Upwork Inc. (UPWK) Earnings Call Transcript & Summary

Good afternoon, everyone. I am Bernie McTernan, the Internet and consumer tech analyst here at Needham & Company. My pleasure to introduce the team of Upwork. We have Hayden Brown, CEO; and Jeff McCombs, CFO. Thank you both, for joining, so much.

Thanks for having us, Bernie.

Good afternoon.

Thank you. Well, maybe just to start, I think last year was a pretty eventful year for Upwork, but I'd love to hear your retrospective of maybe some major accomplishments for the team during the year.

Absolutely. It was an awesome year. We really were focused on one thing, which was evangelizing, growing, scaling our work marketplace. And I think the year bore a lot of fruit on that. We saw innovation within the company was really at an all-time high. We launched a number of new products throughout the year, including Talent Scout, which was our white glove offering for kind of higher touch staffing like engagements. Project Catalog was something we debuted in GA early in the year. And so that was one that was part of the portfolio all year long. And then we had a number of other things going on like new partnerships with companies like Catch and Loom to just further our strategies in a number of areas. So innovation was a big piece of the puzzle last year and execution across the board was just incredibly solid. We saw our enterprise sales team have a really strong year, gave us tons of confidence to continue to grow and invest in that area, which is such a big part of our total addressable market and certainly a unique value proposition that we have for customers really looking to leverage a solution like ours at scale and programmatically. So that was another big area. And then I think the final one I'd mention is around marketing. We debuted in May this idea that we are a work marketplace, not just a freelance marketplace. And so we have a broader story we are telling the customers about all of the ways they can use our platform, both as talent and as clients. And the brand marketing around that that we started early in the year definitely was giving us confidence that we should be expanding our brand marketing investments over the course of the coming quarters and years because this is an incredibly pivotal moment for us. In a time when work is changing fundamentally, businesses and talent are all looking for new solutions to really meet an evolved set of needs. And we have those solutions right on our platform, and yet our unaided awareness is in the single digits amongst our target clients. And so that just represents a huge growth opportunity for us to get in front of more of those customers, tell more of the stories about how we are so relevant to them at this moment. And that's something that obviously is feeding into our investment plans for this year.

Yes. No, that's all great to hear. And so as you look forward to 2022, what's at the top of the priority list for the year?

It's really, in some sense, an extension of last year in that we are executing firmly against this idea of building out and innovating the world's work marketplace. And so for us, that means, first of all, picking up on the brand marketing theme, evangelizing that, making it known to customers how they can use us in driving that adoption in greater ways across all of the customers we serve from small businesses through 30% of the Fortune 500 today. So evangelizing is a big piece of it. And then there's the building piece of the work marketplace. We will continue to be innovating with our product road map on more of the solutions that customers need to really tap into the diverse global talent pool that we offer on our platform that really is capable of moving their businesses forward, I think, in ways beyond their imaginations. And so the product innovation piece of what we'll be doing this year is also going to be incredibly important. And then I'd say scaling that work marketplace is the third piece of the strategy. And that really entails continuing to invest in our enterprise sales team, the successes of last year are something we'll be building on to double our land team this year and really get out in front of more of those larger customers who have programmatic needs that we are uniquely capable of serving.

Yes. Yes, all makes sense. Maybe taking a step back and just thinking about the macro backdrop, a key question that we get from investors is really how much is Upwork a COVID stock. And so I would love just to hear your thoughts in terms of maybe how much of your success over the last 2 years were driven by the macro versus the changes that you're also making in your business. Talk about the products, changes in SEM, SEO. Just love you to discuss those too.

Sure. Bernie, we were a company with a solution that was built for the moment the world has shifted into right now. And our view is, the lessons from the pandemic, specifically around so many companies experimenting for the first time in many cases with remote work. And finally, the remote work is actually working for them and now figuring out how does that weed into their long-term talent strategies. This is something that we ourselves have been doing. We've been a remote work company since our inception, and we've been providing clients and talents ways to work together remotely to build strong, powerful, impactful relationships with their businesses since the get go. And so I think as the pandemic kind of arrived and as we looked at our products and our portfolio and our strategy, for us, it was more about kind of amplifying many of the strengths that were already part of our offering and meeting customer needs that suddenly, I think, accelerated as people figured out they could work differently, they need to work differently. And frankly, age old problems that they had like talent shortages, which even if you go back to surveys of CEOs in 2019, 2018, that is a #1 priority and has been for so many executives. The old solutions are not meeting those needs. They're not solving those problems in the ways that the businesses need. And so we did see acceleration, certainly driven by COVID-related awareness of Upwork and of the fact that remote workers were now much more viable for so many businesses. But our view is, coming out of this pandemic, those changes are very sticky. We see that in our numbers and we see that in terms of how we talk to customers and hear from them that they want to leverage the gains and the learnings that they had from working remotely, from building distributed teams, including independent talent to continue to build on that and get agility, flexibility, strategic access to skills that they literally cannot find and could not find before the pandemic anywhere else and certainly are not finding if they limit their searches to their own backyards and their own ZIP codes. So we view this as having seen a tectonic shift in how work is getting done. This has really been the beginning what we saw during the pandemic and there will be more, I think, structural changes to how work is happening and who is participating in different work ecosystems and environments and within different businesses over the coming years. And that just accelerates for us our pace towards reaching our big 1-plus trillion dollar TAM.

Understood. And so I think I know the answer to this based on that answer. But -- so if you think about 2022, do you think the macro will be a headwind or a tailwind [ to the best ]?

I think it will be more of a tailwind in that remote work isn't going away, and we obviously serve customers primarily who are doing remote work on our platform. Businesses' appetite to find the talent they need, I mean, with the Great Resignation happening all around us, every executive, every CEO I talk to is saying, "What do I do? How do I find these people?" And the problem is most of those businesses have been and continue to be looking in all the wrong places. They're looking in their kind of legacy staffing providers or legacy hiring full-time employment only kind of models for how to find that talent and execute work. When in reality, a totally new model has arrived and our customers know that. They see that. They're leveraging it every day. And I think as we continue to build the awareness in the market against the backdrop of so many companies now being open to different models, having the skills, the technologies, the culture that embrace remote work, even if it's not for every single person on the team, but to have some remote workers participating, some independent talent participating. I think we're in a totally new world in that sense. And that's only going to get, I think, better as people continue to build on the successes, figure out what works and make many of the things that they were doing and saw really succeed for them during the pandemic programmatic and long term. That's what we see our customers doing, and I think that's going to be the bigger trend in the overall market.

Understood. And so variety of the B2B marketplace companies that we cover really the theme that was to really start 2Q earnings results in August, but we heard it in November as well was just seasonality of the SMB customer and some say hyper-seasonality. I think you guys just called it seasonality. But was there anything to point out in terms of maybe how the fourth quarter's demand environment felt relative to your expectations?

Yes, we won't talk specifically about Q4, but in general...

Update to guidance?

No, I'm not going to do that on this call, but I appreciate that. What we saw through maybe, I guess, the start of pandemic up through Q1 of 2021 was COVID really did drive very atypical seasonality. Along with our execution, being very well positioned to be able to capitalize on this, the numbers moved up very quickly to the right on a number of different dimensions, including things like registrations, client starts, spend per customer, quarter-over-quarter retention, whatnot. And what we saw post Q1 was the metric started to -- the impact that COVID was having on the overall trajectory of the numbers was looking different. All the numbers remained in essence at these elevated levels. So our spend for clients was at record levels. It didn't revert back in any way. But the numbers start to look more like historical trends from a week-to-week, month-to-month, quarter-on-quarter basis. People started traveling a bit in the summer. The numbers dipped a little bit in the summer. They come back in September, Thanksgiving dips, end of December you see a drop, all of that, that seasonality sort of dynamic resumed kind of post Q1 of this year, but with all those numbers at an elevated record levels.

Got it. Got it. Make sense. Maybe I wanted to tap into Project Catalog, one of the product innovation pieces that, Hayden, you already mentioned that was introduced last year. Would love just to know how if that’s --what that's doing from either like a gross add perspective or keeping customers on the platform, like what you're seeing in terms of -- I think it was 10% of the gross adds in the second quarter, I believe, but just anything else you can provide.

Yes, Catalog definitely continues to grow for us. It's early, so this is still a nascent product for us relative to much more established products like the Talent Marketplace. But I think to your question around how is it performing from an acquisition standpoint and kind of from the other characteristics, what we always knew and the reason we launched Catalog was there are set of customers who have needs. This could be large customers, small customers, but who have needs that are really well served through a one-click fast conversion, like let me see the deliverable from the talent, let me just buy the deliverable and get that project done in one session in front of my mobile device or my computer. And so we launched Catalog to really capture that opportunity and kind of the velocity and the imagination that I think people get sparked when they see the kind of visual representations even of the work inside of the Catalog project, the product and kind of what they can get done suddenly kind of their eyes light up. So we knew it would attract customers with smaller needs ready to purchase and also kind of drive inspiration and awareness around how people might use freelance talent for their businesses and agencies. And that has absolutely run true. As we've gone into the product launch and heard feedback from customers, they're using Catalog for those needs, definitely top of the funnel has been a big contributor, but also existing customers are saying, Hey, I'm doing this thing with the Talent Marketplace. Freelance over here. But now I want to add on something that I can buy in Catalog or even we launched some new capabilities in Q4 around things like consultations, where Catalog talent can say, Hey, just pay me for a fixed consultation. And then that might convert into more Catalog work or that action might convert into a Talent Marketplace contract that's longer term. So the whole purpose of our strategy around these new products like Catalog and like Talent Scout is because our customers have such heterogeneous needs that need to be served by different experiences to convert $50 or $500 project is well done in Catalog, whereas a $50,000 or $5 million project, we have very different offerings between Talent Marketplace and Enterprise where these customers can kind of leverage all of these different products. They can use them as their needs evolve, as their team has different things going. And that is really the vision around how we serve customers in our single work marketplace with the different offerings that they need to really fully unlock the potential of leveraging the talent on our platform, doing so in amazing, delightful, high-velocity ways that really can't be replicated anywhere else. So we're seeing those early signs both in the data and the customer feedback that we're getting, and we'll just continue to build from here.

That's great. And sorry, I should have mentioned this on the onset, but if anyone in the audience has any questions, please type them in the portal, we'll be sure to get to them. But one question we have gotten is just if you could discuss how you prioritize investments for growth with investments like Enterprise versus margins and progress towards your long-term targets.

Sure. You want me to take a lead on that, Hayden?

Sure.

So first off, we operate in this massive market where we feel grateful to have an abundance of growth opportunities in front of us, and so we're focused on executing against that. Our general investment philosophy is that we want to deploy as much capital wherever we're going to return or receive IRRs comfortably in excess of our WACC. We think that's how we maximize the shareholder value of the company. And so as we look across sales, performance marketing, brand marketing, we don't view them as trade-offs between each other. We're looking to deploy as much capital as we can. So in sales, we know that in order for us to have attractive returns from our reps, we need roughly 6 deals per year. We proved out in 2021 that we can achieve that. So we're doubling the sales force in 2022 to go -- to continue to execute against that. We will continue to grow, we think, for years to come on that. Same thing with performance marketing, we want to spend as much as we possibly can to get the returns we can. We're willing for that because we have such strong retention curves, where customers, once they come in and use us for a couple of quarters, they just continue using us. The returns accrete over many years. And therefore, we're willing to have our margin hit by the spend that we have because we know that the returns are attractive and it's incumbent upon us to make those investments. So we're not limiting our investments to a margin level. That being said, we're very much focused on driving efficiencies wherever we can. So in cost of revenue, in G&A, we're continuing to push for leverage against our overall revenue opportunity. And in R&D, we like the fact that we're the leader in the market to have the opportunity to invest aggressively in building out this robust work marketplace to service the needs of our clients and freelancers. There's a huge opportunity there, so we continue to invest aggressively against that.

Yes. I can just add one thing to that, Jeff, which is if you think about our LTV model with customers, by building out our product portfolio, the way we are with things like Catalog, Talent Scout, Talent Marketplace, Enterprise, these things are very synergistic where you get a customer in maybe through one of these products and then get really good at unlocking that full spend and that LTV from them across a portfolio of products, graduate them to Enterprise perhaps as they scale, et cetera, et cetera. And I think that gives us a very differentiated opportunity then when it comes back to, say, performance marketing, where if we're driving that really high LTV on the back end, we can do things in the market that potentially competitors who maybe just have one offering and really can't unlock that full LTV the way we can have to think very differently about that acquisition kind of approach. So this is part of our strategy to really have unbelievable economics based on leveraging all of the products we have in our portfolio to unlock real customer value.

That's great. And that's actually a great segue to something I want to discuss next, which is really -- I understand like the -- trying the land-and-expand opportunity. And I understand that Enterprise, where you have a rep kind of pushing and working with the HR and the different management teams to try to show what Upwork can do and the value of freelance talent and outsourced talent. But how does that happen in the SMB marketplace? And so basically moving a customer who might use Upwork once or twice a year to get them to use it, have to be part of their like every day or monthly tasks?

Yes. So it happens through a couple of things. One is people, I think, do have -- once they've achieved the success, we call it the unlocked moment of having gone from maybe I'll try this Upwork thing out, they post a project or they get sort of one of the other delivery models that we have, they start spending. And then they go, wow, this is really working for me. Usually, the customer starts asking the question, how else can I use this, how can I get the speed, the talent quality, the cost savings, whatever it is that they're valuing most about our offering in other parts of my business. So there's a very natural kind of pull from customers to do that. But we also do a lot to -- and we'll continue to do a lot to try to show customers more of the path around how they can leverage the platform more. And I think that's where, even as we have these nascent products, certainly, we have not yet built out the full recommendations, remarketing, predictive capability to say, hey, you just did this project, we know the next thing you might need would be this. We have that in some parts of our business that are more established, but there's a lot of topography still for us to continue to do remarketing both in the product around, hey, here's some other ways you might -- if you're posting a copywriting effort, well, maybe you need these other 3 things. And we can predict and know that these are the other skills that might be needed around Project X. And then more globally, certainly with different teams, say, hey, you're in marketing, you're using us for design. Here's like 10 other ways you guys could be using us that maybe are still for marketing teams but beyond design. And so there's a lot of in product as well as CRM and other type of outreach that we do to customers and, again, still can build out given some of the more nascent products we now have in the portfolio to really get them to understand the more strategic, higher value kind of fulsome ways they can unlock the value from Upwork versus maybe just the first project that they came in to execute.

Got it. Got it. Make sense. Want to move over to one of the other product innovations that came on last year, Bring Your Own Talent. Would love just if you could just talk through that opportunity, what kind of customers are using them and if they look kind of maybe different than the base and the success you've had early days.

Yes. So Bring Your Own Talent is this great product where clients have their existing talent that they're working with and they look to us to help them manage the complexities of all that. There's lots of challenging dynamics that companies encounter as they try to do that and they find value in our offering. And it's great for us as well because then we could integrate into their workflows in terms of how they work with remote talents and contractors. And the leap of faith for them, once they're doing that, to then use our Talent Marketplace to access more talent is a very small jump. Like they recognize, hey, this is easy, I can get this done, I need more talent, how do I go to do that and we're right there to serve their needs. So typically, we see the clients that use our Bring Your Own offering end up growing faster than those that don't. A good portion of our overall enterprise customers use Bring Your Own Talent. We had a customer that we talked about in the Q3 call that went from 0 to 10 million, yes, 10 million in the first year, which BYO was a big portion of that. And then they have the opportunity to expand their usage through the Talent Marketplace.

And on Bring Your Own Talent, are they paying like a fixed fee for like that software? Or do you guys have like a take rate on the spend? How the economics of that relationship work?

Yes, it is a different economic. It's still a rate on the overall spend that goes through the platform, but it's a different rate than the Talent Marketplace.

Yes. Yes. Make sense. Understood. All right. Maybe moving over to Enterprise. That was certainly one of the exciting announcements you guys made on the 3Q earnings call that the plans to double the sales force in '22. That's especially after the realignment of the sales force happened previous year. Can you just talk through that thought process of why is right now the right time to double the sales force? Why double, why not increase to 50%? Just would love to hear some commentary there.

Yes, great questions. So in 2021, really what we set out to prove after doing the restructuring at the end of 2020 was, can we make the unit economics work, can the reps that we have with the skill set and backgrounds that we want going against the right ideal customer profile, company selling at the right level of the company achieve the productivity levels that we need for the economics to pay off. And so the team did that wonderfully throughout 2021, and we got very comfortable to listen these are numbers that are working very attractive from a financial perspective, and we should increase the investment. Our goal going back is to invest as aggressively as we possibly can against those opportunities, and we're going to balance that against what's the right operational ability to take on more and more. So we'll be pushing the boundaries on that, saying, hey, great, do we feel comfortable that as we're executing towards a doubling of the sales force, do we encounter some hiccups in cost pause, do we find opportunities to accelerate beyond that, we'll be adjusting course. But we feel good that that doubling in 2022 is a good, meaningful milestone against what’s a significant opportunity in front of us.

Got it. And what is the hiring process like? How long do you think it will take? Is the goal to add like 1 or 2 a month? Or just the thought process on the cadence would be helpful.

Yes, we're trying to bucket them on a quarterly basis, so they can come in and learn together and the training is more efficient. And I'm sure over time, we'll go from a quarter to a monthly dynamic. But right now, we think like having teams coming on a quarterly basis makes sense. It's obviously a tough marketplace out there. Everyone is trying to find great talent, where as a company or also in that situation we're having great success finding really strong talents. We're executing well against that plan. It is a big increase in simply the reps that we're increasing. It's all the supporting infrastructure around that, the management layers, the sales operations, the sales enablement, the account management teams, et cetera. So the team is doing a great job in kicking it off against a challenging overall margin dynamic, but they're doing well.

Got it. And then how long would you expect it would take for sales reps to reach that productivity of bringing on the 6 logos per year?

Yes, so in general, we assume that it takes 6 months for them to ramp. And that being said, we do have reps coming in, in their month 2 end up closing deals. So we don't need that for the unit economics to work, but I do think that the team's focus on onboarding, training, sales enablement, supported by good marketing efforts will allow us to improve that over time and improve the economics.

Yes. I mean it's interesting because, I mean, 6 months certainly isn't that much time. But I mean that was one of the reasons why we've been so bullish on the Enterprise part of your business is that it's not a cold call. These are customers that are already spending in the Talent Marketplace, and then it's really just converting and upselling them, which, I don’t know, the 6-month time frame feels really quick probably relative to other businesses, but it makes a lot of sense in your context.

Yes, your point is absolutely spot on. Most often, folks within these companies are using us already, finding that value, and then we have the opportunity to help them find more value in the platform through our land-and-expand efforts.

And then given that opportunity you've outlined, how many like target ideal customer profiles that are spending in your Talent Marketplace? Currently, that would make a good fit for Enterprise. How do you think about long term, what's the right number of Enterprise sales reps to have? Like I'm assuming doubling it in '22, and you're not going to hit the pause button, but how to think about that?

Yes, we start from the premise that we think a significant portion of our $1.3 trillion TAM is found within enterprises out there. And so we think there is a massive opportunity to continue to invest and grow in the enterprise space for many years to come. We clearly understand that there'll be earlier adopters that this will resonate more quickly with. But our goal is to try to figure out what is that next ideal customer profile that we can go after and be pushing the envelope on that. And that means at times if we're not hitting up against a little bit of friction on like, oh, maybe we were a bit too early on that potential one, then we're probably not trying to grow as fast as we should. So we will take those signals from the marketplace that where is it working, where should we extend into, and then launch new rep teams against those opportunities. And really, we love our position right now that we have a great product that is finding strong product market fit with customers fairly broadly. And we want to invest aggressively to capitalize on this as quickly as possible.

And what's that -- the enterprise sales process? I mean just thinking about it, it sounds like pitching a big organization Bring Your Own Talent, is that like the starting point? Or what's generally the starting point of those discussions to try to upsell from just the Talent Marketplace to more services and to be an Enterprise customer?

I think it can be a number of different starting points. So certainly, in some cases, as you mentioned, Bernie, customers are already active on the Talent Marketplace or using some of our other products. And it's really a question of helping them identify what's working, how can we help you scale, how can you get more value out of Upwork, et cetera. And usually, there's a champion internally that then will both help us drive adoption, maybe more broadly within that team, whether it's a marketing leader or a product leader or engineering leader, and then also make introductions as we expand part of the strategy to other departments who can also be leveraging Upwork and kind of look at the proof points and the success of that first team or department and then kind of build the confidence that they too can get those results. So that's definitely one model. There is definitely the case where customers like the one we mentioned in our earnings call, come in with a strong -- a big workforce of independent talent, whether these could be journalists or delivery people or like whatever the thing is, they have a big workforce. They need to be managing more effectively. They maybe don't even have visibility into all of those people. It might be fragmented across silos, et cetera. And this is where we offer the BYO solution to really help them centralize, get the visibility, manage, control and get the most out of those existing programs. And then obviously, as talent is turning over, as needs emerge, we're plugging in further talent and our offerings on top of that. And then in other cases, I would say, it's really more of the sell from the start of, hey, this is a customer that might reach out to us or we might react out to them and say, look, this is how other companies in your space are having a lot of success, again, leveraging the talent access, the cost savings, the agility, whatever these value props that most resonate for them are. Is this something that you're interested in? And it's interesting because we often see it's a little bit of like a [ lemming ] scenario where maybe nobody in packaged goods is using independent talent. And then once 1 or 2 companies start doing that, everyone starts looking around and be like, wait a minute, like how are they getting so much faster, so much better, getting these results? We need to get on top of this. And so then other companies in that same maybe competitive set will start to raise their hand and be very interested to figure out how they can kind of catch up and not fall behind their competition. So as Jeff mentioned, we have a pretty narrow ideal customer profile we're going after today with our existing team, but the runway we see of additional ICPs and different types of businesses we can get into is extremely exciting for us.

Which verticals are you doing best in with Enterprise currently? And then kind of what's like the next kind of closest bucket that you're going to be aiming to target?

I mean the verticals in terms of the talent that we're offering up to these companies tend to fall into kind of 3 broad areas. So a big one for us is marketing and design talent, these companies -- and every company needs this, by the way, but some more than others and some more excited to innovate ahead of the curve than others. But marketing and design, this is an area where people are seeing their existing agencies are not able to keep up with and be cost effective for a lot of the needs that like a marketing team needs or a web design team might need a lot of support on web designers, et cetera. So that's a big category for us. Another big one is technical talent always. That's something that's been bread and butter on our platform from the early days, and we still see tons of Enterprise customers. Increasingly, their businesses are digital, they're trying to put stuff online, they want that talent. And then I'd say the third one is really more operations teams. And so this is where we're serving them with customer support agents with people to do more back-office functions, things like that. And certainly, every company that has customer-facing components has been trying to figure out how do I get better at serving these customers, do it more cost effectively, maybe have their people speaking the right languages in the right time zones. And this is a place where we bring a lot of capabilities for those types of programs.

Got it. Understood. Maybe moving over to competition. This is certainly one area where it just kind of matters what article is written that day, but Microsoft kind of was tops in and out in terms of what they're trying to do with LinkedIn. Would just love to get your thoughts in terms of what you think they're trying to do, but maybe, if not them, the competitive nature of the environment in general?

Sure. I mean this is a big, attractive market. We've been in it for 20-plus years. We've known that others are always eager to get into the space. We also appreciate, given our long history here, some of the challenges that it takes and the patience it takes for companies to really build meaningful, sustaining and scaled offerings. We've seen Microsoft make several attempts here through LinkedIn. They actually are a customer of ours. And the capabilities, I think, that they get through the program we have with them are extremely different and very sophisticated compared to anything that they're kind of playing within the market today from the LinkedIn side of the house. So I think there's a vast difference there in terms of where we operate. And for us, we're very focused on continuing to be the leader in the market through our very differentiated focus on a couple of things. Clearly, our work marketplace strategy is one of those things that nobody can touch in terms of the breadth, the variety of use cases we can serve and the ability to serve everyone from a small business or a small project and then scaling them up to multimillion dollars of spend on the Enterprise side. A second thing that is a big focus for us is continuing to invest in a lot of the kind of thankless things that people don't think about, but are critical in this space around trust and safety infrastructure, know your customer stuff, ID verification. There's so much that we have put in place and predictive technologies and other things that we have to keep customers safe, which is a bedrock for them wanting to spend more, do more, scale more, et cetera, on our platform. And I think a lot of newer companies into the space really underestimate what is required to do that at scale globally for multimillion dollar and large enterprise businesses in particular. And then I'd say the final one is around really building this world-renowned brand and reputation. I mean we have been the market leader for so long and are now trying to open up more of the world's eyes to what is so unique about us serving this market day in and day out with laser focus just on building these solutions and innovating these solutions so that they are the best for customers. We have a ton of word-of-mouth recognition on the talent side. Talent came flooding to our platform because we're so well known there. And that gives us a huge amount of scale and opportunity that now we're turning to leverage as we build more of our brand on the client side. So I think we have a ton of attributes that we are very excited about in terms of key assets that will help us stay ahead of any competitors in the space.

Understood. And talking about building your brand, made the exciting hire recently, Melissa Waters as Chief Marketing Officer. She was prior the Global VP of Marketing at Instagram. Can you just talk about the hire and how you expect her to evolve your marketing strategy?

Yes. I mean from the minute I met Melissa, it was like we were finishing each other's sentences as we talked about the opportunity in front of Upwork, the space, she grasped it immediately. And then as I got to know her more through directly meeting with her and all of her background and reference information, it was clear that she was just an astounding candidate for us to really come in and take our brand to the next level, take our storytelling to the next level, because I think we are at an amazing moment where the world is looking for new solutions to these age-old problems. And frankly, work has changed. Workers want different things out of work. They don't want the old paradigms that were not serving them well in the past. That suddenly through the pandemic, they've realized, wait a minute, I want different value, I want different boundaries, I want different empowerment, freedom flexibility, et cetera. And so we are the platform that can do that, and Melissa really was clearly the right CMO for us to really take the storytelling, the brand investment that we're making and really kind of put it all on steroids so that we are out in the market telling those great stories to customers. And I think also unbundling some of the outdatedness that exists about either remote work or freelance talent. And that's going to be a continued journey, but it's an exciting moment to have her really steering the ship as someone who's so practiced at building new categories, building world around brands and building incredibly talented marketing teams.

Got it. And we had a question that came in. And actually, I think you just answered it. But kind of like what can you do now that's -- given the -- if the macro backdrop has never been better, maybe you would argue that it can only get better from here. But just how to tackle that low single-digit brand awareness, so it seems like Melissa is going to play a central role and be...

She is, absolutely. Everything we do at Upwork is around being smart, being pragmatic, testing, looking at data, all of that, and then marrying that up with our very big vision around how the world of work is changing, can change more and how we can play an instrumental role in giving businesses the innovative work models they need, and client and talent, the innovative career opportunities that they want. And so she is going to be just really helping with all of our leadership team members take that message to the market. And then obviously, we've been building the product to back up the message. And so as we make those promises to customers of what they can find on Upwork, we have already been making such incredible investments over the last few years in the product portfolio, which is now really ready to be, I think, taken to the next level in terms of that stage of kind of brand awareness and visibility. So it's going to be great to see what she does.

Great. And then lastly here just had another question on seasonality from the audience. So if you can just remind us what normal seasonality for the business is. So the mix has changed since 2019, and we haven't seen normal seasonality for over a year now. So just helping investors understand maybe the peaks and troughs of the business would be helpful.

Yes, it really goes back to that kind of normal traveling and business behavior primarily from a U.S. perspective given that bunch of our, kind of like 75% of our overall client activity comes from the United States right now, where there's a slow start to the beginning of the year in January as people get ramped up. The numbers are relatively strong in Q1, Q2. As people start traveling, there's a little bit of a drop off as they take summer breaks, increases back kind of as kids go back to school and people stop doing their summer traveling, drops a little bit at Thanksgiving, ticks back up as people try to end the year strong, and then drops the last couple weeks as people take vacations. That's really the overall margin dynamic. And then clearly, there's other dynamics in the business in terms of how good is our acquisition, our retention, our brand marketing, our performance market, our enterprise that will influence the overall slope. But those kind of month-to-month and week-to-week seasonality dynamics of the business reemerged once the world started acting a bit more normal, even though we still have ways to go to get back to full normalcy.

Well, that's great. Thanks, Jeff. Well, both of you, thanks so much for the time. Always great to spend time with the Upwork team. Really appreciate it. And thanks for all the audience who joined.

Thanks so much, Bernie. Great to be here.

Thanks, Bernie.