I have written many times about the rise of the gig economy and the explosion of the virtual workforce after the pandemic. These fast-developing trends have had impacts throughout the economy, including triggering a substantial decline in values in commercial real estate values, especially in the office sector. However, many companies are benefiting from these emerging developments. In today's column, we highlight three of these that all reported second quarter earnings this week.
Let's start with Upwork (UPWK) who easily beat expectations with its second quarter earnings report after the bell on Wednesday. Upwork has been highlighted on these pages before, and the company provides a platform that enables the entire freelance work process including communication, engagement and secure payment processing.
The consensus was that the company would breakeven in the quarter, instead it delivered a 10 cent a share profit. Profits rose in the high single digits on a year-over-year basis to just under $170 million, approximately $6 million above estimates. Leadership also raised forward full year guidance a bit and stated it expected positive free cash flow from this point forward. The shares shot up more than 40% in trading on Thursday.
Wix.com Ltd (WIX) posted its second quarter results shortly after Upwork. The company develops, operates and markets a cloud-based platform that enables the creation and maintenance of a website or web application. This has been a go to platform for small companies, independent contractors, freelancers, and individual entrepreneurs alike.
Second quarter earnings came in at $1.26 a share, nearly twice expectations on a 13% rise in revenues. Management also boosted forward guidance slightly. The stock moved up just over 10% in trading on Thursday as a result.
Wix is starting to incorporate some AI features within its capabilities which offers clients a more seamless and efficient way to create new websites. The company saw revenue growth in the mid-30s for its 'partners' business. Partners are customers which sell services built on Wix, and this revenue stream has quickly grown to nearly 30% of overall sales.
The company is generating positive cash flow now and has a strong balance sheet, which it put to use repurchasing some $50 million of its own shares during the recently concluded quarter.
Finally, we have Fiverr International Ltd. (FVRR) whose stock was up better than 15% in trading yesterday and the company easily stepped over top and bottom-line expectations, and boosted guidance, with its own quarterly earnings report.
The company has become a key part of the gig economy as it operates an online marketplace that enables sellers to sell their services and buyers to buy them. These services can range from digital marketing and graphic design to writing and translation. The company recently launched a suite of product offerings to help it make more inroads with larger companies.
While year-over-year revenue growth was only 5%, its customer spend is certainly holding up better than the online advertising market right now. The company is nicely profitable and also has a rock-solid balance sheet.
While I expect office values to continue to implode thanks to workplace revolution, these companies should continue to ride the ripples caused by this paradigm shift in the workforce.
