Upwork Shares Jump 10% on Q2 Earnings Beat & Robust 2025 Guidance

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]