Fiverr International Ltd. (FVRR) Earnings Call Transcript & Summary

Hi, everyone, and welcome to Fiverr Amplify at the incredible [Rtech] house. I'm Michelle and I lead community and social impact here at Fiverr. More than anything, I'm here to celebrate this incredible freelance community, the creators, the builders and the innovators who make Fiverr what it is. We are so thankful to have you here in person from near and far and a big shout out to everyone tuning in from around the world virtually. Whether you're here in New York City or halfway across the globe, you're part of this moment with us, and that's what makes this community so powerful. So hello to those joining from the United States, United Kingdom, Germany, Argentina, India, Brazil and so, so many more. Today is all about creativity, how we protect it, nurture it and push it forward. Over the next hour, we'll unveil something our team has been pouring their hearts into. So without further ado, let's dive into it. [Presentation]

Ladies and gentlemen, our founder and CEO, Micha Kaufman.

We get to live in crazy times. But the question we bring today is where are we headed? Because every breakthrough in history has had one common denominator, the people who dare to create. Have you ever wondered what keeps people creating? There could be many answers but the most basic reason is because their work is seen appreciated and valued. When creation impacts inspire others and is being rewarded, there is a drive to create more. This isn't new. When books started being distributed at scale, copyright laws were created, not to restrict but to encourage creation. In fact, the British Statue of Anne passed in 1710 was officially titled and opt for the encouragement of learning. The revolutionary idea was if creators and inventors will be rewarded every time someone consumes their work, they will stay motivated to create more. The more they share their work, the larger the impact they'll make. And this is how we'll advance as human beings. This principle hasn't changed. From the early days of printing press through the invention of the internet, to the rise of open source software, the same idea has held true. The more creation is shared, the more value it generates, not just for the creator but for society as a whole. Today, as a new kind of technology reshaping how we create, it opens up many new questions about value, about the very nature of creativity itself. Truth is no one has all the answers. But there is one fundamental question. Who is at the center? AI has been designed to learn from existing creations, absorbing ideas, styles and voices to improve its outputs. If AI transforms creativity but shifts the value away from its original creators what will motivate people to keep creating. At Fiverr, when someone consumes your work, you gain from it. And over the past few years, we've seen firsthand how AI has started to reshape industries that have always thrived on creating. For many of you, this shift has felt personal. I bet at some point, you wondered about your future. Will your skills still be relevant? Should you give it to something else? I've had those thoughts myself. And honestly, I don't want to live in a world where people aren't motivated to create. We started looking for the right way to leverage this technology while keeping human talent at the center. When we obsess about the human versus AI, we missed the fact that AI is not a being, at least not yet. It has no feelings, it is not something to fight against, it is a technology. Don't get me wrong, it is a very powerful technology but it is designed to function in a certain way. AI is not the problem. It is how we choose to design, deploy and integrate AI that matters. It is about changing the power dynamics. Today, we say that there's another way to design AI without compromising on what it has to offer. With an unparalleled foundation of data, 6.5 billion interactions and close to 150 million transactions. Fiverr is uniquely positioned to offer a different path and that is why today, I'm excited to introduce Fiverr Go. Fiverr Go is an open platform of personalized AI tools, designed to put control back in the hands of the creators. Curious to see Fiverr Go in action? Let me introduce the 2 main tools we're announcing today. The AI creation model and the personal AI-assistant. Let's start with the creation model. This is your new gig page, as you can see, once your model is active, you're getting a new package, customers can generate sample in real time instead of asking you to generate samples for them. When they hit generate, a new world appears, a futuristic, beautifully designed interface. This world is all about you, it's your creation space. Customers see your profile, your portfolio and your AI model in action. Customers type what they want the model to generate in natural language. They don't need to be from experts and it instantly generates their request. The AI model reflects your exact style. And don't worry, the generated output is watermarked so customers cannot use it without purchasing. After generating with your model, customers have 2 options. Instant download, they purchase the generated work as is without watermarking that option comes with an edit that they can claim for 24 hours after purchase. And the scope of editing is up to you, the freelancers to decide. The second option is a customer offer. They contact you and use the generated sample as a reference. This is how it's going to be reflected on the marketplace. All right. We've seen how your customers interact with your model but let's see how easy it is for you to create and train one. [Presentation]

I love this. By the way, this is not fancy animation. This is the product. This is the experience that you're going to have. And I know this might seem simple, but I can tell you as a product person, that we're using and developing the most cutting-edge technology so that you don't have to hunt for the right solutions. And now let's see the personal AI assistant. We developed this specifically for our community. Let's say Dee, I don't know where Dee is, I saw him earlier. Dee is a top rated voiceover artist sitting here with us in the audience, and I've spoken to Dee, and he's worried about taking vacations. Missing out on opportunities, and he's probably tired of answering the same customer questions over and over again. Dee is busy and he knows that the first 3 minutes after a customer reaches out are crucial. This was in our mind when creating this tool. One that manages routine tasks and frees up your time to do more, create and recharge. Here's an example, Dee has his personal assistant turned on. A potential customer messages him. His personal assistant is right there to respond immediately. If the assistant sees that Dee is needed in the conversation, it will check if he is currently online. If he is, the assistant will invite them to join the conversation. If Dee is not free or too busy to join, the assistant will summarize the conversation and inform the customer that he will respond later. All conversations handled by the assistants are mirrored to the freelancers in books. They can view real-time chats, jump in at any point and take over the conversation. As the assistant continues to learn you, it will evolve into a business partner, offering actionable insights such as keyword optimization for better search visibility and recommendations based on other successful use cases in your category. Now let's talk about how you can build an assistant that you trust. Creating the assistant is super easy. You can set it up so that you have full control over when and how it speaks to customers. This includes its name, availability, the language and what customers you wanted to interact with. We know that there are certain conversations that you want to handle personally. For example, if an ask, is over a certain amount? You can set your personal assistant to automatically end over the conversation. Cool, right? The personal assistant is available starting today. We are rolling out the AI creation model in approximately 60 different categories of services. Starting today, and in the days and weeks to follow we'll be adding new categories from design to audio, from voice over to content. You see this is not another AI product, this is your AI. Enhancing your work, increasing your efficiency and creating new opportunities for you. With the launch of Go, Fiverr is taking the first step towards what we're calling the GIGA Economy. Fiverr Go helps our freelancers work big, they can now operate as a one person production house. Who knows, maybe even becoming the first one person billion dollar company. This is the beginning of a journey we take together. What the Fiverr team has built is truly remarkable, very few teams in the world can build this. But this doesn't mean we think it's perfect. It will be perfect when you say so. And our commitment is to continue trying until we get it right. We always thought of Fiverr as a movement, and every movement needs a reason to exist. Ours is you guys. You are the heartbeat of this movement. And today, we're doing something we wanted to do for a while. Today, we're also announcing the Freelancer Equity Program. The defining initiative for top-performing freelancers to own shares in Fiverr. All the details about the new program will be shared in the coming days. Because if you're shaping the future of work, you should own a piece of it. Oh, but there is one more thing. We are taking it a step further. And today, we're also announcing that we're launching Fiverr Go as an open platform for developers. Why is this such an exciting move? Because it will allow model developers and GenAI engineers to create real-world AI applications because these models and tools will enjoy running on the most extensive data set in existence today because it will allow us to get hold of the most advanced agents, not just for simple but also very complex tasks because it will give developers an opportunity to make money from these applications and because it will allow us to offer the most advanced tools for our freelancers to take their business to the next level. So are you in? Let's go.

The future of work is an exciting topic and building for it is at the heart of everything we do. Here to dive deeper into that conversation with Micha is someone who understands the power of creativity and entrepreneurship and someone I'm super excited to introduce. Steven Bartlett is a British entrepreneur, speaker, investor, bestselling offer and host of global hit Podcast, The Diary of a CEO. An unfiltered journey into the remarkable stories and untold dimensions of the world's most influential people, experts and thinkers. Let's give a warm welcome to Steven and Micha.

I mean my mind is blown. I just want to say that -- congratulations, job done. Honestly, congratulations. I was all the -- you have these moments in your life where something -- it's almost -- what do they call it, like a paradigm shift in possibility and that's kind of what I was experiencing then. As a creator myself, someone who writes books and create products for our clients, but also someone that has used Fiverr for the last decade or so. So yes, congratulations.

Thank you so much. Thank you so much. Thank you guys.

How do you feel?

This is -- this has been so exciting. First of all, I'm so proud of the team for being able to build this, this is incredible. It's a creation of an entirely new world, and they've pulled it off in such a short time. I want you guys to know that the team has been coding last night, this morning, we're so psyched about this. And the pace in which we're going to start opening up these models in tens of different categories and potentially in the future, inventing hundreds of new categories through these tools, and these tools are yours, they're not ours. If they don't make it right by you, they're useless. So we know that you're going to love them because we're not going to rest until you do. And seeing the -- feeling the energy in this space has been one of the highlights of my life. Thank you so much.

It reminded me of -- because I think as creators, there's been a number of questions that we've had as a podcast creator myself, I've been thinking about how my voice and our IP can be owned, but also scaled and monetized by this new technology called AI. I think a lot of us as creators have been slightly, I'd say, anxious about how we sort of maintain ownership. We attribute value from the work that we create but also as in the example of D there. How we're -- our time is freed up so that we can have lives -- go on holiday while also running our businesses. And this felt like it hit all of those points in a really interesting way.

I think that there's a lot of work that comes around the creation that we enjoy less. It's the mundane routine types of tasks that everybody needs to go through but being able to have a very smart assistant that doesn't sound like an agent, it sounds very natural because it knows your voice. The personal assistant goes through all the conversations that a freelancer ever had on the platform. It goes through all of their orders. It learns their gig page, their profiling. They create the knowledge base that is impossible for a human assistant to actually hold at any given moment. And you guys should test it because it's available today, play with it. What I recommended, I said with D -- and a few other operated sellers on Fiverr. And what I actually recommended is have it run when you're online. Every time that the assistant starts a conversation, it notifies you. You can go to the inbox and see the conversation unfold. Nobody knows that you're there. You can join at any moment if you feel that the conversation is not going to the right direction, but don't worry, it's not, because the assistant knows what it can do and what it cannot do. If you ever indicated that you don't offer a specific service, the assistant will deny that service. It's not going to say something that would tie you into a contract, you're not interested in. It is super smart, it's a whole new kind of assistant. It's not a chatbot, it's not a stupid agent. It is super smart because you're smart, and it's basing itself on you. So I think that these things that take you away from actually doing what you're passionate about which is creating, is enormous because it frees up much of your time. But if we think about the creation model as well, a lot of you guys have been going with customers back and forth on providing samples. I know how it is. I don't know if you know, but I was the first seller on Fiverr when I created the platform. So I witnessed firsthand what you guys go through and actually secretly still do stuff on the platform, to stay connected to what's going on. And I know how frustrating it is and how time consuming it is, no more. And the idea of the creation model is not to replace you. It's not taking your voice. It's not taking your parts. It's not taking your content. It is providing samples for customers to make them feel more confidence to make a deal with you. It's a conversion tool. Now if by coincidence, they are happy with the results, fine, they can purchase it, and there's an edit included, which they can claim or not. It's up to them. But this frees up sort of your time to do the things that really matter. It's creating.

And you mentioned 60 different sort of variations within the creation model, things like websites, imagery. Which ones are you most excited about from having seen the demo?

Oh, I'm excited about all of them because as I've said, you guys should not obsess about what is the best technology for anything. It is tough, right? my seat is full of announcement of new AI products, I get, I don't know, 3 to 5 a day. It's impossible to track. And actually, the differences between them are very little, very small. So we're doing this for you. We're going to make sure that you get access to the best technology available today. And when there isn't a technology, we're developing it. So the tools, the creations of these models, the fine-tuning of these models is a process that we made stupid simple for you guys. The behind scenes of this is just mind blowing. I don't know if you try to train a voice model for you, it's not an easy thing, it's not. We're doing this for you. We're doing the behind the scenes to make sure that the product itself remains extremely simple. And we're going to continue doing this. We're not opening up categories -- categories in which we believe that the accuracy of the models are below 90%. And the reason for that is we don't want models that would change you. We don't want models that are not going to be accurate enough to your style. And as I've said, we're opening up many different categories of creation. Among them are contents, graphics, audio, voice over, and we're going to continue rolling out many categories in the next days, weeks and months. And by doing by having this developer network, we're allowing ourselves to move forward even faster. The velocity of changes that we expect to ship out is mind blowing. Right now, the team is working on more and more models that we're going to introduce. This is a game changer. And as I've said, it's not just about simple tasks. A lot of you -- when you specialize in something, customers come in and your creation might be a portion of what they're trying to do. I don't know if you're trying to set up a website, there's so many things. There's the coding, there's the graphics, there's the content, there's the marketing of it, there's the SEO, there's all of this. But what if we can actually allow them to couple more complex jobs, we're actually using different technologies with the domain experts, which are you guys to be able to do more with platforms, this is going to change everything. This is going to make Fiverr a one-stop shop, go to place for anything, which means that you guys are going to have more business, you guys are going to make more money, not necessarily by working harder, smarter.

So if I'm a web developer at the moment. You're saying with these tools, I'll also be able to offer additional services in a cost-effective manner. So I could theoretically also be a graphic designer, I could be a copywriter as well so that my client doesn't have to go to...

Not necessarily because if your domain expertise is web building you're not a graphic designer. You could ask the people here, being a graphic designer is a very, very specific expertise. We're not turning you into a graphic designer experts but we're allowing you to enjoy the types of transactions that you didn't have access before because people didn't just want to come for you for web building. They need more assets. So instead of going to an agency, instead of hiring on their own, a few freelancers, we can combine, we can package, but each of these creations would be coupled with the domain expertise that actually understands the art.

Okay. Okay. Have you heard about this concept called Jevons paradox before. It was I think -- was it William Michael Jevons, who -- he's really -- the Jevons paradox is really what made me understand how AI is going to accelerate the demand for creativity, which is they often cite the example of steam engines in the 1900s and they thought when coal got more efficient in a steam engine demand for coal and sort of the coal industry might suffer. But actually, what happened is the opposite because when coal becomes more efficient in the same way that creativity becomes more efficient, there's more use cases and more people who, back in the day, wouldn't have taken a steam engine are now taking them. They're now using them for deliveries. So coal demand exploded. And I was thinking of that when you were doing your presentation because I was thinking if the efficiency of creativity becomes easier. I don't have to -- I'm not losing customers in the customer service process because I'm on holiday. I'm able to offer my services even when I'm away, but I'm able to offer it at scale, then you might think that the demand for my creativity might decline, but actually, Jevons paradox shows that more people enter the industry. There's more demand for creativity, technology, web development and all these services and the industry explodes. And that's the kind of paradox of making the creativity more accessible is that it causes increased demand, which results in more money, I guess, for freelances. That's kind of how I was thinking it through, as I sat there.

Absolutely. I'm with you. And I think that this -- what we're doing with Fiverr Go is a manifestation of the industrial revolution on steroids. And what we know is that the industrial revolution created so many new jobs created so much more production. This is exactly what we're talking about the GIGA Economy, about the one person production house, this is exactly it. It allows you to create more which in turn is going to increase the demand, make access to talent and tools more available. And in our view, it's going to skyrocket.

What do you -- of everything you've presented today, surely I know people often don't like to pick something because it's like picking your children. But as everything you've presented today, is there a particular feature or a use case that is exciting to you the most?

Well, I think we've demonstrated all of these use cases. And as I've said, I love each and every one of these examples. I've actually been engaged in all kinds of things on the platform as a seller from a graphic design to coding. And I can appreciate how this is going to change the lives of people. So everything we demonstrated are things that I'm super proud of. I think that the Freelancer Equity Program is a dream of mine. I've been wanting to do this for years, I think that the people that are engaging in this platform are people that are helping shape and define the future of work. And these are crazy times. Things are moving so fast, it's confusing that you guys are doing it. And that's why it was so important to make you a part of this movement and how do you own a piece of it.

What can you tell me about that Equity Program? Is it based on my -- the amount of creation, my loyalty to the platform? What's the -- what are the sort of metrics?

So essentially, we're going to introduce this program in the coming days. So I don't -- I can't go into too many details. But what I will say, it's designed for top performance on the platform, people that build their careers on the platform and are connected, their success is very connected with our success which is why we wanted to make that bond even stronger.

I know that this is part of a broader road map, right? So without telling me what you can tell me, but what is -- what do I need to know about the direction of travel for Fiverr, when I think about that more sort of holistic road map?

I was under the impression that I said enough today. Look, we've introduced so many different things. But I think the over arching idea here is that things are moving very fast. As I've said, it's very confusing. The art of exponential advancement of our species is just mind blowing. And today, we're allowing ourselves to challenge the things we get drawn to. In my view, I saw this as a crossroad. I said that in the opening video, where humanity can easily take the wrong turn. And in my view, as long as we believe that human beings are in the center of the universe, and it's not this new being that pushes us aside to orbit around it, which might be the case if we continue going down that path because, look, if everything you create, the moment you create has zero value because AI sucks it and churns out generative stuff based on you without giving you credit, without giving you the opportunity to gain from it. Then my fear is that people's motivation to create is going to drop to zero because there is no value. So why would we create? I think that a future that doesn't motivate people to create could be a very, very dark future. This is how we advanced in the past 500 years. You and I spoke a little bit, 2 minutes seriously. And I said, homo sapiens have been around for 300,000 years but the real advancement, the arc of the advancement, this inflection point happened in the past 500 years. And it's all about the fact that we started getting means to share our creation while protecting it. This is how we inspire others to create. We create something. Think about open source, I've mentioned open source. Open source is all about that. You create something, you put it, you share it and other people work from it and create new things. This is how we advance the society. These people are not going to be motivated to create. I don't want to live in a world where this happens. So on that crossroad, I'm saying that I think we can choose a path. In fact, blaming AI, AI is just a piece of software that is designed to function in a certain way. But we can design AI to function in a different way. A way that keeps us in the center. And this is, in my view, the big news out of this event.

I am curious about, if I'm a creator now in this moment in time, what do you think the mindset is that is most conducive with success in a moment of great transition where this new technology has emerged. Because you mentioned a mindset there that is conducive an unproductive outcome, which is blaming the technology or feeling negative towards it. But what is that mindset that you would recommend every creator in this room adopt in order to win over the coming years?

It's probably -- it's probably pushed away those dark thoughts and feelings, stopping a victim and make sure that you make the most out of technology to amplify ourselves because this is -- this, to me, is the true story. When I said the true technology emancipates, this is what I meant. So I think that mindset of learning how to maximize the potential technology to make you stronger. This is what we call giving you the power of a hundred and this is what matters. And looking at the faces here, a lot of them I know from the platform, they're going to excel in this environment because they're the fastest people to learn new technologies and master them. And actually, working with these technologies is not easy. I don't know -- when you try to do business -- great business outputs for you. Most of these technologies doesn't cut it, at least not if you're not an expert. Anything from needing to be a prompt engineering every new product that pops out and then editing the results is practically impossible and you don't have the confidence, it feels random. And this is what we're changing now because there's such a wealth of talent on our platform, and customers can just come in and just choose what they want and whatever the result that they're going to get is going to be so true to your style and it's going to blow their minds. So I trust this community. I know that it will thrive and it's just push away those dark feelings and keep on marching because we're going to change the world.

And what should they be focused on? So when I think about how to allocate my time in this new world of Fiverr Go, where should I be allocating my time now? If it's not necessarily as much time spent on customer service or queries, whatever, where should I be allocating my time?

So what I would answer to that is keep creating. But now you cannot just create for customers, you can create for your models. You can design new models, you can fine-tune your models to be more powerful, that's the idea. We made it super simple for you guys. Super simple, create new things. Feed it to your models, keep seeing your personal assistant becomes better and better, and you can fine-tune it. When you're going to start playing with it, you're going to understand the power that stands behind this. The amount of configuration and settings that we've provided to you, the amount of control that we provided to you is just mind blowing. Go play with it. It's incredible and I'm sure that with time and as you can see what customers are actually using your models for this might inspire you to create more services, to create more models, to refine these models. As you can see, the center of everything is the creation process. It's not everything that comes around it, which people doesn't necessarily like. It's maximizing your creation time.

And presumably, I've got to turn my model on when I'm ready for it to be publicly available? Or is my model on as default from today?

No. So you guys have 100% control over everything. Once you trained and created your assistant, or models, it is up to you to decide if and when you want these models or assistant to be available for your customers. We don't control this. Actually, we don't control the other parts, which means you can decide not to make it available, you can also decide to delete it. We're not going to use those models, these are your models. If you're not happy with them, we're not happy with them. Our success is your success, which is why we want to give you the power to decide if they're available, how much do they cost, everything is completely up to you, which, again, is very different than any other type of AI.

My last question is more of I guess, a personal one, which is in the story of Fiverr, you founded this company what, almost 15 years ago, roughly?

Yesterday was 15 years ago.

15 years, congratulations. And you've gone through many a technological revolution if we think about things like -- I'd consider a revolution in the social media age to the web3 blockchain age and virtual reality and how that came along and everything that, that was reported to be. And now this new moment in time called Artificial Intelligence with these large languages models. Where does this moment sit in your journey? how are you feeling 15 years in starting this company about where you are, where the company is and about the future, the emotions of that moment? Because you look excited.

Fiverr started as a dream. It started -- I remember probably the first 20 or 30 people I told the idea of Fiverr told me stupid or never going to work. And here we are, a public company with the largest community, the largest movement in the world and that by itself is a dream come true but being able to be a force in the transformation of how work happens of society are big moments. I think the first one was this idea that we can make this concept of service as a product. This idea of a marketplace of digital services in seeing how this grew exponentially. But it is also about the fact that freelancing as a movement was very small when we started. Freelancer -- to be a freelancer 15 years ago was something people did in between jobs. And today, it's both a lifestyle and a career and you're making it. And if we can be a part of this, this excites us. This gets me out of bed every morning, and it's incredible. And I think that what we're doing now is another very important point in this exponential arc of growth, and I can't wait to see what you guys are going to do with it. Thank you for coming today. Thank you, Steven.

And I want to thank you and all your team for -- I heard you guys have worked on this over the last period of time, and it shows your level of excitement is so visceral that it's excited me in such a profound way but also as someone who's had teams of people who have worked on the creative side of Fiverr that have had their lives, their careers made from Fiverr, but also as a customer of Fiverr for the last 10-odd years, who's been able to build my companies using Fiverr and extend my capabilities. I want to thank you on behalf of both sides of that economy for the platform you've created. And as I looked at this, my mind is blown and I can't wait to get back to my computer to start playing around myself. So once again, thank you for all that you've done for the creator economy and entrepreneurs like me. We really appreciate it.

Thank you so much.

Thank you so much to everyone here and everyone all over the world who joined us virtually, a QR code is going to pop up on your screen shortly, scan it and head over to our landing page, learn more and dive in.