Upwork Inc. reported significant financial achievements for the fourth quarter and full year of 2023, demonstrating robust growth and profitability. The company's fourth-quarter GAAP Net Income reached $17.4 million with an Adjusted EBITDA of $30.5 million. For the full year, revenue increased by 11% to $689.1 million, and net income turned positive to $46.9 million, showcasing a strong recovery from the previous year's losses. The acquisition of AI startup Headroom and the appointment of its founder as Upwork’s head of AI highlights Upwork's commitment to integrating AI into its platform. Operational highlights include a 70% growth in AI-related work, the introduction of AI-enhanced tools for faster job postings and proposals, and significant partnerships in the AI field. Upwork also enhanced its Enterprise offering, leading to new client acquisitions. Looking forward, Upwork provided an optimistic financial guidance for 2024, emphasizing continued growth and profitability.

Fourth-quarter GAAP Net Income of $17.4 million
Fourth-quarter GAAP Diluted EPS of $0.13
Fourth-quarter Adjusted EBITDA of $30.5 million
Acquired AI company Headroom and welcomed founder Andrew Rabinovich as Upwork’s head of
AI and machine learning

SAN FRANCISCO, Calif., Feb. 14, 2024  Upwork Inc. (Nasdaq: UPWK), the world’s largest work marketplace that connects businesses with independent talent from across the globe, today announced its financial results for the fourth quarter and full year of 2023.

“Last year proved Upwork’s continued growth momentum and strong profitability. Our business is flexible and resilient, as the skilled talent on Upwork are a critical resource to businesses small and large,” said Hayden Brown, president and CEO, Upwork. “Fueled by our continued investments in human-centered AI and innovation, growing advertising and subscription products, our differentiated Enterprise offering, and new integrations with marquee partners, we are confident in and excited about our long-term strategic plan to drive growth and transform work in 2024 and beyond.”

“In 2023, we proved our ability to produce profitable growth in a dynamic macro environment. The speed with which we strategically shifted to mid-teens adjusted EBITDA margins—taking just two quarters—reflects the strong operating leverage and agility of our business,” said Erica Gessert, CFO, Upwork. “We have made great strides in the early innings of our AI journey, and we’re confident that we will continue to produce growing profit margins and free cash flow each year going forward.”

Fourth Quarter & Full Year 2023 Financial Highlights

• Revenue grew 14% year-over-year to $183.9 million in the fourth quarter


• Revenue grew 11% year-over-year to $689.1 million for full year 2023


• Active clients grew 5% year-over-year to 851,000 at the end of 2023, an all-time high


• Net income was $17.4 million in the fourth quarter of 2023, compared to net loss of $(16.5) million in the fourth quarter of 2022


• Net income was $46.9 million in 2023, compared to net loss of $(89.9) million in 2022


• Diluted earnings per share was $0.13 in the fourth quarter of 2023, compared to diluted loss per share of $(0.13) in the fourth quarter of 2022


• Diluted earnings per share was $0.06 in 2023, compared to diluted loss per share of $(0.69) in 2022


• Adjusted EBITDA* was $30.5 million in the fourth quarter of 2023, compared to Adjusted EBITDA of $1.1 million in the fourth quarter of 2022


• Adjusted EBITDA* was $73.1 million in 2023, compared to Adjusted EBITDA loss of $(4.0) million in 2022


• Cash used in operating activities was $(5.3) million in the fourth quarter of 2023, compared to cash provided by operating activities of $8.5 million in the fourth quarter of 2022


• Cash provided by operating activities was $27.2 million for the full year of 2023, compared to cash provided by operating activities of $6.6 million for the full year of 2022


• Adjusted free cash flow* was $25.5 million in the fourth quarter of 2023, compared to adjusted free cash flow of $5.8 million in the fourth quarter of 2022


• Adjusted free cash flow* was $48.3 million for the full year of 2023, compared to adjusted free cash flow of $(2.2) million for the full year of 2022

* Explanation of non-GAAP measures and reconciliations to their most comparable GAAP measures can be found in the “Non-GAAP Measures" and "Reconciliation of GAAP to Non-GAAP Results” section of this press release.



Full Year 2023 Operational Highlights
Artificial Intelligence

• Advanced Upwork as the premier destination for AI-related talent and work, with GSV from AI-related work growing 70% year-over-year


• Acquired AI startup Headroom and welcomed founder Andrew Rabinovich, formerly of Google and Magic Leap, as Upwork’s head of AI and machine learning


• Launched AI tools and customer experience innovations including Upwork Chat Pro, Job Post Generator and Proposal Tips
  
  
  
  • Clients using Job Post Generator are able to post jobs almost 70% faster
  
  
  • Proposal Tips allows freelancers to secure work at a faster rate
  
  
  
  


• Established marquee AI partnerships with OpenAI, Amazon, Adobe, Jasper, Miro and ClickUp

Ads & Monetization Tools

• Enhanced suite of ads & monetization products, our fastest-growing revenue stream in 2023


• Availability Badges
  
  
  
  • Freelancers with an Availability Badge received 55% more invites
  
  
  • Invites sent to badged freelancers accepted 77% more often
  
  
  
  


• Boosted Proposals
  
  
  
  • A successfully boosted proposal increases a freelancer's chance of getting hired by approximately 20%
  
  
  
  

Enterprise

• Strengthened Enterprise Suite offering and enhanced go-to-market motion, helping to add 31 new Enterprise clients in the fourth quarter


• Unlocked value by partnering with vendor management systems (VMS) like SAP Fieldglass and Flextrack and managed service providers (MSPs), expected to enable Upwork’s expand motion with existing Enterprise clients in 2024

Financial Guidance & Outlook
Upwork’s guidance for revenue, adjusted EBITDA, diluted weighted-average shares outstanding, and non-GAAP diluted EPS for the first quarter of 2024 is:

• Revenue: $183 million to $188 million, representing year-over-year growth of 15.3% at the midpoint


• Adjusted EBITDA: $28 million to $32 million


• Diluted weighted-average shares outstanding: 144 million to 146 million


• Non-GAAP diluted EPS: $0.17 to $0.19

Upwork’s guidance for revenue, adjusted EBITDA, diluted weighted-average shares outstanding, and non-GAAP diluted EPS for full year 2024 is:

• Revenue: $760 million to $780 million, representing year-over-year growth of 11.7% at the midpoint


• Adjusted EBITDA: $125 million to $135 million


• Diluted weighted-average shares outstanding: 148 million to 152 million


• Non-GAAP diluted EPS: $0.77 to $0.81


• Stock-based compensation expense is expected to average slightly more than $20 million per quarter for 2024

Disclosure Information
We use our Investor Relations website (investors.upwork.com), our Blog (upwork.com/blog), our X handle (twitter.com/Upwork), Hayden Brown’s X handle (twitter.com/hydnbrwn) and LinkedIn profile (linkedin.com/in/haydenlbrown), and Erica Gessert’s LinkedIn profile (linkedin.com/in/erica-gessert) as means of disseminating or providing notification of, among other things, news or announcements regarding our business or financial performance, investor events, press releases, and earnings releases and as means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD.

About Upwork
Upwork is the world’s largest work marketplace that connects businesses with independent talent from across the globe. We serve everyone from one-person startups to large, Fortune 100 enterprises with a powerful, trust-driven platform that enables companies and talent to work together in new ways that unlock their potential. Our talent community earned over $3.8 billion on Upwork in 2023 across more than 10,000 skills in categories including website & app development, creative & design, data science & analytics, customer support, finance & accounting, consulting, and operations. Learn more at upwork.com and join us on LinkedIn, Facebook, Instagram, TikTok, and X.

source: https://investors.upwork.com/node/10521/pdf