Good day and welcome to the Fiverr International Limited Q3 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, This event is being recorded. I would now like to turn the conference over to Emily Greenstein, Senior IR Management. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us on Fiverr's earnings conference call for the third quarter that ended September 30th, 2026. Joining me on the call today are Micha Kaufman, founder and CEO, and Esti Levy Dadon, CFO. Before we start, I would like to remind you that during this call we may make forward-looking statements and that these statements are based on our current expectations and assumptions as of today and FIBR assumes no obligation to update or revise them. A discussion of some of the important risk factors that could cause actual results to differ materially from any forward-looking statements can be found under the Risk Factors section in FIBR's most recent Form 20-F and other filings with the SEC. During this call, we'll be referring to some key performance metrics and non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow. Further explanation and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the earnings release we issued today and our shareholder letter, each of which is available on our website at investors.fyber.com. And now, I will turn the call over to Micha.

Thank you, Emily. Good morning, everyone, and thank you for joining us. Let me start with the headline. Q3 came in ahead of our guidance. We delivered revenue of $90.9 million, above the top end of the $80 to $88 million range we gave you in July. Adjusted EBITDA was $14.5 million, a 16% margin, also well above our range. The beat was led by our services business, where AutoDS and our e-commerce offering performed better than expected and the momentum is carrying into Q4, along with tight cost management across the company. Three months ago, we told you we would run this business with discipline through a hard transition. This quarter, we did exactly that. This quarter is also a good reminder of how we run Fiverr. We are one business with diversified lines of revenue and profit. and we manage it as one to make the top line as large and fast growing as possible and as profitable as possible. Within that, we are working to turn around our marketplace and that is exactly what the transformation I'm about to walk you through is for. Esti will walk through the details, but I want to use my time on two things. What is changing in how work gets found and how we plan to win in the new world? What is changing? For 17 years, Fiverr built one of the best performance marketing engines on the internet, on top of search. That world is changing fast. More and more journeys now start and end inside an AI assistant. Organic clicks are falling across the web, and acquisition costs are rising for everyone who depends on them. We expect that pressure on marketplace traffic to continue into 2027. But here is what has not changed. The work The work that remains is more complex and more valuable. That work needs a human who owns the outcome. Our top talent community remains highly engaged. This year alone, we hosted 62 events with more than 3,500 freelancers. Most of them are top talent. Put simply, this is not a talent problem. It is a funnel problem. and Funnels can be rebuilt. So, how are we going to do it? Our North Star is unchanged, to become the most trusted platform for high-value, high-trust work. Let me show you the progress across our four pillars. First, our push-up market. High-value work now represents 16% of completed projects' gross order amount on a trailing 12-month basis, up from 15% last quarter.

and we continue to see businesses bring us multi-phase, mission-critical work.

For example, a London-based private investment firm that manages institutional real estate assets came to us to build an end-to-end digital operations system. They assembled a team of senior engineers through Fiverr and worked alongside them directly, start to finish. An outdoor recreation equipment manufacturer is building a real-time 3D design engine So both consumers and commercial buyers can configure large play installations before they order them. It has to carry real-world compliance logic, safety zones, material libraries, and parametric constraints. And our freelance team is optimizing close to 300 3D assets to render fast in a browser. And a European packaging and industrial manufacturer is replacing its legacy systems with a single enterprise e-commerce platform that ties together sales, real-time inventory, and fulfillment. A Fiverr Pro team is working through continuous cycles with the client's own leadership. These are not one-off gigs. They are exactly the engagements we are building Fiverr for. Second, matching. In an agentic world, an AI agent does not want 20 options. It wants the right one. Our Knowledge Graph ranks talent on what they actually delivered, not on who got clicked. It performs 3.3 million skill extractions a month across roughly 70,000 distinct hard skills, and every order makes it sharper. The results are already showing. Higher gross order value, more orders per buyer, fewer cancellations, and fewer support tickets. Third, the work platforms. In Q3, we launched Mira, our AI headhunter. Mira turns a vague brief into a clear scope and a precise match. Early results are encouraging. A Mira introduction converts at the same rate as a normal conversation on Fiverr, and the median order value for the headhunter experience is five times larger. Among first-time matches, cancellations on Mira work run about a quarter lower. Every brief makes Mira and the knowledge graph smarter. In 2027, Mira is expected to run across the full journey, from the first conversation to order management, including mobile. Fourth, our growth engines. This is where the new funnel is being built. We launched our first public APIs, CLIs, and MCP integrations, with Fiverr now live inside Claude and ChatGPT. AI-sourced GMV for first-time buyers grew approximately 64% from last quarter. Where this goes is a full agentic experience. An agent finds the talent, scopes the work, places the order, and pays for it without ever leaving the assistant. Whether a business arrives through a browser or an AI agent, it should find one place to get serious work done. One leadership update. As you know, Jinjin was planning to relocate to Israel, where our chief business officer role is based. She decided moving her family isn't the right step for them right now, so she stepped down. We respect that decision and thank her for her contribution. The search for her successor is well advanced, and we expect to announce our new chief business officer soon. In the meantime, Esti and I are running the business directly. To take a step back, the search era built Fiverr. The AI era is where we intend to lead. Thank you, Micha.

Q3 was a stronger-than-expected quarter where our operational discipline and strategic execution shined. Both revenue and adjusted EBITDA came in above the guidance range we gave in July, and we are raising our full-year guidance for both revenue and adjusted EBITDA. Today I will review our third quarter results, update you on our cost structure and balance sheet, and share our fourth quarter and full year 2026 guidance, along with some early color on 2027. Third quarter revenue was $90.9 million, down 15.8% year-over-year, reflecting the continued shift away from low-value transactional work and the search-driven traffic pressure Micha described. This was partly offset by the increase in services revenue. Adjusted EBITDA was $14.5 million, a 16% margin. Two things drove that outperformance. A strong quarter in our e-commerce services and the cost discipline we have built into how we run the company, including tight management of discretionary spend, internal AI efficiencies, and a balanced approach to marketing. Q3 marketplace revenue was $55.4 million, down 24.7% year-over-year, driven by 2.4 million active buyers, $373 in average spend per buyer, and a 28.2% marketplace take rate. Spend per buyer rose 12.9% year-over-year, driven by an ongoing mix shift across the marketplace from low-value transactional projects to $1,000-plus projects. The 25.8% decline in active buyers on a TTM basis was mainly due to the ongoing compression in low-value transactional work, as well as the continued traffic and demand pressure from shifts in search that continued through Q3. At the end of Q3, projects at or above $1,000 represented 16% of completed projects' gross order amount on a TTM basis. Programming and Tech and Graphics and Design were the strongest verticals for completed $1,000 plus projects, with both up mid-teens year-over-year. Growth rates in these verticals slowed in Q3 due to top-of-funnel issues related to SEO disruption. Services revenue was $35.5 million, up 3.4% year-over-year, and accounted for 39% of total revenue. The upside was led by AutoDS, A major e-commerce campaign launched in late August. The campaign is performing extremely well and is expected to continue through the rest of the year. This is a good example of why we manage Fiverr as a whole, not as separate segments of revenue and profit. Non-GAAP operating expenses were $62.2 million, down from $66.7 million a year ago and from $65.3 million last quarter. with the largest savings in R&D and sales and marketing. We will continue to run a lean organization through Q4 and into 2027, and we expect operating expenses to be lower year over year in 2027. We ended the quarter with $316.2 million in cash and investments and generated $9.4 million in free cash flow. Our capital allocation priorities are straightforward. First, Funding the transformation that positions our marketplace for how work is found in the AI era. Second, keeping strategic and financial flexibility in a fast-moving environment. A strong balance sheet is a real advantage right now, and we intend to keep it that way. Now, for guidance. For the full year 2026, we are raising our revenue guidance to $374 to $380 million dollars Up from $356 to $372 million last quarter. We are also raising our adjusted EBITDA guidance to $61 to $65 million, a 16.7% margin at the midpoint, and up from $52 to $62 million last quarter. For the fourth quarter, we expect revenue of $80 to $86 million and adjusted EBITDA of $6 to $10 million. That outlook includes continued strength from our e-commerce business, offset by the continued decline in marketplace traffic we have discussed. We are two quarters into the transformation. We expect the shift from search to AI-driven discovery to drive a steeper decline in marketplace traffic through 2027. We will meet that with lower operating expenses and continued discipline. That said, while we anticipate lower year-over-year OPEX in 2027, The reduction is expected to be offset by the ongoing traffic and demand headwinds, resulting in downward pressure on 2027 adjusted EBITDA margin. We will provide full 2027 guidance on our fourth quarter call. To wrap up, we beat on revenue and profit, we raised the year on both, and we did it while lowering our cost base. We are running a lean, disciplined company. and we are moving through this transformation with a strong balance sheet and a clear plan. With that, we will turn the call over to the operator for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question is from the line of Ron Josie with Citi. Please go ahead.

Hey, good morning team. This is Jake on for Ron. Micha, I just wanted to double-click on the fourth pillar, the growth engine. You mentioned AI-sourced GMV for first-time buyers grew 64% quarter-over-quarter. Just talk to us about what you're seeing from buyers who arrive through those channels, and how do you think about the path for AI-sourced work to become a more meaningful share of new buyer acquisition over the next few quarters? And then I had a follow-up.

Thanks. Good morning, Jake. Thanks for the question. I will start maybe by saying that we're witnessing something that is no less than an earthquake on the Internet or the web as we know it. And I've been talking about this for over a year, and I think that we're starting to see this. The Internet as we've known it for the past 20 plus years is going away. It's going to completely change. It's dying. It used to be that customers searched for things, then clicked on links, then came to destination platforms or websites, then made a decision or an exploration, and finally placed an order or an auction. All of the layer that I've described right now is going to disappear. And there is a changing in the interest of customers between the discovery layer and the focus on the actual output. This is changing the complete economics of search. And I think that we've seen that with the latest earnings from Google. And I believe that this is going to have a domino effect on every possible business we know now, including fiber. No one is immune. There have been businesses that have been built over the past 20 years, and this includes all of the Magnificent Seven as well, but definitely all of the other companies, ourselves included, where Right now, what we should be focusing on, because we don't have 20 years to get adjusted to this new reality, I don't know if we have a year, but all of us need to accelerate and understand that the way customers are going to interact is getting upended. And as a result, I've called out the focus that Vyber is doing on these new experiences, these new channels. I've called out the fact that we're live on ChatGPT and Cloud and hopefully soon on Gemini as well. And the idea is to provide customers without leaving the convenience of their agents the full experience. We don't expect them to continue using the internet as they used to. And it's very important that we emphasize the first principle most that we've accumulated over the years to make sure that their experience is optimized for the best output. Now, where I call this an earthquake is because unlike before, agents don't have brand loyalty. If you as a customer send your agent to purchase something, that agent is not loyal to Amazon or Walmart. or your local business. They're loyal to the business that is going to maximize the output. And we can talk about what it means. But the reality is that everything is changing and the entire discovery, search, link, ads, all of this is completely changing. As I've said, I've called it out more than a year ago. Thank you for joining us. because there's less traffic coming to traditional search and more coming to LLM, which increases the ad density, which means that ads are now more expensive, which means that their efficiency is going down. Now, if you think about what's going in LLM, and I'm coming back to your question about AI customers that are generating GNV through LLMs, What we're seeing is, yes, at the amount level, and this is prior to us releasing the MCPN API, which just happened. But prior to that, what we're seeing is we're seeing less traffic coming from LLMs, but we're seeing a higher quality traffic because these are customers that have had experiences with their agents. So they come with a better, more formed intent to us. Now, we don't even expect them to come to us. We expect to bring Fiverr to them, inside their agents, and ultimately allow their agents to be autonomous in working with Fiverr. This is why we think that this is so important. Obviously, I'm happy to talk about this further, but I'll stop here.

That's super helpful. Just pivoting a little bit on services. AutoDS driving momentum here. Just talk to us about what's driving that e-commerce demand, how durable you think it is, and then maybe how you think about services as a growth engine going forward. Thanks so much.

Sure. I made in my opening comments, I've sent a clear message. Thank you for joining us. and therefore the opportunities that we have to increase businesses and grow businesses faster and contribute the top line into the bottom line, this is where we double click. And I recommend our shareholders to look at it the same way. It's a whole business with different avenues of opportunities and those who have an opportunity to grow, we grow as fast as possible.

Thanks so much.

The next question is from the line of Bernie McTernan with Needham. Please go ahead.

Hi, this is Stephanos Christon for Bernie. Thanks for taking our questions. I wanted to follow up on AutoDS. I believe there is something similar in the first quarter this year where there was a marketing campaign that drove the beat and that pulled forward revenue. Is that similar to what's happening this quarter? And if not, Can you just walk us through the dynamic there? Are revenues supposed to be lumpy? Are they just driven by these campaigns? Any more color there would be great. Thank you.

Absolutely. So as I said earlier, AutoDS is growing extremely well. Within our e-commerce business that AutoDS and its team is leading, there's a number of initiatives that are working real well. So first, their software solution for e-commerce stores. That is doing extremely well. They've created AI tools that help those store owners generate content. That is growing extremely well. And on top of that, we are very successful, fortunately, to run very efficient and capture very efficiently marketing opportunities that are also contributing to growth. So again, it's a mix of different things. It's not relying on just one leg, but actually a multi-vector growth opportunity that the team is capturing very well.

Yes, and I'll add on that that the campaign that we referred to started in late August and it was very successful and better than expected. And it's a partnership with a large e-commerce player. And we expect that to continue into Q4. So that's what led us to be able to update our guidance on the top line.

Got it. Thank you. And then on the LLM Partnerships, I think you mentioned ChatGPT and Claude. Can you just talk about the economic model there? What's the take rate? Who owns the customer? And I know it's early, but how do you expect to handle repeat buyers?

Yeah, so the economics are unchanged. We are thinking about those integrations as the new top of funnel, which is, as I've said before at the beginning, Very focused on the outcome and very friendly to the agent of the customer. It is not changing the model. It is true that we've been one of the first 100 brands to also get exposure to advertising on ChatGPT. And I've called out some initial information there, but I think it's very early on that model. And it is probably going to be embraced by other LLM providers. But the main thought around this is we want to meet the customers where they are. And they're shifting from their usual browsing experience and search and clicking links Thank you so much.

The next question is from the line of Marvin Fung with BTIG. Please go ahead.

Great. Good morning. Thanks for taking the questions. Maybe to start with on MIRA, you talked about kind of expanding that in 2027. Should we kind of expect that to apply to all your categories in traffic by then? Or how is that exposure going to kind of phase in in 2027?

Hey, thanks Marvin. So the idea behind MIRA is the understanding that there is fundamentally two ways to experience working with a talent. One is a discovery layer. That allows for the customers to do more on their own when they think about picking the right talent or the right service and the right price and everything. The other is an approach that you should think of as a headhunter. Headhunter, what it does is really does a lot of the work of qualifying the two sides of a transaction. For clients, It's qualifying talent. But for talent, it is qualifying that the client that stands across them is the right client for the services that they offer. This saves for both sides tremendous amount of hustle and time. Now, headhunting is not necessarily the right experience for everyone. And for us, it's really important to surface Mira For the right customers at the right time. Now, because we've developed the knowledge graph and we collect tremendous amount of information about both the clients and obviously about the talent, we can do very bespoke types of matching. And this is what really Mira focuses on. So as we introduce this, we've begun slowly. to ensure that the quality is actually getting delivered. And the way we measure it is we measure it by success. And success is getting measured by the happiness of the fulfillment that we can deliver. Once we saw that this was actually outperforming everything else we've created along the space of headhunting or sophisticated matching, we started expanding it across entry points. Again, we want to be very cautious because if you introduce Mira to the wrong, it's like introducing a headhunter for someone who doesn't want headhunting, you don't get the right results. So our expectation over 2027 is continue expanding this offering as we learn and we qualify which clients Mira is great for. And that's exactly what we're doing. We're seeing some expansion right now. It's very successful, and we'll continue scaling this over time.

That's great. Thank you. And a follow-up question. Just on the quarter, the third quarter, the spend per buyer remains very strong here, but on a dollar basis, I guess, sequentially, it rose $5. That's maybe a bit less than in recent quarters. Is there... I know you called out the growth in the higher value projects, but just kind of square those two metrics. Are we seeing some weakness somewhere else in the spend-per-buyer metrics?

Yeah, thanks, Marvin. So spend-per-buyer is growing because we're seeing higher 1K plus projects. We said now it's 16% of our DOAs. But that being said, the traffic headwinds that Micha described are affecting the entire market. So what we're seeing is and what we're expecting is the spend per buyer to continue to grow. However, there would be some effect on the entire transaction, so we'd be on a slower pace.

Got it. Okay, that's very helpful. Thanks, Esti.

The next question is from the line of Jason Halstein with Oppenheimer. Please go ahead.

Hey, this is Julian on for Jason. You've outlined a number of initiatives to adapt to how AI is changing the top of the funnel. How should we think about those efforts translating into improved acquisition trends in 2027? And then I have a follow-up.

Julian, thanks for the question. The answer is It's very hard to tell. When you think about AI integration, there is no blueprint on how this is done. There is no best practice on how this is done. As I've said at the beginning, agents do not have brand loyalty. They don't care. So you need to optimize for things that they do care about. I'm not going to go into the details for obvious reasons, but it's an uncharted territory, much like doing SEO 20-something years ago was uncharted. So it's very hard to extrapolate what the implications of this on the top funnel is going to be. Now, as I've also said, the traffic that we're seeing coming from agents The business is increasing. The quality is increasing. And building on that, we're making it much simpler for those agents to actually perform actions on behalf of the clients, their owners on Fiverr. We are full steam on this. So whenever I would have something specific or at least solid enough to make some projections, I promise to share those with the market.

All right. Thank you. And then I know you guys have already discussed AI agents a lot during this call, but could you try to size what the opportunity here is for the top of the funnel and then Over what time frame do you think this could really grow? Is this just like a 28, 20, 30 type of thing or is this more imminent?

Well, the necessary speed is yesterday. The horizon is harder to anticipate. Now look, I've called out this domino effect. And it's actually much more complex than we can get into in such a short call. But essentially, it is changing pretty much everything when you think about the movement from top of funnel to the discovery or the destination experiences. Even if you think about things like booking a hotel or shopping for something, everything is changing to the outcome, not the experience that gets you there. The same applies for software. You don't care as much about the software that is doing the job. You are only focused on the output. Regardless of what happens behind the scenes. So this is going to change the software, including enterprise software space as well. Now, the rates of change, unlike 20 years ago, are extremely fast, which means that the ability to offset for these changes are very complex. I'll give you an example. Think about Microsoft and their dominance in enterprise software. Now, if they put a lot of emphasis on Copilot as a channel for customers, if Copilot can actually deliver the output, then it's going to be harder to sell enterprise software because you care less about the software, you care more about what the software can output. Can you offset by crazy growth on Copilot on the decrease on enterprise software decline or potential decline? I don't know. Each brand would have to figure out how to do this. So the urgency of doing this is immediate. The horizon of how fast Customers are going to embrace these new types of experiences and funnels is unknown, but the assumption is it's going to happen very fast. And again, you see Meta with Muse, and you see Instinct. And then you see the announcement of Anthropic with Duo, and you see ChatGPT with Dots. and there's a long line of agents that should do things on behalf of their users. This is going to happen extremely, extremely fast. That is the assumption, which makes it very urgent to act on and realize that the entire ecosystem is changing and definitely, by the way, the ad space. Because again, agents don't care about ads. They don't click on ads. The click to destination has zero meaning. They want to get to the output, to the result. So it sounds bombastic, but again, I've been talking about this for over a year, and it is happening super, super fast as we've just seen in the past two or three days.

Awesome. Thanks.

The next question is from the line of Matt Condon with Citizens. Please go ahead.

Thank you so much for taking the questions. My first one, can you talk about what you're currently seeing as far as the SEO disruption? My point is, have we seen any sort of stabilization after an impact, or are you continuing to see trends worsen here for SEO? And then, Mihan, my second question, I know we've had on AI agents a bunch, but just another follow-up here. Just as they continue to handle discovery and purchase process for buyers, how are you thinking about the potential implications for Fiverr's direct customer relationships? You know, buyers are increasingly transacting to third-party agents rather than going to Fiverr directly. Does that create a risk of losing brand affinity, customer loyalty over time and change the marketplace into an even more transactional type marketplace versus something that people come back to time and time again? Thank you so much. Thanks, Matt. So on SEO, traditional SEO or the impact of SEO is decreasing to the point where it's going to be dead very, very soon. And the reason is that when you have less traffic coming to traditional search or the traffic that comes to traditional search wants the Gemini component, wants the AI component rather than the There's a need to increase ad density. I think we heard that coming from the largest search engine. And when there's very high ad density, there's no space for organic results. And so the impact of SEO is likely to decrease to the point where it's no longer important. Now, we used to think, I say used to think, this was just six or 12 months ago, that GEO is going to replace SEO, which means generative engine optimization. But I don't think that this is the case at all. Because again, what agents want to do is to provide outcomes for their users. They don't want to replace Thank you very much. You asked a question about brand. And I already think that I talked about this. I think that brand loyalty is changing. And yes, it is in a very high risk. Because agents don't care and they don't have brand loyalty. Therefore, you should surface the... differentiating layer into the agent layer. Luckily, over the past 17 years, we've built a long list of these modes that I've been, I kept talking about in that context. And sure, it's going to be harder because it's not going to be dependent on brand loyalty, but if you use your asset correctly, Then you are likely to get the output chosen by the agent with your platform. I think all brands have to play that game, understanding that the powers are changing in this ecosystem. But we've started and we're doing this. and I'm confident that the assets, the data assets, the fact that we have so much nuanced transactional understanding, the fact that we know how to guide on how a project should be managed and orchestrated, the fact that we know where is the importance of human judgment within that ecosystem. The trust, the quality, the reliable fulfillment, all of these are increasingly important sources of differentiation. And so we believe that this transition could happen significantly faster than previous transformation on the Internet. And this is why it's Thank you so much.

We'll take our last question from Brianna Kandu with UBS. Please go ahead.

Hi and good morning. This is Brianna Kandu, mom for Josh Chan. A couple questions on my end. First, can you talk through how marketplace trended in Q3 versus expectations? And a follow-up to that, when you say steeper decline in marketplace, does it mean steeper than expected even three months ago? And can you go into more detail on why that may be? Thank you.

Yes. So in last quarter, we called out the traffic headwinds. and we saw those coming into effect in Q3. So it was within our expectation. Our expectations, of course, were arranged and it was there. What we're seeing that is continuing in Q4 and we expect the traffic deterioration to continue and to increase by the end of the year and also towards 2027. And that's the reason we're investing in all the things that Micha just talked about. on opening these new traffic channels, the transformation that we are updating or upgrading our marketplace in order to entertain the high-value transactions. So all of these are actually being done in order to solve those trends that we're seeing.

Thank you. And then I guess a follow-up. On capital allocation, I know a lot of investments being made on the platform, but curious if more M&A is appealing at all right now, for example, like with AutoDS. Thank you.

M&A is not on the table now. Our focus is investing into the transformation.

Thank you, Chris Owens.

This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you, Maria, for moderating today's call and thank you to everyone who dialed in. Wishing you all a great day and look forward to chatting with you later.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.