Upwork’s Share Price Slumps, But Online Staffing Platform Soldiers On (Part 2) [PRO]

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In Part 1 of this two-part Spend Matters PRO series, we discussed what might have been behind Upwork’s share price decline following its report of Q1 2019 financial results, and we came to focus on potential investor concern about growth deceleration over the past several quarters. We could not say that this was what led to the share price decline, but that was our main finding from the 10-K filing.

Upwork’s actual revenue (to be distinguished from gross services value, or GSV) represents the transactional and service fees that (business) buyers and (work/service) sellers are charged when they use the platform (these can take a variety of forms). Upwork has stated that the majority of its total revenue is comprised of the service fees paid by freelancers as a percentage of the total amount that supply-side freelancers charge clients for their freelance services and, to a lesser extent, payment processing and administration fees paid by buy-side clients.

Growing revenue therefore depends on the volume/value of work/services transactions on the platform (i.e., platform liquidity) and pricing (i.e., the structuring and setting of transactional fees and the fees for Upwork services). Upwork may be able to influence revenue by market segmentation and tuning of offers, quality of service (broadly speaking), structuring and setting of fees (given degrees of price elasticity), and lastly, execution of sales, marketing and support services.

In Part 2 of the series, we will review the handful of updates pertaining to growth initiatives that Upwork provided in its financial results report and earnings call. We will also offer our own perspective on Upwork’s current position as a high profile player in the changing contingent workforce space.

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