Slide 1: Upwork Q3 2024 Earnings
Upwork Q3 2024 Earnings © 2024 Upwork Inc. Proprietary and confidential. 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation of Upwork Inc. (the “Company,” “we,” “us,” or “our”) contains "forward-looking" Undue reliance should not be placed on the forward-looking statements in this statements within the meaning of the federal securities laws. Forward-looking statements include prese
Slide 3: Top line growth with continued margin accretion
Top line Q3’24 growth with GSV Revenue GAAP Gross Margin continued margin $998M $193.8M 78% accretion -3% year-over-year +10% year-over-year +222 bps year-over-year Adjusted EBITDA Free Cash Flow Take Rate $43.2M $98.0M¹ 19.4% 22.3% adjusted EBITDA 226.6% FCF/adjusted +236 bps year-over-year margin
Slide 4: Third quarter highlights
Third quarter highlights GSV GSV from from AI-related AI-related workwork up up Highest ever net income of 36% 36% year-over-year year-over-year in Q3in Q3 $27.8 million Ads & Monetization revenue Strong Free Cash Flow grew 35% year-over-year in Q3 generation; $98M¹ in Q3 ¹Free cash flow benefited fro
Slide 5: Upwork Updates: Fall 2024
Upwork Updates: Fall 2024 Upwork’s semi-annual release of new products, features and partnerships to transform how businesses and professionals find each other, hire, collaborate, manage and pay for work. Explore the full collection of Upwork Updates © 2024 Upwork Inc. Proprietary and confidential. 5
Slide 6: Upwork product updates
Upwork product updates Find Hire Collaborate Manage & Pay Managed Services All About Introducing Upwork Introducing Job now powered by Uma Uma Business Plus Success Insights Unlock potential with Connect with the right fit Build strong working Optimize your experience specialized professionals, faste
Slide 7: Partnerships
Partnerships Acquiring new clients cost-effectively Third-party tech providers have the ability to offer fully-managed projects delivered by Upwork embedded directly within checkout and platform experiences Lettuce and Ocoya are now offering proven talent from Upwork, complemented by AI-powered managed
Slide 8: Advancing AI work + innovation
Advancing AI work + innovation Freelancers working on AI-related work earned 41% more per hour than those working on non-AI-related work in Q3 Uma™, Upwork’s Emerging Use Cases: Mindful AI • AI integration work • Prompt engineering • Generative AI modeling • Data labeling 36% 30% YoY increase in GSV
Slide 9: Planned acquisition of Objective accelerates Upwork's AI strategy
Planned acquisition of Objective accelerates Upwork’s AI strategy Upwork announced agreement to acquire Objective, an AI-native search-as-a-service company¹ • Will improve Upwork’s core search, match, discovery and recommendations performance • Bolsters Upwork’s expertise in AI/ML, search and AI-inf
Slide 10: Ads & monetization momentum
Ads & monetization Freelancer Plus Boosted Profiles Featured Jobs momentum One of Upwork’s fastest-growing revenue streams Ads & monetization revenue grew 35% year-over-year in Q3 Boosted Proposals Connects Purchases Ads & monetization products include: ● Freelancer Plus ● Boosted Profiles ● Boosted P
Slide 11: Additions to our leadership team
Additions to our leadership team Ernesto Lamaina, Peter Sanborn, GM Enterprise VP Strategy, Corporate Development & Partnerships Ernesto was recently appointed General Manager With nearly 20 years of experience in strategy, of Enterprise. In this role, he oversees our global M&A, investing, and finan
Slide 12: Agility and strong foundations in Enterprise
Agility and strong foundations in Enterprise 42 new total Enterprise logos in Q3, including Bill.com, GUESS, and Hunter Douglas Unlocking the Enterprise TAM through an expanded product offering that delivers value to larger customers on the Marketplace with our Business Plus plan Lowering our cost to
Slide 13: Continued commitment to profitability and efficiency
Continued commitment to profitability and efficiency As part of a continued focus on organizational efficiency and profitability, Upwork announced a more streamlined organization on October 23rd, including: A streamlined organizational structure to accelerate decision making that empowers teams to deliver
Slide 14: Third quarter revenue growth and continued margin expansion
Third quarter revenue growth and continued margin expansion Revenue Adjusted EBITDA $193.8M $43.2M $ Millions $ Millions 22% +10% YoY Margin $200 $40.0 $43.2 $190.9 $193.1 $193.8 $40.8 $180 $183.9 $31.2 $33.3 $175.7 $30.0 $30.5 $168.6 $160 $20.0 $140 $14.4 $10.0 $120 $0.0 Q2’23 Q3’23 Q4’23 Q1’24 Q2’
Slide 15: Take rate achieved an all-time high; Marketplace take rate rises above 18%
Take rate achieved an all-time high; Marketplace take rate rises above 18% Take Rate Marketplace Take Rate Active Clients 19.4% 18.3% 855K +14% % Take Rate % Take Rate +16% # in Thousands YoY +2% YoY 20.0% 19.4% 20.0% 1,000 YoY 19.2% 18.9% 18.3% 18.0% 872 868 17.2% 17.7% 836 851 855 17.1% 16.3% 750
Slide 16: Strong growth in Marketplace revenue
Strong growth in Marketplace revenue Marketplace Revenue Enterprise Revenue $167.3M $26.4M $ Millions $ Millions $200 +12% +1% $30.0 YoY YoY $166.8 $167.3 $150 $164.3 $157.5 $26.4 $26.6 $26.3 $26.4 $26.3 $26.1 $149.6 $142.3 $20.0 $100 $50 $10.0 $0 $0.0 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Q3’24 Q2’23 Q3’23
Slide 17: Expanding margins, strong cash flow + healthy balance sheet
Expanding margins, strong cash flow + healthy balance sheet Adjusted Free Cash, cash equivalents EBITDA Margin Cash Flow and marketable securities In the third quarter 2024 In the third quarter 2024 As of September 30, 2024 ¹ 22.3% $98M $601.2M ¹Free cash flow benefited from the weekly timing of custom
Slide 18: Full-year guidance
Full-year guidance Q4 Guidance FY 2024 Guidance Revenue $178 million - $183 million $756 million - $761 million Adjusted EBITDA $38 million - $42 million $155 million - $159 million Diluted weighted-average 140 million - 142 million 139 million - 141 million shares outstanding Non-GAAP diluted EPS $
Slide 19: Appendix + Definitions
Appendix + Definitions © 2024 Upwork Inc. Proprietary and confidential. Do not distribute. 19
Slide 20: Condensed Consolidated Statements of Operations
UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Revenue Marketplace (1) $ 167,337 $ 149,625 $ 498,453 $ 428,609 Enterprise (1) 26,439 26,108 79,389 76,593 Total revenue 193,776
Slide 21: Condensed Consolidated Statements of Operations (Continued)
UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED) (In thousands, except for per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Net income (loss) per share: Basic $ 0.21 $ 0.12 $ 0.51 $ 0.22 Diluted $ 0.20 $ 0.12 $ 0.
Slide 22: Condensed Consolidated Balance Sheets
UPWORK INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, 2024 December 31, 2023 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 288,464 $ 79,641 Marketable securities 312,719 470,457 Funds held in escrow, including funds in transit 214,302 212,387 Trade and client
Slide 23: Condensed Consolidated Balance Sheets (Continued)
UPWORK INC. CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (In thousands) (Unaudited) September 30, 2024 December 31, 2023 Common stock 13 14 Additional paid-in capital 635,578 674,918 Accumulated other comprehensive income 1,222 205 Accumulated deficit (225,642) (294,062) Total stockholders’ equ
Slide 24: Condensed Consolidated Statements of Cash Flows
UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 27,758 $ 16,337 $ 68,420 $ 29,513 Adjustments to reconcile net income to net
Slide 25: Statements of Cash Flows (Continued): Investing Activities
UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable securities (40,205) (195,061) (234,504) (449,180) Proc
Slide 26: Statements of Cash Flows (Continued): Financing Activities
UPWORK INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 CASH FLOWS FROM FINANCING ACTIVITIES: Changes in escrow funds payable (4,354) 316 1,915 16,513 Proceeds from exercis
Slide 27: Reconciliation of GAAP Net Income to Adjusted EBITDA
UPWORK INC. RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA (In thousands, except for percentages) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net income $ 27,758 $ 16,337 $ 68,420 $ 29,513 Add back (deduct): Stock-based compensation e
Slide 28: Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA by Quarter
UPWORK INC. RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA (In thousands) (Unaudited) Three Months Ended September 30, September 30, June 30, 2024 March 31, 2024 December 31, 2023 June 30, 2023 2024 2023 Net income (loss) $ 27,758 $ 22,220 $ 18,442 $ 17,374 $ 16,337 $ (3,991) Add back (
Slide 29: Reconciliation of Operating Cash Flow to Free Cash Flow
UPWORK INC. RECONCILIATION OF CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW (In thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cash provided by operating activities $ 102,128 $ 36,952 $ 145,074 $ 32,560 Less: purchases
Slide 30: Key Definitions
Key Definitions Active Clients Enterprise Revenue We define an Active Client as a client that has had spend activity on our work We define Enterprise Revenue as revenue from our Enterprise offerings, marketplace during the 12 months preceding the date of measurement. including all client fees, subscript
Slide 31: Key Definitions
Key Definitions Marketplace Revenue Marketplace revenue represents the majority of our revenue and is derived from our Marketplace offerings, which include all offerings other than our Enterprise offerings—Enterprise Solutions, previously referred to as Upwork Enterprise, and Managed Services. Marketpla
Slide 32: About Upwork
About Upwork About Upwork Disclosure Information Upwork is the world’s largest work marketplace that connects We use our Investor Relations website (investors.upwork.com), businesses with independent talent from across the globe. We our Blog (upwork.com/blog), our X handle serve everyone from one-pe
Slide 33: Non-GAAP Financial Measures
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 presentation, including adjusted EBITDA, adjus