Why Upwork Stock Is Soaring Today

Upwork (NASDAQ: UPWK) Shares are soaring in trading on Wednesday after the release of preliminary third-quarter results. The gig economy specialist’s share price was up 22.6% at 11 a.m. ET.

Upwork released preliminary third-quarter results before the market opened this morning, reporting performance that beat market expectations. In addition to the better-than-expected quarterly numbers, the company also announced that it would cut its workforce.

Upwork’s Q3 results are poised to beat previous expectations

Upwork is scheduled to report its official third-quarter results after the market closes on Nov. 6, but the workforce specialist has opted to give investors an early look at performance for the period.

The company expects to post sales of approximately $194 million in the third quarter, beating its previous guidance range for sales of $179 million to $184 million. Expected revenue for the third quarter was also well ahead of the average analyst estimate, which had called for sales of $182.1 million.

Upwork’s third-quarter profitability also looks poised to come in ahead of management’s previous guidance and Wall Street expectations. The company’s preliminary report calls for non-GAAP (generally accepted accounting principles) adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to come in at $43 million, beating initial guidance for EBITDA between 36 and 39 million dollars. Net income for the third quarter is expected to be $28 million.

What’s next for Upwork?

Upwork’s preliminary data suggests sales will grow roughly 10% year over year in the third quarter. Meanwhile, net income is expected to grow roughly 72%, compared to the $16.3 million profit posted in the year-ago quarter.

In addition to reporting better-than-expected preliminary data on sales, net income and EBITDA in the third quarter, Upwork also announced that it plans to reduce its total global workforce by approximately 21%. The company expects the layoffs to result in annual savings of approximately $60 million, which should help boost overall profitability.

The company’s preliminary third-quarter results offered bullish catalysts on multiple fronts, and headcount reductions should help boost margins. On the other hand, questions remain about how the rise of artificial intelligence will affect the gig economy and long-term business performance.

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