Markets

Upwork Stock Soars 7%, Adding $86 Million, After Profit Rises And Outlook Is Raised

Cost cuts lifted profit and the earnings outlook rose, even as active clients and work volume fell about 10%.

Upwork, the online marketplace that connects businesses with independent professionals, saw its shares climb 7.10% to $10.41 in Tuesday trading, as of 11:33 a.m. ET, adding $86 million in market value. The move followed Monday's third-quarter results: $185.6 million in revenue and $31.8 million in net income, with a raised full-year earnings outlook.

Profit up, volume down 10%

Gross services volume, the total value of work done on its platforms, slid 10.1% to $914.1 million. Active clients fell 10% to 717,000.

RBC Capital Markets put the client loss at 46,000 in the third quarter, up from 21,000 in the prior quarter.

For the fourth quarter, Upwork guided to revenue of $169 million to $177 million. It raised its full-year earnings-per-share outlook to $1.45 to $1.47, from $1.38 to $1.43.

A new CFO on January 1

CFO Erica Gessert will step down on January 1. Chief Business Officer Peter Sanborn was named her successor.

Upwork runs platforms for freelance, agency, fractional and payrolled work, plus Lifted, a subsidiary that helps large organizations source and pay contingent workers. Management has framed the business as rotating toward higher-value work and larger clients while the low-value work it once handled shrinks.

A rebound from a deep hole

The shares were on pace for a fourth straight daily gain and their biggest one-day gain since October 22. They had risen 21% in the month before this session.

Still, as of Monday's close the stock was down about 51% year-to-date, against a gain of about 10% for the S&P 500. It sat 56% below its highest close of the past year, set on January 23.

The fourth-quarter guidance and the January 1 handoff to Sanborn are the next tests of whether cost cuts can offset shrinking marketplace volume.