Upwork Stock

Upwork Inc. (Upwork) operates a work marketplace that connects businesses with independent talent from across the globe.

Independent talent on the company’s work marketplace, which the company refers to as talent, includes independent professionals and agencies of varying sizes, and is an increasingly sought-after, critical, and expanding segment of the global workforce. The company defines clients as users that seek and work with talent through the company’s work marketplace. The company refers to clients and talent together as customers.

The company serves as a powerful discovery engine for talent, helping them find rewarding, engaging and flexible work, as well as market their services and build their book of business.

For clients, the company’s work marketplace provides fast, secure, and efficient access to high-quality talent with over 10,000 skills across more than 125 categories of work, such as web, mobile and software development, administrative support, sales and marketing, design and creative, and customer service, as well as more emergent categories and skills like those pertaining to generative artificial intelligence. The company offers a direct-to-talent approach as an alternative to traditional intermediaries, such as staffing firms, recruiters, and agencies by providing high-quality independent talent through the company’s work marketplace with innovative technology features that help build trusted relationships and instill trust in remote work, including the ability to engage talent as either independent contractors or as employees of third-party staffing providers. The company’s work marketplace also enables clients to streamline workflows, including talent sourcing, outreach, and contracting. In addition, the company’s work marketplace provides clients with access to essential functionality for remote engagements with talent, including communication and collaboration, the ability to receive all talent invoices through the company’s work marketplace, and payment protection. The company’s clients range in size, from independent professionals and small businesses to Fortune 100 companies.

The company generates revenue from both talent and clients of its Marketplace and Enterprise offerings. Revenue is primarily generated from fees charged to talent as a percentage of their billings to clients, which the company refers to as talent service fees, and to a lesser extent, fees charged to clients on a per-transaction basis, which the company refers to as client marketplace fees. The company also generates revenue from fees for premium offerings, including the company’s Upwork Payroll offering, purchases of Connects (virtual tokens that are required for talent to bid on projects and ads products on the company’s work marketplace), talent memberships, and other services, such as foreign currency exchange when clients choose to pay in currencies other than the U.S. dollar.

Work Marketplace

The following core aspects of the company’s work marketplace provide Upwork with a competitive advantage:

Trusted Work Marketplace

The company’s work marketplace fosters trust and credibility among talent and clients, while reducing the friction associated with searching for, contracting and collaborating with, and paying highly-skilled independent talent for short-term and longer-term projects. The company uses a combination of the latest technology, data science, product features, and the company’s skilled team to position its work marketplace as a trusted online marketplace to get work done.

The company builds and uses software, leverages data analysis, and applies machine learning and artificial intelligence to highlight relevant talent, facilitate security and identity verification for account ownership, and flag and prevent suspicious activities. The company closely monitors activity on its work marketplace to detect and prevent abuse and has integrated several third-party technologies, including an industry-leading fraud detection vendor. The company provides clients with tools to validate work performed by talent and to provide both public and private feedback once the work is completed. The company’s feedback system enables talent to build their business reputation by establishing long-term credibility with project review and verified client feedback. Talent profiles also include data from their work history on the company’s work marketplace, including client feedback, number of hours billed, projects completed, and amount earned. This validated expertise is a critical factor to build trust and promote brand loyalty, giving clients confidence in hiring talent for their next project. Additionally, the company provides escrow services, approval workflows, and dispute processes to help ensure that clients on the company’s work marketplace only pay for work that has been completed and talent is paid by their clients in full and on time.

Proprietary Data Drives Increasing Efficiencies

The company has built an expansive and unique repository of data on the company’s work marketplace. The company’s proprietary database maintains detailed and dynamic information, including skills possessed by talent, feedback, and success indicators of talent and clients transacting on the company’s work marketplace. Using this data in the company’s machine learning models enables the company to provide a trusted, convenient, and effective experience for both new and existing customers. Additionally, clients are able to better connect with available talent for their projects, while at the same time enabling talent to better identify available projects that fit their specific skills. Moreover, the company’s machine learning models leverage the company’s closed-loop transaction data on millions of completed projects. The large volume of transactions on the company’s work marketplace positions the company to improve the effectiveness of its search and match capabilities, product features and experiences, and insights the company provides to its customers.

Robust Functionality

The company’s work marketplace includes a proposal tracking system, search engine and collaboration capabilities, machine learning-driven talent matching and proposal ranking capabilities, time tracking and invoicing systems, and payments services. The robust functionality of the company’s work marketplace is designed to enable talent to more easily run and build their businesses and to enable clients to find, hire, and collaborate with high-quality talent on a global scale.

Powerful Global Network Effects

The company has heavily invested in building a robust work marketplace with features and functionalities to connect talent and clients at scale. The company’s work marketplace provides a strong value proposition for both clients and talent and the company’s scale creates powerful network effects that strengthen the company’s competitive position. In turn, as more clients use and post high-quality projects on the company’s work marketplace, more talent come to seek opportunities. As a result, the company has been able to scale its business and the company’s global community of customers efficiently.

Business Model with Strong Retention Metrics

The growth of the company’s business is driven by long-term and recurring use of the company’s work marketplace by talent and clients, which leads to more predictable revenue. In addition, the scale of the company’s work marketplace incentivizes talent to build their business reputations on, and continue to use, the company’s work marketplace.

Offerings

Marketplace

The company’s Marketplace offerings are designed for clients looking to identify quality talent and scale hiring quickly. The company’s Marketplace offerings provide clients with access to independent talent with verified work history on the company’s work marketplace, as well as client feedback, the ability to instantly match with the right talent, and built-in collaboration features. They also receive perks, such as a verified client badge and highlighted job posts, which stand out to top talent and help clients achieve results.

Upwork Payroll is available to clients when they choose to work with talent that they engage through Upwork as employees. With Upwork Payroll, clients have access to third-party staffing providers to employ talent and meet their talent needs through the company’s work marketplace.

Enterprise

The company’s Enterprise offerings deliver industry-leading work solutions for clients who have achieved, or aim to achieve, enterprise scale and who are looking to be more cost-efficient, innovative, productive, and growth-oriented. Enterprise offers two lines of service—Enterprise Solutions and Managed Services. Clients of Enterprise Solutions receive all the product features of Marketplace, in addition to consolidated billing and monthly invoicing, a dedicated team of account managers, detailed reporting with company insights and trends to enable clients to hire faster and more successfully, and the opportunity for clients to onboard pre-existing independent talent onto the company’s work marketplace. Enterprise Solutions also offers access to additional product features, premium access to expert-vetted talent, professional services, and payment terms flexibility. Additionally, through the company’s Enterprise Compliance offering, clients can engage the company to determine whether talent should be classified as an employee or an independent contractor based on the scope of talent services agreed between the client and talent and other factors. For clients seeking a higher level of service, Managed Services offers a service-led program management and full project lifecycle solution that enables Enterprise customers to contract entire functions. Through Managed Services, the company engages talent directly or as employees of third-party staffing providers to perform services for clients on the company’s behalf, directly invoice the client, and assume responsibility for work performed.

As with the company’s Marketplace offerings, Upwork Payroll is also available to Enterprise clients when they choose to work with talent they engage through Upwork as employees.

Sales and Marketing

The company’s sales and marketing organizations work closely together to increase awareness, generate customer demand, build a strong sales pipeline, and grow account relationships across clients of all sizes, including independent professionals and small businesses to Fortune 100 companies, to accelerate GSV and revenue growth.

Enterprise Sales

The company’s Enterprise sales team focuses on clients interested in its Enterprise Solutions and Managed Services offerings. The company’s Enterprise sales team consists of teams that focus on one of two primary areas—Land and Expand. The Land team consists of business development representatives and other quota-carrying account executives who are primarily focused on acquiring new clients who have achieved, or aim to achieve, enterprise scale. Specifically, the company’s business development representatives are focused on generating qualified opportunities within the company’s target account profile, which include both inbound and self-service customer upgrades. These opportunities are delivered to account executives and solutions architects focused on selling the company’s Enterprise offering. Additionally, on the Expand team, the company’s quota-carrying account management and success team members help new and existing clients scale usage of the company’s work marketplace throughout their organizations. The company achieves this by strategically developing and growing relationships within client organizations at all levels, from users to buyers to executives, as well as executing persona-based workshops, webinars, and account-based marketing campaigns that drive additional client spend through the company’s work marketplace.

Marketing

The Upwork Research Institute leverages proprietary platform data and third party research to publish insights and trends that are leveraged for marketing activities across the funnel, including speaking engagements, social activations, and widespread press coverage. The company’s overall earned and owned media program shapes influential conversations around the future of work and the immediate strategic opportunities provided by flexible talent solutions, and further drives brand awareness. Building upon the company’s brand positioning, the company addresses key client needs in all its marketing efforts and helps point its clients to the right Upwork product based on those needs. While a majority of the company’s new client registrations come through direct and non-paid channels, the company also increases its new client pipeline with a variety of digital, direct mail, and event marketing programs. The company deploys email and lifecycle marketing initiatives to retain, cross-sell, and upsell existing clients. The company also engages in a range of advertising, such as TV, digital, and streaming audio advertising campaigns.

The company has increased its focus on large enterprise organizations through account-based marketing programs that target clients to drive account growth. Once enterprise prospects are identified, the company’s Enterprise sales team works to broaden adoption of the company’s work marketplace into wider-scale deployments. This starts by creating a deeper understanding of the company’s audience to drive clarity and focus across marketing, sales, and product development efforts. The company builds and delivers buyer and journey-based messaging frameworks to position Upwork’s value in alignment with the company’s buyers’ top challenges and priorities. The company’s focus is on fostering meaningful engagements with high-propensity Enterprise prospect accounts to create and accelerate pipeline by leveraging a series of initiatives such as webinars, trade shows, roadshows, executive networking events, private equity channel support, and more. The company also has an increased emphasis on targeted and personalized sales content.

Intellectual Property

As of December 31, 2023, the company held 20 issued U.S. patents. As of December 31, 2023, the company held six registered trademarks in the United States, including Upwork, Elance, oDesk, and ‘Talent Cloud’; and also held 139 registered trademarks in foreign jurisdictions.

Upwork, the Upwork logo, Upwork Enterprise, Elance, oDesk, ‘Talent Cloud,’ ‘Up We Go,’ and other registered or common law trade names, trademarks, or service marks are the property of Upwork.

Government Regulation

The company provides escrow services to its customers and is therefore licensed as an internet escrow agent by the California Department of Financial Protection and Innovation, which the company refers to as the DFPI.

Competition

The company’s main competitors fall into the following categories:

Traditional contingent workforce and staffing service providers and other outsourcing providers, such as The Adecco Group, Randstad, Recruit, Allegis Group, and Robert Half International;

Online freelancer platforms that serve either a diverse range of skill categories, such as Fiverr, Guru, and Freelancer.com, or specific skill categories;

Other online providers of products and services for individuals or businesses seeking work or to advertise their services, including personal and professional social networks, such as LinkedIn and GitHub (each owned by Microsoft), employment marketplaces, platforms providing compliance services, recruiting websites, and project-based deliverable providers;

Software and business services companies focused on talent acquisition, management, invoicing, or staffing management products and services, such as Workday;

Payment businesses that can facilitate payments to and from businesses and service providers, such as PayPal and Payoneer; and

Online and offline job boards, classified ads, and other traditional means of finding work and service providers, such as Craigslist, CareerBuilder, Indeed, Monster, and ZipRecruiter.

In addition, well-established internet companies, such as Google, LinkedIn, and Amazon; social media platforms, such as Meta; and businesses that operate driving, delivery, and other commoditized marketplaces, such as Uber Technologies, have entered the company’s market segment. Some of these companies have launched or have acquired companies or assets that offer products and services that directly compete with the company’s work marketplace.

History

The company was incorporated in the state of Delaware in 2013. It was formerly known as Elance-oDesk, Inc. and changed its name to Upwork Inc. in 2015.