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Morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the first quarter that ended March 31st, 2026. Joining me on the call today are Micha Kaufman, Founder and CEO, and Esti Levy Dagon, CFO. Before we start, I would like to remind you that during this call, we may make forward-looking statements and that these statements are based on our current expectations and assumptions as of today, Fiverr assumes no obligation to update or revise them. A discussion of some of the important risk factors that could cause actual results to differ materially from any forward-looking statements can be found under the Risk Factors section in Fiverr's most recent Form 20-F and other filings with the SEC.

During this call, we'll be referring to some key performance metrics and non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow. Further explanation and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the earnings release we issued today and our shareholder letter, each of which is available on our website at investors.fiverr.com. Now, I will turn the call over to Micha.

Thank you, Emily. Good morning, everyone, and thank you for joining us. Let me start with the headline. Q1 was a solid quarter of execution, with both revenue and adjusted EBITDA coming in at the high end of our guidance range. Esti will walk through the details shortly. The underlying message is this: We are focused on executing the strategic transformation while being methodical in managing the existing business across both top and bottom lines. Maintaining financial discipline and transparency throughout this transformation is critical, and we are committed to doing that consistently and incredibly. Let me now turn to the transformation, or as we mentioned last quarter, we are in the early stages of a multi-year journey to reposition Fiverr from a transaction-oriented marketplace into a trusted work platform for complex, high-value outcomes.

This is not a cosmetic shift. It is a fundamental evolution of how work is matched, delivered, and orchestrated on our platform. Our North Star is clear, to become the most trusted platform for completing high-value, high-trust work. This means enabling businesses and talent, and increasingly AI-driven workflows to collaborate effectively on complex outcomes. Two months into the transformation, the early signals across all pillars of this transformation are consistent with our plan. First, we are strengthening the high-end talent flywheel and expanding into more complex, higher-value projects. Projects over $1,000 continue to grow at a strong double-digit rate, with clients completing $1,000+ projects up 18% year-over-year. We are also seeing increasing participation from talent delivering these engagements. What's important here is not just the growth, it's the nature of the work. We are seeing businesses come to Fiverr not for isolated tasks, but for multi-phase mission-critical projects.

For example, one, a global healthcare company is working with talent on Fiverr to produce over 30 multilingual animated assets for a product launch with ongoing spend across multiple engagements. Two, a C2C sports platform in New Zealand built a full mobile application through multiple development phases on Fiverr. Three, a European entrepreneur is building an AI-enabled invoicing SaaS platform to comply with regional regulatory standards. These are not one-off gigs. They are sustained, high-value engagements that require coordination, iteration, and trust. This is exactly the segment we are targeting and exactly where the market is moving towards more strategic outcome-based engagements. Second, we are investing heavily in matching infrastructure and experience. This is our main differentiator and the key to driving trust and quality, which are the core primitives of the market. Our research and internal data confirm this.

The primary differentiator in hiring platforms is not price. It is talent, quality, and trust. Historically, Fiverr has won on ease of use and speed. Winning upmarket means extending that advantage into quality and trust, and that is exactly what our infrastructure investments are designed to deliver. That is why we are rebuilding our matching infrastructure from the ground up. We are moving from keyword-based matching to context-aware, outcome-driven matching, powered by a knowledge graph that captures not just who the talent is, but what they have delivered in what context and with what results. At the same time, we are shifting ranking from optimizing for conversion to optimizing for expected project success and buyer satisfaction. The data is already moving. Recent tests in Fiverr Pro show mismatch rates down nearly 10%, and we are consistently seeing higher value engagements leading to stronger repeat behavior. These are the early proof points of a durable trust mode.

Third, we are evolving Fiverr into a comprehensive work platform. Today, most high-value projects on Fiverr run on infrastructure built for a different era of the platform. We are addressing this by building an end-to-end fulfillment layer that includes visibility into project progress, early detection of risk, structured feedback loops, and active orchestration by Fiverr. This is a fundamental shift in responsibility and perception of responsibility. We are becoming an active partner for our clients and talent, not just a passive connector. Over time, this infrastructure will also allow Fiverr to integrate seamlessly into agentic workflows, where AI handles coordination and humans provide judgment and accountability. Fourth, we are expanding our go-to-market capabilities to scale more aggressively into high-value work. We are now building three new growth engines. First, talent-led growth engine, driving high-quality demand directly to high-performing freelancers.

Second, industry-led growth engine, building tailored experiences for specific industries, such as e-commerce and early-stage startup companies. Third, partner-led distribution, embedding Fiverr directly into workflows and platforms where high-value demand already exists. These initiatives expand beyond traditional performance marketing and are designed to create scalable, durable growth engines aligned with our up-market strategy. Finally, we are improving execution across the organization. We are optimizing production workflows through better telemetry, identifying bottlenecks, and increasing discipline in delivery. At the same time, we are rebuilding how work is executed with AI agents at the center and human judgment where it matters most. This approach enables faster decision-making, reduces handoffs, improves product quality, and drives efficiency across the organization. Mastering this as a company will also allow us to generate a reusable blueprint for our customers and talent to replicate and enjoy.

Stepping back, the fundamental dynamics of this market are moving in our direction. AI is increasing, not reducing, the complexity of matching the right talent to the right work. The demand for trusted outcome-based platforms is not a future possibility. It is already showing up in our data, in our customer examples, and in the infrastructure we are building. Fiverr has a differentiated model, a compounding data advantage built on real transaction outcomes in an end-to-end platform that no point solution can easily replicate. We are executing with urgency and discipline, and we are confident in where this leads. With that, I'll turn it over to Esti for the financial details.

Thank you, Micha, and good morning, everyone. We delivered a strong first quarter with both top and bottom lines exceeding the midpoint of our guidance. Revenue was $105.5 million, down 1.6% year-over-year, reflecting continued growth in high-value work, offset by headwinds in low-value transactional activity on the marketplace alongside a continued growth of service revenue. Adjusted EBITDA was $22.6 million, up 16.3% year-over-year and representing an adjusted EBITDA margin of 21%. This is an improvement of 330 basis points from a year earlier as we continue to execute with strong financial discipline. Turning to our revenue segments, Q1 marketplace revenue was $67.1 million, driven by 2.9 million active buyers, $356 in spend per buyer, and a 27.7 marketplace take rate.

The continued momentum in our up-market strategy and shift towards more complex engagement is clearly showing in our cohort behavior with spend per buyer growth of 15% year-over-year. Projects over $1,000 grew at a strong double-digit rate, driven by 18% growth in clients completing these engagements. This growth is coming from both new adoption and repeat behavior as buyer expand into larger use cases, along with increased usage of dynamic matching and managed services. Looking ahead, macro conditions remain largely unchanged. Based on current trends, we expect marketplace growth for the remainder of the year and on a full year basis to track broadly in line with Q1 performance. Service revenue in Q1 was $38.4 million, up 30% year-over-year and accounted for 36% of total revenue.

Services revenue came in slightly higher than expected as AutoDS ran successful campaigns at the start of the year, pulling certain users sign-ups and revenue forward from Q2 to Q1. Overall, our expectation for services revenue for this year remain largely unchanged, with growth moderation in Q2 and continuing into the second half of the year. As Micha mentioned, 2026 is a transformational year for us as we make critical foundational investments to strengthen our high-end talent flywheel.

Our decisions are centered on improving marketplace quality and trust, prioritizing high-value work, and driving more focused execution with strong financial discipline. On capital allocation, we continue to take a disciplined and balanced approach. Our strong balance sheet allows us to invest in growth, returning capital to shareholders, and remain opportunistic on M&A. We generated $21 million in free cash flow in Q1, and we expect to continue executing our buyback program in a thoughtful manner. As of March 31st, 2026, we had $59.5 million remaining under the current authorization. Now on to guidance. For the full year 2026, we expect revenue to be in the range of $380 million-$420 million, representing a year-over-year growth of -12% to -3%.

We are raising our full-year adjusted EBITDA guidance and now expect it to be in the range of $64 million-$80 million, representing an adjusted EBITDA margin of 18% at the midpoint. For the second quarter of 2026, revenue is expected to be between $95 million-$103 million, representing year-over-year growth of -13% to -5%. Adjusted EBITDA is expected to be between $16 million-$20 million, representing an adjusted EBITDA margin of 18% at the midpoint. Our revenue outlook reflects solid execution in Q1 and the continued uncertainty in the market conditions.

Our adjusted EBITDA guidance reflects the strength of our core marketplace profitability and our continued commitment in maintaining disciplined margin profile while investing in the transformation. As we look at the rest of the year, we are staying focused on our core priorities, driving progress in higher value work, improving trust and quality, and building scalable growth engine. We believe these are the right indicators to evaluate the business as we transition to the next phase. With that, we will now turn the call over to the operator for questions.

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star and then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. At this time, we will pause momentarily to assemble a roster. We have the first question from the line of Eric Sheridan from Goldman Sachs. Please go ahead.

Thanks so much for taking the questions. Maybe two, if I could. One, just coming back to the transformation strategy, want to know a little bit more about the duration of completion of what you called the infrastructure layer and putting the pieces in place, and how should we be thinking about when you exit that phase of the transformation and some of the execution shifts more predominantly to go-to-market or what the mix is of building blocks relative to execution on the transformation strategy? That would be one. The second one would just be, you talked a little bit about partners and evolving the go-to-market strategy. Want to know if you go a little bit deeper in terms of what those types of partners might look like and what market opportunity they might open up that maybe you're under indexed to today? Thanks so much.

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

As a transformation, my belief is that the entire market is in a transformational moment where every business needs to adapt to a new reality where AI plays a critical game, not in just making products better and more efficient, but also being able to connect with agentic realities where agents are actually using the platform. This is not limited to this year. I think that this is going to be a transformation that every business out there will have to implement in the coming years. It's very similar in my mind to the digital transformation when businesses went from the offline to the online and now are seeing a new reality. We are already seeing some initial signals that we called out in the opening remarks of areas where that transformation has started, and we started rolling out experiments and new products and how they influence a higher quality matching, and focuses on better conversion and better retention around high-end talent and larger scopes.

Over the next few quarters, we will continue to report on what we're seeing the progress in. Obviously, the more history we have in doing this, the results should accumulate. As we said, this is going to be a turnaround year where the next years are going to be years of growth. In terms of the other question regarding partners and go-to-market strategy, again, we very much focus on this idea of human-in-the-loop partners, where the requirement for a skilled talent network to make judgment calls on AI's work and on calibrating models and checking integrity and ensuring accuracy is paramount. I think that this is an area where Fiverr can play a major role.

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

Great. Thank you.

Thank you. We have the next question from the line of Jason Helfstein from Oppenheimer. Please go ahead.

Kind of like a two-part question, but on the same theme. Obviously, you've had a front row seat to this whole evolution of how agents are evolving the business. As you're seeing kind of even these more cutting-edge frontier models coming out, how is that further evolving your view on kind of how both you will leverage this technology, how your companies, how your customers will leverage it? There's also been discussion among investors that AI agents are, like, lowering the barriers to new business creation. There's like, you know, more new domains coming online. You know, I think a record number of apps being submitted to the app stores. I guess, like, how do you think about that? Like, is that a positive for Fiverr, a negative for Fiverr? Can you leverage that? Just kind of broadly all bring those topics together. Thank you.

Thanks for the question, Jason. Good morning. Essentially, the way we're thinking about how agents are becoming a part of what we're doing, essentially, agents are very much learning from human skilled people on how to run workflows much, much faster, much more efficient, 24/7. At the same time, a lot of what agents are doing require ongoing judgment. It's much like everything else with AI. Everybody has the access to the same AI. Everybody has access to the same agents that are available out there. Having access to this technology doesn't give you a competitive edge. It just flattens everything, and it maybe elevates the floor. On top of what agents are doing and how you create skills for agents, how you create workflows that combine multiple skills, multiple agents, that is an art.

That is what a lot of companies are actually focusing in and providing their employees, their expert skills onto agents. In the case of businesses, not all businesses have the talent to actually train an agent and oversee what the agent is doing and providing judgment and calibration and fine-tuning. We see this on Fiverr. The implementation of agents across our system internally require tremendous amount of calibration to overcome hallucinations, inaccuracies, or just moderate execution. Definitely the role of an expert, of an employee, of a freelancer is changing, but it is highlighting the uniqueness of what they can bring to the table to provide an advantage. You know, when we think about lowering the barriers or agents lowering the barriers for business creation, this is amazing news for us.

You know, I've seen lately staggering numbers on the launches of new products in recent months. I believe April was the highest month with over 19,000 new announcements on product and company releases. On the one hand, the signal-to-noise is extremely complex because it makes everybody a builder. Building something gives you nothing. It's all about the deployment. It's all about taking it to the market. It's getting noticed, it's validating, and then it's scaling. These tasks are largely unresolved yet by AI. Can AI help in this? Yes, but generically speaking, because it provides the same help for everybody else. Again, flattening everything. What gives you that competitive edge when you create something or you almost create something and you want to improve it, and then you want to deploy it, and then you want to scale it? This is where experts come in.

Now, the reason why I believe that this is not still showing up in the numbers is that this is a transformative period. I remember the digital transformation from 2000. It took time for businesses to understand that if you don't have a website, you're going to be out of business over time. The same goes with AI, and the same goes with experts that need to come with AI to make your AI or your execution better than your competitors. I think that we're in the early innings. It's going to take some time. All in all, I actually think that this is really a great upside for us. You know, when I look at the market base, we see AI consulting, business formation all grow really strong double-digit. This to me, I think it's, you know, an early sign of what would come. Also, AI-related categories continue to be super strong. AI development up 118% year-over-year. Marketing automation also growing really strong double digits. My answer is really long, so I'll stop here, but I can give more color around this.

That's really helpful. I guess it's haven't automated us doing this earnings process yet, but maybe someday. Thanks.

Nice.

Thank you. We have the next question on the line of Ron Josey from Citi. Please go ahead.

Great. Thanks for taking the question. Automation is the future, right? Can't wait. Hey, Micha, I wanted to ask two questions. First is on just attracting the talent to the marketplace as we go to more upmarket projects and towards these multi-phase projects. We're clearly seeing, you know, continued strength on spend per buyer. We're seeing that growth re-accelerate. Talk to us just about the talent on the marketplace as we go more upmarket and these multi-phase projects. One of the things that struck me, you know, matching is a key part of the marketplace, and I think I heard the team talk about mismatch rates being down 10%. During this transformation era, talk to us just about, you know, the ability to continue to execute on some of the key tenets of the marketplace, like dynamic matching and the results that you're seeing. Thank you very much.

Thank you, Ron. Good morning. On the first question, talent is super important. As we know from research, quality is core and the ability to match quality, drive quality perception is super critical. This is very much in the center of this transformation for us. Now, getting access or getting talent to the platform has never been an issue. Actually, we always had, I would say, an abundance of talent. What we're more adamant right now is really understanding on the meta skill level, what does it mean to be a talent and for what type of customer and what type of an outcome. Creating this skill graph is super critical. In other words, what this means is, A, we're more picky about talent.

Two, by improving the algorithm, improving the matching, we can anticipate better outcomes, better happiness, and as a result, we also anticipate better retention in our customers. Those are the key things. When we call out the reduction in mismatch, this is key because this actually means. You know, it's like hiring for any job, right? Some people that you hire turn out to be amazing. Some you later on figure out that there is something that you missed or they missed, which makes the match not optimal. We don't wanna tolerate this.

We actually think that if there's one huge advantage based on data that we've accumulated over 16 years, billions of interactions, tens of millions of transactions, is being able to take that data and actually make matching like anything that was done before by anyone. This is the reason to win. This is the reason to exist. We're putting a lot of pressure there and seeing numbers, seeing the amount of actual matches that were mismatched in hindsight, getting down is a very positive signal. We're far from done. We're just starting right now. Obviously, over time, as we accumulate more signals, deeper signals, we will continue sharing it with you guys.

That's great. Thank you, Micha.

Thank you. We have the next additional line of Bernie McTernan from Needham & Company. Please go ahead.

Hi, this is Stefanos Crist calling in for Bernie. Thanks for taking our questions. Wanted to follow up on Ron's question on the matching. Could you maybe give us any more details on what a baseline like mismatch rate is or maybe what the revenue impact is of that 10% reduction? Also wanted to ask on the AutoDS pull forward, could you talk about what went right with that campaign? Is the pull forward just a dynamic of annual subscriptions, or is there anything else? Thank you.

Hey, good morning, Stefanos. Thanks for the question. In terms of matching, we haven't publicly shared any specific numbers. With this transformation, we're really focusing on trust and quality as core primitives. To us, mismatch is really about making sure that we have this deep understanding of what are the things that would drive a perfect match between a customer with their specific circumstances and needs, and the very specific skill and validated experience of a talent to do this task. Okay. Again, as we move forward to do this restructure and refocus, we are going to be able to provide more specific color, as we really focus on those KPIs. This, you know, this nuance understanding is super important.

It's not just driving revenue today, but it is driving the flywheel and driving the repeat rate. On the AutoDS, essentially we had a very strong influencer campaign that we found great timing to do. In Q1, essentially, we were kind of focusing this on Q2, but we were able to actually execute this slightly earlier. Not something that we plan to replicate, but which is baked into the numbers, which that has drove strong signups at the beginning of the year. Okay? We called it out because this was a great opportunity for us to move something from Q2 to Q1 and do it earlier.

Great. Thank you.

Thank you. We have the next question in line of Doug Anmuth from JPMorgan. Please go ahead.

Great. Thanks so much for taking the questions. To Micha, can you just talk about where you are in terms of hiring AI native personnel within your own company and how you're thinking about that? Then, Esti, can you just help us bridge the EBITDA margins from the 21% in 1Q to the 18% or so for the full year? Thank you.

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

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

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

Great. Thank you both.

Thank you. We have the next question from the line of Brad Erickson from RBC Capital Markets. Please go ahead.

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

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

As we create more efficient, higher trust, higher quality solutions with everything I've outlined, again, I'm happy to go through it, but I was pretty long in my opening remark about what we're doing with the transformation. What we're doing with acquiring customers, with creating the flywheel will become more efficient, allowing us to also invest more aggressively in marketing to feed this flywheel as it grows. That's the plan. This is why we said at the beginning of the year, and I'm reiterating this, we're building ourself for growth in the next couple of years. This is really important, and the foundational work that we're doing are not buzzwords. It is really the essence of the business.

Understood. Thanks.

Thank you. We have our next question from the line of Matt Condon from Citizens Bank. Please go ahead.

Great. Thank you so much. You know, my first question is just on, as we look at the green shoots that you're seeing in success moving into more complex projects, can you just talk about what you're seeing today as far as either product launches or go-to-market that's really driving that success in the transactions of $1,000+ growing clients purchasing projects, you know, $1,000+ growing? Then my second question is just, you talked in the letter a lot about this comprehensive work platform. Can you just talk about the specific products that you are really focused on today that's really enabling that end-to-end platform, as you called it? Thank you so much.

Thanks, Matt. Morning. The truth is, we're only two months into the transformation. What we've progressed so far is not big product launch yet. What we're doing is really dealing with the fundamentals of the business, the infrastructure of the business, the data infrastructure, the matching algorithm, the quality improvements, all of these. It's not really about new product launches, but it is very much about how we enhance everything we do. In some cases, we completely rewrite those solutions. Now, I called out job posts as an example, dynamic matching, managed services, and they're driving large engagement on Fiverr. We highlighted a few examples in the prepared remarks, but more broadly, we're seeing a clear shift in how customers use the platform.

These products are fundamentally changing Fiverr from a place to complete isolated task into a platform to execute multi-phase high-value projects. Again, two months into it's not about shiny new launches and creating promises. It's about going back to the basics and making sure that we provide a level of service, a quality of service that is unmatched. That is the focus. This is where we're starting to see the numbers provide signals.

Does that answer your question, Matt?

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

Sorry for skipping this. On the product front, we talked about investing in an end-to-end fulfilling layer, which we think is key to identifying and increasing the value of Fiverr as an active partner in ensuring that the customers and the talent is engaging efficiently. If there's anything in the process that we need to identify to course correct, we're there. This is really important because as you go to more bespoke, more complex types of projects, being there and being a part of that transaction and making sure that you understand the scope, you understand the progress, you can create transparency. You identify early on if things are on track or are deviating from track is super important. This is a whole new layer that we are creating.

It's important as we think about changing the perception of Fiverr as a high-end solution for high-end scope and talent. You know, I can talk about those core pillars. I just don't want to reiterate the my opening comments, it's all about the matching and the brain behind things. It's about the product itself. It's about the go-to-market and how we entertain, how we engage with customers. It's all about this idea of operational excellence, where we're creating this extremely high execution capability, which we want to also provide for our customers. The learnings that we have as a team on how to be more efficient, where do you need to have a human in the loop, and where can Fiverr help with both providing you with the right tech, but also with the human in the loop is critical. All of these learnings are transforming from our internal execution into the tools that we are and we will provide for our customers and for talent.

That's very helpful. Thank you so much.

Thank you. We have a last question from the line of Joshua Chan from UBS. Please go ahead.

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

Morning, Josh. In terms of focus, it's still largely focused on SMBs, probably larger than the micro businesses, but still SMBs. There's a lot of on-top demands, both into larger customers and larger use cases. If every business, and definitely mid-sized businesses and up, are building their own new tech stack that includes agents, APIs, MCPs, all of these use cases require a tremendous amount of validation to check accuracy, integrity, compliance, security. All these things require the mix of both technology and human in the loop to continue calibrating, validating, in some cases building, fixing. Those are areas that Fiverr is a perfect fit. We'll see those more of these use cases as we continue exploring this. Largely speaking, it's SMBs.

The projects of $1,000 and more is a proxy. It's a way to identify the spend capacity and willingness on digital services. That has provided us with a good point. Now it's 1,000 and above. Within our market base, we have everything in ranges of hundreds to tens and sometimes hundreds of thousands of dollars on transactions. That's kind of a reference point to help us identify the seriousness and willingness to invest in your business.

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

Great. Thank you both for the color.

Thank you.

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

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

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

Good morning and welcome to the Fiverr International Ltd. Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Emily Greenstein, Investor Relations. Please go ahead. Thank you, Operator, and good morning, everyone. Thank you for joining us on Fiverr International Ltd.'s earnings conference call for the fourth quarter that ended 12/31/2025.

Joining me on the call today are Micha Kaufman, Founder and CEO, and Ofer Katz, President and CFO. Before we start, I would like to remind you that during this call, we may make forward-looking statements, and that these statements are based on our current expectations and assumptions as of today, and Fiverr International Ltd. 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 International Ltd.'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 the reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measures are provided in the earnings release we issued today and our shareholder letter, each of which is available on our website at investors.fiverr.com. I will now turn the call over to Micha.

Thank you, Emily. Good morning, everyone, and thank you for joining us. Let me start simply. 2025 was an execution year, and we delivered. Revenue grew 10%, accelerating from 8% in 2024. Adjusted EBITDA reached $92,000,000, up 23% year over year with a 21% margin. We met the revenue and profitability targets we set at the beginning of the year while continuing to generate strong cash flow. Importantly, we achieved this while repositioning the business for where the market is headed. Products like dynamic matching and managed services are enabling us to expand into larger, more complex projects and drive sustainable wallet share growth. Spend per buyer increased 13% year over year, accelerating from 9% in 2024. Buyers spending over $10,000 annually grew 7%, and GMV from projects over $1,000 increased 23%. These are not just product milestones. They reflect a broader shift in how businesses engage with talent. As many of you saw in the shareholder letter we published this morning, following the restructuring we undertook a few months ago, we have since developed and begun executing a comprehensive multiyear plan to transform Fiverr International Ltd. from a transaction-oriented marketplace into a trusted work platform, one that enables businesses, AI models, and agents to collaborate with talent on complex, high-value outcomes through intelligent matching, integrated workflows, end-to-end orchestration and fulfillment, and durable trust. Before I go deeper into that transformation, it is important to step back and understand the broader environment that led us here and why we believe this is the moment to act decisively. There is a prevailing narrative that AI eliminates labor. That framing is incomplete. What AI actually does to work is one, it compresses task duration. What took weeks now takes days. Two, it expands project ambition. When execution becomes cheaper, scope grows.

Scope grows.

And the number of projects grows exponentially. Three, it democratizes capability. Individuals can operate with domain expertise beyond their original knowledge base. The result is not less work. It is more ambitious work. Human talent remains essential. What changes is where value resides: in context, judgment, orchestration, trust, and ownership of outcomes. There will be displacement in lower value transactional work. We are already seeing that dynamic. At the same time, demand for higher value specialized work is accelerating at a healthy double-digit rate. As work becomes more nuanced and complex, matching talent becomes harder, not easier. That makes Fiverr International Ltd.'s core mission of connecting businesses with the right human talent more relevant than ever. Looking ahead, much of the workflow will become human-in-the-loop. Hiring decisions will increasingly be influenced and, in some cases, initiated by AI agents. In that environment, traditional resume-driven hiring models become inefficient and unreliable. Precision matching, contextual data, and outcomes become critical. So what does this mean for Fiverr International Ltd.? First, we see a significant opportunity. Today, projects over $1,000 represent less than 15% of marketplace GMV, yet they are growing 23% year over year. With focused execution, we believe this segment will become a materially larger contributor to our business. We are prioritizing two categories of high-value work. The first is complex, orchestrated engagements requiring collaboration between businesses, talent, and Fiverr International Ltd. For example, through managed services, we support a Georgia-based automotive technology company with ongoing multilingual UGC production for the Canadian market, coordinating multiple creators each month. This reflects growing demand for scalable, always-on creative production powered by global talent. The second is AI-native work building the AI-enabled economy. For example, we are partnering with AI model safety companies to provide domain experts who help identify vulnerabilities in foundational models. In another partnership, we are enabling enterprises to build AI workflows automation through a white-labeled solution that allows them to deploy AI agents quickly and cost effectively. In one case, we streamlined a historical case discovery workflow in Salesforce and Jira, reducing knowledge gaps and improving support efficiency. What would have required two weeks of internal implementation was delivered in one and a half days at the cost of $6,000, reducing deployment time by roughly 90%. These examples illustrate where the market is moving and where Fiverr International Ltd. is leaning in. Fiverr International Ltd. has a strong right to win in this AI-enabled talent economy. First, the future of work is human-in-the-loop. Scarcity lies in high-quality human expertise, not AI agents. Fiverr International Ltd. operates one of the largest global talent networks and has deep expertise managing liquidity, quality, and engagement at scale. Second, our end-to-end transaction model is built around outcomes. That structure integrates naturally into AI-enabled workflows and eliminates much of the friction inherent in traditional hiring systems. Third, our data is a durable advantage. Over sixteen years, we have captured not only millions of transactions, but the contextual relationship between buyers and sellers: what was delivered, in what context, and with what results. That depth of data enables precision matching in an increasingly complex environment. Capturing this opportunity is why we are making foundational investments across data infrastructure, back-end systems, and product experience, accelerating Fiverr International Ltd.'s evolution into a fully AI-native talent platform. While we have made steady progress over the years, the velocity of AI innovation requires us to move faster and more decisively. A few months ago, we initiated a company-wide effort to accelerate this shift. We have since developed a multiyear execution plan built around four pillars. The first is matching, building advanced semantic and reasoning layers powered by proprietary data to enable AI-native talent matching. The second is product, transforming the experience across match, fulfillment, collaboration, and talent management. The third is go-to-market, expanding into enterprise and AI-native distribution channels with scalable growth engines. The fourth is operational excellence, becoming an AI-native organization across engineering, product, and operations. We expect tangible impact within four to six quarters, including a stronger high-value work flywheel and proven AI-native growth loops. These milestones will position us for meaningful revenue expansion in the years ahead. Let me be clear. This is the moment to lean in. AI is not shrinking the market for human talent. It is reshaping access and expanding ambition. Platforms that own the intelligent matching layer between business demand and human capability will capture significant value. Fiverr International Ltd. has the assets, infrastructure, and strategic clarity to lead in that environment. 2026 will be a transformational year, positioning us for accelerated growth in 2027 and beyond. Before I turn it over to Ofer, I want to acknowledge that today marks his final earnings call as CFO. Ofer will continue as President focusing on strategic investments and M&A as we execute this next chapter. Esti Levy Dadon, after ten years at Fiverr International Ltd., and four years as EVP Finance, will assume the CFO role. Her deep institutional knowledge and disciplined financial leadership provide important continuity as we execute through this transformation. Jinjin Qian, after seven years leading IR and strategy, will step into a newly created Chief Business Officer role overseeing revenue, talent, fulfillment, and business operations. As part of this transition, she will be relocating her husband and two young children from San Francisco to Tel Aviv to take on this expanded responsibility. I am truly excited about our expanded leadership team that will strengthen our ability to execute with focus and velocity as we move forward. I will now turn the call over to Ofer for the financial details. Thank you, Micha, and good morning, everyone.

I am excited about the transformation we are undertaking and very happy to welcome Esti and Jinjin into their expanded leadership roles. The work ahead is ambitious, but across the management team and the broader organization, there is strong alignment, clarity, and conviction on the direction we are taking. Most importantly, there is a shared sense of purpose that ties us back to Fiverr International Ltd.'s founding sixteen years ago. That shared sense of purpose brings tremendous focus, energy, and confidence as we enter 2026. With that, let us turn to financial highlights. As we wrap up 2025, we delivered fourth quarter revenue of $107,200,000, up 3% year over year, while achieving record adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA for Q4 was $26,500,000, representing an adjusted EBITDA margin of 25%, an improvement of 470 basis points from a year earlier. We continue to generate healthy cash flow with $21,800,000 of free cash flow in Q4 2025. We had a convertible note with a principal amount of $460,000,000 which was fully repaid during Q4 2025. We continue to execute a disciplined, thoughtful capital allocation strategy, and our strong balance sheet allows us to invest in growth, return capital to shareholders,

and remain opportunistic

at the M&A front. Diving into our Q4 results, in Q4, Marketplace revenue was $71,500,000, driven by 3,100,000 active buyers, $342 in spend per buyer, and a 27.7% marketplace take rate. Growth in this segment continues to be influenced by broader softness in the SMB sentiment and muted freelancer hiring demand. More importantly, we continue to see diverse trends on the marketplace between low-end transactions and high-value work. GMV from transactions over $1,000 grew 22.8% year over year in Q4 and continued to accelerate. Looking ahead, we expect elevated volatility in marketplace revenue this year compared to last year, as the transformational work we are doing intentionally deprioritizes efforts to optimize low-end transactions, which today represent the majority of the marketplace. As we make progress towards strengthening our flywheel for high-value and AI-native work, we expect this focus area to become a larger portion of our overall business and lead to reacceleration of this segment. Services revenue in Q4 was $35,600,000, representing year-over-year growth of 18% and accounting for 33% of our total revenue in Q4. The upside was driven by the continued strength in Fiverr Ads, subscriptions, and e-commerce solutions. For 2026, we expect more moderate growth in service revenue as the impact from the AutoBS acquisition normalizes and the pace of expansion for Fiverr Ads and Seller Plus moderates compared to 2025. As Micha mentioned, 2026 will be a transformational year with critical conventional investment across data infrastructure, core technology, and product experience to strengthen our high-end talent flywheel. It is important to note we are committed to executing this plan with strong financial discipline. The structural profitability of our core marketplace remains strong and is expected to stay north of 20% as we retain significant control to maintain the health and the profitability of the business. At the same time, we will use a portion of the cash generated to fund the transformational work ahead. We expect that to impact the adjusted EBITDA by approximately 200 basis points in 2026. On capital allocation, we maintain a disciplined approach and expect to continue executing our buyback program in a balanced manner. As of 12/31/2025, we have $67,500,000 left on the current authorization. Now on to guidance. For the full year 2026, we expect revenue to be in the range of $380,000,000 to $420,000,000, representing year-over-year growth of negative 12% to negative 3%. Adjusted EBITDA is expected to be in the range of $60,000,000 to $80,000,000, representing an adjusted EBITDA margin of 18% at the midpoint. For the first quarter of 2026, revenue is expected to be between $101,000,000 to $108,000,000, representing year-over-year growth of negative 7% to 1%. Adjusted EBITDA is expected to be $19,000,000 to $23,000,000, representing an adjusted EBITDA margin of 20% at the midpoint. The wider-than-normal revenue guidance for the full year and the first quarter reflects the elevated uncertainty as we execute our transformational plan focused on high-value work alongside evolving market conditions. On the adjusted EBITDA side, the updated guidance for this year reflects the revenue trend we see as well as the impact from the investment into foundational works. That said, we do not expect factual change to the core business unit economics, and we expect our ability to drive and strengthen leverage on the marketplace business model remains intact. With that, we will now turn the call over to the Operator for questions.

We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Ronald Josey with Citi. Please go ahead.

Great. Thanks for taking the question and the insights on the call. I had two, please. Micha, you talked about product, go-to-market, and operations, and talked about an execution plan around matching given the progress, I think, that we have seen around managed services and dynamic matching,

just talk to us about how you see these investments in those four core areas sort of unfold. Meaning, do you have more work to do on product before we start investing in enterprise go-to-market? Any insights there would be helpful as we think about this multi-quarter transition. And then Ofer, over the balance sheet, we ended the year with approximately $300,000,000 in cash. I know we have mentioned M&A a few times on the call and Ofer in your new role. Talk to us about what you are looking for maybe on M&A or just overall capital allocation. Thank you.

Thank you, Ron, for the questions. Good morning.

So

essentially, the way we are thinking about the investment is really to deprioritize low-end and low-value transactions and focus most of our investment in high-end, high-skilled, larger scope projects, a segment that is currently under 15% of our

revenues.

And we think it should and it will contribute much more to bring us back to GMV growth. That is what 2026 is all about: making that turn so that 2027 and beyond will be growth

years.

Now, bear in mind that the nature of the transactions that are happening on our platform are changing, and we are running a platform that has been built over sixteen years. Some parts of it need to be rebuilt, some parts of it need to be reinvested in and aligned into this new reality. As I have said in my opening comments, the matching portion of it has to deal with the more nuanced needs of businesses today, so we need to calibrate this and make sure that we maximize the usage of our very deep data asset in order to do this. The same goes for product. When we think about the entire matching and fulfillment management, we need to understand that larger projects require more sophisticated fulfillment and collaboration and matching capabilities, also understanding that on the demand side, we may not just see companies and human beings, but also AI agents that can actually take care of or find benefit from using our platform. When we think about go-to-market,

again, in this case,

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

Ron, on the M&A front, I will start by saying that we have $300,000,000, but the amount of cash is growing and expected to grow throughout the quarters. And then, you know, we continue to be highly disciplined in the way we utilize this cash, looking for tuck-ins and then larger transactions

at the same time.

Of course, we are looking to grow in the market and any M&A should support

support this high-end

and flywheel as Micha mentioned

earlier. Great. Thanks, Micha. Thanks, Ofer.

Thank you, Ron.

The next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the question. Just want to come back to the theme of deep

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

Good morning, Eric. Thanks for the question. So when we think about the deprioritization, it is really to ensure that the majority of our resources are directed in growing the segment that, as we demonstrated, has grown significantly over last year, and to make sure that it becomes a much larger portion of our market. As a reminder, when you look at the low skills and small scope, a lot of that is being replaced

with AI solutions,

and still, that is a large portion that contributes to Fiverr International Ltd.'s growth. In that segment, we are seeing a decline, and we have been talking about this, and we do not foresee that that decline is going to slow down. The assumption is that with the newer developments around AI, this will continue to be the case. And so

that centralization

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

That is helpful. Thank you.

Thank you, Eric.

The next question comes from Bernard Jerome McTernan with Needham and Company. Please go ahead.

Great. Thanks for taking the questions. Maybe just two for me. How should we expect the margin profile of the company to look after Fiverr International Ltd. 4 is done or complete or some progress on it? Is this going to be a higher margin company or lower margin company than before? And then how does Fiverr Go fit into this? Are you seeing Fiverr Go help higher value transactions already or just interested in terms of if this is still a key product going forward? Thank you.

I think on the margin profile, we are going to see some lower margin in terms of EBITDA in the short term, but we anticipate the long-term EBITDA

to go back to the

25 long-term EBITDA shortly after. In terms of gross margin, I think it is going to remain the same. It is all about the profile of investment, and that is putting a little bit more into R&D, which is why we anticipate some pressure on the margin. I am sure.

Bernie, on your question about Go, essentially, a lot of what we built into Go has already been integrated into several aspects of our product. And when we talk about the investment that we are doing in the product side, that is one of the pillars of this year. A lot of what we have taken from Go and how it can help buyers and sellers communicate more effectively, scope their work, the nuanced understanding of exactly what they need and what is the most suitable talent for the task, is going to be integrated further

into the product.

So we are not focusing on Go as a product by itself, but actually taking the assets

that we have developed for that project

and integrating them into the customer experience. Understood. Makes sense. Thank you both.

The next question comes from Jason Helfstein with Oppenheimer. Please go ahead.

This is Chad on for Jason. You know, it seems like taking one step back for kind of two steps forward. You are cutting a lot of cost out of the business with the restructuring. Is that having a bigger impact on revenue in 2026 than maybe you previously thought?

And then how should we think about OpEx growth in 2026?

Do you have to invest more in the business? Or, you know, that is it. Thank you. Thanks for the question, Chad. So on the first question, the answer is no. The revenue is not impacted by restructuring. It reflects the ongoing trends on the marketplace, meaning lower end versus higher end, lower end seeing a decrease, higher end seeing an increase. And, again, going back to our strategy, the entire idea is to double down on high end and to make it grow faster and make it become a more meaningful contributor to our GMV growth. We have been talking about this for a couple of quarters. What we have seen is an elevated sense of urgency to move faster, which is why a lot of the strategic, the multiyear strategic plan that we have is all about that. And we said that once the high end is going to become a more meaningful contributor to GMV, GMV will go back to growth. And, again, we are seeing this with double-digit percentage growth in transactions over $1,000, and so we are doubling down on that. So, again, the reflection is just ongoing trends of what we are seeing in the low-skill versus high end.

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

the impact of that is going to be around two percentage points.

And I think it is

I think it is also worth noting that due to recent appreciation of Israeli shekel to US dollar, FX has added over $10,000,000 of headwind on EBITDA guidance for the year.

The next question comes from Marvin Fong with BTIG. Please go ahead.

Great. Thanks for taking my questions, and congrats to Jinjin and Esti.

My first question talked about returning to growth in 2027.

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

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

Mhmm.

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

Thank you. The reason why we did not call out

specifics was

deliberate.

But

the expectation is based on existing

proof of concepts

that we are having with AI model companies and enterprises, and we believe

that when

the product can deliver their needs at scale,

this could be

a very strong contributor for the growth. And so when we think of it, we think about, in the same aspect, our enterprise. And we have given some

some qualitative examples

again, both in the shareholder letter and in the opening remarks, and I have called out the example of the partnership that we have with an AI model safety company to provide domain experts who help identify vulnerabilities in foundational models. And in another partnership, you know, enabling enterprise to build AI workflow automation through a white-label solution that allows them to deploy AI agents

quickly and cost effectively.

And, again, this is all a part of the fact that AI enables many more businesses to build more and to build more ambitiously. Along with that building, there is a lot of support that they need. There is a lot of calibration and fine-tuning. There are very specific types of expertise that are required to take those products and those solutions and make sure that their integrity is high. They are coming to us with it, and we believe that we can create a meaningful flywheel around these opportunities.

Got it. Thanks so much. Appreciate it.

Thank you.

The next question comes from Matthew Condon with Citizens. Please go ahead.

Yes, Micha and Ofer, you help me understand. I am a little confused. Market. I understand deprioritizing the lower end of the market.

But I am trying to figure out, is there any products you are not going to actually even be selling? Any services from your service business that you are just not going to sell to them anymore? Because I am trying to understand why you think revenue will get worse as the year progresses. So your revenue declines exceed as you go down as you go forward. I understand investing in might take a little while to turn and to really build the enterprise business further, but I am trying to understand what you are seeing in quarters two, three, and four that make them worse than quarter one on revenue.

Morning, Nat. Essentially, we are not killing any of our products.

It is

what we are mostly

deprioritizing is the continuing

optimization

of these products in favor

of developing

the types of product experiences and the underlying technologies and infrastructure to address the higher-end project. So this in and of itself should not be a driver for decline. And it is not about the types of services or products that we are discontinuing because we are not discontinuing anything. We are just making sure that after the restructure, we have the vast majority of our resources

to invest

in the higher-end and higher-skilled

types

of services for the larger types of customers that are spending more with us and accelerate the growth that we are seeing there even further. Okay.

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

So we have seen some decline in simple services across the board. There are areas where we are seeing slightly higher decrease than others. For example, within programming, we are seeing the simple side of programming, like things like simple website building, accelerating the decline as a result of AI code and simplistic types of coding-related solutions. But on the same side, we are seeing areas where we are seeing growth.

Like digital marketing is one of them. We are seeing nice

growth in services. So the idea is not to discontinue anything and, by the way, we have called out these changes over the past few quarters as an example. Writing and translation was heavily impacted by AI, down 20% year over year, and we have seen this for a while. We have seen the same under the vertical music and audio. It is also impacted but slightly less, in the teens range, primarily because voiceover is a meaningful portion of the music and audio vertical. So there are

anecdotal

areas. Again, the decline that we are seeing there is mostly in the very simplistic, low-skill-related types of services. And this is not our focus now. That transformation is going to continue happening, and that is fine. The function that we are focusing on is the one-of-a-kind way for us to deal with high-end, high-value transactions

utilizing all the data that we have collected over the

past sixteen years and the incredible talent bench that we have with us today.

Thank you.

The next question comes from Joshua K. Chan with UBS. Please go ahead. Josh, you may be muted.

Sorry about that. Hey. Good morning, Micha, Ofer. Apologies for that.

I guess, maybe following up on the prior question a little,

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

I think on the first part, think the combination of the trends we are seeing in Q4, together with the confirmation that has been discussed,

are creating

some uncertainty in terms of 2026, and those circumstances are guiding for

a wider

a wider range.

Yeah. And on

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

Okay. Great. Thank you for the color.

The next question comes from Matthew Condon with Citizens. Please go ahead.

Thank you so much for taking my questions. My first one is just on, you know, we think you said in the shareholder letter, you are building the marketplace for more recurring work. Can you just talk about the products and functionalities that you need to launch to enable this recurring nature of work? And then I wanted to ask a follow-up on an earlier question is just given where the stock is trading, just can you talk about the prioritization of buybacks versus M&A? Thank you so much.

Thanks for the question. So, essentially, it is all about

putting trust and quality at the forefront.

And we are meaningfully upgrading our data infrastructure, matching algorithm, and product in order to achieve that. And those are the most important

components

of being able

to

optimize for recurring work, and also the fact that we are modernizing our platform allows the usage, as I have said, of not just human customers, but also agents within the platform. A lot of it is about how we build this infrastructure and how we ensure

the quality and the happiness of the

entire fulfillment cycle, which has been one of our biggest moats. The fact that the work happens on the platform, is being documented, and being tracked allows us to understand the right path or route in which work is done to be able to actively intervene in cases where it is less than great. All of these are indicators from our data for recurring usage of our platform. The second one was on buyback. We have a continued disciplined and balanced capital allocation, invest in growth while continuing to utilize our buyback authorization to return capital to shareholders. As of December, there is $67.5 million left on our authorization. And as Ofer mentioned earlier, we will continue to be opportunistic on M&A. Thank you very much.

The next question comes from Bradley D. Erickson with RBC. Please go ahead. Hey. Thanks. This is Audrey on for Brad. First, new business formations have been growing pretty solidly, but that does not seem to be lining up with parts of your business. Is that just because there is really no connection there, or what is the disconnect you would say if there is one? And then second, in the new world of changes to the top of funnel, how big should S&M be as a percentage of revenue or marketplace GMV relative to where it has been in the past? Any reasons why it should be structurally higher or lower? Thanks.

Thank you for the question. Business formation only impacts a small part of our catalog that is focused on the very early-stage companies, so I would not read too much into that aspect or the correlation between the two.

I think as regarding the second part,

we do not anticipate any change.

Okay. Thank you.

The next question comes from Rohit Rangnath Kulkarni with ROTH Capital Partners. Please go ahead.

Hey, thanks. A couple of questions. One is just on this doubling down on high-value things that you will be doing going forward, where do you see the heaviest lift next twelve to eighteen months? Is it you need to attract more supply who is capable of doing these high-value things? Do you think you already have the

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

Morning, Rohit. Thanks for the questions. So on the first one, it is really very much around the data infrastructure, the matching algorithm that prioritizes quality and trust, and it is really all about the customer satisfaction and retention. In terms of talent, it differs between categories, and it changes over time because we see more and more types of skills coming in demand. In most cases, it is very easy for us, because we have been doing this for sixteen years, to make sure that we have the right talent. We have not seen any pockets of shortage in talent, but in any case, we are always equipped to fill any shortage in a very short amount of time. As to go-to-market, we see that as an opportunity, expanding channels from existing channels into AI-native channels, building the enterprise partnerships as we have talked earlier in the call, in targeted growth loops for specific use cases. As to your second part of the question, services revenue will continue to be a growth driver for us this year. That said, the pace of growth will be more moderated this year because most of the efforts this year will be foundational to improve the marketplace moat and enable the high-end flywheel.

That said, service revenue has a long

long-term growth runway as we enable every aspect of the talent's need, and there are lots of service expansion opportunities down the road.

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

Thanks, Megan, for moderating the

call today and for everyone who has joined us this morning. Have a great day.

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