Upwork Q3 Investor Presentation October 2022 urowork Safe Harbor This presentation and the accompanying oral commentary contain "forward-looking" statements based on the beliefs and assumptions of Upwork Inc. (the "Company") and on information currently available to the Company. Forward-looking statements include all statements other than statements of historical fact contained in this presentation, including expected financial results for the fourth quarter and full year 2022, information or predictions co ...

Upwork, Inc. (NASDAQ:UPWK) Q3 2022 Earnings Conference Call October 26, 2022 5:00 PM ET Company Participants Evan Barbosa - VP, IR Hayden Brown - President and CEO Jeff McCombs - CFO Conference Call Participants Bernie McTernan - Needham & Company Matt Farrell - Piper Sandler Logan Reich - RBC Capital Markets Marvin Fong - BTIG Maria Ripps - Canaccord Genuity John Byun - Jefferies Rohit Kulkarni - MKM Partners Andrew Boone - JMP Securities Operator Good day. And thank you for standing by. Welcome to Upwork ...

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Upwork Inc.'s unaudited condensed consolidated financial statements for the periods ended September 30, 2022, including balance sheets, operations, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Data (in thousands) | Balance Sheet Data (In thousands) | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,079,226** | **$1,081,061** | | Total Current Assets | $929,702 | $929,653 | | Cash and cash equivalents | $156,423 | $187,205 | | Marketable securities | $519,383 | $497,566 | | **Total Liabilities** | **$836,643** | **$821,544** | | Total Current Liabilities | $252,011 | $233,634 | | Debt, noncurrent | $563,520 | $561,299 | | **Total Stockholders' Equity** | **$242,583** | **$259,517** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Income Statement Data (in thousands) | Income Statement Data (In thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$158,641** | **$128,141** | **$456,876** | **$365,941** | | Gross Profit | $118,171 | $93,208 | $337,633 | $267,484 | | Loss from Operations | ($25,442) | ($8,317) | ($72,142) | ($32,409) | | **Net Loss** | **($24,827)** | **($9,311)** | **($73,385)** | **($33,684)** | | Net Loss Per Share (basic and diluted) | ($0.19) | ($0.07) | ($0.56) | ($0.27) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Data (in thousands) | Cash Flow Data (In thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($1,896) | $23,284 | | Net cash used in investing activities | ($32,433) | ($26,114) | | Net cash provided by financing activities | $12,950 | $546,975 | | **Net change in cash, cash equivalents, and restricted cash** | **($21,379)** | **$544,145** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates a work marketplace connecting businesses (clients) with independent talent. The financial statements are prepared under **U.S. GAAP** and should be read with the Annual Report on Form 10-K for the year ended December 31, 2021[22](index=22&type=chunk)[24](index=24&type=chunk) - In March 2022, the company suspended business operations in Russia and Belarus due to the invasion of Ukraine, requiring contracts to be wound down by May 1, 2022. The financial impact was **not material** for the reported period, but future impact is uncertain[30](index=30&type=chunk)[31](index=31&type=chunk) - As of September 30, 2022, the company had approximately **$32.7 million** of remaining performance obligations, primarily related to unexercised material rights from tiered service fees. About **$24.9 million** is expected to be recognized as revenue over the next 12 months[35](index=35&type=chunk) - In August 2021, the company issued **$575.0 million** of 0.25% convertible senior notes due 2026. The net proceeds were approximately **$560.1 million** after deducting issuance costs. The company also entered into capped call transactions to reduce potential dilution[59](index=59&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, including a **24% revenue increase** in Q3 2022, the impact of the new Client Marketplace offering, and macroeconomic challenges [Key Financial and Operational Metrics](index=22&type=section&id=Key%20Financial%20and%20Operational%20Metrics) Metric (in thousands, except percentages) | Metric (in thousands, except %) | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | GSV | **$1,027,325** | $903,989 | 14% | | Marketplace Revenue | **$145,143** | $117,783 | 23% | | Marketplace Take Rate | **14.3%** | 13.2% | 1.1% | | Net Loss | **($24,827)** | ($9,311) | (167)% | | Adjusted EBITDA | **($2,868)** | $8,216 | (135)% | - Active clients increased by **9%** to **818,000** as of September 30, 2022, compared to the prior year. GSV per active client grew by **13%** to **$4,958**[79](index=79&type=chunk) - In April 2022, the company launched its new Client Marketplace offering, simplifying the pricing model by eliminating monthly fees and introducing a **5%** client marketplace fee (or **3%** via ACH). This change increased revenue and take rate but also led to some reduction in client spend and a sequential decrease in GSV[77](index=77&type=chunk)[83](index=83&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Revenue Comparison (in thousands) | Revenue Type | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Marketplace | $145,143 | $117,783 | 23% | | Managed Services | $13,498 | $10,358 | 30% | | **Total Revenue** | **$158,641** | **$128,141** | **24%** | - Marketplace revenue growth was driven by a **9%** increase in active clients and a **13%** increase in GSV per active client. The new Client Marketplace offering, launched in April 2022, also contributed to higher revenue and an increased marketplace take rate of **14.3%** in Q3 2022 vs. **13.2%** in Q3 2021[103](index=103&type=chunk)[105](index=105&type=chunk) Operating Expenses Comparison (in thousands) | Expense Category | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Cost of Revenue | $40,470 | $34,933 | 16% | | Research and Development | $38,898 | $30,873 | 26% | | Sales and Marketing | **$63,171** | $43,192 | 46% | | General and Administrative | $31,407 | $26,083 | 20% | | Provision for Transaction Losses | **$10,137** | $1,377 | 636% | - Sales and marketing expenses increased by **46%** YoY in Q3 2022, primarily due to a **$13.0 million** increase in marketing and brand awareness campaigns and a **$6.8 million** increase in personnel-related costs[114](index=114&type=chunk) - Provision for transaction losses increased significantly, primarily due to increased instances of fraud, higher chargeback losses, and a **$2.7 million** reserve for a single Upwork Enterprise client's failure to pay[119](index=119&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - Principal sources of liquidity are cash, cash equivalents, and marketable securities. As of September 30, 2022, the company had **$156.4 million** in cash and cash equivalents and **$519.4 million** in marketable securities[122](index=122&type=chunk) Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from operating activities | **($1,896)** | $23,284 | | Net cash from investing activities | **($32,433)** | ($26,114) | | Net cash from financing activities | **$12,950** | $546,975 | - Net cash used in operating activities for the nine months ended Sep 30, 2022 was **$1.9 million**, a significant decrease from the **$23.3 million** provided in the same period of 2021. This was primarily due to a higher net loss and an increase in trade and client receivables[133](index=133&type=chunk)[134](index=134&type=chunk) - The company has **$575.0 million** in aggregate principal amount of 0.25% convertible senior notes due 2026, issued in August 2021[128](index=128&type=chunk)[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily from interest rate fluctuations and foreign currency exchange rates - The primary market risks are interest rate and foreign currency exchange rate fluctuations[144](index=144&type=chunk) - Interest rate risk is considered low as cash equivalents have short maturities and the **$575.0 million** in convertible notes have a fixed interest rate[145](index=145&type=chunk) - Foreign currency risk exists as clients can pay in various non-USD currencies. The company uses forward contracts to mitigate this risk, and the impact to date has been insignificant[146](index=146&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2022 - The CEO and CFO concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective[147](index=147&type=chunk) - No changes occurred during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[148](index=148&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not a party to any material pending legal proceedings - Upwork is not currently a party to any material pending legal proceedings[149](index=149&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks to Upwork's business, including user attraction and retention, payment and fraud, competition, geopolitical events, and regulatory challenges [Risks Related to Business Operations, Execution, and Growth](index=38&type=section&id=Risks%20Related%20to%20Business%20Operations,%20Execution,%20and%20Growth) - The company's growth is highly dependent on its ability to attract and retain both clients and talent. Competition for users is high, and geopolitical events, such as the suspension of business in Russia and Belarus, can impede access to talent pools[153](index=153&type=chunk)[154](index=154&type=chunk) - The company faces significant payment and fraud risks, including sophisticated methods used by bad actors. For the three and nine months ended September 30, 2022, provision for transaction losses increased due to higher instances of fraud and chargeback losses[166](index=166&type=chunk)[159](index=159&type=chunk) - The company's recent growth, partly driven by the COVID-19 pandemic's shift to remote work, may not be sustainable. Year-over-year growth rates for active clients and GSV have decelerated since **Q2 2021**[163](index=163&type=chunk)[156](index=156&type=chunk) [Risks Related to Our Industry, Offerings, and Services](index=52&type=section&id=Risks%20Related%20to%20Our%20Industry,%20Offerings,%20and%20Services) - The company faces intense competition from online and offline platforms, traditional staffing firms, and large internet companies like LinkedIn and Google, which have greater resources[210](index=210&type=chunk)[211](index=211&type=chunk) - A substantial portion of services on the marketplace are IT-related. A decline in this market, or a shortage of IT talent in key regions (e.g., Ukraine), could adversely affect the business. Approximately **25%** of client spend in the web, mobile, and software development category in 2021 was derived from the region impacted by the Russia-Ukraine war[223](index=223&type=chunk) - The business is dependent on third-party services, particularly AWS for hosting. Any disruption from AWS could significantly harm operations, and the company may not be able to easily switch providers[235](index=235&type=chunk) [Risks Related to Legal and Regulatory Matters](index=61&type=section&id=Risks%20Related%20to%20Legal%20and%20Regulatory%20Matters) - The company faces significant risk related to the classification of talent as independent contractors. Changes in laws, such as California's AB 5, or adverse legal determinations could result in tax liabilities, penalties, and reputational harm[252](index=252&type=chunk)[254](index=254&type=chunk) - The company is subject to complex and evolving data privacy laws globally, such as GDPR and CCPA. Non-compliance could lead to significant fines, litigation, and damage to its reputation[258](index=258&type=chunk)[259](index=259&type=chunk) - As a licensed internet escrow agent in California, the company is subject to regulations from the DFPI. Changes in laws or interpretations regarding money transmission could require additional licenses in other jurisdictions, leading to increased compliance costs[262](index=262&type=chunk)[263](index=263&type=chunk) [Risks Related to Finance, Accounting, and Tax Matters](index=74&type=section&id=Risks%20Related%20to%20Finance,%20Accounting,%20and%20Tax%20Matters) - The company has a history of net losses, with a net loss of **$73.4 million** for the nine months ended September 30, 2022, and an accumulated deficit of **$324.4 million**. Profitability is not guaranteed as operating expenses are expected to increase[287](index=287&type=chunk) - Quarterly operating results are subject to fluctuation due to factors like macroeconomic conditions, seasonality, changes in pricing models, and user spending patterns. A quarter-over-quarter decline in GSV was observed in **Q3 2022**[290](index=290&type=chunk)[175](index=175&type=chunk) - The applicability of sales, use, and other indirect taxes (like digital service taxes) is uncertain and evolving. An adverse interpretation or new legislation could result in significant tax liabilities and administrative costs[299](index=299&type=chunk) [Risks Related to Our Convertible Senior Notes](index=85&type=section&id=Risks%20Related%20to%20Our%20Convertible%20Senior%20Notes) - The company's **$575.0 million** of convertible notes could limit cash flow for operations, increase vulnerability to adverse economic conditions, and potentially dilute existing stockholders upon conversion[322](index=322&type=chunk)[324](index=324&type=chunk) - The capped call transactions entered into in connection with the notes are intended to reduce potential dilution, but hedging activities by the option counterparties could cause volatility in the company's common stock price[325](index=325&type=chunk)[326](index=326&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=87&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[331](index=331&type=chunk) [Item 6. Exhibits](index=88&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Transition and Separation Agreement for the CFO, certifications from the CEO and CFO, and Inline XBRL data files - Key exhibits filed include a Transition and Separation Agreement with CFO Jeff McCombs, CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and XBRL data files[334](index=334&type=chunk)

Financial Data and Key Metrics Changes - Upwork reported a revenue growth of 26% year-over-year, reaching $156.9 million in Q2 2022 [9] - The company estimated a revenue loss of approximately $4 million directly attributable to the war in Ukraine, with expectations of slightly less impact in subsequent quarters [18][20] - The overall spend across approximately 800,000 clients increased by 16% year-over-year, with clients spending over $100,000 up by 38% [35] Business Line Data and Key Metrics Changes - Enterprise revenue increased by 45% year-over-year to $12.3 million, indicating strong performance in larger customer segments [11] - The introduction of the Consultations feature led to higher customer satisfaction and faster time to hire, with clients averaging a 50% faster hiring time [10][84] - The Project Catalog and Consultations are seen as effective inroads for clients, leading to higher engagement and follow-on work [84] Market Data and Key Metrics Changes - The company noted a softening in client acquisition and retention, particularly in Europe and among small to medium-sized businesses (SMBs) [25][54] - Despite macroeconomic challenges, Upwork's business model remains durable, with a focus on delivering skilled talent from over 180 countries [20] Company Strategy and Development Direction - Upwork is focused on product innovation and brand awareness, aiming to become a household name in the freelance marketplace [12] - The company is investing in marketing and sales to capitalize on the growing demand for flexible and cost-effective talent solutions [41] - Upwork Academy was launched to support talent development, with high engagement levels noted [15][59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's value proposition, emphasizing the importance of cost savings and flexibility in a recessionary environment [20][41] - The macroeconomic conditions are difficult to predict, but management sees opportunities for growth as companies reevaluate traditional work models [19][20] - The company remains committed to achieving EBITDA profitability by 2023 and expanding margins thereafter [70] Other Important Information - Upwork's decision to suspend operations in Russia and Belarus has led to a shift in talent sourcing, with many clients working with relocated talent [16][17] - The company has seen a significant increase in the number of clients spending $1 million or more in the trailing 12 months [11] Q&A Session Summary Question: Impact of the global environment on revenue - Management indicated a $10 million to $15 million impact from the softening global environment, particularly in client acquisition and retention [25] Question: Cost savings from utilizing freelance workforce - Management noted that clients save 50% or more using Upwork talent compared to alternatives, which resonates well in the current economic climate [26] Question: Changes in client conversations due to economic slowdown - Conversations have shifted towards cost savings, but the overall success has been driven by execution and existing value propositions [30] Question: Contribution to growth from spend per client - The overall spend per client is up 16% year-over-year, indicating strong growth from existing clients [35] Question: Competitive intensity in the industry - Management has not observed any material changes in competition, with smaller competitors facing more challenges in the current environment [65] Question: Brand campaign effectiveness - The brand campaign is focused on durable growth, with positive resonance noted around Upwork's value proposition [68] Question: Talent quality joining the platform - Freelancing is viewed as a desirable option during economic downturns, attracting higher quality talent to the platform [56] Question: Pricing plan impact on client additions - The pricing changes have not negatively impacted retention, and gross margins have reached their highest levels as a public company [80] Question: Enterprise segment activity - Engagement with enterprise clients remains strong, with no noticeable softness reported [99]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ________________________________________________ FORM 10-Q _____________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number: 001-38678 _____________ ...

upwork Q1 2022 Shareholder Letter Dear Shareholders The first quarter of 2022 presented no shortage of global uncertainty and conflict, and it also demonstrated the strength of Upwork's business as we continued to execute on our strategy to innovate, evangelize, and scale the world's work marketplace. In the first quarter, Gross Services Volume (GSV) grew 27% year-over-year to over $1 billion, and revenue grew 24% year-over-year to $141.3 million. This is the first time our quarterly GSV has hit $1 billion, ...

Upwork Inc. (NASDAQ:UPWK) Q1 2022 Earnings Conference Call April 27, 2022 5:00 PM ET Company Participants Evan Barbosa - Vice President, Investor Relations Hayden Brown - President and Chief Executive Officer Jeff McCombs - Chief Financial Officer Conference Call Participants Eric Sheridan - Goldman Sachs Bernie McTernan - Needham & Company Maria Ripps - Canaccord Marvin Fong - BTIG Matt Farrell - Piper Sandler Andrew Boone - JMP Securities Rohit Kulkarni - MKM Partners Brent Thill - Jefferies Operator Than ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ________________________________________________ FORM 10-Q _____________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number: 001-38678 ____________ ...

Upwork Q4 Investor Presentation March 2022 urowork Safe Harbor This presentation and the accompanying oral commentary contain "forward-looking" statements based on the beliefs and assumptions of Upwork Inc. (the "Company") and on information currently available to the Company. Forward-looking statements include all statements other than statements of historical fact contained in this presentation, including information or predictions concerning the future of the Company's business, anticipated events and tr ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-K _____________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 001-38678 _____________________________ UPWORK INC. (Exact na ...