Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg BusinessWeek
Speaker 1: with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2: Shares the online recruitment company Upwork surged five point five
Speaker 2: percent this after it provided guidance for fiscal years twenty
Speaker 2: twenty six and twenty twenty eight. At its twenty twenty
Speaker 2: five in Investor Day, the company set it will now
Speaker 2: achieve long term targets of seven to nine percent compound
Speaker 2: annual growth rate. This of gross services volume, it's the
Speaker 2: acronym GSV. What essentially means is it's the total value
Speaker 2: of all transactions that occur on the upwork platform. The
Speaker 2: company also settle to see revenue growth of thirteen to
Speaker 2: fifteen percent and twenty percent adjusted EBADA compound annual growth
Speaker 2: rate through twenty twenty eight. This comes after shares search
Speaker 2: thirteen percent earlier this month, after it reported third quarter
Speaker 2: results that beat expectations and raised it's full your forecasts.
Speaker 3: Delighted to have with us right here in our Bloomberg
Speaker 3: Interactive broker studio Erica g Search. She is the CFO,
Speaker 3: Chief Financial Officer of Upwork.
Speaker 4: Busy day for.
Speaker 5: You, Very busy Yeah, busy, but great, A lot of
Speaker 5: exciting stuff going on.
Speaker 3: Well, Investors like what they heard from you guys in
Speaker 3: terms of guidance. Talk to us about the outlook, what
Speaker 3: you're seeing, how much confidence you feel in the outlook,
Speaker 3: and what it kind of tells us about us economy
Speaker 3: and kind of the workforce.
Speaker 4: You know we have.
Speaker 5: You know that our investor day was really timed perfectly
Speaker 5: for us. The reason our stock went up thirteen percent
Speaker 5: after our earnings report was we you know, at the beginning,
Speaker 5: at the end of twenty twenty four, we told our
Speaker 5: investors that we would, you know, take a year and
Speaker 5: really reinvest in our company and rebuild up work and
Speaker 5: we said that we would return to GSB and revenue
Speaker 5: growth in twenty twenty six. Well, we did that two
Speaker 5: quarters early. In Q three of twenty twenty five, we
Speaker 5: report G three growth of two percent. We reported revenue
Speaker 5: growth of four percent. And what we told them then
Speaker 5: was that our results are going up into the right
Speaker 5: right now, and that is because of really three investment areas.
Speaker 5: When is AI, when is SMB expanding our relationship with SMB,
Speaker 5: And one is the outsized opportunity that we have with
Speaker 5: Lurge enterprise. But you know, with AI is really one
Speaker 5: of the big stories for us because I don't know
Speaker 5: how well you follow up work. But you know, we
Speaker 5: have had a bit of an overhang over our stock
Speaker 5: on the opposite side of the spectrum, thinking that we
Speaker 5: were going to be you know, you know, hurt by AI,
Speaker 5: whereas we are truly a beneficiary of AI. We now
Speaker 5: see about annualized volume of three hundred million dollars in
Speaker 5: GSB from the A category on our platform, and that
Speaker 5: is accelerating. In Q three it was over fifty percent
Speaker 5: growth per year.
Speaker 2: So I want to remind everybody upwork is a hiring platform.
Speaker 2: You can go there to find talent in development and
Speaker 2: IT AI services, design and creative, sales and marketing, admin
Speaker 2: and customer support. It's this two sided markets.
Speaker 4: So that's right.
Speaker 2: You have a good view on what exactly the type
Speaker 2: of job that companies are hiring for and then also
Speaker 2: the availability of that labor. What does that picture and
Speaker 2: that balance look like right now?
Speaker 4: Yeah, you know it. The last few years.
Speaker 5: Have been, as we all know, tough the on the
Speaker 5: job market, and you know, most companies in our industry
Speaker 5: were down double digits over the past few years in
Speaker 5: terms of both volume and revenue. Upwork was relatively flat
Speaker 5: for the past couple of years. So you know, we
Speaker 5: were gaining share against staffing companies even other online.
Speaker 4: Marketplaces, but still relatively flat.
Speaker 5: And it's really these investments that we've made in AI,
Speaker 5: we're actually seeing both the AI category itself increase and
Speaker 5: that is really.
Speaker 4: Like I say, accelerating.
Speaker 5: So this is this is AI work on the platform,
Speaker 5: but also the investments on the front end. So if
Speaker 5: you think about the hiring process and how that works,
Speaker 5: there's a lot.
Speaker 4: Of friction to it, right.
Speaker 5: You know, a client comes onto our website, they post
Speaker 5: a job, they have to write it up, they have
Speaker 5: to search for talent, the talent has to write a
Speaker 5: job proposal.
Speaker 4: Well, now AI does all of.
Speaker 5: That for both our clients and our talent, and it's
Speaker 5: making them find each other faster and you.
Speaker 4: Know and kind of fulfill these jobs and get them done.
Speaker 3: Those matches work. Like what percentage of the time are
Speaker 3: where is that?
Speaker 4: It's like, well, not not good?
Speaker 5: Well no, So what the AI is doing is it's
Speaker 5: writing the job post, it's writing the job proposal, and
Speaker 5: of course that you know they're they're there can be editing. Yeah,
Speaker 5: but now we do have AI interviewer, and and we
Speaker 5: also one of our one of our most successful, very
Speaker 5: recent launches is Uma, which is our you know, our
Speaker 5: AI companion on our site is now recruiting talent. So
Speaker 5: so the client asked for a certain type of talent,
Speaker 5: Uma goes out within our you know, eighteen million strong
Speaker 5: talent based and identifies the right talent for that job.
Speaker 5: Now we're seeing fill rates much higher using the using
Speaker 5: the AI recruiter than with the human recruiter. Why, well,
Speaker 5: you know, I think we have one of the best
Speaker 5: data sets honestly on the planet. And if you think
Speaker 5: about what these what this AI is actually really good at.
Speaker 5: It's good at at at you know, uh, spinning lots
Speaker 5: and lots of data, right, And so you know, we've
Speaker 5: been building our our platform is over ten years old,
Speaker 5: and we've been building this data set of you know,
Speaker 5: what types of jobs match with which talent. You know,
Speaker 5: whether client client is price sensitive or you know, maybe
Speaker 5: their quality sensitive. And so the recruiter, the air recruiter
Speaker 5: is much better at scanning across all of this data
Speaker 5: than a human can be.
Speaker 2: Are you are you seeing demand stay of stable decrease
Speaker 2: or increase from the side of your platform that is
Speaker 2: looking for the workers.
Speaker 5: Yeah, so client demand and I think you know what
Speaker 5: we are seeing is client demand has been where we
Speaker 5: have seen the biggest impact from from you know, I
Speaker 5: would say the job market and the economy written large.
Speaker 2: Maybe like like if the economy is softer, then demand
Speaker 2: will go down from the cience, yes.
Speaker 5: And and and if you think about that, if you
Speaker 5: think about you know, our our online marketplace is primarily
Speaker 5: SMB customers, right and so small the small medium sized business.
Speaker 4: So if you think about what's going on there.
Speaker 5: When inflation is high, you know, you know this this
Speaker 5: hits consumer whiles it also hits SMB you know leaders
Speaker 5: and and and then also when interest rates are high,
Speaker 5: they have lower access to capital, right, And so we
Speaker 5: do see the demand environment in terms of just pure
Speaker 5: volume of SMB hirers, uh, you know, relatively flat in.
Speaker 4: This in this you know right now.
Speaker 5: But what we are seeing is, you know, we are
Speaker 5: one of the few places where these SMB customers can
Speaker 5: actually access very high quality AI talent and afford you know,
Speaker 5: in an affordable way and quickly. And so as they're
Speaker 5: trying to implement AI work within their businesses.
Speaker 4: You know, contingent.
Speaker 5: This contingent marketplace that we offer is one of the
Speaker 5: best places they can.
Speaker 3: Find what's your take on AI and the impact it's
Speaker 3: going to have on the labor force.
Speaker 5: So you know, we have amazing data on this, and
Speaker 5: what we are seeing is is that AI is not
Speaker 5: going to replace humans. What's going to you know, humans
Speaker 5: with AI will replace humans without AI, right, And so
Speaker 5: what we're seeing AI replace very simple tasks, but not
Speaker 5: you know, the larger, more complex work because these a
Speaker 5: these AI agents are not that edgentic, right, they have
Speaker 5: no judgment, They cannot complete the complex tasks. So what
Speaker 5: we've seen over well, what we've seen over the years
Speaker 5: is you know, jobs that are three hundred dollars in
Speaker 5: lower those have those have gone down on our platform.
Speaker 4: So about two years ago we had.
Speaker 5: About five percent of our work with job three hundred
Speaker 5: dollars and lower.
Speaker 4: Now it's about three and a half percent.
Speaker 5: But at the same time, the AI jobs on our platform,
Speaker 5: clients who engage in AI work spend about three times
Speaker 5: what our normal you know kind of platform work does
Speaker 5: and so you know, we see that growing and growing
Speaker 5: because that work is more complex. It requires humans and
Speaker 5: you know humans using AI agents, but it requires humans
Speaker 5: in the loop.