Upwork’s Q1 Financial Results Are In — As Growth Continues

Upwork, a global online freelancer marketplace and managed services solution, on Wednesday announced its Q1 2019 financial results, which reflected continuing double-digit topline growth. Upwork’s shares on Thursday were trading early at $18.80, down from Wednesday’s high of $20.90.

Upwork reported a gross services value of $487 million for the first quarter, up 21% period over period (Q1 2018). The company posted $68.9 million in revenue for an increase of 16% over Q1 2019 (and fitting nicely into last quarter’s guidance range).

“Core clients” grew 22%, period over period, to approximately 111,000. Client spend retention increased to 107%, up from 103% at the same time last year.

Total operating expenses rose 15% over Q1 2019 (about in line with the corresponding growth in revenue). The company continued to increase R&D expenditures at about 15%, while spending on sales and marketing was nearly flat (in part due to a decision to spread these expenses more evenly through the year).

The company also reported (GAAP) Adjusted EBITDA of $1.2 million, a significant improvement over $(3.1) million in Q1 2018. Net income came in as Net Loss was $(4.7) million in Q1 — also an improvement over $(6.8) million in Q1 2018. Non-GAAP net income was $0.5 million, or break-even per share, compared to a non-GAAP net loss of $(3.9) million in Q1 2018.

Upwork also announced a restructuring of its client offerings. Originally, just two offerings — Upwork Standard (the marketplace-only feature now labeled Basic) and Upwork Enterprise (managed service for larger organization), there are now four offerings, as shown:

The offerings are intended to expand market coverage and meet business needs in the small-business and mid-range business markets.

The company also announced platform changes and enhancements for freelancers. And, as mentioned in the earnings call, the pilots of enabling businesses to filter and limit their searches to only local freelancers (within a given metro area) are continuing and will be expanded to other metro areas.

Overall, Upwork reported its third quarter of solid financials for a company of its maturity, all within investor expectations.