Good day and thank you for standing by. Welcome to Upwork's First Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised, today's conference is being recorded. I would like to hand the conference over to your speaker today, Samuel Meehan, Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to Upwork's discussion of its first quarter 2025 financial results. Joining me today are Hayden Brown, Upwork's President and Chief Executive Officer; and Erica Gessert, Upwork's Chief Financial Officer. Following management's prepared remarks, they 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 Laws. Forward-looking statements include all statements other than statements of historical fact. 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 statement. For a 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 earnings press release. Additional information will be set forth in our quarterly report on Form 10-Q for the quarter ended March 31, 2025 when filed. In addition, reference will be made to certain non-GAAP financial measures. Information regarding non-GAAP financial measures, including reconciliations to their most directly comparable GAAP financial measures can be found in the press release that was issued this afternoon on our Investor Relations website at investors.upwork.com. Unless otherwise noted, reported figures are rounded. Comparisons for the first quarter of 2025 are to the first quarter of 2024. Adjusted EBITDA, adjusted EBITDA margin and free cash flow are non-GAAP financial measures, and all other financial measures are GAAP unless cited as non-GAAP. Now I'll turn the call over to Hayden.

Good afternoon, and welcome to Upwork's first quarter 2025 earnings call. Upwork had a strong start to the year as our first quarter results feed our plan on both the top and bottom lines. Revenue of $192.7 million exceeded the high end of our guidance range. Combined with consistent cost discipline that led to record high adjusted EBITDA of $56 million and adjusted EBITDA margin of 29%, we have proven quarter after quarter that we can execute well and lead our industry in any market environment. Our business is extraordinarily resilient and our strategy and execution have resulted in industry-leading performance over multiple years despite the uncertain operating environment. Additionally, Upwork is not directly exposed to announced tariffs nor to ongoing federal cost savings measures. Our core marketplace performed well in Q1, where GSV per active client grew year-over-year for the first time in six quarters and increased sequentially for a third consecutive quarter. We also drove sizable GSV outperformance in the marketplace through several product enhancements to search recommendations and other customer experiences. Upwork has helped businesses reinvent through every work transformation of the last 20 years, enabling them with the highly skilled talent required to deliver cloud solutions, build e-commerce storefronts, and embrace the eras of mobile and social media. With AI being the next and biggest paradigm shift for organizations, Upwork is becoming the critical infrastructure for enabling the combination of humans and AI to work together to achieve business outcomes. While AI is rapidly changing every company from the smallest startups to the largest enterprises, an AI skills gap exists today with 63% of employers citing a lack of AI skills as the top barrier to transforming their businesses. We are a critical resource to clients as they navigate this tectonic transformation. One of the world's largest social media platforms has engaged highly skilled math experts on Upwork to safeguard the quality of their training data for integral LLMs. Multiple companies, including one of the top pharmaceutical companies in the world, have relied on a South Carolina-based AI and data science agency on Upwork for healthcare-specific, low-code apps and AI solutions. A mid-size law firm in Florida that specializes in representing veterans turned to Upwork freelancers to transform their knowledge management system with AI, building a custom GPT to organize their massive corpus of documents and access key information instantly. These examples are a testament to how Upwork's talent base constantly evolves to meet new business needs. Today we have a deep reservoir of 80,000 AI specialists on our platform globally, who have already put their expertise to work in designing, developing, and deploying AI systems for clients. And that pool is growing every day. Clients of all sizes are coming to Upwork to find this expert AI talent for complex, long-term projects ranging from model training and tuning, to integrating LLMs into new products, to building AI-powered workflows across departments. As our customers have been embracing AI, we ourselves have been racing ahead to make Upwork a truly AI-native platform. Our investments in Uma, Upwork's Mindful AI, are transforming our customer experience by offloading mundane tasks and making the work journey on Upwork more productive and seamless. This is just the beginning of how with Uma, we envision providing customers with a fully capable AI work agent that can do everything from informing hiring decisions, helping freelancers win work, to end-to-end project management. Uma powered features we recently launched, like Proposal Writer and candidate evaluation, experienced strong uptake. We saw 52% more users engaging with Uma overall in Q1 than in Q4 2024, including a 58% lift in engagement with Uma-powered Proposal Writing as just one example. AI features have already had positive impacts across our platform, driving up volumes of proposals and bids, new client conversion, hiring rates, contract volumes, time to hire, time to start, and freelancer earnings. We are encouraged by the impact of these advancements in making Upwork the leading AI native work marketplace operating at scale. Our significant AI investments are paying off both organically and as we have put capital to work through tech and talent acquisitions that have accelerated our AI roadmap. In Q4, we've successfully integrated Objective AI's native search technology and team. As planned, this team is already injecting incremental innovation capacity into our business, contributing new capabilities in search and match that are showing promising effects on GSV. Upwork is well positioned to lead this AI revolution for our category, with clear advantages in the largest work dataset and scaled marketplace, the right talent and tech platform, and ample R&D investment. We have much more in store throughout 2025, including building more personalized AI-powered experiences for acquisition and onboarding that set up customers for immediate success, along with AI matching features that improve hiring efficiency and drive superior hiring outcomes. We made solid progress in Q1 on our strategies to unlock spend from larger clients. Upwork Business Plus, our new premium marketplace offering focused on larger clients, is performing well. Active clients on Business Plus more than doubled quarter over quarter, reflecting both net new additions and upgrades from our standard marketplace plan. Business Plus has become an attractive value proposition for new customers, with approximately 40% of active Business Plus clients being new customers. This is true without any significant paid marketing, a testament to the offering's value proposition meeting a clear client need. Taken together, Business Plus and Enterprise are delivering growth in GSV and revenue from large customers. With the first half of 2025 representing transitional quarters for enterprise, we are on track with our plan and making steady progress. As we mentioned last quarter, our enterprise strategy is evolving as we align our approach to access a greater share of traditional contingent staffing budgets, and we will share more on these developments on the enterprise front in coming quarters. The strength of our business is evident in record first quarter revenue, adjusted EBITDA, and adjusted EBITDA margin. Following our better than expected results in Q1 and our continued accelerated execution, we are reiterating our revenue guidance for the full year and increasing our adjusted EBITDA guidance range for 2025. We're excited about the massive opportunities ahead of us in AI, enterprise, and ads and monetization, along with the pace at which we are innovating and executing to realize those opportunities. 2025 will be a year where we continue our market share gains while growing profitability, free cash flow, and long-term shareholder value. We are confident we have the right model, talent, investments, and plan to deliver results in 2025 and to continue on the path for more meaningful top-line growth in the future. With that, I'll turn the call over to our CFO, Erica Gessert.

Thanks, Hayden. Upwork kicked off 2025 delivering a strong first quarter, driven by outperformance in our core marketplace. Our Q1 revenue of $192.7 million was a record for a first quarter. Our focused, disciplined approach to margin expansion was evident across our business, as our gross margin reached 78.3% and our adjusted EBITDA margin was our highest ever at 29%. We are firmly on track to achieve our five-year, 35% adjusted EBITDA margin target, and we are raising our full-year 2025 adjusted EBITDA guidance. While the macro environment remains turbulent, we continue to deliver, even after multiple quarters of macroeconomic pressures. First quarter GSV of $988 million was stronger than we expected coming into the year, and we're encouraged by some early signals from continued enhancements in search, match, and other key platform capabilities, which helped to drive some positive customer spend dynamics. Average GSV per active client increased 3% year-over-year, following multiple quarters of sequential growth, giving us confidence in the value that we are driving for customers. GSV per active client grew year-over-year in every client segment. This was driven by our large client segment in which GSV per active grew 11% year-over-year. While our active client count continues to experience some pressure, this is a cumulative effect of the top of funnel demand pressure our business and many others have been experiencing over the past year. To address the challenging demand environment, we have rebalanced our performance marketing spend to focus on higher LTV clients. So while total volume of active clients may be down year-over-year, we are attracting higher quality customers and contracts. Even with these adjustments, it's worth noting that in Q1 we saw client activations increase quarter-over-quarter for the first time in over a year. As a result of these dynamics, Q1 revenue grew 1% year-over-year, above our guidance for the quarter. This performance is particularly notable in the context of the unstable macro environment and the fact that we are lapping strong take-rate growth in Q1 of 2024. Enterprise revenue of $26.4 million was relatively flat year-over-year as we shifted our sales team's focus to the growth of Business Plus in the marketplace along with higher value, more strategic retained accounts. Managed services revenue grew 3% year-over-year to $15.3 million in the first quarter. We have made tremendous strides on our enterprise strategy over the past few quarters. And while we are in a transitional phase with the Enterprise business, we are more excited than ever about the Enterprise strategy at Upwork. Our marketplace take rate was 18.3% in Q1 2025, compared to 17.7% in the first quarter of 2024, driven by continued growth in our ads and monetization business. We expect relatively stable take rates throughout 2025. We continue to focus on introducing new and innovative ways to bring value to our customers, and we expect to launch new products and experiences that will drive meaningful take rate expansion in 2026 and beyond. Non-GAAP gross margin reached a record high of 78.3% as we continue to execute disciplined cost management across every part of our business. Non-GAAP operating expense was $98.1 million in the first quarter or 51% of revenue compared to 61% of revenue in the first quarter of 2024. Adjusted EBITDA was $56 million in the first quarter, leading to a record adjusted EBITDA margin of 29%. We reported GAAP net income of $37.7 million in the first quarter, a 105% increase over 2024, and a record for any first quarter in our company's history. Free cash flow for the first quarter was $30.8 million. In the quarter, we utilized $33.1 million in cash to buy back $2.3 million shares as part of our commitment to driving long-term shareholder value. Cash and cash equivalents were approximately $622 million at the end of the first quarter. Now turning to guidance. For the second quarter of 2025, we expect to produce revenue in the range of $184 million to $189 million. For adjusted EBITDA in the second quarter, we are guiding to a range of $45 million to $49 million, which represents an adjusted EBITDA margin of 25% at the midpoint. As we indicated last quarter, Q1 is expected to be the high water mark for margins in our business this year as we reinvest in the ample growth opportunities in front of us. As our first quarter results demonstrate, we are making strong and steady progress towards our 35% adjusted EBITDA margin goal, while investing in key growth levers, particularly enterprise and AI enablement strategies to reignite top-line growth in our business. For the full year 2025, we are reiterating our revenue guidance range of between $740 and $760 million. We remain confident in this guidance based on what we see today. Our excellent execution and improving customer dynamics offset the slight macro headwinds that weighed on our customer activity in the quarter and these dynamics are factored into our guidance. Looking further out, our pace of execution and our multiple growth levers give us confidence that we will resume revenue growth in 2026. As a result of our strong operational execution and business model, we are increasing our full-year adjusted EBITDA guidance to be in the range of $190 million to 200 million, or 26% adjusted EBITDA margin at the midpoint. This represents a 4 point margin expansion versus 2024. Our ability to meaningfully expand margins, even in a tough operating environment, reflects our commitment to profitability and shareholder value. We expect full-year 2025 non-GAAP diluted EPS to be between $1.05 and $1.10, up from our 2024 results. On stock-based compensation, we have been taking proactive steps to reduce our SBC expense, and these actions will have a lasting benefit on our recorded stock-based comp. Stock-based compensation is expected to be between $60 million and $65 million for the year. I'll briefly touch on our capital allocation strategy. We have $100 million buyback authorization in place, of which we had approximately $67 million remaining at the end of Q1. We intend to fully offset any dilution from stock-based compensation this year through stock repurchases. Beyond that, taking into account the current market environment, we intend to be opportunistic in deploying the remainder of the authorization. Before closing, I'd like to take a moment to acknowledge the unusual times we are all navigating through. It's in times like these that the strongest, most resilient businesses stand out from the field and ultimately emerge as winners. Our rapid pace of innovation, inherently profitable and high cash yield business, and cost optimization muscle will serve us incredibly well as we navigate through the next uncertain months and quarters. The opportunities for Upwork are tremendous and we are excited about the road ahead. Our team is executing better than ever, and I want to thank everyone at Upwork for your commitment to excellence and innovation. With that, we'd be happy to take your questions.

Thank you. Our first question comes from Eric Sheridan with Goldman Sachs. Your line is open.

Thank you so much for taking the questions. Maybe two if I could. The first one, just on the broader economy, the base case that you're assuming from this point through the end of the year in your broader guidance and whether we should be expecting there to be any sort of input changes either in client activity or client growth that are sort of at the base of what you're sort of guiding to or is it sort of taking what you know now and just sort of projecting it out, just we better understand that. And then on the AI product side, really exciting to hear the stats in the prepared remarks about how it's driving volumes inside the broader business. How do you think about AI being a driver of a mixture either of new client growth, volumes among clients, or pricing over time, just so we understand the monetization elements of AI in the business. Thanks so much.

We were really pleased with the customer spending trends we saw in Q1, primarily due to enhancements in our product. Improvements in search and matching, along with other platform upgrades through AI, contributed to a 3% increase in gross sales volume per active client. However, we did encounter some minor macroeconomic challenges that affected customer activity, especially at the beginning of the sales funnel during the quarter. The effects were minimal, but they did influence customer behavior slightly. Both the increasing customer spending and the ongoing macro headwinds are considered in our guidance.

I'll just add, Eric, that some of the observations we have from recent customer conversations really underscore the resilience of our platform in this uncertain time. What we're hearing from them is, they're feeling some degree of uncertainty in their day to day, but they still have truly mission-critical business needs that they need to get done, and they're getting done on Upwork. So one example client we spoke to this quarter, they're a global data engineering company. They needed a bench of talent Upwork including some domain experts with masters and PhDs to do a lot of AI model work across 20 languages for them. And they're continuing with that work. They're plowing ahead even though they recognize the uncertain environment. And I say this is pretty typical of what we're hearing across the platform. Getting to your second question around AI and some of the stats we shared. Our view is that there's two big thematics for our business related to AI, both of which are real catalysts. And we're starting to see that. The first one is around providing the world with this AI skill talent it needs. Companies like InterData finding the people they need here and that is a driver of both new client acquisition, it can drive up volumes in the platform and certainly we've seen already that AI-related work is commanding approximately a 40% premium in terms of freelancer earnings. So it really hits on all tiers and metrics you asked about. The other thematic, of course, is the one we mentioned around Uma and the work we're doing to make our platform fully AI-native. And this is where we're already seeing some of the evidence around these features actually impacting all of the things you asked about. We're seeing more volumes of proposals and bids, new client conversion, hiring rates, contract volumes, time to hire, time to start. All of these things are moving up. So again, we see that as we make Uma more of a fully functioning agent, that is going to really drive the flywheel of metrics for our business in both of these ways. So we're excited about the progress. It's still early, but there's a lot more coming out over this year as we invest in both our AI platform category and then also the platform itself in terms of Uma.

Great. Appreciate it.

One moment for our next question. Our next question comes from Bernie McTernan with Needham & Company. Your line is open.

Thank you for the opportunity to ask a question. I wanted to highlight the significant growth you are experiencing with larger customers, which is up 11% this quarter, and your increased marketing efforts aimed at higher lifetime value customers. Is this shift primarily influenced by market trends, or is it more about your revised goals for lifetime value? Hayden, your earlier remarks suggested that more large organizations are selecting Upwork, so I am curious whether this is a result of your strategic efforts or a change in the marketplace. Thank you.

Yeah, so what we've seen is this combination of efforts to unlock our spend from larger customers really is working. And that's where we saw that year-over-year growth in large customer spend in Q1 when we measured across both Enterprise and Business Plus. And this is part of our focus strategy that we began last year with the release of Business Plus and with some of the changes to our Enterprise area to really go after this larger customer segment in some new ways. So it's very consistent with that, that we're seeing these results. It's still early, and as I mentioned, the first two quarters of the year will be more traditional on the enterprise side. But we're really setting ourselves up for growth towards the end of the year and into 2026.

Understood. Thanks, Hayden.

Yes, thanks.

One moment for our next question. Our next question comes from Ron Josey with Citi. Your line is open.

Great, thanks for taking the question. Hayden, you mentioned on the call better search and recommendation product enhancements within the core, and that's helping to drive the flywheel. Talk to us a little bit more about what those enhancements were and the benefits there. And then, Erica, I think you mentioned a change in go-to-market, meaning something around search and client acquisition. We'd love to hear just the profile you're seeing as a result from this change in go-to-market. Thank you.

So Ron, what we saw on the search and recommendation side is some new features we released around semantic search, a new recommendation experience, as well as enhancements to our client dashboards. Some of these things launched at the end of Q4 and some launched throughout Q1, but all of them together are really driving our client metrics in a really positive way. And we have a lot more that's coming. We just integrated the objective team that we bought at the end of last year into our team and their technology is also getting integrated in. So there's going to be a lot more that we're launching in the search and recommendations area that I think is going to really benefit the business.

And maybe Ron to your second question. Our optimization of our performance marketing spend has been really effective in kind of channel experimentation and lifting our average LTV per client acquisition, but even more importantly, kind of in the underlying growth in GSV per active client on the platform, we see a lot of bright spots actually. Overall hourly rates have actually been relatively steady over the past few quarters, but where we've seen lift is in average hours per contract at 5% year-over-year, fixed price spend per contract at 12% year-over-year. And these are all related to all the customer experience improvements that we've been talking about, and in particular, the AI enablement of the platform.

Super helpful. Thank you.

One moment for our next question. Our next question comes from Andrew Boone with Citizens. Your line is open.

Thanks so much for taking the question. I want to go back to Business Plus. Given the fact that Business Plus is now seizing a little bit and you guys have more information, can you talk about the new clients that are coming on and kind of the evolution of what was that easier on-ramp to larger enterprises and what Business Plus is unlocking? And then Erica, sales and marketing had a multi-year low. Can you just talk about the cost guidance as it relates to 2025? I think Q1 was supposed to be the peak EBITDA margin quarter, but how do we think about potential investments or anything else that we should be thinking about for margins going forward? Thanks so much.

On the Business Plus side of things, what that's really unlocking is a bigger funnel of larger customers, both new that are coming into the platform for the first time and existing marketplace customers who are upgrading into this offering. And so, the customer feedback and the signs we're seeing already are super encouraging here that the strategy is working. We're seeing new customers in Business Plus really adopting the features that are part of that plan at high rates. So that includes things like access to our enterprise vetted talent, access to a special short listing capability, net 30 payment terms. So these things are driving customers to then have higher client conversion rates, from registration to job post and from registration to start, as well as higher average spend per client when you compare these clients to our standard marketplace customers. So we've got really good encouraging signs of product market fit for the plan, and we're continuing to invest and tune it over the course of this year.

Yes, this is Erica. Regarding your questions about margin cadence and our investment strategy, it's true that sales and marketing reached an all-time low in Q1. In Q4, we discussed optimizing the enterprise business by improving the costs of serving and acquiring customers through the Business Plus strategy, which is reflected in our results. We also recognize that Q1 will be the peak for margins this year, and we plan to reinvest. We see numerous growth opportunities within this business. Hayden mentioned in the prepared remarks that this is a transitional period for Enterprise, and we aim to reinvest to tap into the contingent labor total addressable market that we've been discussing. Additionally, we will continue to invest in the AI enablement of the platform from the R&D perspective. You can expect to see these investments in Q2 and Q3 this year. Historically, we've demonstrated our ability to invest in growth while achieving significant margin expansion, so we are optimistic about both aspects.

Thank you.

One moment for our next question. Our next question comes from Brad Erickson with RBC Capital Markets. Your line is open.

Yes, thanks. You talked again about the top of funnel pressure related to the macro and it's been consistent the last several quarters, which I think is kind of the hiring and staffing environment. Talk through kind of the puts and takes as AI maybe has sort of like unclear effects on a net basis on those hiring trends and how you think that might translate to your business, if you could. Thanks.

Yeah. So our active client number overall, we've talked a lot about the kind of top of funnel demand pressure that we've seen. Our active client number is a trailing 12-month number, so that encompasses a lot of all of the kind of pressures we've seen over the past four quarters. Now one thing to remember about our active client activations is that, more than 50% of them come from kind of broader organic or unpaid channels. So that's where we're really seeing the macro forces play in. I don't think we see any kind of focused impact from AI, either positive or negative. Overall, we see AI as an ongoing tailwind for our business given the growth of that category.

Yes, Brad, that's really evidence of the 25% year-over-year growth we saw in GSV from AI-related work, and so we continue to see the positive opportunity here is much more substantial than any risk. We've really seen no change in terms of AI-related degradation of any kind of works or project types over the last quarter. We're really just looking at the opportunity here, which is quite formidable.

Got it, and then maybe just to follow up, if I could, a broader question with the tariffs. I recognize the lack of exposure here. But you talk with your customers, everyone's kind of in the same boat of uncertainty, but talk about your client conversations where maybe there is exposure and I don't know, just anything sound different say with your smaller clients versus your larger clients. Just kind of if you're hearing any divergent views between those groups? Thanks.

Sure. When we talk to customers, I wouldn't say there's any one answer, partly because we serve such a heterogeneous range of customers and across so many different work categories. But a few of the thematics are, while the uncertainty is there for a lot of customers, many of them, the worst thing to do, they haven't changed their decision making around investing in the work on our platform. They're continuing because they have critical things they need to get accomplished, and the uncertainty in the environment isn't really getting in the way of that. Now of course, things can change if the economy worsens substantially but right now what we've really seen is people hanging in there, continuing to spend, continuing to do the work they need to, a slight headwind at the top of our funnel. But that's consistent with the commentary we hear from customers, which is that the work they're doing with us is essential.

That's great. Thanks.

One moment for our next question. Our next question comes from Brent Thill with Jefferies. Your line is open.

Hi, thank you. This is John Byun for Brent Thill. Maybe one more around the macro side of things. You mentioned there's no direct exposure from tariffs and so on. But I wanted to see if you can talk about maybe indirect or second-order exposure in the public sector, whether fed or state and local, in terms of where the clients are doing their prices. I don't know if you have that sort of visibility. And then you alluded to some high impact features to launch in Q2. I don't know if you can go into a little bit more detail. Thank you.

Maybe, John, I'll take the question on the macro. We really don't see any impacts from kind of the public sector job releases and in general, as Hayden already articulated, I think, you know, we haven't seen any impact from any of the recent tariff announcements on customer behavior whatsoever.

Yeah. And I'd say, you know, underscoring the fact that our exposure, I think, is in a good spot. You know, we have 131 categories of work that we're active in the past quarter, and 58 of those had $1 million of GSV or more flowing through them. And so, again, I think this is just where the diversity of the work happening, the diversity of our client base is a really positive thing around the resilience of our business. In terms of the high-impact features that are launching in Q2, we're going to be doing a lot more in the search and recommendations area, building on the tech and the talent that we brought in last year with the objective team. We're also going to be investing a lot in our Uma AI agent, really evolving Uma from being able to do specific tasks like evaluate your candidates or help you draft a proposal to being an end-to-end full-service companion that can really help customers, both clients and talent, across the entire workflow. And that is from hiring all the way through project management and work delivery. So there's going to be a lot more coming out over both Q2 and the rest of the year as we enhance Uma and bring those capabilities into the hands of our customers.

Thank you. One moment for our next question. Our next question comes from Rohit Kulkarni with the ROTH Capital Partners. Your line is open.

Hey, thanks. AI high-level question. I guess it's been a few quarters you've disclosed how AI-related GSV is going faster. And so perhaps at what point or at what scale do you think AI would be big enough for the overall GSV to start growing again? Maybe how far out in the future do you think that scale you could reach? And then I have a couple of follow ups on take rate and EBITDA.

Sure, so our expectation is that we do see re-acceleration of GSV growth next year. And that's going to come through from a combination of the AI-related investments we're making, as well as the work we're doing in the enterprise area and on specifically driving the revenue side of the equation. So this is not a far-out prediction for us. This is something we can see and have line of sight to in 2026. And our confidence is really underscored by both the early metrics we're seeing from Uma related features that we've launched on the one hand, and then the other side of the AI strategy, the growth that as you point out, we continue to see from AI related work. They're growing 25% in the quarter. Some categories like prompt engineering grew 52% year-over-year. I'd also note that we are seeing no incremental disruption at all, no disruption at all from legal and design creative categories that people are all saying should be disrupted. We're actually seeing growth in those areas. And the work is becoming more complex, more valuable, really tapping into the specialized nature of the experts on the platform. So this is exciting for us as we think about growing from both AI-related areas as well as the broader ecosystem that we host.

Okay, and then maybe actually a macro question on the Enterprise side of things. Any call out or any change in visibility or the way deals are getting closed or the way large enterprises are making decisions at the same velocity or not over the last, call it, six to eight weeks?

I wouldn't say we've seen any notable changes in the last six to eight weeks. We did see overall in the platform some slower trends from the beginning of the year, but nothing has really changed on the enterprise side specifically. It's always a little bit of a large sales cycle. That hasn't changed. I think if anything, Business Plus is helping us open up more large customers faster. So that's an accelerant for us right now, but no other real changes.

Thank you. Erica, could you explain the reasoning behind the take rate outlook you've provided? Although it remains unchanged from before, one might typically expect a natural upward trend, so I'd like to discuss that further.

Sure. The increase in take rate we observed in the first quarter is mainly driven by strong growth in Asset Monetization. Revenue from Asset Monetization in Q1 rose by 23%, marking our highest revenue quarter to date. We have also made significant strides in 2024 to enhance our take rate, allowing us some flexibility in 2025 to experiment with our take rate strategies for more substantial growth in 2026. Therefore, you can anticipate a relatively stable take rate for the remainder of this year as we prepare for that work.

Okay. Thank you, both.

One moment for our next question. Our next question comes from Matt Shidler with Scotiabank. Your line is open.

Yes, thank you. I have a question mainly for Erica. In reviewing your guidance, I noticed that you indicated this would be the peak for your EBITDA. However, considering that you performed about $8 million above the midpoint of your guidance this quarter, and that you've raised your full-year estimate by around $10 million, while also increasing your stock-based compensation yet not raising EBITDA for the second half of the year and maintaining revenue estimates, is this a cautious approach or do you have specific investments planned that will significantly impact areas like sales and marketing in the coming quarters?

I believe we have been appropriately cautious with our guidance, but this mainly reflects our strategy to invest in the significant growth opportunities available for our business. We are already witnessing the benefits from our investments in Uma, and we plan to continue expanding our enterprise business and investing in that area. There's a lot ahead for us, but our guidance accounts for both our better-than-expected performance and some of the incremental cost optimization we implemented in the first quarter, which we are carrying into the remainder of the year. Overall, we have a balanced outlook.

Okay. And then just secondly, probably for Hayden, can you help me understand the impact of the current macroeconomic situation on contract labor, especially in relation to white-collar positions, which is where your focus is? I know that this sector has already been affected following COVID and during a prolonged white-collar recession. If the unemployment rate rises or a recession occurs, what are the typical effects on contract or contingent labor in your industry?

Sure. So as you kind of referenced, we have seen two years now of suppressed demand overall because of interest rates and inflation that have really been prompting customers to be more conservative to spend, to hold off on certain types of work, et cetera. And that's obviously impacted not just our business but the broader contingent staffing space overall. And we've done better than others. Now, if unemployment spikes, there's kind of puts and takes on that for us. On the one hand, depending on the conditions in the broader economy, like interest rates, we could see customers continue to be cautious or even more cautious with spend on our platform because they're being conservative and just holding off on deploying capital or random labor. On the other hand, we've also seen in certain environments that are transitional or kind of suppressed from a broader macro that some customers prefer spending more in contingent staffing because they don't want to commit to long-term full-time employees. And so, it's likely that we see a mix of those things if the economy gets a lot worse. It's impossible to say right now what that mix would look like. But I do think it's a positive that even with the uncertainty, that's really shown up over the past four months of this year, our platform is doing great. We are not seeing changes in spend other than some lighter top of funnel from the beginning of the year, but nothing new even in the last couple of weeks since some of the April announcements from the government. So I think we're in a good spot based on everything we know now.

Okay, thank you.

One moment for our next question. Our next question comes from Marvin Fong with BTIG. Your line is open.

Great. Good evening. Thanks for taking my questions. Maybe just to start, I think we've covered a lot of ground here. But on Uma, you've cited numerous benefits and other specific examples. I was just wondering at a higher level, have you done any work trying to quantify how much benefit Uma has had in terms of GSV growth? Is there any sort of single percentage impact that you could help us think through how much so far Uma has benefited the company? And then the second question, I think you've said on the tariff question and the macro, I mean, you have noticed top of funnel some slight weakening, I think you characterized it as, but you also have said no impact from the public sector, no significant impact from tariffs. So I'd just like to kind of square all those statements together. I mean, what would you attribute like the slight weakness at the top of funnel that'd be great. Thanks.

Marvin, on the Uma side of things, some of those early indicators that I shared around increasing volume of proposals, lift in hiring rates, incremental earnings, those are definitely translating into GSV gains. And that's something we have internally quantified and factored into our current guidance. And it's certainly a small contributor also to our Q1 overperformance on GSV. So we feel good about what that's doing. It's not just driving our funnel, but it is driving real spend behaviors. And that's also why we have confidence that as we continue executing our Uma roadmap, this will be a contributor to GSV acceleration in 2026.

To clarify, Marvin, the comments regarding the macro situation refer specifically to a phenomenon that occurred in Q1. This was evident before any federal government announcements. We did notice a slight increase in some of the demand metrics during Q1, but overall, it has affected our business. However, I want to emphasize that when the tariffs were introduced in April, we did not observe any additional impact.

And I'm not showing any further questions at this time. And as such, this does conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.