Upwork Spikes 21% On 3Q Profit Beat; Stock Up 90% YTD

Shares of Upwork jumped 20.7% in extended trading on Wednesday after the freelancing platform’s 3Q results surpassed Street expectations fueled by its new and existing client base.

Upwork’s (UPWK) earnings of $0.04 per share jumped from $0.01 per share in the year-ago quarter and came ahead of the analysts’ estimates of a loss of $0.06 per share. 3Q revenues grew 24% year-over-year to $96.7 million and beat analysts’ expectations of $90.4 million.

The company’s gross services volume increased 23% year-over-year to $654.5 million. Marketplace revenue rose 26% year-over-year, while the marketplace take rate grew to 13.6% in 3Q from 13.3% in the year-ago quarter. The company’s CEO Hayden Brown said in a statement that “Our third-quarter performance was fueled by strength from both existing and new clients, who adopted Upwork in record numbers.”

As for 4Q, the company forecasts revenue in the range of $96 million – $98 million. For 2020, Upwork expects revenues in the range of $363 million – $365 million. (See UPWK stock analysis on TipRanks).

Ahead of 3Q results, BTIG analyst Marvin Fong raised the stock’s price target to $19 (about 6% downside potential) from $17 and maintained a Buy rating. The analyst expected “healthy” sequential growth in 3Q job listings, and therefore, indicated “overly conservative” 3Q guidance.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 4 Buys and 2 Holds. Given the year-to-date share rally of 89.50%, the average price target of $18.50 implies downside potential of about 8.5% to current levels.

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