Summary of Upwork Conference Call Industry Overview - The macro environment is described as "choppy," with a deceleration in economic activity noted in Q4 and early Q1, particularly affecting small jobs under $300, which are the weakest segment of the market [1][2] - Job openings in December 2025 were significantly lower than pre-COVID levels, especially in tech and professional services, marking the lowest non-recessionary year since 2003 [2] Company Performance and Strategy - Upwork has managed to perform well despite the weak macro environment, focusing on larger, more complex work and diversifying growth levers, including AI, SMB, and enterprise [3] - The company is experiencing pressure in lower-value work, which is attributed to both macroeconomic factors and AI displacement [4][6] AI and Workforce Trends - Companies are rethinking workforce strategies towards more flexible models, which is expected to benefit platforms like Upwork in the long term [7] - AI advancements are seen as beneficial for Upwork, as they allow companies to reimagine workflows, often leading to a shift from full-time employees to a mix of full-time and contingent workers [11][12] Financial Guidance and Growth Catalysts - Upwork has provided guidance for 2026, expecting 4%-6% GSV growth, 6%-8% revenue growth, and a 29% adjusted EBITDA margin [13] - Key growth catalysts include the implementation of AI tools like Uma, which is expected to contribute an additional $100 million in GSV in 2025, and the growth of the AI category itself, projected to reach a $300 million run rate with 50% annual growth [14][15] Business Plus and Variable Freelancer Fee - Business Plus, a premium plan for larger SMBs, was launched in late 2024 and is expected to double its GSV contribution in 2026, currently accounting for 2.5% of GSV [23][25] - The variable freelancer fee strategy is being gradually rolled out, with less than 20% deployment currently, aimed at optimizing take rates based on supply and demand dynamics [26][28] Enterprise Strategy - Upwork has been expanding its enterprise offerings, acquiring companies like Bubty and Ascen to provide a comprehensive solution for managing contingent staff across various contract types [34][35] - The enterprise market is seen as a significant growth opportunity, with Upwork aiming to capture a larger share of the $650 billion staffing market [43] Profitability and Capital Allocation - Upwork is focused on balancing growth and profitability, with a long-term target of 35% EBITDA margins, currently at 29% [50][53] - A $300 million stock buyback has been approved, reflecting confidence in the growth strategy and current valuations [55] AI Impact on Labor Market - Upwork is actively monitoring the impact of AI on job postings and skills demand, finding that human and AI agent collaboration yields better outcomes than AI alone [61][62] - The AI category is growing rapidly, with clients spending three times the platform average on AI-related work, indicating a strong long-term growth trend [66] Conclusion - Upwork is navigating a challenging macro environment while positioning itself for future growth through strategic investments in AI, enterprise solutions, and flexible workforce models. The company remains optimistic about its ability to capture market share and enhance profitability in the coming years.

Core Viewpoint - Upwork Inc. has announced a new $300 million share repurchase program, contributing to a total of $600 million in share repurchase authorizations since November 2023 [1][2]. Financial Performance - 2025 was highlighted as a pivotal year for Upwork, achieving GSV growth and record financial results [2]. - The company deployed $136 million in cash to repurchase over 9 million shares in 2025, demonstrating its commitment to long-term shareholder value [2]. Share Repurchase Program - The new share repurchase authorization allows for purchases on the open market, through privately negotiated transactions, or other methods, with no expiration date [3]. - The timing and amount of repurchases will depend on market conditions and other considerations, and the authorization does not obligate Upwork to repurchase a specific dollar amount or number of shares [3]. Company Overview - Upwork connects businesses with global, AI-enabled talent across various work types, including freelance and payrolled solutions [4]. - The company has facilitated over $30 billion in total transactions since its founding, aiming to create opportunities in every work era [5].

Group 1 - Upwork Inc. will participate in a fireside chat at The Citizens Technology Conference on March 2, 2026, featuring President and CEO Hayden Brown and CFO Erica Gessert [1] - A live webcast of the event will be available on Upwork's Investor Relations website, with an archive accessible for 90 days post-event [2] - Upwork connects businesses with global, AI-enabled talent across various work types, including freelance and payrolled solutions [3] Group 2 - Upwork has facilitated over $30 billion in total transactions since its founding, aiming to create opportunities in every work era [4] - The company offers access to professionals with expertise in over 10,000 skills, including AI & machine learning, software development, and finance [3]

Core Insights - Upwork reported record revenue and adjusted EBITDA for 2025, driven by growth in AI-related work and the Business Plus offering for small businesses [4][6][3] Financial Performance - In Q4, Upwork achieved a 3% year-over-year growth in gross services volume (GSV) and a 4% increase in revenue, with adjusted EBITDA margin at 27% [2] - For the full year 2025, Upwork reported over $4 billion in GSV, $788 million in revenue, and $226 million in adjusted EBITDA, marking record highs [3][6] - Q4 GSV exceeded $1 billion, with average GSV per active client rising 7% year-over-year to over $5,100 [2][6] Client Metrics - The company ended Q4 with 785,000 active clients, with churn improving to its lowest level in over eight quarters [1] - Active Business Plus clients grew 49% sequentially in Q4, with these clients spending nearly 2.5 times more than the marketplace average [11][12] AI Integration and Growth - AI-related work grew over 50% year-over-year, generating an annualized GSV of over $300 million in Q4 [6][8] - AI-native features contributed approximately $100 million in incremental GSV in 2025, with significant growth in categories like Generative AI [7][8] Business Plus and Enterprise Strategy - Business Plus saw a 24% increase in GSV quarter-over-quarter in Q4, with management targeting it to double in GSV by 2026 [12][18] - The Lifted platform, aimed at enterprise clients, is expected to drive significant growth, with a target of 25% GSV growth for the enterprise business in 2026 [13][15] Margins and Cash Flow - Gross margin was 78.0% in Q4 and 77.8% for the full year 2025, with non-GAAP operating expenses at 54% of revenue in Q4 [16] - Free cash flow for Q4 was $57 million, with the company repurchasing about 2 million shares for $34 million [17] 2026 Outlook - For 2026, Upwork guided GSV growth of 4% to 6% and revenue between $835 million and $850 million [6][18] - Q1 2026 revenue is expected to be between $192 million and $197 million, with adjusted EBITDA margin projected at 23% to 24% [19]

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]

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 [7][20] - Revenue growth was 2.4% year-over-year, with an adjusted EBITDA margin of 29% for the full year [7][20] - In Q4, GSV grew by 3% year-over-year, revenue by 4%, and adjusted EBITDA margin was 27% [7][20] Business Line Data and Key Metrics Changes - The AI-related work on the platform generated over $300 million in GSV on an annualized basis in Q4, up more than 50% from the prior year [10][11] - Business Plus, aimed at SMBs, saw active clients grow by 49% sequentially, with these clients spending almost 2.5 times more than the marketplace average [12][22] - Enterprise revenue decreased by 3% year-over-year in Q4 due to a strategic pause in selling legacy enterprise plans [23][24] Market Data and Key Metrics Changes - The company is targeting a $1.3 trillion market opportunity, with a focus on AI, SMB, and enterprise segments [8][19] - The demand for AI-skilled talent has more than doubled year-over-year, indicating a strong market trend [16][19] Company Strategy and Development Direction - The company aims to lead in the AI era by transforming its product, customer experience, and operations [6][19] - The strategy includes enhancing AI functionalities, expanding the Business Plus offering, and integrating the Lifted platform for enterprise clients [12][15][19] - The company plans to double GSV from Business Plus to represent over 5% of total annual GSV in 2026 [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving top-line growth in 2026, driven by strong fundamentals and growth levers [29][31] - The company anticipates a ramp-up in GSV and revenue in the second half of 2026 as the Lifted platform integration completes [27][29] - Management highlighted the importance of human-agent collaboration, which is expected to enhance work outcomes significantly [81][84] Other Important Information - The company generated a record $223 million in free cash flow in 2025, which will support growth initiatives and share repurchases [26][30] - The company ended Q4 with 785,000 active clients, with a declining churn rate reaching its lowest level in over eight quarters [22][23] Q&A Session Summary Question: How should investments in AI features and Business Plus expansion scale in 2026? - Management expects a ramp in GSV and revenue throughout 2026, with strong growth trajectories in AI and Business Plus [34][35] Question: What are the early benefits of the AI search and recommendation functionalities? - Early investments in AI features have positively impacted client hiring processes, accelerating time to hire and improving search experiences [40][41] Question: What dynamics are driving active client growth? - The declining churn rate and effective marketing campaigns are expected to resume active client growth [56][57] Question: What is the outlook for enterprise revenue and client demand? - Enterprise revenue is expected to see a slight decline in Q1 due to a pause in legacy plans, but there is a healthy pipeline for future growth [73][74] Question: What factors contribute to higher spending by AI clients? - AI clients tend to have higher hourly rates and project volumes, contributing to their increased spending [78][79]

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 [5][19] - Revenue growth was 2.4% year-over-year, with a fourth-quarter revenue growth of 4% [5][20] - Adjusted EBITDA margin reached 29% for the full year and 27% in Q4 [5][24] Business Line Data and Key Metrics Changes - The AI-related work on the platform generated over $300 million in GSV on an annualized basis in Q4, reflecting a growth of more than 50% year-over-year [9][10] - Business Plus, aimed at SMBs, saw active clients grow by 49% sequentially, with clients spending nearly 2.5 times more than the marketplace average [11][21] - Enterprise revenue decreased by 3% year-over-year in Q4 due to a strategic pause in selling legacy enterprise plans [22][23] Market Data and Key Metrics Changes - The number of clients engaging in AI work increased by over 50% year-over-year, with GSV from these clients exceeding the average spend per client by about three times [10][19] - The company is targeting a $1.3 trillion market opportunity, with a focus on flexible, skills-based talent in the AI era [6][18] Company Strategy and Development Direction - The company aims to lead in the AI era by transforming its product, customer experience, and operations, positioning itself as a human plus AI solution [5][6] - The strategy includes enhancing the AI-native marketplace and expanding the Business Plus offering to capture more of the SMB market [12][16] - The Lifted platform is designed to support major contingent work contracts and integrate into workflows of large companies, with a focus on a targeted set of enterprise accounts [12][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in accelerating growth and generating strong margins in 2026, supported by ongoing investments in AI and SMB initiatives [6][18] - The company anticipates a ramp-up in GSV and revenue in the second half of 2026 as the Lifted platform integration completes [26][89] - Management highlighted the importance of human-agent collaboration, indicating that combining human judgment with AI capabilities leads to superior outcomes [80][81] Other Important Information - The company generated a record $223 million in free cash flow in 2025, which will support organic growth initiatives and share repurchases [25][29] - The company expects to maintain an adjusted EBITDA margin of approximately 29% for 2026, with a target of exiting the year at a margin in the low 30s [26][28] Q&A Session Summary Question: How should we think about the investments scaling as you move deeper into 2026? - Management anticipates a ramp in GSV and revenue throughout the year, with strong growth trajectories in AI and Business Plus [33][34] Question: Can you elaborate on the search and recommendation functionality? - The company has launched features like Uma Recruiter to accelerate hiring and improve client visibility, which are already having a positive impact [38][40] Question: What are the dynamics driving active client growth? - The company is seeing a decrease in churn rates and positive top-of-funnel yields, which are expected to benefit active client growth [54] Question: Can you comment on AI clients spending three times the average? - Higher spend is driven by higher rates, longer project durations, and larger scopes of work in the AI category [75][76] Question: What milestones are needed to achieve enterprise growth goals? - The focus is on onboarding a small number of high-quality clients and launching the Lifted platform by mid-year [88][89]

Upwork Investor Presentation Undue reliance should not be placed on the forward-looking statements in this presentation. Neither we nor any other person makes any representation or warranty as to the accuracy or completeness of the information herein. This presentation is made solely for informational purposes. Upwork, the Upwork logo, Lifted, "UmaTM, Upwork's Mindful AI," and other registered or common law trade names, trademarks, or service marks of Upwork appearing in this presentation are the property o ...

Core Insights - Upwork Inc. reported record full-year revenue of $787.8 million for 2025, with fourth-quarter revenue of $198.4 million and GAAP net income of $15.6 million [1][2] - The company achieved a record adjusted EBITDA of $225.6 million for the full year 2025, representing a 35% increase compared to 2024 [1][4] - Upwork's leadership in the human-plus-AI collaboration market positions it to capitalize on a $1.3 trillion market opportunity for flexible digital knowledge work [2] Financial Performance - Fourth-quarter revenue grew 4% year over year to $198.4 million, while full-year revenue grew 2% year over year to $787.8 million [4] - GAAP net income for the fourth quarter was $15.6 million, a significant decrease from $147.2 million in the same quarter of 2024 [4] - Adjusted EBITDA for the fourth quarter was $52.9 million, a 5% increase from $50.2 million in Q4 2024, with an adjusted EBITDA margin of 27% [4][10] Client Metrics - Active clients as of December 31, 2025, were 785,000, a decrease from 832,000 in 2024 [4] - Gross Services Volume (GSV) per active client increased by 7% year over year to $5,129 in Q4 2025 [4] Cash Flow and Shareholder Returns - Cash provided by operating activities was $63.7 million in Q4 2025, up 65% from $38.6 million in Q4 2024 [4] - Free cash flow for Q4 2025 was $57.3 million, a 65% increase compared to $34.7 million in Q4 2024 [4] - The share repurchase program returned $136 million to shareholders in 2025, with the purchase of 9.3 million shares [4] Future Outlook - Upwork expects 4% to 6% GSV growth and 6% to 8% revenue growth for 2026, driven by diversified growth across AI, SMB, and Enterprise segments [2][9] - The company introduced AI-generated work summaries and partnered with OpenAI to enhance talent training and upskilling on its platform [9]

Core Insights - The Upwork annual In-Demand Skills report indicates that while demand for AI-enabled skills has more than doubled year-over-year, hiring for human expertise remains robust across various work categories [1][2]. Demand for Skills - Demand for top skills on the Upwork Marketplace has consistently remained strong, even in areas considered vulnerable to automation, such as coding, creative, marketing, and customer support [2][5]. - Skills explicitly tied to AI applications have seen a significant growth of 109% year-over-year, with notable increases in AI video generation and editing (+329%), AI integration (+178%), AI data annotation and labeling (+154%), and AI chatbot development (+71%) [2][5]. Human-AI Collaboration - The Human+Agent Productivity Index shows that collaboration between humans and AI can boost project completion by up to 70%, emphasizing that AI enhances rather than replaces human expertise [3]. - Business leaders are willing to pay a premium for independent talent who demonstrate creativity and innovation, highlighting the ongoing importance of human skills alongside AI capabilities [5]. Talent Needs - 77% of business leaders report that AI is increasing their need for specialized, fractional talent rather than traditional full-time roles, indicating a shift in the type of talent companies require [5]. - The report suggests a redefinition of professional advantage, where professionals who can merge technical skills with foundational skills will stand out [3]. Fastest-Growing Skills - The top three fastest-growing skills by category for 2026 include: - Coding & Web Development - Customer Service & Admin Support - Data Science & Analytics [4]. Most In-Demand Skills - The most sought-after skills on the Upwork Marketplace include full stack development, general virtual assistance, data analytics, and graphic design, which have remained consistently strong year over year [5][7].