Fiverr International Ltd. (FVRR) Q2 2019 Earnings Report, Transcript and Summary

Good day and welcome to the Fiverr Second Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. At this time, I'd like to turn the conference over to Jinjin Qian, Vice President of Strategic Finance at Fiverr. Please go ahead.

Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining us on Fiverr's earnings conference call for the second quarter ended June 30, 2019. Please note that this call is being webcast on 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 today on the call are Micha Kaufman, CEO and Co-Founder and Ofer Katz, CFO. Before we start, I would like to remind you that the following discussion contains forward-looking statements. These include, but are not limited to, Fiverr's market opportunities and future financial results, which involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in Fiverr's periodic SEC filings, including those factors discussed under the Risks section of Fiverr's Form F-1. The forward-looking statements in this conference call are based on current expectations as of today and Fiverr assumes no obligation to update or revise them whether as a result of new developments or otherwise. And now I will turn the call over to Micha.

Thank you, Jinjin. I am happy and honored to welcome you all to our first earnings call as a public company. We delivered a stellar second quarter with revenue growth of 41% year-over-year, along with significant operating leverage, which translated to 1,130 basis points improvement in adjusted EBITDA margin. The results show strong momentum in our business and our guidance reflects our continued excitement for the second half of 2019. For today's call, I'll start with a brief overview of Fiverr and then give you some highlights from Q2 and our priorities for the rest of 2019 and beyond. Ofer will then go through our results, financial trends and our guidance. Then we will be happy to take your questions. We started Fiverr in 2010 with two important observations: First, we noticed that the way people wanted to work was changing. The nine to five always in the office mentality was shifting towards a desire for flexibility. The data we gathered demonstrated that this was not a phenomenon limited to only one country or one sector. There was a profound shift underway and we saw significant opportunity to create a technology platform to enable the freelancing economy and capitalize on the change in the way people work. Second, it was clear that working with freelancers was challenging and anything but simple. As an entrepreneur trying to build a company, I was frustrated by the friction associated with finding the right freelancer negotiating with them, collaborating and getting the results I was happy with. On the seller side, it was clear that even the most talented and hard-working freelancers were having a hard time communicating with prospective businesses about themselves and finding clients, especially clients, who were not physically located nearby. Beyond that, typically they had to spend hours bidding on projects they did not end up winning. Moreover, they had to spend large amounts of time managing their business rather than doing the work they love and making more money. At a very high level, those are the reasons Fiverr exists and why we are thriving. But it's really our approach that sets us apart. We didn't want to create yet another staffing company. Instead, we chose to innovate, developing proprietary technology that is powering an elegant simple to use marketplace that enables buyers and sellers to transact for digital services. We prototype digital services in a SKU-like catalog making hiring freelancers for a project as simple as buying something on Amazon. Today with nearly 10 years of product development and transaction experience, we have a beautiful and extensive platform that uses advanced algorithms to optimize and leverage mass quantities of big data making everything easier for both buyers and sellers. Perhaps most importantly, we believe we are at the very early stage of our journey and our opportunity. The early trends we observed on how work was fundamentally evolving in 2010 have exploded into a global phenomenon. Freelancing isn't a task and it isn't limited to any sector or any geography. The US has been our biggest market so far, but our sites are set globally. For example, in July, we created a day-long community event on the iconic London Eye in the UK. While we are an online company, we do a lot of events around the world, to bring buyers and sellers together. And to be a true thought leader on the future of work. As part of the event, we commissioned a study, with market research firm, Censuswide, which resulted in some compelling statistics, about the current state of work in the UK. Here are a few of them. 67% of Brits are thinking about quitting their jobs, to go freelance. The number of self-employed workers, in the UK has increased from 3.3 million, in 2001 to 4.9 million in 2019. And 43% of full-time workers have a side-job to help make extra income. These statistics are remarkable. But they are reflected in the everyday reality of our business and our platform. We have created a marketplace specifically designed, to enable and monetize these trends, on a global basis. Buyers come to Fiverr, for a specific need, such as a logo or a voiceover project. And we drive repeat orders, as their business needs expand, based on our massive catalog of services. We have seen remarkably consistent behavior, from buyer cohorts, over the past 8 years, giving us strong visibility and predictability in our financials. We are moving upmarket, very effectively. As evidenced, by strong increases in spend per buyer. While, we do have many individuals within enterprises using Fiverr, to get things done, we are focused on the massive global SMB market. By choosing to focus on SMBs, we can address a rapidly growing market opportunity. In the US alone, there are more than 30 million SMBs. And they represent 99% of total businesses. We estimate our TAM in US alone, is more than $100 billion per year. Just as importantly, we can tackle this massive market opportunity, without an expensive sales team. Instead, we benefit from the fact, that most of our traffic is organic. And we are highly efficient online marketers. This is evidenced, by our Time to Return On Investment metric, or tROI, that Ofer will describe in a few minutes. Turning to our Q2 results and progress. We had a very strong quarter, with revenue growing 41% on a year over year basis, driven by strong growth in Active Buyers, which were up 14%. We consistently grow active buyers by between, 200,000 and 300,000, each year. And we are focused on driving the quality of our buyers. And their lifetime value, which has improved significantly, over the years. Spend per Buyer, was up 16%, driving continued scale benefits that helped us improve our Adjusted EBITDA margin, by 1,130 basis points over last year. While we do not manage the business, for take rate, it grew to 26.4%. We believe that this take rate is not only sustainable, but that we can grow it over time on the tremendous value our marketplace brings, to both buyers and sellers. And the multiple levers, we have to drive take rate, if we choose to do so. One other financial metric that, I am excited about, is the revenue contribution, from high value buyers, which we define as buyers, with more than $500 Spend per Buyer each year. Contribution from these buyers continued its steady march upward. And those buyers represent more than 50% of transactions on Fiverr. We believe this is a clear indicator that our path going upmarket is working and that buyers are placing a high value, on the services available in the marketplace. Our strong results for Q2, demonstrate the tremendous momentum in our business. And I truly believe that, we have only begun to scratch the surface of what we can accomplish. We have five key strategies that will drive long-term sustainable growth. One, bring new buyers to our platform. Two, continue to go upmarket. Three, expand our Gig catalog. Four, innovate technology and services and five expand our geographic footprint. During Q2, we continued to execute against those strategies. And I'd like to highlight a few here. In early July, we launched our gaming industry store. This is part of our catalog expansion strategy. We currently have more than 250 categories. Adding new categories, helps propel our business, and drives expansion of the lifetime value, of our buyers since they come back more often. And buy across different categories. It also increases our total addressable market. We chose to invest, in a verticalized experience for the gaming sector, after analyzing demand and observing both Rapid organic growth and gaming-related purchases from buyers and Gig registration by sellers. By packaging Gigs into a store, we are able to provide a better experience for both buyers and sellers in this high-growth, high value sector. Buyers can now purchase services in 30 categories relating to the gaming industry, including animation, storyboards, video and character development and many more. It provides convenient access to high-quality gaming talent and gives our freelancers additional opportunity to utilize their skills. Additionally, we introduced a brand-new product called Fiverr Studios, just a few days ago. We see this as an excellent example of how we innovate a transformative product, offering sellers a new way to collaborate. Fiverr freelancers can now join forces under one studio to create projects combining their different skills and experiences. I will give you one example. Michael from Colorado is one of the first sellers, who became a studio lead upon our invitation. He is an ex-Hollywood actor, who offers spokesperson video Gigs on Fiverr. He created his studio named Wall Studios, along with two other Fiverr sellers, Kevin, a content writer and Adnan, a graphic and web designer. Together, they offer a complete package to create professional TV commercial videos for buyers. For sellers, Fiverr Studios enable them to tackle larger and higher value projects with cross category skills involved. For buyers, it is all about getting end-to-end solutions without any additional complexity. With Fiverr Studios, businesses get the same seamless experience, a single point of contact, a single brief and a single price for an entire agency-like team, the same e-commerce experience that they have come to expect from Fiverr. For freelancers, joining the Fiverr studio or becoming a fiber Studio lead, means more opportunity to work with businesses of all sizes on more intricate projects. Freelancers can now collaborate as a part of these online studios without the hassle of billing, invoicing or managing payments. They can simply focus on the work they love doing together. We also made significant progress in non-English-speaking markets. Approximately 70% of our revenue last year was from English-speaking countries and we see multiple and meaningful opportunities beyond these markets. To that end, we launched a German language homepage Fiverr.de, supported by a number of digital and out-of-home marketing campaigns that were adapted to the German market. These early localization initiatives have already enabled us to acquire German-speaking buyers more efficiently. Once we have a proven playbook from Germany, we aim to replicate these principles in other markets. Moreover, we added additional payment capabilities so buyers can now pay in 11 other currencies in addition to US dollars. We added the euro as a default payment option for buyers in 18 European countries, which builds awareness and the adoption rate of our currency products among users. In the coming quarters, we will continue expanding our currency capabilities to allow sellers to withdraw funds in different currencies. Expanding our platform in multiple languages and accepting multiple currencies, combined with customizing our market base to meet local needs and preferences, will drive awareness and adoption of our platform as we target buyers and sellers around the world. These are the types of initiatives that you should expect from us moving forward. We back our decisions with a combination of data-driven approach and our significant experience but we are not afraid of making bets and experimenting with new ideas that we believe will drive the freelancing business forward globally. As we look ahead to the rest of 2019, we see a very busy and exciting year. The consistent behavior of our existing buyers and cohorts represents a tremendous base from which we can build. We will continue to roll out important technology for both buyers and sellers that will further increase the power engagement and stickiness of our market base. We have grown extremely rapidly without the need for a sales force and with low global awareness of Fiverr. We strongly believe that we are only in the beginning stage of what Fiverr is going to be able to achieve as a company. We are extremely excited to have completed our IPO and begun our journey as a public company. I want to take a moment and thank the Fiverr team for all of your hard work and dedication and to our new public investors for your support. Fiverr is a change the world company and we invite you to stay tuned to our progress. I will now turn the call to Ofer before we take your questions. Ofer?

Thank you, Micha. Full details of our results are available in our shareholder letter. I will not repeat many of the numbers contained there. On today's call, I would like to share three highlights from this quarter: First, our revenue growth momentum continued in Q2 with strong underlying trends across our business. Second, we continue to drive operating leverage and deliver significant EBITDA margin improvement during the quarter. And third our guidance for Q3 and full-year 2019 demonstrates our commitment to achieving strong growth, while driving towards profitability in the long-term. Revenue grew to $25.9 million in the second quarter, up 41% year-over-year and we continue to see robust growth in all three underlying revenue drivers. Active buyers, grew 14% year-over-year to 2.2 million. Spend per buyer, grew 16% year-over-year to $157 and our take rate grew 170 basis points year-over-year to 26.4%. The modest increase in take rate benefited from the inclusion of ClearVoice whose subscription-based services enjoys a higher take rate. The monetization of seller tools such as And.Co and Fiverr Learn as well as continued benefit from currency capability and service fee increase. We continue to see a stable trend across our annual buyer cohort and a consistent tROI for performance marketing spend. We continue to drive the majority of our new buyers through organic, non-paid channels and we continue to drive the majority of our revenue from repeat buyers and from high-value buyers, whose spend per buyer is greater than $500 per year. Our second-quarter adjusted EBITDA was negative $4.9 million and our EBITDA margin was negative 19%, representing 1130 basis point improvement year-over-year. We continue to deliver strong gross margin of 81.4% on a non-GAAP basis a moderate improvement year-over-year. We gained significant sales and marketing leverage during the quarter with 560 basis point improvement year-over-year on a non-GAAP basis. We've seen modest improvement in conversion rates as a result of ongoing final optimization efforts across our platform. We are also improving marketing efficiency by diversifying channels and increasing automation. Our Q2 Time to Return On Investment or tROI remains consistent with prior quarters and during the quarter we already recovered 90% of our performance marketing investment. I'm extremely proud that we are able to achieve this level of efficiency, while driving both more buyers and higher-quality buyers to our platform. We also gained 480 basis points improvement for non-GAAP R&D expenses as a percentage of revenue. The improving leverage is driven by top-line growth as well as disciplined spend control. Our R&D investments are focused in several areas: first, continued product iteration to drive better user experience and improve conversion; second product innovations such as Fiverr Studio; third investment in mobile and fourth front-end and back-end development to support category and international expansion. We believe building technology assets and robust product portfolio is a key driver for increasing scale and enhancing our platform for growth and we expect to continue to invest in this area. Now to guidance. For Q3, we expect revenue between $25.5 million and $26.5 million representing year-over-year growth of 30% to 35%. We expect Q3 adjusted EBITDA between negative $6 million and negative $5 million, representing negative 21.2% adjusted EBITDA margins at the midpoint. We expect continued leverage from several marketing and R&D expenses, while G&A as a percentage of revenue is expected to modestly increase due to increased costs as a public company. For full-year 2019 we expect revenue between $101.5 million and $103.5 million representing annual revenue growth of 34% to 37%. We expect adjusted EBITDA of negative $21.5 million to negative $20.5 million, representing negative 20.5% adjusted EBITDA margin at the midpoint. We are very happy with our performance in Q2 and excited about the rest of 2019 and beyond. With that we will open the call to questions. Operator?

Thank you. [Operator Instructions]. Our first question today will come from Doug Anmuth of JPMorgan. Please go ahead. Q – Unidentified Analyst: Hi guys. Thanks for taking our questions. This is Neeraj on for Doug. So I have a couple of questions. So number one could you maybe talk about your buyer acquisition strategy? And curious to know where you see the biggest opportunity. Is it geo expansion entering new categories or something else? And what gives you the confidence you can take share over time? And number two on Fiverr Studios, could you just share some of the early engagement metrics you have seen here? Thanks.

Thank you for the question. We understand that this is a very busy day for earnings calls and that there are a large event in New York that has required attendance by some of our lead analysts. As to your question about the acquisition strategy, so the channel that works best for us is organic. The majority of our new business comes from organic channels. Among paid channels, paid search and affiliate programs are two most effective for us. On paid search, we continue to invest both in terms of number of keywords as well as the quality of ranking for top keywords. The affiliate program was created mainly to reward website owners, social media influencers, content creators, promoters, or anyone who has access to audience interested in using Fiverr for the first time. We refreshed and updated our affiliate website earlier this year and have since expanded the program and the team on this channel. It has been a tremendous growth channel for us this year. On influencer marketing, this is a new channel for us and still very small and we will continue to invest and test this new channel in the coming quarters. On brand marketing, we launched our new connection campaign in January running out-of-home in New York and Chicago and online in YouTube, Facebook, and Instagram which has contributed to organic traffic and first-time buyer conversion since then. And recently we expanded that particular campaign to Germany as well. I think you should expect us to have similar levels of marketing spend to Q2 and an improvement on the percentage of revenue over the long-term. Q – Unidentified Analyst: Got it.

And to your question about Fiverr Studios, so the reason why we created Fiverr Studios is that we've noticed that in more complex projects, there was a need for more than one type of skill. And we wanted to allow freelancers to team up and create digital studios where they can offer these more sophisticated products which are very complex without adding complexity on the customer side. It is important to note that we also have a lot of agencies on our platform and that they are enjoying our prime products. But actually with the introduction of Fiverr Studios, we allow the creation of virtual agency which allows sellers who are in different locations and who might not know each other before to meet and collaborate through Fiverr Studio platform. And in terms of statistics, it's super early stage as a product and there's no statistics to be shared at this point. Q – Unidentified Analyst: Got it. Thanks.

Thank you.

And our next question today will come from Nat Schindler of Bank of America. Please go ahead.

This is Ben on for Nat, thanks for taking our call. As for the question when buyers are making repeat transactions, do they typically go back to the same seller if it's in the same category or gig? And when they do go back to that same seller, are there any changes to the negotiated price of that transaction? I would expect it to be decreasing if they continue to use the same speller? And also I was just wondering you spoke to the German language expansion. What other geographies or countries are you most excited about expanding into? Thanks.

Thank you, Ben. So, your first question related to repeat transactions between sellers and -- between buyers and sellers. It is important to note that the majority of the revenues generated on Fiverr comes from repeat customers. It's actually 58% and it is growing year-over-year. In some of the cases, these are transactions that happened between the same buyer and the same seller, but in many cases, it's from different sellers and oftentimes from -- in different categories. We don't see any particular changes or trends in those transactions other than the fact that sometimes buyers and sellers start with a small project and over time the amount of work and the sophistication of that work grows and that we see contributing to our spend per buyer. As to Germany, your second question, I think we noted in the past that we launched Germany as a pilot program to write the playbook on how we should launch new territories and we are really focusing on that right now. We are seeing great first signals with it. Actually, Germany is growing faster than the overall business. It has a new homepage, tailored digital and out-of-home campaigns and we're growing the know-how on local preference. I think in the coming quarters, we will continue to invest in expanding location efforts, but we first want to perfect the playbook before we actually expand to other languages. I did note that we did introduce 11 new currencies in addition to the use of dollar and we are going to roll out additional payout capability to allow sellers to withdraw funds as well. And we expect that over time we will look like most larger Internet companies, with a relatively equal balance of revenue in the U.S. and the rest of the world globally.

Okay. Thanks guys and congrats on a great quarter.

Thank you.

Appreciate it.

And our next question today will come from Eric Sheridan of UBS. Please go ahead.

Thanks so much for taking the question. Maybe two if I can. One on the ClearVoice acquisition, wanted to know what kind of contribution you're seeing from that acquisition. How you're thinking about what it might do to the business over the medium to long-term, so an update there. And then second, post the IPO, how do you think about the M&A landscape? And looking across the globe at some inorganic opportunities, what are some of the pockets you might want to try to fill, either from a product or a geographic expansion standpoint that can be done inorganically? Thanks so much, guys.

Thank you for the question. So the ClearVoice acquisition was triggered by the fact that content marketing was one of the fastest-growing categories within Fiverr. And we wanted to extend our footprint within that category. And so, ClearVoice that has multiple different business avenues from a marketplace to a enterprise solution was a clear choice for us.

In terms of financial impact of the ClearVoice acquisition, at this point it's immaterial to the overall revenue or expenses, which is why we do not separate the data. I would say that the take rate of ClearVoice is higher than our core business and that the gross margin is slightly lower. Again, since it is immaterial at this point of time, it doesn't impact the overall picture. Once time come and numbers mature, we will consider to provide more input on ClearVoice.

And our next question will come from Nick Jones of Citi. Please go ahead.

Hi. Thanks for taking my question. As you start to move up-market, are there opportunities to maybe expand – build your relationships with companies like Wix or Shopify or things like that, where maybe there's buyers who kind of have an immediate need or don't realize they have a need? And then, I guess, secondly, as kind of the market volatility picks up how should we think about what might happen to buyers and sellers in the event of a downturn? Thanks.

Thanks for the questions, Nick. As to your first question about the opportunities to expand our relationship with other companies, we're definitely getting increases in. And since the introduction of the store capability within Fiverr, we definitely see opportunities to have specific stores that relate to other companies' businesses that have tangents with our business. So with that capability, I think that we have pretty much everything needed and we are getting some increase about that. In terms of market volatility, we feel that our business model is relatively insulated from macroeconomic downturns. One may even think that we can benefit from an economic downturn. We have a very diverse buyer base and low revenue concentration. Our largest buyer represents less than 1% of revenue and our largest category is less than 15% of revenue. 58% of our revenue comes from repeat buyers and consistent growth over the past few years. This along with the consistent core behavior provides a high level of visibility into our further future quarters.

Got it. Thank you for taking my questions.

Thank you.

And the next question will come from Ron Josey of JMP Securities. Please go ahead.

Great. Thanks for taking the question. Micha, I wanted to ask about just how the buyer on Fiverr is evolving. And I ask that only with repeat buyers now accounting for 58% of revenue I think that's up from 57%. And then I think 50% of revenues continues to come from buyers spending $500 or more. You talk about going more up-market and we're seeing that with the growth in spend per buyer. So just curious how do you see the buyer evolving on Fiverr? I know you talked about focusing on SMBs – continue to focus on SMBs, but just curious there. And then, I also wanted to ask about the progress of newer products. It's very helpful to hear about studio and stores, but maybe talk a little bit about promoted listing, specifically and if you're beta testing that and thoughts there. Thank you.

Thank you, Ron. So as to your first question about the way buyers are evolving, I think we mentioned that our focus has shifted from gaining quantity of buyer to the quality of the buyers. And I think to your point that is being demonstrated by the fact that our high-value buyers are evolving and growing over time and now are more than half of our revenues. So we are definitely continuing to focus our efforts in those higher value buyer's. In terms of the progress of new products, so as we think about a roadmap for the next couple of quarters we are working on a set of innovations around business tools, which enable buyers from the same company to share resources and we've seen that teams who take advantage of these tools are more meaningfully engaged. Things like payment, collaboration and communication features, unified payment options for teams, the ability to see peer-reviews and share seller lists, file transfer within a team and so forth. And on top of that, adding multi-language support and continue with category expansion in the creation of new stores. You've also asked about promoted listing specifically. I think we've noted about this before that we definitely see an opportunity to create, a product that allows sellers to promote their services. We have demand for that. And a part of the reason to add more assets to our website such as the store, or the industry stores, gives us more real estate in which we can actually put promoted listings. So it's definitely on our radar, and we are looking into it. Technology is our core, and we have a very robust roadmap ahead of us.

Great. Thank you.

And our next question today will come from -- pardon me, Helfstein of Oppenheimer. Please go ahead.

Thanks. I'll ask two questions. So, spend per buyer did slow in the quarter, I think from 16 – to 16 from 19 in the first quarter. Maybe just talk about the drivers of that how much of that was mix adding more buyers at a lower price point or anything worth calling out? And then secondly, you showed improving operating leverage in the quarter. What you are thinking about accelerating marketing spend particularly in 2020 to drive faster growth? And how correlated is marketing spend to revenue generated in period versus future periods? Thanks.

Jason, this is Ofer. So I think on the first question, it's preliminarily due to tough comp. We experienced some hyper growth of spend per buyer in the past due to Fiverr Pro, an increase of – in minimum transaction fee from $1 to $2 as of May 2018 and because of these two factors, we see higher growth last year and also the beginning of the year. So those two – those two – that the Fiverr Pro and the service fee the benefit lap over the last few months, which is why we see kind of slower growth in terms of spend per buyer. Yet I would say that, we feel comfortable with the level of spend per buyer as we see now and the balance between the growth of spend per buyer and the number of active buyers.

So to your question about the outlook of marketing spend going forward. I will say that, we are very happy with the efficiency of our marketing efforts. As I've noted most of the traffic is organic, and I think that we have a very efficient marketing with quick TROI payback and high multiples on ROI. We focus on performance marketing, which is highly measurable and we are using brand marketing to boost awareness. This has been very effective, especially in core markets like Germany. We are not guiding specifically on marketing spend, but you shouldn't expect any dramatic changes from Q2. What you can expect is that we will continue to decrease as a percentage of revenue over time. That's a very important takeaway from this.

Thank you.

Our next question will come from Brad Erickson, Needham and Company. Please go ahead.

Thanks. Just to follow-up on that. So, it looked like your cost to acquire buyers in the quarter was down again year-over-year, also was down in Q1. Can you unpack the effect of some of the brand spending you had going in the first part of the year versus sort of a normalized customer acquisition cost lately? And how have things been trending there? And then maybe secondarily just to follow-up on Jason's question on an annual basis. Can you remind us just how you approach the allocation of your marketing spending through the year in say a garden variety year? Thanks.

On the first question on the cost to acquire a buyer, I think that -- as mentioned before, as we open more channels and as our brand is improving, cost of this position is becoming more and more efficient. Together with the improvement in conversion, we are able to demonstrate a very efficient unit economy that we believe will continue towards the end of the year.

Your second question was what's our approach on marketing spend throughout normal year. So, we typically invest more in Q1 to match the spending pattern of businesses and to drive growth throughout the year. There's a number of underlying reasons for that one being the fact that retail is going out of the advertising competition after the holiday seasons. In Q1, there is no holidays. And there's new budgets for businesses, and it's the beginning of the year, there's New Year's resolutions. This is why Q1 is a quarter where we invest slightly more. We do expect this trend to continue. However, as you can see, we have become much more disciplined this year compared to prior years as we optimize channel distribution and continue to improve efficiency. At that end, -- at the end of Q2, we already recovered 90% of performance marketing spend done in Q2. So again, I will reemphasis the fact that you should expect similar levels of marketing spend in Q2 and improvement as a percentage of revenue over the long-term.

Got it. And then maybe just one more follow-up for Ofer on the guidance, does the guidance contemplate -- for the second half, particularly does the implied contemplate any delta between revenue growth and GMV growth for this year? I know you called out some puts and takes in terms of what was going on the first part of the year. But if that is implied, maybe if you could just call those out what would drive any delta there? That would be great. Thanks.

So we do believe that we are in a good place in terms of take rate. Yet to be said, we believe that we have some room and opportunity to slightly increase it. But generally speaking, GMV and take rate are aligned and the guidance for the remainder of the year is that the GMV growth and the revenue would grow at a similar rate.

Got it. That’s helpful. Thanks.

Ladies and gentlemen, this will conclude our question-and-answer session. At this time, I'd like to turn the conference back over to management for any closing remarks.

Thank you all for joining us today. We are very excited about our 2Q results and our guidance for the rest of 2018. We intend to be very active with regard to investor relations and keeping you updated with our progress, starting with meetings on the East Coast after Labor Day. Have a good rest of your day, and goodbye.

The conference has now concluded, and we thank you for attending today's presentation. You may now disconnect your lines.