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Investing.com - Canaccord Genuity has reiterated its Buy rating and $22.00 price target on Upwork Inc. (NASDAQ:UPWK) following the company’s third-quarter results that exceeded guidance on both revenue and profitability metrics. InvestingPro data shows Upwork is profitable over the last twelve months with a solid P/E ratio of 9.34, significantly lower than many tech peers.
Upwork’s Gross Service Value (GSV) returned to growth for the first time since the first quarter of 2024, partly reflecting investments in AI features. AI-related work accelerated to 53% year-over-year growth compared to 30% in the previous quarter, while active clients decreased only slightly quarter-over-quarter as churn rates declined by 70 basis points sequentially.
The company’s Business Plus plan is gaining traction with small and medium-sized businesses, with Business Plus GSV increasing 33% quarter-over-quarter. Marketplace take rate expanded both year-over-year and quarter-over-quarter, supported by continued growth in ads and monetization products. This growth contributes to Upwork’s impressive 77.88% gross profit margin as revealed by InvestingPro data.
Upwork’s Enterprise business returned to growth in the third quarter. The company announced a new subsidiary called Lifted, which will house its recent acquisitions of Bubty and Ascen to provide talent sourcing, contracting, and workforce management solutions for enterprise clients, though existing enterprise customers are not expected to be onboarded until early 2026. The company maintains strong financial health with a current ratio of 3.36, indicating liquid assets significantly exceed short-term obligations.
Fourth-quarter guidance for both revenue and profitability exceeded market expectations, with management indicating they expect GSV growth to accelerate in 2026 despite the current sluggish labor market. Canaccord Genuity noted that even after factoring in after-hours gains, Upwork stock trades at just 2x revenue and 8x adjusted EBITDA. According to InvestingPro analysis, Upwork appears undervalued based on its Fair Value estimate, with the stock showing a strong 15.95% price return over the past six months. InvestingPro offers 10 additional tips on Upwork and comprehensive Pro Research Reports for over 1,400 US equities, providing clear, actionable intelligence for smarter investing decisions.
In other recent news, Upwork Inc. reported its third-quarter 2025 financial results, significantly surpassing analysts’ expectations. The company achieved an earnings per share of $0.36, compared to the forecasted $0.28, representing a 28.57% surprise. Revenue for the quarter reached $201.7 million, exceeding the anticipated $193.35 million. This performance was driven by contributions from AI categories, the adoption of Upwork Business Plus, and AI product enhancements. In response to these strong results, Goldman Sachs raised its price target for Upwork to $25 from $24 while maintaining a Buy rating. The investment firm highlighted the company’s strong third-quarter performance, which exceeded the high end of guided ranges for revenue, adjusted EBITDA, and adjusted EPS. These developments underscore Upwork’s growth trajectory and strategic advancements in AI and business services.
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