Core Viewpoint - Upwork is participating in a conference with a focus on discussing its financial outlook and operations, led by CFO Erica Gessert [1][2]. Group 1: Company Overview - Erica Gessert serves as the Chief Financial Officer of Upwork, overseeing the global finance team and operations [3]. - Gessert has over 20 years of experience in finance operations, analytics, and investor relations, particularly in technology companies [3]. - Prior to Upwork, Gessert held senior executive roles at PayPal, including Chief Transformation Officer [3]. Group 2: Financial Disclosures - Upwork will make forward-looking statements during the conference, which may involve risks and uncertainties that could lead to actual results differing from those statements [2]. - The company will discuss both GAAP and non-GAAP financial measures, emphasizing the importance of reviewing the Risk Factors section in its recent quarterly report [2].

Upwork Conference Call Summary Company Overview - **Company**: Upwork Inc. (NasdaqGS: UPWK) - **Industry**: Human Capital and Staffing Industry - **Position**: World's largest AI and human-powered work platform, serving companies from Fortune 100 to solo entrepreneurs [6][3] Key Financial Performance - **Q2 Performance**: Described as a "truly breakout quarter" with financial metrics outperforming industry peers [6] - **Growth Rates**: Consistently 10% to 15% higher than other staffing agencies [6] - **Adjusted EBITDA Margin**: Increased to 29.3%, up from previously flat margins [11] Strategic Priorities - **Focus Areas**: 1. Growth of the AI category, which grew 25% in Q1 and 30% in Q2 [12] 2. Implementation of AI tools on the platform, reducing friction in hiring processes [12] 3. Expansion into enterprise solutions through acquisitions [27] AI Integration - **AI Impact**: AI tools like UMA (Upwork's mindful AI companion) are enhancing the hiring process by automating job postings and proposals [12] - **GSV Contribution**: Approximately $80 million of GSV driven by AI improvements in Q2 [12] - **Future Potential**: AI is expected to augment various categories, not just those traditionally associated with AI [15] Macro Environment and Client Dynamics - **Macro Volatility**: The company has positioned itself to be macro-agnostic, with GSV relatively flat compared to negative trends in the staffing industry [9] - **Client Behavior**: Larger projects are being pursued, with a shift towards contingent labor solutions [19] Enterprise Solutions - **Acquisitions**: Recent acquisitions of BubTea and Ascend to enhance enterprise offerings [27] - **Market Access**: Previously limited to 10% of enterprise wallet spend, now has access to a full suite of contingent labor products [28] - **Future Growth**: Major GSV and revenue growth expected from enterprise requisitions in the latter half of 2026 [30] Take Rate and Revenue Drivers - **Current Take Rate**: Approximately 18.5%, lower than industry average [31] - **Growth Strategies**: Focus on pricing to value, with expectations for both GSV and take rate to drive growth into 2026 [31][34] Value-Added Services - **Opportunities**: Early phases of launching micro-lending products for freelancers and clients [37] - **Long-Term Vision**: Significant potential in value-added services over the next three to five years [37] Margin Potential - **Long-Term Goals**: Targeting a 35% adjusted EBITDA margin while continuing to grow top line [39] - **Investment Focus**: Continued investments in AI, enterprise growth, and monetization strategies [40] Conclusion - **Future Outlook**: Exciting opportunities in AI integration, enterprise market expansion, and value-added services, with a strong focus on technology-driven growth [44]

Core Viewpoint - Upwork Inc. has announced a new $100 million share repurchase program, marking the third such authorization since November 2023, aimed at enhancing shareholder value through effective use of its balance sheet [1][2]. Group 1: Share Repurchase Program - The board of directors of Upwork has approved an additional $100 million share repurchase program, which has no expiration date and can be modified or terminated at any time [1][2]. - The repurchase may occur through various methods, including open market transactions and privately negotiated deals, at the company's discretion and in compliance with applicable laws [2]. Group 2: Financial Performance and Strategy - Upwork's financial results have consistently exceeded expectations, providing opportunities to utilize its balance sheet for increasing shareholder value [2]. - The company emphasizes its operational discipline and rapid execution as key factors in growing Gross Services Volume (GSV) and gaining market share [2]. Group 3: Company Overview - Upwork Inc. operates the Upwork Marketplace and its enterprise-focused subsidiary, Lifted, connecting companies with global, AI-enabled talent across various work models [3]. - The Upwork Marketplace serves a diverse clientele, from Fortune 100 companies to entrepreneurs, offering access to professionals with over 10,000 skills, including AI & machine learning, software development, and finance [4]. Group 4: Historical Context - Since its inception, Upwork has facilitated over $25 billion in talent earnings, reinforcing its commitment to creating opportunities in the evolving work landscape [5].

Core Insights - The inaugural monthly analysis of the freelance economy by Upwork reveals significant shifts in the U.S. labor market, highlighting the increasing demand for human-centric skills such as fact-checking and video editing [1][2][8] - The freelance economy, generating approximately $1.5 trillion in annual earnings, serves as a leading indicator for broader labor market trends, reflecting how businesses are adapting to changes [1][10] Hiring Trends - High-value work among large businesses increased by 31%, indicating a strategic use of flexible talent to fill key gaps and drive growth despite a softer overall labor market [3] - Demand for AI and machine learning skills surged by 40% among small and medium-sized businesses (SMBs), with video and animation skills also growing by 27%, suggesting that SMBs are leveraging technology to innovate [4] - The rise of the creator economy is evident, with 15% of jobs on Upwork driven by content creator demand, and a notable increase in AI skills required for these roles [6] Skill Demand - Categories vulnerable to disruption, such as writing, are experiencing growth, with demand for content writing and language tutoring increasing by 15% and 162% respectively, driven by high-value work [5] - The top in-demand AI-related skills in August 2025 include machine learning and Python, reflecting the evolving needs of businesses [7] Future of Work - The collaboration between AI and human talent is emphasized, with businesses hiring for skills that complement AI capabilities, such as quality control and creativity [8] - The Upwork Monthly Hiring Report aims to provide real-time insights into hiring trends, focusing on the freelance economy as a vital sector of the workforce [10]

Group 1 - Investors are aggressively pricing in the threat of Artificial Intelligence for companies like Upwork (UPWK) and Fiverr (FVRR), which are leading in the gig hiring market [1] - Observing megatrends can yield insights into the advancement of human society and potential investment opportunities [1] - The importance of fundamentals, quality of leadership, and product pipeline is emphasized for uncovering investment opportunities [1] Group 2 - The focus has been on marketing and business strategy for medium-sized companies and startups, with experience in evaluating startups and emerging industries/technologies [1]

Core Insights - Upwork Inc. has launched Lifted, a subsidiary designed to provide a comprehensive solution for enterprises to source, contract, manage, and pay global contingent talent in a compliant manner [1][2] - Lifted aims to eliminate the trade-offs traditionally faced by businesses between flexibility and compliance, speed and scale, or digital ease and enterprise rigor [2] - The platform is built to address the complexities of modern workforce models, offering a tech-enabled solution that integrates with existing systems and supports various contingent workforce models [2][3] Company Overview - Upwork Inc. connects companies with global, AI-enabled talent across all contingent work models through its marketplace and Lifted subsidiary [4] - The Upwork Marketplace has facilitated over $25 billion in economic opportunities for talent worldwide, showcasing its significant impact on the labor market [6] Lifted's Features - Lifted provides a contract- and country-agnostic platform that unifies the management of independent contractors, agents of record, employers of record, staff augmentation, and statement of work engagements [2][3] - The platform is supported by acquisitions of Bubty and Ascen, enhancing its capabilities in workforce management and compliance [3] - Lifted enables enterprises to access a talent pool of over 250,000 AI experts, allowing for efficient management of extended workforces [3][8] Market Position - More than 25,000 hiring managers currently utilize Lifted for their contingent workforce needs, with over 500 new projects initiated weekly [8] - Lifted supports a wide range of contract types and work engagements, making it suitable for enterprise-grade workflows [8]

Executive Leadership Changes - Upwork has appointed Anthony Kappus as its first chief operating officer (COO), effective September 2, 2025, to lead various operational teams [1][2] - Andrew Rabinovich has expanded his role to chief technology officer (CTO), overseeing engineering, IT, and AI initiatives [1][3] - Jacob McQuown has been promoted to chief legal officer (CLO), focusing on legal, compliance, and policy programs [1][4] Strategic Vision and Growth - The leadership team is expected to drive excellence across Upwork's operations, enhancing the company's position in the human and AI-powered work marketplace [2] - Kappus brings over a decade of operational expertise from Redfin, where he led digital revenue and corporate development [2] - Rabinovich's leadership in AI and machine learning is pivotal as Upwork evolves into an AI-native platform, contributing to significant growth [3][4] AI Integration and Economic Impact - Upwork's AI initiatives, particularly the development of Uma™, have led to an increase of over $80 million in gross services volume (GSV) in 2025 [3] - The company has facilitated more than $25 billion in economic opportunity for talent globally, showcasing its impact on the workforce [6]

Core Insights - Upwork (UPWK) shares increased by 10.2% following the release of its second-quarter 2025 results, driven by better-than-expected performance and strong guidance for 2025 [1][10] Financial Performance - In Q2 2025, Upwork reported non-GAAP earnings of $0.35 per share, exceeding the Zacks Consensus Estimate by 34.62% and reflecting a 35% year-over-year increase [1][10] - Revenues for Q2 2025 reached $195 million, a 0.9% year-over-year growth, surpassing the consensus estimate by 4.58% [1][10] - For the full year 2025, Upwork anticipates revenues between $765 million and $775 million, with adjusted EBITDA expected between $206 million and $214 million [2][10] - The adjusted EBITDA margin target for 2025 is set at 35% [2] Client and Revenue Breakdown - Marketplace revenues, which constitute 87.5% of total revenues, grew by 2.3% year-over-year to $170.7 million, while enterprise revenues (12.5% of revenues) declined by 7.8% to $24.3 million [5] - Active clients reached 796,000, with Gross Services Volume (GSV) per client increasing by 5% year-over-year to $5,002 [6] - GSV from AI-related work grew by 30% year-over-year, with the Prompt Engineering subcategory seeing a significant 51% increase [6][10] Operational Efficiency - The non-GAAP gross margin for Q2 2025 expanded by 30 basis points to 77.8% [9] - Operating expenses as a percentage of revenues decreased by 740 basis points year-over-year to 50.7% [9] - The adjusted EBITDA margin improved by 810 basis points year-over-year to 29.3% [11] Balance Sheet and Cash Flow - As of June 30, 2025, Upwork had cash and cash equivalents totaling $635 million, with long-term debt at $359 million [12] - Cash provided by operating activities was $72.5 million, and free cash flow reached $65.6 million [12] Future Guidance - For Q3 2025, Upwork expects revenues between $190 million and $195 million, with earnings projected between $0.28 and $0.30 per share [14]

Core Insights - Upwork is expanding its services beyond freelancers by acquiring Bubty and planning to acquire Ascen, aiming to provide a comprehensive solution for managing various workforce models [2][3][5] Group 1: Acquisitions and Strategy - The acquisition of Bubty will help Upwork manage a range of workforce models, including independent contractors and contingent W-2 workers [2] - Ascen is expected to enhance Upwork's capabilities with its digitally native solutions and easy-to-integrate APIs for contingent W-2 workers [2][3] - Upwork's President and CEO, Hayden Brown, emphasized the need for a singular solution that balances flexibility, compliance, speed, and scale for enterprise customers [5][6] Group 2: Market Demand and Performance - There is a growing demand from enterprise customers for access to diverse talent pools, which Upwork aims to fulfill with its new acquisitions [4] - Upwork has reported record revenue for 2024, partly driven by AI innovations and the connection to AI talent on its platform [7] - The gross services volume (GSV) from AI-related work grew by 30% year over year during the quarter, up from 25% in the same quarter last year, indicating a strong market trend towards AI expertise [8]

Jane, shares of Upwork up about 11% right now on strong second quarter earnings and a fullyear revenue guidance raise. Upwork attributing the performance to AI and recent M&A activity. So joining me now is Hayden Brown, CEO of Upwork.Hayden, it's great to have you on and let's start right there. Beaten race quarter, what drove it. We had two big highlights this quarter, Morgan.One was our AI strategies across the website which are really working. This is where we implement AI solutions for our customers, ma ...