Upwork(US:UPWK)2025-11-04 21:42Financial Performance - Marketplace revenue increased to $174.6 million, or 4%, for the three months ended September 30, 2025, compared to $167.3 million in the same period in 2024[128] - Gross Services Volume (GSV) for the three months ended September 30, 2025, was $1,017.7 million, a 2% increase from $998.3 million in the same period in 2024[135] - Net income for the three months ended September 30, 2025, was $29.3 million, a 6% increase from $27.8 million in the same period in 2024[132] - Adjusted EBITDA for the three months ended September 30, 2025, was $59.6 million, a 38% increase from $43.2 million in the same period in 2024[132] - Total revenue for the nine months ended September 30, 2025, was $589.4 million, representing a 2% increase compared to the same period in 2024[165] - Income from operations for the nine months ended September 30, 2025, was $101.0 million, compared to $51.6 million in the same period in 2024[162] - The company reported a net income of $99.8 million for the nine months ended September 30, 2025, compared to $68.4 million for the same period in 2024[210][211] Client Metrics - Active clients decreased to 794, a 7% decline from 855 in the same period in 2024[136] - GSV per active client increased to $5,036, a 5% increase from $4,781 in the same period in 2024[136] - The number of active clients decreased by 7% as of September 30, 2025, compared to the same date in 2024[165] Revenue Breakdown - Marketplace take rate increased to 18.9% for the three months ended September 30, 2025, up from 18.3% in the same period in 2024[129] - Enterprise revenue for the three months ended September 30, 2025, increased to $27.2 million, a 3% increase from $26.4 million in the same period in 2024[131] - Enterprise revenue for Q3 2025 increased by $0.7 million, or 3%, compared to Q3 2024, totaling $27.2 million[167] Cost and Expenses - Cost-saving measures implemented in recent years are expected to continue positively impacting net income and adjusted EBITDA throughout the remainder of 2025[132] - For the three months ended September 30, 2025, cost of revenue increased by $2.4 million, or 6%, primarily due to a $1.9 million increase in talent services costs and a $1.2 million increase in amortization expense[169] - Gross margin for the three months ended September 30, 2025, decreased to 77% compared to 78% in the same period in 2024, driven by lower margins in Managed Services[171] - Research and development expenses decreased by $2.9 million, or 6%, for the three months ended September 30, 2025, primarily due to reductions in personnel-related costs[175] - Sales and marketing expenses decreased by $11.1 million, or 24%, for the three months ended September 30, 2025, driven by cost-optimization efforts[177] - General and administrative expenses increased by $10.0 million, or 32%, for the three months ended September 30, 2025, primarily due to higher personnel-related costs and consultant fees[179] Tax and Other Income - Income tax provision increased by $5.2 million, or 463%, for the three months ended September 30, 2025, with an effective tax rate of 17.8%[184] - Other income, net, decreased by $2.2 million, or 27%, for the three months ended September 30, 2025, primarily due to lower unrealized foreign currency gains[183] - Provision for transaction losses increased by $0.6 million, or 33%, for the three months ended September 30, 2025, compared to the same period in 2024[182] Cash and Investments - As of September 30, 2025, the company had $260.8 million in cash and cash equivalents and $382.3 million in marketable securities[188] - Net cash provided by operating activities was $184.6 million, an increase from $115.0 million in the same period of 2024[210][211] - Net cash used in investing activities for the nine months ended September 30, 2025, was $138.2 million, primarily due to investments of $365.9 million in marketable securities and $59.8 million for acquisitions[212] - Funds held in escrow, including funds in transit, were $211.4 million as of September 30, 2025, compared to $195.7 million as of December 31, 2024[202] Share Repurchase and Commitments - The company repurchased 2.1 million shares for $31.0 million and 7.3 million shares for $101.9 million during the three and nine months ended September 30, 2025, respectively[200] - As of September 30, 2025, the company had $98.1 million available for repurchases under the 2025 Share Repurchase Authorization[200] - The company authorized a share repurchase program for up to $100.0 million in both 2024 and 2025, totaling $200.0 million[197][198] - The company has future purchase commitments of $40.0 million for cloud infrastructure over two years, with $20.0 million committed for each year[195] Future Outlook - The company expects Marketplace revenue to increase for the remainder of 2025, driven by strategic initiatives for improved monetization[166] - The company anticipates a decline in Enterprise revenue in Q4 2025 due to a slower sales pace while integrating the Lifted platform[168] - The company expects total research and development expenses to decrease throughout the remainder of 2025 compared to 2024, focusing on generative AI[176] Acquisition - Lifted completed the acquisition of Ascen for a total purchase price of $42.2 million in August 2025[134] Debt - The company had $361.0 million aggregate principal amount of Convertible Senior Notes outstanding as of September 30, 2025[203][221] - Net cash used in financing activities for the nine months ended September 30, 2025, was $76.0 million, primarily due to share repurchases[214]