Upwork's Q2 Earnings Surge: AI Integration Boosts Performance and Signals Future Growth

Upwork Stock Climbs After Strong Q2 Earnings Report: Details - Upwork (NASDAQ:UPWK)

Upwork, Inc. UPWK released its second-quarter results after Wednesday's closing bell. Here's a look at the key figures from the quarter. Check out UPWK stock price and chart in real-time here. The Details: Upwork reported quarterly earnings of 35 cents per share, which beat the analyst estimate of 28 cents. Quarterly revenue came in at $194.93 million, which beat the analyst consensus estimate of $187.68 million. Read Next: Palantir's Alex Karp Tells Haters To 'Read 'Em And Weep' Upwork reported the following financial highlights from the second quarter: Revenue grew 1% year-over-year to $194.9 million. Active clients of 796,000. GSV per active client of $5,002 increased 5% year-over-year and average hours per contract in the second quarter were the highest ever, as projects on the platform increase in size and complexity. Net income was $32.7 million, up 47% year-over-year. Adjusted EBITDA was $57.1 million, up 40% year-over-year. "Upwork delivered an exceptional second quarter, significantly outperforming across all key financial metrics. Our strong Marketplace performance was driven by AI features that delivered tremendous value to our full range of customers, from SMBs to large enterprises to talent," said Hayden Brown, CEO of Upwork. Outlook: Upwork has third-quarter adjusted EPS of between 26 cents and 28 cents, versus the 27 cent estimate, and revenue of between $190 million and $195 million, versus the $187.74 million estimate. UPWK Stock Price: According to data from Benzinga Pro, Upwork stock was up 9.79% at $13.12 in Wednesday's extended trading. Read More: Hims & Hers Stock Could Rocket To Meme Stock Fame -- If Short Sellers Feel The Squeeze Photo: Shutterstock UPWKUpwork Inc$13.2011.1%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum29.40Growth98.73QualityN/AValue71.40Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Upwork (UPWK) Q2 Revenue Beats by 4%

Upwork (UPWK 0.55%), a leading online talent marketplace, reported its Q2 2025 financial results on August 6, 2025. The headline news: GAAP revenue surpassed expectations at $194.9 million, up from $193.1 million in Q2 2024 and above the analyst estimate of $187.6 million. Non-GAAP earnings per share were $0.35, while GAAP earnings of $0.24 per share missed estimates by $0.04. Despite record profitability and margin expansion, the platform's active client base fell by 8.3% to 796,000. These results reflected operational discipline and growing AI-driven initiatives, even as topline growth remained modest. Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report. What Upwork Does and Where It's Focused Upwork connects businesses and freelancers worldwide, acting as an online marketplace for remote work. It helps companies hire, collaborate with, and pay professional talent across more than 125 categories. Its platform generates revenue by charging service fees and offering premium services to both businesses and freelancers. Recent company strategy centers on leveraging artificial intelligence, expanding enterprise offerings, and investing in network effects -- the value that grows as more users join. The current focus is on deepening engagement with both sides of the marketplace, launching more sophisticated AI tools, and pursuing enterprise clients through acquisitions and new service plans. Second Quarter Highlights: Results, Risks, and Product Progress For the quarter, GAAP revenue rose to $194.9 million, exceeding expectations and marking a record result for this period. Adjusted EBITDA, which measures earnings before interest, taxes, depreciation, and amortization, grew to $57.1 million -- a 40% increase from a year earlier. Free cash flow (non-GAAP) almost doubled, reaching $65.6 million. Management delivered on cost discipline, cutting GAAP operating expenses by 10% year over year to $118.9 million. GAAP net income hit $32.7 million, a 47% year-over-year increase in GAAP net income. However, several core business activity metrics showed pressure. The active client number dropped to 796,000 from 868,000 compared to Q2 2024. This decline raises questions about long-term platform growth and network effects. Still, gross services volume (GSV), which tracks the total contract value flowing through the platform, held steady at $1.00 billion, and GSV per active client rose 5% year-over-year. This points to bigger or more complex projects among remaining clients. Product and technology investments were front and center this period. Upwork ramped up its AI work, notably with Uma, its AI agent. Uma saw a 24% jump in adoption quarter-over-quarter, and its Proposal Writer feature was used 58% more often in Q1 2025 compared to Q4 2024. More than 35% of engineering code deployed at Upwork now comes from AI tools, and prompt engineering -- a fast-growing area -- saw GSV climb 51% year-over-year. AI-enabled projects now make up a fast-increasing share of Upwork's business, growing 30% year over year. Enterprise initiatives are pacing change for the company. The acquisition of Bubty and the pending purchase of Ascen are aimed at attracting large businesses wanting tools to manage different types of contract workers. Though enterprise revenue (GAAP) fell 8% to $24.3 million, Business Plus -- a premium plan for mid-market clients -- reported strong results: GSV rose 190% quarter over quarter and the active client base grew 45%. Business Plus clients now represent a growing share of overall platform activity, suggesting traction with larger organizations. Ads and promotional product revenue jumped 17% year-over-year, Connects (a way freelancers buy opportunities to pitch for jobs) revenue grew 19% year-over-year, and Freelancer Plus subscriptions climbed 13% year-over-year. Meanwhile, Upwork continued to buy back shares to offset dilution from its stock-based compensation program. Management did not announce a dividend. Looking Ahead: Guidance and Key Areas for Investors Management raised its full-year guidance for FY2025. It now expects total revenue between $765 million and $775 million for FY2025, up from prior estimates of $740 million to $760 million for FY2025. Adjusted EBITDA guidance increased as well, moving to $206 million to $214 million for FY2025. For Q3 2025, revenue is expected to land between $190 million and $195 million, with non-GAAP EPS guidance of $0.26 to $0.28 for Q3 2025. Stock-based compensation is forecast between $60 million and $65 million for FY2025. Investors will want to watch trends in active client counts, the impact of AI investments on project size and engagement, and continued uptake of Business Plus and other higher-margin offerings. Of note, management reiterated that meaningful take rate expansion -- higher fees as a share of total transactions -- will likely not arrive until 2026 and beyond. Management also flagged transitional challenges in its enterprise segment, but suggested evidence of early momentum from its new product offerings and recent M&A moves. Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Upwork signals 2026 growth with AI-driven platform and enterprise acquisitions (NASDAQ:UPWK)

Hayden Brown, President and CEO, highlighted "another record quarter on both the top and bottom lines," reporting Q2 revenue of $194.9 million, citing outperformance from "AI enhancement of the platform, accelerated client hiring in AI-related work, ads and monetization Seeking Alpha's Disclaimer: The earnings call insights are compilations of earnings call transcripts and other content available on the Seeking Alpha website. The insights are generated by an AI tool and have not been curated or reviewed by editors. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of the earnings call insights cannot be guaranteed. Please see full earnings call transcripts here. The earnings call insights are intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.