Upwork: 2022 Q3 Earnings – Key Points to Know!
- Rupam Deb
- Nov 14, 2022
- 3 min read
Updated: Nov 28, 2024
Upwork released its 2022 Q3 earnings. Here are the key points that you don't want to miss for Upwork from this earnings!
In 2022 Q3, as previously guided by the company, Upwork saw a slight sequential slowdown in its growth of clients (+9%) and revenue (+24%) due to the challenging macroeconomic environment. This revenue growth of 24% is more than double the competitor Fiverr’s 11%.
On expenses, Upwork continued to invest a lot on its sales and marketing, leading to a similar level of negative profits as the previous quarters in the year. Meanwhile, the CFO would leave by the end of the year and Upwork was still searching for a new CFO.
Let’s look at some of Upwork’s key financials for the quarter 2022 Q3 (and comparing it with its competitor Fiverr), followed by some comments on its overall business.
On the key financials:
Active clients grew 9% y/y (to 818 thousand clients), which is a slowdown compared to the 25% a year ago, or the 16% and 11% in the first two quarters of 2022. The slowdown was expected and was due to some softening seasonal and macroeconomic trends, including lower client acquisition and retention rates, particularly in Europe and from small- and medium-sized businesses. However, this 9% growth in clients was still higher than competitor Fiverr’s 3% growth (to 4.2 million active buyers).
Existing clients continued to spend more on Upwork, with the gross service volume (GSV) per active client growing by 13% y/y, or 2% q/q, to $4,958, as more-tenured clients expand their spend and the large number of recently acquired clients begin to mature into higher-value clients. The 13% y/y growth in GSV per active client slowed down this quarter (vs the 16% y/y growth for previous quarter) as it faced headwind from a full quarter’s impact of the pricing structure change implemented in early 2022 Q2. On the pricing change, in April 2022, Upwork combined its Upwork Basic and Plus client offerings into its new Client Marketplace offering, simplifying its pricing model and making available more features overall. This pricing change resulted in some reduction in client spend (in line with expectations), but drove higher marketplace take rate and greater revenue.
Considering the above two factors, total GSV grew 14% y/y (to $1.03 billion), slower than the 38% growth a year ago, or 19% growth a quarter ago.
Overall take rate improved to an all-time high of 15.4% since IPO (vs 14.2% a year ago, or 15.0% a quarter ago), primarily driven by a full quarter’s benefit of the pricing change.
With a higher take rate, revenue grew faster than GSV, by 24% (to $159 million), slower than the 32% growth a year ago, or the 26% growth a quarter ago. This 24% revenue growth was more than double the competitor Fiverr’s 11% revenue growth.
Gross profit margin remained at an all-time high of 74% since IPO, slightly higher than the 73% a year ago or similar as the 74% a quarter ago. Thus, gross profit grew slightly faster than revenue, at 27% y/y (to $118 million).
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For Upwork Q3 Earnings of the company, check out the video below.
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