Why Upwork Stock Is Skyrocketing Today

Upwork (NASDAQ: UPWK) stock is soaring in Wednesday's trading following the publication of preliminary third-quarter results. The gig-economy specialist's share price was up 22.6% as of 11 a.m. ET.

Upwork published preliminary Q3 results before the market opened this morning, reporting performance that came in ahead of the market's expectations. In addition to the better-than-anticipated quarterly numbers, the company also announced that it would be trimming its workforce.

Upwork's Q3 results are poised to surpass previous expectations

Upwork is scheduled to report its official third-quarter results after the market closes on Nov. 6, but the gig-labor specialist has chosen to give investors an early look into performance for the period.

The company expects to report sales of roughly $194 million in the third quarter, beating its previous guidance range for sales between $179 million and $184 million. The expected revenue for Q3 also came in significantly ahead of the average analyst estimate, which had called for sales of $182.1 million.

Upwork's Q3 profitability also looks poised to come in ahead of management's previous guidance and Wall Street expectations. The company's preliminary report calls for non-GAAP (generally accepted accounting principles) adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to come in at $43 million -- surpassing initial guidance for EBITDA between $36 million and $39 million. Q3 net income is expected to come in at $28 million.

What's next for Upwork?

Upwork's preliminary data suggests that sales will grow roughly 10% year over year in the third quarter. Meanwhile, net income is projected to grow roughly 72%, compared to the profit of $16.3 million posted in last year's quarter.

In addition to reporting better-than-expected preliminary data for sales, net income, and EBITDA in Q3, Upwork also announced that it plans to reduce its total global workforce by roughly 21%. The company anticipates that the layoffs will result in annual savings of approximately $60 million, which should help boost overall profitability.

The company's preliminary Q3 results delivered bullish catalysts on multiple fronts, and workforce reductions should help push margins higher. On the other hand, questions still remain about how the rise of artificial intelligence will impact the gig economy and the business's long-term performance.

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Keith Noonan has positions in Upwork. The Motley Fool recommends Upwork. The Motley Fool has a disclosure policy.