In 2022 Q1, Upwork continued to grow its clients and revenues well, while continuing to invest a lot on its sales and marketing, leading to negative profits.
During the quarter:
Gross services volume (GSV) grew 27% y/y to cross more than USD 1b for the first time. This is driven by a 16% increase in active clients to 793k (with new client acquisition exceeding the record levels seen in 2021 Q1 during the height of the pandemic), and a 18% increase in GSV per active client to USD 4.7k (which was an acceleration over the 12% or 15% growth in the past 2 quarters, as more-tenured clients expand their spend, and new clients mature into higher-value clients).
Revenue grew slower at 24% y/y to USD 141m, due to a slightly lower take rate of 14.1% (vs 14.2% a year ago), mainly due to clients maturing into higher spending clients with a lower fee rate.
The Enterprise segment continued to grow well, with Upwork signing 32 new Enterprise clients (similar to last 2 quarters), which was up 33% y/y despite having a similar number of ramped sales representatives (thereby exceeding its deals-per-rep productivity targets). Enterprise revenue also grew well, by 55% y/y to USD 11m, with clients that spent >USD1m a year growing by 57% y/y (or 12% q/q).
Gross profit margin stayed constant (relative to a year ago) at 73% of revenue, leading to USD 103m of gross profit in 2022 Q1 (a 24% y/y growth).
Operating expenses were higher than gross profit, at 90% of revenue (i.e. USD 127m), comprising 41% for S&M (up from 35%), 27% for R&D (up from 23%), 21% for G&A (flat), and 2% for transaction losses (up from 1%).
Due to the high operating expenses, Upwork had a net loss of USD 25m (or USD 21m, after excluding the incremental expenses on humanitarian response efforts of USD 4m), higher than the loss of USD 8m a year ago.
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