with it. It is generating money. It is increasing its contribution. But as Ofer said, in comparison to the overall activity on Fiverr, it's still small. But we're happy to see it grow and grow very, very well. -------------------------------------------------------------------------------- Ofer Katz, Fiverr International Ltd. - President & CFO [13] -------------------------------------------------------------------------------- And then, Ron, for the second part of the questions, we always guide based on what we know. We do not factor wishful thinking or a new business model that we don't feel comfortable and have enough data to support guidance. Having said that, new features or recently initiated features are not included in the guidance. We base guidance based on cohort behavior over the long term. We do factor the uplift that we've seen during the corona period. I think that, as we mentioned before, all cohort spend grew by approximately 15%. And if you go into the shareholders letter, you can see the revenue cohort diagram that specifically demonstrates how this cohort behaves. We think that this type of behavior is not temporary; rather, permanent. We also feel that the new cohort that we were able to acquire into 2021 is stronger in terms of spend, in terms of frequency and ASPs. So this all goes into the guidance of 2021. Now the guidance for the coming year is higher than what we've seen as growth rate for the year 2019, pre-corona. We grew by 42% in 2019. We are forecasting 48% at midpoint, between 46% to 50%. So we do feel enough confidence based on, as said, existing cohorts and our ability to maintain a very efficient unit economy as we acquire more buyers. And lastly, the organic channel performed very well, as well. So all in all, I think that we feel that there will be some normalization in terms of growth as we lap for COVID-19. But yet to be said, the growth rate is anticipated to be higher than pre-COVID. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- The next question comes from Nick Jones with Citi. -------------------------------------------------------------------------------- Nicholas Freeman Jones, Citigroup Inc. Exchange Research - Research Analyst [15] -------------------------------------------------------------------------------- Micha, maybe on Fiverr Business, it seems to be off to a strong start, with thousands of buyers registering. How many of your buyers today do you think fit the mold for Fiverr Business? And kind of what's the opportunity from here on that solution? And then, Ofer, maybe on the spend per buyer, that continues to grow nicely. And I know there's a bunch of factors in there, but on average, is frequency contributing to the growth? Or is it -- are you seeing kind of an uptick in kind of price on what people are spending on a per-project basis? -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [16] -------------------------------------------------------------------------------- Nick, thanks for the questions. As to Fiverr Business, Fiverr Business really has -- when we look at the customer base of it, it's really a combination of both existing customers that are moving from Fiverr into the Fiverr Business to enjoy the team features and the collaboration, but also new customers that are joining Fiverr through Fiverr Business. We do think that the potential of shifting some of our more established, larger types of customers to Fiverr Business is still untapped. There's a lot of potential there. But we definitely also spend time figuring out how to effectively acquire and onboard businesses directly to Fiverr Business. We've seen a combination. If you look at the -- you're correct to say that the growth seems to be going very well. It is a combination of both existing and new. We haven't seen any concentration in one of these comps, in particular. -------------------------------------------------------------------------------- Ofer Katz, Fiverr International Ltd. - President & CFO [17] -------------------------------------------------------------------------------- In terms of contributing to growth, spend per buyer is based on frequency and ASP, and I'm happy to say that both are contributing, with tremendous improvement in both, which I think is the balanced approach that we've been always pitching to. And as we look forward, we believe there is a tremendous opportunity to impact both in terms of products and quality and target audience. As we go up market, and Micha spoke about Fiverr Business earlier, we see that the Business buyers that use the product are using it more frequently, and we also see that the average ASP is higher. So that said, as we go up market, the growth, which is based on spend per buyer in our model, actually refers to improvement in both frequency and ASP. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- Our next question comes from Eric Sheridan with UBS. -------------------------------------------------------------------------------- Eric James Sheridan, UBS Investment Bank, Research Division - MD and Equity Research Internet Analyst [19] -------------------------------------------------------------------------------- I hope everyone on the team is well. I think following up on the success you mentioned with the Super Bowl ad and it seems that you're continuing to sort of invest in brand initiatives and TV advertising, can you talk a little bit about the halo effect you might have gotten from that effort? What it might mean for marketing efficiency over the medium to long term? Is now the right time to sort of lean in to marketing because you have a lot of momentum in the business and you want to maintain or maybe even accelerate that momentum? Or could you see some of the brand awareness that's building around the company lead to greater levels of marketing efficiency over the medium to long term? -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [20] -------------------------------------------------------------------------------- Eric, thanks for the question. So on the Super Bowl, I think that as a company that said that we're trying to build a household brand, the Super Bowl is a very important event. It's definitely a “we have arrived” event in terms of brand marketing. And I think that that definitely influenced the brand awareness, mostly in the U.S., but it has some halo effect outside of the U.S., as well. We invested last year pretty extensively in brand marketing, including TV campaigns and work on social. And this was a peak in that investment, but also an event that propels our future investments into brand. Everything we do on the organic side, and a lot of branding is attributed to organic because it just creates market awareness, is extremely important. And to your question, if you are able to be in front of your customers on several occasions, on a daily, a weekly or a monthly basis, then your ability to do performance marketing more efficiently also increases. And so we think that the combination of doing performance marketing and brand marketing together creates that efficiency. And I think that if you look at the unit economy of our marketing, you see that efficiency well built into everything, every dollar that we spend. We are leaning in. Again, if you look at -- the efficiency of our marketing has been improving over quarters, despite the fact that we've been investing more in marketing every quarter. And we don't plan to stop. As long as we see the opportunity, as long as the unit economy justify continued investment, we will continue to invest more. We are definitely seeing that, and we think that the Super Bowl is just another important milestone in establishing a household brand. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- The last question comes from Jason Helfstein with Oppenheimer. -------------------------------------------------------------------------------- Jason Stuart Helfstein, Oppenheimer & Co. Inc., Research Division - MD & Senior Internet Analyst [22] -------------------------------------------------------------------------------- So I want to ask maybe 2 questions. First, on kind of the subscription side. So when you think about the Gigs you have been doing, is there a way to kind of quantify, like, what percent of those Gigs or what percent of GMV actually kind of belongs in a subscription-type model and then kind of what the benefit would be? But then, in addition, kind of what new Gigs would come on or you'd be able to add because really they do lend themselves really only to subscription? And then the second, Ofer, I think you talked about in your prepared remarks that you saw take rate going up kind of looking forward. Historically, when companies move upmarket there's downward pressure on take rates. So maybe talk about what you think the offsets are that are actually going to drive up the take rate over the next medium term. -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [23] -------------------------------------------------------------------------------- Jason, thanks for the questions. Starting with your first one, subscriptions. We haven't published the exact percentage of categories in which this is relevant for, although that number is sizable. Subscriptions, when you think about that, has to do with a combination of things. Both the convenience of being able to rehire or repurchase the same service over and over again without any hassle, but also it helps buyers and sellers establish a longer-term relationship. And in some cases, and this is open for sellers for their discretion, they can also combine that, the long-term relationship, with a discount, as well. A lot of our categories have this in place. There are categories in which this is less relevant. If you need someone to help you do some grammar or editing work on your resume, this is probably not something that you have to subscribe to. But a lot of our services, if think about that, most of the creative services are relevant for some buyers on a repeat basis. We see this as an exciting opportunity for sellers to actually establish those longer-term relationships. -------------------------------------------------------------------------------- Ofer Katz, Fiverr International Ltd. - President & CFO [24] -------------------------------------------------------------------------------- And then, Jason, related to take rate, we've been going upmarket for some time now, and I think that we've been able to demonstrate that take rate has gone up with us. It doesn't grow because of the transaction services, production related; it's because of added-value services that we add on top, whether it's subscription on the seller side or capability on the buyer side, like the ClearVoice subscription. So the plan, our expectation to increase take rates modestly over time is based on the road map of product releases that we believe are chargeable and will contribute additional line of revenue. So behind that assumption, there is a full stack of products that we plan to launch over time, both on the buyer and the seller side, that we'll be able to monetize against and create or increase take rate, modestly, as said. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- This concludes our Q&A session. I would like to turn the conference back over to Micha Kaufman for any closing remarks. -------------------------------------------------------------------------------- Micha Kaufman, Fiverr International Ltd. - Co-Founder, CEO & Chairman of the Board [26] -------------------------------------------------------------------------------- Thank you, Operator. Thank you, everyone, for joining the call this morning. We are extremely excited with our performance and momentum heading into 2021. And we look forward to seeing you at the upcoming investor events. Have a great day. -------------------------------------------------------------------------------- Operator [27] -------------------------------------------------------------------------------- The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.