Against a challenging macro backdrop, freelance work matters more than ever.
And the innovations that support those freelancers have taken on a new prominence.
That’s the tack that Upwork executives emphasized on their company’s first quarter 2024 earnings call Wednesday (May 1), shedding light on the evolving landscape of the gig economy and the impact of innovative payment solutions on the sector, while also stressing the impact of cutting-edge technologies like artificial intelligence (AI).
“We have been at the forefront of every major technology-driven shift in how work gets done over the last 20 years, and in the age of AI we will continue to lead the way in defining the future of work for businesses and professionals alike,” said Hayden Brown, president and CEO at Upwork.
One of the key drivers of Upwork’s success was its marketplace business, which saw Gross Services Volume (GSV) exceed $1 billion for the quarter. The platform has experienced a 5% year-over-year increase in active clients, now totaling 872,000. This growth is attributed to both the acquisition of new clients and the introduction of product innovations designed to enhance the efficiency and outcomes for clients and freelancers alike.
“We continue to accelerate profitability while investing in growth and innovation. Our comprehensive Upwork Updates launch reflects a huge slate of exciting new products — many of which are built on our innovative AI foundations — as well as extensive feature enhancements and partnerships across our work marketplace,” Brown said on the call.
“Data shows that freelancers are already ahead of their full-time employee peers inside businesses in the adoption of AI tools,” she added.
Read more: GoDaddy and Upwork Partner to Connect Businesses and Web Designers
The Impact of Payments on the Gig Economy
Per its financials, Upwork’s marketplace revenue grew 20% year over year to $164.3 million, and the companies freelance gig work within the AI and machine learning category grew 50% year-over-year, again representing the fastest-growing category on Upwork.
“We drove strong business momentum in the first quarter, delivering 19% year-over-year revenue growth and steadily increasing net income to $18.4 million and adjusted EBITDA to $33.3 million,” Brown said.
“We have rapidly and successfully executed on our plans to identify ongoing cost optimization opportunities, allowing us to raise our outlook for adjusted EBITDA for the year,” CFO Erica Gessert said. “The inherent profitability of the business we’ve built, combined with our ongoing discipline, enables us to grow operating leverage, adjusted free cash flow, and shareholder returns this year, next year and into the future.”
PYMNTS Intelligence data from paycheck-to-paycheck economy reports showed that additional streams of income, through part-time or project work, have been critical in helping consumers shore up their financial health.
Separate PYMNTS Intelligence research revealed that the majority of gig workers and contractors, facing greater financial insecurity due to the part-time nature of their work, express a strong preference for faster payment methods over the conventional bimonthly pay period.
Measuring consumers’ satisfaction with instant payouts, PYMNTS Intelligence found that 36% of consumers who received payment for freelance or consulting work — which includes supplemental income — opted to get paid instantly. Seventy-seven percent of consumers chose instant payments for earnings and wages.
Read more: Gig Economy and Gaming Push Instant Payments Forward
Just a day before reporting its earnings, on Tuesday (April 30), Upwork introduced Uma, an AI system designed to power key experiences in the hiring and matching process as well as develop into a work companion that interacts with clients and freelancers throughout their Upwork journey.
In early testing, clients who used Uma started spending on Upwork in their first month at a 7% higher rate, the company noted, explaining that Uma powers new features like Best Match, and improves existing features like Job Post Generator, Proposal Tips and Upwork Chat Pro.
As PYMNTS has covered, AI has been a consistent theme throughout the earnings calls of platform-based companies.
Source: Upwork Believes AI is the Future of Work
