Upwork Inc. (NASDAQ:UPWK) shares surged 2.6% following a robust fourth-quarter earnings report that exceeded analyst expectations. The online freelancing platform announced an adjusted EPS of $0.20, surpassing the consensus estimate of $0.17. Revenue for the quarter also beat forecasts, coming in at $183.93 million against the anticipated $178.15 million. This represents a significant 14% increase in revenue YoY, signaling strong growth for the company.
The positive market response aligns with Upwork's reported growth and profitability, showcasing a successful year. The company's active clients grew by 5% YoY, reaching a record 851,000 by the end of 2023. This growth in clientele contributed to a net income of $17.4 million in the fourth quarter, a substantial improvement from the net loss of $(16.5) million in the same period last year. For the full year, Upwork turned a net income of $46.9 million, a notable recovery from the net loss of $(89.9) million in 2022.
Upwork's president and CEO, Hayden Brown, attributed the company's performance to its strategic investments and innovation. "Last year proved Upwork’s continued growth momentum and strong profitability. Our business is flexible and resilient, as the skilled talent on Upwork are a critical resource to businesses small and large," Brown said.
Looking ahead to fiscal year 2024, Upwork's guidance suggests continued growth, albeit at a slightly cautious pace. The company expects revenue to be between $760 million and $780 million, with the midpoint of this range falling slightly below the analyst consensus of $778 million. However, the forecast for adjusted EBITDA between $125 million and $135 million and non-GAAP diluted EPS between $0.77 and $0.81 is more optimistic than the consensus estimate of $0.71, indicating confidence in profitability.
Investors' upbeat reaction to the earnings report reflects optimism about Upwork's strategic direction and its ability to drive growth and transform work. The company's focus on human-centered AI, expanding advertising and subscription products, and new partnerships appears to resonate well with its long-term vision for 2024 and beyond.
Following the results, Citi analysts maintained a Neutral rating and $16 price target on Upwork shares. The firm stated the results were better than expected.
"Upwork ended the quarter with ~851K active clients (+5% Y/Y, +2% Q/Q) and added 31 new enterprise clients in the quarter," said the bank. "We’ll be watching demand for AI-related categories; adoption of Upwork’s advertiser tools, like Availability Badges and Boosted proposals, Enterprise adoption, and EBITDA expansion," they added.