Upwork posted year-over-year revenue growth of 14% in Q1 2023, to $161 million, in what the freelance marketplace described as a “better-than-expected” first quarter.
Marketplace revenue came to $148 million, also up by 14% over the period, with managed services revenue climbing by 7% to $12.8 million.
“Total revenue growth was primarily a result of client fee changes related to the transition to our Client Marketplace Plan in the second quarter of 2022, partially offset by the softening macroeconomic conditions that negatively impacted GSV, client acquisition, and retention,” wrote president and CEO Hayden Brown and CFO Erica Gessert in a letter to shareholders.
The number of active clients, namely those with spend activity during the 12 months preceding the date of measurement, rose by 4% y-o-y as of March 31, to reach approximately 827,000, a gain of nearly 2% quarter on quarter.
Gross services volume (GSV), which remained flat year on year, was above $1 billion for the fifth straight quarter. The indicator was down by around 3% quarter on quarter, “primarily driven by continued impacts from the macroeconomic environment,” said Upwork.
GAAP net income stood at $17.2 million with adjusted EBITDA of -$2.9 million.
The CEO and CFO said that the company had spent the quarter “moving swiftly to adapt to new realities, as we saw the economy further impact our customers and our business.”
Upwork had seen “some unanticipated softness in certain client behavior due to macroeconomic uncertainty, which was most pronounced with our Enterprise customers and large businesses in the self-service Marketplace.”
The ensuing cost reduction measures included axing 137 roles, or approximately 15% of full-time employees, and pausing its brand media investment indefinitely.
“In total, the measures announced today are expected to drive over $80 million of annualized net cost savings, and deliver approximately $40 million of net cost savings in 2023,” said the executives.
Founded in 2015, San Francisco-based Upwork describes itself as “the world’s work marketplace.” Its users earned over $3.8 billion on the site in 2022, according to company data.
Globally, it competes with freelancer sites such as Freelancer, Fiverr and Dribbble.