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Upwork Inc. owns and operates a work marketplace that connects businesses with independent talent. The Company's independent talent refers to as freelancers, and, together with clients, as users, include independent professionals and agencies of varying sizes. The Company's marketplace offerings include Upwork Basic, Upwork Plus, Upwork Enterprise and Upwork Payroll. Upwork Basic offering provides clients with access to independent talent with verified work history on its work marketplace and client feedback; the ability to instantly match with the right freelancers, and built-in collaboration features. Upwork Plus offering is designed for teams looking to stand out to quality talent and scale hiring quickly. Upwork Enterprise offering is designed for larger clients. Upwork Payroll service offerings are available to clients when they choose to work with freelancers, where they engage through Upwork as employees.
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What is Upwork and what does it do?
A freelancer's playground. Upwork Inc. operates the world’s largest work marketplace, connecting professionals with businesses across the globe.
Upwork serves as a marketing channel for independent professionals looking for work. At the same time, it provides businesses with direct access to this workforce, bypassing traditional (and costly) means of hiring.
Businesses of all sizes, from small to Fortune 100 companies, seek out freelancers on Upwork across 90 categories and 10,000 skills. Some highly popular categories include customer service, design and creative, web/mobile/software development, data science and analytics, and sales and marketing.
How does Upwork make money?
Upwork earns revenue via two business segments, marketplace and managed services.
The majority of this segment’s revenue comes from service fees charged to freelancers when they finish projects and invoice clients. Service fees are a cut of the freelancer’s invoice and are typically 20% of the first US$500, 10% of the next US$9.5k, and 5% for amounts over US$10k.
Upwork also earns revenue by charging:
Payment processing and administration fees to freelancers and businesses
Premium talent access fees to businesses
“Connects” tokens fees (virtual tokens allowing freelancers to bid on projects)
Foreign currency exchange fees (when businesses choose to pay in currencies other than US$)
Upwork Payroll fees (when a business classifies a freelancer as an employee and wants Upwork to handle payment)
For FY2021, the marketplace business segment earned a total of US$462.3m, 92% of all of Upwork’s total revenue for the year.
Managed services revenue
Through its managed services offering, Upwork engages freelancers on behalf of businesses to complete projects. Upwork takes responsibility for the work a freelancer produces and directly invoices the business after delivery.
The managed services segment earned US$40.46m, 8% of Upwork’s total revenue for FY2021.
Is Upwork a profitable company?
No, Upwork is not profitable.
While Upwork’s revenue is growing, its net income has sunk deeper into the red over the past three financial years. The company earned minus US$17m for FY2019, minus US$23m for FY2020 and minus US$56 for FY2021.
As of December 2021, Upwork had US$575m of debt on its books.
Is Upwork stock a good buy?
The performance of UPWK stock shows investors are wary of the company’s lack of earnings and high levels of debt. Since UPWK stock’s October 2021 highs of over US$60, the stock has dropped more than 60% to a little above US$20 in March 2022.
Despite this drop, Upwork bulls believe the future of the world’s economy will be built on the efforts of freelancers. UPWK stock may be a buy for long-term investors who understand the freelance market, how freelancers work and believe Upwork will become profitable in the near future.
Who owns UPWK stock?
Upwork’s biggest shareholders are institutional. They include Vanguard Group (8.33%), T. Rowe Price Group (7.77%), BlackRock (6.19%), Baillie Gifford & Co. (4.88%) and Jackson Square Partners (4.72%).
Chairman Thomas Layton owns 3.18% of the company’s shares.