Upwork Q2 Results Beat Estimates; Shares Fall 4.4%

Freelancing platform Upwork Inc. (UPWK) has reported better-than-expected second-quarter results on the back of growth in revenues. Following the earnings release, shares of the company declined 4.4% to close at $55 in the extended trading session.

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Quarterly revenues stood at $124.2 million, up 42% from the same period last year, and surpassed the Street’s estimate of $120.24 million.
The rise in revenues can be primarily attributed to the growth witnessed in marketplace revenues and managed services revenues of about 46% and 7.2%, respectively.

Upwork reported earnings per share (EPS) of $0.03, which compares favorably to a loss of $0.03 per share last year. It surpassed the consensus estimate of a loss of $0.09 per share.

Notably, the company’s gross services volume (GSV) rose 50% from the prior year to $875.8 million.

The company also provided guidance for the third quarter and for FY2021. For the third quarter, it anticipates EPS and revenues to be in the range of $0.01-$0.03 and $125-127 million, respectively. The Street expects Upwork to witness a loss of $0.05 per share. Revenues’ estimate is pegged at $124.5 million.

For FY2021, the company expects EPS and revenues to be in the range of $0.05-$0.07 and $490-494 million, respectively. The consensus estimate for FY2021 EPS points at a loss of $0.24. Revenues are pegged at $487.17 million.

The CEO of Upwork, Hayden Brown, said, “The second quarter marks our fourth consecutive quarter of accelerating year-over-year growth in GSV and revenue. We will continue to innovate, scale, and increase awareness of our work marketplace as we transform from a single product company to a multi-product company to capture an even larger part of our $1.3 trillion market opportunity.” (See Upwork stock chart on TipRanks)

On July 29, Stifel Nicolaus analyst Scott Devitt reiterated a Buy rating on the stock with a price target of $65. The analyst’s price target implies upside potential of 13% from current levels.

Overall, consensus among analysts is a Moderate Buy based on 2 unanimous Buys. The average Upwork price target of $70.50 implies upside potential of 22.5% from current levels. Shares have gained 287% over the past year.