Upwork (NASDAQ: UPWK) recently released its second-quarter results, marking the company's fourth quarterly update since its initial public offering last year. Upwork, which provides a platform for businesses to hire freelancers, has seen strong growth since its IPO -- and that growth continued in Q2.
The company's revenue growth rate accelerated during the quarter, fueled by robust growth in marketplace revenue. In addition, the company continued to gain traction with larger clients and enterprise customers.
Here's what you should know.
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Upwork's second-quarter results: The raw numbers
GAAP = generally accepted accounting principles. Data source: Upwork second-quarter earnings release.
What happened with Upwork this quarter?
Upwork's total revenue increased 18% year over year to $74.3 million -- an acceleration from 16% growth in Q1. But significant investments, primarily in marketing and advertising, weighed on the quarter's bottom line. The company notably detailed plans for this heavy spending in its first-quarter earnings call earlier this year. Management believes its aggressive investment will ultimately help the company expand its share in a large and fast-growing market opportunity, benefiting shareholders over the long haul.
A 49% year-over-year increase in GAAP and non-GAAP sales and marketing expenses during the quarter meant that this category of Upwork's operating expenses accounted for 32% of revenue, up from 26% of revenue in the year-ago quarter.
Other highlights include:
What management had to say
Management was particularly pleased with its progress in attracting larger clients to its platform.
"Our focus on larger clients and our Enterprise customers drove 4x more Upwork Business and Enterprise sales deals in the first half of 2019 compared to a year ago," said Upwork CEO Stephane Kasriel in the company's second-quarter earnings release.
In addition, in the company's second-quarter shareholder letter, management notably gave an explanation for its decline in client spend retention:
Management lifted the bottom end of its full-year guidance range. The company guided for 2019 revenue between $300 million and $304 million, up from a previous forecast for revenue during the period to be between $299 million and $304 million.
The company also said it expects full-year adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to be between 1% and 2% of revenue. Management previously expected adjusted EBITDA in 2019 to be between breakeven and 1% of revenue.
Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool recommends Upwork. The Motley Fool has a disclosure policy.
This article was originally published on Fool.com