Upwork, Inc Q3 FY2022 Earnings Call

Good day and thank you for joining us. Welcome to Upwork's earnings conference call for the third quarter of 2022. All participants are currently in listen-only mode. After the presentation, we will have a question-and-answer session. I will now hand it over to your speaker for today, Evan Barbosa. You may begin. Thank you. Welcome to Upwork discussion of the third quarter 2022 financial results. Leading the discussion today, are Hayden Brown, Upwork's President and Chief Executive Officer, and Jeff McCombs, Upwork's Chief Financial Officer. Following management's prepared remarks, we will be happy to take your questions, but first I'll review the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under federal securities law. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statements. In addition, any statements regarding the current and future impacts of Russia's invasion of Ukraine and our decision to suspend business operations in Russia and Belarus and the COVID-19 pandemic on our business, and currently future impacts of actions we have taken in response to Russia's invasion of Ukraine and the COVID-19 pandemic are forward-looking statements related to matters that are beyond our control and changing rapidly. For discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC website and on our Investor Relations website, as well as the risks and other important factors discussed in today's shareholder letter. Additional information will also be set forth in the quarterly report on Form 10-Q for the quarter ended September 30, 2022 when we filed. In addition, reference will be made to non-GAAP financial measures. Information regarding a reconciliation of non-GAAP to GAAP measures can be found in the shareholder letter that was issued this afternoon on our Investor Relations website, at investors.upwork.com. As always, otherwise known and reported figures are grounded and comparisons of the third quarter of 2022 or to the third quarter of 2021. All measures are GAAP unless cited as non-GAAP. Now, I'll turn the call over to Hayden.

Thanks, Evan. And thank you all for joining us today for our third quarter 2022 earnings call. As we closed the third quarter of 2022, Upwork has clear indicators that both our business and our value proposition continue to be critical to our customers in times of economic uncertainty. Revenue grew 24% year-over-year to $158.6 million, and GSV grew 14% year-over-year to exceed $1 billion in the quarter once again, and adjusted EBITDA was a loss of $2.9 million. We're focused on making prudent and sustainable investments in our business to drive steady, durable growth, even against the backdrop of challenging macroeconomic conditions. Importantly, our customers continue to count on us to enable their critical work and their businesses during these uncertain times. We have both pioneered and benefited from the major paradigm shifts around remote work and hybrid workforces, fundamental changes that have shaped the new reality of work as we know it today. This sea change is illustrated by the fact that one fourth of American workers are now working remote first or mostly remote, while 71% of companies expect remote work to be part of their standard operations moving forward. This new work reality opens up a vast opportunity for Upwork to introduce ourselves to the 90% or more of companies and hiring managers who have not been aware of or considered Upwork and to bring them into the fold as customers. Nowhere has that opportunity been more apparent and central to our priorities than the late-September launch of our new brand campaign. This is how we work now, appearing across TV, online video, streaming audio, digital, and social media; the campaign reinforces our belief that work should unleash human potential instead of limiting it and emphasizes that now is the time to embrace the new ways of working that have emerged over the past few years. It targets mainstream prospects, clients, and talent alike, who largely aren't yet aware of Upwork but, like us, recognize that the world of work has changed forever. Our strong business position and resonant value proposition allow us to remain on offense, evidenced through both our new brand campaign as well as our amplification of benefits most valuable to our clients: flexibility in hiring expert talent at their fingertips, operational agility, and bottom-line savings.

Ladies and gentlemen, this is the operator. I apologize for the slight delay in your conference. Please remain on hold; your conference will resume momentarily.

Hello? Okay, can you hear me on this line? Okay, can you hear me? Well, can you hear me on this phone line? Okay, thank you.

Thank you for your patience, ladies and gentlemen. Hayden, you may begin.

I think you just disconnected my line. Can you hear me?

Yeah, we can hear you.

Excellent. Our strong business position and resonant value proposition allow us to remain on offense, evidenced through both our new brand campaigns as well as our implications of benefits most valuable to our clients: flexibility in hiring expert talent at their fingertips, operational agility, and bottom-line savings. Our solution satisfies the tight budgets that many organizations are implementing amid economic uncertainty, as clients find that they can realize cost savings upwards of 50% by using Upwork compared with traditional staffing alternatives. By delivering highly skilled, diverse talent from more than 180 countries affordably and quickly, clients can have greater flexibility with our cost structure and reduce operating costs through talent innovation. As a result, we're helping companies improve their EBITDA and generate value-added growth while maintaining the optionality that has been shown by McKinsey Research to be vitally important in weathering or even accelerating during economic downturns. Notable brands that we welcomed as enterprise clients in the quarter include Anheuser-Busch InBev, Constellation Brands, Cushman and Wakefield, iCIMS, and Marriott International. These companies are leveraging our platform to deliver on their business plans, tap new sources of scalable, flexible remote talent, and retain a competitive advantage. Market makers like these new customers contributed to enterprise revenue growing a healthy 41% year-over-year to $12.5 million in the third quarter. Coupled with strong growth of clients spending $1 million or more, this underscores how our value proposition resonates with enterprise clients. We continue to invest in innovating the work marketplace with the goal of helping clients and talent start work more easily on the Upwork platform and returned to Upwork time after time for a consistent and productive experience. We deliver critical and differentiated value, not just in matching clients and talent, but also in serving as the hub for seamless back office tasks for talent around invoicing and getting paid and equally for clients around contract management and payment activities. We enhanced these core experiences in the third quarter, debuting improvements to our contract workroom that reduce friction and allow clients and talent to manage contracts, navigate all their contract actions, and more easily review weekly billings, earnings, contract terms, and feedback. Additionally, we made enhancements to our enterprise suite by enabling multi-approver team-based approvals that support large scale and complex workflows and adding more refined search functionality for faster access to our global pool of expert vetted talent, who are ready and pre-approved to work with these companies. Project Catalog consultations made available across all 90-plus categories of work during the third quarter continue to drive effective connections and collaboration between clients and talent. Enhancements this quarter improve the experience, allowing them to confirm scope, skills required, feasibility, and timeline for a potential project, driving speed and starting working together, which can be 50% faster than on the talent marketplace. These enhancements also enable customers to establish longer-term relationships that go beyond an initial project engagement. Ultimately, this drives elevated client spend on Project Catalog. In fact, 30-day spend by customers who use consultations is nearly three times what customers who only purchase on Project Catalog spent. Lastly, thousands of talented professionals on our marketplace are adding profile badges that display and validate their expertise through our budding partnership with Credly, the market leader in digital workforce credentialing, enabling talent that clients can match faster and with more confidence. Equipped with access to a vast supply of talent and job posts and the technological capabilities to engage more effectively and efficiently, clients and talent are together defining the new reality of work, blazing the trail regardless of the economic uncertainty that may persist. To be sure, as we expected since our second quarter earnings, our customers are not fully immune to that uncertainty, evidenced by the softness we continue to see in some metrics. Nonetheless, the revenue impact in the third quarter from these conditions was in line with our previously shared expectations. We have seen the softer client acquisition and retention trends that we observed in the second quarter stabilize in the third quarter, with the softness continuing to be more pronounced in Europe and with small and medium-sized businesses. Our enterprise LAN team also saw elongated sales cycles due to the macroeconomic outlook for a handful of accounts. This, plus some operational growing pains, resulted in fewer enterprise clients finding in the third quarter than targeted. We are remedying the operational growing pains and believe the enterprise opportunity remains as attractive as ever for Upwork. Additionally, we continue to manage our own business with discipline. Being prudent with resources has always been a guiding principle at Upwork. And as the economic outlook evolves, we have several measures underway, including evaluating our budgets, adjusting hiring, timing and prioritizing roles more aggressively, reviewing and reducing vendor spend, and ensuring we have a tight operating cadence around cost management with a high degree of visibility and internal partnership toward our goals. Due to the largely recurring and programmatic nature of the majority of customer activity on our platform, we are able to monitor for changes in behavior as they occur and be nimble in making adjustments to our plans as needed. This gives us further confidence in our ability to manage the business responsibly through a dynamic environment. We still view this period of macroeconomic uncertainty as a critical time for us to be focused on expanding our position as a market leader and cementing new integral ways of working across the work ecosystem. We see businesses continuing to turn to Upwork as we always source for highly skilled remote workers, regardless of their industry, whether their business need is project-based or ongoing, or where they stand in their workforce transformation or their current economic climate. We also know that Upwork fosters a deep, diverse, and highly skilled talent community across the globe. The world's work marketplace remains the center of gravity for these work and career innovators to build trusted, lasting relationships and get more done together. And we will continue to innovate, evangelize, and scale it in the fourth quarter and beyond. Thank you for joining us on this journey. Before we take your questions, I just want to thank Jeff, as this will be his last earnings call for Upwork. I am incredibly grateful for all his contributions to the company and our investor community over the last few years. His experience and marketplace expertise have positioned Upwork for continued growth and put us in a position of strength for the next chapter. Best of luck to you, Jeff, on all your future endeavors. We will now open the call to your questions, and thank you for your patience with some of the technical challenges today as well.

Our first question comes from Bernie McTernan with Needham & Company. Your line is open.

Great, thank you for taking the questions. Maybe just to start on enterprise revenue. Sequentially, it was virtually flat. So I understand the top of funnel and gross add problems that were addressed in the shareholder letter. But was there any churn issues or customers downshifting or maybe spending less in the quarter? And I know you re-emphasized or reiterated doubling the sales force, but do you still have confidence in the $300 million long-term target for revenue?

Thanks for the question, Bernie. I'd say we did not see any downshifting in terms of retained customer spend. In fact, we saw really good success with the team growing existing account customers leaning into the solution. We referenced one of our customers who was not in the top five vendors previously and has kind of zoomed into the top of the list and now is close to a $40 million run rate with us. So we really feel good about the trajectory with our existing customers who are continuing to spend with us and expanding spend in a lot of cases. We're not coming on long-term targets in this call. I think that's something we know more normally do in the Q4 call, but are continuing to expand that land team on plan and feel really great about the overall opportunity, with no changes in terms of how we're thinking about that. And the spend, to your earlier part of your question, has been really good with our enterprise cohort.

Great, and then the investor letter struck a nice balance of investing for the long term while also focusing on cost discipline near term. Is there any early indications on how to think about so far the success in the new brand marketing campaigns and what that could mean for '23? And then just how much leeway there is in some of the other sites to hit the profitability goals in '23 assuming the investments and brand marketing continue?

Sure, we are definitely monitoring our brand investment and measurability focus. Looking at that, we knew at the outset as we went into the brand area that this would be a multi-quarter journey. And we're not out the other side of that yet. But we feel good about the ability to achieve our brand goals in the context of EBITDA profitability next year. And so that will be a continued commitment for us. And again, we're excited about the new campaign we've launched; a lot of good things happening there. But next year, we will see that, even our profitability, even in the context of achieving our brand goals and awareness.

Great, thanks for taking questions.

Absolutely.

Thank you. Our next question comes from the line of Matt Farrell with Piper Sandler. Your line is open.

Thanks for taking my question. And it was great to work with you, Jeff. I wanted to zero in a little bit on the macro. It sounded like it was in line with expectations for Q3. And I believe you provided the $10 million to $15 million number for the second half. Is that still the right way to think about Q4, or did it get any worse? And I guess, how should we be thinking about the macro headwind maybe as we start to look at early 2023 as well?

Sure, I'll start, Matt, and then definitely Jeff, add anything that you want to chime in with. But I think we definitely did see everything so far, from what we can see now, in line with the $10 million to $15 million that we previously communicated. And that has been some softer than normal client acquisition and retention that decelerated a bit in Q2 and then stabilized in Q3. I think we're not seeing right now any indications of further deceleration, or anything that's giving us particular concerns as we look ahead, but we have kind of baked in that full $10 million to $15 million for Q3 and Q4. And so I think that's really where we've given those guardrails, and we feel good that that is the level of visibility around any exposure we have in the macro from where we stood last quarter and consistent with where we see things right now.

And just to add on to that, Matt, you noticed that our guidance for Q4, the midpoint is roughly in line with the Q3 actuals on the revenue front. And normally, we would see a bit of seasonal expansion from Q3 to Q4. So our macro adjustments to that kind of offsets that normal seasonal adjustment. And with respect to 2023, we're not commenting on that at this time, but more on that on that Q4 call.

Thanks. And Hayden, this one's for you. You've been talking about the next chapter of growth for Upwork recently. Could you just provide some more detail on how you think that looks, and maybe with some of the specific drivers and trends and dynamics, particularly with the macro?

Sure. The next chapter for us is really about continuing to unlock the opportunity we have around our total work marketplace, which is more than just a talent marketplace, which we've had and has been such a source of strength for us historically. But we've been launching new products over the last one and a half, two years; we have more innovation in the pipeline. And we've been making some of these strategic bets around the sales force and the enterprise expansion, our brand marketing investment. And really, that's been laying the groundwork over the last few years for this next chapter of more customer adoption to the way of work that Upwork offers them and all the benefits that we offer them. So the next chapter ahead for us is us continuing to innovate for customers, building the awareness in the market that gets us way beyond that sub-10% cohort of customers that knew about us today and bringing this model we've been building to a much wider stage.

Thank you. Please stand by for our next question. Our next question comes from the line of Brad Erickson with RBC. Your line is open.

Hi. It's Logan on for Brad. Just wanted to double-click on enterprise, which like you had some internal and external headwinds. Just wanted to ask, where would you say was the most strong headwind in the quarter? And then just on each one, any sort of timeline on getting back to where you guys want to be internally? And then externally, can you guys just kind of unpack the economic uncertainty and macroeconomic environment and how that's impacting clients, or potential clients' decision-making? Thanks.

Thanks, Logan. In enterprise, we feel really good about where we are overall, again, with enterprise revenue up 41% for the quarter. Again, lots of great activity happening, particularly with the expansion side. We did hit a hiccup with our land team in the quarter, and that was actually driven more by internal execution than by the macro, although we did see sales cycles elongate for some accounts and that definitely was part of the issue as well. But from an internal execution standpoint, there were some things like email system migration that was happening previously and that impacted our ability to have as many leads in the top of the funnel as we wanted because we had turned off a bunch of marketing campaigns and some things like that. So we feel good that we have our arms around what those execution challenges have been and how we're remedying those. And our hiring for that team continues to be on track, which is another key piece of the puzzle for us on the land side. In terms of timeline, I think it could take a quarter to a little bit of time for us to get back to where we want to be. And the macro does present a bit of uncertainty around exactly what that timeframe is. But we feel good that we have insights to show you the drivers that we can control and where that's headed. In terms of how the macro factors are impacting potential client decisions, I think it's really, on the one hand, we've seen accounts where they're very excited to be expanding our model now, either existing customers or even some land customers, where, because they have certain other spend constraints, our model is very appealing. But then on the other side, as we talked about, the deal cycles being elongated, that is another factor. So we feel a little bit of a mix of that. But overall, again, for existing customers, in particular, who already are familiar with our model and are using us, we haven't seen the macro be a headwind at all on that side.

Great, thanks for taking the question.

Thank you. Our next question comes from the line of Marvin Fong with BTIG. Your line is open.

Great, thank you for taking my question. I appreciated the detail that you provided about Project Catalog and the consultation and the success there. Just wondering, you've cited the significant increase in the spend after 30 days. So are Product Catalog projects with consultation approaching the average project size of the talent marketplace? Or are they still quite a bit smaller? And then I have a follow-up.

Sure, Marvin. I think they're still, we still view them as a stepping stone in between what maybe catalog and the talent marketplace look like. So they're still in between. But they're also, it's like a pretty dynamic space for us. It's a very new product; we just rolled it out across all 90-plus categories on the site. So I would emphasize this is very early days, where it was both a very new product. And having just launched this across all of our categories and customers, it's definitely kind of a moving situation, which we're very excited about. Because of all the applications we're seeing where customers are leaning into this product, and we're kind of deploying it in a lot of new contexts with them.

Okay, great. My follow-up is also about enterprise. I wanted to ask the question in a different way. Are you still confident that these product decisions, which are taking longer, will close at the same rate? Can you provide insight into how much longer clients are taking to make this decision? Thank you.

Thanks. We haven't observed any changes in the conversion rates at different stages of our sales process, which is a positive sign indicating that we're not facing significant issues there. The main concern seems to be the lengthening of cycle times. For instance, we're noticing that more approvers are being added to the process, and some companies are opting to involve outside counsel to gain additional confidence in their deal approvals during this time. While these factors are contributing to an increase in cycle time, they are not completely hindering our process. Overall, we believe this situation is not severely impacting our land team. It represents a smaller portion of the challenges we faced in the quarter, and some aspects appear to be more operational on our part. Although we are not satisfied with these outcomes, it is reassuring to recognize that many of the challenges affecting the land team stem from internal adjustments we are currently addressing, and we are optimistic about resolving these issues.

So it's great to hear. Thanks, Hayden. And good luck, Jeff, on your next endeavors.

Thanks, Marvin.

Thank you. Our next question comes from Maria Ripps with Canaccord. Your line is open.

Great, thanks for taking the questions. First, is there anything to call out in terms of retention curves or spend patterns by category or by vertical? I mean, obviously, tech has been impacted by expense and workforce reductions. Is that impacting you at all? Or would you say that sort of what you're seeing is more kind of broad-based?

See, what we're seeing is broad-based with a caveat that, as mentioned, some of the softening of certain metrics has been more with the SMBs and more in Europe. So I would say it's exclusively that we have seen a little bit in the U.S. and in some cases with larger customers, but it's definitely more pronounced with the smaller customers and in Europe. So that's where we see the differentiation. We're not seeing a real differentiation by sector, or business type, or any of those other dimensions.

Got it, that's very helpful.

In terms of cohorts, I wouldn't call anything out there either, Maria. I think you were asking about customer cohorts. I don't think there's anything really to note on that dimension.

Got it. And then secondly, your take rate expanded really nicely, both sequentially and year-over-year, and you talked about several drivers behind it. How should we think about sort of sequential progression from here over the next couple of quarters?

Yeah. Hey, Maria. Thanks for the question. So the take rate over the last couple of quarters was primarily driven by the pricing change that we implemented Q2, mid-quarter. So you saw that benefits both in Q2 and Q3. That's fully incorporated now, so you won't have that benefit. We still have the dynamic that, as our clients continue to find more and more value with us and spend more with the freelancers that they're working with, they graduate into the lower pricing tiers of our tiered service structure. And so that dynamic will continue to play out. And all the additional upward pressure on take rate that we've had will also continue to play out, meaning enterprise side take rate is growing faster than non-enterprise. And Project Catalog and talent scout also have higher take rates. So those will be the offsetting dynamics. We're not providing guidance in terms of where we think take rates will be in 2023, but those trends will continue to play out for the foreseeable future.

Great, thank you very much. And Jeff, best of luck going forward.

Thank you so much.

Thank you. Our last question comes from the line of John Byun with Jefferies. Your line is open.

Hi, thank you. This is John Byun for Brent Thill. Just have a couple of questions. First, the enterprise logos that are going to show the letter we're pretty impressive this quarter, more recognizable brand names. I guess, just wondering if there's anything to read through from there. Is it just that a lot of these things are maturing? And is there any color you can add to that? And then I'll follow up.

Thanks, John. We're excited about those customers as well. Our business is gaining more recognition, and our sales team is performing exceptionally well. Despite some challenges, we're making significant progress with many great customers. We've mentioned brands like Marriott and Dun & Bradstreet, which shows that our solution appeals to a wide range of industries, not just tech companies. Many people outside may view Upwork as a platform exclusively for tech businesses, but we are successfully engaging with numerous companies across various sectors that recognize the value of our model. This model offers them an optimal experience, agility, cost savings, and access to the talent they need, whether they're a long-established company or a startup. This is evident from the logos we've secured and the resilience of our business, even in these uncertain times. It also reflects our potential to tap into the trillion-dollar market opportunity we're pursuing through partnerships with remarkable companies that we’ve onboarded this quarter.

Thank you very much, that’s helpful. I have another question related to macro that indicates that year was down sequentially. I believe it was mentioned you have some understanding of churn or in the letter, but I wanted to see if you could clarify it a bit between seasonality and macro or possibly the client market and client price change. Any insight there would be appreciated. Thank you.

Yeah, as you pointed out, there's a number of drivers that played out there. First off, the macro dynamics that kind of increased in softness throughout Q2, and it kind of stabilized throughout Q3. So that played a bigger role would have played a role in causing that quarter-over-quarter decrease. Secondly, Ukraine also, the war in Ukraine also played a role where the implementation of our changes on May 1 had a couple of months of impact there, whereas it had a full quarter of impact in Q3. It's a little bit offset by the substitution rate that was increasing substitution improvements that was increasing. Third, the pricing change, which was right in line with our expectations, it's delivered the features that are gaining more traction to customers, removing those from behind the paywall increased revenue, and increased take rate. As expected, we also thought there might be some GSV impact. And so we saw a bit from that as well. And then the map, I guess, I already mentioned the macro. So those are really the key drivers. We're not providing context in terms of the absolute breakdown of those. But those are the key reasons why we saw that decline. In addition to the Q2 to Q3 seasonal dynamic normally, it is also a slower quarter-over-quarter jump. And so when you layer all those on top of it, we ended up with that decline.

Thanks very much. And I wish you the best, Jeff.

Thank you very much.

Thank you. Please stand by for our next question. Our next question comes from the line of Rohit Kulkarni with MKM Partners. Your line is open.

Hey, thank you. A couple of questions. One is just on the shape of kind of visibility or uncertainty that you're seeing through the conversations with your clients over the past 60 days or over the past 30 days. Has that changed overall, as in we're hearing a lot of other companies talk about growing uncertainty, growing lack of visibility. So how December could look like is not the whole degree of confidence that they can say right now. So just would love to hear what you're hearing. Love that you're reiterating your guidance, but just want to see if there is some change in how certainty or conviction has evolved. And then I have a couple of quick follow-ups.

Yes, it's two questions, Rohit. I don't believe there has been a significant shift in the last 30 days regarding their level of certainty. However, there is a widespread discussion at every company about self-tightening in general. Consequently, we anticipate that as companies approach Q4, they will remain very cautious and deliberate with their spending. This cautious approach is likely to modestly affect our Q4 numbers. Typically, in Q4, spending behavior shifts, and companies often adopt a use-it-or-lose-it mentality with their budgets, which reflects a different mindset. This is the current sentiment in the environment, and we have factored it into our outlook for the year ahead. Additionally, we hear from our enterprise customers, particularly those acting as change agents for the Upwork solution within their organizations. They often view this as an opportunity to assert their agenda more strongly since the current scarcity prompts everyone in the business to reconsider their operations and resource allocation. This situation allows these change agents to present Upwork as an alternative that helps meet objectives in a different way, providing them with a platform they may not have during more prosperous periods. It's challenging to predict how the overall macroeconomic factors will affect us, but we've been hearing from our change agents that this scarcity creates a different kind of dialogue and offers them an advantage in advocating for our solution and its benefits to their businesses, which is fascinating.

Okay, fantastic. And one question on how the spend per client has been steadily growing sequentially as well as any additional color on top of what you've already disclosed as to the why behind how that has been trending? Are there specific kind of new verticals that are driving that? Or are there specific kinds of clients that seem to continue to drive the spend per client, which is clearly above and beyond what some of your peers do? So wanted to see the why behind that, as well as how sustainable is that slow and gradual uptake as such?

Thank you, Rohit. I appreciate the question. The trends we've observed are a continuation of prior drivers. The growth is quite broad-based across all categories. While some categories are expanding faster than others, overall, the growth is widespread. This is mainly due to the strengthening relationships between clients and talent, leading to longer project hours. When we analyze the spending per client, it breaks down into several components: projects per client, hours per project, and the hourly rate. The increase in hourly spending is generally consistent, perhaps slightly lower, while the number of projects per client remains a slight contributor. Over the past couple of years, we've noticed that the relationship dynamic, which is central to Upwork, continues to evolve, encouraging clients and talent to create increasing value together.

Okay, okay, awesome. Thanks, Jeff. And again, good luck with whatever you do next. It was great working with you.

Thank you so much, Rohit.

Thank you. Our last question comes from the line of Andrew Boone with JMP Securities. Your line is open.

Hi. Thanks so much for taking my questions. You guys offered some really good detail on enterprise. But is there any way you can help us better understand the health of SMB in terms of cohorts or top of funnel traffic?

Thanks, Andrew. Sorry, I was going to say, I think the SMB business is really healthy. There haven't really been any changes of note from where we were last quarter. We've mentioned that even the softness we've seen has stabilized in some of the metrics that were impacted by the macro. And as we've looked at things like our spenders, who are at over $100,000 in spend, that number was up 32% year-over-year in terms of people leaning into our solution in a significant way, even despite what's going on in the broader environment. So we feel really good about that. Top of funnel, again, that was somewhat impacted by the macro. And we have seen a slight increase in CPCs that are NCPAs that I think was driven by a couple of things. So we continue to monitor that and optimize our program around acquisition so that it is healthy from an ROI perspective. But the business is doing really well. And we feel great about where we've been with our growth. Our acquisition around the work marketplace and bringing customers in through the different new products that we've been innovating, from Catalogs to consultations to talent marketplace continues to be a crown jewel for us. And we're continuing to innovate new products in the pipeline while doing things like growing our sales team to tackle the enterprise opportunity, which includes graduating enterprise customers that come in through that marketplace, have a great experience and then are ready for more and to build even more programmatic usage.

And then for my second question, I wanted to go back to marketing. I thought the way that you guys frame it historically is that the $80 million of brand spend would basically be judged on the results that you guys are seeing. So now that we're at the end of kind of October of this year, how do you guys think about that spend and the effectiveness you guys have seen there? Thanks so much, Jeff. Best of luck.

Thank you, Andrew, for your question. We've had a strong couple of quarters as our initial campaign has gained traction and significantly increased awareness. We're closely monitoring our progress. As mentioned in our previous call, we've partnered with additional organizations to enhance the efficiency and measurement of the program. With the recent campaign launch, our focus is on maximizing the impact of our investment. This campaign features a more compelling message and creative approach that captures attention and boosts awareness without significantly increasing our spending compared to previous quarters. The powerful message emphasizes that traditional work rules are obsolete. After a few quarters, we have gained valuable insights that have helped us improve our marketing and messaging across various channels while enhancing our measurement processes. This ongoing effort is enabling us to obtain better insights, which we will leverage as we continue to refine our program. We feel optimistic about our current position as we remain committed to achieving our brand objectives while also targeting EBITDA profitability in 2023. We will continue to assess this program and make necessary adjustments to meet our profitability goals.

Thank you.

Thank you.

Thanks. On behalf of the entire Upwork team, thank you for joining us today. And thank you for your interest in Upwork. If you need any clarifications or have any follow-up questions, please do not hesitate to reach out to me at investor@upwork.com. This concludes our call. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.