Core Insights - Upwork Inc. will report its financial results for Q4 and the full year of 2025 on February 9, 2026, after market close [1] - A Q&A conference call will be held on the same day at 2:00 p.m. Pacific Time [1] Company Overview - Upwork Inc. connects businesses with global, AI-enabled talent across various contingent work types, including freelance and payrolled [3] - The Upwork Marketplace provides on-demand access to skilled talent, while Lifted offers solutions for enterprise organizations to manage talent [3] - The company has facilitated over $30 billion in total transactions since its founding, aiming to create opportunities in every work era [4]

Core Insights - The Upwork Monthly Hiring Report indicates a shift in hiring focus towards operational execution as businesses prepare for potential volatility in 2026 [1][2][4] - Demand for project management and accounting roles has significantly increased, particularly among small and medium-sized businesses (SMBs) [3][4] Hiring Trends - Operational roles, especially Project Management, saw a month-over-month increase of 70% in hiring, while Virtual Assistance and Accounting & Bookkeeping rose by 18% and 9% respectively [3][4] - Hiring activity in December was primarily driven by SMBs, reflecting a strategic focus on roles that enhance execution rather than experimentation [2][3] Market Conditions - Less than one-third of business leaders viewed macro conditions as favorable in December, leading to a more cautious approach in hiring [2] - The report suggests that companies are prioritizing roles that support coordination, quality control, and reliable execution in everyday operations [4] Skills Demand - The most in-demand skills in December included Project Management (+23%), Accounting & Bookkeeping (+15%), and Virtual Admin Assistance (+3%) [6] - Some categories related to experimentation, such as Ecommerce Development and Branding & Logo Design, experienced declines in hiring activity [6] Future Outlook - The digital knowledge work market is projected to reach $1.3 trillion by 2028, indicating significant growth potential in the sector [1][9]

Core Insights - The Upwork Monthly Hiring Report for November 2025 highlights a growing demand for human-centered skills as businesses scale AI systems, with 39% of companies identifying skill gaps as a top challenge heading into 2026 [1][2][8] Hiring Trends - Quality assurance testing increased by 19% month-over-month, indicating businesses are adding human capacity to enhance confidence in digital and AI system adoption [2][6] - There is a notable rise in demand for communication and creative skills, particularly a 48% increase in language tutoring and interpretation, as companies seek to apply a human touch to their projects [3][6] - Hiring in marketing and e-commerce continues to grow as businesses prepare for the holiday season, with steady demand for talent to support marketing strategies and e-commerce infrastructure [4][6] In-Demand Skills - The top AI-enabled skills in November 2025 include: - Quality assurance testing (19% growth) - AI & machine learning (16% growth) - Language tutoring & interpretation (48% growth) - Audio & music production (20% growth) - Photography (14% growth) [6][7] - 85% of businesses report that digital fluency and AI literacy skills are becoming increasingly important [6] Future Hiring Plans - 40% of businesses plan to hire independent digital marketing professionals in the next three months, reflecting a strategic focus on enhancing marketing capabilities [6][8]

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]

Core Insights - Upwork Inc. has introduced the Human+Agent Productivity Index (HAPI), which evaluates how human expertise enhances AI agent performance in real knowledge work [1][4] - The index is based on over 300 real client projects, focusing on simple, low-complexity tasks where AI agents can succeed [2][3] - The collaboration between humans and AI agents has been shown to increase project completion rates by up to 70% compared to AI agents working alone [2][4] Company Overview - Upwork Inc. connects businesses with global, AI-enabled talent across various contingent work types, including freelance and payrolled work [5] - The company has facilitated over $30 billion in total transactions since its inception, aiming to create opportunities in every work era [6] - Upwork's portfolio includes the Upwork Marketplace and Lifted, which provide solutions for sourcing, contracting, managing, and paying talent [5][6]

Core Insights - Upwork Inc. is expanding its operations by opening its first international hub in Lisbon, Portugal, marking a significant milestone in its growth strategy [1][4] - The new office is set to be fully operational by Q4 2026 and is located in the Alcântara district, known for its vibrant business and technology environment [2] - The expansion is part of Upwork's strategy to leverage AI-driven demand for skills that cannot be automated, with a notable 53% year-over-year growth in gross services volume (GSV) from AI-related work [3][4] Company Expansion - Upwork has begun hiring to support its new operational hub in Lisbon, which is expected to enhance its product development and technical hiring capabilities outside the U.S. [2] - The CEO of Upwork, Hayden Brown, emphasized the city's exceptional talent pool and the supportive local government as key factors in choosing Lisbon for expansion [4] Market Context - The announcement of the Lisbon hub follows a record-breaking Q3 for Upwork, driven by AI-powered product innovations and strong demand for AI skillsets [4] - Lisbon has become an attractive destination for tech companies, with Upwork being the 17th unicorn to establish an office there since the launch of the Unicorn Factory initiative [4] Strategic Importance - The Lisbon hub is expected to play a central role in advancing Upwork's AI infrastructure, which is a critical driver for the company's future growth [5] - Upwork's family of companies connects businesses with global talent across various work types, facilitating over $30 billion in total transactions since its founding [6]

Core Insights - 78% of businesses plan to hire independent talent in the next three months, indicating a shift towards flexible hiring practices to meet seasonal demands [1][8] - The freelance economy is generating an estimated $1.5 trillion in annual earnings, highlighting its significance in the labor market [1][8] Hiring Trends - Flexible hiring for customer-facing skills grew by 30% ahead of the holiday season, as companies seek to enhance customer support and optimize e-commerce performance [2][6] - Data mining and management roles increased by 26%, reflecting a focus on quality and reliability in digital operations [3][6] - High-value creative contracts surged, with game design and development seeing a 38% increase, driven by the need for original storytelling and brand strategy [4][6] In-Demand Skills - The top in-demand AI-enabled skills include customer service and tech support (30% growth), community management and tagging (29% growth), and e-commerce development (9% growth) [6] - Businesses are particularly looking for skills in AI proficiency (61%), digital marketing (53%), and strategic and creative thinking (44%) [6] AI Integration - The integration of AI in workflows is evolving from experimentation to execution, with companies focusing on building AI infrastructure [7] - The combination of creative and AI skills is fostering new forms of collaboration, as teams utilize AI for ideation and content refinement [7]

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]

Core Insights - Upwork Inc. achieved record quarterly revenue of $201.7 million in Q3 2025, with a GAAP net income of $29.3 million and an adjusted EBITDA of $59.6 million, resulting in a profit margin of 15% and an adjusted EBITDA margin of 30% [1][2][6] Financial Performance - Revenue grew by 4% year-over-year to $201.7 million, while net income increased by 6% year-over-year to $29.3 million [6][21] - Adjusted EBITDA rose by 38% year-over-year to $59.6 million, with a record adjusted EBITDA margin of 30% [6][34] - Free cash flow for the quarter was $69.4 million, up 22% from $56.8 million in Q3 2024 [6][10] Operational Highlights - Active clients reached 794,000, with a Gross Services Volume (GSV) of $1.018 billion, reflecting a 2% year-over-year growth [6][8] - GSV per active client increased by 5% year-over-year to $5,036 [6] - GSV from AI-related work accelerated to 53% year-over-year growth in Q3 2025, compared to 30% in Q2 2025 [6][9] Strategic Initiatives - The company launched Lifted, a new enterprise-focused subsidiary, aimed at providing comprehensive contingent work solutions for large enterprises [9][15] - Upwork's AI tool, Uma™, has evolved to enhance customer engagement and productivity, contributing to the overall growth in GSV from AI-related projects [6][9] Guidance and Outlook - Upwork raised its full-year guidance for both revenue and adjusted EBITDA, projecting revenue between $782 million to $787 million and adjusted EBITDA between $222 million to $225 million for FY2025 [9][10]