SAN FRANCISCO - Upwork Inc. (NASDAQ:UPWK), a global platform connecting businesses with independent talent, announced organizational changes aimed at enhancing profitability and efficiency. These adjustments are expected to yield approximately $60 million in annual cost savings and propel the company toward its five-year profitability goal.
The company's restructuring includes a 21% workforce reduction and the adoption of more automated processes and third-party services. This streamlining is part of Upwork's long-term strategy to foster profitable growth and deliver shareholder value.
Upwork's preliminary third-quarter results for 2024 indicate a 22% adjusted EBITDA margin, surpassing the previously issued guidance. The company's estimated revenue for the quarter is $194 million, exceeding the forecasted range of $179 million to $184 million. Additionally, Upwork reported a preliminary net income of $28 million and adjusted EBITDA of $43 million, both figures outperforming expectations.
These preliminary figures reflect Upwork's disciplined approach to cost management and operational efficiency. The company's strategic focus has led to industry-leading revenue growth and sustainable margin expansion, with a notable increase from a 1% adjusted EBITDA margin in Q4 2022 to the current 22%.
As part of the strategic shift, Ernesto Lamaina has been appointed as Upwork's general manager of Enterprise. Lamaina brings extensive experience from the staffing industry and will spearhead the enterprise strategy, focusing on aligning clients with appropriate service offerings and driving profitability.
Upwork will report its full financial results for the third quarter of 2024 on November 6, 2024, after market close, followed by a conference call and webcast.
These developments are based on a press release statement and are subject to the completion of the company's standard quarter-end review procedures. The final results will be included in Upwork's Quarterly Report on Form 10-Q for the three months ended September 30, 2024.
In other recent news, Upwork Inc. reported a 15% year-over-year increase in revenue to $193.1 million for the second quarter of 2024, marking its highest-ever quarterly GAAP net income at $22.2 million. Despite these achievements, Upwork adjusted its full-year revenue guidance downward due to softer client activity and macroeconomic challenges. The company anticipates Q3 revenue to be between $179 million and $184 million, with full-year revenue expected to range from $735 million to $745 million.
Additionally, Upwork repurchased $100 million in shares in 2024, accounting for approximately 7.5% of its current market capitalization, and plans to continue this trend. An activist investor, now the fourth largest shareholder, proposed several changes to improve Upwork's performance and governance, including enhancing the core marketplace, streamlining management levels, and restructuring the board.
In response to these financial developments, Roth/MKM reduced Upwork's stock price target to $13 from $19, maintaining a Buy rating. Similarly, BTIG reaffirmed its Buy rating and $14.00 price target for Upwork. Citi also updated its stance on Upwork stock, reducing the price target to $11 from $13 while maintaining a Neutral rating. These are the recent developments in the company's trajectory.
InvestingPro Insights
Upwork's recent organizational changes and strong preliminary Q3 results are reflected in several key metrics from InvestingPro. The company's revenue growth of 14.5% over the last twelve months aligns with its reported industry-leading growth. Moreover, Upwork's impressive gross profit margin of 76.18% underscores its efficient business model, which is crucial as the company aims to enhance profitability.
An InvestingPro Tip highlights that Upwork's net income is expected to grow this year, which is consistent with the company's reported preliminary net income of $28 million for Q3 2024. This positive trend is further supported by analysts' predictions that the company will be profitable this year, as indicated by another InvestingPro Tip.
The company's focus on operational efficiency and cost management is evident in its EBITDA growth of 173.23% over the last twelve months. This substantial increase aligns with Upwork's strategic shift towards profitability and margin expansion.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 11 more InvestingPro Tips available for Upwork, providing a deeper understanding of the company's financial health and market position.
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