What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-16 compared with 2022-02-15 · 65 added, 70 removed, 199 unchanged (40% of the section changed)

We operate the world’s largest work marketplace that connects businesses, which we refer to as clients, with independent talent, as measured by gross services volume, which we refer to as GSV.

Independent talent on our work marketplace, which we refer to as talent, and, together with clients, as users, includes independent professionals and agencies of varying sizes and is an increasingly sought-after, critical, and expanding segment of the global workforce.

We define clients as users that work with talent through our work marketplace.

We operate the world’s largest work marketplace that connects businesses with independent talent from across the globe, as measured by gross services volume, which we refer to as GSV.

Independent talent on our work marketplace, which we refer to as talent, includes independent professionals and agencies of varying sizes, and is an increasingly sought-after, critical, and expanding segment of the global workforce.

We define clients as users that work with talent through our work marketplace, and refer to clients and talent together, as users.

During the year ended December 31, 2022, our work marketplace enabled $4.1 billion of GSV.

For talent, we serve as a powerful marketing channel to find rewarding, engaging, and flexible work.

Talent benefits from access to quality clients, simplified invoicing, and secure and timely payments while enjoying the freedom to run their own businesses, create their own schedules, and work from their preferred locations.

We serve as a powerful discovery engine for talent, helping them find rewarding, engaging and flexible work, as well as market their services and build their book of business.

Talent benefit from access to quality clients and secure and timely payments while enjoying the freedom to run their own businesses, create their own schedules, and work from their preferred locations.

Moreover, talent has real-time visibility into opportunities that are in high demand, so that they can invest their time and focus on developing sought-after skills.

For clients, our work marketplace provides fast, secure, and efficient access to high-quality talent with over 10,000 skills across over 90 categories, such as sales and marketing, customer service, data science and analytics, design and creative, and web, mobile, and software development.

For clients, our work marketplace provides fast, secure, and efficient access to high-quality talent with over 10,000 skills across over 90 categories, such as web, mobile, and software development, administrative support, sales and marketing, design and creative, and customer service.

We offer a direct-to-talent approach as an alternative to traditional intermediaries such as staffing firms, recruiters, and agencies by providing high-quality independent talent and features that help build trusted relationships and instill trust in remote work, including the ability to engage talent as either independent contractors or as employees of third-party staffing providers.

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In addition, our work marketplace provides clients with access to essential functionality for remote engagements with talent, including communication and collaboration, the ability to receive all talent invoices through our work marketplace, and payment protection.

Our clients range in size from small businesses to Fortune 100 companies.

We believe that a key differentiator and driver of our growth is our track record of creating trust and enabling our users to successfully connect at scale.

As the world’s largest work marketplace that connects businesses with independent talent, as measured by GSV, we benefit from network effects that drive growth in both the number of clients posting jobs and the number of talent seeking work.

Our clients range in size, including small businesses to Fortune 100 companies.

We believe that a key differentiator and driver of our growth is our track record of creating trusted relationships, enabling our users to successfully connect at scale.

As the world’s largest work marketplace that connects businesses with independent talent from across the globe, as measured by GSV, we benefit from network effects that drive growth in both the number of clients posting jobs and the number of talent seeking work.

Our growth is driven by long-term and recurring use of our work marketplace by our users.

We generate revenue from both talent and clients, with a majority of our revenue generated from service fees charged to talent for access to our work marketplace.

We also generate revenue from fees charged to both clients and talent for other services, such as for transacting payments through our work marketplace, premium offerings, purchases of “Connects” (virtual tokens that allow talent to bid on projects on our work marketplace), foreign currency exchange when clients choose to pay in currencies other than the U.S.

We generate revenue from both talent and clients.

Revenue is primarily generated from fees charged to talent as a percentage of their billings to clients, which are referred to as talent service fees, and to a lesser extent, client marketplace fees (previously referred to as client payment processing and administrative fees).

We also generate revenue from fees for premium offerings, including our Upwork Enterprise offering, as well as talent memberships, purchases of Connects (virtual tokens that are required for talent to bid on projects on our work marketplace), and other services, such as foreign currency exchange when clients choose to pay in currencies other than the U.S.

dollar, and our Upwork Payroll offering.

In addition, we provide a managed services offering where we engage talent to complete projects, directly invoice the client, and assume responsibility for work performed.

COVID-19 Impact on Our Business

The ongoing COVID-19 pandemic and the resulting restrictions intended to prevent its spread have continued to accelerate the secular shift toward remote and independent work.

As a result of our unique, remote-based business model, the pandemic has not impacted our clients’ access to highly-skilled talent to complete short- and long-term projects on our work marketplace.

In 2021, we prioritized our advertising, marketing, and product development efforts to reach those new and existing clients seeking to engage remote talent in light of the shift toward remote work, due in part to the COVID-19 pandemic.

As a result of these efforts, our 2021 results were fueled by both existing and new clients, who used Upwork to address their changing business needs.

We expect our business to continue to grow over time, and while we have not incurred significant disruptions to our business thus far from the COVID-19 pandemic, we are continuously evaluating the nature of, and extent to which, the ongoing pandemic will impact our business, operating results, and financial condition.

For a more detailed discussion of the potential impact of the COVID-19 pandemic, the associated economic disruptions, and the actual operational and financial

1 GSV represents the total amount that clients spend on both our marketplace offerings and our managed services offering as well as additional fees we charge to talent for other services.

For additional information related to how we calculate GSV, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Business” and “ — Key Financial and Operational Metrics.”

impacts that we have experienced to date, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our Work Marketplace

We operate the world’s largest work marketplace that connects businesses with independent talent, as measured by GSV.

We operate the world’s largest work marketplace that connects businesses with independent talent from across the globe, as measured by GSV.

We believe the following core aspects of our work marketplace provide us with a competitive advantage:

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Our work marketplace fosters trust and credibility among talent and clients, while reducing the friction associated with searching for, contracting and collaborating with, and paying highly-skilled independent talent for short-term and longer-term projects.

We use a combination of the latest technology, data science, product features, and our skilled team to position our work marketplace as a trusted online marketplace to get work done.

We build and use software to highlight relevant talent, facilitate security and identity verification for account ownership, and flag suspicious posts.

We use a combination of the latest technology, data science, product features, and our skilled team to position our work marketplace as a trusted online marketplace to get work

1 GSV represents the total amount that clients spend on both our marketplace offerings and our managed services offering as well as additional fees we charge to talent for other services.

We build and use software to highlight relevant talent, facilitate security and identity verification for account ownership, and flag suspicious activities.

We closely monitor activity on our work marketplace to detect and prevent abuse and have integrated several third-party technologies, including with an industry-leading third-party fraud detection vendor.

We provide clients with tools to validate work performed by talent and to provide both public and private feedback once the work is completed.

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Our proprietary database maintains detailed and dynamic information, including skills provided by talent, feedback, and success indicators of talent and clients transacting on our work marketplace.

Using this data in our machine learning algorithms enables us to provide a trusted, convenient, and effective experience for both new and existing users and enables clients to better connect with available talent for their projects, while at the same time enabling talent to better identify available projects that fit their specific skills.

Moreover, our machine learning algorithms leverage our closed-loop transaction data on millions of completed projects.

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We have marketplace offerings and a managed services offering.

Our marketplace offerings include Upwork Basic, Upwork Plus, Upwork Enterprise, and Upwork Payroll.

Our Upwork Basic offering provides clients with access to independent talent with verified work history on our work marketplace and client feedback, the ability to instantly match with the right talent, and built-in collaboration features.

Our Upwork Plus offering is designed for teams looking to stand out to quality talent and scale hiring quickly.

In addition to receiving all the product features of Upwork Basic, Upwork Plus clients can access personalized assistance, whether strategic or job-specific.

Our marketplace offerings include Client Marketplace, Upwork Enterprise, and Upwork Payroll.

Client Marketplace

Our Client Marketplace offering is designed for teams looking to stand out to quality talent and scale hiring quickly.

Our Client Marketplace offering provides clients with access to independent talent with verified work history on our work marketplace and client feedback, the ability to instantly match with the right talent, and built-in collaboration features.

Additionally, clients can access personalized assistance, whether strategic or job-specific.

They also receive perks such as a verified client badge and highlighted job posts, which stand out to top talent and help clients achieve results.

Upwork Enterprise

Our Upwork Enterprise offering is designed for larger clients with at least 250 employees.

Upwork Enterprise clients receive all the product features of Upwork Plus, in addition to consolidated billing and monthly invoicing, a dedicated team of advisors, detailed reporting with company insights and trends to enable clients to hire faster and more successfully, and the opportunity for clients to onboard pre-existing independent talent onto our work marketplace.

Our Upwork Enterprise offering is primarily designed for larger clients with at least 250 employees.

Upwork Enterprise clients receive all the product features of Client Marketplace, in addition to consolidated billing and monthly invoicing, a dedicated team of account managers, detailed reporting with company insights and trends

to enable clients to hire faster and more successfully, and the opportunity for clients to onboard pre-existing independent talent onto our work marketplace.

Upwork Enterprise also offers access to additional product features, premium access to top talent, professional services, and payment terms flexibility.

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We enable remote work not only through our work marketplace for our users, but also for our own team members for whom we are proud to offer a remote-first work model, which has environmental, as well as other benefits.

Our team consists of independent talent that we engage through our work marketplace, corporate employees, and advisors.

Our team consists of corporate employees, independent talent that we engage through our work marketplace, and advisors.

Our team members are distributed around the world, and while we have corporate offices, we do not solely rely on in-person collaboration.

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As of December 31, 2022, we had approximately 850 employees, and throughout 2022, we engaged approximately 1,950 independent team members through our work marketplace to provide services to us on a variety of internal projects.

None of our team members are represented by a labor union or are covered by a collective bargaining agreement.

We believe the positive relationship between us and our team members and our unique, strong culture differentiate us and are key drivers of our business success.

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We view belonging as a feeling, inclusion as a practice, and diversity as an outcome.

We foster belonging through our Upwork Belonging Communities—employee resource groups that build empathy and promote inclusive skill-building.

We foster belonging through our Upwork Belonging Communities—groups that build empathy and promote inclusive skill-building.

We cultivate inclusion by equipping managers with tools to effectively build and lead amazing and inclusive teams that amplify team members’ voices.

Additionally, we practice multi-dimensional compensation and mobility reviews during our semi-annual employee performance evaluation process.

This is led by a cross-functional team of human resource and legal leaders to help ensure we are fair in our rewards and recognition strategy.

This is led by a cross-functional team of human resource and legal leaders to help ensure we are fair in our rewards

and recognition strategy.

To bolster our diversity, inclusion, and belonging efforts, we also conduct an internal review to facilitate equity in internal mobility practices throughout the company as an ongoing priority.

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Benefits and Competitive Compensation

Beyond our training and development efforts, we take pride in offering competitive, market-based compensation and benefits to our employees.

We engage compensation consultants to benchmark our employee compensation with external sources to ensure fair and equitable pay practices, and utilize equity grants to align employee compensation with stockholder interests.

Merit increases and promotions are awarded based on an individual’s impact within the organization and an established business need, and in consideration with market data.

Knowing our employees have diverse needs and life priorities, we also provide expanded benefits to those eligible, which include core benefits such as medical, dental, vision, and disability insurance, in addition to benefits tailored to the specific needs of our employees, such as mental health, fertility, family back-up care, and adoption support.

Team Member Feedback

We strive to offer market-competitive compensation and benefits to attract and retain employees for the long-term.

We engage compensation consultants to benchmark our employee compensation with external sources to ensure fair and equitable pay practices.

We provide total rewards that attract and retain world-class employees through a total compensation package that includes equity-based awards to align employee compensation with stockholder interests.

We compensate high performers more than average performers.

Knowing our employees have diverse needs and life priorities, we also provide comprehensive benefits and services to those eligible, which include core benefits such as medical, dental, vision, and disability insurance, in addition to benefits tailored to the specific needs of our employees, such as mental health, fertility, family back-up care, and adoption support.

We offer a health savings account with company contributions, family and medical leave, flexible working schedules, paid holidays and flexible vacation policies.

We sponsor a 401(k) plan that includes a matching contribution, offer financial coaching through a third-party provider, and maintain an employee stock purchase plan that enables eligible employees to purchase shares of our stock at a discount through payroll deductions.

Organizational Well-being

We engage our workforce in meaningful ways and take timely action in response to their feedback.

While our culture and engagement process starts during the new team member onboarding process, one way we sustain our feedback loop is via an industry-recognized team member engagement platform.

Through the platform, we survey our team members on a regular basis to gather feedback.

In 2021, our average employee response rate was 86%, and we received notably high scores with respect to our leadership and purpose, with the survey results reflecting that many team members feel invested in our future and continue to regard Upwork as a workplace they would recommend to others.

In these surveys, team members also consistently recognize our efforts to cultivate an inclusive workplace.

Responses to these surveys and other employee feedback guide our team engagement efforts.

We believe that ensuring that our people feel valued, supported, and heard helps us attract, retain, and develop the right talent to lead the Company and successfully execute our corporate strategy.

Research into workforce experience begins during onboarding and is sustained throughout a team member’s tenure at Upwork.

This “life cycle” approach to workforce research affords Upwork senior leadership and human resources team members ongoing and real-time insight into critical moments of worker experience and productivity.

The collection of such data allows leadership, line managers, and our human resources team to identify successes and opportunities at a myriad of levels, including, for individual team members, company-wide programs or larger organizational units.

Over time, the aggregation and analysis of such data enables us to optimize for those workforce factors that drive crucial people and business outcomes.

Employee Wellness

Employee safety and well-being is of paramount importance to us in any year and continued to be of particular focus in 2021 in light of the COVID-19 pandemic.

Employee safety and well-being is of paramount importance to us.

We provide productivity and collaboration tools and resources for employees, including training and toolkits to help leaders effectively lead and manage remote teams.

addition, we enhanced and promoted programs to support our employees’ physical, financial, and mental well-being.

For example, we regularly conduct internal surveys to assess the well-being and needs of our employees, and we significantly expanded employee assistance and mindfulness programs to help employees and their families manage anxiety, stress, sleep, and overall well-being.

In addition, we promote programs to support our employees’ physical, financial, and mental well-being.

For example, we regularly conduct internal surveys to assess the well-being and needs of our employees, and we offer employee assistance and mindfulness programs to help employees and their families manage anxiety, stress, sleep, and overall well-being.

Additionally, we believe that our employees are at their best when they take the time to recharge.

In order to encourage our employees to recharge and make their well-being a priority, we provide company-wide “ChargeUp Days”—paid time off that is in addition to our company-recognized holidays.

In order to encourage our employees to recharge and make their well-being a priority, we provide unlimited paid time off in addition to our company-recognized holidays.

Board of Directors Oversight

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Sales and Marketing

Our sales and marketing organizations work closely together to increase awareness, generate user demand, build a strong sales pipeline, and grow account relationships across businesses of all sizes, from small businesses to Fortune 100 companies, to accelerate GSV and revenue growth.

Our sales and marketing organizations work closely together to increase awareness, generate user demand, build a strong sales pipeline, and grow account relationships across clients of all sizes, including small businesses to Fortune 100 companies, to accelerate GSV and revenue growth.

We have a holistic and integrated marketing strategy with the goal of attracting clients to our work marketplace and helping them select the right product offering based on their business needs.

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Building upon our brand positioning, we address key client needs in all our marketing efforts and help point our clients to the right Upwork product based on those needs.

We also enjoy the benefits of high Net Promoter Scores, which we refer to as NPS, that generate significant word-of-mouth growth.

While a majority of our new client registrations come through direct and non-paid channels, we also increase our new client pipeline with a variety of digital, direct mail, and event marketing programs.

We deploy email and lifecycle marketing initiatives to retain, cross-sell, and upsell existing clients.

We also engage in offline advertising, as well as TV and radio advertising campaigns.

We have also increased our focus on large enterprise organizations by adding account-based marketing programs that target clients to drive account growth.

We also engage in a range of advertising, such as TV, digital and streaming audio advertising campaigns.

We have also increased our focus on large enterprise organizations through account-based marketing programs that target clients to drive account growth.

Once prospects are identified, our enterprise sales team works to broaden adoption of our work marketplace into wider-scale deployments.

Enterprise Sales

Our enterprise sales team consists of business development representatives and other quota-carrying account executives who are focused on acquiring new clients with at least 250 employees.

Our enterprise sales team consists of business development representatives and other quota-carrying account executives who are primarily focused on acquiring new clients with at least 250 employees.

Specifically, our business development representatives are focused on generating qualified opportunities within our target account profile, which include both inbound and self-service customer upgrades.

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We invest substantial resources in research and development to enhance our platform, develop new products and features, and improve our infrastructure.

We utilize a flexible systems architecture to allow us to scale easily as our

platform usage increases and to provide a consistent and robust user experience.

We utilize a flexible systems architecture to allow us to scale easily as our platform usage increases and to provide a consistent and robust user experience.

We host our platform on Amazon Web Services, which we refer to as AWS.

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We leverage machine learning to balance supply and demand within the platform as well.

Talent receives data on

market rates based on similar jobs when submitting proposals.

Talent receives data on market rates based on similar jobs when submitting proposals.

When clients post jobs, similar rate resources also appear within the system.

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We enable workers to access opportunities beyond their local labor market and choose the type of projects they pursue, when and with whom they work, and how much they earn.

Upwork provides a new way for talent to market their skills and expertise—one based on merit—and we are promoting inclusive hiring practices through continuous accessibility improvements, analysis of potential underlying bias in our technology, and features like our certified-diverse badges.

Upwork provides a new way for talent to market their skills and expertise, and we are promoting inclusive hiring practices through continuous accessibility improvements, analysis of potential underlying bias in our technology, and features like our certified-diverse badges.

We are also powering a more efficient and sustainable way to work.

We believe that by facilitating remote work engagements and providing our users with the tools they need to collaborate from afar, we are helping them avoid work-related commutes and business travel.

By committing to carbon neutrality and pursuing ways to decrease our own footprint, we are demonstrating how companies across the globe can take on climate change.

We believe that by facilitating remote work engagements and providing our users with the tools they need to collaborate from afar, we are helping them avoid

work-related commutes and business travel.

By committing to carbon neutrality and pursuing ways to decrease our own footprint, we are demonstrating how companies across the globe can take action on climate change.

Our drive to create a more equitable and sustainable future of work has helped us identify new ways to serve our stakeholders—including our clients and the independent talent on our work marketplace, our hybrid workforce, our investors, and our community partners—and contribute towards long-term value creation.

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diversity, inclusion, and belonging;

health, safety, and human rights;

workforce innovation and well-being;

environmental sustainability;

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The market segment for independent talent and the clients that engage them is highly competitive, rapidly evolving, fragmented, and subject to changing technology, shifting needs, and frequent introductions of new competitors as well as new offerings and services.

The level of competition within, and the frequency and likelihood of increased third-party investment and new competitors entering, this market segment has further intensified due to the ongoing COVID-19 pandemic and the resulting shift toward remote work and other labor market dynamics.

The market continues to draw increased third-party investment and new competitor entrants, driven by the trend towards remote work and changing labor market dynamics.

We compete with a number of online and offline platforms and services domestically and internationally, as well as traditional staffing firms, to attract and retain users and expand our share of user spend.

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• brand awareness and reputation;

• trust and safety;

• level of user satisfaction;

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• ability to innovate and develop new or improved offerings and services;

We believe that we compete favorably with respect to these factors.

• greater flexibility with cost structure and reduced operating costs.

We believe that we compete favorably with respect to these factors and are committed to making the continued investments in our business to ensure our long-term success.

Intellectual Property

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As of December 31, 2022, we held 22 issued U.S.

As of December 31, 2021, we held eight registered trademarks in the United States, including Upwork, Elance, oDesk, and “Talent Cloud” and also held 161 registered trademarks in foreign jurisdictions.

As of December 31, 2022, we held six registered trademarks in the United States, including Upwork, Elance, oDesk, and “Talent Cloud” and also held 161 registered trademarks in foreign jurisdictions.

We continually review our development efforts to assess the existence and patentability of new intellectual property.

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in March 2014, and then to Upwork Inc.

In 2015, we commenced consolidation of the Elance platform and the oDesk platform and following the consolidation in 2016, began operating under a single work marketplace.

Following the consolidation of the Elance and oDesk platforms in 2016, we began operating under a single work marketplace.

Our principal executive office is located at 475 Brannan Street, Suite 430, San Francisco, California 94107, and our mailing address is 655 Montgomery Street, Suite 490, Department 17022, San Francisco, California 94111.

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The information contained on, or that can be accessed through, our website is not a part of this Annual Report.

Investors should not rely on any such information in deciding whether to purchase our common stock.

Unless otherwise expressly stated or the context otherwise requires, references in this Annual Report to “Upwork,” the “Company,” “our,” “us,” and “we” and similar references refer to Upwork Inc.

and its wholly-owned subsidiaries.

Investors should not rely on any such information in deciding whether to purchase our securities.

Upwork, the Upwork logo, Upwork Enterprise, Elance, oDesk, “Talent Cloud,” and other registered or common law trade names, trademarks, or service marks of Upwork appearing in this Annual Report are the property of Upwork.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business