UPWORK INC

Previous wording

Over the past several quarters, we implemented a number of initiatives that positively impacted Marketplace revenue and Marketplace take rate, including (i) retiring the tiered service fee structure for talent working with clients on our Marketplace offering in favor of a flat fee, (ii) increasing the number of virtual tokens, which we refer to as Connects, needed by talent to bid on projects, (iii) deploying ads products on our work marketplace, and (iv) introducing new features, with a focus on machine learning and generative artificial intelligence. These initiatives, along with others, resulted in an increase in Marketplace revenue of $24.5 million, or 17%, and $52.1 million, or 19%, for the three and six months ended June 30, 2024, as compared to the same periods in 2023, respectively. Marketplace take rate also benefited from these initiatives, increasing to 18.0% and 17.9% for the three and six months ended June 30, 2024, respectively, as compared to 15.0% and 14.9% in the same periods in 2023, respectively.

Current wording

Over the past several quarters, we implemented a number of initiatives that positively impacted Marketplace revenue and Marketplace take rate, including (i) retiring the tiered service fee structure for talent working with clients on our Marketplace offering in favor of a flat fee, (ii) increasing the number of virtual tokens, which we refer to as Connects, needed by talent to bid on projects, (iii) deploying ads products on our work marketplace, and (iv) introducing new features, with a focus on machine learning and generative artificial intelligence. These initiatives, along with others, contributed to an increase in Marketplace revenue of $17.7 million, or 12%, and $69.8 million, or 16%, for the three and nine months ended September 30, 2024, as compared to the same periods in 2023, respectively. Marketplace take rate also benefited from these initiatives, increasing to 18.3% and 18.0% for the three and nine months ended September 30, 2024, respectively, as compared to 15.8% and 15.2% in the same periods in 2023, respectively.

Previous wording

During the three months ended June 30, 2024, we generated net income of $22.2 million and adjusted EBITDA of $40.8 million, as compared to a net loss of $4.0 million and adjusted EBITDA of $14.4 million during the same period in 2023. During the six months ended June 30, 2024, we generated net income of $40.7 million and adjusted EBITDA of $74.2 million, as compared to net income of $13.2 million and adjusted EBITDA of $11.4 million during the same period in 2023. These improvements were primarily a result of cost-saving measures we implemented in 2023, including reducing our investments in brand marketing and vendor spend. We expect these measures will continue to positively impact net income and adjusted EBITDA in 2024, as compared to 2023. Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with generally accepted accounting principles in the United States, which we refer to as U.S. GAAP. See “Key Financial and Operational Metrics—Non-GAAP Financial Measures” below for a definition of adjusted EBITDA, information regarding our use of adjusted EBITDA, and a reconciliation of adjusted EBITDA to net income, the most directly comparable financial measure prepared under U.S. GAAP.

Current wording

During the three months ended September 30, 2024, we generated net income of $27.8 million and adjusted EBITDA of $43.2 million, as compared to net income of $16.3 million and adjusted EBITDA of $31.2 million during the same period in 2023. During the nine months ended September 30, 2024, we generated net income of $68.4 million and adjusted EBITDA of $117.4 million, as compared to net income of $29.5 million and adjusted EBITDA of $42.7 million during the same period in 2023. These improvements were primarily a result of cost-saving measures we implemented in 2023, including reducing our investments in brand marketing and vendor spend. We expect these measures will continue to positively impact net income and adjusted EBITDA in the fourth quarter of 2024, as compared to 2023. Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with generally accepted accounting principles in the United States, which we refer to as U.S. GAAP. See “Key Financial and Operational Metrics—Non-GAAP Financial Measures” below for a definition of adjusted EBITDA, information regarding our use of adjusted EBITDA, and a reconciliation of adjusted EBITDA to net income, the most directly comparable financial measure prepared under U.S. GAAP.

Previous wording

We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. As of and for the three and six months ended June 30, 2024 and 2023, our key financial and operating metrics were as follows:

Current wording

We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. As of and for the three and nine months ended September 30, 2024 and 2023, our key financial and operating metrics were as follows:

Previous wording

(2) Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with U.S. GAAP. See “—Non-GAAP Financial Measures” below for the definition of adjusted EBITDA, information regarding our use of adjusted EBITDA, and a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable financial measure prepared under U.S. GAAP.

Current wording

(2) Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with U.S. GAAP. See “—Non-GAAP Financial Measures” below for the definition of adjusted EBITDA, information regarding our use of adjusted EBITDA, and a reconciliation of adjusted EBITDA to net income, the most directly comparable financial measure prepared under U.S. GAAP.

Previous wording

Marketplace revenue is the primary driver of our business, and we believe it provides comparability to other online marketplaces. Marketplace revenue represents the majority of our revenue and is derived from our Marketplace offerings, which include all offerings other than our Enterprise offerings—Enterprise Solutions (previously referred to as Upwork Enterprise) and Managed Services. We generate Marketplace revenue from both talent and clients. Marketplace revenue is primarily generated from talent service fees, and to a lesser extent, client marketplace fees. We also generate Marketplace revenue from fees for premium offerings, such as our Upwork Payroll offering, as well as purchases of Connects, talent memberships, and other services, such as foreign currency exchange when clients choose to pay in currencies other than the U.S. dollar. To conform to the current period presentation as of June 30, 2024, we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering in Marketplace revenue.

Current wording

Solutions (previously referred to as Upwork Enterprise) and Managed Services. We generate Marketplace revenue from both talent and clients. Marketplace revenue is primarily generated from talent service fees, and to a lesser extent, client marketplace fees. We also generate Marketplace revenue from fees for premium offerings, such as our Upwork Payroll offering, as well as purchases of Connects, talent memberships, and other services, such as foreign currency exchange when clients choose to pay in currencies other than the U.S. dollar. To conform to the current period presentation as of September 30, 2024, we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering in Marketplace revenue.

Previous wording

We define adjusted EBITDA as net income (loss) adjusted for stock-based compensation expense; depreciation and amortization; other income (expense), net, which includes interest expense; income tax benefit (provision); and, if applicable, certain other gains, losses, benefits, or charges that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with U.S. GAAP.

Current wording

We define adjusted EBITDA as net income adjusted for stock-based compensation expense; depreciation and amortization; other income (expense), net, which includes interest expense; income tax benefit (provision); and, if applicable, certain other gains, losses, benefits, or charges that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with U.S. GAAP.

Previous wording

The following table presents a reconciliation of net income (loss), the most directly comparable financial measure prepared in accordance with U.S. GAAP, to adjusted EBITDA for each of the periods indicated:

Current wording

The following table presents a reconciliation of net income, the most directly comparable financial measure prepared in accordance with U.S. GAAP, to adjusted EBITDA for each of the periods indicated:

Previous wording

(1)During the six months ended June 30, 2023, we recognized a gain of $38.9 million on the early extinguishment of a portion of our 0.25% convertible senior notes due 2026, which we refer to as the Notes, which is included in other income, net in the condensed consolidated statement of operations and comprehensive income (loss).

Current wording

(1)During the nine months ended September 30, 2023, we recognized a gain of $38.9 million on the early extinguishment of a portion of our 0.25% convertible senior notes due 2026, which we refer to as the Notes, which gain is included in other income, net in the condensed consolidated statement of operations and comprehensive income.

Previous wording

(2)During each of the three and six months ended June 30, 2024 and 2023, we incurred $0.2 million and $0.4 million, respectively, of expense related to our Tides Foundation warrant.

Current wording

(2)During the three and nine months ended September 30, 2024 and 2023, we incurred $0.2 million and $0.6 million, respectively, of expense related to our Tides Foundation warrant.

Previous wording

Because of these and other limitations, you should consider adjusted EBITDA along with other financial performance measures, including net income (loss) and our other financial results prepared in accordance with U.S. GAAP.

Current wording

Because of these and other limitations, you should consider adjusted EBITDA along with other financial performance measures, including net income and our other financial results prepared in accordance with U.S. GAAP.

Previous wording

During the three and six months ended June 30, 2024, macroeconomic conditions adversely impacted GSV, which declined 2.7% and 1.1%, as compared to the same periods in 2023, respectively. The number of active clients increased 6% as of June 30, 2024, as compared to June 30, 2023, driven by improvements in both acquisition of new clients and retention of existing clients. As a result of the increase in active clients while GSV declined, our GSV per active client decreased 5% as of June 30, 2024, as compared to June 30, 2023. We expect no material improvement to macroeconomic conditions through the remainder of 2024.

Current wording

During the three and nine months ended September 30, 2024, macroeconomic conditions adversely impacted GSV, which declined 3.1% and 1.8%, as compared to the same periods in 2023, respectively. The number of active clients increased 2% as of September 30, 2024, as compared to September 30, 2023, driven by improvements in both acquisition of new clients and retention of existing clients. As a result of the increase in active clients while GSV declined, our GSV per active client decreased 3% as of September 30, 2024, as compared to September 30, 2023. We expect no material improvement to macroeconomic conditions in the fourth quarter of 2024.

Previous wording

For the three and six months ended June 30, 2024, Marketplace revenue increased, as compared to the same periods in 2023, due to a number of initiatives that we implemented over the past several quarters, including modifying existing offerings and other services and features. Specifically, we retired the tiered service fee structure for talent working with clients on our Marketplace offering—ranging from 5% to 20%—in favor of a flat fee of 10%, increased the number of Connects needed by talent to bid on projects, deployed ads products on our work marketplace, and introduced a contract initiation fee for clients on our Marketplace offering. These factors also drove Marketplace revenue to grow at a faster rate than GSV from our Marketplace offerings, which caused Marketplace take rate to increase to 18.0% and 17.9% during the three and six months ended June 30, 2024, respectively, as compared to 15.0% and 14.9% in the same periods in 2023, respectively.

Current wording

For the three and nine months ended September 30, 2024, Marketplace revenue increased, as compared to the same periods in 2023, largely due to a number of initiatives that we implemented over the past several quarters, including modifying existing offerings and other services and features. Specifically, we retired the tiered service fee structure for talent working with clients on our Marketplace offering—ranging from 5% to 20%—in favor of a flat fee of 10%, increased the number of Connects needed by talent to bid on projects, deployed ads products on our work marketplace, and introduced a contract initiation fee for clients on our Marketplace offering. These factors also drove Marketplace revenue to grow at a faster rate than GSV from our Marketplace offerings, which caused Marketplace take rate to increase to 18.3% and 18.0% during the three and nine months ended September 30, 2024, respectively, as compared to 15.8% and 15.2% in the same periods in 2023, respectively.

Previous wording

For the three months ended June 30, 2024, Enterprise revenue remained flat, as compared to the same period in 2023. For the six months ended June 30, 2024, Enterprise revenue increased, as compared to the same period in 2023, primarily due to increased revenue from our Managed Services offering, driven by new spend from existing clients. We intend to focus on efforts to attract new clients of both our Enterprise Solutions and Managed Services offerings, as well as talent that meet the criteria sought by such clients.

Current wording

For the three and nine months ended September 30, 2024, Enterprise revenue increased, as compared to the same periods in 2023, primarily due to increased revenue from our Managed Services offering, driven by new spend from existing clients.

Previous wording

For the three and six months ended June 30, 2024, cost of revenue increased, as compared to the same periods in 2023, primarily due to increases in the cost of talent services to deliver Managed Services revenue of $2.0 million and $3.8 million, respectively, and amortization expense related to internal- use software and platform development costs of $1.3 million and $2.5 million, respectively. For each of the three and six months ended June 30, 2024, gross margin increased to 77%, as compared to 76% and 75% in the same periods in 2023, respectively, primarily driven by the increase in Marketplace revenue.

Current wording

For the three months ended September 30, 2024, cost of revenue remained flat, as compared to the same period in 2023. For the nine months ended September 30, 2024, cost of revenue increased, as compared to the same period in 2023, primarily due to increases in the cost of talent services to deliver Managed Services revenue of $4.4 million and amortization expense related to internal-use software and platform development costs of $4.3 million, offset by a reduction in payment processing fees of $1.8 million. For the three and nine months ended September 30, 2024, gross margin increased to 78% and

Previous wording

For the three and six months ended June 30, 2024, research and development expense increased, as compared to the same periods in 2023, primarily due to investments we made to increase the size of our research and development workforce that resulted in increases in personnel-related costs of $7.5 million and $14.2 million, respectively. Additionally, for the six months ended June 30, 2024, costs related to software and intangible amortization increased $1.3 million and $0.8 million, respectively, compared to the same period in 2023.

Current wording

For the three and nine months ended September 30, 2024, research and development expense increased, as compared to the same periods in 2023, primarily due to investments we made to increase the size of our research and development workforce that resulted in increases in personnel-related costs of $6.4 million and $20.4 million, respectively. Additionally, for the nine months ended September 30, 2024, costs related to software and intangible amortization increased $1.4 million and $1.2 million, respectively, compared to the same period in 2023.

Previous wording

We remain committed to ongoing innovation to further enhance our platform, including improving the quality of our offerings and building new features, with a focus on machine learning and generative artificial intelligence. We expect research and development expense to increase in future periods, as compared to the same periods in 2023, but decline as a percentage of revenue throughout the remainder of 2024.

Current wording

We remain committed to ongoing innovation to further enhance our platform, including improving the quality of our offerings and building new features, with a focus on machine learning and generative artificial intelligence. Total research and development expense is expected to increase in the fourth quarter of 2024 due to charges incurred as a result of the Restructuring Plan. Excluding the Restructuring Plan charges, research and development expense is expected to grow at a slower pace in the fourth quarter of 2024 as compared to the same period in 2023.

Previous wording

For the three and six months ended June 30, 2024, sales and marketing expense decreased, as compared to the same periods in 2023, due to a number of cost-saving measures that we implemented in the second quarter of 2023, including reducing our investments in brand marketing and vendor spend, as well as implementing a reduction of our workforce and slowing our Enterprise sales hiring pace. As a result, during the three and six months ended June 30, 2024, we experienced reductions in marketing and advertising expense of $8.8 million and $23.5 million, respectively, and personnel-related costs of $2.7 million and $4.4 million, respectively, as compared to the same periods in 2023.

Current wording

For the three and nine months ended September 30, 2024, sales and marketing expense decreased, as compared to the same periods in 2023, due to a number of cost-saving measures that we implemented in the second quarter of 2023, including reducing our investments in brand marketing and vendor spend, as well as implementing a reduction of our workforce and slowing our Enterprise sales hiring pace. As a result, during the three and nine months ended September 30, 2024, we experienced reductions in marketing and advertising expense of $1.1 million and $24.6 million, respectively, as compared to the prior year periods. Additionally, for the nine months ended September 30, 2024, personnel-related costs decreased $4.4 million, as compared to the same period in 2023.

Previous wording

For the three and six months ended June 30, 2024, general and administrative expense increased primarily due to increases in personnel-related costs of $0.6 million and $2.0 million, respectively, as compared to the same periods in 2023.

Current wording

For the three and nine months ended September 30, 2024, general and administrative expense increased primarily due to increases in personnel-related costs of $2.6 million and $4.6 million, respectively, as compared to the same periods in 2023.

Previous wording

We maintain trust and safety measures designed to mitigate bad debt losses, instances of fraud, and chargeback losses. For the three and six months ended June 30, 2024, provision for transaction losses decreased, as compared to the same periods in 2023.

Current wording

We maintain trust and safety measures designed to mitigate bad debt losses, instances of fraud, and chargeback losses. For the three months ended September 30, 2024, provision for transaction losses increased slightly, as compared to the same period in 2023. For the nine months ended September 30, 2024, provision for transaction losses decreased, as compared to the same period in 2023. This reduction was the result of improved internal review processes, which decreased bad debt losses, instances of fraud and chargeback losses.

Previous wording

For the three months ended June 30, 2024, other income, net increased, as compared to the same period in 2023, due to increases in interest income earned on marketable securities. For the six months ended June 30, 2024, other income, net decreased, as compared to the same period in 2023, due to a gain of $38.9 million on the early extinguishment of a portion of the Notes that we recognized during the three months ended March 31, 2023, partially offset by increases in interest income earned on marketable securities.

Current wording

For the three months ended September 30, 2024, other income, net increased, as compared to the same period in 2023, due to increases in interest income earned on marketable securities. For the nine months ended September 30, 2024, other income, net decreased, as compared to the same period in 2023, due to a gain of $38.9 million on the early extinguishment of a portion of the Notes that we recognized during the three months ended March 31, 2023, partially offset by increases in interest income earned on marketable securities.

Previous wording

For the three and six months ended June 30, 2024, income tax provision decreased, as compared to the same periods in 2023.

Current wording

For the three and nine months ended September 30, 2024, income tax provision increased, as compared to the same periods in 2023.

Previous wording

Our principal sources of liquidity are our cash and cash equivalents and marketable securities. Our cash equivalents and marketable securities primarily consist of money market funds, commercial paper, treasury bills, corporate bonds, U.S. and foreign government securities, asset-backed securities, and other types of fixed income securities. The primary objective of our investment activities from our operating investments is to preserve principal while maximizing income without significantly increasing risk. Since our inception, our business has consisted of the operation of an online work marketplace that connects businesses with independent talent from across the globe, and we do not make investments for trading or speculative purposes. As of June 30, 2024 and December 31, 2023, we had $182.8 million and $79.6 million in cash and cash equivalents, respectively. As of June 30, 2024 and December 31, 2023, we had $314.9 million and $470.5 million in marketable securities, respectively.

Current wording

Our principal sources of liquidity are our cash and cash equivalents and marketable securities. Our cash equivalents and marketable securities primarily consist of money market funds, commercial paper, treasury bills, corporate bonds, U.S. and foreign government securities, asset-backed securities, and other types of fixed income securities. The primary objective of our investment activities from our operating investments is to preserve principal while maximizing income without significantly increasing risk. Since our inception, our business has consisted of the operation of an online work marketplace that connects businesses with independent talent from across the globe, and we do not make investments for trading or speculative purposes. As of September 30, 2024 and December 31, 2023, we had $288.5 million and $79.6 million in cash and cash equivalents, respectively. As of September 30, 2024 and December 31, 2023, we had $312.7 million and $470.5 million in marketable securities, respectively.

Previous wording

Our principal commitments consist of the Notes, future purchase commitments for cloud infrastructure and other services of $20.0 million for each of the twelve months ending June 30, 2025 and 2026, and obligations under our non-cancellable operating leases for office space. There were no material changes to our commitments under our lease agreements from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023. Assuming the outstanding Notes are not converted into our common stock, repurchased, or redeemed prior to maturity, (i) annual interest expense relating to the Notes will be $2.7 million in each fiscal year through 2025 and $1.8 million in 2026 and (ii) principal in the amount of $361.0 million will be payable upon the maturity of the Notes on August 15, 2026. For additional information about our Notes, see the section below titled “—Convertible Senior Notes Due 2026.”

Current wording

Our principal commitments consist of the Notes, future purchase commitments for cloud infrastructure and other services, and obligations under our non-cancellable operating leases for office space. Assuming the outstanding Notes are not converted into our common stock, repurchased, or redeemed prior to maturity, (i) annual interest expense relating to the Notes will be $2.7 million in each fiscal year through 2025 and $1.8 million in 2026 and (ii) principal in the amount of $361.0 million will be payable upon the maturity of the Notes on August 15, 2026. For additional information about our Notes, see the section below titled “—Convertible Senior Notes Due 2026.” In July 2024, we commenced a non-cancellable agreement for cloud infrastructure and other services that contains future purchase commitments of $40.0 million over two years, with $20.0 million in each year. As of September 30, 2024, we had remaining purchase commitments under this agreement of $37.8 million. There were no material changes to our commitments under our lease agreements from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

During the three and six months ended June 30, 2024, we repurchased and subsequently retired 2.9 million and 8.1 million shares of common stock for an aggregate amount of $33.1 million and $100.0 million at an average price of $11.60 and $12.38 per share, including fees associated with the repurchases, respectively. As of June 30, 2024, we had no remaining balance available for repurchases under the Share Repurchase Program.

Current wording

During the nine months ended September 30, 2024, we repurchased and subsequently retired 8.1 million shares of common stock under the 2023 Share Repurchase Authorization for an aggregate amount of $100.0 million at an average price of $12.38 per share, including fees associated with the repurchases and excluding excise tax. For the three months ended September 30, 2024, we did not repurchase any shares under the 2023 Share Repurchase Authorization. As of September 30, 2024, we had no remaining balance available for repurchases under the 2023 Share Repurchase Authorization.

Previous wording

In November 2023, our board of directors authorized a share repurchase program for the repurchase of up to $100.0 million of shares of our outstanding common stock, which we refer to as the Share Repurchase Program. Repurchases of our common stock under the Share Repurchase Program may be made from time to time on the open market (including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act), in privately negotiated transactions, or by other methods, at our discretion, and in accordance with applicable securities laws and other restrictions. The Share Repurchase Program has no expiration date and will continue until otherwise suspended, terminated, or modified at any time for any reason. The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the timing and amount of any repurchases will depend on market and business conditions.

Current wording

In October 2024, our board of directors authorized a share repurchase program for the repurchase of up to $100.0 million of shares of our outstanding common stock, which we refer to as the 2024 Share Repurchase Authorization. Repurchases of our common stock under the 2024 Share Repurchase Authorization may be made from time to time on the open market (including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act), in privately negotiated transactions, or by other methods, at our discretion, and in accordance with applicable securities laws and other restrictions. The 2024 Share Repurchase Authorization has no expiration date and will continue until otherwise suspended, terminated, or modified at any time for any reason. The 2024 Share Repurchase Authorization does not obligate us to repurchase any dollar amount or number of shares, and the timing and amount of any repurchases will depend on market and business conditions.

Previous wording

As a licensed internet escrow agent, we offer escrow services to customers of our work marketplace and, as such, we are required to hold our customers’ escrowed cash and in-transit cash in trust as an asset and record a corresponding liability for escrow funds held on behalf of talent and clients on our balance sheet. We expect the balances of our funds held in escrow, including funds held in transit, and the related liability to grow as GSV grows and may vary from period to period. Escrow regulations require us to cover the trust with our operating cash in the event of shortages due to the timing of cash receipts from clients for completed hourly billings. Talent submit their billings for hourly contracts to their clients on a weekly basis every Sunday, and the aggregate amount of such billings is added to escrow funds payable to talent on the same day. As of each Sunday of each week, we have not yet collected funds for hourly billings from clients as these funds are in transit. Therefore, in order to satisfy escrow funding requirements, every Sunday we match the shortage of cash in trust by restricting our own operating cash and typically collect this cash shortage from clients within the next several days. As a result, we expect our total cash and cash flows from operating activities to be impacted when a quarter ends on a Sunday. As of June 30, 2024 and December 31, 2023, funds held in escrow, including funds in transit, were $218.7 million and $212.4 million, respectively. We deposit a portion of funds held in escrow in interest-bearing checking accounts.

Current wording

As a licensed internet escrow agent, we offer escrow services to customers of our work marketplace and, as such, we are required to hold our customers’ escrowed cash and in-transit cash in trust as an asset and record a corresponding liability for escrow funds held on behalf of talent and clients on our balance sheet. We expect the balances of our funds held in escrow, including funds held in transit, and the related liability to grow as GSV grows and may vary from period to period. Escrow regulations require us to cover the trust with our operating cash in the event of shortages due to the timing of cash receipts from clients for completed hourly billings. Talent submit their billings for hourly contracts to their clients on a weekly basis every Sunday, and the aggregate amount of such billings is added to escrow funds payable to talent on the same day. As of each Sunday of each week, we have not yet collected funds for hourly billings from clients as these funds are in transit. Therefore, in order to satisfy escrow funding requirements, every Sunday we match the shortage of cash in trust by restricting our own operating cash and typically collect this cash shortage from clients within the next several days. As a result, we expect our total cash and cash flows from operating activities to be impacted when a quarter ends on a Sunday. As of September 30, 2024 and December 31, 2023, funds held in escrow, including funds in transit, were $214.3 million and $212.4 million, respectively. We deposit a portion of funds held in escrow in interest-bearing checking accounts.

Previous wording

As market conditions warrant, we may, from time to time, repurchase additional outstanding Notes, as we did in the three months ended March 31, 2023, in the open market, in privately negotiated transactions, by tender offer, by exchange transaction, or otherwise. Such repurchases of Notes, if any, will depend on prevailing market conditions, our liquidity, and other factors, and may be commenced or suspended at any time.

Current wording

As market conditions warrant, we may, from time to time, repurchase outstanding Notes, as we did in the three months ended March 31, 2023, in the open market, in privately negotiated transactions, by tender offer, by exchange transaction, or otherwise. Such repurchases of Notes, if any, will depend on prevailing market conditions, our liquidity, and other factors, and may be commenced or suspended at any time.

Previous wording

For the six months ended June 30, 2023, net cash used in operating activities was $4.4 million, which resulted from net income of $13.2 million and adjustments of $5.7 million, driven by the gain of $38.9 million on the early extinguishment of a portion of the Notes, offset by net cash outflows of $23.3 million from changes in operating assets and liabilities.

Current wording

For the nine months ended September 30, 2024, net cash provided by operating activities was $145.1 million, which resulted from net income of $68.4 million, non-cash adjustments of $62.7 million, and net cash inflows of $14.0 million from changes in operating assets and liabilities.

Previous wording

For the six months ended June 30, 2024, net cash provided by operating activities was $42.9 million, which resulted from net income of $40.7 million and non-cash adjustments of $40.2 million, offset by net cash outflows of $37.9 million from changes in operating assets and liabilities.

Current wording

For the nine months ended September 30, 2023, net cash provided in operating activities was $32.6 million, which resulted from net income of $29.5 million and non-cash adjustments of $24.5 million, offset by net cash outflows of $21.4 million from changes in operating assets and liabilities.

Previous wording

For the six months ended June 30, 2024, net cash provided by investing activities was $156.5 million, which was primarily a result of proceeds from maturities of marketable securities of $321.8 million and proceeds from the sale of marketable securities of $35.4 million, partially offset by investing $194.3 million in various marketable securities, as well as $5.6 million of internal-use software and platform development costs that we paid during the period.

Current wording

For the nine months ended September 30, 2024, net cash provided by investing activities was $158.6 million, which was primarily a result of proceeds from maturities of marketable securities of $365.3 million and proceeds from the sale of marketable securities of $38.4 million, partially offset by investing $234.5 million in various marketable securities, $8.6 million of internal-use software and platform development costs that we paid during the period, and $2.0 million paid for purchases of property and equipment.

Previous wording

For the six months ended June 30, 2023, net cash provided by investing activities was $196.9 million, which was primarily a result of proceeds from maturities of marketable securities of $307.4 million and proceeds from the sale of marketable securities of $149.9 million, including $143.7 million to enable the repurchase of a portion of the Notes, partially offset by investing $254.1 million in various marketable securities, as well as $6.1 million of internal-use software and platform development costs that we paid during the period.

Current wording

For the nine months ended September 30, 2023, net cash provided by investing activities was $151.7 million, which was primarily a result of proceeds from maturities of marketable securities of $451.0 million and proceeds from the sale of marketable securities of $159.6 million, including $143.7 million to enable the repurchase of a portion of the Notes, partially offset by investing $449.2 million in various marketable securities, as well as $9.2 million of internal-use software and platform development costs that we paid during the period.

Previous wording

For the six months ended June 30, 2024, net cash used in financing activities was $90.0 million, which was driven by $100.0 million cash paid for repurchases under the Share Repurchase Program, partially offset by an increase in escrow funds payable of $6.3 million, proceeds received from our 2018 Employee Stock Purchase Plan, which we refer to as the 2018 ESPP, of $2.9 million, and cash received from stock option exercises of $0.8 million.

Current wording

For the nine months ended September 30, 2024, net cash used in financing activities was $93.2 million, which was driven by $100.0 million cash paid for repurchases under the 2023 Share Repurchase Authorization, partially offset by proceeds received from our employee stock purchase plan of $2.9 million, an increase in escrow funds payable of $1.9 million, and cash received from stock option exercises of $1.9 million.

Previous wording

For the six months ended June 30, 2023, net cash used in financing activities was $151.6 million, which was driven by $171.3 million that we paid to consummate the repurchase of a portion of the Notes, including related fees to effect the repurchase, partially offset by an increase in escrow funds payable of $16.2 million, proceeds received from the 2018 ESPP of $2.6 million, and cash received from stock option exercises of $0.9 million.

Current wording

For the nine months ended September 30, 2023, net cash used in financing activities was $150.3 million, which was driven by $171.3 million that we paid to consummate the repurchase of a portion of the Notes, including related fees to effect the repurchases, partially offset by an increase in escrow funds payable of $16.5 million, proceeds received from our employee stock purchase plan of $2.6 million, and cash received from stock option exercises of $1.9 million.