Thank you for standing by. At this time, I would like to welcome everyone to the Fiverr Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would like to now turn the conference over to Jinjin Qian. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the third quarter that ended September 30, 2025. Joining me on the call today are Micha Kaufman, Founder and CEO; and Esti Levy Dadon, EVP, Finance. Before we start, I'd like to remind you that during this call, we may make forward-looking statements and that these statements are based on our current expectations and assumptions as of today, and Fiverr assumes no obligation to update or revise them. A discussion of some of the important risk factors that could cause actual results to differ materially from any forward-looking statements can be found under the Risk Factors section in Fiverr's most recent Form 20-F and other filings with the SEC. During this call, we will be referring to some key performance metrics and non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow. Further explanation and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measure is provided in the earnings release we issued today in our shareholder letter, each of which is available on our website at investors.fiverr.com. And now I'll turn the call over to Micha.

Thank you, Jinjin. Good morning, everyone, and thank you for joining us. We delivered another strong quarter with solid performance across the business. In Q3 '25, revenue grew 8% year-over-year, and we achieved a record high adjusted EBITDA margin of 22%. This is a clear reflection of our disciplined execution and the inherent leverage in our market-based model. Over the past several years, we've consistently prioritizing moving upmarket and investing in product innovation to support more complex use cases and larger customers. Q3 results clearly demonstrate our success on both fronts. Spend per buyer increased 12% year-over-year, our strongest growth rate since the COVID era and off a much higher base. Not only are we seeing wallet share expansion across the broader buyer base, but more importantly, thanks to the adoption of dynamic matching and managed services, we are witnessing strong growth among projects that are significantly larger than the average marketplace transaction. In Q3, GMV for Dynamic Matching grew 22% year-over-year with 15% of job briefs having a budget of over $1,000 and an average order value of $2,200. Managed Services is capturing even larger and more sophisticated engagements with a minimum budget of $3,000. In Q3, Managed Services GMV grew 65% year-over-year with average product size reaching $17,000. The success of these offerings marks a meaningful evolution in Fiverr's value proposition. We're no longer just a platform for fast, lightweight freelance tasks. We are increasingly becoming a trusted partner for businesses executing highly specialized multistage projects that often require depth of talent and orchestration. Another area where we are seeing tremendous growth is AI-related services. As AI is increasingly reshaping how work is delivered and being implemented across industries, demand continues to surge in areas such as AI agents, workflow automation, and vibe coding. Fiverr freelancers have become…

Thank you, Micha, and good morning, everyone. We delivered a strong third quarter, with both top and bottom lines exceeding the midpoint of our guidance. Revenue for the third quarter was $107.9 million, up 8% year-over-year. We also achieved record adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA for Q3 was $24.2 million, representing an adjusted EBITDA margin of 22%, an improvement of 260 basis points from a year earlier. We continue to generate strong cash flow, with free cash flow totaling $29.1 million in Q3. The strategic restructuring, combined with our continued discipline in expense management, contributed to strong profitability and robust cash flow generation. As always, we remain focused on balancing between growth and profitability, while maintaining discipline in capital allocation. Q3 saw solid performance across both our Marketplace and Services segments. Marketplace revenue was $73.6 million, driven by 3.3 million active buyers, $330 in spend per buyer, and 27.6% marketplace take rate. Within the Marketplace segment, we saw strong momentum driven by the tailwinds in AI-related categories and the success of our expanded Managed Services and Dynamic Matching. These channels continue to fuel higher-value, complex projects, which in turn result in higher average transaction values and increased in share of customer spending. We continue to believe the structural tailwinds within the Marketplace segment, particularly around AI and upmarket adoption, will help offset broader economic headwinds and serve as a sustained growth driver. Services revenue was $34.3 million, representing a year-over-year growth of 40% and accounting for 32% of our total revenue in Q3. The upside was driven by Fiverr Go increasing adoption of Seller Plus, which saw 20% year-over-year growth. Fiverr Ads maintained double-digit growth as a result of ad load expansion, and AutoDS benefited from enhanced synergies with Fiverr and continued success with the Shopify partnership.…

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

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

Thank you for the question. I should clarify that Ofer is with us on the line. He's having a sore throat. So this is why Esti was coming with the opening remarks. But in case we have questions, he will be happy to answer them. As to your question, look, I think what AI is giving us is the ability to change the way people express themselves. And you see that in the market, the way search is being augmented or replaced by prompting, it gives us an opportunity to extract more -- a more accurate representation of the actual need from the customer, which in turn gives us better tools to be able to accurately match in a very precise manner the right expert to the right mission. The same applies for more complex projects that sometimes require multi-talent and sometimes require an orchestration of those multi-talent into the end result. So this is just one example, which is very robust because the primary function that customers are using is the browsing and searching. And this is the most fundamental thing that we can use AI for. The same applies for the rest of our solutions like the dynamic matching, as an example, the project management, and so forth. And I've alluded to it in my opening remarks with everything I said about the matching capabilities, the Know Your Customer aspects. And we're already reaping the benefits or starting to reap the benefits of this being able to deliver much better matching to our customers that, in turn, result in larger types of projects and with higher satisfaction.

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

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

Your next question comes from Jason Helfstein with Oppenheimer.

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

Right now, since the dynamics in the macro economy that we've seen hasn't changed materially, then we don't assume those changes. And while we see the Fed has started to lower interest rates, which could be constructive for SMBs, we also continue to see weak job data across full-time and staffing sectors. So the macroeconomic conditions are still highly uncertain, to say the least. So when we think about our guidance or how it's being made off, it really assumes no change in the macro front. We talked about it in the full year basis that services will be a little over 30% and of the 2025 revenue. So that will give you some idea of how we think about the marketplace versus services revenue. But overall, we continue to expect the marketplace revenue to be flat or low single-digit decline and services revenue to exit the year with double-digit growth. And that assumes no improvement in the SMB side. That said, when we look at everything that has to do with the upmarket, meaning the larger types of customers, and the larger types of projects, this is where we do see an improvement, absolutely. And that contribution is very noticeable. And as much as that portion of the business becomes larger, the contribution is going to be larger, which means that by definition, the return to growth in active buyers is going to happen, period. We've been saying that for multiple quarters, and we're seeing this. So it converges to that point, okay? That is the assumption. That's the framework. And this is what we're seeing happening in reality.

Your next question comes from Doug Anmuth with JPMorgan.

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

So thanks for the questions, Doug. So the investment that we're doing is, one, on talent. And I think that this is true for everyone. Finding AI natives on the talent side within the company is one area of focus. The second is the improvements that we're introducing to our infrastructure. So some of the benefits of being able to use new development, coding, design, marketing allows us not to just put more people on problems or building things on our infrastructure, but actually finding new ways of moving much, much faster without paying the price of working on a 15-year-old infrastructure. The third is the marketplace experience. On everything we do, and we've highlighted things like dynamic matching and project management and orchestration. And we've highlighted also the aspects of having a much more nuanced and much more accurate matching technology and KYC. And I've mentioned those 4 pillars, which is the go-to-market with the investment in LLM engines, GEO and partnerships, the buyer experience, the matching and the talent. So across all of these areas that I've mentioned, these are the areas that we're putting focus. And the approach is AI-first mentality, meaning we want to make sure that we maximize the new possibilities that AI gives us both internally in how we work and how we develop and how we execute, but both in how we can make AI more involved in our core business to make that core business better. As to your second question about the spend per buyer, I think that this is -- when we think about spend per buyer, there are catalysts for it. And some of it is the ability to identify categories that are now growing, some of which thanks to our move upmarket and some of which is because of the technological transformation of AI. Now I've given some examples for it. Programming and tech vertical is one of them, which has a much, much higher project size, dynamic matching and its contribution and the fact that 15% of them are from briefs that are above $1,000, managed services that have grown 65% year-over-year with an average size of $17,000. So these are very, very different from our average transaction size of services. And we continue to drive very healthy deal flow on managed services. So the nature of these projects is very strategic, not just tactical. And there are a few examples, if you are interested in more examples in the shareholder letter.

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

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

Thank you for the question. So as these AI-driven products or needs grow, they grow much faster than the average. And so -- and the more they become a bigger portion of the total, they are driving us to change direction and go back to growth. We're seeing that. Still, it takes time for those types of customers and those types of projects to become the majority of our business. But as they grow, we are, by definition, going back to growth. And we see that, we see that on a constant basis, and you're seeing the numbers grow every time we meet here every quarter and they become larger and larger. Today, transactions over $200 is already the majority. They're over 50% of our market base, and they're growing double digit. And transactions over $1,000 is growing in the 20s year-over-year and more than 10% of the marketplace already. So this gives you some idea that they are already meaningful in the marketplace, and they continue growing, and this is where we draw our confidence from. The second part of your question about the job displacing, I've addressed that many times. The jobs that are being displaced are the very, very simplistic types of jobs. All of us are using AI for 2 years plus. We know its limitations. There's a lot of limitations to what AI can do to its accuracy and to its quality. And customers understand that as well. And they are -- we've seen a lot of our customers and talent, by the way, using AI. But the more they use it, the more they understand its limitations and their ability to trust the outcome to be production-ready and business ready. And so the things that we have seen being displaced are very low skill types of services. Those types of services have been very small in size anyway. So the fact that they are being displaced is not a big deal. The more we invest in larger projects, the more we grow. That's the bottom line. And this is where AI doesn't replace human beings. It doesn't replace human talent and high skills.

Your next question comes from Josh Chan with UBS.

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

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

Your last question comes from Marvin Fong with BTIG.

I hope you feel better as well. Question, I don't want to be -- cover ground that we previously did, but I think I'd like to ask it just kind of on a category basis, you called out the 14% growth in programming and tech. I just would like to know if other major categories are, how are they benefiting from AI? Are you seeing the same trends? So perhaps you could comment on like design, creative, I think that's another large category for you. But any other major categories you'd like to kind of call out and how AI might be a tailwind for that? And then second question, just on the move upmarket, obviously, really great traction there. And I was wondering if there were other unlocks that you can do? Are you satisfied with the product suite or in the next 12 months, what are some new features that you might be able to launch to address other parts of the ecosystem. So for example, 1099 versus W-2, anything along those lines would be great.

Thanks for the question. So to highlight some of the areas where we're seeing growth. So programming and tech is growing fast, and it's becoming a very meaningful category with about 20% of our business. Alongside programming and tech, we have digital marketing, video and animation, which are also growing very strong. Some of it is due to AI and the possibility of bringing highly skilled people that know how to extract the most out of AI, which is kind of the case I mentioned where you have customers sometimes trying to use AI, understanding its limitation and their limitations is not being experts in how to make the most out of it, and they come to us in these cases, and we're seeing this as a very prominent case in these verticals. And also the nature of how customers come to us is very different from 2 years ago or even a year ago. So they -- in many cases, they come more educated. They do a little bit of work on their own. They're not clueless. They can better express their needs, which also changes the basic function of what we do, which is less of explaining them what they need, but more trying to address that need by giving them a really strong and very accurate high-quality match. As we think about the move up market, there is a lot to do. And I've already highlighted both in my opening remarks and in some of the answers and in the shareholder letter, some of these areas. But just to reiterate some of them, today, many customers are already enjoying dynamic matching and managed services, but many more don't yet know that Fiverr can do these projects that are in the tens of thousands of dollars. So there is a lot of opportunity that we can unlock there. At the same time, there is the LLM channels, which are another example of areas to invest in where the traditional search or the fact that Google was the Internet up until a few years ago, and now they're not playing there alone. There are also other ways to explore the Internet and a lot of it is going to LLMs, creates a challenge, which we prefer to look as an opportunity. And we're seeing how the LLM channels at the top of funnel is contributing more and more into the top of funnel traffic, which also makes us more motivated to continue investing along those areas. And lastly, I would say that is maybe to reiterate what I said before, which is customers are more accurate in how they share their needs. They're more explicit, which is good news for us because now we have more to work with and be able to match them with this incredible base of unbelievable talent that we have on our platform so that we can address their needs.

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

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

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