Upwork Reports Second Quarter 2024 Financial Results
Upwork (NASDAQ: UPWK) reported strong Q2 2024 financial results, with revenue growing 15% year-over-year to $193.1 million. The company achieved its highest-ever GAAP Net Income of $22.2 million, with GAAP Diluted EPS of $0.17. Adjusted EBITDA reached $40.8 million, more than doubling from Q2 2023. Active clients grew 6% to over 868,000. Upwork's AI-related work saw significant growth, with AI GSV increasing 67% year-over-year. The company's ads & monetization revenue grew 75% year-over-year. Upwork also expanded its partnerships and added 46 new Enterprise clients. For Q3 2024, Upwork expects revenue between $179-184 million and adjusted EBITDA of $36-39 million. The full-year 2024 guidance projects revenue of $735-745 million and adjusted EBITDA of $140-150 million.
Upwork (NASDAQ: UPWK) ha riportato risultati finanziari solidi per il secondo trimestre del 2024, con un incremento del fatturato del 15% su base annua, arrivando a 193,1 milioni di dollari. L'azienda ha raggiunto il suo massimo storico di utile netto GAAP di 22,2 milioni di dollari, con un utile per azione (EPS) diluito GAAP di $0,17. Il EBITDA rettificato ha raggiunto 40,8 milioni di dollari, più che raddoppiando rispetto al Q2 2023. I clienti attivi sono aumentati del 6%, superando i 868.000. Il lavoro legato all'IA di Upwork ha mostrato una crescita significativa, con un aumento del GSV IA del 67% su base annua. Il fatturato proveniente da pubblicità e monetizzazione è cresciuto del 75% su base annua. Upwork ha anche ampliato le sue alleanze e aggiunto 46 nuovi clienti Enterprise. Per il terzo trimestre del 2024, Upwork prevede un fatturato compreso tra 179 e 184 milioni di dollari e un EBITDA rettificato tra 36 e 39 milioni di dollari. Le previsioni per l'intero anno 2024 stimano un fatturato tra 735 e 745 milioni di dollari e un EBITDA rettificato tra 140 e 150 milioni di dollari.
Upwork (NASDAQ: UPWK) reportó resultados financieros sólidos para el segundo trimestre de 2024, con un aumento del 15% en ingresos interanuales, alcanzando los 193,1 millones de dólares. La compañía logró su máxima utilidad neta GAAP de 22,2 millones de dólares, con un beneficio por acción (EPS) diluido GAAP de $0,17. El EBITDA ajustado alcanzó los 40,8 millones de dólares, más que duplicándose con respecto al Q2 2023. Los clientes activos crecieron un 6%, superando los 868.000. El trabajo relacionado con IA de Upwork mostró un crecimiento significativo, con un aumento del GSV de IA del 67% interanual. Los ingresos por publicidad y monetización de la compañía crecieron un 75% interanual. Upwork también amplió sus asociaciones y agregó 46 nuevos clientes empresariales. Para el tercer trimestre de 2024, Upwork espera ingresos entre 179 y 184 millones de dólares y un EBITDA ajustado de 36 a 39 millones de dólares. Las proyecciones para todo el año 2024 estiman ingresos entre 735 y 745 millones de dólares y un EBITDA ajustado entre 140 y 150 millones de dólares.
Upwork (NASDAQ: UPWK)는 2024년 2분기 강력한 재무 결과를 보고했으며, 연간 15% 증가한 1억 9310만 달러의 매출을 기록했습니다. 회사는 최고 역사상 GAAP 순이익 2220만 달러를 달성했으며, GAAP 희석 주당순이익(EPS)은 $0.17입니다. 조정된 EBITDA는 4080만 달러에 달하여 2023년 2분기 대비 두 배 이상 증가했습니다. 활성 고객은 6% 증가하여 868,000명을 초과했습니다. Upwork의 AI 관련 작업은 눈에 띄는 성장을 보였으며, AI GSV는 연간 67% 증가했습니다. 회사의 광고 및 Monetization 수익은 전년 대비 75% 증가했습니다. Upwork는 파트너십을 확장하고 46개의 새로운 기업 고객을 추가했습니다. 2024년 3분기에는 Upwork가 1억 7900만에서 1억 8400만 달러의 매출과 3600만에서 3900만 달러의 조정된 EBITDA를 예상하고 있습니다. 2024년 전체 연간 가이던스는 735억에서 745억 달러의 매출과 조정된 EBITDA 140억에서 150억 달러를 예상하고 있습니다.
Upwork (NASDAQ: UPWK) a annoncé de solides résultats financiers pour le deuxième trimestre 2024, avec une croissance des revenus de 15 % d'une année sur l'autre, atteignant 193,1 millions de dollars. La société a atteint son plus haut bénéfice net GAAP jamais réalisé de 22,2 millions de dollars, avec un bénéfice par action (EPS) dilué GAAP de $0,17. Le EBITDA ajusté a atteint 40,8 millions de dollars, plus que doublant par rapport au deuxième trimestre 2023. Le nombre de clients actifs a augmenté de 6% pour dépasser 868 000. Le travail lié à l'IA d'Upwork a connu une croissance significative, avec un GSV IA augmentant de 67 % d'une année sur l'autre. Les revenus de publicité et de monétisation de l'entreprise ont augmenté de 75 % d'une année sur l'autre. Upwork a également élargi ses partenariats et ajouté 46 nouveaux clients d'entreprise. Pour le troisième trimestre de 2024, Upwork prévoit des revenus compris entre 179 et 184 millions de dollars et un EBITDA ajusté de 36 à 39 millions de dollars. Les prévisions pour l'année 2024 projettent des revenus de 735 à 745 millions de dollars et un EBITDA ajusté de 140 à 150 millions de dollars.
Upwork (NASDAQ: UPWK) hat für das zweite Quartal 2024 starke Finanz Ergebnisse bekannt gegeben, mit einem Umsatzwachstum von 15% im Vergleich zum Vorjahr auf 193,1 Millionen Dollar. Das Unternehmen erzielte seinen höchsten jemals GAAP Nettoertrag von 22,2 Millionen Dollar, mit einem GAAP verwässerten Gewinn pro Aktie (EPS) von $0,17. Das angepasste EBITDA erreichte 40,8 Millionen Dollar, mehr als sich im Vergleich zum Q2 2023 verdoppelt. Die aktiven Kunden wuchsen um 6% auf über 868.000. Die AI-bezogene Arbeit von Upwork verzeichnete signifikantes Wachstum, mit einem Anstieg des AI GSV um 67% im Vergleich zum Vorjahr. Die Einnahmen aus Werbung und Monetarisierung des Unternehmens wuchsen um 75% im Vergleich zum Vorjahr. Zudem erweiterte Upwork seine Partnerschaften und fügte 46 neue Unternehmenskunden hinzu. Für das dritte Quartal 2024 erwartet Upwork einen Umsatz zwischen 179 und 184 Millionen Dollar und ein angepasstes EBITDA von 36 bis 39 Millionen Dollar. Die Prognose für das gesamte Jahr 2024 rechnet mit einem Umsatz zwischen 735 und 745 Millionen Dollar und einem angepassten EBITDA zwischen 140 und 150 Millionen Dollar.
- Revenue grew 15% year-over-year to $193.1 million in Q2 2024
- Highest-ever GAAP Net Income of $22.2 million, with GAAP Diluted EPS of $0.17
- Adjusted EBITDA increased to $40.8 million, more than double Q2 2023
- Active clients grew 6% year-over-year to over 868,000
- AI-related GSV grew 67% year-over-year in Q2
- Ads & monetization revenue grew 75% year-over-year
- Added 46 new Enterprise clients
- Free cash flow improved to $33.5 million in Q2 2024, up from $1.0 million in Q2 2023
- GSV (Gross Services Value) decreased 2.7% year-over-year to $1,008,267 in Q2 2024
Insights
Upwork's Q2 2024 results demonstrate strong financial performance amid challenging macroeconomic conditions. The company reported its highest-ever net income of
The company's focus on profitability is evident, with a profit margin of 12% and free cash flow of
While GSV (Gross Services Value) saw a slight decline of
Upwork's Q2 results highlight the company's successful integration of AI technologies into its platform. The
Interestingly, freelancers working on AI-related projects earned
The expansion of Upwork's partnership ecosystem and the successful testing of a modified Enterprise offering suggest a strategic focus on diversifying revenue streams and penetrating larger corporate clients, which could drive long-term growth.
Upwork's Q2 performance indicates a strong market position in the evolving gig economy landscape. The
The
Upwork's expansion into AI-related work and its partnership with Beeline for VMS integration positions the company well to capitalize on emerging trends in the future of work. The guidance for Q3 and full-year 2024 suggests management's confidence in sustaining growth and improving profitability.
Second-quarter GAAP Net Income of
Second-quarter GAAP Diluted EPS of
Second-quarter Adjusted EBITDA of
SAN FRANCISCO, Aug. 07, 2024 (GLOBE NEWSWIRE) -- 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 second quarter of 2024.
“We produced strong revenue growth of
“Upwork continues to deliver durable growth on the top and bottom lines, driven by disciplined cost management and improved operating efficiencies,” said Erica Gessert, CFO, Upwork. “Our profit margin was
Second Quarter Financial Highlights
- Revenue grew
15% year-over-year to$193.1 million in the second quarter of 2024 - Active clients grew
6% year-over-year to over 868,000 - Net income was
$22.2 million in the second quarter of 2024, compared to net loss of$(4.0) million in the second quarter of 2023 - Diluted earnings per share was
$0.17 in the second quarter of 2024, compared to diluted loss per share of$(0.03) in the second quarter of 2023 - Adjusted EBITDA* was
$40.8 million in the second quarter of 2024, compared to adjusted EBITDA of$14.4 million in the second quarter of 2023 - Cash provided by operating activities was
$37.3 million in the second quarter of 2024, compared to cash provided by operating activities of$4.3 million in the second quarter of 2023 - Free cash flow* was
$33.5 million in the second quarter of 2024, compared to free cash flow of$1.0 million in the second quarter of 2023 - Repurchased 2.9 million shares of Upwork stock in the second quarter of 2024
* Explanation of non-GAAP measures and reconciliations to their most directly comparable GAAP measures can be found in the “Non-GAAP Financial Measures" section and the subsequent tables at the end of this press release.
Second Quarter Operational Highlights
Artificial Intelligence
- GSV from AI-related work grew
67% year-over-year in Q2 - Number of clients engaging in AI-related projects grew
50% year-over-year in Q2 - Daily active users of Upwork Chat Pro, powered by Uma™, Upwork’s Mindful AI, grew
68% quarter-over-quarter - Freelance professionals working on AI-related work earned
47% more per hour than freelancers working on non-AI-related work in Q2
Ads & Monetization
- Revenue from ads & monetization products grew
75% year-over-year, continuing to be one of Upwork’s fastest-growing revenue streams - Revenue from Connects, virtual tokens for talent to bid on projects and ads products on Upwork’s work marketplace, grew
81% year-over-year
Partnerships
- Expanded ecosystem of distribution channels for skilled talent on Upwork by more than doubling number of partner deals quarter-over-quarter
- Delivered Upwork’s highest monthly revenue derived from partnerships to date in May
Enterprise
- Successfully tested a modified Enterprise offering, resulting in increased sales team win rates and adding 27 new logos through the new offering
- Added 46 total new Enterprise clients, including Builders FirstSource, Guidepoint, and Labelbox
- Announced a new VMS partnership with Beeline, extending Upwork’s market penetration to more than
60% of businesses using VMS platforms
Financial Guidance & Outlook
Upwork’s guidance for revenue, adjusted EBITDA, diluted weighted-average shares outstanding, and non-GAAP diluted EPS for the third quarter of 2024 is:
- Revenue:
$179 million to$184 million - Adjusted EBITDA:
$36 million to$39 million - Diluted weighted-average shares outstanding: 139 million to 141 million
- Non-GAAP diluted EPS:
$0.23 t o$0.25
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:
$735 million to$745 million - Adjusted EBITDA:
$140 million to$150 million - Diluted weighted-average shares outstanding: 139 million to 143 million
- Non-GAAP diluted EPS:
$0.90 t o$0.94 - Stock-based compensation expense is expected to average slightly less than
$20 million per quarter for 2024
| UPWORK INC. Key Financial and Operational Metrics (In thousands, except percentages) (Unaudited) | |||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||
| GSV(1) | $ | 1,008,267 | $ | 1,036,507 | (2.7 | )% | $ | 2,017,063 | $ | 2,039,852 | (1.1 | )% | |||||||||
| Marketplace revenue(1)(2) | $ | 166,786 | $ | 142,308 | 17 | % | $ | 331,116 | $ | 278,984 | 19 | % | |||||||||
| Enterprise revenue(1)(2) | $ | 26,343 | $ | 26,303 | — | % | $ | 52,950 | $ | 50,485 | 5 | % | |||||||||
| Gross profit | $ | 149,277 | $ | 127,729 | 17 | % | $ | 296,021 | $ | 248,160 | 19 | % | |||||||||
| Gross profit margin | 77 | % | 76 | % | 1 | % | 77 | % | 75 | % | 2 | % | |||||||||
| Operating expenses | $ | 131,496 | $ | 133,845 | (2 | )% | $ | 265,191 | $ | 279,314 | (5 | )% | |||||||||
| Net income (loss) | $ | 22,220 | $ | (3,991 | ) | * | $ | 40,662 | $ | 13,176 | * | ||||||||||
| Adjusted EBITDA(1)(3) | $ | 40,835 | $ | 14,362 | * | $ | 74,160 | $ | 11,436 | * | |||||||||||
| Profit margin | 12 | % | (2 | )% | 14 | % | 11 | % | 4 | % | 7 | % | |||||||||
| Adjusted EBITDA margin(3) | 21 | % | 9 | % | 12 | % | 19 | % | 3 | % | 16 | % | |||||||||
| Cash provided by (used in) operating activities | $ | 37,290 | $ | 4,309 | * | $ | 42,946 | $ | (4,392 | ) | * | ||||||||||
| Free cash flow(1)(3) | $ | 33,543 | $ | 963 | * | $ | 36,534 | $ | (10,599 | ) | * | ||||||||||
*Not meaningfu
| As ofJune 30, | ||||||||
| (In thousands) | 2024 | 2023 | % Change | |||||
| Active clients(1) | 868 | 822 | 6 | % | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||
| 2024 | 2024 | ||||
| New enterprise clients(1) | 46 | 74 | |||
(1) See Key Definitions in our second quarter 2024 earnings presentation.
(2) In order to conform to the current period presentation as of June 30, 2024, we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering, previously referred to as Upwork Enterprise, in Marketplace revenue.
(3) Explanation of non-GAAP measures and reconciliations to their most directly comparable GAAP measures can be found in the “Non-GAAP Financial Measures" section and the subsequent tables at the end of this press release.
Second Quarter 2024 Financial Results Conference Call and Webcast
Upwork will host a conference call today at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the company’s second quarter 2024 financial results. An audio webcast archive will be available following the live event for approximately one year at investors.upwork.com. Please visit the Upwork Investor Relations website at investors.upwork.com/financial-information/quarterly-results to view Upwork’s second quarter 2024 earnings presentation.
Disclosure Information
We use our Investor Relations website (investors.upwork.com), our Blog (upwork.com/blog), our X handle (twitter.com/Upwork), Hayden Brown’s X handle (twitter.com/hydnbrwn) and LinkedIn profile (linkedin.com/in/haydenlbrown), and Erica Gessert’s LinkedIn profile (linkedin.com/in/erica-gessert) as means of disseminating or providing notification of, among other things, news or announcements regarding our business or financial performance, investor events, press releases, and earnings releases, and as means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.
About Upwork
Upwork is the world’s largest work marketplace that connects businesses with independent talent from across the globe. We serve everyone from one-person startups to large, Fortune 100 enterprises with a powerful, trust-driven platform that enables companies and talent to work together in new ways that unlock their potential. Our talent community earned over
Contact:
Investor Relations
investor@upwork.com
Safe Harbor:
This press release of Upwork Inc. (the “Company,” “we,” “us,” or “our”) contains "forward-looking" statements within the meaning of the federal securities laws. Forward-looking statements include all statements other than statements of historical fact, including any statements regarding our future operating results and financial position, including expected financial results for the third quarter and full year 2024, information or predictions concerning the future of our business or strategy, anticipated events and trends, potential growth or growth prospects, competitive position, technological and market trends, including artificial intelligence, industry environment, the economy, our plans with respect to share repurchases, and other future conditions.
We have based these forward-looking statements largely on our current expectations and projections as of the date hereof about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. As such, they are subject to inherent uncertainties, known and unknown risks, and changes in circumstances that are difficult to predict and in many cases outside our control, and you should not rely on such forward-looking statements as predictions of future events. We make no representation that the projected results will be achieved or that future events and circumstances will occur, and actual results may differ materially and adversely from our expectations. The forward-looking statements are made as of the date hereof, and we do not undertake, and expressly disclaim, any obligation to update or revise any forward-looking statements, to conform these statements to actual results, or to make changes in our expectations, except as required by law. Additional information regarding the risks and uncertainties that could cause actual results to differ materially from our expectations is included under the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the three months ended March 31, 2024, filed with the SEC on May 1, 2024, and in our other SEC filings, which are available on our Investor Relations website at investors.upwork.com and on the SEC’s website at www.sec.gov. Additional information will also be set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the three months ended June 30, 2024, when filed.
All third-party trademarks, including names, logos, and brands, referenced in this press release are property of their respective owners. All references to third-party trademarks are for identification purposes only and shall be considered nominative fair use under trademark law.
| UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except for per share data) (Unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | |||||||||||||||
| Marketplace(1) | $ | 166,786 | $ | 142,308 | $ | 331,116 | $ | 278,984 | |||||||
| Enterprise(1) | 26,343 | 26,303 | 52,950 | 50,485 | |||||||||||
| Total revenue | 193,129 | 168,611 | 384,066 | 329,469 | |||||||||||
| Cost of revenue | 43,852 | 40,882 | 88,045 | 81,309 | |||||||||||
| Gross profit | 149,277 | 127,729 | 296,021 | 248,160 | |||||||||||
| Operating expenses | |||||||||||||||
| Research and development | 52,465 | 43,246 | 105,381 | 87,727 | |||||||||||
| Sales and marketing | 47,333 | 59,069 | 95,184 | 124,069 | |||||||||||
| General and administrative | 29,924 | 28,983 | 61,925 | 58,270 | |||||||||||
| Provision for transaction losses | 1,774 | 2,547 | 2,701 | 9,248 | |||||||||||
| Total operating expenses | 131,496 | 133,845 | 265,191 | 279,314 | |||||||||||
| Income (loss) from operations | 17,781 | (6,116 | ) | 30,830 | (31,154 | ) | |||||||||
| Other income, net | 5,620 | 3,982 | 12,342 | 46,982 | |||||||||||
| Income (loss) before income taxes | 23,401 | (2,134 | ) | 43,172 | 15,828 | ||||||||||
| Income tax provision | (1,181 | ) | (1,857 | ) | (2,510 | ) | (2,652 | ) | |||||||
| Net income (loss) | $ | 22,220 | $ | (3,991 | ) | $ | 40,662 | $ | 13,176 | ||||||
| Net income (loss) per share: | |||||||||||||||
| Basic | $ | 0.17 | $ | (0.03 | ) | $ | 0.30 | $ | 0.10 | ||||||
| Diluted | $ | 0.17 | $ | (0.03 | ) | $ | 0.30 | $ | (0.18 | ) | |||||
| Weighted-average shares used to compute net income (loss) per share | |||||||||||||||
| Basic | 131,436 | 134,142 | 133,809 | 133,492 | |||||||||||
| Diluted | 138,266 | 134,142 | 140,798 | 135,049 | |||||||||||
(1) In 2023, we changed the name of our Upwork Enterprise offering to Enterprise Solutions. Concurrently, to align with customer needs and internal decision-making, we combined Enterprise Solutions and Managed Services into a suite of Enterprise offerings. In order to conform to the current period presentation as of June 30, 2024, we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering, previously referred to as Upwork Enterprise, in Marketplace revenue.
| UPWORK INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||||||
| June 30, 2024 | December 31, 2023 | ||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 182,803 | $ | 79,641 | |||
| Marketable securities | 314,941 | 470,457 | |||||
| Funds held in escrow, including funds in transit | 218,656 | 212,387 | |||||
| Trade and client receivables, net | 116,522 | 103,061 | |||||
| Prepaid expenses and other current assets | 22,743 | 17,825 | |||||
| Total current assets | 855,665 | 883,371 | |||||
| Property and equipment, net | 28,149 | 27,140 | |||||
| Goodwill | 118,219 | 118,219 | |||||
| Intangible assets, net | 2,258 | 3,048 | |||||
| Operating lease asset | 2,627 | 4,333 | |||||
| Other assets, noncurrent | 1,645 | 1,430 | |||||
| Total assets | $ | 1,008,563 | $ | 1,037,541 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 5,863 | $ | 5,063 | |||
| Escrow funds payable | 218,656 | 212,387 | |||||
| Accrued expenses and other current liabilities | 49,811 | 58,192 | |||||
| Deferred revenue | 10,766 | 17,361 | |||||
| Total current liabilities | 285,096 | 293,003 | |||||
| Debt, noncurrent | 357,008 | 356,087 | |||||
| Operating lease liability, noncurrent | 4,835 | 6,088 | |||||
| Other liabilities, noncurrent | 528 | 1,288 | |||||
| Total liabilities | 647,467 | 656,466 | |||||
| Stockholders’ equity | |||||||
| Common stock | 13 | 14 | |||||
| Additional paid-in capital | 615,012 | 674,918 | |||||
| Accumulated other comprehensive income (loss) | (529 | ) | 205 | ||||
| Accumulated deficit | (253,400 | ) | (294,062 | ) | |||
| Total stockholders’ equity | 361,096 | 381,075 | |||||
| Total liabilities and stockholders’ equity | $ | 1,008,563 | $ | 1,037,541 | |||
| UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||
| Net income (loss) | $ | 22,220 | $ | (3,991 | ) | $ | 40,662 | $ | 13,176 | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||
| Provision for transaction losses | 1,637 | 1,730 | 2,433 | 5,442 | |||||||||||
| Depreciation and amortization | 3,629 | 1,854 | 6,775 | 3,878 | |||||||||||
| Amortization of debt issuance costs | 461 | 461 | 921 | 1,177 | |||||||||||
| Accretion of discount on purchases of marketable securities, net | (3,283 | ) | (2,667 | ) | (8,159 | ) | (6,154 | ) | |||||||
| Amortization of operating lease asset | 859 | 811 | 1,706 | 1,611 | |||||||||||
| Tides Foundation common stock warrant expense | 187 | 187 | 375 | 375 | |||||||||||
| Stock-based compensation expense | 19,238 | 18,437 | 36,180 | 38,337 | |||||||||||
| Gain on early extinguishment of convertible senior notes | — | — | — | (38,945 | ) | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||
| Trade and client receivables | (3,769 | ) | (8,947 | ) | (16,158 | ) | (6,957 | ) | |||||||
| Prepaid expenses and other assets | (3,004 | ) | (104 | ) | (5,133 | ) | (1,464 | ) | |||||||
| Operating lease liability | (1,580 | ) | (1,447 | ) | (3,129 | ) | (2,866 | ) | |||||||
| Accounts payable | (81 | ) | 9 | 701 | (3,371 | ) | |||||||||
| Accrued expenses and other liabilities | 4,050 | 1,714 | (6,847 | ) | (5,141 | ) | |||||||||
| Deferred revenue | (3,274 | ) | (3,738 | ) | (7,381 | ) | (3,490 | ) | |||||||
| Net cash provided by (used in) operating activities | 37,290 | 4,309 | 42,946 | (4,392 | ) | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||
| Purchases of marketable securities | (44,423 | ) | (97,991 | ) | (194,299 | ) | (254,119 | ) | |||||||
| Proceeds from maturities of marketable securities | 190,074 | 139,994 | 321,846 | 307,410 | |||||||||||
| Proceeds from sale of marketable securities | 8,485 | 6,150 | 35,394 | 149,859 | |||||||||||
| Purchases of property and equipment | (598 | ) | 23 | (775 | ) | (135 | ) | ||||||||
| Internal-use software and platform development costs | (3,149 | ) | (3,369 | ) | (5,637 | ) | (6,072 | ) | |||||||
| Net cash provided by investing activities | 150,389 | 44,807 | 156,529 | 196,943 | |||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||
| Changes in escrow funds payable | (4,281 | ) | (1,766 | ) | 6,269 | 16,197 | |||||||||
| Proceeds from exercises of stock options | 664 | 177 | 770 | 935 | |||||||||||
| Proceeds from employee stock purchase plan | 2,917 | 2,564 | 2,917 | 2,564 | |||||||||||
| Repurchase of common stock | (33,124 | ) | — | (100,000 | ) | — | |||||||||
| Net cash paid for early extinguishment of convertible senior notes | — | (575 | ) | — | (171,327 | ) | |||||||||
| Net cash provided by (used in) financing activities | (33,824 | ) | 400 | (90,044 | ) | (151,631 | ) | ||||||||
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 153,855 | 49,516 | 109,431 | 40,920 | |||||||||||
| Cash, cash equivalents, and restricted cash—beginning of period | 251,994 | 286,635 | 296,418 | 295,231 | |||||||||||
| Cash, cash equivalents, and restricted cash—end of period | $ | 405,849 | $ | 336,151 | $ | 405,849 | $ | 336,151 | |||||||
The following table reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows as of the following (in thousands):
| June 30, 2024 | December 31, 2023 | ||||||
| Cash and cash equivalents | $ | 182,803 | $ | 79,641 | |||
| Restricted cash | 4,390 | 4,390 | |||||
| Funds held in escrow, including funds in transit | 218,656 | 212,387 | |||||
| Total cash, cash equivalents, and restricted cash as shown in the condensed consolidated statement of cash flows | $ | 405,849 | $ | 296,418 | |||
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), we present certain non-GAAP financial measures in this press release, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow.
We define adjusted EBITDA as net income (loss) adjusted for stock-based compensation expense; depreciation and amortization; other income (expense), net, which includes interest expense; income tax benefit (provision); and, if applicable, certain other gains, losses, benefits, or charges that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. Free cash flow is defined as cash provided by (used in) operations less purchases of property, plant and equipment and cash outflows from internally developed software.
We use non-GAAP financial measures in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. These measures provide consistency and comparability with past financial performance, facilitate period-to-period comparisons of our core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. In addition, adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to certain items that can vary substantially from company to company, and free cash flow allows investors to evaluate the cash generated from our underlying operations across periods.
Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as analytical tools, and investors should not consider them in isolation or as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. In particular, (1) adjusted EBITDA excludes stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy, (2) although depreciation and amortization expense are non-cash charges, the assets subject to depreciation and amortization may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, and (3) adjusted EBITDA does not reflect: (a) changes in, or cash requirements for, our working capital needs; (b) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (c) tax payments that may represent a reduction in cash available to us. In addition, the non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, including companies in our industry, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures. Reconciliations of the non-GAAP measures presented in this press release to their most directly comparable GAAP financial measures have been provided below, and investors are encouraged to review the reconciliations and not rely on any single financial measure to evaluate our business.
We have not reconciled our adjusted EBITDA guidance to GAAP net income or non-GAAP diluted EPS guidance to GAAP diluted EPS because certain items that impact GAAP net income and GAAP diluted EPS are uncertain or out of our control and cannot be reasonably predicted. In particular, stock-based compensation expense is impacted by the future fair market value of our common stock and other factors, all of which are difficult to predict, subject to frequent change, or not within our control. The actual amount of these expenses during the third quarter of 2024 and fiscal year 2024 will have a significant impact on our future GAAP financial results. Accordingly, a reconciliation of adjusted EBITDA guidance to GAAP net income and non-GAAP diluted EPS guidance to GAAP diluted EPS is not available without unreasonable effort.
| UPWORK INC. RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except for percentages and share data) (Unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income (loss) | $ | 22,220 | $ | (3,991 | ) | $ | 40,662 | $ | 13,176 | ||||||
| Add back (deduct): | |||||||||||||||
| Stock-based compensation expense | 19,238 | 18,437 | 36,180 | 38,337 | |||||||||||
| Depreciation and amortization | 3,629 | 1,854 | 6,775 | 3,878 | |||||||||||
| Other income, net(1) | (5,620 | ) | (3,982 | ) | (12,342 | ) | (46,982 | ) | |||||||
| Income tax provision | 1,181 | 1,857 | 2,510 | 2,652 | |||||||||||
| Other(2) | 187 | 187 | 375 | 375 | |||||||||||
| Adjusted EBITDA | $ | 40,835 | $ | 14,362 | $ | 74,160 | $ | 11,436 | |||||||
| Profit margin | 12 | % | (2 | )% | 11 | % | 4 | % | |||||||
| Adjusted EBITDA margin | 21 | % | 9 | % | 19 | % | 3 | % | |||||||
| Cost of revenue, GAAP | $ | 43,852 | $ | 40,882 | $ | 88,045 | $ | 81,309 | |||||||
| Stock-based compensation expense | (497 | ) | (490 | ) | (963 | ) | (910 | ) | |||||||
| Cost of revenue, Non-GAAP | 43,355 | 40,392 | 87,082 | 80,399 | |||||||||||
| As a percentage of total revenue, GAAP | 23 | % | 24 | % | 23 | % | 25 | % | |||||||
| As a percentage of total revenue, Non-GAAP | 22 | % | 24 | % | 23 | % | 24 | % | |||||||
| Gross profit, GAAP | $ | 149,277 | $ | 127,729 | $ | 296,021 | $ | 248,160 | |||||||
| Stock-based compensation expense | 497 | 490 | 963 | 910 | |||||||||||
| Gross profit, Non-GAAP | 149,774 | 128,219 | 296,984 | 249,070 | |||||||||||
| Gross margin, GAAP | 77 | % | 76 | % | 77 | % | 75 | % | |||||||
| Gross margin, Non-GAAP | 78 | % | 76 | % | 77 | % | 76 | % | |||||||
| Research and development, GAAP | $ | 52,465 | $ | 43,246 | $ | 105,381 | $ | 87,727 | |||||||
| Stock-based compensation expense | (8,106 | ) | (6,903 | ) | (15,476 | ) | (14,532 | ) | |||||||
| Intangible amortization | (398 | ) | — | (797 | ) | — | |||||||||
| Research and development, Non-GAAP | 43,961 | 36,343 | 89,108 | 73,195 | |||||||||||
| As a percentage of total revenue, GAAP | 27 | % | 26 | % | 27 | % | 27 | % | |||||||
| As a percentage of total revenue, Non-GAAP | 23 | % | 22 | % | 23 | % | 22 | % | |||||||
| Sales and marketing, GAAP | $ | 47,333 | $ | 59,069 | $ | 95,184 | $ | 124,069 | |||||||
| Stock-based compensation expense | (3,393 | ) | (2,998 | ) | (6,329 | ) | (6,566 | ) | |||||||
| Sales and marketing, Non-GAAP | 43,940 | 56,071 | 88,855 | 117,503 | |||||||||||
| As a percentage of total revenue, GAAP | 25 | % | 35 | % | 25 | % | 38 | % | |||||||
| As a percentage of total revenue, Non-GAAP | 23 | % | 33 | % | 23 | % | 36 | % | |||||||
| General and administrative, GAAP | $ | 29,924 | $ | 28,983 | $ | 61,925 | $ | 58,270 | |||||||
| Stock-based compensation expense | (7,242 | ) | (8,046 | ) | (13,412 | ) | (16,329 | ) | |||||||
| Other(2) | (187 | ) | (187 | ) | (375 | ) | (375 | ) | |||||||
| General and administrative, Non-GAAP | 22,495 | 20,750 | 48,138 | 41,566 | |||||||||||
| As a percentage of total revenue, GAAP | 15 | % | 17 | % | 16 | % | 18 | % | |||||||
| As a percentage of total revenue, Non-GAAP | 12 | % | 12 | % | 13 | % | 13 | % | |||||||
| Total operating expenses, GAAP | $ | 131,496 | $ | 133,845 | $ | 265,191 | $ | 279,314 | |||||||
| Stock-based compensation expense | (18,741 | ) | (17,947 | ) | (35,217 | ) | (37,427 | ) | |||||||
| Intangible amortization | (398 | ) | — | (797 | ) | — | |||||||||
| Other(2) | (187 | ) | (187 | ) | (375 | ) | (375 | ) | |||||||
| Total operating expenses, Non-GAAP | 112,170 | 115,711 | 228,802 | 241,512 | |||||||||||
| As a percentage of total revenue, GAAP | 68 | % | 79 | % | 69 | % | 85 | % | |||||||
| As a percentage of total revenue, Non-GAAP | 58 | % | 69 | % | 60 | % | 73 | % | |||||||
| Income (loss) from operations, GAAP | $ | 17,781 | $ | (6,116 | ) | $ | 30,830 | $ | (31,154 | ) | |||||
| Stock-based compensation expense | 19,238 | 18,437 | 36,180 | 38,337 | |||||||||||
| Intangible amortization | 398 | — | 797 | — | |||||||||||
| Other(2) | 187 | 187 | 375 | 375 | |||||||||||
| Income from operations, Non-GAAP | 37,604 | 12,508 | 68,182 | 7,558 | |||||||||||
| Net income (loss), GAAP | $ | 22,220 | $ | (3,991 | ) | $ | 40,662 | $ | 13,176 | ||||||
| Stock-based compensation expense | 19,238 | 18,437 | 36,180 | 38,337 | |||||||||||
| Gain on early extinguishment of convertible senior notes(1) | — | — | — | (38,945 | ) | ||||||||||
| Intangible amortization | 398 | — | 797 | — | |||||||||||
| Tax effect of non-GAAP adjustments | (6,815 | ) | (1,111 | ) | (12,387 | ) | (155 | ) | |||||||
| Other(2) | 187 | 187 | 375 | 375 | |||||||||||
| Net income, Non-GAAP | 35,228 | 13,522 | 65,627 | 12,788 | |||||||||||
| Weighted-average shares outstanding used in computing earnings (loss) per share, GAAP | |||||||||||||||
| Basic (in millions) | 131.4 | 134.1 | 133.8 | 133.5 | |||||||||||
| Diluted (in millions) | 138.3 | 134.1 | 140.8 | 135.0 | |||||||||||
| Basic earnings (loss) per share, GAAP | $ | 0.17 | $ | (0.03 | ) | $ | 0.30 | $ | 0.10 | ||||||
| Diluted earnings (loss) per share, GAAP | $ | 0.17 | $ | (0.03 | ) | $ | 0.30 | $ | (0.18 | ) | |||||
| Weighted-average shares outstanding used in computing earnings per share, Non-GAAP | |||||||||||||||
| Basic (in millions) | 131.4 | 134.1 | 133.8 | 133.5 | |||||||||||
| Diluted (in millions) | 138.3 | 135.7 | 140.8 | 136.8 | |||||||||||
| Basic earnings per share, Non-GAAP | $ | 0.27 | $ | 0.10 | $ | 0.49 | $ | 0.10 | |||||||
| Diluted earnings per share, Non-GAAP | $ | 0.26 | $ | 0.10 | $ | 0.48 | $ | 0.09 | |||||||
(1) During the six months ended June 30, 2023, we recognized a gain of
(2) During each of the three and six months ended June 30, 2024 and 2023, we incurred
| UPWORK INC. RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA (In thousands) (Unaudited) | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||||||
| Net income (loss) | $ | 22,220 | $ | 18,442 | $ | 17,374 | $ | 16,337 | $ | (3,991 | ) | $ | 17,167 | ||||||||||
| Add back (deduct): | |||||||||||||||||||||||
| Stock-based compensation expense | 19,238 | 16,942 | 18,047 | 17,811 | 18,437 | 19,900 | |||||||||||||||||
| Depreciation and amortization | 3,629 | 3,146 | 3,808 | 1,763 | 1,854 | 2,024 | |||||||||||||||||
| Other income, net(1) | (5,620 | ) | (6,722 | ) | (7,389 | ) | (5,766 | ) | (3,982 | ) | (43,000 | ) | |||||||||||
| Income tax (benefit) provision | 1,181 | 1,329 | (1,557 | ) | 895 | 1,857 | 795 | ||||||||||||||||
| Other(2) | 187 | 188 | 187 | 188 | 187 | 188 | |||||||||||||||||
| Adjusted EBITDA | $ | 40,835 | $ | 33,325 | $ | 30,470 | $ | 31,228 | $ | 14,362 | $ | (2,926 | ) | ||||||||||
(1) During the three months ended March 31, 2023, we recognized a gain of
(2) For all periods presented, we incurred
| UPWORK INC. RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TOFREE CASH FLOW (In thousands) (Unaudited) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Cash provided by (used in) operating activities | $ | 37,290 | $ | 4,309 | $ | 42,946 | $ | (4,392 | ) | |||||||
| Less: purchases of property, plant & equipment and cash outflows from internally developed software | (3,747 | ) | (3,346 | ) | (6,412 | ) | (6,207 | ) | ||||||||
| Free cash flow | $ | 33,543 | $ | 963 | $ | 36,534 | $ | (10,599 | ) | |||||||
FAQ
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