Upwork has had an impressive run over the past six months as its shares have beaten the S&P 500 by 23.3%. The stock now trades at $16.19, marking a 33.6% gain. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.

Is now still a good time to buy UPWK? Or are investors being too optimistic? Find out in our full research report, it’s free.

Why Does UPWK Stock Spark Debate?

Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ: UPWK) is an online platform where businesses and independent professionals connect to get work done.

Two Positive Attributes:

1. Eye-Popping Growth in Customer Spending

Average revenue per gmv (ARPG) is a critical metric to track for gig economy businesses like Upwork because it measures how much the company earns in transaction fees from each gmv. This number also informs us about Upwork’s take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.

Upwork’s ARPG growth has been excellent over the last two years, averaging 9.1%. Its ability to increase monetization while growing its gross services volume demonstrates its platform’s value, as its gmv are ing significantly more than last year.

2. Increasing Free Cash Flow Margin Juices Financials

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Upwork’s margin expanded by 11.2 percentage points over the last few years. This is encouraging because it gives the company more optionality. Upwork’s free cash flow margin for the trailing 12 months was 16.5%.

One Reason to be Careful:

Change in Gross Services Volume Points to Soft Demand

As a gig economy marketplace, Upwork generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.

Over the last two years, Upwork’s gross services volume, a key performance metric for the company, increased by 4% annually to 855,000 in the latest quarter. This growth rate lags behind the hottest consumer internet applications. If Upwork wants to accelerate growth, it likely needs to engage users more effectively with its existing offerings or innovate with new products.

Final Judgment

Upwork’s positive characteristics outweigh the negatives, and with its shares beating the market recently, the stock trades at 13.8× forward EV-to-EBITDA (or $16.19 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

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