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Upwork (UPWK)
NASDAQ:UPWK
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Upwork
(NASDAQ:UPWK)
70Outperform
Positive Factors
Financial Performance
Upwork reported solid Q4 results, with both revenue and profitability coming in solidly ahead of guidance despite continued pressure on the broader staffing industry.
Negative Factors
Client Growth
Upwork's active clients declined by 23K in Q4, bringing total active clients to 832K, down 2% year-over-year and slightly below CGe at 835K.
Macroeconomic Environment
The macroeconomic environment continues to pressure GSV trends.
Upwork (UPWK) vs. S&P 500 (SPY)
Market Cap
$1.81B
Dividend YieldN/A
Average Volume (3M)2.73M
Price to Earnings (P/E)8.8
Beta (1Y)1.52
Revenue Growth11.64%
EPS Growth363.49%
CountryUS
Employees600
SectorIndustrials
Sector Strength69
IndustryCorporate Services
Share Statistics
EPS (TTM)1.53
Shares Outstanding135,459,610
10 Day Avg. Volume2,334,249
30 Day Avg. Volume2,731,984
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)N/A
Price to Sales (P/S)2.36
Price to Cash Flow (P/CF)53.40
P/FCF Ratio53.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$19.20Price Target Upside55.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Upwork Business Overview & Revenue Model
Company DescriptionUpwork, Inc. operates an online marketplace that enables businesses to find, hire, and pay freelancers for short-term and longer-term projects. It provides managed services and marketplace offerings such as Upwork Standard, Upwork Enterprise, and Upwork Payroll. The company was founded in December 2013 and is headquartered in Mountain View, CA.
How the Company Makes MoneyUpwork makes money primarily through a service fee model, charging freelancers a percentage of their earnings from contracts secured on the platform. This fee varies based on the total amount billed by the freelancer to a client, incentivizing long-term client relationships. In addition to service fees, Upwork generates revenue from its premium offerings, such as the Upwork Plus and Upwork Business subscription plans, which provide enhanced features and support for freelancers and clients. The company also earns from its enterprise solutions, which cater to larger organizations requiring tailored talent management and compliance services. Partnerships with payment processors and other strategic alliances further support its financial ecosystem.
Upwork Financial Statement Overview
Summary
Upwork's financial performance is strong, with a notable gross profit margin of 77.37% and a net profit margin of 28.02%. The company shows impressive revenue growth of 11.64% and robust cash generation with a 1480% increase in free cash flow. However, there is a need to manage high liabilities effectively.Income Statement
Upwork's TTM (Trailing-Twelve-Months) income statement shows a strong gross profit margin of 77.37% and a net profit margin of 28.02%, indicating efficient cost management and profitability. Revenue growth is impressive at 11.64% from the previous year, demonstrating a positive growth trajectory. The EBIT and EBITDA margins are 8.48% and 9.57%, respectively, reflecting operational efficiency. Overall, Upwork's income statement highlights solid profitability and growth, with an upward trend in revenue and margins.75
Positive
Balance Sheet
Upwork's balance sheet shows a favorable equity ratio of 47.50%, indicating a solid capital structure. The debt-to-equity ratio is low at 0.02, suggesting minimal reliance on debt financing, which reduces financial risk. Return on Equity (ROE) is strong at 37.47%, reflecting high profitability relative to equity. However, total assets have increased, and stockholder equity has grown, signaling a healthy financial position. Despite these strengths, the company has a high level of liabilities to manage.68
Positive
Cash Flow
The cash flow statement for Upwork reveals robust free cash flow growth of 1480%, highlighting significant improvement in cash generation. The operating cash flow to net income ratio is 0.85, and the free cash flow to net income ratio is 0.80, indicating strong cash profitability. The company has effectively managed capital expenditures, maintaining a healthy cash flow. These metrics underscore strong cash flow performance and financial flexibility.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 769.33M | 689.14M | 618.32M | 502.80M | 373.63M | Gross Profit |
| 595.23M | 518.69M | 457.92M | 367.29M | 269.36M | EBIT |
| 65.21M | -11.26M | -92.62M | -54.22M | -22.41M | EBITDA |
| 65.21M | 1.46M | -81.49M | -40.13M | -7.91M | Net Income Common Stockholders |
| 215.59M | 46.89M | -89.89M | -56.24M | -22.87M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 622.10M | 550.10M | 686.61M | 684.77M | 169.65M | Total Assets |
| 1.21B | 1.04B | 1.08B | 1.08B | 529.23M | Total Debt |
| 9.57M | 367.86M | 581.94M | 584.37M | 31.23M | Net Debt |
| -296.19M | 288.22M | 452.56M | 397.16M | -62.85M | Total Liabilities |
| 636.24M | 656.47M | 831.37M | 821.54M | 229.92M | Stockholders Equity |
| 575.38M | 381.07M | 248.88M | 259.52M | 299.31M |
| Cash Flow | Free Cash Flow | |||
| 150.03M | 10.87M | -2.17M | 4.70M | 8.00M | Operating Cash Flow |
| 153.56M | 27.22M | 6.56M | 10.84M | 22.36M | Investing Cash Flow |
| 137.57M | 88.27M | -69.47M | -428.98M | -4.15M | Financing Cash Flow |
| -81.96M | -114.30M | 6.08M | 537.74M | 54.64M |
Upwork Technical Analysis
Negative
12.34
Price Trends
15.72
Negative
15.50
Negative
12.98
Negative
Market Momentum
-0.77
Positive
27.09
Positive
8.29
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UPWK, the sentiment is Negative. The current price of 12.34 is below the 20-day moving average (MA) of 15.17, below the 50-day MA of 15.72, and below the 200-day MA of 12.98, indicating a bearish trend. The MACD of -0.77 indicates Positive momentum. The RSI at 27.09 is Positive, neither overbought nor oversold. The STOCH value of 8.29 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UPWK.
Upwork Risk Analysis
Upwork disclosed 47 risk factors in its most recent earnings report. Upwork reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Upwork Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $16.06B | 16.51 | 68.48% | ― | 7.52% | 1855.81% | |
70 Outperform | $1.81B | 8.85 | 45.08% | ― | 11.64% | 363.49% | |
63 Neutral | $947.64M | 56.45 | 5.08% | ― | 8.33% | 436.49% | |
62 Neutral | $8.17B | 12.83 | 0.26% | 3.07% | 3.83% | -16.44% | |
58 Neutral | $1.19B | 26.42 | 9.78% | ― | 7.64% | 5.22% | |
45 Neutral | $161.42M | ― | -75.62% | 17.16% | -10.32% | -3860.81% |
* Industrials Sector Average
Performance Comparison
UPWK
Upwork
12.34
0.09
0.73%
TTEC
TTEC Holdings
3.12
-7.22
-69.83%
DOCU
DocuSign
74.70
17.24
30.00%
FVRR
Fiverr International
25.45
3.64
16.69%
TASK
TaskUs
13.22
1.15
9.53%
Upwork Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -20.54% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
Upwork delivered strong financial results with record revenue and profitability, driven by growth in AI-related work and enterprise segment. However, the company faces macroeconomic challenges impacting growth and providing a cautious outlook for 2025.Highlights
Record-Breaking Revenue and Growth
Upwork achieved record highs for full-year revenue, adjusted EBITDA, and adjusted EBITDA margin in 2024, with revenue growing 12% year-over-year to $769.3 million.
AI-Related Work Surge
GSV from AI-related work grew 60% year-over-year in 2024, with prompt engineering up 93% year-over-year in Q4. AI-related work is higher paying, with freelancers earning 44% more per hour.
Enterprise Segment Performance
Enterprise revenue grew 4% year-over-year to $107 million in 2024, with improved engagement from retained customers and a 12% increase in managed services revenue.
Ads & Monetization Growth
Ads and monetization revenue grew 51% year-over-year in 2024, with Freelancer Plus revenue increasing 58%.
Cost Efficiency and Profitability
Adjusted EBITDA margin reached an all-time high of 26.2% in Q4 and 21.8% for the full year 2024. Free cash flow was $139.1 million for the year.
Lowlights
Macroeconomic Challenges
Upwork faced a challenging macroeconomic environment with headwinds affecting the top-of-funnel and a cautious outlook for 2025.
GSV Decline
GSV declined 3.6% year-over-year in Q4, impacted by macroeconomic factors and fewer Sundays in Q4 2024 versus 2023.
Stock-Based Compensation
Stock-based compensation was $68.4 million in 2024, highlighting ongoing focus to reduce this expense.
Revenue Guidance and Outlook
Upwork provided a cautious revenue guidance of $740 million to $760 million for 2025, reflecting macroeconomic uncertainty.
Company Guidance
During the Upwork Fourth Quarter and Full Year 2024 Earnings Conference Call, the company provided guidance emphasizing its strong financial performance despite a challenging macroeconomic environment. Upwork reported record highs for full-year revenue at $769.3 million, adjusted EBITDA, and adjusted EBITDA margin, which reached 21.8% for the year. The company's gross margin stood at 77.4% for 2024, and its marketplace take rate was 18.1% in Q4. Key growth areas included AI-related work, which saw a 60% year-over-year growth in GSV, and the launch of Business Plus, a premium plan aimed at enterprise clients. For 2025, Upwork projects revenue between $740 million and $760 million, with an expected adjusted EBITDA margin of 25%. The company is investing in growth catalysts, including AI, enterprise, and ads & monetization, with expectations of continued strong performance and market share gains.Upwork Corporate Events
Business Operations and StrategyFinancial Disclosures
Upwork Announces Restructuring and Strong Q3 Revenue
Positive
Oct 23, 2024
Upwork has announced a major restructuring plan aimed at propelling its profitability, optimizing efficiency, and enhancing innovation. This strategic move involves a 21% reduction in workforce, projected to save $60 million annually. The company has reported a preliminary Q3 2024 revenue of $194 million, surpassing expectations, and continues to focus on margin expansion and strategic growth. Investors can look forward to further financial insights during the upcoming earnings call on November 6, 2024.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.