Upwork, Inc. (NASDAQ:UPWK) Third Quarter 2022 Results Conference Call October 26, 2022 5:00 p. m. Eastern Time
Participating companies
Evan Barbosa – Vice President, RI
Hayden Brown – President and Chief Executive Officer
Jeff McCombs – Chief Financial Officer
Conference Call Participants
Bernie McTernan – Needham
Matt Farrell – Piper Sandler
Logan Reich – RBC Capital Markets
Marvin Fong – BTIG
Maria Ripps – Genuineness of Canaccord
John Byun – Jefferies
Rohit Kulkarni – MKM Partners
Andrew Boone – JMP Securities
Operator
Have a nice day. And thank you for being here. Welcome to the call of the Upwork earnings convention Q3, 2022. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a response session. [Operator Instructions] I would now like to turn the lecture to your speaker today, Evan Barbosa. You can get started.
Evan Barbosa
Thanks. Welcome to Upwork’s discussion of Q3 2022 Monetary Results. Today, Hayden Brown, Chairman and CEO of Upwork, and Jeff McCombs, CFO of Upwork, lead the discussion. Following comments prepared by management, I’ll be happy to answer your question, however, I’ll take a look at protection first.
During this call, we would possibly make statements similar to our business that are forward-looking statements under the federal securities law. These statements are not promises of long-term performance, but are subject to a variety of risks, uncertainties and assumptions. Our true effects may also differ materially from the expectations reflected in the forward-looking statements. In addition, any statements regarding the existing and long-term effects of the Russian invasion of Ukraine and our resolution to suspend business operations in Russia and Belarus and COVID- The November 19 pandemic on our business and the existing long-term effects of the measures we have taken in reaction to the invasion of Ukraine and the COVID-19 pandemic are forward-looking statements similar to topics beyond the grain. under our control. and evolve rapidly.
For a discussion of the dangers of curtains and other vital points that can only our actual results, see our SEC filings found on the SEC’s online page and on our online investor relations page, as well as the dangers and other vital points discussed in today’s letter to shareholders. Additional data will also be filed in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 at the time of our filing.
In addition, reference will be made to non-GAAP monetary measures. Information regarding the reconciliation of non-GAAP measures to GAAP can be found in the letter to shareholders posted this afternoon on our online Investor Relations page at Investor. upwork . com. As always, the known and differently reported figures and comparisons for the third quarter of 2022 or the third quarter of 2021 are discovered. All measures are in accordance with GAAP unless listed as non-GAAP.
Now I pass the one to Hayden.
Brown Hayden
Thank you, Evan. Thank you all for joining us today in our third quarter 2022 results call. As we close out the third quarter of 2022, Upwork has transparent signals that our business and pricing proposition remains critical for our clients in times of economic uncertainty. Revenue increased 24% year-over-year to $158. 6 million and GSV increased 14% year-over-year to exceed $1 billion in the quarter, and adjusted EBITDA was a loss of $2. 9 million. We focus on making prudent decisions and sustainable investments in our business to generate stable and sustainable growth, even in a context of challenging macroeconomic conditions.
Most importantly, our customers continue to depend on us to enable their critical jobs and business in those dubious times. We have pioneered and benefited from major paradigm shifts around remote jobs and hybrid workforces, basic tweaks that have shaped the new truth of paintings as we know them today. This radical change is exemplified by the fact that a quarter of U. S. personnel are in the process of being exemplified. The U. S. now paints remotely first, or mostly remotely, while 71% of corporations expect remote paints to be part of their operations in the future.
This new truth of paintings opens up a great opportunity for Uppaintings to introduce itself to 90% or more of corporations and recruiters who have not been aware of Uppaintings and integrate them as clients. Nowhere has this opportunity been more evident and at the center. of our priorities that the launch of our new crusade logo at the end of September.
As we paint now, appearing through television, online video, audio streaming, social and virtual media, the crusade reinforces our confidence that paintings liberate human perspective rather than restrict it and highlights that now is the time to embrace the new tactics of execution. that have emerged in recent years.
It targets prospects, clients and client skills, who still know Uppaintings, but who, like us, recognize that the world of paintings has replaced forever. Our strong commercial position and resonant pricing proposition allow us to remain in evidence of infringement either through our new logo crusade, as well as our amplification of maximum valuable benefits to our clients’ flexibility and hiring qualified skills at our fingertips, operational agility and bottom line.
Operator
[Operator Instructions] Ladies and gentlemen, here is the operator. I that there will be a slight delay in your convention, please update remain on hold, your convention will resume momentarily.
Brown Hayden
Hello? Well, can you hear me in that line? Well, can you hear me?Can you hear me on this phone line? Fine thank you
Operator
Thank you for your patience and gentlemen. Hayden, you can start
Brown Hayden
You just disconnected my line. Can you hear me?
Operator
Yes, we hear you.
Brown Hayden
Our strong business position and resonant pricing proposition keep us on the offensive, as evidenced through our new logo campaigns, as well as our implications for maximum value for our clients, flexibility in hiring qualified skills at our fingertips, operational agility and economy. of results.
Our solution meets the tight budgets many organizations implement amid economic uncertainty, as consumers find they can save up to 50% on charges through Upwork compared to classic staffing alternatives. By offering highly professional and varied skills from over 180 countries at an affordable and fast price, clients can have greater flexibility with our charge design and reduce operating costs through skill innovation.
As a result, we help companies improve EBITDA and generate value-added growth, while retaining the option that McKinsey Research has proven is vital to dealing with or even driving economic downturns.
Notable brands we received as corporate consumers this quarter included Anheuser-Busch InBev, Constellation Brands, Cushman and Wakefield, iCIMS and Marriott International. These corporations leverage our platform to execute their business plans, leverage new, scalable, and flexible resources from remote talent, and have a competitive advantage. Market makers like those new consumers contributed to the company’s forged earnings expansion of 41% year-over-year to $12. 5 million in the third quarter. Along with a strong expansion in consumers spending $1 million or more. This underscores how our pricing proposition resonates with commercial consumers.
We continue to invest in office innovation, with the purpose of helping clients and skills get up and running smoothly on the Upwork platform and return to Upwork every time for a consistent and productive experience. We deliver critical and differentiated value, not only through the combination of customers and skills, but also serving as a hub for transparent administrative responsibilities for skill around billing and payment and also for customers around contract control and payment activities.
We enhanced those core reports in the third quarter, releasing improvements to our contract workspace that friction and allow customers and skill to manage contracts, navigate all of their contract actions, and more smoothly review weekly invoices, payment contract terms, and feedback.
In addition, we’ve made innovations to our business suite, enabling approvals based on a team of multiple approvers that aid complex workflows at scale, and adding more subtle search capability for faster access to our global pool of expert-approved talent. who are in position and pre-approved. paintings with such companies. Project catalog inquiries across more than 90 paint categories in the third quarter continue to foster effective connections and collaboration between clients and talent.
This quarter improves the experience, allowing them to verify the scope, skills required, feasibility and timeline of a potential task, speeding up and starting to work together, which can be 50% faster than in the skills market. long-term relationships that go beyond an initial assignment commitment.
Ultimately, this leads to visitors spending more on the assignment catalog. In fact, the 30-day spend of consumers using queries is about 3 times what consumers who shop in Project Catalog have spent.
Finally, thousands of qualified professionals in our market are adding profile badges that demonstrate and validate their expertise through our budding partnership with Credly, the market leader in virtual accreditation, enabling clients to adapt faster and with more confidence. With access to a wide diversity of skills and jobs, and the technological functions to have a more effective interaction, customers and skill in combination describe the new truth of work, paving the way, regardless of the economic uncertainty that may persist.
Certainly, as we expected from our quarterly results at the moment, our clients are not absolutely immune to this uncertainty, as evidenced by the weakness we continue to see on some measures. situations were in line with our shared expectations in the past. We saw the weaker visitor acquisition and retention trends we saw in the current quarter stabilise in the third quarter, and weakness remained more pronounced in Europe and among small and medium-sized businesses. .
Our commercial LAN team also experienced long sales cycles due to the macroeconomic outlook for a handful of accounts. This, coupled with some demanding operational situations in development, resulted in fewer commercial consumers being discovered in the third quarter compared to the target. Demanding situations of expansion and the business opportunity remains hotter than ever for Upwork.
In addition, we continue to run our own business with discipline. Taking care of resources has been a guiding precept at work. And as the economic landscape evolves, we have several moves in place, adding comparative aids to our budgets, adjusting hiring, scheduling and prioritizing roles more aggressively, reviewing and reducing supplier spending, and ensuring we have a strict operational cadence around job control with a maximum degree of visibility and an internal association toward our goals.
Due to the largely recurring and programmatic nature of most consumer activity on our platform, we can monitor behavioral adjustments as they occur, and be agile and adjust our plans as needed. This gives us greater confidence in our ability to manage the business responsibly in a dynamic environment.
We continue to view this era of macroeconomic uncertainty as a critical time to focus on expanding our market leadership position and consolidating new and comprehensive tactics for operating in the paint ecosystem. Remote painters, regardless of their industry, whether their business need is project-based or ongoing, where they are transforming their workforce, or their existing economic climate.
We also know that Uppaintings encourages deep, varied and highly professional netpainting around the world. The global job market remains the center of gravity for those painters and career innovators to build trusting, lasting relationships and do more together. And we will continue to innovate, evangelize, and expand it into the fourth quarter and beyond.
Thank you for joining us on this journey. Before I answer your questions, I just want to thank Jeff, because this will be his last winning call for Upwork. I am incredibly grateful for all his contributions to the company and our investment network over the past few years. His market experience and enjoyment positioned Upwork for continued expansion and put us in a strong position for the next chapter. Good luck to you, Jeff, in all your long-term endeavors.
We will now open the call for your questions and thank you for your patience in the face of some of today’s technical challenges.
Q&A session
Operator
[Operator Instructions] Our first comes from Bernie McTernan’s line with Needham
Bernie Mc Ternan
Great, thanks for answering questions. Perhaps the company’s almost stable profit has just begun. Therefore, I perceive the most sensible problems of the funnel and the gross sums that were addressed in the letter to shareholders. ? And I know that you have insisted or reiterated the doubling of the sales force?But are you still sure of yourself on the $300 million long-term profit goal?
Brown Hayden
Thanks for the pregunta. Bernie. Je, we haven’t noticed any slowdown in terms of visitor spend retention. In fact, we’ve noticed a very smart fortune with the team, expanding the number of existing consumers who have sought the solution. We discussed that one of our clients who wasn’t among the top five sensible before approached the most sensible on the list and is now close to a $40 million execution rate with us.
Therefore, we are very satisfied with the track record of our existing consumers, who continue to spend with us, expanding their expenses in many cases. We do not aim for long-term goals in this call. I think it’s something we know how to do more often. On the fourth quarter call, however, we continued to expand this flooring team as planned and felt smart about the overall opportunity, not replacing the way we thought about it. And the topic spent on his first component of his practice was very smart with our cohort of companies.
Bernie Mc Ternan
Great, and then the letter to investors struck a smart balance between making a long-term investment and also focusing on short-term load discipline. Are there early indications and how to think so far about the clever fortune of new logo marketing campaigns?And what can that mean for the 23rd? And then, how much wiggle room is there on some of the other sites to hit profitability targets in the 23rd, assuming logo investment and marketing continues?
Brown Hayden
Of course, we definitely monitor our investment in the logo, in the ability to measure. Seeing this, we knew early on that we were getting into the logo business that would be a multi-quarter journey. And we haven’t come out in the other aspect yet. But we are pleased with our ability to achieve our logo targets in the context of EBITDA earnings ability next year. And therefore, it will be an ongoing commitment for us. And again, we’re excited about the new crusade we’ve launched, a lot of smart things are happening there. But next year we will see that even our ability to profit even in the context of achieving our logo and awareness goals.
Bernie Mc Ternan
Great, thanks for answering questions.
Brown Hayden
Absolutely.
Operator
Our next one comes from Matt Farrell’s line with Piper Sandler. Your line is open.
mate farrel
Thank you for accepting my question. And it was wonderful to work with you, Jeff. I tried to focus a little on the macro. This appeared to be in line with expectations for the third quarter. And you provided the figure of $10 million to $15 million for the current part of the year. Is this still the right way to think about the fourth trimester or has the scenario worsened?And I guess, how do we deserve to think about the macro headwind maybe when we start looking into early 2023 as well?
Brown Hayden
Of course, I’ll start Matt, and then Jeff will upload everything you need to go up. But
I think we’ve definitely noticed everything so far, from what we can see now according to the $10 million to $15 million we communicated in the past. And it was a smoother-than-normal visitor acquisition and retention, which slowed in the fourth moment and then stabilized in the 3rd quarter.
And I think we don’t see any additional slowdown right now, or anything we’re involved in going forward, yet we’ve priced that $10 million to $15 million for the third and fourth quarters. And I think that’s where we’ve given the safeguards, and we feel good, that’s the point of visibility around any exposure, we have the macro where we were in the last quarter and consistent with where we’re looking at things right now.
Jeff McCombs
And just to complement that, Matt, noted that our guidance for the fourth quarter midpoint is pretty much in line with actual third-quarter numbers on the earnings front. And overall, we’d see a bit of seasonal expansion from the third to fourth quarters. So our macro-adjustments to these types of trade-offs are this overall seasonal adjustment. And as far as 2003 is concerned, we’re not commenting on that at the moment. But more on that on this fourth quarter call.
mate farrel
Merci. Et Hayden, this one is for you. He recently talked about the upcoming bankruptcy of Upwork’s growth. Could you provide more main points about how you think this sounds, and some of the drivers, trends, and dynamics expressed, especially with macro?
Brown Hayden
Of course. The next bankruptcy for us is about unlocking the opportunity we have around our overall hard work market, which is more than a skills market, that we’ve had and that historically has been a great source of strength for us. But we’ve introduced new products in the year and a half, two years, we have more innovation on the way.
And we made some of those strategic bets around sales force and business expansion, our investment in logo marketing. And it really laid the groundwork in recent years for this upcoming bankruptcy of increased visitor adoption of the way Upwork works and all the benefits we’re offering them.
So the next bankruptcy ahead of us is that we continue to innovate for consumers, creating awareness in the market that takes us beyond that, a cohort of less than 10% of consumers who knew us today, and bringing this style to the one we were building. a much broader stage.
Operator
Thank you. Wait for our next Array Our next one comes from Brad Erickson’s line with RBC. Your line is open.
Logan Reich
Hi. This is Logan for Brad. Je just wanted to double click on the company that, like you, had internal and external headwinds. I just wanted to ask, where would you say there’s the most powerful headwind of the quarter?? And then, just for everyone, a kind of calendar to get back to where they need to be internally?And then, externally, can you just look at economic uncertainty and the macro environment how it affects consumers or the decision-making of potential consumers?? Thank you.
Brown Hayden
Thank you, Logan, I see a business, we literally feel smart where we are overall, again, with a 41% increase in business profit for the quarter. There were issues with our floor equipment during the quarter and it was really more due to internal execution than macro, although we’ve noticed fuel cycles being extended for some accounts, and that was also part of the challenge.
But from an internal execution perspective, there were a few things like the messaging formula migration that was interrupted before it affected our ability to get as many leads into the most sensible funnel as we were looking for because we had disabled a bunch of marketing. campaigns and things like that. Therefore, we feel smart to know what those demanding execution situations have been and have been and how we are addressing them. And our recruitment to this team continues on track, which is another key piece of the puzzle for us on the floor side.
So in terms of time, I think it could take a quarter of a time for us to get back to where we need to be. And the macro presents a bit of uncertainty as to what exactly that delay is. But we feel smartto have a preview to show you which pilots we can and where you’re headed.
In terms of the effect of macrofactors on the decisions of potential consumers. I think, on the one hand, we’ve noticed accounts where they’re very excited about expanding our style now, whether they’re existing consumers or even land-based consumers where, because they have other spending restrictions, our style is very appealing. But on the other hand, while we were talking about longer transaction cycles, that’s another factor.
So we felt a little bit of that. But in general, again, for existing customers, in particular, who are already familiar with our style and it’s us, we haven’t noticed the macro as a headwind at all in that regard.
Logan Reich
Great, thanks for answering the question.
Operator
Our next one comes from Marvin Fong’s lineage with BTIG. Your line is open.
Marvin Fong
Great, thanks for answering my question. I appreciated the main points you provided in Project Catalog, consultation and success. I was wondering if he discussed the significant accumulation of expenses after 30 days. So, make our product catalog projects with the query technique have the average duration of the skill market. Or are they still a little smaller?And then I have a follow-up.
Brown Hayden
Of course, Marvin. I think they still are, we see them as a springboard between the possible look of the catalog and the skills market. So they’re in the middle. But they’re also like a pretty dynamic area for us. It’s a new logo product, we’ve just launched it, in the site’s more than 90 categories.
So, I must emphasize that those were the early days when it was a new product with the logo. And just introduced this in all our categories and consumers, it is an emotional situation that we are very excited about. Because of all the shows we watch, consumers are looking for this product. And we are in the process of implementing it in many new contacts with them.
Marvin Fong
It is ok! Super. And my follow-up is also in the company. Just sought to ask the question, press. But are you still convinced that those product decisions drag on?And can you give us a precise concept of time?How long does it take consumers to make that decision?Thank you.
Brown Hayden
Yes, thanks. We haven’t noticed conversion rates being replaced in other things in our funnels. So, the symptoms are quite positive there, which does not catch our attention. These are fairer cycle times. And, for example, some of the problems we’re seeing are just introducing more approvers into the process, or some corporations seem to turn more to outside counsel to worry about approving their deals, because they’re more cautious about that right. now.
So, the types of challenges are the type of challenges. And the accumulation in cycle time of those things, I mean, that’s all we’re seeing, but it’s not, you know, absolutely blowing up the process. So, again, we believe this is a factor that doesn’t derail our terrain: our floor team significantly, was the minority of the quarter’s challenge and some think it definitely is: it was more operational on our side, in terms of our myths. And it is, in some ways, comforting.
I mean, it’s unfortunate, we’re not satisfied with this result, but it’s comforting that a lot of the disruptions we’ve noticed are hampering the floor team. We’re dealing more with internal developmental pains than we’re just running, and we feel smart to be there to fix those messes.
Marvin Fong
So that’s smart to listen to. Thank you Hayden. Et good luck, Jeff, on your next projects.
Jeff McCombs
Thank you Marvin.
Operator
Thank you. The following is from Maria Ripps from Canaccord. Su line is open.
Maria Ripps
Great, thanks for answering questions. First, is there anything to report in terms of retention curves or spending patterns by category or sector?I mean, obviously, the generation has been affected by spending and personnel cuts. Or would you say what you see is broader?
Brown Hayden
You see, what we see is broad, with one caveat, as mentioned. Part of the rest of some measures has been more with SMEs and more in Europe. So I would say that’s exclusively what we’ve noticed a little bit in the U. S. and, in some cases, with giant consumers, but it is more pronounced with smaller consumers and in Europe. That’s where we see differentiation. We don’t see any genuine differentiation by sector, type of business, or any of those other dimensions.
Maria Ripps
They gave it to me That’s very helpful.
Brown Hayden
As for the cohorts. I wouldn’t call anything there either. Maria, I think you were talking about consumer cohorts. I don’t think there is anything to point out about this dimension.
Maria Ripps
And then secondly, his engagement rate has increased very well, either sequentially and year after year, and he talked about various drivers of that. How does it merit that we think about some kind of sequential progression from here over the next two quarters?
Jeff McCombs
Yes. Hello, Maria. Thank you for the question. Therefore, the warning about the subsequent two quarters was basically due to the value update that we implemented in the current quarter, in the middle of the quarter. either the time and the third trimester. It’s fully incorporated now, so you may not have that benefit. We still have the momentum that our customers continue to find more and more costs with us and spend more with the freelancers they work with.
The price levels of our multi-tier service structure decrease. Therefore, this dynamic will continue to develop. And all the additional upward pressure on the participation rate that we have experienced will also continue to occur, which means that the participation rate on the business side is developing faster than that of non-business companies. Participation rates. So those will be the dynamics of compensation.
We provide guidance on where we think catch rates will be in 2023.
But those trends will continue to manifest themselves for the foreseeable future.
Brown Hayden
Great, thank you very much. And Jeff, lucky for the future.
Jeff McCombs
Thank you so much.
Operator
Our next one comes from John Byun’s lineage with Jefferies. Your line is open.
Jean Byun
Hello thanks. I’m John Byun for Brent Thill. I just have a few questions. First, corporate logos that are going to show the letter that we’re awesome this quarter, more recognizable logo names. I guess, I wonder if there’s anything to read from there. Is there a lot of those things ripening? And is there any color you can upload to that?And then I’ll stay upstairs.
Brown Hayden
Thank you, Jean. Yes, we are also very happy with those consumers. I think our company continues to be more and more recognized. Our sales team does a phenomenal job, despite some setbacks that make strides with many savvy consumers. . We’re talking about Marriott, ABM [ph] Dun
I think a lot of other people in the outdoor world think Upwork is a solution for you, tech corporations, or some kind of forward-thinking company, but in reality, we’re Array, I think, we contact so many corporations, and therefore so many industries, who increasingly perceive the price of our model, How it gives them the most productive experience and agility, the cost savings, access to the skill they surely need, right now, whether it’s an 80-year-old or 100-year-old company. or a small business just starting out. I think that’s exemplified through some of those logos and the resilience of our business, even in those dubious times we find ourselves in.
I think it also illustrates the ability we have to unlock that trillion dollars TAM that we’re looking for through corporations like the ones we made this quarter.
Jean Byun
Thank you very much, that’s helpful. And then I have another macro-related query that suggests the year has gone down sequentially. I think it was discussed to have some familiarity with the rotation or on the chart, but I searched to see if maybe you could analyze it a bit. between maybe seasonality and macro or I guess. . . I guess you’re targeting the visitor market, the visitor is worth changing. Any color will be useful. Thank you.
Jeff McCombs
Yes, as you pointed out. There are a number of boosters that have played there. First, the macro momentum that softened the current quarter and stabilized the third quarter. Therefore, it played a bigger role in the cause of this quarter. Decrease of the fourth.
Secondly, Ukraine also, the war in Ukraine also played a role where the implementation of our adjustments around May 1 had an effect of some months there, while it had an effect of a quarter of an hour in the 3rd quarter. This is compensated in some way through the replacement rate that was increasing, the substitution innovations that were increasing.
Third, the change in value, which perfectly matched our expectations, provided the features that are gaining popularity among customers, cutting the ones hidden behind the paywall. Higher incomes have a higher share. And unsurprisingly, we also think there may be an effect on GSV. And we’ve noticed a little bit of that too.
And then the map, I guess, I’ve already discussed the macro. So those are the main drivers. We don’t provide context in terms of the absolute distribution of those. But those are the main reasons why we have noticed this decline. In addition to the second quarter to the third trimester, seasonal dynamics are usually also a slower jump from one quarter to the next. So when you combine it all, we end up with this decline.
Jean Byun
Thank you so much. And I wish you all Jeff.
Jeff McCombs
Thank you so much.
Operator
Thank you. Wait for our next Array Our next comes from the lineage of Rohit Kulkarni with MKM Partners. Your line is open.
Rohit Kulkarni
Hey thanks. A few questions. One is just about how visibility or uncertainty you see, through conversations with your consumers over the past 60 or 30 days. That has replaced in general, because we hear many other corporations talk about growing uncertainty, a growing lack of visibility. So what December might look like, that’s not all the degree of confidence they can say right now.
So I’d like to hear what you’re hearing. I love that you reiterate your advice, but I just want to see if there’s a change in the way certainty or conviction has evolved. And then I have some quick follow-ups.
Brown Hayden
Yes, these are two questions, Rohit. No I think there has been a big change in the last 30 days around its point of certainty. But there’s a big verbal shift in each and every company right now around automatic tuning in general. So, I think where we’ve taken that, in terms of how we get a sense of our directions, we expect each and every company in the fourth quarter to continue to be very cautious about their spending, very measured with their expenses.
And that’s all we, at the margin, are expecting again, a modest effect and an effect on our fourth-quarter numbers. Because, in the fourth trimester, that’s not the case, other people are more in this area, like employing it or wasting it with their budget, and it’s just another mindset. So I think it’s a temperature that exists in the surrounding area right now. And that’s something we’ve taken into account when thinking about how the rest of the year is going to go.
I think the other dynamic we hear from our consumers is, our consumers, especially if you think about our corporate clients and replacement agents, who are the ones who regularly advocate for the Upwork solution within those companies. So, other people like [Indistinguishable] at UST, they are the ones who are the replacement agents, and they really see that moment as the moment when they can suddenly force their schedule a little bit more. Why is it a time of scarcity, which forces everyone in the company to prevent and compare what they are doing and how they are doing it?And it is the most productive use of resources.
So, that’s the time when those replacement agents can sit down at the table and step to the front and say, hey, I have an option here with Upwork that allows us to achieve goals differently. And that provides them with a platform that maybe in general times or in fatter times, they don’t have that opportunity in the same way.
So, again, it’s very complicated for us to know how macro headwinds and tailwinds affect us. But I’ve heard some of them tell our replacement agents that this is an opportunity where shortages lead to another kind of verbal replacement and a credit to them in selling the timing and the merit of the wisdom they have around our solution and what it can do for their business. Which is interesting.
Rohit Kulkarni
And a question about how consistent visitor spending increases sequentially, as well as any other color in the most sensitive of what you’ve already revealed about why the trend is happening?Is there, is there an express kind of new verticals driving this?Or are there express types of visitor types that seem to continue to drive spending according to visitors, which obviously goes beyond what some of their peers are doing?So he sought to see why this, as well as how sustainable this slow and slow is. adoption?
Jeff McCombs
Thank you Rohit. I appreciate the question. It’s a continuation of the drivers we noticed in the past. First, it is very broad. It is in all categories. It is transparent that some categories grow faster and slower than others. But overall, it’s pretty broad. And it’s basically driven through customer relationships and skill that continues to grow. As a result, hours consistent with assignment continue to grow.
If you break down the size, consistently spend with the consumer on allocations consistent with the consumer’s hours consistent with the allocation rate. The hourly rate is: the accrual rate in hourly spending is essentially online, slightly down, consistent consumer allocations remain light, a slight driver. So, actually, what we’ve noticed over the last few years is probably this dating dynamic, which is what Upwork is all about, continues to grow as consumers and skill become more and more combined.
Rohit Kulkarni
Good, good, wonderful. Thanks Jeff. Once again, good luck with everything you do next. It’s wonderful to paint with you.
Jeff McCombs
Thank you very much Rohit.
Operator
Our latest comes from Andrew Boone’s lineage of JMP Securities. Your line is open.
Andres Boon
Hello, thank you very much for answering my questions. He has laid out some very smart main points about the company. But can you better perceive the aptitude of SMEs in terms of cohorts or traffic at the top of the funnel?
Brown Hayden
Thank you, André. Sorry, I was going to say, I think SMB is, it’s healthy. There has been no adjustment in the ratings of what we were in the last quarter. We discussed that even the smoothness we saw stabilized in some of the measures that were affected through the macro. And because we look at things like our spending, which exceeds $100,000, that number is 32% higher year-over-year in terms of other people looking particularly into our solution, even in spite of what’s going on in the broader environment. So we feel smart about it.
In the most sensitive part of the funnel, again, this was affected through the macro. And we noticed a slight build-up in CPCs, which are NCPAs that I think have been driven by a couple of things. So we continue to monitor that and optimize our acquisition program to be healthy from an ROI perspective. But the company works very well. And we feel smart where we are with our growth.
Our acquisition around the market of hard work and the contribution of consumers through the new products we have innovated, from catalogs to consultation and the market of skills, continues to be a jewel in the crown for us. And we keep innovating new products in the process. , while doing things like building our sales team to capture the business opportunity, which includes the graduate consumer businesses that come into this market, have a lot of fun, and then are in a position to get more and create even more programmatic use.
So I think everything is in a very smart place. We feel smart, we’re still in the early stages of unlocking this massive trillion-dollar market opportunity with a foundation we’re building on.
Andres Boon
And then, for my question at the moment, I looked back to marketing. I think the way you traditionally say it is that the $80 million spent through brands would necessarily be judged by the effects you see. Now that we are at the end of October of this year, what do you think of those expenses and the power you have noticed there?Thank you very much Jeff. Good luck.
Brown Hayden
Yes, thank you, Andrew. Thanks for the question. I think it’s been a wonderful couple of quarters to see the first campaign, gain traction and start moving some of the consciousness. And we measure it very carefully. As we talked about in the last call, we have recruited more partners with [indistinguishables] to increase the power and measurement capacity we have around this program.
And with the launch of this recent ultimate crusade, we’re actually looking to grow our money. Because this crusade is about having an even more revolutionary message and creation that really grabs people’s attention and stimulates that awareness without even materially expanding the spending point from room to quarter, but having a greater effect on the hard creation and the message around it. The old rules of painting are dead.
So we think it’s, you know, in a few quarters. We’ve learned a lot, we’ve used it for marketing and more artistic messaging through the other channels we use and our measurement along the way to get even more insights that we plan to continue as we continue to fine-tune this program.
So, all of this makes us feel smart where we are, as we are committed to achieving our logo goals while achieving EBITDA profitability in 2023. And I think that’s where we know we’ll continue to measure this timeline and make dynamic adjustments as needed. to see the effects and see that we’re basically moving towards those profitability targets.
Andres Boon
gracias.
Brown Hayden
gracias.
Operator
Merci. No there are more questions in the queue. I will now call Evan for his closing remarks.
Evan Barbosa
On behalf of the entire Upwork team, thank you for joining us today. And thank you for your interest in Upwork. Si you want an explanation or if you have any follow-up questions, feel free to contact me eninvestor@upwork. . . com. This concludes our call. Thank you.
Operator
Ladies and gentlemen, this concludes the convening of today’s convention. Thank you for your participation. You can now log out.