Aug 15·edited Aug 15Liked by Kostadin Ristovski, ACCA
Great analysis. I feel like Upwork should be doing better than it is. As a client, one of the frustrations is being bombarded with poor quality candidates. I suspect investors are also wary of the impact of AI and concerned about the decline in GSV?
At this price I wonder if the company might be suitable for an activist investor or an acquisition as I feel the company could be better run.
By the way, how do you get to operating margin from Adjusted EBITDA?
Thanks Joe, glad you enjoyed the analysis. I do agree with you, as I see way too many AI-generated cover letters sent by applicants. I think the decline in GSV is partly impacted by the change to a 10% flat fee (instead of the multi-tier fees before). There are probably many contracts taken outside of UpWork, to avoid this increase. I do expect next year the growth to re-accelerate.
I was also thinking about an activist investor / acquisition. My question is - What can be done to improve the platform?
As for the adjustment from operating margin to Adjusted EBITDA, I add together the lines that are normally part of operating profit (such as SBC) and see what % of revenue it is.
On one side, clients will drop projects that can wait.
On the other side, companies that must lower costs would be introduced to it.
I do think a recession will likely be a net negative in the short run. However, as an investor, I do have a long-term horizon, which is I'm not worried.
Given the company's cash position, I don't see any risk of bankruptcy. In the long run, I see a very high probability that the company is the ultimate winner of the freelance economy.
Great analysis. I feel like Upwork should be doing better than it is. As a client, one of the frustrations is being bombarded with poor quality candidates. I suspect investors are also wary of the impact of AI and concerned about the decline in GSV?
At this price I wonder if the company might be suitable for an activist investor or an acquisition as I feel the company could be better run.
By the way, how do you get to operating margin from Adjusted EBITDA?
Thanks Joe, glad you enjoyed the analysis. I do agree with you, as I see way too many AI-generated cover letters sent by applicants. I think the decline in GSV is partly impacted by the change to a 10% flat fee (instead of the multi-tier fees before). There are probably many contracts taken outside of UpWork, to avoid this increase. I do expect next year the growth to re-accelerate.
I was also thinking about an activist investor / acquisition. My question is - What can be done to improve the platform?
As for the adjustment from operating margin to Adjusted EBITDA, I add together the lines that are normally part of operating profit (such as SBC) and see what % of revenue it is.
Management do stupid things sometimes)) I worked there)
Everybody does :) However, if you think there's something that's alarming, feel free to share.
Thanks for the post! Do you think the possible upcoming recesion would play in favor or against upwork.
It is difficult to estimate.
On one side, clients will drop projects that can wait.
On the other side, companies that must lower costs would be introduced to it.
I do think a recession will likely be a net negative in the short run. However, as an investor, I do have a long-term horizon, which is I'm not worried.
Given the company's cash position, I don't see any risk of bankruptcy. In the long run, I see a very high probability that the company is the ultimate winner of the freelance economy.