Thank you for your patience. I now welcome everyone to the Fiverr Third Quarter 2025 Earnings Conference Call. I will now hand it over to Jinjin Qian. Please proceed.

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 an essential partner for SMBs looking to turn AI, from potential into performance. This demand is directly reflected in the Programming and Tech vertical, which grew 14% year-over-year in Q3. We believe that this AI transformation cycle mirrors an early stage of digital transformation and could provide a multiyear tailwind for broader tech investment. To lean into this secular tailwind, we are doubling down on our investment in AI-related categories from growing specialized talent communities and launching tailored AI solutions to expanding our go-to-market channels through strategic partnerships. Our ambition is to position Fiverr as the go-to destination for finding top-tier AI talent and deploying applied AI solutions. Despite a macro environment that remains uneven, we're seeing positive signals and gaining market share. Labor markets continue to show mixed trends and broader hiring recovery remains elusive. However, our growth strategy, which centers around upmarket expansion and AI enablement is built on long-term macro-agnostic trends. We believe these are the right bets to get us back on track for GMV acceleration regardless of macroeconomic scenarios. In that context, we announced a strategic restructuring in September to streamline our organization, sharpen our product focus, and accelerate our evolution into an AI-first company. This means accelerating investments in building an AI-native team, upgrading our tech infrastructure to drive faster AI integration and operational efficiency and reimagining our marketplace with an AI-integrated experience. From a product perspective, this transformation is anchored on four key pillars: One, strengthening our go-to-market execution. We're expanding our generative engine optimization, GEO, capabilities, integrating our catalog into native AI channels and building AI-powered catalog management systems. We're also investing in partnerships that drive growth across AI-related verticals. Two, building the next Gen AI-powered buyer experience. This includes expanding LLM-powered workflows across the buyer journey, advancing our Know Your Customer, KYC, capabilities through data and product innovation and investing in customer success to deepen trust. Three, evolving our matching technology. As we serve more upmarket clients and more complex projects, we're transitioning from traditional search to agentic matching, delivering a recruiting-like experience that surpasses human performance through deeper data, richer context, and advanced reasoning. Four, investing in talent and the talent community. Talent is at the heart of the entire marketplace experience. In a world where AI is rapidly transforming how work is done, our priority is to build a high-quality, trusted talent ecosystem. This means supporting human-in-the-loop workflows, creating pathways for professional growth and deepening our commitment to long-term community engagement. I am truly excited about the opportunities ahead and the strength of the roadmap we have built. As we enter the final stretch of the year, we remain laser-focused on execution. Our momentum in AI and upmarket expansion gives me confidence in the foundation we've built. I look forward to sharing more about our 2026 roadmap in our next call. With that, I'll turn it over to Esti.

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. Looking ahead, we expect Services revenue growth to moderate as we lap the one-year anniversary of the acquisition, but to maintain healthy double-digit revenue growth. We continue to expect Services revenue to represent a little over 30% of total revenue for the full year 2025. Now onto guidance. For the full year 2025, we expect revenue to be in the range of $428 million to $436 million, representing year-over-year growth of 9% to 11%. We are raising our full-year adjusted EBITDA guidance and now expect it to be in the range of $88 million to $93 million, representing an adjusted EBITDA margin of 21% at the midpoint. For the fourth quarter of 2025, revenue is expected to be between $104.3 million to $112.3 million, representing a year-over-year growth of 1% to 8%. The wider-than-normal revenue guidance for the fourth quarter reflects the elevated uncertainty in the macro environment with mixed signals. Adjusted EBITDA is expected to be $23.9 million to $27.9 million, representing an adjusted EBITDA margin of 24% at the midpoint. During Q3, we announced a strategic restructuring plan, which resulted in a streamlined headcount and enhanced operational efficiency. These efforts contributed to the increased adjusted EBITDA guidance in Q4. While the pace of EBITDA improvement in Q4 should not be viewed as a steady-state cadence, profitability, margin expansion, and cash flow will remain key priorities for us, even as we redeploy some of our cost base savings into selective high-impact investments in AI and upmarket initiatives in 2026. We remain committed to our accelerated schedule to reach the long-term adjusted EBITDA margin of 25% in 2026.

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 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 multiple talents and sometimes require an orchestration of those multi-talents 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, 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 trends that currently seem to be flat, might decline by single digits. 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.

The increase in spend per buyer was positive. You mentioned that this increase wasn't coming from small and medium-sized businesses, but rather from the ability to engage in more advanced projects, which indicates a broader company capability. How does the reorganization relate to the potential to tap back into the SMB market? Are you suggesting that the business has been reorganized to prioritize higher-value jobs, and if SMBs return, that would be a bonus, but there’s no expectation for that? Given the long period without SMB demand, should we assume it may not come back? I'd appreciate any general thoughts on this.

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 two, 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?

Thank you for the questions, Doug. Our investments focus primarily on talent, especially in finding AI-native individuals within the company. Additionally, we are enhancing our infrastructure. The benefits of new development and marketing enable us to work faster and more efficiently, rather than being hindered by outdated infrastructure. We are also improving the marketplace experience through advancements like dynamic matching and project management, as well as refining our matching technology and KYC processes. The key areas of focus include go-to-market strategies with investments in LLM engines, geographic expansion and partnerships, enhancing the buyer experience, matching, and talent acquisition. Our approach is centered on an AI-first mentality, aiming to harness the potential of AI internally and in our core business. Regarding your question about spend per buyer, there are several catalysts driving it. Some are linked to identifying growing categories, aided by our move upmarket and the technological transformation driven by AI. For example, the programming and tech vertical sees significantly larger project sizes, with 15% of briefs exceeding $1,000. Our managed services have also grown 65% year-over-year, with an average project size of $17,000. These figures reflect a strategic approach, and if you'd like more examples, they are available in the shareholder letter.

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. As AI-driven products and needs expand, they tend to grow at a much faster rate than average. As they increasingly represent a larger share of our overall business, they are pushing us to pivot back towards growth, which we are already witnessing. However, it will take time for these types of customers and projects to constitute the majority of our business. Nevertheless, as their presence increases, we are inherently returning to growth. We observe this consistently, as reflected in the growing numbers each quarter. Currently, transactions over $200 account for the majority of our market, exceeding 50% and growing at double-digit rates. Additionally, transactions over $1,000 are increasing by more than 20% year-over-year, already making up more than 10% of the marketplace. This indicates their significance in the market and underscores our confidence in continued growth. Regarding job displacement, I have addressed this matter previously. The jobs being displaced are largely simple roles. We have been utilizing AI for over two years and are aware of its limitations regarding accuracy and quality. Customers are also cognizant of these limitations. We have observed many of our customers and their talent using AI, and as they do, they come to realize its constraints and become more cautious about relying on its outcomes for production and business readiness. The jobs that have been displaced are low-skill services, which have always been limited in size. Therefore, their displacement is not particularly concerning. Our growth correlates with our investment in larger projects. Ultimately, AI does not replace human beings, talent, or high-skilled work.

Your next question comes from Josh Chan with UBS.

I just have two 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 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. I don't want to repeat what we've previously discussed, but I would like to inquire about key categories. You mentioned a 14% growth in programming and tech. How are other significant categories benefiting from AI? Are you observing similar trends? For instance, could you comment on design and creative, as that's another large category for you? Additionally, are there other major categories you’d like to highlight regarding how AI might positively impact them? Moving on to your traction in the upmarket, it’s impressive. Are there other opportunities you see? Are you satisfied with your product suite, or do you have plans to introduce new features in the next 12 months that could address other areas of the ecosystem, like 1099 versus W-2? Any insights on that would be appreciated.

Thank you for your question. I’d like to highlight some growth areas. Programming and tech are expanding rapidly, now representing about 20% of our business. Additionally, digital marketing, video, and animation are also seeing significant growth. This is partly driven by AI, as skilled individuals who understand how to leverage AI are in demand. Customers often approach us after realizing the limitations of their own knowledge in using AI effectively, making this a prominent situation in these sectors. The way customers interact with us has evolved compared to two years or even one year ago. They are more informed, having done some preliminary work themselves, which allows them to articulate their needs better. This shifts our role from simply explaining their requirements to delivering strong, accurate matches for their needs. As we look to move upmarket, there is considerable potential. Many customers are already benefiting from dynamic matching and managed services, but many still don't realize that Fiverr can handle projects worth tens of thousands of dollars, presenting a significant opportunity for us. Additionally, we see potential in LLM channels, which are emerging as alternatives to traditional search methods. This shift creates challenges, but we view it as an opportunity. We're noticing that LLM channels are increasingly contributing to top-of-funnel traffic, motivating us to continue investing in that area. Lastly, I want to emphasize that customers are becoming more precise in sharing their needs, which is beneficial for us as it gives us more to work with to match them with our exceptional talent base.

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.