ZACKSยท2025-06-30 13:46Core Insights - The freelance economy is rapidly evolving, with Upwork Inc. (UPWK) and Fiverr International (FVRR) at the forefront, each adopting distinct strategies to leverage AI and cater to enterprise clients [1][5] Upwork Overview - Upwork reported record first-quarter results for 2025, with revenues of $193 million, a 1% year-over-year increase, and adjusted EBITDA of $56 million, reflecting a 29% margin [6] - The company is transitioning to an AI-native platform, utilizing its in-house AI assistant, Uma, which has seen a 52% increase in user engagement and a 58% rise in proposal-writing usage [7] - Upwork has access to over 80,000 AI specialists, addressing the talent gap as 63% of employers report a lack of skilled personnel [8] - For 2025, Upwork reaffirmed its revenue target of $740-$760 million and raised its adjusted EBITDA guidance to $190-$200 million, with EPS forecasted at $1.14-$1.18 [10] Fiverr Overview - Fiverr's first-quarter 2025 revenues increased by 15% year-over-year to $107.2 million, with an adjusted EBITDA margin of 18% [11] - The classic marketplace revenue declined by 0.8% to $77.7 million, while service revenues surged by 94% to $29.5 million, now representing 27.5% of total revenues [12] - Fiverr is evolving into a full-service work platform, focusing on larger clients and enhanced tools like Fiverr Pro and Fiverr Go, which are designed to improve buyer-seller interactions [13][15] - The company anticipates full-year revenues between $425-$438 million, with adjusted EBITDA margins expected to reach 20% in 2025 [11] Comparative Analysis - Upwork is positioned as a leader in AI integration within the freelance market, while Fiverr is gaining traction in high-margin services but faces challenges with a shrinking active buyer base [19][20] - Upwork's focus on AI and operational strength makes it a more compelling investment choice, currently rated as a Zacks Rank 1 (Strong Buy), compared to Fiverr's Zacks Rank 3 (Hold) [21]