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Upwork:Quarterly Results/2023 Q1: Difference between revisions
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* They are excited to continue persuing it. | * They are excited to continue persuing it. | ||
* Hayden noted that it's too early to tell its impacts. | * Hayden noted that it's too early to tell its impacts. | ||
== Assessments == | |||
=== Moritz quarterly assessment === | |||
Here is my take on the quarter: (4.May 2023) | |||
Results looked very ugly at first glance with the significantly lowered FY guidance. More than half of the decrease can be attributed though to lowered expectations for enterprise sales as the sales team was heavily reduced and it's head publicly fired. That makes the reduced guidance less bad as they are basically investing less and are getting less revenue in return. | |||
Similarly their brand advertising spent was slashed but Upwork claims material year-over-year gains to top-of-funnel efficiency from performance advertising. That makes sense in my opinion as performance marketing (esp. Instagram and Tiktok) likely offers higher ROIs in the age of ai and i was never a huge fan of Upworks brand awareness campaign. | |||
As @Aron~Bluesky highlighted out to me the most important insight is that 85% of Upworks GSV is related to longer and complex projects which are harder to automate. Looking at our open jobs tracking (1)<ref><nowiki>https://docs.google.com/spreadsheets/d/1HEX9PT_YXkz-eua9tR-FFx-s6gAr-7ZoTmbW8RbRqYE/edit#gid=1524496488</nowiki></ref> i deemed it implausible at first given the large number of jobs with a short duration but in the end GSV is not about the quantity of open jobs but the spent per job. So i think their claims are logical and give some confidence. | |||
Talking about GSV: Hayden Brown talked about the fact that Upwork is demand constrained and they are seeing wage pressures as a large international platform. We could therefore see GSV headwinds in the short to medium term in my opinion. Indeed Upwork management was surprised about the weaker GSV per client as other metrics like volume and activity tracked well. Our job tracking matched the activity seen by management but failed to produced GSV insights for us. In that regard we have to think about additional data points to measure that could give us insights. In the longterm increased competitiveness provides value for clients and should lead to even larger client adoption which in term attracts more freelancers. I could therefore see strong flywheel adoption dynamics over the next 10+ years. | |||
Overall Upwork feels a bit like a startup to me with experimental processes and a lot of things not working out yet. I think it's probably the right move to go back to the drawing board and refine the sales and brand marketing playbooks before heavily investing on those fronts, but we should be aware about the unmature nature of the business. I am not sure if i like the way Hayden Brown is publicly firing people especially as she has been the one who recruited or promoted them in the first place and we can only hope that she grows into the CEO position fast enough and her new key hires are indeed good. That said i think everyone needs time to adopt and her latest decisions like to scale back on unsuccessful attempts in the current macro environment or the early stage launch of the full-time hiring offering seem to be correct and her new hires promising. Increasing EBITDA drastically provides an important buffer in case things go south from here. | |||
In Summary i believe that given the large TAM opportunity ahead i think Upwork offers the highest level of medium to longterm upside of all our portfolio companies with risks coming from the immature state of the business, risks with leadership and lacking visibility into e.g. macro impacts. I therefore think we should drastically increase our focus on Upwork to do everything we can to increase our visibility. This will serve as well in terms of spotting problems and taming my optimism if necessary or enables us to increase our position either at current $8 price levels which i deem very attractive or being ready in case the stock drops again at those crazy $5-6 price levels. | |||
== Key Items to examine == | == Key Items to examine == | ||