Worrying results and outlook from Upwork.
Even though Upwork saw its strongest addition of active clients in two years they only guide for very modest GSV growth in 2024. At the same time they are seeing declines in the average spending levels per client.
In my opinion, that points to churn of existing client workloads that is likely caused by their 5/10 percent fee increase.
As a consequence, their Q1 and FY 2024 outlooks came in significantly below our expectations.
This endangers the entire investment thesis.
It remains to be seen if most clients are going to accept paying an aggregate of 15% of total transaction volume to Upwork in the long run compared to the very reasonable 3% transaction fee for clients and 5% fee for freelancers 2 years ago.
In the meantime, I took a step back and liquidated my entire position in after-hours and premarket trading at an average weighted price of $15.76.