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Factors Setting the Tone for Upwork's (UPWK) Q1 Earnings

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Upwork (UPWK - Free Report) is set to release first-quarter 2024 results on May 1.

For the first quarter of 2024, Upwork anticipates revenues between $183 million and $188 million. The Zacks Consensus Estimate for the same is currently pegged at $186.71 million, implying 16.07% growth from the year-ago period's level.

Non-GAAP earnings are expected in the range of 17-19 cents per share. The Zacks Consensus Estimate for earnings has remained unchanged at 19 cents per share over the past 30 days, indicating growth of 2,000% from the year-ago period's reported actuals.

Upwork’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 272.97%.

Upwork Inc. Price and EPS Surprise

Upwork Inc. Price and EPS Surprise

Upwork Inc. price-eps-surprise | Upwork Inc. Quote

Factors to Note

Upwork’s first-quarter performance is expected to have benefited from take rate expansion due to strength in the company’s ads products, its shift to a simplified, flat-fee pricing structure for freelancers and other monetization strategies implemented in 2023 to drive enhanced value and efficiency in the Marketplace business.

The total take rate in the fourth quarter was 17.2%, up from 17.1% in the previous quarter and 16% in the first quarter of 2023. The momentum is expected to have continued in the to-be-reported quarter.

Upwork is a standout in the world of freelance work, connecting businesses of all shapes and sizes with people around the globe.

The company’s top line is expected to have been aided by strong active client growth, driven by improved client retention and acquisition in the to-be-reported quarter.

In the fourth quarter, active clients increased 5% year over year and quarter over quarter to approximately 851,000.

Managed Services is expected to have been positively impacted by clients moving from an Enterprise plan to a Managed Services plan.

This online talent marketplace provider has been striving hard to attract large business organizations to hire freelance talent through its Work Together Talent Grants program. A surge in hiring of freelance talent as businesses resort to stringent cost-saving practices is expected to have resulted in healthy adoption of UPWK’s services in the to-be-reported quarter.

The company signed 31 new Enterprise clients in the fourth quarter of 2023, representing a 35% sequential increase over new Enterprise client additions in the third quarter of 2023.

However, management remains cautious about some of the existing clients as they might have curbed spending on talent acquisition. Moreover, increased spending on product innovation is likely to have been a drag on profitability in the first quarter.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

UPWK has an Earnings ESP of 0.00% and carries a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

APi Group (APG - Free Report) has an Earnings ESP of +2.06% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

APi Group is scheduled to release first-quarter 2024 results on May 2. The Zacks Consensus Estimate for APG’s earnings is pegged at 32 cents per share, indicating growth of 28% from the year-ago quarter’s reported figure.

Arista Networks (ANET - Free Report) has an Earnings ESP of +2.49% and a Zacks Rank #1 at present.

ANET is set to report first-quarter 2024 results on May 7. The Zacks Consensus Estimate for the company’s earnings is pegged at $1.74 per share, indicating a rise of 21.68% from the year-ago quarter’s reported figure.

Docebo (DCBO - Free Report) has an Earnings ESP of +8.00% and a Zacks Rank #3 at present.

DCBO is set to report first-quarter 2024 results on May 9. The Zacks Consensus Estimate for the company’s earnings is pegged at 17 cents per share, indicating growth of 88.89% from the year-ago quarter’s reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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