2 Reasons to Watch UPWK and 1 to Stay Cautious

July 30, 2025 at 00:03 AM EDT

UPWK Cover Image

Shareholders of Upwork would probably like to forget the past six months even happened. The stock dropped 21.1% and now trades at $12.65. This might have investors contemplating their next move.

Following the drawdown, is now an opportune time to buy UPWK? 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 customer (ARPC) is a critical metric to track because it measures how much the company earns in transaction fees from each customer. 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 ARPC growth has been impressive over the last two years, averaging 8.3%. Its ability to increase monetization while growing its gross services volume demonstrates its platform’s value, as its customers continue to spend more each year. Upwork ARPC

2. Increasing Free Cash Flow Margin Juices Financials

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, Upwork’s margin expanded by 27 percentage points over the last few years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Upwork’s free cash flow margin for the trailing 12 months was 25.5%.

Upwork Trailing 12-Month Free Cash Flow Margin

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 1.6% annually to 812,000 in the latest quarter. This growth rate is one of the lowest in the consumer internet sector. If Upwork wants to accelerate growth, it likely needs to engage users more effectively with its existing offerings or innovate with new products. Upwork Gross Services Volume

Final Judgment

Upwork’s positive characteristics outweigh the negatives. With the recent decline, the stock trades at 9.5× forward EV/EBITDA (or $12.65 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.

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