ICYMI: Recruiting for AI Powered Solutions

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2:30Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. We're going to go back a little bit to earnings because that's definitely been on our radar as of late. I know we talked a lot about geopolitics and we might roll a little bit of that into our next conversation. We want to go to Upwork. Shares rallying big time yesterday following their quarterly update. The online recruitment company reported second quarter results that beat expectations. They also raised their full year forecast. The$1.7 billion market cap company, it connects businesses and independent professionals, so freelancers and others, for remote work opportunities.

3:12The stock down more than 20 % year to date and about 10 % of the float is short. The company, though, a useful indicator of what is going on in the labor force. And so let's get to it. Today's CFO briefing with us is Erica Gesser. She is chief financial officer at Upwork. She joins us from San Francisco. She will be featured in an upcoming edition of the Bloomberg CFO briefing newsletter, which you can find at Bloomberg.com slash CFO briefing. And also with us is Nina Tretman. She's Bloomberg News senior editor who writes the Bloomberg CFO briefing newsletter. She joins us here in studio. Eric, good to have you here with Nina, Jess, and myself.

3:47Your stock did soar on your latest quarterly update and outlook. Talk to us about the business and what's driving growth. Yeah, thanks so much, Carol. It's great to be here. You know, we had a standout quarter in Q2 in so many ways. But, you know, I think really the most distinctive thing is the AI category of work. So many different types of work are developing in AI. And on our platform, our AI category grew 30 % year over year in the second quarter. And that was actually an acceleration from the first quarter. And one of the other drivers is actually all of the AI enablement on our platform.

4:27So if you think about the hiring process just in general, posting a job, freelancers bidding on a job, and then the interview process. Well, we have now enabled AI all across the hiring process, pulling out friction from every single part of the customer experience. And we actually attribute about$80 million of volume on our platform just from those improved customer experiences. Erica, thanks for joining us. I'm just wanting to follow up on this. Of course, your platform operates all around the world. It's not just an indicator of job markets in the U.S., but also in other countries. Just wondering, if we're looking at your U.S.

5:06business in particular, I'm wondering what does the growth that you've seen in the latest quarter tell you about the state of the labor market more broadly? You know, it's really interesting, Nina, and hello. Good to talk to you again. You know, we overall, you know, I think in the labor market writ large, you know, there are obviously persistent headwinds hitting the labor market, the BLS data coming down. And, you know, public staffing, if you look at the kind of public market, public staffing companies, they reported about a 4 % on average down quarter in Q2 and actually projecting even, you know, even more kind of negative growth.

5:46we're actually really pleased in that context that, you know, Upwork had a growth quarter in Q2, and that actually just shows the strength and the attractiveness of our digital platform. But, you know, I would just say that the vagaries of the BLS data in general, you know, if that's telling us anything, it's that things are really uncertain out there. And that uncertainty is affecting our clients and people in small businesses in general that are just unsure about what's around the corner. When you're looking at particularly your share price actually being down roughly 17 percent year to date, why is that?

6:21And what do you think investors are telling you when it comes to their chief concerns right now? You know, it's a great question. And, you know, we obviously disagree with what the market is saying right now. And I think I think that the reality is that some of these kind of broader labor market concerns are affecting a lot of stocks in the human capital industry. and we're kind of getting pulled down with the pack, even though our results and the progress on the platform is really standing out from the crowd. You know, I think that in general, there's been this concept out there that, you know, as these really, really exciting advances in AI come forward, that they're going to start to substitute work.

7:04And there's actually no doubt that in certain categories, at the very lowest end of, you know, the types of work that are getting done and writing and translation, And you do see AI substitution. But on platforms like ours, where we actually supply much larger, more complex work with skilled workers, we're seeing AI actually enhance work and actually start to augment and accelerate categories that some people thought would be disrupted. Things like video and animation, contract law, accounting and bookkeeping. All of these categories are actually being accelerated and advanced by AI. Erica, we'll turn to AI in a second.

7:42I think Carol has a follow up on that. I'm just wondering, you said one thing about the BLS that I thought was interesting and actually one of the things I had wanted to ask you about. As the CFO of a business that is, of course, labor related, I'm wondering what you make of the firing of President Trump of the commissioner of the Bureau of Labor Statistics recently. uh well it's it's it's hard to comment on on sort of on those decisions i think um you know these types of data get you know get revised all the time these were actually large revisions but um you know it's hard to comment on on that decision it was it was certainly very surprising is it but is it a data point that you respect and have looked at and compared it to kind of what's going on in your world?

8:31Look, I mean, we, of course, as a business, you know, a business in the human capital industry, watch the labor market very, very carefully. And, you know, and we have seen historically that, you know, our kind of volume related trend, what we call GSB on our platform, has some correlation to kind of the movement of the JOLTS report on a lagging, as a lagging indicator. But what we're seeing now is that all the improvements on our platform, and again, some of the strength that we're seeing in certain categories is actually helping us to kind of buck the trends of what's going on out there. And we're really kind of, we're relying on the strength of our platform and the advancements in our own tech to offset what continues to be a very, very uncertain operating environment.

9:19Erica, Nina was right. I want to go back to AI for a moment because I'm kind of blown away that you say AI is kind of enhancing your work and your platform in a big way? Because I think there is this feeling like, could even AI make what you guys do obsolete at some point? But educate, because I think as we go along and we throw so much about AI into one little bucket, like help us understand how you're using it on the platform, how it is actually driving things in your business. Yeah, so AI is driving things in our business in two ways. You know, the first is, you know, what I refer to is that AI enhancements on our platform.

9:57So just making it easier for our clients, which are, you know, businesses of all sizes who are coming onto our platform, you know, looking for great talent to get work done. In the past, they would have to write up a job post, you know, post the job, interview freelancers, a series of freelancers, and the freelancers themselves have to write a proposal. Now all of that is done by AI. It's taking what used to take hours and hours, you know, down to minutes. So that's a huge advancement just in the enablement of finding a great match to get the work that you want to get done, done quickly and easily.

10:32But the even more interesting trends are really around how AI is enhancing every single category of work. I mean, what we're seeing on our platform is freelancer job descriptions popping up saying, hey, I'm an AI video animator. I'm an AI artist. It's not just prompt engineering or LLM building, of which we have many, many, many, nearly 250 ,000 AI-skilled talent on our platform. But it's really impacting every single area of work. And what we're finding is, you know, it's enabling our freelancers to get work done faster, to get work done better. And clients are actually looking for freelancers who are using AI to get work done.

11:16Hey, listen, we just have about 30, 40 seconds. I know Nina has one last question that she wants to ask just quickly. Yeah, Erica, just wondering, you completed two transactions recently. I'm wondering, did any of the macro uncertainty influence the dealmaking for those transactions? That's an interesting question. You know, I don't think the macro uncertainty, you know, really played into it at all. These two game changing transactions that we did, the names of the companies are Bubt and Ascend. These are really adding kind of digitally native capabilities to our enterprise offering to integrate, you know, kind of an incredible AI kind of enhanced platform with our talent, as well as a broader contingent labor solution that will enable enterprises to, again, quickly and easily kind of get through all the red tape of compliance and everything else to hire the contingent labor that they need.

12:12Thank you so much. You're so real. Love it. Erica Gessert, Chief Financial Officer at Upwork, featured in an upcoming Bloomberg CFO briefing, and of course, our Nina Tretman, Bloomberg News Senior Editor.

12:26When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience. Learn more at the Hartford.com slash risk mitigation.

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