Gessert said marketplace GSV growth in Q4 was “relatively flat” versus the prior year due primarily to fewer “low-value, high-volume” contracts, while fundamentals for larger clients remained positive. The company ended Q4 with 785,000 active clients. Management said churn improved over 2025, with Q4 churn reaching its lowest level in more than eight quarters and more than 130 basis points better than Q4 2024.In the fourth quarter, management highlighted year-over-year growth of 3% in GSV, 4% in revenue, an ...

Financial Data and Key Metrics Changes - In 2025, the company achieved over $4 billion in Gross Services Volume (GSV), $788 million in revenue, and $226 million in adjusted EBITDA, marking record levels for both revenue and adjusted EBITDA with revenue growth of 2.4% and an adjusted EBITDA margin of 29% [7][20] - Q4 saw year-over-year growth of 3% in GSV, 4% in revenue, and a 27% adjusted EBITDA margin [7][20] - Average GSV per active client increased by 7% year-over-year in Q4 to over $5,100, while overall spend per contract rose by 10% year-over-year [21][22] - The churn rate declined in 2025, reaching its lowest level in over eight quarters in Q4, which was over 130 basis points lower than Q4 2024 [22] Business Line Data and Key Metrics Changes - The Business Plus solution for SMBs grew active clients by 49% sequentially in Q4, with 38% of these clients being new to the platform [12][22] - Revenue from Freelancer Plus grew by 29% year-over-year, contributing to a total ads and monetization revenue growth of 24% year-over-year [23] - Enterprise revenue decreased by 3% year-over-year in Q4 due to a strategic pause in selling legacy enterprise plans as the company shifted to the new Lifted strategy [23] Market Data and Key Metrics Changes - GSV from AI-related work surpassed $300 million on an annualized basis in Q4, up more than 50% from the prior year, driven by categories like Generative AI and creative production [10][11] - The number of clients engaging in AI work increased over 50% year-over-year, with GSV from these clients exceeding the average spend per client by about three times [11] Company Strategy and Development Direction - The company aims to capitalize on a $1.3 trillion market opportunity by positioning itself as a leader in the AI era, focusing on flexible, skills-based talent [8][19] - The strategy includes enhancing the AI-native marketplace, expanding the Business Plus offering, and ramping up the Lifted platform for enterprise clients [15][18] - The company plans to double GSV from Business Plus to represent over 5% of total annual GSV in 2026 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for 2026, anticipating GSV growth of 4%-6% and revenue growth of 6%-8% [26][27] - The company expects to see sequential increases in GSV, total take rate, and revenue throughout 2026, particularly in the second half as Lifted completes its integration [27][28] - Management highlighted the importance of human-agent collaboration, indicating that combining human judgment with AI capabilities leads to superior outcomes [81][82] Other Important Information - The company generated a record $223 million in free cash flow in 2025, which will support organic growth initiatives, M&A, and share repurchases [26] - Non-GAAP operating expenses were $107 million in Q4, maintaining a consistent percentage of revenue compared to Q4 2024 [25] Q&A Session Summary Question: Insights on 2026 investments and growth contributions - Management indicated that investments in AI features, Business Plus expansion, and Lifted are expected to ramp up throughout 2026, contributing to GSV and revenue growth [34] Question: AI search and recommendation functionality - The company has launched features like Uma Recruiter to enhance client hiring efficiency and is seeing positive impacts from these investments [40] Question: Active client trends and marketing initiatives - Management noted a decrease in churn rates and positive top-of-funnel yields, which are expected to drive active client growth [56] Question: AI talent availability on the platform - The company reported no significant talent gaps in the AI category and is actively working to attract more AI talent through partnerships [58] Question: Enterprise client demand and milestones - Management is focused on acquiring a small number of high-quality enterprise clients to meet growth goals, with a healthy pipeline of interest from existing customers [63][90]

Upwork (NasdaqGS:UPWK) Q4 2025 Earnings call February 09, 2026 05:00 PM ET Company ParticipantsEric Sheridan - Managing DirectorErica Gessert - CFOGary Fuges - VP of Investor RelationsHayden Brown - President and CEOJohn Byun - SVP of Equity ResearchMatt Condon - Director of Equity ResearchRohit Kulkarni - Managing DirectorRon Josey - Managing DirectorConference Call ParticipantsBernie McTernan - Senior AnalystBrad Erickson - Equity AnalystJosh Chan - Executive Director and Equity Research AnalystMaria Ripp ...

Upwork (NasdaqGS:UPWK) Q4 2025 Earnings call February 09, 2026 05:00 PM ET Speaker11Hello and thank you for standing by. Welcome to Upwork Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, pl ...

Upwork Conference Call Summary Company Overview - **Company**: Upwork (NasdaqGS: UPWK) - **Industry**: Online freelance marketplace connecting freelancers with SMB and enterprise clients globally - **Key Speaker**: Erica Gessert, CFO Key Points Company Introduction - Upwork is described as the world's human and AI work marketplace, connecting global talent with businesses of all sizes, offering over 130 job types and thousands of skills [7][8] GSV Growth Trajectory - Upwork experienced a return to Gross Services Volume (GSV) growth after a period of stagnation, attributed to investments in three key growth catalysts: AI, SMB growth, and enterprise strategy [8][9] - GSV growth was previously negative due to post-pandemic adjustments in the human capital industry, while Upwork remained relatively flat [8] AI Growth Opportunities - The AI category on Upwork's platform is currently at a run rate of approximately $300 million, growing over 50% annually [10] - AI is enhancing the hiring experience by automating job postings and proposals, leading to a $100 million GSV lift in 2025 [11] - Substitution effects from AI were noted in writing and translation jobs, with lower-value jobs ($300 and less) decreasing from 5% to 3.5% of total volume [14][15] SMB and Enterprise Strategy - Upwork is focusing on the SMB category, with a new Business Plus product that has seen a 36% year-over-year GSV growth [21] - The enterprise strategy aims to capture a larger share of the contingent labor market, previously accessing only 10% of enterprise spending [26] - Recent acquisitions (Ascend and Bubty) are expected to enhance Upwork's offerings in the enterprise market, targeting a $650 billion total addressable market (TAM) [27] Financial Guidance - Upwork guided for 4%-6% GSV growth in 2026, following a 2% growth in Q3 2025, indicating a positive inflection point [32][33] - The company anticipates 7%-9% GSV growth for the subsequent three years, driven by AI and enterprise strategies [33] Take Rate and Revenue Strategy - Upwork's current take rate is approximately 19.6%, which is lower than industry averages, indicating potential for growth [46] - The Business Plus product has a higher take rate of 10%, contributing to both volume and revenue growth [46] Margin Improvement - Upwork has improved its margins from 11% two years ago to just under 29% currently, with ongoing optimization efforts [57][58] - The business is characterized as having an 80% gross margin, with further cost optimization opportunities available [59] Competitive Landscape - Upwork differentiates itself by offering a global talent pool of 18 million freelancers, enabling labor arbitrage for enterprises [63][65] - The platform specializes in longer-term, complex projects, contrasting with competitors like Fiverr, which focus on lower-value transactions [76] Capital Allocation - Upwork is actively engaging in capital allocation strategies, including organic investments, acquisitions, and stock buybacks to reduce share count [78] Conclusion - Upwork is positioned for growth through strategic investments in AI, SMB, and enterprise markets, with a strong focus on improving GSV and margins while navigating macroeconomic challenges [31][66]

Core Insights - Upwork Inc. has outlined a long-term growth strategy and financial outlook, emphasizing its position to capture a larger share of the $1.3 trillion global digital knowledge work market through a focus on AI and SMBs [1][2] Financial Outlook - The company provided guidance for 2026 and growth targets for 2028, projecting a Gross Services Volume (GSV) growth rate of 4-6%, revenue growth rate of 6-8%, and an adjusted EBITDA margin of approximately 29% [4][5] - Long-term targets include a GSV CAGR of 7-9%, revenue CAGR of 13-15%, and adjusted EBITDA CAGR of around 20% [4][5] Strategic Building Blocks - **Transforming Human + AI Work**: The AI strategy includes expanding AI-powered workflows, accelerating AI categories of work, and integrating AI agents for better collaboration, with an expected $100 million in incremental GSV from these initiatives in 2025 [4] - **Accelerating SMB Growth**: Upwork is targeting the $530 billion SMB market with its Business Plus offering, designed to attract higher-spending SMB customers and improve retention rates [4] - **Unlocking Enterprise Expansion**: The launch of Lifted aims to tap into the $650 billion contingent labor market, providing a comprehensive solution for large organizations to manage contingent talent [4] Market Position - Upwork has facilitated over $30 billion in total transactions since its inception, positioning itself as a leader in connecting businesses with global, AI-enabled talent across various work types [7][8]

Upwork 2025 Investor Day Summary Company Overview - **Company**: Upwork (NasdaqGS: UPWK) - **Event**: 2025 Investor Day held on November 18, 2025 - **Key Focus**: Overview of significant opportunities and strategies to create long-term shareholder value Core Industry Insights - **Industry**: Freelance and Gig Economy - **Market Dynamics**: The integration of AI is reshaping the workforce, creating new opportunities for talent and businesses alike Key Points and Arguments Business Transformation - Upwork has undergone a profound transformation over the last three years, focusing on speed, scale, and human-AI collaboration [7][10][33] - The company has achieved accelerated Gross Services Volume (GSV) growth two quarters ahead of schedule, with record profitability and margin expansion [4][10] AI Integration - AI is viewed as a significant tailwind for Upwork, with the platform seeing a 50% year-over-year growth in AI-related projects [18][41] - The company has launched an AI-native platform, enhancing the customer experience and operational efficiency [9][20] - Upwork's AI agent, Uma, is set to revolutionize the hiring process by automating job postings, candidate selection, and project management [40][56] Market Opportunities - Upwork identifies three major growth areas: AI, Small and Medium Businesses (SMBs), and Enterprise [11][38] - The global market for digital knowledge work is projected to reach $1.3 trillion by 2028, with SMBs accounting for $530 billion and enterprise spending at $650 billion [36][37] Client Engagement and Spend - Clients engaging in AI projects spend three times more than those not involved in AI [19] - The average GSV spend per client is $12,000, with SMBs hiring across multiple categories [66] Customer Experience - Upwork aims to shift customer mindsets from scarcity to abundance, enabling them to realize the potential of the platform [28] - The company has focused on enhancing client quality over quantity, attracting larger clients with bigger budgets [21][22] Financial Projections - Upwork expects a GSV CAGR of 7%-9% and revenue CAGR of 13%-15% over the next three years, alongside a 20% margin expansion CAGR [48][49] Competitive Advantage - Upwork's unique data asset, which tracks work across 130 categories, provides a competitive edge in the AI era [27][66] - The company is positioned to lead in the human and AI work marketplace, combining human expertise with AI capabilities [43][66] Additional Important Insights - The company has seen a shift in job types, with smaller jobs decreasing from 5% to 3.5% of GSV due to AI substitution in certain categories [13][14] - Upwork's operational changes included a 21% reduction in team size to enhance agility and efficiency [36] - The company has made significant acquisitions to bolster its enterprise offerings and enhance its AI capabilities [34][47] This summary encapsulates the key insights and strategic directions discussed during Upwork's 2025 Investor Day, highlighting the company's commitment to leveraging AI and expanding its market presence.

Financial Performance & Growth - Q3 2025 GSV reached $1,018 million, a 2% year-over-year increase[14] - Q3 2025 revenue was $202 million, a 4% year-over-year increase[14] - Q3 2025 adjusted EBITDA was $60 million, representing a 30% adjusted EBITDA margin[14] - The company targets a 7-9% CAGR for GSV, 13-15% CAGR for revenue, and approximately 20% CAGR for adjusted EBITDA over the next three years[66, 291] AI Integration & Impact - AI-related work is growing, with a 50% year-over-year increase in AI clients[23] - The company anticipates a $100 million increase in GSV in 2025 driven by expanding AI-powered workflows[50] - Annualized GSV from AI-related work is $300 million[54] - 70% of new job posts are touched by Uma, Upwork's Mindful AI[29, 236] Market Opportunity & Strategy - The company estimates a $13 trillion market opportunity in 2028 for contingent digital knowledge work[47] - The company is focused on three growth areas: transforming human + AI work, accelerating SMB growth, and unlocking enterprise expansion[48] - Business Plus sees strong organic growth, with 36% QoQ active client growth and 25x GSV per active client vs the marketplace average[113] - Lifted aims to access a larger share of the enterprise contingent labor market, targeting 10x FY26 Lifted GSV growth[261]

Financial Performance - Upwork's Q3 2025 revenue reached a record high of $201.7 million, a 4% year-over-year increase[21, 55] - The marketplace take rate grew to 19.8%, a 2% year-over-year increase[21, 55] - Adjusted EBITDA for Q3 2025 was $59.6 million, representing a 38% year-over-year increase and a record adjusted EBITDA margin of 29.6%[25, 55] - Upwork generated strong free cash flow of $69.4 million in Q3 2025[25] - The company's cash, cash equivalents, and marketable securities totaled approximately $643 million at the end of Q3 2025[25] Growth Drivers - GSV from AI-related work increased by 53% year-over-year in Q3 2025[15, 36] - Business Plus GSV grew 33% quarter-over-quarter in Q3 2025[16, 46] - The average GSV per active client was over $5,000 in Q3 2025, a 5% year-over-year increase[15, 19] Strategic Initiatives - Upwork launched Lifted, an enterprise-focused subsidiary, in Q3 2025 to capture a greater share of the $650 billion contingent workforce TAM[3, 37] - Lifted expanded Upwork's enterprise offering through the acquisitions of Bubty and Ascen[3, 39] - Business Plus active clients increased 36% quarter-over-quarter in Q3 2025[46]

Group 1: Upwork Overview - Upwork shares increased by 8.1% to close at $19.6, with a notable volume of shares traded, reflecting a 27.7% gain over the past four weeks [1] - The company is experiencing growth due to AI-driven platform enhancements, strategic acquisitions, and increased demand for AI-related work, alongside growth in its Business Plus offering [1] Group 2: Earnings Expectations - Upwork is expected to report quarterly earnings of $0.25 per share, representing a year-over-year decline of 13.8%, with revenues projected at $192.13 million, down 0.9% from the previous year [2] - The consensus EPS estimate for Upwork has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [3] Group 3: Industry Context - Upwork is part of the Zacks Internet - Services industry, where Zillow, another company in the same sector, has a consensus EPS estimate of $0.46, reflecting a year-over-year increase of 31.4% [3][4] - Zillow currently holds a Zacks Rank of 4 (Sell), contrasting with Upwork's Zacks Rank of 3 (Hold) [3][4]