Upwork Inc. (NASDAQ:UPWK): Is Breakeven Near?
Upwork Inc. (NASDAQ:UPWK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Upwork Inc., together with its subsidiaries, operates a work marketplace that connects businesses with various independent professionals and agencies in the United States, India, the Philippines, and internationally. The US$3.2b market-cap company announced a latest loss of US$56m on 31 December 2021 for its most recent financial year result. Many investors are wondering about the rate at which Upwork will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Upwork
Upwork is bordering on breakeven, according to the 10 American Professional Services analysts. They expect the company to post a final loss in 2023, before turning a profit of US$1.6m in 2024. Therefore, the company is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 15% is expected, which seems relatively fair. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Upwork's growth isn’t the focus of this broad overview, but, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Upwork is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Upwork, so if you are interested in understanding the company at a deeper level, take a look at Upwork's company page on Simply Wall St. We've also compiled a list of important factors you should further research:
Valuation: What is Upwork worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Upwork is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Upwork’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
