Why Upwork Stock Plunged Today

Core Insights - The recent sell-off in Upwork's shares may be overdone, as the downturn is expected to be temporary [1] - Upwork reported a decline in active clients, leading to a significant drop in stock price [1] Financial Performance - Upwork's fourth-quarter revenue increased by 4% year over year to $198.4 million [3] - The company's gross services volume (GSV) rose by 3% to $1 billion [3] - GSV from the Upwork Business Plus offering for small and midsize businesses (SMBs) surged by 24% sequentially [3] AI Investments - Upwork is heavily investing in artificial intelligence (AI), with AI-powered search recommendations contributing over $100 million to GSV in 2025 [4] - Annualized GSV from AI-related work increased by more than 50% to over $300 million in the fourth quarter [4] Client Metrics - Active clients on Upwork's platform decreased by 6% to 785,000, which raised concerns among investors [6] - The company's churn rate improved throughout 2025, and it anticipates active client growth in the first quarter of 2026 [6] Future Guidance - Upwork's guidance for 2026 includes projected GSV growth of 4% to 6% and revenue growth of 6% to 8% [7] - Expected revenue for 2026 is between $835 million and $850 million, compared to $787.8 million in 2025 [7] - Adjusted earnings per share are forecasted to be between $1.43 and $1.48, compared to $1.41 [7]