Good day, and thank you for standing by. Welcome to the Upwork Q3 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, David Anhalt, Manager of Investor Relations. Please go ahead. Thank you. Welcome to Upwork's discussion of its third quarter 2023 financial results. Joining me today are Hayden Brown, Upwork's President and Chief Executive Officer, and Erica Gessert, Upwork's Chief Financial Officer. Following management's prepared remarks, we will be happy to take your questions. But first, I'll review the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under federal securities law. Forward-looking statements include all statements other than statements of historical facts. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statements. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC website and our investor relations website, as well as the risks and other important factors discussed in today's shareholder letter. Additional information will also be set forth in our quarterly report on Form 10-Q for the three months ended September 30, 2023. In addition, reference will be made to certain non-GAAP financial measures. Information regarding a reconciliation of non-GAAP to GAAP measures can be found in the shareholder letter that was issued this afternoon on our investor relations website at investors.upwork.com. As always, unless otherwise noted, reported figures are rounded, and comparisons of the third quarter of 2023 are to the third quarter of 2022. All financial measures are GAAP unless cited as non-GAAP. Now I'll turn the call over to Hayden. Thanks, David. Thank you all for joining us today. In the third quarter of 2023, Upwork continued to drive durable, profitable growth while advancing our position as the world's work marketplace. We made significant progress on our goal to become the preeminent destination for AI-related talent and work, while also improving the efficiency, effectiveness, and speed to match on our platform through improvements to our core product experiences and capabilities. In the third quarter, we made huge strides on our financial goals. We achieved better than expected results, generating third quarter 2023 revenue of $175.7 million, up 11% from a year ago. We recorded GAAP net income of $16.3 million and Adjusted EBITDA of $31.2 million this quarter, demonstrating very rapid margin improvement. We also continued to make important investments in near and long-term growth opportunities. These include adding new features and functionality to the platform, including new innovations to our ads and monetization products. These products contribute revenue to Upwork, but more importantly, they contribute to the efficiency of the platform by helping professionals and clients connect more quickly. One of our most ambitious growth goals is to foster the most AI-empowered independent professionals in the world. In pursuit of this, we greatly enhanced our AI services hub, which has seen a 10x increase in average monthly visitors since its launch in the second quarter, and just yesterday announced an extension of the hub with a new suite of generative AI apps, offers, and educational content specially designed for talent. Our scale as the world's work marketplace has aided us in creating a deep and diverse ecosystem of partners that span education, technology, and special offers for clients and talent. New featured partnerships for AI-powered apps and offers for independent professionals include industry-leading companies like Adobe, Amazon, ClickUp, and Miro, that have advanced integration of generative AI into their tools and services, alongside educational AI skill-based courses and content from leading providers like Coursera, Jasper, and Udemy that form a new education marketplace on Upwork Academy. We also launched limited access to Upwork Chat Pro, a new generative AI application embedded directly on Upwork's platform and powered by GPT-4. Upwork Chat Pro utilizes unique insights from Upwork about independent professionals to provide specific, contextualized responses and recommendations that are relevant to the needs of professionals on Upwork, assisting them in starting, creating, and completing projects more efficiently and effectively. In the third quarter, we continued on our journey to unlock the vast opportunity in the enterprise space, increasing our new enterprise logos in the quarter by 21% versus Q2 2023. We added 23 new enterprise clients in the third quarter, expanding our customer roster with notable new organizations like Dropbox, IT'SUGAR, Moderna, and Florida State University. We also drove substantive growth in our highest value cohort of customers, as the number of enterprise clients in the third quarter spending $5 million or more over the trailing twelve months grew 43% quarter-over-quarter. We continue to be pleased with the progress we are making toward our long-term strategy of providing companies with the talent, skills, and tools they need to get critical work done through harnessing the power of generative AI on the platform, innovating on behalf of all our customers, optimizing our operations, and running our business to drive durable, profitable growth. We are on track to deliver a record year in 2023 in both revenue and Adjusted EBITDA, and have set a steady course for sustained momentum in the quarters ahead. I'll now turn it over to Erica for more details on the financials. Thank you, Hayden, and hello, everyone. I'm delighted to be here with you today to review a very successful third quarter. GSV again exceeded $1 billion in the third quarter. Revenue grew 11% to $175.7 million, with marketplace revenue of $161.7 million. The enterprise business unit, which includes managed services and enterprise revenue, was flat quarter-over-quarter, with revenue of $26.1 million. This quarter, managed services revenue increased 4% year-over-year to $14 million, while enterprise revenue, which is reported as a part of marketplace revenue, was down 3% to $12.1 million. These offsetting growth rates are due to the movement of a customer to managed services during the quarter. Total revenue growth was the result of take rate expansion, driven by strength in our ads products and our move in 2023 to a simplified flat fee pricing structure. Total take rate in the third quarter of 2023 was 17.1%, up from 16.3% in the previous quarter and from 15.4% in the third quarter of 2022. Active clients increased 2% year-over-year and quarter-over-quarter to approximately 836,000. Active client growth was driven both by improvements to our client retention as well as improvements in efficiency in acquisition of new clients. In particular, we saw strong improvements to our performance marketing efficiency in the quarter. GSV per active client decreased slightly by 1% year-over-year to $4,906, a reflection of the strong active client growth in the quarter. Non-GAAP gross profit was $133 million, or 76% of revenue in the third quarter, compared to 75% in the third quarter of 2022. Non-GAAP operating expenses for the third quarter of 2023 were $103.5 million, representing just 59% of revenue, compared to 78% in the prior year period, with R&D expenses increasing 16% year-over-year, offset by sales and marketing expense decreasing by 26% year-over-year, and G&A decreasing by 2% year-over-year. Provision for transaction losses decreased a remarkable 84% year-over-year. The strong improvements in operating costs were the result of aggressive management action to focus on efficiency and profitable growth. We will continue to identify ways to improve our efficiency while also investing in innovations, innovations to grow our business. In the third quarter, we made huge strides in our focus on durable, profitable growth. Non-GAAP net income was $28.9 million in the third quarter of 2023, compared to non-GAAP net loss of $4.2 million in the third quarter of 2022. Our non-GAAP net income per basic and diluted share was $0.20 in the third quarter of 2023, as compared to non-GAAP net loss per basic and diluted share of $0.03 in the third quarter of last year. This rapid improvement is the result of our ability to quickly identify areas of cost optimization and efficiency. Adjusted EBITDA was $31 million in the third quarter, compared to -$2.9 million in the third quarter of 2022. Adjusted EBITDA margin was 18% in the third quarter of 2023, compared to Adjusted EBITDA margin of -2% in the third quarter of last year. Our strong Adjusted EBITDA results are due to revenue overperformance, as well as the implementations of the cost optimization programs we've discussed. We are very pleased with our ability to rapidly identify these cost efficiencies in our business, which we expect in part to reinvest in organic growth in future quarters. In Q4 2023, we remain committed to our previous guidance of exiting the year at approximately 15% EBITDA margin. Our focus on profitable growth is also increasing our cash balances, with cash from our operating activities of $37 million in the third quarter and cash, cash equivalents, and marketable securities of approximately $555 million. I am also delighted to announce that our board of directors has approved a share repurchase program with authorization to purchase up to $100 million of our outstanding shares of common stock. This is a testament to our strong financial performance and ongoing commitment to durable, profitable growth. Turning now to guidance. We are guiding fourth quarter revenue to between $175 million and $180 million, which results in full-year revenue guidance to between $680 million and $685 million, which represents a 10% year-over-year growth rate at the midpoint. We're raising our revenue guidance primarily due to the revenue overperformance we saw in the third quarter, particularly around our ads and monetization products. We expect fourth quarter Adjusted EBITDA to be between $24 million and $28 million, which represents an Adjusted EBITDA margin of 13.5%-15.8%. We're also raising our full year 2023 Adjusted EBITDA guidance to be between $67 million and $71 million. We continue to be on pace to post an Adjusted EBITDA in 2023 that is more than double that of any year since we went public. We also expect to generate positive free cash flow on an ongoing basis. The third quarter has been another successful one for Upwork's business, and I'm proud of our team's ability to rapidly execute on our efficiency goals. Going forward, we will continue to balance our commitment to strong, steady growth of revenue and EBITDA margin expansion, while also focusing on shareholder value. I want to thank the fantastic Upwork team for everything they contribute every day to driving value for our customers and building a growing, successful business. Thank you, and we will now turn the call to your questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Matt Farrell of Piper Sandler. Your line is now open. Thanks for taking my question and congrats on the really strong results. You highlighted throughout the shareholder letter the continued innovation on the AI front. Would love just to hear how sentiment among both talent and clients is evolving around the topic. Have things slowed down at all, or is it full steam ahead? Thanks, Matt. Absolutely. Definitely sentiment is very positive on this front. I'd say clients and talent are both pretty eager to take advantage of what's out there in the ecosystem, and more specifically, the innovations that we've been launching on our own platform, including some of the really exciting partnerships that talent can now take advantage of directly on Upwork. You know, leveraging tools like Amazon CodeWhisperer, you know, Miro, ClickUp, and others yesterday. So we're seeing, you know, Upwork talent is the first and at the forefront of all of these AI adoptions because freelancers know, you know, this is what puts bread and butter on the table. Their ability to work quickly and effectively to deliver incredible outcomes for clients is absolutely transformed by these tools and technologies. So the sentiment amongst talent is strong. With what we announced yesterday, also with our own innovations around Upwork Chat Pro, which is, you know, powered by GPT-4 and embedded across the Upwork platform, we're seeing a lot of interest in that product as well. So there's just, I think, a lot of excitement there on both the client side and the talent side. I know you aren't going to provide any quantitative commentary for 2024, but what are some of your priorities for next year, whether it's areas of investments, opportunities for outsized growth? Anything you could highlight would be great. Thanks. Sure. You know, as we look at the data on our platform, it's obviously early days in the growth of some of these generative AI, you know, skills and work. But we did see already, generative AI categories of work were up 34% quarter-over-quarter in Q3. We're seeing, AI & Machine Learning, growing tremendously, Data Science & Analytics growing tremendously. So, you know, this is a priority for us in terms of really building Upwork to be the preeminent destination for where clients of every size can come and find this talent. And again, you know, this year, we're already starting to see that even off of the smaller base that we're growing from. So next year, you know, we're going to continue to deliver the tools and technologies for talent so they can be effective. We're going to continue to innovate around the product and solutions on our own platform, so both clients and talent can leverage generative AI-powered features and functionality on Upwork. We're continuing to leverage our partner ecosystem as part of that, ensuring that everyone who comes and uses Upwork is not just using our own tools, but the best tools in the business, to deliver work, because we are a work business after all. Hey, Matt, this is Erica. I'll just add, you know, we're, as you said, we're not giving any specific guidance on 2024 at this point. That said, you know, we said last quarter, and it remains consistent, you know, we are committed as a business to year-upon-year improving our revenue growth rates from 2023 - 2024, and improving our EBITDA margin year- over -year. So that remains very, very consistent from what we said last quarter, and obviously, we'll give you more, you know, more concrete guidance when we report Q4. All right. Thank you. One moment for our next question. Next question comes from the line of Kunal Madhukar of UBS. Your line is now open. Thanks a lot. This is Jason on for Kunal from UBS. I have a couple of questions. The first one is on OpEx. So in terms of OpEx, could you help us understand how to think about the new run rate of sales and marketing spend for Q4 as well as 2024, if possible, in the percentage of revenue? And, and it has been declining consistently the last several quarters after 39%-38% range. It was also a lot lower than expected for Q3. So if you could provide some details around the underlying drivers of that marketing spend efficiency for Q4, we appreciate it. Thank you. ... Yeah, sure, Jason. Well, yeah, so obviously at the beginning of the year in Q1, when we announced the reductions, our decision to reduce our brand spend, we did indicate that that would be, you know, kind of gradual reduction over the course of the year. So I think Q3, you know, kind of reductions are consistent with that. We did actually see some very good efficiencies on the performance marketing front in Q3. You know, just, you know, kind of more efficient yield on that spend, which also enabled us to, you know, reduce costs. But, we're not giving guidance on 2024, so we're not going to update you on any specific run rates there. I will say, you know, from an EBITDA margin point of view, as we committed to, you know, earlier in the year, we expect to exit, 2024 in Q4, or sorry, 2023 in Q4, round about the 15% EBITDA margin. And again, we'll give you more concrete guidance on 2024 when we, when we guide for the year. Thanks a lot. Yeah, so that's sort of my next question, which is on EBITDA. You've said before, EBITDA margin typically peaks in Q4, but drops sequentially in Q1 in the vicinity of 200-300 basis points. Given the stronger than expected EBITDA guide for Q4, how would you characterize the magnitude of sort of a sequential decline in EBITDA margin off of the 15% Q4 guide? Yeah, sure. So look, you know, as I talked about last quarter, listen, you know, when I came into the business in Q1, we committed to reductions in brand spend, and, you know, we also reduced costs really on, you know, kind of on the sales side as well. I talked about last quarter, the fact that, you know, we were going to continue to look for cost efficiencies in the business, which we have done, I think, very, very effectively. I'm actually incredibly proud of the team for working hard to identify places where we can reduce cost and the very high EBITDA margin in Q3 of 18% reflects our ability to do that. That's not just, you know, kind of in, you know, discretionary expenses, but also in reducing spend in longer-term projects in favor of reinvesting in growth in kind of more near-term opportunities. Things like the AI partnerships we just announced, other AI, ML innovations and product platform improvements that we plan to invest into in Q4, in order to enable growth in 2024. So, we are deploying some investment in, right now in Q4, ahead of 2024, and that's why you'll see a little bit of margin offset and closer to kind of the 15% range as we exit the year. But that's appropriate as we, you know, remain committed to, you know, profitable growth going forward. Thank you very much. Thank you. One moment for our next question. Next question comes from the line of Logan Reich of RBC. Your line is now open. Hey, good afternoon. Thanks for taking the question and, congrats on the strong quarter. Just wanted to ask a macro question on just what you guys are sort of seeing, on the macro backdrop and in trends with your clients, as it pertains to both active clients and then also spend per client. Just wondering if there's anything to call out there on a geography basis, or like a size of client basis, and then also just any sort of impact, from the conflict in the Middle East. Thanks. Yeah, sure. This is Erica. Maybe I'll, I'll take this one, Hayden. Can you... Obviously, you can add anything. So, you know, I would say that we haven't seen any real material improvement in the macro environment in Q3. The external macro trends continue to be, I would, I would characterize as uneven and a little difficult to anticipate, and honestly, sometimes even changing month to month. This all lends itself to customers tending to keep their purse strings a little bit tighter, and we're seeing this especially on the large business side. Even despite this, you know what? We're focused on what we can control. You know, as we said in the prepared remarks, we continue to add active clients, up 2% year-over-year and quarter-over-quarter, and our new enterprise logo growth was up 21% quarter-over-quarter. So we're really pleased with our ability to execute in, you know, what we consider to be a kind of in continuing uneven environment. Another really important point is that, you know, we are increasing our revenue from monetization strategies like the ads products that we talked about in, again, in the prepared remarks. These are things like Boosted Proposals and also subscription products like Freelancer Plus. And these aren't just bringing revenue to Upwork or increasing customer lifetime value. They're also driving efficiency on the platform and enabling talent to get jobs faster. Our talent who use Boosted Proposals, for example, have about a 25% higher chance of securing a job. So, you know, we've said for a couple of quarters now that we're really focused on untethering ourselves from the macro environment, and I think, you know, our results really do display the success in doing that. So really proud of what we've been able to do, and we're committed to both, like I said, improving revenue growth rates year-over-year and expanding EBITDA margin. Yeah, and Logan, just to address the question about geo and client size. I don't think there's anything notable to call out there. Nothing really major this quarter. You know, I'd say our very small business clients actually are the ones, like, leading the pack in terms of their performance, but nothing specific to mention. In terms of the conflict in the Middle East, you know, obviously, this is incredibly heartbreaking and we are, you know, really just our hearts are with everyone who's impacted by this terrible tragedy. It's, it's absolutely shocking and deeply sad to see these devastating events unfolding and impacting civilians in such a, a horrific way. We have a very small number of team members across the region whose safety and wellbeing we're focused on. We don't anticipate any impact to our business as our GSV from that area is negligible. ... Thank you very much. Appreciate it. All right. Thank you. One moment for our next question. Next question comes from the line of Bernard McTernan of Needham and Company. Your line is now open. Great. Thank you for taking the question. Just wanted to double-click on the ads marketplace. Can you go a little bit deeper into this opportunity? The shareholder letter spells out how it's driving conversion, but how much is this being used right now? How much do you think it could be used in the future? And if it could provide a, you know, upward pressure on take rate over a longer period of time. And then just to follow up on the take rate, when should we expect to see the full benefit of the pricing changes in the take rate? And if it's possible to decouple those two in terms of the sequential growth in the take rate this quarter? Sure, Bernie. We have a lot of runway on this ads and monetization area of the business. You know, we've been building the strategy over the last couple of years, and we're really starting to see it bear fruit. As Erica mentioned earlier, you know, one thing that we love the most about this is it's not just about monetizing the business, it's about doing so in a way that advances customer goals around talent being discoverable, people who are really excited to get jobs and are qualified to do so, being found faster in the marketplace. So we're seeing data such as talent using Availability Badges, receiving 50% more invites than those who are not. Clients are 62% more likely to actually get their invites accepted or invite those or work with those who are badge talent. Boosted Proposals is another feature here that is increasing professionals' likelihood to get hired by approximately 25%. So overall, this is actually still early in the strategy because there are other features and functionality around different types of ad products, as well as optimizing those that we've already launched, which we think will provide, you know, further opportunities in 2024 and beyond. So that's kind of the bigger picture. We really are focused on the efficiency, the equitability, and the optimization around these features. And certainly, I think that's a plus for both customers and for, you know, our shareholders over time. Maybe just a little bit more color on your question of how to think about the dynamic between the flat fee pricing structure and the ads and monetization products. When we. So we made the transition to the simpler pricing structure in May of this year, and when we did that, we said that we would, you know, we expected to get accretion from take rate over, you know, sort of the next four quarters. Just as a reminder, at the end of the year is when, you know, the 5% tier moves up to 10%. Of course, we've given a long runway to those the talent at 5% to, you know, to have time to adjust and, you know, price appropriately with their clients. But that also means that we will, we will get additional accretion from the pricing change itself, you know, into the first half of next year. We're not breaking out the exact dynamics, but we did say at the time when we made the price change in May, you know, that over the next several quarters, we'd get, you know, call it round about a point of total accretion, and so that kind of remains consistent. Perfect. Thank you both. Thank you. One moment for our next question. The next question comes from the line of Brent Thill of Jefferies. Your line is now open. Hi, this is John Bianchi for Brent Thill. Thank you. I wanted to go back maybe a little bit on the macro. You mentioned it's been hard to predict month by month, but is there anything you've seen in terms of monthly linearity, including, you know, through, I guess, the first week of November so far? I mean, anything notable other than maybe for seasonality? I just, yeah. Sorry, can you... I just want to make sure I understood the question. You're asking in the, in kind of in Q4, if we're seeing any, any kind of changing dynamics, was that the question? I mean each month of Q3 as well as through Q4 so far. Yes. You know, I mean, like I say, I mean, I would say that we're not seeing any notable changes. I think just, you know, I think as we're all observing, you know, the sort of environment of uncertainty, you know, is affecting all, you know, all types of businesses, you know, spend in this environment. Maybe I can give you a little, you know, kind of color on some of the underlying trends in the platform. One example we're seeing is that, you know, new clients coming onto the platform, you know, we have seen good growth, like we said, active clients growing, you know, more logos coming in enterprise side. But one thing we're seeing is that, you know, new clients are ramping spend a bit more slowly than what we saw, you know, a couple of years ago. We do think that that clearly speaks to just some of the macro impacts. You know, another thing is that we're seeing some bright spots, you know, also in kind of hours per contract are up slightly quarter-over-quarter. And actually, you know, when we look at, you know, the, even the year over two-year trends, hours per contract are up about 10%. So I think that that shows that there is good, strong, robust growth happening on the platform. Okay, great. That's a helpful call. Maybe, and then on the, in the, the AI skill set and so on, I think you, you shared, one metric, but is there anything else to share in terms of how that's ramping in terms of projects and, and, talent putting out skills? And, I mean, I guess the average rate, probably is much higher as well, but anything else you could add there would be great. Thank you. John, so in terms of how projects and talent skills are trending, you know, I think we're seeing just a lot of positives in terms of what the overall impact of AI is to the platform right now. I think that's really the headline. So we're seeing growth in categories like AI & Machine Learning, which is up 60% year-over-year. Data Science & Analytics is another big growth category for us, up 30% in job posts. and so I think the thing to understand is, even though we are measuring, you know, like, every single thing in the business around some of these AI specific impacts, it's also important to understand the AI positive growth we're seeing is in both categories that are specifically AI and generative AI-type categories, as well as a growth in demand for talent across categories of work, where people want, you know, content writers who are using AI in their work or translators who are using AI in their work. And so we're actually seeing that shift as well. And in those cases, what we're seeing is talent who are using these new tools are actually commanding premiums in terms of their wages, which is extremely positive as we see kind of the mix shift around that work actually evolving and seeing the talent themselves upskilling and again, adding tools to their toolkit, which again, goes back to the strategies you see us deploying around some of the partnerships. So, you know, we're seeing the growth in specific categories as well as talent across categories, really evolving how they're working and getting the benefits of these new tools as they go. Very helpful. Thank you. Thank you. One moment for our next question. Next question comes from the line of Rohit Kulkarni of Roth MKM. Your line is now open. Hey, thank you. A couple questions. One, on enterprise net adds. Anything you'd flag that leads you to believe that this kind of inflection or the uptick that we are seeing in new client additions is this trend is sustainable, perhaps due to the team productivity of reps, or maybe it is macro, that you think you are now in a new sustainable cadence of growing net adds in enterprise? And then, quick clarification on Erica's comments. I guess, regarding 2024, were you trying to say that you're committed to improving revenue growth rate, which means accelerating growth rate from 2023 - 2024? Just wanna clarify that. Yeah, Rohit. So on the enterprise side, the continued improvement we're seeing in adding new logos to the portfolio is definitely a testament to the hard work we've been doing to increase the land team productivity. And that started, you know, back in Q1 and has, you know, been kind of a steady march, and it's certainly continuing under Zoe's leadership of the enterprise business unit. And I think it also speaks to the value of our product, you know, despite the macro backdrop, which is certainly challenging, I think, for many and most businesses in this environment. So, you know, we're continuing to execute there and feel good that that is going to be a sustaining trend. It may not be perfectly even quarter to quarter, but certainly the demand is there, and we're getting more and more efficient at completing that demand. Yeah, and on the question on 2024, I really appreciate the clarifying question to make sure everyone understands it. What we've committed to is year over year, from 2023 - 2024, to have our growth rate increase on revenue. Similarly, year -over -year, from 2023 - 2024, our EBITDA margin is also expected to increase. That's what we talked about last quarter. That remains consistent. And, you know, obviously, like I say, we will give more detailed guidance on 2024 on the Q4 call. But it's really on a, you know, full year versus full year, growth rate and margin that we are making the comparison. Great. Thanks, Erica. If I could add one more, on GSV, what would it take for the GSV to kind of start to grow beyond the zip code that it has been in the last, call it 3-4 quarters? I know pricing has changed a lot, and that may be weighing on the GSV. But just overall, how should we think about GSV as in your algorithm into revenue growth as such? Yeah, yeah. We're not guiding to GSV right now, nor have we traditionally done so. And look, I would say that there's really no doubt that GSV is being affected by the macro environment. Like I've said, you know, to some of the earlier questions, there really is a lot of uncertainty still out there. And trends and sentiment can kind of change month to month these days. And, you know, what we're seeing is that that translates to some general hesitation for all types of businesses to spend into this environment. Like I said, there are some really nice bright spots under the covers. You know, kind of, I referenced the kind of sequential increase on hours per contract. You know, we do see some very good dynamics there, you know, on a kind of year-over-two-year basis. And so, you know, I think that, you know, we do expect that also, you know, some of the investments that we're making on the platform into new, you know, innovative AI experiences, other things like that, will continue to help us on the GSV front as well. But, you know, we'll give more of an update on that as we approach 2024. Okay. Thanks, Erica. Thanks, Adam. Thank you. One moment for our next question. Our next question comes from the line of Andrew Boone of JMP Securities. Your line is now open. Good afternoon, and thanks for taking my questions. I wanted to go back to sales and marketing. Erica, is there a framework that you have or that we should be thinking about as we think about maybe demand coming back and macro improving and what that would mean to sales and marketing at large? Meaning, is it artificially low right now, but there will be a period where it just expands, or do you have a framework in which we should apply? ... So a couple things on that. I would say we're really pleased with the performance marketing, you know, the performance of our performance marketing spend. We do see some improvements in yield there. You know, we're gonna continue to balance our commitments on EBIT, EBITDA margin accretion with investments into growth. Right now, those investments into growth are really focused on R&D. The other thing that you've seen us do since we reduced our brand spend at the beginning of the year, is make some surgical investments in brand spend around new product and feature launches. We certainly do plan to do that next year as well, and so you will see us from time to time making brand spend investments. I think beyond that, it's, it's a little bit too early to tell, beyond the fact that, you know, I think that over time, you know, while balancing kind of EBITDA margin accretion, I, I do think that we, you know, believe that, you know, we can make a good return on brand, brand investment, as, you know, macro factors return. Yeah, the other thing I'd add on this, Andrew, is on the sales side specifically. You know, we're very focused, as you can see from the performance of our numbers on the enterprise side right now, on increasing the efficiency in our model and on sales team optimization. I mean, this is a great time for us to be doing that, and driving those improvements, which we think we can continue to deliver over time, which will help us in any demand environment, you know, the current macro or an improved macro, and just help us have a more efficient team to deliver the results that we want. And then, Hayden, I wanted to ask you a product question. Upwork Chat Pro, understood this is basically a first version of the product. How do you see AI tools evolving as you guys help freelancers be more efficient on the platform? This is definitely a first version of... Frankly, there's a lot of different features that we have been working on here. You know, we, we launched some features in Q2. This is the latest one in Q3, Q4. We've got more in the pipeline. You know, we're gonna continue experimenting. I think to the question of, you know, how do these tools evolve? There are so many different touch points that we have with talent across their life cycle of matching with clients, of delivering the work with clients, and really delivering great outcomes. And so I think we are still in the early days of, you know, with the partnership side, making sure that they have amazing tools, the best in the market, at their fingertips, at discounted rates, and knowing which are the best tools to be using to deliver that work. And then within our own platform, with Chat, with Chat Pro, clearly there's a lot we can do to smooth out the workflows, you know, to give them an even better experience for the work delivery through the pieces of the puzzle that we serve them with directly. So again, this is early days. I think these tools are gonna get better and better, both our own tools and those in the market. We're just really excited to be pushing things forward, you know, innovating on the forefront and getting a ton of customer feedback along the way that will continue to guide product roadmap as we go. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Eric Sheridan of Goldman Sachs. Your line is now open. Thanks for taking the question, and hope everyone on the team is well. I'll just ask maybe one big picture one, as we've gotten through a lot of the big topics. When you look at these newly announced partnerships, can you take a step back and help us better understand what that will do to demand and supply on the platform over the longer term? And how we should be thinking about potentially partnerships like you're announcing, potentially improving the return or the efficiency of your go-to-market strategy over the medium to long term? Thanks so much. Yeah. Thanks, Eric. You know, we're doing a number of different types of partnerships right now, and we feel really great about this progress because as we look at it, it's really building an ecosystem that is valued by customers and further differentiates Upwork, leveraging our unique data, our insights, our scale, to really strengthen our competitive moat. So to your question about, you know, return, on the investment and the go-to-market strategy, medium to long term, there's a bucket of partnerships we're doing around client acquisition, which really is about, you know, if you saw the OpenAI partnership we did, the previous quarter, this is an example of how we use a partnership to give talent to, customers who otherwise may not know about Upwork and really use that as an acquisition vehicle, like through OpenAI in this case, to get to their end customers and give them the talent they need right here on Upwork. And that is, you know, a really early and yet exciting opportunity for us to replicate that model with other partners who we have lined up and very eager to work with in that kind of capacity, so that they can give access to their end customers, the type of talent we have on Upwork to really achieve their business goals. So there is a whole acquisition motion that's possible there. And again, we're in the early days of building that out and seeing, you know, how it could play over the medium and long term. Then there are the other types of partnerships we're doing around tools for talent, which really are around driving our flywheel, around the value of talent on the platform, the efficacy of their work delivery, the quality of the results that they deliver. As you can imagine, the more effective they are in delivering this work, the higher value they are, and that really just drives, again, our flywheel, which helps with all of the metrics and characteristics of what Upwork is. And then the third category is around the education partnerships. So things like Coursera and Udemy, which again, is around enabling talent to upskill and self skill in new and better ways, particularly in this moment around this AI revolution, which is incredibly relevant. And again, that will touch our flywheel as the talent on Upwork is the most AI-enabled, is delivering those 10x, 30x outcomes. This is a place to come find that talent, and again, that will drive so many of our metrics over time as that strategy delivers. So again, it's early days on all of this, but that's how it kind of connects to our broader vision for the existing business, our existing flywheel, and things like client acquisition in particular. Thank you. ... All right, thank you for your questions. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Our next question comes from the line of Maria Ripps of Canaccord. Your line is now open. Great. Thanks for taking my questions. First, is there anything you can share with us in terms of how we should think about the pace of customer growth in 2024? Is this largely a function of the macro environment, improved sales productivity, or something else? Sure. You know, again, we're not giving any specific guidance on it. Look, I think that it's probably a combination of all of those things. I think, you know, we've been really, really pleased with the progress on sales productivity specifically, and you know, particularly the sequential growth on new logos on the enterprise side, considering all of the work that we've done on optimizing for efficiency in that business. So that's been really, really good. Again, you know, a combination of that, the benefits we're seeing on the performance marketing side and just the lower CAC that we're seeing there is also contributing. And, you know, certainly some of the macro environment, you know, would also be helpful. But I think, you know, on an ongoing basis, we do believe that the continued optimizations that we're making on the platform should help us. Got it. That, that's very helpful. And then is there any data that you tracked that sort of demonstrates that you are perhaps gaining share? Obviously, there's been a ton of progress on the product side, but broadly, how do you view your competitive positioning in this sort of uncertain hiring environment? Maria, I'd say we view our competitive position as, as strong or stronger than ever, frankly. You know, there's a, there's a lot of different data you can look at. I think it's, it's... Our, our, the point, the place we sit in the industry is a very interesting one, you know, as the market leader, and certainly building a new way of working. But as I look at, the data points we have around our competitive set and certainly everything we're executing on to take advantage of the strengths we have in this business around our size, our scale, our data asset, our incredible customer base, the product innovations we've already built, let alone the ones that we are launching, you know, on a weekly basis, I think all of those things really lend themselves to, our continued strength as we pull ahead of competitors. Not to mention, you know, the partners now that are so eager to work with us as they see that strength in Upwork and are eager to be part of our ecosystem. Got it. Thank you so much, and, congrats on the strong quarter. Thank you. Thanks so much, Maria. All right. Thank you for your questions. I am showing no further questions at this time. I would now like to turn the call back to David Anhalt for closing remarks. Thank you. On behalf of the entire Upwork team, thank you for joining us today, and thank you for your interest in Upwork. If you need any clarifications or have any follow-up questions, please do not hesitate to reach out to me at investor at upwork.com. This concludes our call. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.