Upwork (UPWK) Q2 2024 earnings summary

Executive summary

• Revenue for Q2 2024 reached $193.1 million, up 15% year-over-year, with record GAAP net income of $22.2 million and adjusted EBITDA of $40.8 million (21% margin, up from 8.5% last year).

• GSV declined 2.7% year-over-year to $1.0 billion, but marketplace take rate hit an all-time high of 18%, and active clients increased 6% to 868,000.

• AI-related work and monetization products were key growth drivers, with AI-related GSV up 67% year-over-year and ad/monetization revenue up 75%.

• Completed $100 million share repurchase program, buying 2.9 million shares in Q2 and 8.2 million shares in 2024, returning nearly all Q2 free cash flow to shareholders.

• Despite macroeconomic headwinds, profitability and free cash flow improved, but top-of-funnel activity softened, especially among larger clients, with a mix shift toward smaller businesses.

Financial highlights

• Marketplace revenue grew 17% year-over-year to $166.8 million; enterprise revenue was flat at $26.3 million.

• Gross margin improved to 77%, and adjusted EBITDA margin reached 21% in Q2 2024.

• Free cash flow was $33.5 million, with $33.1 million returned to shareholders via share repurchases.

• Diluted EPS was $0.17, compared to $(0.03) in Q2 2023.

• Cash, cash equivalents, and marketable securities totaled $497.7 million at quarter end.

Outlook and guidance

• Full-year 2024 revenue guidance lowered to $735–$745 million (7% growth at midpoint), with Q3 2024 revenue expected at $179–$184 million; adjusted EBITDA guidance for Q3 is $36–$39 million.

• Full-year adjusted EBITDA expected at $140–$150 million, with margin outlook increased.

• Non-GAAP diluted EPS for 2024 guided to $0.90–$0.94, up from prior guidance.

• Guidance assumes no macro improvement and factors in anti-circumvention initiatives and a structural impact from fewer Sundays in Q4.

• Stock-based compensation expense expected to average less than $20 million per quarter in 2024.