Ladies and gentlemen, thank you for standing by and welcome to Upwork first quarter 2020 earnings conference call. At this time, all participants lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded.

[Operator Instructions]. I would now like to hand the conference over to your speaker today, Ms. Denise Garcia, Investor Relations. Please go ahead, ma'am..

Welcome to Upwork's discussion of its first quarter 2020 financial results. Leading the discussion today are Hayden Brown, Upwork's President and Chief Executive Officer and Brian Kinion, Upwork's Chief Financial Officer. Following management's prepared remarks, we will be happy to take your questions.

But first, let me review the Safe Harbor statement. During this call, we may make statements related to our business that are forward-looking statements under the federal securities laws. 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 the COVID-19 pandemic on our business and actions we have taken in response to the COVID-19 pandemic are forward-looking statements and related to matters beyond our control and are changing rapidly.

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 press release.

Additional information will also be set forth in our Quarterly Report on Form 10-Q for the three months ended March 31, 2020 when filed. In addition, reference will be made to non-GAAP financial measures.

Information regarding reconciliation of non-GAAP to GAAP measures can be found in the press release that was issued this afternoon on our Investor Relations website at investors.upwork.com. As always, reported figures are rounded, unless otherwise noted, comparisons of the first quarter of 2020 are to the first quarter of 2019.

All measures are GAAP unless cited as non-GAAP. Please note that, consistent with recent SEC guidance, today we will be disclosing more current and detailed information regarding our operating results and financial condition in order to provide insight into the impact of the COVID-19 pandemic on our business.

We do not currently plan to provide these types of disclosures in future earnings calls. The prepared remarks corresponding to the information reviewed on today's conference call will also be available on our Investor Relations website, shortly after the call has concluded. Now I will turn the call over to Hayden..

First, a planet blanketed by high-speed internet access, offering the potential to connect people across the globe like never before. Second, better and better collaboration tools, making remote work increasingly comparable to being face-to-face.

Third, shifting sands in the labor force, in which people increasingly demand to work differently, seeking freedom from the traditional nine-to-five workplace and greater autonomy in when and for whom they work.

And fourth, an increasing war for talent, with companies running out of options for how to attract and retain the types of workers they need to be competitive. In the last eight weeks, two of these trends have accelerated at an astonishing pace. Remote work has gone mainstream and the genie is not going back in the bottle.

A recent Gartner CFO study found that 74% of companies plan to permanently shift to more remote work after the current crisis passes.

Additionally, working from home has opened many more workers' eyes to the benefits of remote work, A recent Citrix poll found that 28% of people who moved to work remotely during this crisis plan to seek out a job that lets them work remotely after the crisis passes.

Upwork was built to help companies excel in the very conditions that businesses are finding themselves in today, a world in which companies of all sizes are comfortable with a portion of their workforce being remote and a time when companies recognize the strategic value of greater flexibility in how, when and at what cost the talent is engaged.

We believe these two values, embracing remote talent and placing a premium on workforce agility and efficiency, will be hallmarks of the new normal that emerges from the current crisis. We are staying focused on serving our customers through this difficult time and setting our business up to support them as a new normal is established.

First and foremost, we are regularly providing our clients and highly-skilled independent professionals with the information, resources and tools to help them adapt quickly. I want to share a few examples of the steps we have taken in the last eight weeks to meet the emerging needs of our customers.

We launched a Remote Work Resource Center with best practices for how to build and manage a remote workforce. We began a series of training webinars for our customers. And together with Udacity, we developed a Managing Remote Teams online course. Our team moved quickly to address the critical needs of freelancers.

We were a founding partner of the Freelancers Relief Fund, which assists independent workers experiencing financial hardship as a result of the pandemic. We mobilized to offer our Top Rated freelancers faster access to their funds, accelerating their hourly contract payments by 50%.

We also launched a new product called Direct Contracts, which enables freelancers to receive the payments protection of our escrow service for fixed-price engagements outside of the Upwork marketplace.

Finally, we have seen unprecedented influxes of new talent to our platform and are streamlining our talent onboarding experience to better identify the most qualified professionals possessing the most in-demand skills to fast-track them to open opportunities.

The most important way we can help our freelancer community through this difficult time is by bringing them more work. Last week we debuted our Work Together Talent Grants program, which offers $1 million in grants for companies that hire independent professionals on Upwork to work on COVID-19-related projects.

We also launched a curated set of job templates to help clients identify and immediately act on their crisis response and business continuity needs they have. Speaking of these needs, I would like to briefly provide some color on how our clients have been looking to Upwork for critical help during this crisis.

We have received requests from multiple clients for help reviewing and analyzing which of their open staff augmentation roles they can source via remote workers.

We are working with a large, U.S.-based multinational corporation to deliver on projects that are typically completed by contingent and statement of work providers and are creating a talent pipeline in case employees or current contractors cannot work due to the crisis.

For another European-based enterprise client, we identified roles across software development, DevOps, finance, accounting and HR that could move to Upwork, supported by our employer of record services. Another area of activity is urgent project-based work.

A small tech non-profit turned to Upwork for the user experience design, translation and marketing talent they needed to rapidly launch a COVID-19 resource center. Another small business client, a commercial lender, turned to Upwork to grow its customer service team to meet increased customer demand due to the COVID-19 crisis.

Larger clients are also coming to Upwork for large, project-based work. The training and enablement teams of a multinational cybersecurity company used Upwork to source instructional designers and e-learning developers to create new training materials for their customers and internal teams.

A sports marketing agency is hiring highly-skilled independent professionals on Upwork with expertise in software development, quality assurance testing, user experience design, graphics and animation as they develop entirely new products offering augmented reality experiences and gamification programs.

We also heard from clients asking to move their non-Upwork contractors and agencies to our platform to take advantage of our global payroll and work protection products, which enable businesses to classify and pay independent professionals compliantly in 160 countries.

These customers wanted the unified billing, enhanced visibility and reporting, strong spend control and worker classification peace of mind offered by our platform. One client, a global electronics conglomerate, was faced with the sudden inability to relocate a pool of newly-hired international team members to a U.S.

office due to COVID-19 border restrictions. Instead of having to cancel this program and rescind these team members' offers, they were able to onboard these employees onto our remote talent infrastructure ensuring continuity of the program.

It is truly humbling to see the human ingenuity and creativity revealed on our platform as businesses nimbly adapt to the current challenges. Now, I would like to transition into discussing the performance of our business, including the impact of the pandemic.

Our first quarter revenue was strong, $83.2 million, representing 21% year-over-year growth and exceeding the high end of our guidance range. The pandemic started to impact our platform during the second week of March.

For two weeks, we saw a deceleration in clients initiating new work, which we believe was a symptom of companies entering a triage phase as they pivoted focus in response to the crisis and the impending shelter in place orders. By the fourth week of March, this client activity started to rebound and accelerate week-over-week.

In early to mid-April, we began to surpass pre-crisis levels on numerous client activity metrics and momentum has continued to build. In the last week, for example, we broke our own records by a significant margin on leading indicators such as client registrations and new job posts.

While it's still early in these trends, we are optimistic that these leading indicators of future spend will translate, as they typically do, into GSV and revenue.

These signals indicate companies have shifted from the triage phase in March to a transition phase in April, as they are now focused on getting work done in new ways as they navigate the opportunities and constraints this crisis has created. That said, significant, unpredictable macroeconomic risks will continue to persist throughout 2020 and beyond.

The biggest unknown for our business this year is how well our existing small and mid-sized business customers will fare, since these businesses comprise a majority of our GSV. So far, these businesses appear to be weathering the pandemic well.

We observed average weekly GSV from small and mid-sized clients decrease 3% starting in the week of March 9 and lasting through early April, compared to the average levels seen earlier in the quarter.

This relatively muted impact may be due to our clients' industry mix, with approximately one-third of our GSV generated by clients in industries classified by a Goldman Sachs research report as Low Exposure to recession risk.

Another one-third of our clients' industries are classified as Moderate Exposure and only 1% as High Exposure with the remainder having an unspecified industry.

Further, our own analysis of changes in demand that we saw as the crisis hit in March suggests that approximately half of the GSV on our platform comes from categories of work that are Essential to our clients' businesses and an additional one-third is from categories that are Somewhat Essential.

This leads us to believe that the large majority of work being performed on the Upwork platform will endure as long as these clients are still in business.

I want to emphasize that the data, analyses and perspectives shared today are recent and may be subject to change given the unpredictable and volatile nature of the pandemic and its ongoing impact. Personally, I am concerned about the pace at which we as a global community will emerge from the shadow of this pandemic.

However, I continue to believe in the resiliency of our business and our customers and am confident in the positive impact we will see over time as a result of the hard work we are doing now to ensure current and prospective customers understand the strategic advantage of embracing Upwork in a significant and sustaining way.

Against that backdrop, I will provide an update on our focus areas for Q2. On our last call, I shared our three-pronged growth strategy for 2020, which is our plan for achieving and sustaining a 20% plus annual revenue growth rate in the years to come.

While the global economic climate has changed dramatically since the beginning of the year, I continue to believe this goal is achievable and that these three pillars are as critical to delivering growth now as they were a quarter ago.

The first goal, to attract more and bigger clients, has been at the forefront as we aim to close the perception versus reality gap that we face. Too many prospective clients have either never heard of Upwork or wrongly believe that we are only a site for small gig work.

In Q1, we saw significant traction on this goal with our year-over-year brand awareness among prospects increasing 70%, accompanied by increasing strength in the volume of high-value job posts in our marketplace.

This quarter, we are retooling our sales assets and talk tracks to speak to our target clients' needs at the current moment and are launching new solution-focused landing pages that showcase the ways companies can leverage independent professionals immediately for their most pressing needs.

We are also encouraged by progress on our second growth goal, enabling more spend per client. In Q1, even through the pandemic onset, we substantially grew the number of users per enterprise account, increased the number of accounts spending $1 million or more and exceeded our goal for GSV per contract every single week of the quarter.

We continued to improve our secure authentication options for businesses of all sizes, including enhanced single sign-on capabilities that streamline user onboarding in corporate accounts and we began engineering work on a roadmap of enhancements for our employer of record service.

We continue to invest to ensure this solution is truly unparalleled in enabling clients to work with highly distributed, flexible teams around the globe.

And our third goal, to make more high-quality matches, has been a particular focus as we make the most of the massive influx of new talent we have seen since the start of the pandemic as well as the heightened activity levels from existing freelancers on our site.

Our ability to precisely categorize highly-skilled independent professionals and jobs and match them at scale is more important than ever.

And we made a number of positive changes in Q1, including modifications to our connects program - the virtual tokens used to submit proposals for jobs, as well as changes to our search and matching system that have contributed to pushing our fill rate up.

In Q2, we are focused on key enhancements to our search and match capabilities, as well as rolling out easier access to pre-vetted talent that is ready to work for our business and enterprise clients. Now, I would like to take a minute to talk about how we are managing expenses during this time of uncertainty.

We have trimmed spending in areas such as T&E and ancillary office-related expenses and we have stepped up our cost management efforts across the board. This includes re-evaluating vendor and headcount spend, although we are continuing to hire for roles that support our growth priorities.

We saw some sales productivity softness in Q1 as a result of the pandemic's immediate impact on larger companies' general willingness to sign new contracts. Consequently, we have paused further sales hiring and are adapting our sales approach to better address clients' most top of mind concerns.

We continue to have confidence in the economics of our sales model and the imperative of serving larger clients, as evidenced by the sales team achieving close to full Q1 quota, despite the challenges in March. We will re-initiate sales team hiring once we see more predictable economic activity from larger clients during this crisis.

Given our strong balance sheet and relevant value proposition, we are redeploying these cost savings and incrementally investing to take advantage of this unprecedented moment to reach and serve customers like never before.

On the marketing side, we see a unique opportunity to drive higher performance from both direct and brand advertising, given the stronger appetite for more remote-friendly and flexible solutions from customers right now.

And on the R&D side, we are continuing to invest in product innovations that will drive growth both this year and in the years ahead.

I am confident that the steps we are taking today by investing in serving our customers in critical ways are moving us towards a sustainable 20% plus revenue growth rate in the future, with the goal of fully unlocking our $560 billion market opportunity.

I would like to thank our teams for their around-the-clock work during this unprecedented time, our customers for their continued loyalty and trust and our investors for seeing the future that we see, a future with greater talent access for businesses, as organizations unshackle themselves from outdated location-based constraints that have governed with whom and how they work.

A future with greater freedom for workers, as they trade in painful commutes and pointless FaceTime requirements in exchange for greater autonomy and job satisfaction. And a future with greater productivity in our economy, as businesses integrate the powerful advantages that modern capabilities and tools, including Upwork, can deliver.

Now I will turn the call over to Brian before we open the call to your questions..

Thank you Hayden and good afternoon everyone. I would like to start with a brief update on our first quarter financial results and share thoughts regarding our outlook before opening the call to your questions. GSV, which includes both client spend and additional fees we charge for other value-added services, was $559.5 million in the first quarter.

Core clients increased by approximately 4,000 in the first quarter to approximately 129,000. Core clients increased in line with our expectations, given our current emphasis on not just adding new accounts, but expanding our footprint within existing accounts.

Client spend retention was 102% as of March 31, 2020, steady with where this metric was in Q4. Revenue increased by 21% year-over-year to $83.2 million in the first quarter, exceeding the high-end of our guidance range of $82.5 million. We estimate that our Q1 revenue year-over-year growth rate was reduced by approximately 1% by the COVID-19 pandemic.

Marketplace revenue increased by 24% year-over-year to $74.8 million in the first quarter, representing 90% of our total revenue. Managed services revenue increased as expected, growing 5% in the first quarter to $8.4 million. Our overall take rate in the first quarter was 14.9%, up from 14.1% in the year prior.

Our marketplace take rate improved to 13.6% in Q1 compared to 12.6% in the year prior.

This improvement was primarily from several changes we made after the first quarter of last year, including the adoption of new paid client subscription plans, changes to connects, which are the virtual tokens that allow independent professionals to bid on projects on our platform and the increase in client payment fees for Upwork Basic and Plus from 2.75% to 3%.

Non-GAAP gross profit was $59.9 million, representing 72% of revenue, compared with 69% in the first quarter of 2019. The increase was primarily due to the growth in marketplace revenue and improvements in the management of our cloud computing costs. Turning to operating expenses.

In February 2020 prior to the COVID-19 pandemic, we made significant organizational changes to streamline the delivery of our end-to-end customer experiences that resulted in a onetime charge of $1.6 million.

Our operating expenses will increase in absolute dollars but fluctuate as a percentage of revenue from period-to-period as we continue to invest for growth. Non-GAAP sales and marketing expenses were $29.8 million in the first quarter, representing 36% of total revenue as compared to 29% in the year prior.

The year-over-year increase was driven by the buildout of our direct sales team through the back half of 2019 and by increased marketing investments including our brand campaign.

In the second quarter, we expect to spend an additional $3 million to $5 million above what we typically spend, as we are focused on driving both brand awareness and performance marketing given the market's increased appetite for remote-friendly and flexible workforce solutions.

Non-GAAP R&D expenses were $17.4 million, representing 21% of total revenue as compared to 21% in the first quarter of 2019. We continue to invest in product innovation as a core part of our growth strategy. Lastly, non-GAAP G&A expenses were $14.5 million, representing 17% of total revenue compared to 18% in the first quarter of 2019.

Transaction losses were $0.9 million in the first quarter, representing approximately 1% of total revenue. Our typical range has been between 1% and 2% of revenue.

We expect transaction losses will return to the high-end of the typical range during the COVID-19 pandemic, due to changes in clients' ability to pay and due to our move to pay top-rated freelancers faster. Non-GAAP net loss was $3.6 million in the first quarter of 2020, compared to non-GAAP net income of $0.1 million in the first quarter of 2019.

Our basic and diluted non-GAAP net loss per share was $0.03 in the first quarter of 2020 compared to breakeven in the first quarter of 2019. Adjusted EBITDA loss was $1 million in the first quarter compared to adjusted EBITDA of $0.8 million in the first quarter of 2019. Now, I would like to share thoughts regarding our outlook.

Given the rapidly evolving and unpredictable environment and the combination of both tailwinds and headwinds that we can contemplate impacting our revenue performance in the next few quarters, we are withdrawing our annual revenue guidance. We are however providing guidance for the second quarter of 2020.

We expect revenue to be in the range of $79 million to $81 million. This anticipates the effect of the aforementioned March slowdown in client activity, which will impact our business in the second quarter as weaker new activity in March translates into less associated recurring revenue going forward.

Our approach regarding guidance on EBITDA and our focus on investing for growth versus profitability this year has not changed.

At this time, we do not expect EBITDA to be positive in 2020 as we remain bullish on our business opportunities and plan to continue funding both near term and long term growth initiatives while closely monitoring our performance to achieve our ROI thresholds.

We will continue to manage costs with discipline while preserving our cash and maintaining our strong balance sheet, which includes cash and marketable securities of over $145 million at the end of the first quarter.

While there are many unknowns about the future of this pandemic and its macroeconomic effects, we remain optimistic about the outlook for our business given the secular trends that are being cemented today.

Upwork's business model is durable to a variety of potential impacts and we are executing on a plan that will allow us to exit the current crisis stronger than before.

While we are buoyed by the speed and strength of the resurgence in activity we have seen on our platform in recent weeks, we are also taking measures to ensure we are prepared for whatever the future holds.

Our ongoing scenario planning anticipates a range of economic outcomes and these plans give us confidence that we have ample cash runway even in the event of years of macroeconomic hardship.

We are committed to providing regular investor updates and plan to participate in virtual investor conferences and alternative meetings as much as possible, despite the challenging macroeconomic environment. We will now take your questions..

[Operator Instructions]. And we have a question from Marvin Fong with BTIG. Your line is open..

Good afternoon. Thank you for taking my questions. I thought I would start with just elaborating on the adjustment you are making advertise or performance marketing and brand awareness advertising.

If you could just kind of talk about the ROI that this new environment is, how much better the ROI is with regards to performance marketing, that would interesting to know? And then also, are you able to calculate and ROI on your brand awareness spending as well? Thanks. And I have a follow-up..

Marvin, thanks for the question. We think that this is really a once in a generational moment for us in terms of building our brand awareness and that's one of the reasons we are moving to really shore up all of our channels and make sure that we are full force sending the message to customers about how relevant our solution is at this very moment.

In terms of the ROI on performance marketing, we have seen actually similar ROI our over the last couple months and weeks as we have seen historically. So the performance marketing spend has been returning similar results to what we have seen in the past in that scenario where we continue to invest where we see opportunities.

On the brand side, we are trying to closes this perception versus reality gap that I think exists in the market and are fortified by the fact that the brand investments we have made in 2019, heading into this year already resulted in a 70% increase in brand awareness amongst our target market place buyers.

So I think there are great signs that the brand work we are doing is driving the results that we are looking for.

And we are increasingly focused on measuring as well conversion around users deeper into the funnel, although, as you know, with brand spending, some of those attributions are always a little bit less direct than what we have on the performance side.

But stepping back, I think this is really a time where we feel the interest and relevancy of our message is at an all-time high and we have taken measures in Q1 to really retool a lot of our marketing assets to speak to customers at this very moment around things that are most top of mind for them.

And so that's where we think now we are prepared with some of the really relevant messaging that can help them understand why we are relevant and really lower the barriers to them starting out and trialing our offering..

And I would add, the other thing that we have been doing is targeting in where and how we think about the marketing channels. So no longer doing outdoor and coming back on radio and really focusing on the right channels in this environment.

Again, measuring that ROI threshold and making sure we get pay for performance advertising, where we see strong economics. The other thing I would add is, as part of this investment in Q2 is this being very thoughtful around deploying some of this related to the working together talent grant program where we allocated $1 million.

We felt it was the right thing to do. It enables us to both get new and existing customers experience Upwork in new ways, while supporting our community of independent professionals and will result in some really powerful stories that bring our solution and network of professionals to life..

Terrific. Thanks for that, Hayden and Brian. And my follow-up question, it was very encouraging to hear about the leading metric indicators. And I understand that second quarter revenue guidance was impacted by what happened in March and I guess in April as well.

So if you could just kind of help me square that in the sense, perhaps you could just kind of add more color to the run rate that we are kind of operating now through April into this first half of May.

You seem to indicate that the run rate is above the $83 million from first quarter since that, correct me if I am wrong, was your highest revenue quarter so far in your history. So just kind of help me square those two comments you made. Thanks..

There is definitely still a number questions, Marvin, in terms of how quickly and how aggressively the really strong leading indicators that we have been seeing in the last few weeks will translate into GSV and revenue.

So what we did with this quarter's forecast is, we really looked at a number of different scenarios and have been planning around the various outcomes that we anticipate, both based on some of the tailwinds we have been seeing in the last few weeks as well as a number of things that could happen in a more macro environment to the business.

And so we basically came up with a balanced approach where we have baked in some of the continued headwinds for March continuing with our SMBs as their activity may still be dampened in areas where they are still facing uncertainty, deciding how to spend, are facing challenges because of their business model.

But also, that impact we think will continue to muted barring much worse things happening in the macro environment. So that's factored into the Q2 forecast.

And we also have a little bit of upside factored in due to the tailwinds that we have been seeing in the last few weeks, but anticipate that that may not materialize in a significant way until late in the quarter or the following quarter, just given the pacing at which this type of activity, the timing it takes to kind of translate into GSV and revenue.

So we have tried balance some of those different factors with this forecast..

Terrific. Thanks for that color and I am glad everyone's healthy and safe and I hope that remains the case. Thank you..

Same to you. Thanks..

Thank you. Our next question comes from Jian Li with RBC Capital Markets. Your line is open..

Great. Thank you. This is Jian, for Mark Mahaney. So maybe just a couple of questions here. One on just double-clicking on the improvement in take rate.

Wondering if you can highlight where you are seeing the most improvement in? Is it just from new subscriptions uptake? Or the adjustments you made in connects? And is this a metric that you think has stabilized? Or do you think there is still room to grow in the next few quarters? And then I have a follow-up. Thank you..

Thanks. The improvement in Q1 was related to the adoption of paid client subscription plans we launched last year in lat Q1, early Q2.

And then there is the changes in connects as well that we had introduced last year and we started to kind of rollback a little bit of that in the late part of Q1 and into Q2 which is going to be a little bit of a headwind for the rest of the year, as we talked about on the last call.

And then the increase in the client payment fee that we also introduced last year was 2.75%. We move that to 3% last year. So this is a high watermark for us on the take rate for quite a while here. We expect it to come down in Q2 with the connects changes we mentioned before and remain in line with the rest of the year..

Great. Thank you. And also just if you can share any color on around client spend retention? Retention rate has been stable versus last quarter. But wondering if you are seeing different trends in the SMB retention versus enterprise, especially I think historically enterprise has higher retention rate.

Just wondering if that trend has been increasing, either before or after the COVID outbreak? Thank you..

We feel really good about where client spend retention netted out in the past quarters, staying stable at 1% or 2%. And I would say, between SMB and mid-market, it's slightly different performance. We mentioned in our remarks that small and midsize businesses did see a softening of GSV by about 3%.

We did see an uptick on the mid-market and larger customers. So that was slightly offsetting that trend. And I would say, in general for this metric, it's still really early innings for us anticipate where it might go with COVID specifically, it looks really solid.

Again, the trends we are seeing in terms of our existing cohort of customers are really strong, but there is some unforeseen bumpiness that could come out of the macro economic conditions it doesn't exist. And since this is trailing 12-month metric, it may take a while for those things to flow-through the metric.

But so far, it's looking really positive..

Great. Thank you..

Thank you. And we have a question from Ron Josey with JMP Securities..

[indiscernible] some increased demand for freelancer services and as unemployment increases, do you see some of these organizations more permanently shifting to freelancers? And then number two, can you highlight any vertical, like creative and design or technical that are seeing higher or lower demand or performing better or worse? Thank you..

Pardon me.

Ron, can you repeat your question?.

Sorry. I think my line cut out while Ron was asking the first part of his question.

Ron, can you repeat the question related to, I think you were asking about freelancing becoming a more prominent fixture for larger companies?.

Yes. Sorry. This is David for Ron. You talked about seeing some increased demand for freelancer services in your prepared remarks.

And I am wondering if you can see some of this demand being more permanent as unemployment increases?.

Absolutely.

I think that that's a lot of the conversations that we are having with customers and certainly as we are looking at a lot of the data from folks like Gartner, PwC and others who are talking to many CFOs and CEOs in the landscape who are saying these trends around remote work and having a more flexible workforce are things that are more important to companies now than ever before.

And we do expect that as companies place a higher premium on having flexibility in their workforce models, right now they are scrambling to figure out how to create more of that flexibility overnight and I think will be realizing that that flexibility is something that will serve them well even after this crisis passes because it let's them be much more dynamic in adapting to the variety of business challenges and opportunities that they face even outside of a crisis.

So we do anticipate that more dynamic and flexible models will be the rule of the road going forward. I think our model is particularly interesting because we provide not just freelancing talent and IC compliance, but also we have an employer of record and payrolling solution.

So we are also having a lot of customer conversations right now where companies are looking at moving their distributed workforce that takes a lot of forms onto our platform to take advantage of both the IC talent capabilities we have as well as global payroll and compliance.

And I think those are the types of things that more companies will be doing once they start seeing the opportunities during the crisis, it will become part of their new normal way of operating after the crisis passes..

The only thing I think I would add to the financial services, which Hayden mentioned was we created this new offering called direct contracts which is a service for freelancers that aren't on the platform to bring their work to the platform so they get the payments protection of Upwork's escrow service.

So hopefully, that will bring more freelancers that aren't working necessarily on the platform and bring them more onto our platform as well as more of as their existing business as well which will help us grow as well..

Your second question about some of the trends we are seeing around used cases right now. I think there is a lot of incredible activity happening and I can characterize a few broad themes that we are seeing.

So the first one is around customers looking for IT and superstructure skills for digital transformations and digital tools that are implementing and really all of the digital pieces of their business continuity planning and execution right now.

And so customers coming to look for freelancers who can help with deployments around websites that they are building for the first time. We have had customers looking to build COVID-19 app tracking mechanisms or new digital storefronts that they are moving from brick-and-mortar to online.

So there is a lot of activity around kind of IT and infrastructure support. The second big theme that we are seeing is around marketing and content. So as you might imagine, so many companies are pivoting to address customer needs in new ways in new channels.

So there is broadly a content explosion happening with companies trying to create relevant, timely content for customers that addresses those pain points and top of mind concerns that their customers are having right now.

So that's creating demand for people who are doing writing, content creation, content strategy and then areas within the same theme around designers, video production, animation.

Those type of skills are really in demand right now, as companies are looking for new digital vehicles for communicating with their customers and they usually don't have those skills fully in-house.

And maybe redeploying their marketing budgets from in-person events to virtual events and they need help to create all of the content assets, videos, et cetera that would go with those types of activities. A third area that we are seeing a lot of activity is around customer support.

Because whether companies are benefiting from the current crisis or struggling with the current prices, we are seeing a trend where so many companies, regardless of their situation, are getting spike in customer contacts.

And so they are looking to us to provide customer support reps who can really deal with these unexpected demand surges in speaking with customers, which is so critical to them to get feedback or communicate key messages or a resolve customer issues.

The fourth and final thing I would say is there are definitely some interesting niche verticals that have become very active.

For us, they are much smaller relative to our total business, but areas like game development, instructional design, e-learning, all of those are, I think, areas where you wouldn't be surprised just to imagine the type of use cases that companies are leaning into right now to stay relevant, pivot and really make sure that they are delivering the messages, the solutions, et cetera that they need to at this very moment.

So those are some of the really interesting themes that we are seeing..

That's really helpful. Thank you..

[Operator Instructions]. And I am showing no further questions at this time. That concludes our call for today. Thank you for participating. You may now disconnect. Everyone have a great day..