Micha Kaufman: Good morning, Brad, thanks for the question. So, as for the first one, I think, first, what we’re really optimizing for is this offline to online, right? So freelancers, you know, in general are addressing things like skill gaps, cost efficiency, issues of scaling up or down very rapidly without the complexities that comes with full-time hiring. And what we’re doing is we’re really doing this but in a hyper-efficient model online. So, we make the actual process that is taking, on average, many, many weeks for companies, we’re changing that to a really simple interaction that takes minutes. So I think that by really covering this entire spectrum from the small needs of micro businesses to very sophisticated needs for more sophisticated and large customers, we’re actually helping to transform this offline to online.
Now in terms of what investors should focus on, you know, we’re trying to ourselves to look for proxies. And one of the interesting things that we saw is that it is hard to find a proxy other than the actual numbers that we’re seeing on our platform, meaning new business formation is not necessarily an indication that those businesses have the spend capacity. Sometimes new business formation is tied with job cuts or people that need to replace or create new businesses, it doesn’t mean that this is going to immediately lead to more spending. I think that if anything, cost of borrow is probably a decent proxy because when you think about that, you know, smaller businesses who need to borrow money to invest in growth have a harder time in this economy.
And if you’re a business that is already generating capital, then you can reinvest without borrowing money. So this is why I think we called out pretty much in the past year and a half. The fact that we’re seeing parity between mid-size, large-size enterprise business and small and micro businesses. And the lower, those lower cohorts of smaller businesses have a harder time than the large one. As we’ve demonstrated, the fact that there is a pretty massive decrease in job openings doesn’t mean that we’re not growing. So we’re seeing and we’re showing, we’re demonstrating an opposite trend. So it’s really hard to find to these proxies. Jinjin, do you want to take the?
Jinjin Qian: Yeah, so SBC, you know, we, SBC is an elevated level as we mentioned before because of the accounting treatment that is booked at cost and it’s tied with the high stock price during COVID. And so from a modeling perspective, you know, this is going to take, you know, four years to vest those, you know, RSUs and options. And so for modeling this year, it will be similar to last year’s level from a dollar perspective. So as a percentage revenue, it will come down slightly. And as we finish the four-year vesting, we do expect that percentage of revenue will more substantially stepping down.
Brad Erickson: Great. Thank you.
Operator: Thank you. And our next question will come from Bernie McTernan from Needham & Company. Your line is open.
Bernie McTernan: Great. Thanks for taking the questions. Really appreciate all the color and date on the complex for simple declines or growth. Wanted to follow up on it. What was the shape of complex growth and simple declines throughout the year? Just wanted to get a sense in terms of if trends were stabilizing or accelerating in any direction just as we use that to forecast ’24. And then on the third bucket, the neutral, any specific examples you could provide in terms of what those gigs are predominantly and over time, do you think the growth will move more like simple or complex or really stay kind of flat?
Micha Kaufman: Thanks, Bernie. Nothing really specific to comment on shape, right? We’re not, we can’t call any difference across the year, and it seems to be steady. We have a full year of analysis that is showing that. You know, obviously, we’ll need to see how the future shapes up, but this is what we can call for now. In terms of the neutral bucket, essentially these are categories that are not being affected. So essentially their trends have nothing to do with the AI impact. So we don’t see any material trend changes due to AI, whether because AI is not involved in it or because it’s just not impacting it. Yeah. So as to your second part of the question, will growth move to simple or complex? I think that at some point every transformation, every technological transformation may plateau at some point, but we don’t think that this is going to happen anytime soon.
So our assumption is that some of the simple tasks are going to continue to be automated, which, by the way, is nothing new. I mean, it happened before even before AI. Automation has been a part of our lives. And definitely the more complex services is where I think the growth potential definitely lies. This is why we called out the fact that we’re going to double down on these categories and services.
Bernie McTernan: Understood, thank you.
Operator: Thank you. And our next question will come from Marvin Fong from BTIG. Your line is now open.
Marvin Fong: Great. Good morning. Thanks for taking my question. So two for me. So first, let’s start on enterprise. Great to see adding over a dozen clients there. Just be interested if there was any additional color you could add about the pipeline that you see for this cohort. And can you speak to any, what’s kind of the size of the clients that are adopting this? Are they 500 plus employees or thousands plus employee kind of organizations, the very large organizations. And then second question, just more of a housekeeping question, but love to see the disclosure about AI being 4% of TMP. But just curious if, since AI didn’t really manifest itself until sort of, let’s call it, May or June, was the percentage in the back half of the year actually higher, and, you know, or maybe could kind of speak to, you know, fourth quarter, you know, what was the impact just in that quarter, just trying to get a sense of, you know, maybe what we’re seeing currently.
So thanks a lot.
Micha Kaufman: Thanks for the questions. So on the first one, on the dozen clients we’ve added to enterprise. So in Q4, we acquired three multinational enterprise clients, including two in the tech space and one in the manufacturing industry. And we also added about 10 mid-size enterprises, including a few media companies. And just to give you a color on size, when we talk about large versus mid-size, we categorize it below or above 3,000 employees. That hopefully is giving you color. On the second part of your question, well, we’ve been responding to the changes or the announcement of AI. I mean, ChatGPT was announced November of 2022. So as far as we’ve seen the impact of started at the backend of 2022. In the beginning of 2023, we were already with about 20 or 30 categories that we’re dealing with AI-related services.
So for us, it’s really a full-year effect. That said, obviously, categories are very dynamic on the market base and outside of the market base the demands for those and they’ve been developing throughout the year. But we’ve been, you know, we have been talking about the net positive impact of AI throughout the year. And this is just our opportunity to wrap up on 2023 from a full year perspective and really calling and putting an actual number on it.
Marvin Fong: Okay, that’s fair. Thanks so much, Micha. Appreciate it. Thanks, everyone.
Micha Kaufman: Thank you.
Operator: Thank you. And our next question will come from Rohit Kulkarni from ROTH MKM. Your line is open.
Rohit Kulkarni: Hey, thank you. Thank you for the extra color on GMV growth and the underlying layers. I guess just on metrics and how they affect your guidance for GMV. Anything you could provide to unpack a little bit more with regards to kind of trend in active buyers and spend per buyer as we think ahead. How that stacks up to help you accelerate GMV.
Micha Kaufman: Yeah, Thanks for the question. So essentially, I think, as to active buyers, what we’re seeing is what we’ve seen so far, meaning because of macro, there isn’t any noticeable improvements in terms of our ability to increase those numbers in terms of quantity and therefore we are focused on the quality of those active buyers which is everything we said about the high-value buyers. And obviously, if you continue to track those numbers, you see that the percentage that they contribute continues to increase steadily. So active buyer is going to be similar trends as in 2023. And spend per buyer will accelerate in your year-over-year growth in comparison to 2023. So, our, really our focus on it is going to continue.
You know, if you just, you know, calling out, you know, the contribution of higher value buyers, those who spend more than $500 with us, that cohort grew 4% year-over-year in 2023, which is significantly higher than the overall active buyer growth. Yeah, so that’s how we view 2023 about 2024, sorry.
Rohit Kulkarni: Okay, that’s a very helpful color. Thank you very much. And then I guess I know there were a bunch of questions on this new disclosure around simple versus complex versus marketplace mix that you have. I think just on that, probably like as far as the mix going forward, anything noteworthy that you’re assuming, assuming with regards to complex services that probably could be a bigger proportion of GMV going forward. And as a sub question to that would be, are there any pricing or take-rate differences as in material differences across those three categories of GMV?
Jinjin Qian: Hey Rohit, this is Jinjin. Yeah, so I think definitely, I think we mentioned in the shareholder letter as well, complex services in ’23 is already almost a third of our marketplace in terms of GMV contribution and much higher than the simple services, which is around 23%. And yeah, given the growth rate, 29% year-over-year growth, it is a big step up in terms of the overall percentage of GMV coming from those complex services. And we do expect that contribution to continue to grow in the coming years.
Rohit Kulkarni: And any noticeable differences in take-rate, Jinjin? Or anything that impact.
Jinjin Qian: Yeah, that’s right. Yeah, so take-rate, nothing really are different. Our entire marketplace takes very consistent like just uniform take-rates across the board. So 20% from the seller side and then 5.5% from the buyer side. There’s no difference in terms of the transaction.
Rohit Kulkarni: Okay. Thank you very much.
Operator: Thank you. And I am showing no further questions from our phone lines. I’d now like to turn the conference back over to Micha Kaufman for any closing remarks.
Micha Kaufman: Thank you, Krystal, and thank you everyone for joining us today. We look forward to an exciting and successful year and hope to see you in person soon. Thank you. Have a great day.
Operator: Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
