Cloud Stocks: Upwork Improves Monetization

Mountain View-based Upwork (UPWK), the largest online marketplace that enables businesses to find and work with highly-skilled freelancers, has been making several changes to revive its growth rate and improve monetization.

Upwork’s Financials

Upwork’s fourth quarter revenue was up 19% to $80.3 million, beating analyst estimate of $79.42 million. Net loss was $5.5 million, or $0.05 per share; compared to a net loss of $5.4 million, or $0.05 per share a year ago. Non-GAAP net income was $3.4 million, or $0.3 per share, compared to a non-GAAP net income of $2.7 million, or $0.03 per share a year ago.

Marketplace revenue grew 21% to $72.2 million, and accounted for 90% of total revenue. Managed services revenue increased 5.3% to $8.1 million.

Gross services volume (GSV) increased by 16% year-over-year to $549 million. Take rate, defined as total revenue divided by GSV, was 14.6%, compared to 14.3% a year ago. Core clients grew 18% to approximately 124,000.

Full year 2019 revenue grew 19% to $300.6 million. GSV grew 19% to $2.1 billion. Net loss narrowed to $16.7 million from $19.9 million a year ago. Non-GAAP net income improved to $5.5 million, compared to net loss of $0.6 million a year ago.

For the first quarter, Upwork expects revenue in the range of $81.5 to $82.5 million. For the full year 2020, it expects revenue in the range of $340-$345 million, at a growth rate of 13%-15%. Revenue increased 25% to $253.4 million in fiscal 2018, and 19% in 2019.

Changes at Upwork

Upwork made several changes last year. It introduced new paid client subscription plans, which have higher monetization characteristics, both in the subscription fee and take rate. It also changed both the cost of Connects and the number of Connects required to submit a proposal.

Lastly, it increased its client payment fee for Upwork Basic and Plus from 2.75% to 3%. As a result of these changes, its monetization has improved. Overall take rate improved in Q4 to 14.6%, from 14.3% a year ago. Its marketplace take rate improved to 13.4% in Q4, compared to 12.8% a year ago.

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Disclosure: This segment is a part in the series: Cloud Stocks

Sramana Mitra is the founder of One Million by One Million (1M/1M), a ...

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