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Approximately $60 million in annual cost savings advances Upwork toward 5-year profitability target Company expects to exceed revenue and adjusted EBITDA guidance for third quarter 2024 results
Upwork Inc. (Nasdaq: UPWK) the world’s work marketplace that connects businesses with independent talent across the globe, today announced a more streamlined organizational structure and operational changes to continue the Company’s profitable trajectory, increase efficiency, and accelerate innovation for its customers.
“We are making ourselves a more streamlined and efficient organization, continuing our successful focus on durable, profitable growth and delivering value for our customers and shareholders,” said Hayden Brown, president and CEO, Upwork. “This is a continuation of our ongoing strategy to invest in growth levers that are high-return and high-potential while demonstrating proactive cost discipline.”
“Over the past year and a half, we made significant strides in reaching our 5-year profitability target, achieving record-high 22% adjusted EBITDA margin1 in our preliminary results for the third quarter of 2024,” Brown added. “We are confident that these actions will further our rapid progress toward our profitability goals, fuel our outperformance of hiring and staffing industry peers, and strengthen our ability to win in a dynamic macro environment.”
As part of the announced actions, Upwork is:
- Streamlining organizational structure to further reduce costs and accelerate decision-making that empowers teams to deliver better outcomes for customers. The announced changes reduce Upwork’s total workforce by 21% and are expected to generate approximately $60 million in annualized cost savings. The Company is flattening team structures and leveraging more automation and third-party services to simplify processes and operate more efficiently at scale.
- Optimizing R&D spend, as previously indicated, on a portfolio of high-return and high-potential product investments, along with rebalancing product and engineering resources to enable teams to more effectively serve customer needs.
- Sharpening Enterprise strategy, which remains a key pillar of the Company’s growth plans, by aligning clients with the right service offerings and driving a focus on profitability through lower cost to acquire and serve customers. This strategy leverages insights from successful pricing and packaging work underway for the past several quarters to introduce new client plans for both Marketplace and Enterprise that help high-value customers grow with Upwork. Ernesto Lamaina has been appointed as Upwork’s general manager of Enterprise and will lead the execution and expansion of this strategy. Lamaina has been at Upwork for more than a year and has deep experience building enterprise products and leading business units within traditional staffing providers. Lamaina previously served as CEO of Adia, a joint program between Adecco and Infosys, where he led the creation and commercialization of a tech-enabled staffing solution.
Preliminary Third Quarter 2024 Financial and Operating Results
“We are pleased to announce preliminary results for the third quarter that exceed the top end of our guidance. These results demonstrate our commitment to execution on both top and bottom lines, driven by disciplined cost management and continuous improvement in operational efficiency,” said Erica Gessert, CFO, Upwork. “We remain relentlessly focused on executing our strategic plan, growing our highly profitable business, and increasing shareholder value.”
The announced actions are part of Upwork’s long-term strategy that the Company has been successfully executing over many quarters. Management’s focus on driving profitable growth has resulted in the following to date:
- Industry-leading revenue growth: Upwork has reported consistently higher revenue growth than competitors and the broader staffing industry.2
- Sustainable margin expansion: Upwork has delivered on margin expansion and continues the march toward its 5-year profitability target of 35% adjusted EBITDA margin. Upwork has aggressively expanded margins by 21 points in the span of seven quarters, from 1% in Q4 2022 to preliminary reported adjusted EBITDA margin of 22% in Q3 2024.
Today, Upwork provided the following select estimated preliminary financial and operating results for the third quarter of 2024:
| Preliminary Q3 2024 Results | Original Q3 2024 Guidance | |
| GSV | $998 million | N/A |
| Revenue | $194 million | $179 million to $184 million |
| Net Income | $28 million | N/A |
| Adjusted EBITDA1 | $43 million | $36 million to $39 million |
These unaudited preliminary results are based on management’s initial analysis of operations for the quarter ended September 30, 2024. As such, these preliminary financial and operating results are estimates and subject to the completion of the Company’s normal quarter-end closing and other review procedures and execution of the Company’s internal control over financial reporting for the quarter ended September 30, 2024. Accordingly, actual financial and operating results that will be reflected in the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2024, including its condensed consolidated financial statements when they are completed and publicly disclosed, may differ materially from these preliminary results.
Third Quarter 2024 Financial Results Conference Call and Webcast
Upwork announced that it will report its full financial results for the third quarter of 2024 on Wednesday, November 6, 2024, after market close. The Company will host a Q&A conference call to discuss these results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on the same day.
A live webcast of the call will be available on the Upwork Investor Relations website at investors.upwork.com. An audio replay of the conference call will be available for one week following the call and will be archived via webcast on the Upwork Investor Relations website for approximately one year.
