Upwork, Inc (NASDAQ: UPWK)

Sector: Communication Services Industry: Internet Content & Information CIK: 0001627475
Market Cap 2.63 Bn
P/B 4.18
P/E 10.64
P/S 3.37
ROIC (Qtr) 9.54
Div Yield % 0.00
Rev 1y % (Qtr) 4.10
Total Debt (Qtr) 369.44 Mn
Debt/Equity (Qtr) 0.59

About

Upwork, Inc., a leading online platform with a market capitalization of over $4 billion, operates in the staffing and human resources industry. The company connects businesses with independent talent from around the world, and it is the largest work marketplace globally, measured by gross services volume (GSV). Upwork's mission is to create economic opportunities that enable people to have better lives. Upwork's business model is built around its work marketplace, which provides a platform for clients to post projects and receive bids from a pool...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 193.05M provides robust 0.52x coverage of total debt 369.44M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 1.12B provides 3.03x coverage of total debt 369.44M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 170.47M exceeds capital expenditure of 22.58M by 7.55x, indicating strong organic growth funding capability.
  • Tangible assets of 1.12B provide exceptional 141.14x coverage of deferred revenue 7.94M, showing strong service capability backing.
  • Operating cash flow of 193.05M provides strong 24.30x coverage of deferred revenue 7.94M, indicating service delivery capability.

Bear case

  • Operating cash flow of 193.05M barely covers its investment activities of (159.21M), with a coverage ratio of -1.21, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (159.21M) provide weak support for R&D spending of 191.98M, which is -0.83x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 260.84M provide limited coverage of acquisition spending of (74.18M), which is -3.52x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 193.05M shows concerning coverage of stock compensation expenses of 61.67M, with a 3.13 ratio indicating potential earnings quality issues.
  • Operating cash flow of 193.05M provides minimal -1.76x coverage of tax expenses of (109.46M), suggesting potential tax planning inefficiencies or unsustainable tax positions.

Contract with Customer, Sales Channel Breakdown of Revenue (2024)

Contract with Customer, Sales Channel Breakdown of Revenue (2024)

Peer comparison

Companies in the Internet Content & Information
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GOOGL Alphabet Inc. 4,538.16 Bn 131.46 27.23 33.71 Bn
2 META Meta Platforms, Inc. 1,747.49 Bn 74.30 23.25 51.06 Bn
3 SPOT Spotify Technology S.A. 103.00 Bn 62.32 5.18 2.57 Bn
4 BIDU Baidu, Inc. 62.73 Bn 49.63 3.42 13.66 Bn
5 RDDT Reddit, Inc. 32.18 Bn 92.16 16.90 0.03 Bn
6 NBIS Nebius Group N.V. 27.81 Bn 127.53 81.80 4.51 Bn
7 TME Tencent Music Entertainment Group 24.66 Bn 15.77 5.54 0.54 Bn
8 PINS Pinterest, Inc. 16.95 Bn 8.53 4.18 0.21 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.06 1.10
EV to Cash from Ops. EV/CFO 14.02 -3.08
EV to Debt EV to Debt 7.33 28.98
EV to EBIT EV/EBIT 19.68 -26.54
EV to EBITDA EV/EBITDA 19.52 9.30
EV to Free Cash Flow [EV/FCF] EV/FCF 15.88 -67.01
EV to Market Cap EV to Market Cap 1.03 0.90
EV to Revenue EV/Rev 3.47 61.25
Price to Book Value [P/B] P/B 4.18 1.56
Price to Earnings [P/E] P/E 10.64 2.92
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.33
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -8.92
Dividend per Basic Share Div per Share (Qtr) 0.00 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.58
Interest Coverage Int. cover (Qtr) 0.00 -202.56
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -59.06 -24.06
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -9.58 175.36
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.94
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 187.85 31.53
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 78.72 -472.14
EBIT Growth (1y) % EBIT 1y % (Qtr) 56.47 32.66
EBT Growth (1y) % EBT 1y % (Qtr) 56.47 -25.80
EPS Growth (1y) % EPS 1y % (Qtr) 184.62 -18.36
FCF Growth (1y) % FCF 1y % (Qtr) 40.96 20.83
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.88 19.58
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.60 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.39 1.54
Current Ratio Curr Ratio (Qtr) 1.44 3.38
Debt to Equity Ratio Debt/Equity (Qtr) 0.59 -0.39
Interest Cover Ratio Int Coverage (Qtr) 0.00 -202.56
Times Interest Earned Times Interest Earned (Qtr) 0.00 -202.56
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.70 -4,283.87
EBIT Margin % EBIT Margin % (Qtr) 17.61 -4,786.62
EBT Margin % EBT Margin % (Qtr) 17.61 -5,002.12
Gross Margin % Gross Margin % (Qtr) 77.80 58.65
Net Profit Margin % Net Margin % (Qtr) 31.60 -5,003.08