Upwork Inc. (UPWK) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance, promising AI-driven growth, and optimistic guidance. The company is raising revenue and EBITDA guidance, indicating confidence in future performance. Despite some margin dilution due to investments, the long-term target remains robust. The continuation of stock buybacks further signals financial health. The market cap suggests moderate volatility, but overall, the sentiment is positive, predicting a 2% to 8% stock price increase over the next two weeks.
Key Financial Performance
Gross Services Volume (GSV) $1.02 billion in Q3 2025, a 2% year-over-year growth. This growth was driven by both marketplace and enterprise businesses. Average GSV per active client grew 5% year-over-year, remaining over $5,000. GSV per new client grew 7% year-over-year, and GSV from AI-related work increased 53% year-over-year, driven by the expansion of AI projects and jobs on the platform.
Revenue $201.7 million in Q3 2025, exceeding $200 million for the first time in company history. This represents a record-breaking performance, attributed to targeted AI customer experience and product innovations, AI category growth, and robust adoption of Upwork Business Plus.
Adjusted EBITDA $59.6 million in Q3 2025, with an adjusted EBITDA margin of 29.6%, marking an all-time high. This reflects disciplined cost management and strong operational execution.
GAAP Net Income $29.3 million in Q3 2025, a 6% increase over Q3 2024. This growth is attributed to strong revenue performance and cost management.
Free Cash Flow $69.4 million in Q3 2025, a record high. This was supported by strong profitability and operational efficiency.
Marketplace Take Rate 18.9% in Q3 2025, up from 18.3% in Q3 2024. This increase was driven by strategies like dynamic pricing and Business Plus.
Gross Margin 77.3% in Q3 2025, reflecting disciplined cost management.
Active Clients 794,000 active clients at the end of Q3 2025. GSV per active client grew 5% year-over-year, and churn rate declined over 70 basis points quarter-over-quarter, marking the lowest Q3 churn rate in years.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
AI-native platform transformation: Upwork has enhanced its AI-native platform, Uma, with new capabilities such as talent sourcing, proposal drafting, and project management. These features have improved customer experience and business impact, contributing $100 million in incremental GSV in 2025.
AI-related projects growth: The number of clients engaging in AI-related projects increased by 45% year-over-year, and GSV from AI-related work grew by 53% year-over-year in Q3 2025.
Upwork Business Plus enhancements: Upwork enhanced its SMB product, Business Plus, with premium features for talent sourcing and evaluation. Active clients on Business Plus grew 36% quarter-over-quarter.
Launch of Lifted subsidiary: Upwork launched Lifted, a new subsidiary targeting the $650 billion contingent work market. Lifted offers talent sourcing, contracting, and workforce management for enterprises, with strong initial demand and expected onboarding of first customers by early 2026.
Revenue and profitability records: Upwork achieved $201.7 million in revenue and $29.3 million in GAAP net income in Q3 2025, marking record highs. Adjusted EBITDA reached $59.6 million with a margin of 29.6%.
GSV growth resumption: Gross Services Volume (GSV) grew 2% year-over-year to $1.02 billion, driven by marketplace and enterprise businesses.
Client engagement improvements: Average GSV per active client grew 5% year-over-year, and churn rate declined by 70 basis points quarter-over-quarter, marking the lowest Q3 churn rate in years.
Focus on AI and SMBs: Upwork's strategy to focus on AI and SMBs is delivering results, with significant growth in AI-related projects and Business Plus adoption.
Enterprise expansion with Lifted: The launch of Lifted positions Upwork to capture a larger share of the contingent work market, with anticipated growth in GSV, revenue, and adjusted EBITDA by 2027.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
AI adoption challenges: 95% of Gen AI pilots fail, and 63% of employers cite skills gaps as a major hurdle to business transformation, which could impact Upwork's ability to fully capitalize on AI-related opportunities.
Economic uncertainties: The labor market remains sluggish, which could affect client spending and overall growth.
Enterprise sales cycle: The sales cycle for large multimillion-dollar enterprise agreements can take up to a year or more, potentially delaying revenue realization from the Lifted platform.
Integration costs: The acquisitions of Bubty and Ascen by Lifted are expected to be margin dilutive throughout 2026 due to integration and launch costs.
Seasonal volume fluctuations: Lower seasonal volumes from managed services customers are expected to impact the marketplace take rate in Q4.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Expectations: For Q4 2025, revenue is expected to be in the range of $193 million to $198 million. Full-year 2025 revenue guidance has been increased to $782 million to $787 million, driven by the strength of the marketplace business.
Adjusted EBITDA Projections: For Q4 2025, adjusted EBITDA is projected to be between $49 million and $52 million, representing a margin of 25% to 26%. Full-year adjusted EBITDA guidance has been raised to $222 million to $225 million, with a 28% margin at the midpoint.
Long-term Margin Target: The company reiterates its long-term adjusted EBITDA margin target of 35%.
Lifted Subsidiary Impact: Lifted is expected to contribute meaningfully to GSV, revenue, and adjusted EBITDA starting in 2027. Temporary integration costs will impact margins in 2026.
AI-Driven Growth: AI-related projects and jobs on the platform are expanding, with GSV from AI-related work increasing 53% year-over-year in Q3 2025. AI category growth is expected to continue driving revenue and GSV growth.
Market Trends and SMB Strategy: Adoption of Upwork Business Plus by SMBs grew 36% quarter-over-quarter in Q3 2025. This segment is expected to continue contributing to growth as SMBs increasingly rely on Upwork for AI-related initiatives.
Enterprise Business Expansion: The Lifted subsidiary is expected to onboard its first customers by early 2026, with strong demand anticipated for its comprehensive contingent workforce solutions.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Share Buyback Program: In the quarter, we used $31 million in cash to buy back 2.1 million shares as part of our commitment to driving long-term shareholder value.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What are the key early learnings from integrating the acquired enterprise assets and how should investors view the enterprise offering in terms of growth?
A:The company is pleased with the progress of the acquisitions. Enterprise revenue for Q3 and Q4 is based on the former product, which was stopped earlier this year. The next milestone is integrating platforms and moving customers to Lifted in early 2026. Leading indicators are strong, with increased top-of-funnel interest and invitations for large multimillion-dollar RFPs. Significant GSV growth is expected to accelerate in the back half of next year and continue into 2027.
Q:What are the drivers behind the acceleration in AI-related GSV and the contribution from the two acquisitions?
A:The $100 million incremental GSV was driven by rebuilding the search and recommendation stack using acquired AI tech and talent. Features like 'Boost Your Profile' also contributed. The AI-related category grew 53% in the quarter. The acquisitions (Bubty and Ascen) contributed $5 million to revenue in the back half of the year, consistent with Q2 guidance. Organic marketplace growth was 1% in GSV and 4% in revenue for Q3, with expected acceleration.
Q:What is the update on freelancer demand and the impact of AI on marketplace liquidity?
A:The macro environment has been stable since Q2. GSV growth is driven by AI and SMB initiatives. AI improvements are expected to drive further GSV growth, with major updates planned for 2026. AI has been integrated into some workflows, with more to come, bolstering confidence in GSV growth and acceleration in 2026.
Q:Is agentic talent sourcing available for the rest of the marketplace, and what are the expectations for margins given the investment in Lifted?
A:Agentic sourcing, specifically Uma Recruiter, is a Business Plus-only feature. There are plans to explore versions for basic customers. The company remains committed to a 35% margin target but will slow margin expansion in 2026 due to investments in Lifted, which will cause about 2 percentage points of dilution. Despite this, margins are expected to remain strong.
Q:What is driving the sustained increase in hours per contract, and how does AI-related work impact this trend?
A:Hours per contract are growing due to a focus on quality, attracting larger SMB customers, and the AI category of work. AI-related work clients spend 3.5x more than typical clients, and Business Plus clients spend 3x more. AI is a growth driver for hours per contract, not a suppressor, as it fractionalizes traditional full-time work, creating more demand for contingent work.
Q:Who are the competitors for the Lifted business, and how does the company differentiate itself?
A:The company competes with staffing companies and others in the contingent work ecosystem. Lifted offers a full-stack, end-to-end solution, unlike competitors who focus on niches like temp staffing or specific geographies. The digital and modular nature of Lifted makes it a strong partner and differentiates it from competitors.
Q:What supports the confidence in accelerating GSV growth in 2026, and what are the assumptions for Q4 GSV growth?
A:Confidence in 2026 GSV growth is based on multiple drivers like AI work acceleration, low penetration of Business Plus, and new features. Q4 GSV growth is expected to be lighter due to seasonality and the absence of new accounts from the legacy enterprise solution, but optimism remains for the Lifted strategy's impact in late 2026.
Q:Is the current level of free cash flow generation sustainable, and will the company continue stock buybacks?
A:Free cash flow is expected to sustain around 85% conversion from EBITDA. The company plans to continue stock buybacks, having already surpassed its commitment to offset dilution from stock-based compensation. It will also explore inorganic growth opportunities.
Q:What is the progress on variable freelance fee testing and the impact of the Uma Proposal writer?
A:Variable freelance fee testing is in early stages, with minimal Q3 impact. It is expected to drive both revenue and GSV in 2026. The Uma Proposal writer has improved proposal quality and matching experiences, increasing client spending and contributing to the $100 million incremental GSV this year.
Q:How is the company balancing sales and marketing leverage with product improvement, and what is the view on ChatGPT as a customer acquisition channel?
A:The company is moderating margin expansion in 2026 to invest in organic growth opportunities. ChatGPT and chatbots are small but promising channels, converting at higher rates with high intent signals. The company is testing approaches to capture growing demand from these channels.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific categories where variable freelance fee testing is most effective, citing ongoing experimentation. Additionally, while they expressed optimism about ChatGPT and chatbot channels, they provided limited quantitative data or detailed strategies for leveraging these channels.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI MIT
AI Plus
AI business
AI category
AI equalizer
AI era
AI project
Anticipation Lifted
Businesses size
Corporate Securities
Counsel Upwork
Economic Forum
Forum Upwork
GSV company
GSV headwind
GSV launch
Hayden afternoon
Lifted Upwork
Lifted demand
Lifted suite
Lifted talent
SMBs
adoption
client talent
contingent work
customer experience
enhancement Uma
feature
milestone
moment
platform AI
potential
solution
talent proposal
UPWK Transcript
Upwork Inc. (UPWK) Q1 2026 Earnings Call Transcript
Unknown5-8
The earnings call presents mixed signals: strong adjusted EBITDA and AI-related growth are positive, but workforce reduction and lowered revenue guidance are concerning. The Q&A highlights confidence in AI growth and enterprise demand but acknowledges market volatility. Given the small-cap nature, the stock may see minor fluctuations but is likely to remain stable overall.
Upwork Inc. (UPWK) Q4 2025 Earnings Call Transcript
Positive2-9
The earnings call highlights strong financial performance, with a 15% YoY revenue increase and improved margins. Net income turned positive, indicating better expense control. Although strategic initiatives and risks were not detailed, the financial metrics and raised guidance suggest optimism. Given the market cap of $1.4 billion, a positive stock reaction is expected, though not overly strong due to lack of specific strategic details.
Upwork Inc. (UPWK) Presents at UBS Global Technology and AI Conference 2025 Transcript
Neutral12-3
Upwork Inc. (UPWK) Q3 2025 Earnings Call Transcript
Positive11-3
The earnings call reveals strong financial performance, promising AI-driven growth, and optimistic guidance. The company is raising revenue and EBITDA guidance, indicating confidence in future performance. Despite some margin dilution due to investments, the long-term target remains robust. The continuation of stock buybacks further signals financial health. The market cap suggests moderate volatility, but overall, the sentiment is positive, predicting a 2% to 8% stock price increase over the next two weeks.
UPWK Slides
UPWK Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
