My take on Upworks Q3 is more optimistic, given that we had an overall economically strong Q3 with slightly increased job openings, stable small businesses, and an overall resilient labor market.
That said the recent weakening in payrolls might finally signal the start of an easing job market and cause Upwork’s Q4 and 2024 outlook to be cautious or negative.
It’s important to note that we still do not have established correlations regarding Upwork.
As an example, we continue to track open Jobs on the Upwork but am unaware if there is a correlation between it and Upwork performance. After all, it’s not mainly new open jobs that are important for Upworks GSV but how stable the established contract base is and which amount of money is flowing through it.
Similarly, we are unaware of the exact effects of higher unemployment and a weaker broader economy on Upwork as layoffs in industries like construction, transportation, and manufacturing are not likely going to have a strong direct effect on Upwork and digital industries like VC funded startups that are related to Upwork already entered into their “recession period” more than one year ago. It is therefore possible that Upwork will stay stable or grow even if the broader economy enters into a contraction.
Fundamentally the most important and uncertain factor when it comes to Upwork lies in its execution. Recent new product developments are a step in the right direction but we need to keep a close eye on Upwork’s internal developments.