• Upwork Reports Third Quarter 2024 Financial Results

    来源: Nasdaq GlobeNewswire / 06 11月 2024 15:03:00   America/Chicago

    Achieves 10% year-over-year revenue growth, record GAAP net income of $27.8 million and adjusted EBITDA of $43.2 million
    Third-quarter GAAP diluted EPS of $0.20
    Raises FY 2024 guidance for revenue and adjusted EBITDA
    Enters definitive agreement to acquire Objective to enhance core search and match offerings and strengthen AI talent bench
    Announces new $100 million share repurchase program authorization

    SAN FRANCISCO, Nov. 06, 2024 (GLOBE NEWSWIRE) -- 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 third quarter of 2024.

    “Upwork continues to seize the tremendous market opportunity and execute our strategy to deliver durable, profitable growth, with 10% year-over-year revenue growth and our highest-ever net income in the third quarter,” said Hayden Brown, president and CEO, Upwork. “We are building long-term shareholder value by serving clients with work outcomes on demand, produced by the world’s most skilled freelance professionals working hand-in-hand with cutting-edge AI tools. This quarter, our AI-powered innovation accelerated, with new capabilities for Uma™, Upwork’s Mindful AI, that streamline key steps in matching with and hiring talent as well as delivering outcomes in both our Marketplace and Managed Services offerings.”

    “As we raise our full-year 2024 revenue and adjusted EBITDA guidance, the resilient performance of our business and our continued market share gains in the face of a challenging macro environment are remarkable. Underscoring our confidence in our strategy, our Board of Directors has authorized another $100 million share repurchase, positioning Upwork to build on our track record of returning meaningful capital to shareholders,” said Erica Gessert, CFO, Upwork. “Through our disciplined execution, we accomplished a record-high adjusted EBITDA margin of 22% in the third quarter. We are wholly committed to growing profitability, and have made great progress towards achieving our 35% adjusted EBITDA margin target in the next five years.”

    Third Quarter Financial Highlights

    • Revenue grew 10% year-over-year to $193.8 million in the third quarter of 2024
    • Active clients grew 2% year-over-year to 855,000
    • Net income reached an all-time high of $27.8 million in the third quarter of 2024, up 70% compared to net income of $16.3 million in the third quarter of 2023
    • Diluted earnings per share was $0.20 in the third quarter of 2024, up 67% compared to diluted earnings per share of $0.12 in the third quarter of 2023
    • Adjusted EBITDA1 was $43.2 million in the third quarter of 2024, up 38% compared to adjusted EBITDA of $31.2 million in the third quarter of 2023
    • Cash provided by operating activities was $102.1 million in the third quarter of 2024, compared to cash provided by operating activities of $37.0 million in the third quarter of 2023
    • Free cash flow1 was $98.0 million in the third quarter of 2024, compared to free cash flow of $33.4 million in the third quarter of 20232

    Third Quarter Operational Highlights

    Artificial Intelligence

    • Launched enhancements for Uma™, Upwork’s Mindful AI, to create tailored proposal drafts for freelancers and evaluate candidates for clients based on how closely professionals’ skills and experience fit a job post.
    • Premiered Uma™-powered Managed Services to more efficiently scope projects, evaluate skills, and design optimal teams of experts to deliver work outcomes.
    • Uma™-enabled Job Post Generator helped clients complete job posts 73% faster than job posts in the quarter not leveraging Job Post Generator.
    • GSV from AI-related work grew 36% year-over-year in the third quarter.
    • Number of clients engaging in AI-related projects grew 30% year-over-year in the third quarter.
    • Freelance professionals working on AI-related work earned 41% more per hour than freelancers working on non-AI-related work in the third quarter.
    • Announced agreement to acquire Objective AI, Inc.3, an AI-native search-as-a-service company, to further enhance Upwork’s core search and match performance, strengthen Upwork’s AI and machine learning team, and continue upleveling multi-modal capabilities for Uma™ to assist customers with images, videos, and audio content.

    Enterprise

    • Continued success with a modified Enterprise offering, resulting in increased sales team win rates and 42 total new Enterprise clients, including Hunter Douglas, Bill.com, Berlitz, and Guess.
    • Grew Managed Services revenue 5% year-over-year in the third quarter, reflecting increasing demand for delivery of work outcomes and strong pipeline of new Managed Services clients.

    Ads & Monetization

    • Continued strength in ads & monetization, with revenues increasing 35% year-over-year in the third quarter.
    • Freelancer Plus subscription revenue increased 48% year-over-year in the third quarter.

    Partnerships

    • Partnered with emergent tech providers including Lettuce, Ocoya, TheWordsmith and Builderall to offer fully-managed projects delivered by Upwork embedded directly within partners’ customer experiences, expanding access to Upwork services and skilled talent beyond Upwork’s platform.
    • Welcomed Webflow, Smartsheet, Bubble, General Assembly and more to Upwork Partner Experts program, providing clients access to pre-vetted specialist talent on Upwork.

    Financial Guidance & Outlook

    Upwork announced the authorization of a new $100 million share repurchase program, following the completion of a previous $100 million authorization earlier this year.

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

    • Revenue: $178 million to $183 million
    • Adjusted EBITDA: $38 million to $42 million4
    • Diluted weighted-average shares outstanding: 140 million to 142 million
    • Non-GAAP diluted EPS: $0.24 to $0.26

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

    • Revenue: $756 million to $761 million
    • Adjusted EBITDA: $155 million to $159 million
    • Diluted weighted-average shares outstanding: 139 million to 141 million
    • Non-GAAP diluted EPS: $1.00 to $1.02
    • Stock-based compensation expense is expected to be lower than previous guidance of $20 million per quarter in 2024

    ______________________
    1 An explanation of non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures can be found in the “Non-GAAP Financial Measures" section and the subsequent tables at the end of this press release.
    2 Free cash flow benefited from the weekly timing of customer payments in the quarter due to Q2 ending on a Sunday.
    3 The transaction is expected to close in the fourth quarter of 2024, subject to the satisfaction of customary closing conditions.
    4 Adjusted EBITDA guidance does not include one-time restructuring charges related to the organizational changes announced on October 23, 2024.

     
    UPWORK INC.
    Key Financial and Operational Metrics
    (In thousands, except percentages and basis points)
    (Unaudited)
     
     Three Months Ended
    September 30,
       Nine Months Ended
    September 30,
      
      2024   2023  Change  2024   2023  Change
    GSV(1)$998,268  $1,030,321  (3.1)% $3,015,331  $3,070,174  (1.8)%
    Marketplace revenue(1)(2)$167,337  $149,625  12% $498,453  $428,609  16%
    Enterprise revenue(1)(2)$26,439  $26,108  1% $79,389  $76,593  4%
    Gross profit$150,368  $132,460  14% $446,389  $380,620  17%
    Gross profit margin 78%  75% 222 bps  77%  75% 191 bps
    Operating expenses$129,575  $120,994  7% $394,766  $400,308  (1)%
    Net income$27,758  $16,337  70% $68,420  $29,513  132%
    Adjusted EBITDA(1)(3)$43,227  $31,228  38% $117,387  $42,664  175%
    Profit margin 14%  9% 503 bps  12%  6% 600 bps
    Adjusted EBITDA margin(3) 22%  18% 454 bps  20%  8% 1,187 bps
    Cash provided by operating activities$102,128  $36,952  176% $145,074  $32,560  346%
    Free cash flow(1)(3)$97,961  $33,422  193% $134,495  $22,823  489%


     As of September 30,  
    (In thousands)2024 2023 % Change
    Active clients(1)855 836 2%


     Three Months Ended September 30, Nine Months Ended September 30,
     2024 2024
    New enterprise clients(1)42 116

    (1) See Key Definitions in our third quarter 2024 earnings presentation.

    (2) In order to conform to the current period presentation as of September 30, 2024, we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering, previously referred to as Upwork Enterprise, in Marketplace revenue.

    (3) An explanation of non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures can be found in the “Non-GAAP Financial Measures" section and the subsequent tables at the end of this press release.

    Third Quarter 2024 Financial Results Conference Call and Webcast
    Upwork will host a conference call today at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the company’s third quarter 2024 financial results. An audio webcast archive will be available following the live event for approximately one year at investors.upwork.com. Please visit the Upwork Investor Relations website at investors.upwork.com/financial-information/quarterly-results to view Upwork’s third quarter 2024 earnings presentation.

    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.

    Contact:
    Investor Relations
    investor@upwork.com

    Safe Harbor:
    This press release of Upwork Inc. (the “Company,” “we,” “us,” or “our”) contains "forward-looking" statements within the meaning of the federal securities laws. Forward-looking statements include all statements other than statements of historical fact, including any statements regarding our future operating results and financial position, including expected financial results for the fourth quarter and full year 2024, information or predictions concerning the future of our business or strategy, anticipated events and trends, potential growth or growth prospects, competitive position, technological and market trends, including artificial intelligence, industry environment, the economy, our plans with respect to share repurchases, the expected impact of cost-saving initiatives, our planned acquisition of Objective AI, Inc., and other future conditions.

    We have based these forward-looking statements largely on our current expectations and projections as of the date hereof about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. As such, they are subject to inherent uncertainties, known and unknown risks, and changes in circumstances that are difficult to predict and in many cases outside our control, and you should not rely on such forward-looking statements as predictions of future events. We make no representation that the projected results will be achieved or that future events and circumstances will occur, and actual results may differ materially and adversely from our expectations. The forward-looking statements are made as of the date hereof, and we do not undertake, and expressly disclaim, any obligation to update or revise any forward-looking statements, to conform these statements to actual results, or to make changes in our expectations, except as required by law. Additional information regarding the risks and uncertainties that could cause actual results to differ materially from our expectations is included under the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the three months ended June 30, 2024, filed with the SEC on August 7, 2024, and in our other SEC filings, which are available on our Investor Relations website at investors.upwork.com and on the SEC’s website at www.sec.gov. Additional information will also be set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the three months ended September 30, 2024, when filed.

    All third-party trademarks, including names, logos, and brands, referenced in this press release are property of their respective owners. All references to third-party trademarks are for identification purposes only and shall be considered nominative fair use under trademark law.

     
    UPWORK INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except for per share data)
    (Unaudited)
     
     Three Months Ended
    September 30,
     Nine Months Ended
    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   175,733   577,842   505,202 
    Cost of revenue 43,408   43,273   131,453   124,582 
    Gross profit 150,368   132,460   446,389   380,620 
    Operating expenses       
    Research and development 50,411   43,419   155,792   131,146 
    Sales and marketing 46,093   47,308   141,277   171,377 
    General and administrative 31,276   28,652   93,201   86,922 
    Provision for transaction losses 1,795   1,615   4,496   10,863 
    Total operating expenses 129,575   120,994   394,766   400,308 
    Income (loss) from operations 20,793   11,466   51,623   (19,688)
    Other income, net 8,091   5,766   20,433   52,748 
    Income before income taxes 28,884   17,232   72,056   33,060 
    Income tax provision (1,126)  (895)  (3,636)  (3,547)
    Net income$27,758  $16,337  $68,420  $29,513 
            
    Net income (loss) per share:       
    Basic$0.21  $0.12  $0.51  $0.22 
    Diluted$0.20  $0.12  $0.50  $(0.06)
            
    Weighted-average shares used to compute net income (loss) per share       
    Basic 132,603   135,450   133,404   134,152 
    Diluted 139,294   137,291   140,552   135,184 

    (1) In 2023, we changed the name of our Upwork Enterprise offering to Enterprise Solutions. Concurrently, to align with customer needs and internal decision-making, we combined Enterprise Solutions and Managed Services into a suite of Enterprise offerings. In order to conform to the current period presentation as of September 30, 2024, we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering, previously referred to as Upwork Enterprise, in Marketplace revenue.

     
    UPWORK INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands)
    (Unaudited)
     
     September 30, 2024 December 31, 2023
    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 receivables, net 69,447   103,061 
    Prepaid expenses and other current assets 19,359   17,825 
    Total current assets 904,291   883,371 
    Property and equipment, net 29,875   27,140 
    Goodwill 118,219   118,219 
    Intangible assets, net 1,859   3,048 
    Operating lease asset 6,441   4,333 
    Other assets, noncurrent 1,974   1,430 
    Total assets$1,062,659  $1,037,541 
        
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities   
    Accounts payable$5,601  $5,063 
    Escrow funds payable 214,302   212,387 
    Accrued expenses and other current liabilities 55,754   58,192 
    Deferred revenue 8,782   17,361 
    Total current liabilities 284,439   293,003 
    Debt, noncurrent 357,468   356,087 
    Operating lease liability, noncurrent 9,220   6,088 
    Other liabilities, noncurrent 361   1,288 
    Total liabilities 651,488   656,466 
        
    Stockholders’ equity   
    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’ equity 411,171   381,075 
    Total liabilities and stockholders’ equity$1,062,659  $1,037,541 


     
    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 cash provided by operating activities:       
    Provision for transaction losses 1,100   1,364   3,533   6,806 
    Depreciation and amortization 3,668   1,763   10,443   5,641 
    Amortization of debt issuance costs 460   460   1,381   1,637 
    Accretion of discount on purchases of marketable securities, net (2,272)  (3,678)  (10,431)  (9,832)
    Amortization of operating lease asset 722   824   2,428   2,435 
    Tides Foundation common stock warrant expense 188   188   563   563 
    Stock-based compensation expense 18,578   17,811   54,758   56,148 
    Gain on early extinguishment of convertible senior notes          (38,945)
    Changes in operating assets and liabilities:       
    Trade and client receivables 46,015   4,319   29,857   (2,638)
    Prepaid expenses and other assets 2,665   2,951   (2,468)  1,487 
    Operating lease liability (1,086)  (1,509)  (4,215)  (4,375)
    Accounts payable (160)  (2,431)  541   (5,802)
    Accrued expenses and other liabilities 6,480   4,064   (367)  (1,077)
    Deferred revenue (1,988)  (5,511)  (9,369)  (9,001)
    Net cash provided by operating activities 102,128   36,952   145,074   32,560 
    CASH FLOWS FROM INVESTING ACTIVITIES:       
    Purchases of marketable securities (40,205)  (195,061)  (234,504)  (449,180)
    Proceeds from maturities of marketable securities 43,423   143,637   365,269   451,047 
    Proceeds from sale of marketable securities 3,027   9,716   38,421   159,575 
    Purchases of property and equipment (1,204)  (423)  (1,979)  (558)
    Internal-use software and platform development costs (2,963)  (3,107)  (8,600)  (9,179)
    Net cash provided by (used in) investing activities 2,078   (45,238)  158,607   151,705 
    CASH FLOWS FROM FINANCING ACTIVITIES:       
    Changes in escrow funds payable (4,354)  316   1,915   16,513 
    Proceeds from exercises of stock options 1,165   1,006   1,935   1,941 
    Proceeds from employee stock purchase plan       2,917   2,564 
    Repurchase of common stock       (100,000)   
    Net cash paid for early extinguishment of convertible senior notes          (171,327)
    Net cash provided by (used in) financing activities (3,189)  1,322   (93,233)  (150,309)
    NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 101,017   (6,964)  210,448   33,956 
    Cash, cash equivalents, and restricted cash—beginning of period 405,849   336,151   296,418   295,231 
    Cash, cash equivalents, and restricted cash—end of period$506,866  $329,187  $506,866  $329,187 


    The following table reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows as of the following (in thousands):

     September 30, 2024 December 31, 2023
    Cash and cash equivalents$288,464 $79,641
    Restricted cash 4,100  4,390
    Funds held in escrow, including funds in transit 214,302  212,387
    Total cash, cash equivalents, and restricted cash as shown in the condensed consolidated statement of cash flows$506,866 $296,418


    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 press release, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow.

    We define adjusted EBITDA as net income adjusted for stock-based compensation expense; depreciation and amortization; other income (expense), net, which includes interest expense; income tax benefit (provision); and, if applicable, certain other gains, losses, benefits, or charges that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. Free cash flow is defined as cash provided by (used in) operations less purchases of property, plant and equipment and cash outflows from internally developed software.

    We use non-GAAP financial measures in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. These non-GAAP financial measures provide consistency and comparability with past financial performance, facilitate period-to-period comparisons of our core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. In addition, adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to certain items that can vary substantially from company to company, and free cash flow allows investors to evaluate the cash generated from our underlying operations across periods.

    Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as analytical tools, and investors should not consider them in isolation or as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. In particular, (1) adjusted EBITDA excludes stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy, (2) although depreciation and amortization expense are non-cash charges, the assets subject to depreciation and amortization may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, and (3) adjusted EBITDA does not reflect: (a) changes in, or cash requirements for, our working capital needs; (b) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (c) tax payments that may represent a reduction in cash available to us. In addition, the non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, including companies in our industry, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from the non-GAAP financial measures that we present. Reconciliations of the non-GAAP financial measures presented in this press release to their most directly comparable GAAP financial measures have been provided below, and investors are encouraged to review the reconciliations and not rely on any single financial measure to evaluate our business.

    We have not reconciled our adjusted EBITDA guidance to GAAP net income or non-GAAP diluted EPS guidance to GAAP diluted EPS because certain items that impact GAAP net income and GAAP diluted EPS are uncertain or out of our control and cannot be reasonably predicted. In particular, stock-based compensation expense is impacted by the future fair market value of our common stock and other factors, all of which are difficult to predict, subject to frequent change, or not within our control. The actual amount of these expenses during the fourth quarter of 2024 and fiscal year 2024 will have a significant impact on our future GAAP financial results. Accordingly, a reconciliation of adjusted EBITDA guidance to GAAP net income and non-GAAP diluted EPS guidance to GAAP diluted EPS is not available without unreasonable effort.

     
    UPWORK INC.
    RECONCILIATION OF GAAP TO NON-GAAP RESULTS
    (In thousands, except for percentages and share data)
    (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 expense 18,578   17,811   54,758   56,148 
    Depreciation and amortization 3,668   1,763   10,443   5,641 
    Other income, net (1) (8,091)  (5,766)  (20,433)  (52,748)
    Income tax provision 1,126   895   3,636   3,547 
    Other(2) 188   188   563   563 
    Adjusted EBITDA$43,227  $31,228  $117,387  $42,664 
    Profit margin 14%  9%  12%  6%
    Adjusted EBITDA margin 22%  18%  20%  8%
            
    Cost of revenue, GAAP$43,408  $43,273  $131,453  $124,582 
    Stock-based compensation expense (361)  (499)  (1,324)  (1,409)
    Cost of revenue, Non-GAAP 43,047   42,774   130,129   123,173 
    As a percentage of total revenue, GAAP 22%  25%  23%  25%
    As a percentage of total revenue, Non-GAAP 22%  24%  23%  24%
            
    Gross profit, GAAP$150,368  $132,460  $446,389  $380,620 
    Stock-based compensation expense 361   499   1,324   1,409 
    Gross profit, Non-GAAP 150,729   132,959   447,713   382,029 
    Gross margin, GAAP 78%  75%  77%  75%
    Gross margin, Non-GAAP 78%  76%  77%  76%
            
    Research and development, GAAP$50,411  $43,419  $155,792  $131,146 
    Stock-based compensation expense (8,053)  (6,902)  (23,529)  (21,434)
    Intangible amortization (398)     (1,196)   
    Research and development, Non-GAAP 41,960   36,517   131,067   109,712 
    As a percentage of total revenue, GAAP 26%  25%  27%  26%
    As a percentage of total revenue, Non-GAAP 22%  21%  23%  22%
            
    Sales and marketing, GAAP$46,093  $47,308  $141,277  $171,377 
    Stock-based compensation expense (3,225)  (3,106)  (9,554)  (9,672)
    Sales and marketing, Non-GAAP 42,868   44,202   131,723   161,705 
    As a percentage of total revenue, GAAP 24%  27%  24%  34%
    As a percentage of total revenue, Non-GAAP 22%  25%  23%  32%
            
    General and administrative, GAAP$31,276  $28,652  $93,201  $86,922 
    Stock-based compensation expense (6,939)  (7,304)  (20,351)  (23,633)
    Other (2) (188)  (188)  (563)  (563)
    General and administrative, Non-GAAP 24,149   21,160   72,287   62,726 
    As a percentage of total revenue, GAAP 16%  16%  16%  17%
    As a percentage of total revenue, Non-GAAP 12%  12%  13%  12%
            
    Total operating expenses, GAAP$129,575  $120,994  $394,766  $400,308 
    Stock-based compensation expense (18,217)  (17,312)  (53,434)  (54,739)
    Intangible amortization (398)     (1,196)   
    Other (2) (188)  (188)  (563)  (563)
    Total operating expenses, Non-GAAP 110,772   103,494   339,573   345,006 
    As a percentage of total revenue, GAAP 67%  69%  68%  79%
    As a percentage of total revenue, Non-GAAP 57%  59%  59%  68%
            
    Income (loss) from operations, GAAP$20,793  $11,466  $51,623  $(19,688)
    Stock-based compensation expense 18,578   17,811   54,758   56,148 
    Intangible amortization 398      1,196    
    Other (2) 188   188   563   563 
    Income from operations, Non-GAAP 39,957   29,465   108,140   37,023 
            
    Net income, GAAP$27,758  $16,337  $68,420  $29,513 
    Stock-based compensation expense 18,578   17,811   54,758   56,148 
    Gain on early extinguishment of convertible senior notes (1)          (38,945)
    Intangible amortization 398      1,196    
    Tax effect of non-GAAP adjustments (7,762)  (5,447)  (20,150)  (5,602)
    Other (2) 188   188   563   563 
    Net income, Non-GAAP 39,160   28,889   104,787   41,677 
            
    Weighted-average shares outstanding used in computing earnings (loss) per share, GAAP
    Basic (in millions) 132.6   135.4   133.4   134.2 
    Diluted (in millions) 139.3   137.3   140.6   135.2 
    Basic earnings per share, GAAP$0.21  $0.12  $0.51  $0.22 
    Diluted earnings (loss) per share, GAAP$0.20  $0.12  $0.50  $(0.06)
            
    Weighted-average shares outstanding used in computing earnings per share, Non-GAAP
    Basic (in millions) 132.6   135.4   133.4   134.2 
    Diluted (in millions) 139.3   142.8   140.6   135.9 
    Basic earnings per share, Non-GAAP$0.30  $0.21  $0.79  $0.31 
    Diluted earnings per share, Non-GAAP$0.29  $0.21  $0.76  $0.31 

    (1) During the nine months ended September 30, 2023, we recognized a gain of $38.9 million on the early extinguishment of a portion of our 0.25% convertible senior notes due 2026, which is included in other income, net.

    (2) During the three and nine months ended September 30, 2024 and 2023, we incurred $0.2 million and $0.6 million, respectively, of expense related to our Tides Foundation warrant.

     
    UPWORK INC.
    RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
    (In thousands)
    (Unaudited)
     
     Three Months Ended
     September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023
    Net income (loss)$27,758  $22,220  $18,442  $17,374  $16,337  $(3,991)
    Add back (deduct):           
    Stock-based compensation expense 18,578   19,238   16,942   18,047   17,811   18,437 
    Depreciation and amortization 3,668   3,629   3,146   3,808   1,763   1,854 
    Other income, net (8,091)  (5,620)  (6,722)  (7,389)  (5,766)  (3,982)
    Income tax (benefit) provision 1,126   1,181   1,329   (1,557)  895   1,857 
    Other (1) 188   187   188   187   188   187 
    Adjusted EBITDA$43,227  $40,835  $33,325  $30,470  $31,228  $14,362 

    (1) For all periods presented, we incurred $0.2 million of expense related to our Tides Foundation warrant.

     
    UPWORK INC.
    RECONCILIATION OF CASH PROVIDED BY 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 of property, plant & equipment and cash outflows from internally developed software  (4,167)  (3,530)  (10,579)  (9,737)
    Free cash flow $97,961  $33,422  $134,495  $22,823 

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