SAN FRANCISCO - Upwork Inc. (NASDAQ: NASDAQ:UPWK), a leading global work marketplace, has responded to a letter from Engine Capital, affirming its commitment to shareholder interests and outlining recent progress in revenue growth and profitability. The company has engaged with Engine Capital, as part of its regular shareholder dialogue, valuing the input received.
Upwork highlighted its focus on key revenue and Gross Services Volume (GSV) growth levers, as detailed in its second-quarter earnings call earlier this year. The company has seen a significant improvement in profitability, with adjusted EBITDA margins expanding from negative 2% to 21% over the past five quarters.
The company also announced that it has repurchased $100 million in shares in 2024, accounting for approximately 7.5% of its current market capitalization, and plans to continue this trend. Additionally, Upwork has taken steps to optimize costs, including discontinuing brand marketing and optimizing performance marketing.
Further expense reductions, particularly in research and development, are being evaluated as part of ongoing cost management efforts. Upwork is working towards its strategic priorities and growth and profitability goals, with plans to maintain active engagement with shareholders.
Goldman Sachs & Co. LLC and Wachtell, Lipton, Rosen & Katz are serving as financial and legal advisors, respectively, to Upwork.
The company's platform has enabled independent talent to earn over $3.8 billion in 2023, showcasing a diverse range of skills to businesses of all sizes, including Fortune 100 companies.
This update is based on a press release statement by Upwork Inc. and includes forward-looking statements subject to risks, uncertainties, and other factors that could cause actual results to differ materially from expectations.
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, the company adjusted its full-year revenue guidance downward due to softer client activity and macroeconomic challenges. Upwork anticipates Q3 revenue to be between $179 million and $184 million, with full-year revenue expected to range from $735 million to $745 million.
In the wake of these financial developments, Roth/MKM reduced Upwork's stock price target to $13 from $19, while maintaining a Buy rating. The firm's stance reflects a belief in Upwork's potential to navigate the current economic headwinds, supported by sustained interest in AI-related projects, Enterprise services, and Advertising.
On another note, an activist investor, now the fourth largest shareholder, proposed several changes to improve Upwork's performance and governance. These include enhancing the core marketplace, streamlining management levels, and restructuring the board. Amidst this backdrop of shareholder activism, BTIG reaffirmed its Buy rating and $14.00 price target for Upwork. These are the recent developments in the company's trajectory.
InvestingPro Insights
As Upwork Inc. (NASDAQ: UPWK) continues to implement strategies to enhance shareholder value, recent data from InvestingPro underscores the company's financial health and market performance. Upwork's market capitalization stands at $1.35 billion, reflecting its position in the competitive global work marketplace. The company's price-to-earnings (P/E) ratio, a key indicator of market expectations about growth and profitability, is currently 18.42. This valuation is supported by the company's strong gross profit margins of 76.18% over the last twelve months as of Q2 2024, highlighting its efficiency in converting revenue into gross profit.
InvestingPro Tips suggest that Upwork's management has been proactive in enhancing shareholder value through share buybacks, as evidenced by the company's repurchase of $100 million in shares in 2024. Additionally, Upwork holds more cash than debt on its balance sheet, providing financial flexibility and stability. These factors are crucial as the company navigates through market conditions and continues its growth trajectory.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips on Upwork's financial health and future prospects. As of now, there are 12 more InvestingPro Tips available, including insights into the company's expected net income growth this year and its ability to cover interest payments with cash flows. Visit https://www.investing.com/pro/UPWK to explore these valuable insights and make informed investment decisions.
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