Adjusted EBITDA margin

Adjusted EBITDA margin is adjusted EBITDA divided by GAAP revenue for the same period, the share of each revenue dollar that Upwork Inc. keeps as operating profit on its own non-GAAP definition.

The ratio comes from two reported numbers: adjusted EBITDA, the non-GAAP measure Upwork Inc. states in every earnings release and in the Key Financial and Operational Metrics table of its Form 10-Q and 10-K, and revenue from the GAAP income statement. Upwork sometimes quotes the margin itself in releases and guidance; where it does not, it has to be computed. Because the numerator is non-GAAP, the margin is too, and it carries every adjustment that adjusted EBITDA does, above all the exclusion of stock-based compensation, which is why it sits far above any margin computed from net income.

Read beside the take rate it describes Upwork's economics in two steps. Take rate is the share of what clients spend that becomes Upwork's revenue; adjusted EBITDA margin is the share of that revenue that becomes operating profit. A rising margin on flat revenue means costs are being cut or operating leverage is working, not that the marketplace is growing. A rising take rate with a rising margin means Upwork is both keeping more of each client dollar and spending less to do so.

The margin is a management number, not an accounting one. Comparisons between companies on it are unreliable because each defines its adjustments differently, and comparisons across Upwork's own history should allow for the definition changing.