Upwork(US:UPWK)2023-11-06 16:00Revenue and Income - For the three months ended September 30, 2023, Marketplace revenue increased by 11% to $161.7 million compared to $145.1 million in the same period of 2022[76]. - Total revenue for the three months ended September 30, 2023, was $175.7 million, an increase of 11% compared to $158.6 million for the same period in 2022[102]. - Net income for the three months ended September 30, 2023, was $16.3 million, a significant improvement from a net loss of $24.8 million in the same period of 2022[78]. - The company experienced a net income of $29.5 million for the nine months ended September 30, 2023, with non-cash adjustments of $24.5 million[132]. - For the nine months ended September 30, 2022, the company reported a net loss of $73.4 million[133]. Client Metrics - The number of active clients increased by 2% to 836, up from 818 as of September 30, 2022[79]. - GSV per active client decreased by 1% to $4,906 as of September 30, 2023, compared to $4,958 in the same period of 2022[79]. - The number of active clients increased by 2% as of September 30, 2023, compared to the same date in 2022, contributing to improved client retention[103]. Expenses and Cost Management - Total operating expenses for the three months ended September 30, 2023, were $121.0 million, a decrease from $143.6 million in the same period in 2022[102]. - Research and development expenses increased by 12% to $43.4 million for the three months ended September 30, 2023, compared to $38.9 million in 2022[109]. - Sales and marketing expenses decreased by $15.9 million (25%) to $47.3 million for the three months ended September 30, 2023, compared to $63.2 million in 2022, and by $12.7 million (7%) to $171.4 million for the nine months ended September 30, 2023, compared to $184.1 million in 2022[111][112]. - General and administrative expenses decreased by $2.8 million (9%) to $28.7 million for the three months ended September 30, 2023, and by $6.9 million (7%) to $86.9 million for the nine months ended September 30, 2023, compared to the same periods in 2022[113]. - Provision for transaction losses decreased by $8.5 million (84%) to $1.6 million for the three months ended September 30, 2023, and by $8.1 million (43%) to $10.9 million for the nine months ended September 30, 2023, compared to the same periods in 2022[114]. Cash Flow and Financial Position - Cash and cash equivalents increased to $146.8 million as of September 30, 2023, from $129.4 million as of December 31, 2022, while marketable securities decreased to $408.4 million from $557.2 million in the same period[121]. - Funds held in escrow, including funds in transit, increased to $178.0 million as of September 30, 2023, from $161.5 million as of December 31, 2022[126]. - The company anticipates that existing cash and cash equivalents, marketable securities, and cash flow from operations will be sufficient for at least the next 12 months to meet its cash requirements[122]. - For the nine months ended September 30, 2023, net cash provided by operating activities was $32.6 million, compared to a net cash used of $1.9 million in the same period of 2022[131][133]. - Net cash provided by investing activities for the nine months ended September 30, 2023, was $151.7 million, primarily due to proceeds from maturities of marketable securities of $451.0 million[134]. - Net cash used in financing activities for the nine months ended September 30, 2023, was $150.3 million, driven by $171.3 million paid for repurchases[136]. Debt and Interest - The company recognized a gain of $38.9 million on the early extinguishment of debt during the nine months ended September 30, 2023, included in other income[100]. - Interest expense decreased to $711,000 for the three months ended September 30, 2023, down from $1.1 million in 2022[102]. - Interest expense decreased by $406,000 (36%) to $711,000 for the three months ended September 30, 2023, and by $837,000 (25%) to $2.5 million for the nine months ended September 30, 2023, compared to the same periods in 2022[115][116]. - The company had $361.0 million and $575.0 million in aggregate principal amount of borrowings outstanding under the Notes as of September 30, 2023, and December 31, 2022, respectively[143]. Strategic Changes - The company implemented a simplified flat service fee structure of 10% in May 2023, replacing the previous tiered service fee model[83]. - A contract initiation fee of up to $4.95 per contract was introduced for clients in April 2023[83]. - The company expects research and development expenses to continue increasing in future periods to enhance the quality and adoption of current offerings[110]. - The company expects sales and marketing expenses to continue decreasing throughout the remainder of 2023 compared to the same period in 2022[112]. - The board of directors authorized a Share Repurchase Program allowing for the repurchase of up to $100.0 million of common stock[120]. Market and Risk Management - The company has entered into forward contracts to mitigate foreign currency risk, which has been insignificant to date[145]. - The company’s cash and cash equivalents are relatively insensitive to interest rate changes due to their short maturity[143].