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Upwork Inc. (Nasdaq: UPWK), the world’s largest work marketplace that connects businesses with independent talent from across the globe, today announced its financial results for the third quarter of 2024.
“Upwork continues to seize the tremendous market opportunity and execute our strategy to deliver durable, profitable growth, with 10% year-over-year revenue growth and our highest-ever net income in the third quarter,” said Hayden Brown, president and CEO, Upwork. “We are building long-term shareholder value by serving clients with work outcomes on demand, produced by the world’s most skilled freelance professionals working hand-in-hand with cutting-edge AI tools. This quarter, our AI-powered innovation accelerated, with new capabilities for Uma™, Upwork’s Mindful AI, that streamline key steps in matching with and hiring talent as well as delivering outcomes in both our Marketplace and Managed Services offerings.”
“As we raise our full-year 2024 revenue and adjusted EBITDA guidance, the resilient performance of our business and our continued market share gains in the face of a challenging macro environment are remarkable. Underscoring our confidence in our strategy, our Board of Directors has authorized another $100 million share repurchase, positioning Upwork to build on our track record of returning meaningful capital to shareholders,” said Erica Gessert, CFO, Upwork. “Through our disciplined execution, we accomplished a record-high adjusted EBITDA margin of 22% in the third quarter. We are wholly committed to growing profitability, and have made great progress towards achieving our 35% adjusted EBITDA margin target in the next five years.”
Third Quarter Financial Highlights
- Revenue grew 10% year-over-year to $193.8 million in the third quarter of 2024
- Active clients grew 2% year-over-year to 855,000
- Net income reached an all-time high of $27.8 million in the third quarter of 2024, up 70% compared to net income of $16.3 million in the third quarter of 2023
- Diluted earnings per share was $0.20 in the third quarter of 2024, up 67% compared to diluted earnings per share of $0.12 in the third quarter of 2023
- Adjusted EBITDA1 was $43.2 million in the third quarter of 2024, up 38% compared to adjusted EBITDA of $31.2 million in the third quarter of 2023
- Cash provided by operating activities was $102.1 million in the third quarter of 2024, compared to cash provided by operating activities of $37.0 million in the third quarter of 2023
- Free cash flow1 was $98.0 million in the third quarter of 2024, compared to free cash flow of $33.4 million in the third quarter of 20232
Third Quarter Operational Highlights
Artificial Intelligence
- Launched enhancements for Uma™, Upwork’s Mindful AI, to create tailored proposal drafts for freelancers and evaluate candidates for clients based on how closely professionals’ skills and experience fit a job post.
- Premiered Uma™-powered Managed Services to more efficiently scope projects, evaluate skills, and design optimal teams of experts to deliver work outcomes.
- Uma™-enabled Job Post Generator helped clients complete job posts 73% faster than job posts in the quarter not leveraging Job Post Generator.
- GSV from AI-related work grew 36% year-over-year in the third quarter.
- Number of clients engaging in AI-related projects grew 30% year-over-year in the third quarter.
- Freelance professionals working on AI-related work earned 41% more per hour than freelancers working on non-AI-related work in the third quarter.
- Announced agreement to acquire Objective AI, Inc.3, an AI-native search-as-a-service company, to further enhance Upwork’s core search and match performance, strengthen Upwork’s AI and machine learning team, and continue upleveling multi-modal capabilities for Uma™ to assist customers with images, videos, and audio content.
Enterprise
- Continued success with a modified Enterprise offering, resulting in increased sales team win rates and 42 total new Enterprise clients, including Hunter Douglas, Bill.com, Berlitz, and Guess.
- Grew Managed Services revenue 5% year-over-year in the third quarter, reflecting increasing demand for delivery of work outcomes and strong pipeline of new Managed Services clients.
Ads & Monetization
- Continued strength in ads & monetization, with revenues increasing 35% year-over-year in the third quarter.
- Freelancer Plus subscription revenue increased 48% year-over-year in the third quarter.
Partnerships
- Partnered with emergent tech providers including Lettuce, Ocoya, TheWordsmith and Builderall to offer fully-managed projects delivered by Upwork embedded directly within partners’ customer experiences, expanding access to Upwork services and skilled talent beyond Upwork’s platform.
- Welcomed Webflow, Smartsheet, Bubble, General Assembly and more to Upwork Partner Experts program, providing clients access to pre-vetted specialist talent on Upwork.
Financial Guidance & Outlook
Upwork announced the authorization of a new $100 million share repurchase program, following the completion of a previous $100 million authorization earlier this year.
Upwork’s guidance for revenue, adjusted EBITDA, diluted weighted-average shares outstanding, and non-GAAP diluted EPS for the fourth quarter of 2024 is:
- Revenue: $178 million to $183 million
- Adjusted EBITDA: $38 million to $42 million4
- Diluted weighted-average shares outstanding: 140 million to 142 million
- Non-GAAP diluted EPS: $0.24 to $0.26
Upwork’s guidance for revenue, adjusted EBITDA, diluted weighted-average shares outstanding, non-GAAP diluted EPS, and stock-based compensation expense for full year 2024 is:
- Revenue: $756 million to $761 million
- Adjusted EBITDA: $155 million to $159 million
- Diluted weighted-average shares outstanding: 139 million to 141 million
- Non-GAAP diluted EPS: $1.00 to $1.02
- Stock-based compensation expense is expected to be lower than previous guidance of $20 million per quarter in 2024
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1 An explanation of non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures can be found in the “Non-GAAP Financial Measures” section and the subsequent tables at the end of this press release.
2 Free cash flow benefited from the weekly timing of customer payments in the quarter due to Q2 ending on a Sunday.
3 The transaction is expected to close in the fourth quarter of 2024, subject to the satisfaction of customary closing conditions.
4 Adjusted EBITDA guidance does not include one-time restructuring charges related to the organizational changes announced on October 23, 2024.
