Upwork (UPWK) Q3 2024 earnings summary

Executive summary

• Achieved 10% year-over-year revenue growth in Q3 2024 to $193.8 million, with record net income of $27.8 million and adjusted EBITDA of $43.2 million, reflecting strong profitability and margin expansion.

• Implemented organizational changes, including a 21% headcount reduction and restructuring plan, targeting $60 million in annualized cost savings and incurring $17–$22 million in pre-tax charges to be recognized in Q4 2024.

• Announced acquisition of Objective, an AI-native search company, to accelerate AI roadmap and enhance search, match, and content capabilities.

• Launched Business Plus and enhancements to Uma AI, targeting larger clients and improving proposal drafting and candidate evaluation.

• Authorized a new $100 million share repurchase program after completing a prior $100 million buyback.

Financial highlights

• Q3 2024 revenue grew 10% year over year to $193.8 million, exceeding guidance.

• Marketplace revenue rose 12% to $167.3 million; enterprise revenue grew 1% to $26.4 million.

• Gross margin reached 78%, and adjusted EBITDA margin hit 22%, both all-time highs.

• Free cash flow was $98 million, or $52 million excluding favorable payment timing, up 58% year over year.

• Cash, cash equivalents, and marketable securities totaled $601 million at quarter end.

Outlook and guidance

• Q4 2024 revenue expected between $178–$183 million; adjusted EBITDA guidance of $38–$42 million (22% margin at midpoint).

• Full-year 2024 revenue projected at $756–$761 million (10% growth at midpoint); adjusted EBITDA of $155–$159 million.

• Full-year non-GAAP diluted EPS expected between $1.00–$1.02, up from prior guidance.

• Most cost savings from organizational changes to materialize in 2025, with EBITDA margin improvement expected.

• Stock-based compensation expense is trending down and expected to continue declining into 2025.