Upwork IPO: Customer Metrics Disclosed (And Not Disclosed)

Upwork filed paperwork for its IPO. While they didn’t disclose the standard metrics that Peter Fader and I studied in our papers, two interesting customer metrics they did disclose which are very similar were “core clients” and “client spend retention.”

• “Core clients” is basically what we would call “annual active users”, except that they only include active customers who have spent $5K+ over their lifetime to date.
• “Client spend retention” is the ratio of total spend over the past 12 months relative to what those same customers had spent in the year earlier period — basically, a revenue retention rate (1 – revenue churn).

There is nothing wrong per se about these metrics — and it is heartening to know that when you take all the people who spent a year ago, their total spend this year went up — this data is not enough to identify any sort of reasonably sophisticated model for customer behavior.

For one, they really need to disclose some measure for new customer acquisition over time. Very sorely lacking. If I could have my druthers though, I wish all firms would simply disclose revenue by acquisition cohort over time. Period.

(This post was originally published here)

Dan McCarthy is a co-founder of Theta Equity Partners and an Assistant Professor of Marketing at Emory University’s Goizueta Business School