Upwork (UPWK) Q4 2020 Earnings Call Transcript

Picture supply: The Motley Idiot.

Upwork (NASDAQ:UPWK)
This fall 2020 Earnings Name
Feb 23, 2021, 5:00 p.m. ET

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Ready Remarks:

Operator

Girls and gents, thanks for standing by, and welcome to the Upwork fourth-quarter and full-year 2020 earnings convention name. [Operator instructions] I’d now like at hand the convention over to your speaker right now, Denise Garcia, investor relations. Thanks. Please go forward, ma’am.

Denise Garcia — Investor Relations

Thanks. Welcome to Upwork’s dialogue of its fourth quarter and full-year 2020 monetary outcomes. Main the dialogue right now are Hayden Brown, Upwork’s president and chief government officer; and Jeff McCombs, Upwork’s chief monetary officer. Following administration’s ready remarks, we shall be blissful to take your questions.

However first, I will assessment the protected harbor assertion. Throughout this name, we might make statements associated to our enterprise which are forward-looking statements underneath federal securities legal guidelines. These statements will not be ensures of future efficiency however fairly are topic to a wide range of dangers, uncertainties and assumptions. Our precise outcomes might differ materially from expectations mirrored in any forward-looking statements.

As well as, any statements concerning the present and future impacts of the COVID-19 pandemic on our enterprise and present and future impacts of actions now we have taken in response to the COVID-19 pandemic are forward-looking statements and associated to issues which are past our management and altering quickly. For a dialogue of the fabric dangers and different necessary components that would have an effect on our precise outcomes, please check with our SEC filings accessible on the SEC web site and on our investor relations web site in addition to the dangers and different necessary components mentioned in right now’s press launch. Further data may even be set forth in our annual report on Type 10-Okay for the 12 months ended December 31, 2020, when filed. As well as, reference shall be made to non-GAAP monetary measures.

Info concerning reconciliation of non-GAAP to GAAP measures will be discovered within the press launch that was issued this afternoon on our investor relations web site at traders.upwork.com. As at all times, reported figures are rounded, until in any other case famous. Comparisons of the fourth quarter of 2020 are to the fourth quarter of 2019. And comparisons for the full-year 2020 are to the full-year 2019.

All measures are GAAP until cited as non-GAAP. The ready remarks similar to the data reviewed on right now’s convention name may even be accessible on our investor relations web site shortly after the decision has concluded. Now, I will flip the decision over to Hayden.

Hayden Brown — President and Chief Government Officer

Thanks, Denise, and thanks all for becoming a member of right now. I am happy to report that fourth quarter income grew 32% 12 months over 12 months to succeed in $106 million, and fourth quarter gross providers quantity grew 33% 12 months over 12 months to succeed in $728 million. That is our greatest year-over-year development efficiency since going public and was pushed by our aggressive execution throughout the pandemic to allow our prospects with a greater option to work. I applaud our group for vastly increasing our working capabilities to serve our prospects right now whereas concurrently constructing towards the longer term we envision, a reordering of the world of labor with unbiased expertise on the coronary heart of each enterprise.

COVID has compelled a mass experiment of distant work throughout the enterprise panorama, proving what we at all times knew, previous fashions of labor had been in want of and able to change. Folks will be simply as, if no more productive, when not in an workplace. Practically a 12 months into the pandemic, we see the distant work is definitely getting simpler, as proven in our lately revealed Economist Report: Future Workforce. However the focus solely on distant work could be to miss one thing far more necessary.

Whereas most see 2020 because the 12 months when individuals discovered how one can work remotely, we see a a lot larger pattern rising. There’s a new openness throughout the spectrum of our shoppers to rethink not simply the place work occurs, however to rethink who does the work and the way it will get executed. They understand that a lot of their important work wants a extra versatile, dynamic, expert and environment friendly resolution. It must be executed by unbiased expertise.

And that is the place the true energy of Upwork’s work market is unleashed. Corporations that really need to work with the most effective individuals for the job at hand are realizing that most of the greatest professionals right now at the moment are freelancers. That is an simple new actuality in an age the place within the U.S. alone, greater than 50% of Gen Z school grads and 59 million Individuals at the moment are freelancers.

So many extra corporations are awakening to this fact. Small companies to massive enterprises are bringing unbiased expertise on to do extra work ever nearer to the core of their corporations. We see that the work panorama has shifted, and we imagine this has elevated our complete addressable market alternative to greater than $1 trillion. With this unimaginable potential nonetheless forward of us, it is evident that the step change consolation that corporations gained with distant work final 12 months was solely step one on the trail towards this thrilling horizon.

As we step into this new period of labor, we see the work world quickly evolving. The biases and obstacles between full-time staff and unbiased expertise are dissolving rapidly as their contributions are being equally valued and more and more wanted at each stage of the group. We see everybody benefiting on this new means of working. Full-time staff acquire entry to much-needed companions, who can traverse the more and more fluid partitions of their corporations.

Freelancers are capable of contribute important abilities and experience whereas persevering with to work on their very own phrases. And corporations profit from harnessing the facility of a world, inventive and numerous expertise pool that provides them precisely the individuals they want for the work at hand, providing the aggressive benefits of agility and pace in an ever-changing setting. We all know what it takes to unlock the market alternative forward of us. It takes greater than being a gig firm, a expertise community or a vertically built-in single-category supplier.

To unlock the super potential forward requires being the work market for the world. For shoppers, this implies serving them with the a number of ways in which they need to discover and construct their digital expertise bench. Whether or not that’s posting jobs in our expertise market, one-click fashions like undertaking catalog, advanced undertaking and group collaboration choices like our company resolution, recruiting providers reminiscent of Expertise Scout, the place our specialised recruiters pinpoint prevetted expertise that aligns with our shoppers’ objectives or our vary — our full vary of enterprise options. For unbiased expertise, being the work market means serving them with high-quality shoppers and diverse incomes alternatives that they search.

The management to dial up or down the pipeline of labor they need as they construct their freelance careers, a set of choices to assist their companies and the instruments to nurture trusted consumer relationships for the long run. We all know from expertise that the power to construct trusted long-term relationships on our platform makes the work being executed on our work market additional differentiated from what occurs in different components of the freelance economic system. It’s the distinctive traits of freelancing on Upwork that allows corporations to vary their whole working fashions to depend on the unbiased expertise on our platform and to fully rethink, not simply with whom they work, but in addition how they get core work executed, gaining unimaginable agility, productiveness and effectivity within the course of. When companies and expertise absolutely embrace the facility that they acquire from this reimagining of what is attainable, we see that they’ve tapped into the complete potential of our work market.

Our singular focus this 12 months is bringing this transformational consciousness to the market in an even bigger means whereas persevering with to reinforce and innovate our platform as we bolster our place as not simply the market chief, however the one firm providing these distinctive capabilities. That is our 2021 technique. We’re innovating, scaling and evangelizing the work market for the world. With that perspective, let’s step again and check out our fourth quarter efficiency, specializing in the important thing drivers of our development, particularly new consumer acquisitions, consumer retention, product and gross sales.

I will begin with new consumer acquisition. We began the 12 months with an aggressive plan for development in web optimization, SEM, cell and worldwide, and we executed strongly towards that plan, including a file variety of new shoppers at engaging acquisition prices. We acquired new shoppers at a sooner clip and with better efficiencies throughout the fourth quarter than in any of the earlier quarters since turning into a public firm. The efficiencies and success of the packages now we have been constructing with self-discipline all year long had been evident.

For instance, new shoppers from SEM grew 86% 12 months over 12 months in This fall and 50% for the 12 months as an entire. Our laser focus in 2020 on tuning our advertising and marketing packages round lifetime worth was additionally obvious as the brand new shoppers we acquired in This fall spent over 10% extra per consumer than new shoppers in the identical quarter of the earlier 12 months. We noticed our greatest quarter of development in each worldwide and cell consumer acquisition with additional runway forward. In 2021, we’ll enhance our SEM spend given these sturdy indicators with the intention to drive extra new prospects to Upwork and assist them see the worth of our increasing work market.

Transferring to consumer spend retention. We had been happy with an acceleration to 102% within the fourth quarter as our core shoppers elevated by greater than 6,400, 64% greater than the rise in This fall 2019. GSV from shoppers acquired earlier than This fall was up 30%, and GSV from shoppers acquired earlier than 2020 was up 27% as present and new shoppers deepened their utilization of Upwork to construct, function and develop their corporations. I might prefer to now speak about a few of our fourth quarter product developments, that are being led by our new chief product and expertise officer, Sam Brilliant, who joined us from eBay in November.

Final quarter, we introduced undertaking catalog, a brand-new means to make use of Upwork. We launched undertaking catalog a full month sooner than deliberate throughout 300 market classes. The client response has been constructive. undertaking catalog permits shoppers to right away perceive the large breadth of expertise on Upwork via predefined, ready-to-purchase initiatives.

Not solely does it create a strong new consumer pathway into Upwork, it permits present shoppers to enhance bigger and extra advanced, role-based work with smaller, well-defined initiatives and serves as a robust discovery engine for the remainder of the platform. We see undertaking catalog as a super complement to our different choices collectively broadening the spectrum of pathways to get work executed in our work market. Within the quarter, we expanded our direct contract providing for freelancers to allow them to bill and construct their shoppers for hourly work along with utilizing our escrow protections for mounted value jobs. Whereas this providing remains to be nascent, we see freelancers proceed to develop the portfolio of consumer and work they’re billing via our platform as they consolidate extra of their freelance work on Upwork.

All through the course of 2020, we noticed elevated demand from shoppers desirous to onboard their varied group members and companies onto Upwork for straightforward and unified billing, program administration and collaboration and aggressive bidding in our market. Our bigger shoppers are smitten by our convey your individual expertise, or BYOT, resolution. Not simply because we mechanically deal with all the cash motion, native foreign money funds on a world scale and related paperwork, but in addition as a result of for our enterprise compliance shoppers, we resolve the employee classification, different complications usually related to these duties, that are more and more daunting for a lot of corporations in a fragmented and distributed work panorama. To reinforce this expertise, we launched an built-in onboarding course of in This fall that lowered our industry-leading begin time on payroll contracts from 9 to 2 and a half days.

This previous quarter, we landed a world tech agency that onboarded over 1,000 freelancers, working over $1 million via this BYOT product all inside This fall. We’re bullish on the prospects that our extremely engaging providing has for the increasing set of shoppers looking for options for his or her challenges paying and undertaking managing distributed groups. Constructing the world of labor market means each creating and integrating best-of-breed instruments that prospects love to make use of for his or her work. Throughout the fourth quarter, we introduced a partnership with Zoom that integrates Zoom’s video and voice communication instruments into Upwork.

This gives our prospects a frictionless and safe communications expertise for interviewing candidates, setting alternatives and collaborating on initiatives. The client suggestions has been phenomenal, leading to a major enhance in calls and collaboration exercise on our platform and is an instance of the sorts of additional integrations now we have within the pipeline. Our gross sales group has absolutely carried out the adjustments we introduced final quarter and has been making progress towards our sharper go-to-market technique. Our group is engaged in strategic dialog on the highest ranges to assist shoppers implement and handle their distant and unbiased expertise packages and is happy by the reception out there.

One instance was the current work we did for a number one world know-how conglomerate. The consumer wanted an answer that might allow them to proceed working with their present unbiased expertise whereas aggressively scaling their group. We seamlessly onboarded greater than 30 freelancers in 5 international locations within the first day and now function the operational spine of their globally distributed group, spanning 30 subcategories of labor. Since inception, the account has seen 400% development in new initiatives.

2020 was a watershed 12 months for Upwork. We understood early on that though the tide of distant work was rising, it was crucial to create long-term methods that might retain prospects on our platform and develop their worth over time, nicely after COVID handed, laying the muse for Upwork’s sturdy long-term development. As we glance to 2021, our focus is obvious. We’ve got a single strategic precedence, innovating, scaling and evangelizing the work market for the world.

We’re humbled and excited to be ready to rework work so positively for therefore many individuals, pursuing with function, our mission to create financial alternatives so individuals have higher lives. I will now flip the decision over to Jeff to debate our monetary leads to extra element.

Jeff McCombs — Chief Monetary Officer

Thanks, Hayden. Our fourth quarter and full-year monetary outcomes had been sturdy, and I am wanting ahead to the 12 months forward. I joined Upwork to be a part of the group captivated with our mission, and I am proud to see that we’re executing strongly towards our technique, rising efficiencies in our enterprise and delivering merchandise forward of schedule. Now, I’ll focus on the monetary outcomes for the fourth quarter and full-year 2020 and supply our income and EBITDA steerage for the primary quarter and full-year 2021, which we included in our earnings launch filed earlier right now.

GSV within the fourth quarter and full 12 months was $728 million and $2.5 billion, respectively, and represents sturdy year-over-year development of 33% and 21%. Income grew 32% 12 months over 12 months to $106 million within the fourth quarter and grew 24% to $374 million within the full-year 2020. Market income for the fourth quarter was $97 million, reflecting a year-over-year enhance of 34%. For the full-year 2020, market income was $338 million, a rise of 26% from 2019.

Managed providers income grew 15% to $9.3 million within the fourth quarter and was $35 million for the complete 12 months. I need to contact briefly on our sturdy beat versus This fall income steerage. Our enterprise sometimes experiences a seasonal slowdown beginning in November and peaking within the final two weeks of the 12 months. This 12 months, the seasonal slowdown was nearly nonexistent, which we had not assumed in steerage.

Along with notably sturdy acquisition and quarter-over-quarter retention, this atypical seasonality was a key driver behind the income beat within the fourth quarter. We hypothesized that this was as a result of COVID and COVID-related restrictions, lowering vacation journey and social gatherings and rising the quantity of labor that was being executed throughout this era relative to prior years. We would not anticipate this atypical seasonality to repeat in 2021. Whole core shoppers grew by roughly 17% 12 months over 12 months or 6,460 within the fourth quarter to 145,400, with gross new core shoppers within the quarter rising 36% 12 months over 12 months and web additions of core shoppers up 64% 12 months over 12 months.

Consumer spend retention accelerated from 100% in Q3 to 102% in This fall because the spending power of shoppers acquired in 2019 and earlier carried out nicely. Our general take fee within the fourth quarter was 14.6%, according to This fall ’19, however down barely from the 14.8% we noticed in Q3. This lower was pushed primarily by a better share of income being earned within the decrease pricing tiers as a result of consumer spending extra with their freelancers in addition to adjustments we made in connects to enhance liquidity by higher balancing the variety of job posts and proposals. Non-GAAP gross revenue was $78 million for the fourth quarter or 73% of income and $270 million for the complete 12 months or 72% of income.

With respect to the fourth quarter, non-GAAP working bills had been $70 million, representing 66% of income, down from 69% in 2019, with G&A reducing from 19% to fifteen% and transaction losses remaining flat at 1%, whereas gross sales and advertising and marketing elevated from 31% to 32% and R&D elevated from 18% to 19%. With respect to the complete 12 months, non-GAAP working bills had been $264 million, representing 71% of income, up from 70% in 2019, with gross sales and advertising and marketing rising from 31% to 34% and R&D rising from 19% to twenty%, whereas G&A decreased from 18% to fifteen%. Non-GAAP web revenue was $7.8 million within the fourth quarter of 2020 in comparison with $3.4 million within the fourth quarter of 2019. For the complete 12 months, non-GAAP web revenue was $6.1 million in comparison with $5.5 million for 2019.

Our primary and diluted non-GAAP web revenue per share was $0.06 within the fourth quarter of 2020 as in comparison with $0.03 within the fourth quarter of 2019. Our primary and diluted non-GAAP web revenue per share was $0.05 in each the full-year 2020 and the full-year 2019. Adjusted EBITDA was $9.6 million within the fourth quarter of 2020 in comparison with $3.5 million within the fourth quarter of 2019 and materially above our steerage, primarily the results of the flow-through of the income beat. For the full-year 2020, adjusted EBITDA was $14 million in comparison with $7.4 million for 2019.

Now, let’s transfer on to steerage. We’re guiding first-quarter income between $107 million and $109 million and full-year income between $460 million and $470 million, representing 24% year-over-year development on the midpoint. We count on GSV development to be barely stronger as market income will probably develop sooner than managed providers income and as a result of adjustments now we have made to our connects program which are driving higher liquidity within the market and better GSV whereas reducing connects particular income. We stay bullish on the funding alternatives in entrance of us, and we’ll proceed funding development initiatives whereas intently monitoring our efficiency to attain our return thresholds.

As such, we count on first-quarter EBITDA to be between $2 million and $3 million and full-year EBITDA to be between $12 million and $16 million. We’ll proceed to handle price with self-discipline whereas preserving our money and sustaining our sturdy steadiness sheet, which included money and marketable securities of roughly $170 million on the finish of the fourth quarter. Whereas the distinctive macro setting continues to make forecasting this 12 months tougher than common, we count on the power now we have seen in our enterprise to persist, and our present outlook requires comparatively constant quarter-over-quarter development all year long. We stay dedicated to a long-term income development fee of 20-plus p.c.

We ended the 12 months with stable execution throughout all areas of the enterprise, and we enter 2021 nicely positioned to drive development as we proceed to execute on our plans and seize an excellent bigger share of our market alternative. On a remaining be aware, we’re internet hosting a digital investor day, June 15, and we would prefer to personally invite all of you to hitch us. We’ll present registration data on our IR web site quickly. Thanks.

We’ll now take your questions.

Questions & Solutions:

Operator

[Operator instructions] Our first query comes from the road of Nick Jones from Citi. Your line is now open.

Nick Jones — Citi — Analyst

Nice. Thanks for taking the query. Two for me. I suppose, first, are you able to increase just a little bit, Hayden, on undertaking catalog and what the early traction is in beta and now what you are seeing as soon as it is launched? After which I suppose a follow-up on that’s, how ought to we take into consideration Upwork’s take fee because the undertaking catalog beneficial properties traction? I believe the worth factors, that would doubtlessly enhance take fee over time as extra transactions funded via there.

Thanks.

Hayden Brown — President and Chief Government Officer

Thanks, Nick. Sure, we have been actually gratified by the response out there to catalog up to now. It is actually an effective way for brand spanking new shoppers to find what’s attainable in Upwork and actually dip their toe into freelance expertise general, and it has a implausible discovery engine facet to it. After which they’ll use catalog as a option to then graduate to a few of our bigger, extra advanced project-based work with freelancers on the platform.

It is also proven to be a pleasant means for shoppers who’re already utilizing Upwork for bigger advanced initiatives to actually spherical out and add on extra small initiatives to enhance the work they’re already doing within the market. So it is nonetheless actually early within the providing. We launched it a month early in January, however the indicators are very constructive, and we see it as a complement as we construct out the one work market that basically gives our shoppers and our expertise all the ways in which they need to work collectively and collaborate contained in the ecosystem. And Jeff, I do not know if you wish to handle the factors on take fee.

Jeff McCombs — Chief Monetary Officer

Certain, Nick. So on take charges, as you recognize, our pricing for undertaking catalog is similar mannequin that now we have for the expertise market. Nonetheless, on condition that the typical measurement of the initiatives on undertaking catalog we’d count on to be smaller, extra of them will find yourself within the higher-priced tiers. So on common, we’d suppose that we’ll have a better take fee there.

And as undertaking catalog represents a bigger and bigger share of the general market, it’ll drive upward stress and take fee because it does that.

Nick Jones — Citi — Analyst

Nice. Thanks for taking the questions.

Operator

Thanks. Our subsequent query comes from the road of Ron Josey from JMP Securities. Your line is now open.

Ron Josey — JMP Securities — Analyst

Nice. Thanks for taking the query and blissful New Yr. Hayden, I wished to ask just a little bit extra in regards to the cohort spend. I believe you talked about fairly sturdy development throughout GSV for each 2020 cohorts and cohorts previous to 2020, and consumer retention charges reached 102%.

So are you able to discuss simply in regards to the drivers right here of cohort spend? And clearly, the primary query is sustainability. And I believe one of many — my second query right here, Hayden and Jeff, I believe one of many core imperatives final 12 months, Hayden, was to only generate extra high-quality matches, and I wished to listen to the progress there. And perhaps, Jeff, as that pertains to your touch upon the adjustments on the connects program, in case you can simply elaborate just a little bit extra, that might be nice. Thanks.

Hayden Brown — President and Chief Government Officer

Thanks, Ron. What we have seen has been actually sturdy broad-based acceleration in spend throughout just about each consumer cohort, each from new shoppers and retained shoppers. So GSV from shoppers acquired earlier than This fall was up 30%. GSV from shoppers acquired earlier than 2020 was up 27%, and that was a part of what drove our CSR to 102% this previous quarter with that 6,400 enhance, which is the biggest acceleration we have seen since being a public firm.

So our view is that this is a rise that’s definitely not simply associated to pandemic-related work. What we’re listening to from shoppers is that they’re actually shifting workloads to freelancers which are a part of their core operations, deepening their relationships additional with the freelancers on the platform. And our view is that that is actually sticky. As we hear from prospects, they do not need to return to the ways in which they had been working prepandemic.

They see Upwork as a continued a part of their ongoing operations. And so our expectation is that this larger spend retention, in lots of circumstances, actually will keep and stick nicely after the pandemic recedes as a result of the consumer behaviors themselves are altering and the worth they’re seeing in these relationships is de facto long run. So it is a extremely sustainable mannequin for them. By way of your query round about high-quality matches and that focus final 12 months, I might say we have been making actually good progress there.

A few of the dynamics we have talked about round connects income and a few of the adjustments to that program has been a part of powering increasingly more matching on the platform, particularly as we have seen the inflow in freelance expertise during the last 12 months proceed to be so sturdy. And we’re very centered on ensuring that each job that is posted, each consumer is discovering precisely that nice expertise match for them. And in order that connects program is only one piece of the puzzle, together with plenty of the info science adjustments and technical adjustments on the platform that we have been making, to proceed to enhance fill charges, speed up the time that shoppers and freelancers are discovering to really get matched up on the platform, et cetera. And so we really feel just like the progress there was actually constructive and truly has been one of many items of the puzzle when it comes to ensuring that matches are occurring rapidly, spend is occurring, and that’s displaying up in each the acquisition spend numbers and the retention spend numbers.

Ron Josey — JMP Securities — Analyst

That is nice. Thanks very a lot. Nice quarter.

Hayden Brown — President and Chief Government Officer

Thanks.

Operator

Thanks. Our subsequent query comes from the road of Marvin Fong from BTIG. Your line is now open.

Marvin Fong — BTIG — Analyst

Nice. Thanks for taking my query and congrats on the nice quarter. Only a query — a few questions. So final quarter, you talked in regards to the — concentrating on 20% development in 2021.

And now you’ve got really given us steerage. It appears to be like prefer it’s just a little bit above that, perhaps 20% — 23% to 26% development. Simply curious in case you might discuss in regards to the KPIs that you just’re monitoring. Are you seeing really stronger development than that than the place we stood three months in the past? Simply speak about your optimism there.

After which my second query is simply on Enterprise. For those who might simply type of elaborate extra on how the gross sales power carried out there and what is perhaps embedded in your steerage for 2021. Thanks.

Jeff McCombs — Chief Monetary Officer

Certain. Thanks, Marvin. Recognize it. With respect to steerage, as we checked out This fall, we noticed actually sturdy efficiency actually throughout all dimensions of the enterprise, together with acquisition and spend per consumer, each setting file ranges for us.

And as we expect via the 12 months forward, we’re assuming that we’re capable of — our steerage displays we’re capable of proceed to construct on these elevated ranges and purchase new shoppers. And also you’re proper that, that does replicate 23% to 26% development for the 12 months, forward of what we had guided final quarter to twenty%. And we actually — we noticed an inflection level change within the efficiency of our cohorts in Q3 and This fall. It does make it actually difficult to forecast that going ahead as a result of the predictability of buyer conduct prior to now is — it is just a little bit much less on condition that it improved a lot, however we’re assuming that we are able to maintain on to that larger stage of efficiency on condition that we actually do suppose that the adjustments which are occurring are everlasting and structural in nature, and all that is mirrored within the steerage going ahead.

And so these numbers — the efficiency we noticed each in acquisition and retention inform our retention curves and acquisition forecasts which are included in steerage. After which with respect to gross sales, we — nicely, we at present — gross sales represents 10% to twenty% of our general economics of the enterprise, relying upon what metric you have a look at. The group is — has executed nice work to digesting the adjustments that we introduced in This fall and are persevering with to execute towards the technique, and we’ll consider sooner or later once we need to enhance our funding there as we get increasingly more information when it comes to the general efficiency.

Marvin Fong — BTIG — Analyst

Terrific. Thanks a lot. Recognize it.

Operator

Thanks. Our subsequent query comes from the road of Brent Thill from Jefferies. Your line is now open.

John Byun — Jefferies — Analyst

Hello. Thanks. That is John Byun for Brent Thill. I had two questions.

On undertaking catalog, I understand it is early, however in case you might speak about perhaps how a lot you are assuming this 12 months’s 2021 steerage after which in case you can provide some colour on year-to-date developments. Clearly, we’re virtually on the finish of February. I imply it appears like all of the power from This fall has sustained, however any form of colour you could possibly add could be nice. Thanks.

Jeff McCombs — Chief Monetary Officer

Certain. So with respect to undertaking catalog, as we talked about within the script, it’s included in our general steerage. It’s early, so we do not have a ton of nice information to forecast a quickly rising undertaking like undertaking catalog, however we have taken our greatest guess, and it’s mirrored in our general steerage. By way of January efficiency and the way we’re trending for the 12 months, clearly, we have taken that into consideration when it comes to the steerage that we offered.

We have seen good power proceed throughout the enterprise, and that is mirrored within the steerage.

John Byun — Jefferies — Analyst

Thanks.

Operator

Thanks. Our subsequent query comes from the road of Logan Thomas from Stifel. Your line is now open.

Logan Thomas — Stifel Monetary Corp. — Analyst

Hello, Hayden and Jeff. I used to be questioning in case you might discuss in regards to the enterprise section, drill down on that just a little bit extra given the adjustments that you just’re seeing in expertise procurement and organizational conduct and the profit that, that is having on the platform, I suppose, particularly because it pertains to Enterprise, in case you might simply speak about gross sales productiveness and perhaps how conversations you are having or what you are seeing within the gross sales cycle, which may — are typically longer and the way you are serious about that year-to-date. After which the second piece would simply be in case you might simply handle your views on aggressive depth in your key markets, the way you’re serious about aggressive curiosity within the alternative and your place towards that. Thanks.

Hayden Brown — President and Chief Government Officer

Certain. I might say our consumer mindset, as we discuss to people out there, are actually evolving quickly in our favor. We discuss to enterprise prospects on a regular basis, who’re more and more creating their digital expertise benches on Upwork, transferring extra organizational capabilities to make use of unbiased expertise in additional and new methods. And that is actually the place the conversations with shoppers are shifting from.

Final 12 months, I believe they had been actually centered on how will we work remotely. And now we’re beginning to have extra conversations round we work remotely now by default, how will we use that as an actual device to faucet into this unbiased expertise workforce, which is on the market, throughout the globe, able to do work for us. And that is the place we’re listening to conversations with shoppers proper now, shifting from the the place to the who and the way aspect of actually how Upwork will be a part of their expertise methods going ahead and understanding that, that must be how they keep aggressive out there nicely after this pandemic recedes. By way of the aggressive depth, we all know it is a massive, engaging market, and so competitors by no means surprises us.

We additionally know from expertise that opponents can actually battle to construct massive, profitable companies. So we keep very centered on our technique, investing in and sustaining the benefits that now we have. I believe a few of the massive ones that we deal with are scale. We all know we have already got greater than three and a half occasions the gross providers quantity and greater than — roughly two occasions the income of the following largest participant in our house.

And meaning now we have the deepest, highest high quality expertise community, which is a large differentiator for shoppers of all sizes as they’re considering how one can have interaction with unbiased expertise at scale. They need high-quality expertise that’s extremely dependable, and we provide that in a means that nobody else does. I believe the second factor we actually deal with is the belief and security aspect of our platform the place we all know corporations are very involved about how do they discover individuals they’ll belief which are extremely dependable, and the way shoppers and expertise need to know that their cash is protected, that they’ll use this mannequin at scale. And that’s one thing that we have needed to construct up over a few years, and it’s extremely laborious for an additional competitor to copy.

I believe the very last thing round our strategic focus is de facto the deal with constructing the work market, the place we all know that to win on this house requires not simply having one providing or one functionality however actually serving shoppers and abilities with a spectrum of ways in which they can not simply do small undertaking work or bigger undertaking work however really do each. And that’s the place we’re uniquely differentiated and the way we are able to serve our prospects with a small via to the very massive undertaking wants that they’ve. And I believe these issues are the issues the place we’re executing very quickly, persevering with to innovate and actually be the pioneer. And as I look ahead, I actually could not be extra enthusiastic about what’s forward for Upwork and for our prospects.

Logan Thomas — Stifel Monetary Corp. — Analyst

That is nice. Thanks, Hayden.

Operator

[Operator signoff]

Length: 39 minutes