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Shares the online recruitment company Upwork surged five point five percent this after it provided guidance for fiscal years twenty twenty six and twenty twenty eight. At its twenty twenty five in Investor Day, the company set it will now achieve long term targets of seven to nine percent compound annual growth rate. This of gross services volume, it's the acronym GSV. What essentially means is it's the total value
of all transactions that occur on the upwork platform. The company also settle to see revenue growth of thirteen to fifteen percent and twenty percent adjusted EBADA compound annual growth rate through twenty twenty eight. This comes after shares search thirteen percent earlier this month, after it reported third quarter results that beat expectations and raised it's full your forecasts.
Delighted to have with us right here in our Bloomberg Interactive broker studio Erica g Search. She is the CFO, Chief Financial Officer of Upwork.
Busy day for.
You, Very busy Yeah, busy, but great, A lot of exciting stuff going on.
Well, Investors like what they heard from you guys in terms of guidance. Talk to us about the outlook, what you're seeing, how much confidence you feel in the outlook, and what it kind of tells us about us economy and kind of the workforce.
You know we have.
You know that our investor day was really timed perfectly for us. The reason our stock went up thirteen percent after our earnings report was we you know, at the beginning, at the end of twenty twenty four, we told our investors that we would, you know, take a year and really reinvest in our company and rebuild up work and we said that we would return to GSB and revenue growth in twenty twenty six. Well, we did that two quarters early. In Q three of twenty twenty five, we
report G three growth of two percent. We reported revenue growth of four percent. And what we told them then was that our results are going up into the right right now, and that is because of really three investment areas. When is AI, when is SMB expanding our relationship with SMB, And one is the outsized opportunity that we have with Lurge enterprise. But you know, with AI is really one of the big stories for us because I don't know
how well you follow up work. But you know, we have had a bit of an overhang over our stock on the opposite side of the spectrum, thinking that we were going to be you know, you know, hurt by AI, whereas we are truly a beneficiary of AI. We now see about annualized volume of three hundred million dollars in GSB from the A category on our platform, and that is accelerating. In Q three it was over fifty percent growth per year.
So I want to remind everybody upwork is a hiring platform. You can go there to find talent in development and IT AI services, design and creative, sales and marketing, admin and customer support. It's this two sided markets.
So that's right.
You have a good view on what exactly the type of job that companies are hiring for and then also the availability of that labor. What does that picture and that balance look like right now?
Yeah, you know it. The last few years.
Have been, as we all know, tough the on the job market, and you know, most companies in our industry were down double digits over the past few years in terms of both volume and revenue. Upwork was relatively flat for the past couple of years. So you know, we were gaining share against staffing companies even other online.
Marketplaces, but still relatively flat.
And it's really these investments that we've made in AI, we're actually seeing both the AI category itself increase and that is really.
Like I say, accelerating.
So this is this is AI work on the platform, but also the investments on the front end. So if you think about the hiring process and how that works, there's a lot.
Of friction to it, right.
You know, a client comes onto our website, they post a job, they have to write it up, they have to search for talent, the talent has to write a job proposal.
Well, now AI does all of.
That for both our clients and our talent, and it's making them find each other faster and you.
Know and kind of fulfill these jobs and get them done.
Those matches work. Like what percentage of the time are where is that?
It's like, well, not not good?
Well no, So what the AI is doing is it's writing the job post, it's writing the job proposal, and of course that you know they're they're there can be editing. Yeah, but now we do have AI interviewer, and and we also one of our one of our most successful, very recent launches is Uma, which is our you know, our
AI companion on our site is now recruiting talent. So so the client asked for a certain type of talent, Uma goes out within our you know, eighteen million strong talent based and identifies the right talent for that job. Now we're seeing fill rates much higher using the using the AI recruiter than with the human recruiter. Why, well, you know, I think we have one of the best data sets honestly on the planet. And if you think about what these what this AI is actually really good at.
It's good at at at you know, uh, spinning lots and lots of data, right, And so you know, we've been building our our platform is over ten years old, and we've been building this data set of you know, what types of jobs match with which talent. You know, whether client client is price sensitive or you know, maybe their quality sensitive. And so the recruiter, the air recruiter is much better at scanning across all of this data than a human can be.
Are you are you seeing demand stay of stable decrease or increase from the side of your platform that is looking for the workers.
Yeah, so client demand and I think you know what we are seeing is client demand has been where we have seen the biggest impact from from you know, I would say the job market and the economy written large.
Maybe like like if the economy is softer, then demand will go down from the cience, yes.
And and and if you think about that, if you think about you know, our our online marketplace is primarily SMB customers, right and so small the small medium sized business.
So if you think about what's going on there.
When inflation is high, you know, you know this this hits consumer whiles it also hits SMB you know leaders and and and then also when interest rates are high, they have lower access to capital, right, And so we do see the demand environment in terms of just pure volume of SMB hirers, uh, you know, relatively flat in.
This in this you know right now.
But what we are seeing is, you know, we are one of the few places where these SMB customers can actually access very high quality AI talent and afford you know, in an affordable way and quickly. And so as they're trying to implement AI work within their businesses.
You know, contingent.
This contingent marketplace that we offer is one of the best places they can.
Find what's your take on AI and the impact it's going to have on the labor force.
So you know, we have amazing data on this, and what we are seeing is is that AI is not going to replace humans. What's going to you know, humans with AI will replace humans without AI, right, And so what we're seeing AI replace very simple tasks, but not you know, the larger, more complex work because these a these AI agents are not that edgentic, right, they have
no judgment, They cannot complete the complex tasks. So what we've seen over well, what we've seen over the years is you know, jobs that are three hundred dollars in lower those have those have gone down on our platform.
So about two years ago we had.
About five percent of our work with job three hundred dollars and lower.
Now it's about three and a half percent.
But at the same time, the AI jobs on our platform, clients who engage in AI work spend about three times what our normal you know kind of platform work does and so you know, we see that growing and growing because that work is more complex. It requires humans and you know humans using AI agents, but it requires humans in the loop.