Citizens JMP has increased its price target for Upwork (UPWK, Financial) from $18 to $20, while maintaining an "Outperform" rating on the stock. This decision reflects a positive outlook for both the company and its shares. Upwork is currently experimenting with a new freelancer fee structure, which is expected to enhance its take rate beyond previous forecasts. This move is seen as a strategic step towards achieving its long-term objective of a 35% EBITDA margin.
According to Citizens JMP’s analysis, this change has the potential to significantly boost Upwork's EBITDA by 2026, with projections indicating an increase of 19% to 43% over current market estimates. The firm's optimistic outlook is rooted in the belief that these adjustments will strengthen Upwork's financial performance in the coming years.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for Upwork Inc (UPWK, Financial) is $18.90 with a high estimate of $25.00 and a low estimate of $15.00. The average target implies an upside of 10.53% from the current price of $17.10. More detailed estimate data can be found on the Upwork Inc (UPWK) Forecast page.
Based on the consensus recommendation from 11 brokerage firms, Upwork Inc's (UPWK, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Upwork Inc (UPWK, Financial) in one year is $14.02, suggesting a downside of 18.01% from the current price of $17.1. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Upwork Inc (UPWK) Summary page.
UPWK Key Business Developments
Release Date: May 05, 2025
- Revenue: $192.7 million, a record for the first quarter.
- Adjusted EBITDA: $56 million, with a margin of 29%.
- Gross Margin: 78.3%.
- GSV (Gross Services Volume): $988 million.
- Net Income: $37.7 million, a 105% increase over 2024.
- Free Cash Flow: $30.8 million.
- Cash and Cash Equivalents: Approximately $622 million at the end of the first quarter.
- Enterprise Revenue: $26.4 million, relatively flat year-over-year.
- Managed Services Revenue: $15.3 million, a 3% year-over-year growth.
- Marketplace Take Rate: 18.3% in Q1 2025, up from 17.7% in Q1 2024.
- Stock Buyback: $33.1 million used to buy back 2.3 million shares.
- Guidance for Q2 2025 Revenue: $184 million to $189 million.
- Guidance for Full Year 2025 Revenue: $740 million to $760 million.
- Guidance for Full Year 2025 Adjusted EBITDA: $190 million to $200 million.
- Non-GAAP Diluted EPS Guidance for 2025: Between $1.05 and $1.10.
- Stock-Based Compensation for 2025: Expected to be between $60 million and $65 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Upwork Inc (UPWK, Financial) reported a record first quarter revenue of $192.7 million, exceeding the high end of their guidance range.
- The company achieved a record high adjusted EBITDA of $56 million and an adjusted EBITDA margin of 29%.
- Upwork Inc (UPWK) is seeing strong growth in its Business Plus offering, with active clients more than doubling quarter over quarter.
- The company is making significant strides in AI, with 80,000 AI specialists on the platform and AI-related work commanding a 40% premium in freelancer earnings.
- Upwork Inc (UPWK) is well-positioned to lead the AI revolution with its investments in Uma, Upwork's Mindful AI, which is transforming customer experiences and driving platform engagement.
Negative Points
- Upwork Inc (UPWK) is experiencing some pressure on active client count due to top of funnel demand challenges.
- The macroeconomic environment remains turbulent, with slight macro headwinds impacting customer activity.
- Enterprise revenue was relatively flat year-over-year as the company shifted its sales focus.
- The company anticipates that Q1 will be the high water mark for margins in 2025 as they reinvest in growth opportunities.
- Despite strong performance, Upwork Inc (UPWK) is facing ongoing challenges in attracting new clients due to broader economic uncertainties.
