UPWK

What a brutal six months it’s been for Upwork. The stock has dropped 30.7% and now trades at $9.10, rattling many shareholders. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation. Is now the time to buy Upwork, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free. Even with the cheaper entry price, we’re sitting this one out for now. Here are two reasons we avoid UPWK, plus one stock we’d rather own. Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Upwork’s 6.6% annualized revenue growth over the last three years was tepid. This fell short of our benchmark for the consumer internet sector. Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite. Over the next 12 months, sell-side analysts expect Upwork’s revenue to decline by 8.8%. This underwhelming projection suggests its products and services may face demand challenges. Upwork isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 4.3× forward EV/EBITDA (or $9.10 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We’re fairly confident there are better investments elsewhere. We’d recommend looking at a safe-and-steady industrials business benefiting from an upgrade cycle. WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Monday, Aug. 10, 2026 at 5:00 p.m. ET Chief Business Officer - Peter Sanborn President and Chief Executive Officer - Hayden Brown Operator: Good day. Thank you for standing by. Welcome to Upwork's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note today's conference may be recorded. I will now hand the conference over to your speaker host, Peter Sanborn, Chief Business Officer. Please go ahead. Peter Sanborn: Thank you, and welcome to Upwork's discussion of its second quarter 2026 financial results. Joining me today is Hayden Brown, Upwork's President and Chief Executive Officer. Following our prepared remarks, we will be happy to take your questions. But first, I'll review the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. Forward-looking statements include all statements other than those of historical fact. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statements. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC website and on our Investor Relations website, as well as risks, and other important factors discussed in today's earnings press release. Additional information is also available in our quarterly report on Form 10-Q for the quarter ended June 30, 2026, which was filed today. In addition, references will be made to certain non-GAAP financial measures. Adjusted EBITDA, adjusted EBITDA margin, non-GAAP operating expense, non-GAAP net income, non-GAAP diluted EPS, and free cash flow are non-GAAP financial measures, and all other financial measures are GAAP unless cited as non-GAAP. Information regarding non-GAAP financial measures, including reconciliations to their most directly comparable GAAP financial measures, can be found in the press release that was issued this afternoon on our Investor Relations website at investors.upwork.com. Unless otherwise noted, reported figures are rounded and comparisons of the second quarter of 2026 are to the second quarter of 2025. With that, I'll now turn the call over to Hayden. Hayden Brown: Good afternoon, and welcome to Upwork's Second Quarter 2026 Earnings Call. In Q2, Upwork demonstrated strong execution in an operating environment that continues to be challenging. We delivered revenue of $191.7 million at the high end of our guidance range and adjusted EBITDA of $64.1 million, exceeding the high end of our guidance range. This was driven by disciplined cost management across our entire business. Our growth building blocks of SMB, Enterprise, and AI are delivering results. We're driving momentum with larger clients, capturing higher value projects, and scaling our position as the platform of choice for complex AI-enabled work. In SMB, our prioritization of quality and customer value, not volume, continues to pay off. Business Plus continues to pace ahead of plan, with GSV growing 174% year over year as larger customers utilize Upwork for complex recurring needs. GSV per active client reached another record at $5,230, up 5% year over year, marking our eighth consecutive quarter of sequential growth in this metric. The core part of our SMB strategy is helping these businesses tap into AI for practical outcomes. For many of these customers, the constraint is not access to AI technology, but access to people who understand how to apply it to their specific industry, workflow, or business problem. Upwork is uniquely able to solve this at scale, combining a deep pool of AI-skilled talent with the marketplace infrastructure and trust that lets customers confidently tap into the human expertise they need. This is reflected in the 51% year-over-year growth we saw in our AI strategy and consulting category in Q2. SMBs are telling us that they're hiring AI experts to guide them in making their businesses more AI-native so they can grow and scale. In Enterprise, our goals for Lifted remain on track and demand signals are strong. We initiated customer migrations to the new platform on schedule in June. We also saw positive developments with customers advancing through later stages of the sales process. The thesis around serving larger customers with this differentiated offering is working. Our focus on an expanded ability to support and grow larger customers that fit our ideal customer profile contributed to 7% year-over-year growth in GSV per enterprise account, the highest level it's been in more than three years. We also saw 29% year-over-year growth in GSV from employer of record, or EOR solutions, which are made possible due to Lifted's acquisition of Ascen. Moving our employment infrastructure in the U.S. and Canada from third-party partners to Ascen's wholly-owned entities is garnering the improvement to our value proposition we anticipated, accelerating our sales funnel with the added benefit of improving our gross margins. We continue to expect Lifted to achieve approximately 25% year-over-year GSV growth in 2026. Our industry is in a period of transition as AI is changing work and transforming our marketplace in real time. The near-term AI and macro headwinds we identified last quarter have persisted in Q2 with an acceleration in the pace of AI-related automation. We now have greater visibility into the work transition underway and are updating our guidance outlook accordingly. Short-term headwinds do not change our confidence in the enduring value proposition of Upwork. While AI automation shrinks demand for some types of work on our platform, AI creates new demand in other areas. This is evident in the 22% growth in GSV from AI-related jobs in Q2, as defined by jobs stating an explicit AI need. These were up 5% quarter over quarter to reach an approximate annualized $330 million run rate. This quarter we saw indications that the quantum of AI-related work on Upwork is actually much greater. Many clients now simply expect the use of AI tools and capabilities without feeling the need to specify this in their job posts. For example, nearly half of talent in a recent survey reported that their most recent jobs were AI-related, despite only 16% of such jobs explicitly referencing AI in the post, demonstrating how prevalent AI-related work is becoming on Upwork. AI is also changing search. Our client acquisition strategy is to diversify beyond paid and organic Google Search to build a highly durable growth engine spanning emergent channels, including LLM-based search. Google's changes to search have dampened new customer acquisition with accelerated negative impact in Q2. Our SEO rankings have continued to step up, but the channel overall is smaller, underscoring the importance of the ongoing paid acquisition efficiencies we've been driving. Paid search has become our largest customer acquisition channel, and we have grown it in both relative and absolute size, while increasing efficiency. Cost per new contract start improved 22% quarter-on-quarter, and this performance gives us confidence in increasing our paid acquisition investments for the balance of the year. We've also begun tuning our acquisition approaches for new channels that we expect to scale over time, like Answer Engine Optimization, or AEO, and LLM-based referrals. While these channels are still nascent, third-party measures show that our share of AI-based mentions and referrals is 18 percentage points higher than our closest peer. Additionally, our AI integrations are beginning to drive AI-based referral traffic and set us up for growth from these channels as OpenAI, Anthropic, and others enhance their approaches. These levers give us new paths to acquire customers in this unfolding AI and marketing landscape. The expansion of our acquisition channels goes hand in hand with how we're expanding our platform capabilities. With the proliferation of AI, we've been seeing clients trying to use AI agents to hire on Upwork for projects. We are also seeing a growing volume of clients come to Upwork to find people who can complete or fix a project they started with AI. Requests like "turn my vibe-coded concept into a production website" or "humanize the translation output from this AI" are growing, among many others. In the second quarter, we delivered key milestones on our product roadmap to support these use cases at scale. And today we announced the Upwork MCP server, our next capability for enabling agentic interactions on both sides of the marketplace, backed by the talent and job access, trust, guarantees, and quality that only Upwork offers. In Q2, we embedded Upwork directly into both ChatGPT and Claude. And with today's launch, Upwork talent and jobs are now accessible inside any AI tool that connects to our MCP. This lets both humans and their AI agents hire and collaborate with Upwork talent without leaving their own environments, while giving freelancers a way to win and deliver work without leaving their preferred AI tools. The demand for human taste, judgment, and quality assessment is increasingly commanding a premium. We're building these capabilities that let clients reach directly into our marketplace from inside the AI tools where they're already working to find the human expert they need the moment they need them. And as agents become a bigger part of how work gets done, we're building toward a marketplace where clients and their agents can hire not just human talent, but can also hire specialized AI agents and human agent teams. Bringing both sides of this emerging human and agent economy together on one platform is something no other marketplace can do at our scale. These innovations will help position Upwork as a key beneficiary of the AI shift that is underway. Now, I'll walk through our financial performance for the second quarter in more detail, as well as our updated guidance. Our financial results in Q2 demonstrate our capability to execute with discipline, driving profit expansion even as top-line volume reflects the transition underway. GSV was $966 million, reflecting the continued burn-off of lower-value, highly automatable work, the evolving impact of AI on new client acquisition, and a subdued labor market. Total revenue for the second quarter was $191.7 million, representing the high end of our guidance range, supported by strong, high-margin contributions from our ads and monetization levers, including dynamic pricing, Connects, and Business Plus. Revenue from these levers was up 15% year over year, and Connects and talent subscriptions now represent 15% of total revenue. This drove a strong take rate of 19.8% with highly accretive, high-margin revenue streams that also improve high-quality matching. Q2 active client count was 763,000. Active client count continues to be pressured by AI automation and search trends, labor market conditions, and our strategy to focus on client value over volume. Our average spend per contract reached an all-time high over any 12-month period in company history, presenting the sixth consecutive quarter of positive year-over-year growth. GSV per new client grew year-over-year for another consecutive quarter, confirming that we are attracting clients with larger initial budgets and longer project horizons. Non-GAAP gross margin for the second quarter was 77%, remaining near record levels as we manage infrastructure and support costs efficiently. Non-GAAP operating expenses reflected the early execution of our restructuring actions we announced in May, as the annualized $70 million of OpEx reduction we initiated is expected to generate approximately $40 million in realized savings in fiscal year 2026, allowing us to continuously fund our pillars in SMB, Enterprise, and AI while expanding operating leverage. Adjusted EBITDA for Q2 was $64.1 million, exceeding the high end of our guidance range and delivering an adjusted EBITDA margin of 33.4%. Non-GAAP net income and non-GAAP diluted EPS were similarly strong, while our GAAP metrics reflect the impact of our Q2 restructuring charges. While our capital-light marketplace model consistently yields exceptional free cash flow conversion, this quarter's free cash flow of $35.9 million included the impact of one-time cash payments related to our restructuring. During the quarter, we closed a new $150 million revolving credit facility with a $50 million accordion. This positions us to repay the August 2026 convertible notes at maturity while supporting our disciplined capital allocation strategy, opportunistic M&A, and our share repurchase program. We repurchased approximately 164,000 shares in Q2 while we closed the revolving credit facility. Year-to-date, we have repurchased approximately 8.3 million shares. Turning now to our updated outlook, as I mentioned at the top of this call, the near-term AI and macro headwinds we identified last quarter have persisted throughout Q2 and into Q3, with an uptick in the pace of AI-related automation and impacts from SEO. We are adjusting our full year guidance on both the top and bottom line accordingly. For the full year 2026, we now expect revenue in the range of $730 million to $750 million. This assumes a heightened pace of AI-related automation and no improvements in the labor market. As planned, we will continue to expand take rate this year as part of our overall growth story. We expect full year 2026 adjusted EBITDA of approximately $225 million to $235 million, which represents an adjusted EBITDA margin of 31% at the midpoint. This is driven by the flow through of our reduced revenue outlook alongside planned marketing spend. We expect full year 2026 non-GAAP diluted EPS to be between $1.38 and $1.43. Our updated guidance also assumes stock-based compensation of approximately $60 million to $65 million for the full year 2026. For the third quarter, we expect to generate revenue in the range of $176 million to $184 million and adjusted EBITDA in the range of $50 million to $54 million, which represents an adjusted EBITDA margin of 29% at the midpoint. We expect Q3 non-GAAP diluted EPS to be between $0.31 and $0.33. Our underlying metrics, including record GSV per active client and continued Business Plus and AI work growth, confirm Upwork's strong value proposition, even in a changing market. Our product innovations and tailored offerings for larger customers are deepening our moat, and we continue operating with financial discipline. We're navigating the near-term impacts of this significant evolution in how work gets done, while continuing to build Upwork to capture the demand, talent, and economic opportunity that this new era of work offers. Thank you for your continued support. Operator, we are now ready to open the call for questions. Operator: [Operator Instructions] And our first question comes from Ron Josey of Citi. Ronald Josey: Hayden, I had two questions, one on operations. And just you talked about the challenging operating environment continuing. We'd love to hear more about the view and the visibility, and then more insights on the SEO challenges that you mentioned. And then some interesting data came out today, or at least a press release around the MCP server. Wanted to understand directly how that might impact the business going forward just given the AI benefits. Hayden Brown: Thanks, Ron. So, from a visibility standpoint, you know, we are really in the midst of a transition of work broadly. And what we're seeing is that our decisions, including our growth strategy and our effective cost management, are enabling us to navigate this situation from a real position of strength. The trend we saw this quarter is really a continuation of last quarter, but with an acceleration in the AI automation of very low complexity work and further deterioration on Google SEO, especially notable in the non-brand channel. And that's understandable given that demand for less complex work is shrinking as customers embrace AI, and this is just flowing through to our platform. But the important thing here is it really is an evolution with a situation that's quite fluid. We are already seeing really great green shoots that our strategy is working, and this is showing us what Upwork will look like as this transition unfolds. We can see that Upwork will be home to a lot of new work. AI-relevant work is already a big and enduring part of Upwork. We're seeing this with $330 million of GSV run rate in our AI categories. And as I mentioned a few moments ago, this is really an undercount because there's a lot more AI usage that is de facto across the platform. We can also see that on the other side of this transition, projects are becoming much bigger. This is how we've seen eight consecutive quarters of increased GSV per client. And it's not just a mix shift, we are actually seeing increases in things like the length of hourly work contracts, which hit a record of 100 hours on average this quarter. The final thing that's really going to be a hallmark of the new Upwork on the other side of this are these new channels and the new participants in those channels. And that speaks to the MCP part of your question, which I'll answer in a moment. With the launch of the MCP, we really are stepping into new AI-first client acquisition strategies, which started working already with the integrations that we made in the last few months with Claude and ChatGPT. But this now opens Upwork to integrating agents and agent participants on both sides of our marketplace in a very at-scale way. So for us, the good news is we know how to navigate through these changes. It's in the DNA of our company to navigate changes and work. And we are very focused on just executing through them and seeing our strategies scale. Now, to your question about SEO, I would say these are industry-wide trends that are hitting the business. And so the impact to us is very similar to what we're seeing, I think, across our peer group. Specifically, Google has changed SEO referrals and the layout of the search page so that many fewer searches on Google result in any kind of referral to any kind of business. And that's really what's weighing on new client acquisition. And of course, it's coming at a moment that's kind of compounding the impact because the labor market is subdued, AI work is happening, and this is happening kind of all at the same time. The good news is we've done a lot to counter this, and that includes rebuilding our marketing funnels for this new world. As I mentioned earlier, paid acquisition is really doing well for us in Q2, and that's leaving us the confidence to increase our marketing spend by approximately $5 million to $10 million incrementally in the back half of the year. And these new acquisition channels around AI are the future really for organic low-cost acquisition that really lets us integrate into these endpoints and get customers right where the work is happening. And maybe that's the right transition to answer your MCP question because the reason we built this is not just to create this new demand channel, it's actually in response to seeing agents already coming to our website, trying to do work on behalf of clients. This has been a fascinating phenomenon that started to grow, and previously they couldn't get very far because of our restrictions on agent activity. Now with the MCP server, Upwork can be called by and embedded into any AI tool that a client or a freelancer is using. So this really lets clients do more in terms of their job posting activity, their hiring activity, getting the benefit of both Upwork and their favorite AI tools together in one place. It also lets freelancers do more in terms of managing their proposals, their projects, client communications inside their own AI tools, and lets them actually operate as human supervisors to trusted AI tools that are integrated into Upwork and give clients and talent the full visibility, auditability, et cetera, of what those tools are being used for. So this is a launch that really was about going to where customers already are and not waiting for that demand to come to us, but really opening up more broadly by bringing Upwork into these channels. And this is something that really is unique to Upwork because one of the expectations that is coming along with this from clients is as they work in AI tools, they want things instantly. They want human impact, they want people on demand, they expect answers now. And because of our unique scale and talent breadth and quality, we can actually offer humans at scale on demand through these types of solutions, which no one else in the market can do. Operator: And our next question comes from Eric Sheridan of Goldman Sachs. Eric Sheridan: Maybe two if I could. One I think is going to sort of dominate the debate around the space for a while is how do you think about the duration to get to the end state? Is the visibility that this transition is a 6- to 12-month transition or could it be more than a 12-month transition? I'm just curious for any framing you think about what the sort of countervailing factors in the business might lead to in terms of a mixture of these headwinds and tailwinds before we get back to some sort of more normalized levels of growth. And second, among the active client base you have today, how many of those active clients do you think will eventually be transitioned into high-end higher quality AI-driven work and how much of it is about rebuilding your active client base to be centered around where the nature of work on your platform is going for the longer term. Hayden Brown: Yes, thanks, Eric. So, in terms of your question around timing, you know, I think these things are incredibly hard to predict. And it would be probably disingenuous for me to say that I know exactly how long this is going to take. But the important thing is it really is an evolution and it's a situation where on the other side of these changes, Upwork is actually emerging structurally as a beneficiary because it's unique to our platform, as I was just mentioning on the MCP side, for us to serve the market where it's going and really displace legacy and other solutions that can't do what we can do here. So we're staying laser focused just on our execution on these strategies that are working. And we see everything from our enterprise growing, our Business Plus offering up 174% year over year, and AI tailwinds in the parts of our business that really speak to AI work. All of those things will continue to scale and compound as we work through this. And that makes me incredibly optimistic about where we'll land. To your second part of your question, which was, sorry. Eric Sheridan: When you think about the active client base today relative to where the active client base needs to evolve, how much of your active clients today do you think are along this journey towards higher quality work as opposed to rebuilding the client base around higher quality AI-driven work when we think about over the next 12, 24 months? Hayden Brown: Got it. Yes, I'd say on that front, this is really an expansion, not a replacement. We do see with very small business customers that we have today, those that are active in the Marketplace Basic plan, they are shifting their workloads to be more AI-oriented. And we see huge resonance with SMBs and larger customers who want the combination of both features and functionality of Business Plus and the AI kind of transformation that our business can offer. This is why we saw our AI strategy consulting practice or categories up significantly in the quarter. And I think this is just an example of how customers are using these new tools to do different types of work than they were doing a few months ago. So we really see it across all of our customer segments that they're leaning in more on these AI workloads and just they're changing what they do, and so that changes what they come to Upwork to do. Operator: And our next question comes from Bernard McTernan of Needham & Company. Bernard McTernan: Two for me. First, just on the AI category work, we've seen a slowdown over the past two quarters growing 50% year over year in the fourth quarter, then 40% last quarter, then 22% now. I know there's some caveats you gave, Hayden, in your prepared remarks. Just anything you could dig in deeper there. And then second, the marketplace take rate, we were expecting to be down sequentially, and I think some pressure on like Connects and more ancillary revenue, but it came in actually higher sequentially. I'm assuming that's just Business Plus, but was there anything else to call out in the quarter and how to think about the marketplace take rate for the rest of the year? Hayden Brown: Sure. So, on the AI category, this is pacing now at a $330 million run rate, as I mentioned. I want to emphasize this is really an undercount of AI work on Upwork because what we're seeing is customer behavior is changing. Customers who previously felt they needed to specify, hey, this is an AI job or I really need help with this AI project, now they just assume that is expected and they don't even talk about it in their job posts. That's why in a survey we did just in the last few weeks, when we talked to talent, almost half of them said their most recent project was an AI-related effort. Whereas when we looked at the job posts and what we would capture in this AI category metric, only 16% of jobs specifically mentioned from clients that they wanted AI help. So there's just a transition happening in the ecosystem broadly where AI is now permeating all types of work. And I think that is what's reflected more than anything in the metric here. Now, in terms of the marketplace take rate trends, we did have some success with our ads and monetization efforts in Q2, and we will continue to expand on those in Q3 and Q4. So the expansion of things like dynamic pricing on freelancer fees and some other things were some of the big contributors to the over-performance and take rate and our outlook is for take rate to continue to step up in the back of the year. Operator: And our next question comes from John Byun of Jefferies. Sang-Jin Byun: This is John Byun on behalf of Brent Thill. Question on Lifted, you mentioned that it's on track, it's still growth, GSV 25%, and guess that the employer of record category did very well. I'm wondering if there's anything more you could share about the migration there, the different project categories that's able to achieve in the pipeline, how that is building. Hayden Brown: John, in Q2 we did see really great progress with both customer migrations and pipeline building for Lifted, and that's what gives us confidence that we're on track for the approximate 25% GSV growth in full year '26. June was when we really started the customer migrations, and that activity will be ramping up because it's going very well. Customers are giving us very positive feedback. As we're running these customers through the new systems and workflows, things are going very well. So we feel good about that. From a pipeline perspective, the pipeline continues to be incredibly healthy and customers are converting. We talked about pipeline expansion last quarter. Now we're seeing those customers continue to move through our funnel. One example is we recently won a multimillion-dollar RFP with a very large global company for a staff augmentation contract that we would never have been invited to participate in before Lifted and before everything we've done to round out that set of capabilities. So we're really seeing the proof point between that, between the EOR data I shared earlier, that these new capabilities are helping us close deals and also improve our margins versus what we were doing before with third parties. So we're very excited about what's going to happen here through the rest of the year and in 2027. Sang-Jin Byun: And then maybe a quick follow-up on the SEO change. In terms of what you're seeing there, I mean, does it look like it's stabilizing or is still kind of ongoing in terms of what the impact could be from the search changes? That's it for me. Hayden Brown: Sure. You know, we started seeing these impacts accelerate in Q2, and because, you know, there is some kind of volatility in the industry around this, our outlook is that they will continue to get worse through Q3 and Q4. So that's what's baked into our current guide. We haven't seen them stabilized yet, but certainly to the extent they do, that would be better than our current outlook, which is for further deceleration. Operator: And our next question comes from Josh Chan of UBS. Joshua Chan: Maybe just two quick ones. Could you give us some sense in terms of monthly cadence on when things start to weaken? And I think you said that they're not kind of stabilizing yet at the moment, but when did that kind of start happening? And then maybe secondly, I think previously there was some thought that only a portion of Upwork's GSV may be susceptible to AI. So I was wondering if there's a change in that thinking there. Hayden Brown: So, at the time of our last earnings call, we had seen some of these trends, particularly around the pace of AI automation stabilize. Subsequent to that, in this past quarter, over the last few months, we've seen those trends accelerate. One thing that's super important here to your question about the kind of 10%. This really is an acceleration of erosion in the part of the business we had already identified as being more exposed to AI automation. So it's kind of a pull forward in that activity versus what we had previously expected. Operator: And our next question comes from Matt Condon of Citizens JMP. Matthew Condon: Hayden, I just wanted to ask on the Enterprise opportunity, we're hearing more and more from enterprise clients or enterprise-type clients that they're leaning more and more into AI and that's reducing their full-time employee workforce. But I just wanted to get your thoughts and see what you think about the potential of AI maybe impacting freelancer work in that segment as well? Hayden Brown: Yes, it's a good question. I'd say the whole reason that we built out Lifted the way we did to enable us to tap into, not just freelancer budgets, but into the full $650 billion enterprise market was predicated on the idea that enterprises, you know, spend all this money on contingent labor, but only 10% historically has gone to freelancers. And that's the part that we were eligible for before. Now we can serve customers across all of these different work types. And I think that's yet another reason why this business is moving towards, more and more insulation from AI-related risk. Not to say that freelancing is going to be highly automated, but it's just that now we can diversify how we serve customers across every type of work. So if they're changing their workloads and bringing AI to different parts of the business, this just gives us more opportunity to both bring AI talent to bear across those things and help them lean into those strategies as well as insulates us from any one part of their business where they might be automating at a faster rate. So this is definitely a really healthy expansion for us that just has multiple benefits for the business and is why we're very leaned in on driving this growth here in the back of the year and in 2027. Matthew Condon: That's very helpful. And then just to follow up on go-to-market, obviously you have the SEO changes and those don't seem to have stabilized yet. And I understand the LLM investments, but those remain nascent today. As we think about the back half of the year and the increased investment in customer acquisition, are there different channels that you're leaning into in finding success here near term? Hayden Brown: Yes, there are. So, certainly on the paid side, we're seeing strength on international SEM. That's one area where we're relatively under-penetrated and have seen really good returns with some of the testing we did in Q2. There's also a bunch of other channels where we see that we have headroom. That includes Meta, Reddit. We've seen some great results with podcasts and connected TV. And that's just like a few of them. So I'd say overall, when we look at our paid acquisition channels, you know, we're seeing the paid part from SEM grow on a relative basis, but we're also seeing a really good mix shift across other more nascent channels that we've been ramping over the last few quarters and they're getting more sizable. That's one of the reasons we now have the confidence kind of seeing that scaling, seeing the ROI. We know we can put more money into those channels with room for it to be very efficient spend in the back half of the year. And we think that's the right thing to do. Operator: [Operator Instructions] And our next question comes from Marvin Fong of BTIG. Marvin Fong: Yes, I just wanted to follow up on that point you made about investing more in marketing. How did you arrive at $5 million to $10 million? Is there potential you could do even more than that to, drive more growth there? And then second question on the monetization levers, growing Connects, you cited Business Plus and dynamic pricing. But on pricing and Connects specifically, you know, how are you managing that, in this environment? It's clearly kind of more growing faster in the overall marketplace, but just kind of comment on how you think about pulling those levers to drive revenue growth and that would be great. Hayden Brown: Sure. So on your first question, we've done a lot of testing in the first half of the year around these varied channels that I mentioned. And through that testing, we really arrived at this optimal $5 million to $10 million of incremental spend based on where we're seeing performance and kind of the degradation curves in those different channels. So obviously, it's a dynamic space, but we feel pretty confident based on all the work we did in Q2 that this is a place where we can deploy capital very efficiently and start to get some of that benefit even in Q4 of this year. So we'll be hard at work doing that. To your other question about monetization levers, it's a really good one because as we've seen our shift from customer volume to value and all of these ecosystem changes happening, of course, the marketplace is becoming even more competitive for these jobs. And that has good and bad factors. And we're trying to always balance how much we charge on the talent side, for example, for job access, while still really focusing on using these levers to drive match quality and fill rate. And that is always our North Star with these changes. The reality is, in places where the marketplace is more congested and has a lot more talent than client demand at the moment, we have the ability to do some things with pricing that are beneficial to both take rate, but also beneficial to matching and keeping the marketplace super high quality in terms of those signals. So that's where we're always performing the balance. And I'd say in the back half of this year, we will be pulling some of those levers as we see these marketplace dynamics play out, as well as ensuring that we're always working within our guardrails around match quality, et cetera. Operator: This concludes our question and answer session and also today's conference call. Thank you for participating and you may now disconnect. Before you buy stock in Upwork, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Upwork wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 17, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Upwork. The Motley Fool has a disclosure policy. Upwork (UPWK) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Upwork’s second quarter was marked by ongoing challenges tied to the accelerating adoption of artificial intelligence (AI) and changing patterns in client acquisition. Management emphasized that increased AI automation, especially for lower-complexity work, and headwinds from shifting Google Search dynamics weighed on active client numbers. CEO Hayden Brown described the environment as “a transition of work broadly,” noting the impact of rapid AI-related automation and a deterioration in search-driven customer acquisition. Upwork’s efforts to pivot toward higher-value, more complex projects and to strengthen its enterprise and AI-related offerings were highlighted as key responses to these pressures. Is now the time to buy UPWK? Find out in our full research report (it’s free). Revenue: $191.7 million vs analyst estimates of $190 million (1.7% year-on-year decline, 0.9% beat) Adjusted EPS: $0.41 vs analyst estimates of $0.34 (19.7% beat) Adjusted EBITDA: $64.05 million vs analyst estimates of $57.61 million (33.4% margin, 11.2% beat) The company dropped its revenue guidance for the full year to $740 million at the midpoint from $775 million, a 4.5% decrease Management lowered its full-year Adjusted EPS guidance to $1.40 at the midpoint, a 7.9% decrease EBITDA guidance for the full year is $230 million at the midpoint, below analyst estimates of $254.4 million Operating Margin: 14.7%, down from 16.7% in the same quarter last year Market Capitalization: $1.06 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Ronald Josey (Citi): Asked about the visibility on operating challenges and the impact of SEO changes. CEO Hayden Brown explained that the environment remains volatile as AI automation and search headwinds persist, but highlighted ongoing marketing and product pivots to address these issues. Eric Sheridan (Goldman Sachs): Queried about the expected duration of the AI-driven transition and the evolution of the active client base. Brown stated it is difficult to predict the timeline but emphasized Upwork’s focus on serving higher-value, AI-driven work across all client segments. Bernard McTernan (Needham & Company): Questioned the slowdown in AI category growth and the drivers of the take rate. Brown noted the undercounting of AI work due to changing client behavior and highlighted dynamic pricing and monetization initiatives as contributors to take rate expansion. Sang-Jin Byun (Jefferies): Inquired about the progress of the Lifted enterprise migration and pipeline health. Brown pointed to positive feedback, successful migrations, and the closing of significant enterprise contracts as evidence of traction. Matthew Condon (Citizens JMP): Sought clarity on enterprise exposure to AI and the effectiveness of new acquisition channels. Brown described diversification across work types and increased spend in underpenetrated paid channels like international SEM, Meta, and connected TV. In the coming quarters, the StockStory team will be monitoring (1) the pace and effectiveness of paid acquisition investments to offset search-related headwinds, (2) client adoption and monetization of new AI-integrated features like the MCP server, and (3) the ongoing success of Lifted and Business Plus in driving higher-value, recurring enterprise engagement. The evolution of AI-related work and stabilization in marketing channels will also be central to tracking Upwork’s progress. Upwork currently trades at $8.55, down from $9.83 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Interested in Upwork Inc.? Here are five stocks we like better. Upwork exceeded Q2 expectations with $191.7 million in revenue and $64.1 million in adjusted EBITDA, supported by cost controls, higher-value clients and record GSV per active client of $5,230. AI is creating both opportunity and pressure: AI-related job GSV rose 22% year over year and AI strategy and consulting grew 51%, while automation reduced demand for lower-complexity work and contributed to weaker active-client trends. Upwork lowered its 2026 outlook to $730 million–$750 million in revenue and $225 million–$235 million in adjusted EBITDA, citing worsening Google search referrals, ongoing labor-market weakness and faster AI automation; it plans to increase paid acquisition spending by $5 million–$10 million in the second half. MarketBeat Week in Review – 12/15 - 12/19 Upwork (NASDAQ:UPWK) reported second-quarter 2026 revenue of $191.7 million, at the high end of its guidance range, while adjusted EBITDA of $64.1 million exceeded the company’s outlook. Management said disciplined cost management supported profitability as the company navigated accelerating AI-related automation, weaker Google search referrals and a subdued labor market. Chief Executive Officer Hayden Brown said the company is prioritizing customer value and higher-value work rather than client volume. Gross services volume, or GSV, totaled $966 million in the quarter, reflecting what Brown described as the ongoing reduction of lower-value and highly automatable work, along with changes in new-client acquisition. → MarketBeat Week in Review – 08/03 - 08/07 Can Upwork Maintain Its Comeback? Reasons to Be Bullish and Bearish Upwork said GSV per active client reached a record $5,230, rising 5% from a year earlier and marking the eighth consecutive quarter of sequential growth in the metric. The company’s active client count was 763,000, a figure management said remains under pressure from AI automation, search trends, labor-market conditions and its own focus on customer value over volume. Business Plus, the company’s offering for larger small and midsize business customers, continued to exceed internal plans. GSV through Business Plus increased 174% year over year, according to Brown. The company also said GSV per new client grew year over year, while its average spend per contract reached an all-time high over a trailing 12-month period. → Quantum Earnings Week: Winners and Losers Are Finally Emerging Upwork's Stock Soars on Q3 Blowout and a New AI Blueprint Revenue from advertising and monetization tools—including dynamic pricing, Connects and Business Plus—rose 15% year over year. Connects and talent subscriptions represented 15% of total revenue. Upwork reported a 19.8% take rate for the quarter and said the higher-margin revenue streams also improve matching quality. Non-GAAP gross margin was 77%, near record levels, and adjusted EBITDA margin was 33.4%. Free cash flow totaled $35.9 million, including the impact of one-time restructuring-related cash payments. Upwork said its restructuring program, announced in May, is expected to produce about $40 million in realized savings during fiscal 2026 from an annualized $70 million reduction in operating expenses. → Take-Two’s Q1 Results Leave GTA 6 Bulls Stuck in the Fog of War Brown said AI-related automation accelerated during the quarter, particularly in lower-complexity work that Upwork had previously identified as more exposed to automation. At the same time, the company reported 22% year-over-year growth in GSV from jobs explicitly requesting AI-related work, reaching an approximate annualized run rate of $330 million. Management said that figure likely understates the amount of AI-related activity on the platform because many clients now expect AI capabilities without specifically mentioning AI in their job posts. In a recent talent survey cited by Brown, nearly half of respondents said their most recent jobs involved AI, while only 16% of those job posts explicitly referenced AI. Upwork’s AI strategy and consulting category grew 51% year over year in the second quarter. Brown said small and midsize businesses are increasingly hiring AI experts to help apply AI tools to specific industries, workflows and business problems. The company also announced its Upwork MCP Server, which is intended to support agentic interactions across the marketplace. Upwork said it embedded its services into ChatGPT and Claude during the second quarter, and the MCP Server makes Upwork talent and jobs available within AI tools that connect to its MCP. Brown said the product is designed to let clients and their AI agents hire and collaborate with freelancers without leaving their preferred AI environments. Management said Google’s changes to search referrals and search-page layout reduced the number of searches resulting in referrals to businesses, dampening Upwork’s new-client acquisition. Brown said the deterioration was especially pronounced in non-brand search during the second quarter and has not yet stabilized. Upwork’s updated outlook assumes that search-related impacts will worsen through the third and fourth quarters. The company is responding by increasing paid acquisition investments by approximately $5 million to $10 million in the second half of the year. Paid search became Upwork’s largest customer-acquisition channel, and cost per new contract start improved 22% sequentially in the second quarter. Brown said the company has also found promising results in international search marketing, Meta, Reddit, podcasts and connected television. Meanwhile, Upwork is developing answer-engine optimization and LLM-based referral channels, which it described as still nascent. In Enterprise, Upwork began migrating customers to its new platform in June and said customer feedback has been positive. GSV per Enterprise account rose 7% year over year, the highest level in more than three years, while GSV from employer-of-record solutions increased 29% year over year. Brown said Upwork remains on track for approximately 25% Enterprise GSV growth for full-year 2026. The company attributed part of the opportunity to its acquisition of Ascen, which supports employer-of-record services through wholly owned entities in the United States and Canada. Management said the expanded capabilities have improved its value proposition, sales funnel and margins, and cited a recently won multimillion-dollar staff-augmentation contract with a large global company. Upwork closed a new $150 million revolving credit facility with a $50 million accordion feature during the quarter. The company said the facility positions it to repay convertible notes due in August 2026, while supporting potential acquisitions and share repurchases. It repurchased about 164,000 shares in the second quarter and approximately 8.3 million shares year to date. For full-year 2026, Upwork lowered its outlook to revenue of $730 million to $750 million and adjusted EBITDA of approximately $225 million to $235 million. The guidance assumes a heightened pace of AI-related automation and no improvement in labor-market conditions. The company forecast full-year non-GAAP diluted earnings per share of $1.38 to $1.43. For the third quarter, Upwork expects revenue of $176 million to $184 million, adjusted EBITDA of $50 million to $54 million, and non-GAAP diluted EPS of $0.31 to $0.33. Upwork Inc operates a leading online talent marketplace that connects businesses with independent professionals worldwide. Through its digital platform, the company enables clients across industries—including technology, marketing, creative services and customer support—to source, hire and manage freelance talent on demand. Key features of the Upwork platform include streamlined job posting, proposal evaluation, time-tracking tools, invoicing and secure payment processing, all designed to simplify collaboration between clients and remote workers. The company traces its roots to the merger of two pioneering freelance marketplaces, Elance (founded in 1998) and oDesk (founded in 2003), which combined in 2015 to form a unified entity. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Upwork Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

The Nasdaq Composite (NASDAQINDEX:^IXIC) fell 0.60% to 26,445, the S&P 500 (SNPINDEX:^GSPC) slipped 0.32% to 7,728, and the Dow Jones Industrial Average (DJINDICES:^DJI) lost 0.34% to 53,792 as elevated oil prices again weighed on stocks. Gold prices rose 0.18% to $4,368.79 as of U.S. market close, and the 10-Year Treasury yield fell 0.02% to 4.70%. Energy and healthcare stocks led the sector gainers; real estate and technology stocks finished in the red. Nvidia shares gained in early trading before finishing down 0.02% as investors weighed its $500 billion financing initiative for artificial intelligence (AI) infrastructure. Entravision Communications Corp shares plummeted more than 20%, and Upwork tumbled 15%, after both firms issued disappointing earnings. Fermi soared following an announcement that TensorWave would lease its Project Matador facility — its first such deal for the AI and data center campus. Geopolitical tensions again drove markets today as mixed messages about an agreement to reopen the Strait of Hormuz weighed on stocks. WTI crude oil edged up slightly to $83.39 a barrel, and a report from the U.S. Energy Information Administration predicted that supply disruptions would not return to normal before 2027. Key Consumer Price Index data is due tomorrow, and Wall Street was in wait-and-see mode. If inflation seems to be slowing, major indexes may rally further. On the other hand, if inflation comes in higher than expected, it may reduce risk appetite, as the Federal Reserve is more likely to raise rates. The ongoing uncertainty in the Middle East is closely connected to oil prices, which impact inflation. As such, until the U.S. and Iran reach a firm agreement, investors can expect further volatility. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. Emma Newbery has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Upwork. The Motley Fool has a disclosure policy. Stock Market Today, Aug. 11: Markets Slip as Oil Prices Rise, Upwork Tumbles on Mixed Earnings was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue: $191.7 million in Q2 2026, at the high end of guidance. Adjusted EBITDA: $64.1 million, exceeding the high end of guidance, with a margin of 33.4%. Gross Margin (Non-GAAP): 77%, near record levels. GSV: $966 million in Q2. Active Clients: 763,000 in Q2. GSV per Active Client: Record $5,230, up 5% year over year. Take Rate: 19.8%. Business Plus GSV: Grew 174% year over year. AI Strategy and Consulting Category: Grew 51% year over year. AI-Related Jobs GSV: Grew 22% year over year, reaching an approximate annualized $330 million run rate. Enterprise GSV per Account: Up 7% year over year. Employer of Record (EOR) GSV: Grew 29% year over year. Free Cash Flow: $35.9 million in Q2, including one-time restructuring payments. Full-Year 2026 Revenue Guidance: $730 million to $750 million. Full-Year 2026 Adjusted EBITDA Guidance: Approximately $225 million to $235 million. Full-Year 2026 Non-GAAP Diluted EPS Guidance: $1.38 to $1.43. Q3 2026 Revenue Guidance: $176 million to $184 million. Q3 2026 Adjusted EBITDA Guidance: $50 million to $54 million. Q3 2026 Non-GAAP Diluted EPS Guidance: $0.31 to $0.33. Warning! GuruFocus has detected 6 Warning Signs with BW. Is UPWK fairly valued? Test your thesis with our free DCF calculator. Release Date: August 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Upwork Inc (NASDAQ:UPWK) delivered Q2 revenue of $191.7 million at the high end of guidance and adjusted EBITDA of $64.1 million, exceeding the high end of guidance, driven by disciplined cost management. Business Plus GSV grew 174% year-over-year, and GSV per active client reached a record $5,230, up 5% year-over-year, marking the eighth consecutive quarter of sequential growth. AI-related GSV grew 22% year-over-year to an annualized run rate of approximately $330 million, with AI strategy and consulting category up 51% year-over-year. Enterprise GSV per account grew 7% year-over-year, the highest level in over three years, and EOR solutions GSV grew 29% year-over-year, with Lifted on track for approximately 25% GSV growth in 2026. The launch of the Upwork MCP server enables agentic interactions and integration with AI tools like ChatGPT and Claude, positioning the company to benefit from AI-driven demand and new acquisition channels. Cost per new contract start improved 22% quarter-over-quarter, and the company plans to increase paid acquisition investments by $5 million to $10 million in the back half of the year. Non-GAAP gross margin remained near record levels at 77%, and the company closed a new $150 million revolving credit facility to support capital allocation and share repurchases. Upwork Inc (NASDAQ:UPWK) faces persistent near-term AI and macro headwinds, with an acceleration in AI-related automation impacting demand for low-complexity work. Google SEO changes have dampened new customer acquisition, with accelerated negative impact in Q2 and expectations of further deterioration in Q3 and Q4. Active client count declined to 763,000, pressured by AI automation, search trends, labor market conditions, and the company's strategy to focus on client value over volume. Full-year 2026 revenue guidance was lowered to $730 million to $750 million, reflecting the heightened pace of AI automation and no improvement in the labor market. Q3 2026 revenue guidance of $176 million to $184 million implies a sequential decline, and adjusted EBITDA margin is expected to be lower at 29% midpoint. The pace of AI-related automation has accelerated, leading to a pull-forward in erosion of the business segment most exposed to AI, with no clear timeline for stabilization. Free cash flow in Q2 was impacted by one-time restructuring payments, and the company incurred restructuring charges related to the $70 million OpEx reduction plan. Q: How is Upwork navigating the challenging operating environment, and what is the company's view on visibility and the SEO challenges? Additionally, how might the new MCP server impact the business going forward? A: Hayden Brown (President and CEO) explained that the company is in the midst of a work transition, with an acceleration in AI automation of low-complexity work and further deterioration in Google SEO, particularly in the non-brand channel. However, he emphasized that the strategy is working, citing green shoots like the $330 million GSV run rate in AI categories, eight consecutive quarters of increased GSV per client, and record average hourly work contract length of 100 hours. Regarding the MCP server, Brown stated it opens Upwork to integrating agents on both sides of the marketplace at scale, allowing clients and freelancers to use Upwork within their preferred AI tools. This is a response to agents already attempting to work on the platform, and it positions Upwork uniquely to offer humans at scale on demand, which no other marketplace can do. Q: What is the expected duration of the transition to AI-driven work, and how much of the current active client base will transition to higher-quality AI-driven work versus needing to be rebuilt? A: Brown acknowledged that predicting the exact timing is difficult but framed it as an evolution where Upwork will emerge as a structural beneficiary due to its unique ability to serve the market where it's going. He noted that the company is focused on executing strategies that are working, such as enterprise growth, Business Plus (up 174% year-over-year), and AI tailwinds. On the client base, Brown described it as an expansion, not a replacement, noting that small business customers are shifting their workloads to be more AI-oriented, and there is strong resonance with customers wanting the combination of Business Plus features and AI transformation. He cited the significant growth in AI Strategy Consulting as evidence that customers are using new tools for different types of work. Q: Can you provide more detail on the slowdown in AI category work growth (from 50% to 40% to 22% year-over-year), and what drove the higher-than-expected marketplace take rate? A: Brown clarified that the AI category metric is an undercount of actual AI work on the platform. Customer behavior is changing; they no longer specify AI in job posts because it's now an expected capability. A recent survey showed nearly half of talent reported their most recent jobs were AI-related, while only 16% of job posts explicitly referenced AI. On the take rate, Brown attributed the overperformance to successful monetization efforts, including dynamic pricing on freelancer fees, and stated the outlook is for the take rate to continue stepping up in the back half of the year. Q: What is the latest on Lifted's progress, including customer migrations and pipeline building? A: Brown reported great progress in Q2, with customer migrations starting in June and ramping up due to positive feedback. The pipeline remains healthy, with customers advancing through the funnel. He highlighted a recent win of a multimillion-dollar RFP with a large global company for a staff augmentation contract, which would not have been possible before Lifted. The EOR solutions, enabled by Ascen, grew 29% year-over-year and are improving gross margins. The company remains on track for approximately 25% GSV growth for Lifted in 2026. Q: Has the impact from Google SEO changes stabilized, or is it still ongoing? A: Brown stated that the impacts accelerated in Q2 and the company's outlook assumes they will continue to worsen through Q3 and Q4. He noted that while there is volatility in the industry, they have not yet seen stabilization, and any stabilization would be better than the current guidance, which anticipates further deceleration. Q: What is the monthly cadence of when things started to weaken, and has the thinking changed on the portion of GSV susceptible to AI? A: Brown explained that at the time of the last earnings call, some trends had stabilized, but over the past few months, they have seen an acceleration in the erosion of the part of the business previously identified as more exposed to AI automation. He characterized this as a pull-forward in that activity versus prior expectations, rather than a change in the overall assessment of susceptibility. Q: How is AI impacting freelancer work in the enterprise segment, and how does Lifted help insulate the business? A: Brown explained that Lifted was built to tap into the full $650 billion enterprise market, not just the 10% historically spent on freelancers. By serving customers across all work types, the business becomes more insulated from AI-related risk. If enterprises change their workloads and bring AI to different parts of their business, Upwork can bring AI talent to bear and help them lean into those strategies, while also being protected from any single part of the business being automated at a faster rate. Q: What are the near-term customer acquisition channels being leaned into, and how was the $5 million to $10 million incremental marketing spend determined? A: Brown identified international SEM as a strong area with good returns, along with other channels like Meta, Reddit, podcasts, and connected TV. The incremental spend was determined through extensive testing in the first half of the year, arriving at an optimal range based on performance and degradation curves in different channels. The company is confident in deploying capital efficiently and expects to see benefits even in Q4 of this year. Q: How is Upwork managing monetization levers like Connects and dynamic pricing in the current environment? A: Brown acknowledged that the marketplace has become more competitive for jobs, which has both positive and negative factors. The company balances how much it charges on the talent side for job access while focusing on using these levers to drive match quality and fill rate. In places where the marketplace is more congested with talent, there is an ability to adjust pricing beneficially for both take rate and matching quality. The company will continue pulling these levers in the back half of the year within its guardrails around match quality. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was characterized by disciplined cost management and high-margin revenue contributions from ads and monetization levers, offsetting a challenging labor market and AI-related headwinds. Management attributed the record GSV per active client of $5,230 to a deliberate strategy of prioritizing customer quality and project complexity over sheer volume. The platform is experiencing a structural shift where low-complexity, highly automatable work is burning off, while high-value AI strategy and consulting work grew 51% year-over-year. Google SEO changes significantly dampened new customer acquisition, particularly in non-brand channels, as fewer searches now result in external business referrals. Management noted that AI is becoming a de facto requirement for most work, with nearly half of talent reporting recent jobs were AI-related despite only 16% of posts explicitly stating it. The acquisition of Ascen has allowed Upwork to move its U.S. and Canadian employment infrastructure to wholly-owned entities, accelerating the sales funnel and improving gross margins. Strategic positioning is shifting toward 'agentic interactions,' allowing AI agents to hire and collaborate with human talent directly through the new Upwork MCP server. Full-year 2026 guidance assumes a heightened pace of AI-related automation and no near-term improvements in the broader labor market. The company expects to realize approximately $40 million in savings in fiscal year 2026 from the $70 million annualized OpEx reduction initiated in May. Management plans to increase paid acquisition investments by $5 million to $10 million in the second half of the year to counter SEO headwinds and scale emerging channels like Meta and Reddit. Lifted is projected to achieve approximately 25% year-over-year GSV growth in 2026 as customer migrations to the new platform ramp up. Take rate is expected to continue stepping up through the remainder of the year, driven by dynamic pricing and monetization levers like Connects. Restructuring charges in Q2 impacted GAAP metrics and free cash flow, though the underlying marketplace model remains capital-light. A new $150 million revolving credit facility was secured to repay 2026 convertible notes and support opportunistic M&A and share repurchases. The company identified an acceleration in the erosion of work categories most exposed to AI automation compared to previous internal expectations. SEO rankings have improved, but the overall channel size has shrunk due to fundamental changes in how Google handles search referrals. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management declined to provide a specific timeline but emphasized that Upwork is emerging as a structural beneficiary by displacing legacy solutions. The transition is viewed as an evolution where projects are becoming larger and hourly contract lengths are hitting record highs. The MCP server allows Upwork to be embedded into any AI tool, enabling agents to post jobs and freelancers to manage projects without leaving their preferred AI environments. This initiative responds to observed trends of AI agents already attempting to interact with the marketplace on behalf of clients. Take rate expansion is being driven by dynamic pricing on freelancer fees and increased competition for jobs within the marketplace. Management uses these pricing levers as a tool to manage match quality and fill rates in a congested talent environment. Lifted expands Upwork's addressable market to the full $650 billion enterprise contingent labor spend, rather than just the 10% historically allocated to freelancers. This diversification is intended to insulate the business from AI-related risks in any single work category.

GSV per Active Client Reaches Record $5,230 Marking Eighth Consecutive Quarter of Sequential Growth Second-quarter revenue of $191.7 million and GAAP net income of $25.4 million Second-quarter adjusted EBITDA of $64.1 million or 33% adjusted EBITDA margin PALO ALTO, Calif., Aug. 10, 2026 (GLOBE NEWSWIRE) -- Upwork Inc. (Nasdaq: UPWK), the world’s human and AI-powered work marketplace, today announced its financial results for the second quarter of 2026. "In the second quarter, Upwork demonstrated solid execution against our strategic plan in a challenging operating environment," said Hayden Brown, president and CEO of Upwork Inc. “While lower-complexity work continues to shift toward automation, we are increasingly seeing what is emerging in its place: growing demand for high-value AI talent, more complex projects, and new categories of work across SMB and Enterprise. We are on track with our enterprise strategy, staying disciplined in how we execute, and continuing to build the AI capabilities that will make Upwork essential infrastructure as work becomes increasingly human-and-agent driven.” Second Quarter 2026 Financial Highlights GSV(1) was $966.4 million, decreased 4% year-over-year Revenue decreased 2% year-over-year to $191.7 million Active clients(1) of 763,000 GSV per active client(1) of $5,230 increased 5% year-over-year GAAP Net income was $25.4 million, a decrease of 22% year-over-year GAAP Diluted earnings per share was $0.20, compared to diluted earnings per share of $0.24 in the second quarter of 2025 Adjusted EBITDA(2) was $64.1 million, up 12% year-over-year Cash provided by operating activities was $46.9 million, compared to cash provided by operating activities of $72.5 million in the second quarter of 2025 Free cash flow(2) was $35.9 million, compared to free cash flow of $65.6 million in the second quarter of 2025 Share repurchase program returned $109.7 million to shareholders during the six months ended June 30, 2026 with the repurchase of 8.3 million shares. As of June 30, 2026, the Company had $254.3 million in remaining authorization in its repurchase program Second Quarter 2026 and Recent Operational Highlights Building the World’s Human and AI-Powered Work Marketplace Following the April launch of Upwork’s app for ChatGPT, launched the Upwork Claude Connector, a new app inside Anthropic’s Claude that embeds Upwork’s marketplace at the moment businesses use AI to plan and scope work, connecting them with the experts they need as a project takes shape. Launched Upwork’s Model Context Protocol (MCP) server, allowing clients and freelancers to direct AI agents to find talent, source opportunities, and help manage work on Upwork's marketplace from within the tools and workflows they already use. Growing AI Work on the Marketplace GSV from AI-related work increased more than 22% year-over-year in Q2 2026. GSV from AI Strategy & Consulting, an AI-related work sub-category, grew over 50% year-over-year in Q2 2026. Winning Bigger with SMB Q2 2026 GSV from Upwork Business Plus offering for SMB increased 24% quarter-over-quarter and 174% year-over-year. Q2 2026 Business Plus active clients grew 16% quarter-over-quarter and 219% year-over-year. 38% of active clients on Business Plus in Q2 2026 had their first Upwork spend on Business Plus. Unlocking the Enterprise Opportunity Lifted migrated its first wave of enterprise customers onto its new platform at the end of June and expanded the go-to-market team, including hiring a new head of sales. The Lifted value proposition is resonating: Q2 2026 GSV from our EOR offering within Enterprise Solutions, that we bolstered in 2025 with Lifted’s acquisition of Ascen, increased 29% year-over-year. Financial Guidance & Outlook Upwork’s guidance for revenue, adjusted EBITDA, diluted weighted-average shares outstanding, and non-GAAP diluted EPS for the third quarter of 2026 is: Revenue: $176 million to $184 million Adjusted EBITDA: $50 million to $54 million Diluted weighted-average shares outstanding: 130 million to 133 million Non-GAAP diluted EPS: $0.31 to $0.33 Upwork’s guidance for revenue, adjusted EBITDA, diluted weighted-average shares outstanding, and non-GAAP diluted EPS for full year 2026 is: Revenue: $730 million to $750 million Adjusted EBITDA: $225 million to $235 million Diluted weighted-average shares outstanding: 132 million to 135 million Non-GAAP diluted EPS: $1.38 to $1.43 UPWORK INC.Key Financial and Operational Metrics(In thousands, except percentages and basis points)(Unaudited) (1) See Key Definitions in our second quarter 2026 earnings presentation. (2) An explanation of non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures can be found in the “Non-GAAP Financial Measures" section and the subsequent tables at the end of this press release. Second Quarter 2026 Financial Results Conference Call and Webcast Upwork will host a conference call today at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the company’s second quarter 2026 financial results. An audio webcast archive will be available following the live event for approximately one year at investors.upwork.com. Please visit the Upwork Investor Relations website at investors.upwork.com/financial-information/quarterly-results to view Upwork’s second quarter 2026 earnings presentation. Disclosure InformationWe use our Investor Relations website (investors.upwork.com), our Blog (upwork.com/blog), our X handle (twitter.com/Upwork), Hayden Brown’s X handle (twitter.com/hydnbrwn) and LinkedIn profile (linkedin.com/in/haydenlbrown), and Erica Gessert’s LinkedIn profile (linkedin.com/in/erica-gessert) as means of disseminating or providing notification of, among other things, news or announcements regarding our business or financial performance, investor events, press releases, and earnings releases, and as means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD. About UpworkUpwork Inc.’s (Nasdaq: UPWK) family of companies connects businesses with global, AI-enabled talent across every contingent worker classification. This portfolio includes the Upwork Marketplace, which connects businesses with on-demand access to highly skilled talent across the globe, and Lifted, which provides a purpose-built solution for enterprise organizations to source, contract, manage, and pay talent across the full spectrum of contingent work. From Fortune 100 enterprises to entrepreneurs, businesses rely on Upwork Inc. to find and hire expert talent, leverage AI-powered work solutions, and drive business transformation. With access to professionals spanning more than 10,000 skills across AI & machine learning, software development, sales & marketing, customer support, finance & accounting, and more, the Upwork family of companies enables businesses of all sizes to scale, innovate, and transform their workforces for the age of AI and beyond. Since its founding, Upwork Inc. has facilitated more than $30 billion in total transactions and services as it fulfills its purpose to create opportunity in every era of work. Learn more about the Upwork Marketplace at upwork.com and follow on LinkedIn, Facebook, Instagram, TikTok, and X; and learn more about Lifted at go-lifted.com and follow on LinkedIn. Contact:Investor [email protected] Safe Harbor: This press release of Upwork Inc. (together with its wholly owned subsidiaries, the “Company,” “we,” “us,” or “our”) contains “forward-looking” statements within the meaning of the federal securities laws. Forward-looking statements include all statements other than statements of historical fact, including any statements regarding our future operating results and financial position, including expected financial results for the third quarter and full year 2026, information or predictions concerning the future of our business or strategy, future market opportunity and market size, future products, features, or functionality, anticipated events and trends, potential growth or growth prospects, competitive position, technological and market trends, industry environment, the economy, our plans with respect to share repurchases, the expected impact and timing of strategic or cost-saving initiatives, and other future conditions. We have based these forward-looking statements largely on our current expectations and projections as of the date hereof about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short- and long-term business operations and objectives, and financial needs. As such, they are subject to inherent uncertainties, known and unknown risks, and changes in circumstances that are difficult to predict and in many cases outside our control, and you should not place undue reliance on such forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. We make no representation that the plans, intentions, expectations, or results disclosed in these forward-looking statements will be achieved or that future events and circumstances will occur, and actual results or events may differ materially and adversely from our expectations. The forward-looking statements are made as of the date hereof, and we do not undertake, and expressly disclaim, any obligation to update or revise any forward-looking statements, conform these statements to actual results, or make changes in our expectations, except as required by law. Additional information regarding the risks and uncertainties that could cause actual results to differ materially from our expectations is included under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the three months ended March 31, 2026, filed with the SEC on May 7, 2026, and in our other SEC filings, which are available on our Investor Relations website at investors.upwork.com and on the SEC’s website at www.sec.gov. Additional information will also be set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the three months ended June 30, 2026, when filed. Upwork, Lifted, UmaTM, and other registered or common law trade names, trademarks, or service marks of Upwork appearing in this press release are the property of Upwork. This press release may also contain additional trade names, trademarks, and service marks of other companies, including names and brands. All third-party trademarks are property of their respective owners, and any references to third-party trademarks are for identification purposes only and shall be considered nominative fair use under trademark law. The following table reconciles cash, cash equivalents, and restricted cash as reported in the condensed consolidated balance sheets to the total of the same amounts shown in the condensed consolidated statements of cash flows as of the following (in thousands): Non-GAAP Financial MeasuresTo supplement our condensed consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), we present certain non-GAAP financial measures in this press release, including adjusted EBITDA, adjusted EBITDA margin, free cash flow, and non-GAAP diluted EPS. We define adjusted EBITDA as net income adjusted for stock-based compensation expense; depreciation and amortization; other income (expense), net, which includes interest expense; income tax benefit (provision); and, if applicable, certain other gains, losses, benefits, or charges that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. Free cash flow is defined as cash provided by operations less purchases of property, plant and equipment and cash outflows from internally developed software. We use non-GAAP financial measures in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. These non-GAAP financial measures provide consistency and comparability with past financial performance, facilitate period-to-period comparisons of our core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. In addition, adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to certain items that can vary substantially from company to company, and free cash flow allows investors to evaluate the cash generated from our underlying operations across periods. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as analytical tools, and investors should not consider them in isolation or as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. In particular, (1) adjusted EBITDA and certain of our other non-GAAP financial measures exclude stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy, (2) although depreciation and amortization expense are non-cash charges, the assets subject to depreciation and amortization may have to be replaced in the future, and adjusted EBITDA and certain of our other non-GAAP financial measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, and (3) adjusted EBITDA does not reflect: (a) changes in, or cash requirements for, our working capital needs; (b) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; (c) tax payments that may represent a reduction in cash available to us; or (d) material acquisition-related deal costs. In addition, the utility of free cash flow as a measure of our liquidity is limited as it does not represent the total increase or decrease in our cash balance for a given period. Moreover, the non-GAAP financial measures we use may be different from non-GAAP financial measures used by other companies, including companies in our industry, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from the non-GAAP financial measures that we present. Reconciliations of the non-GAAP financial measures presented in this press release to their most directly comparable GAAP financial measures have been provided below, and investors are encouraged to review the reconciliations and not rely on any single financial measure to evaluate our business. We have not reconciled our adjusted EBITDA guidance to GAAP net income or non-GAAP diluted EPS guidance to GAAP diluted EPS because certain items that impact GAAP net income and GAAP diluted EPS are uncertain or out of our control and cannot be reasonably predicted. In particular, stock-based compensation expense is impacted by the future fair market value of our common stock and other factors, all of which are difficult to predict, subject to frequent change, or not within our control. The actual amount of these expenses during the third quarter of 2026 and fiscal year 2026 will have a significant impact on our future GAAP financial results. Accordingly, a reconciliation of adjusted EBITDA guidance to GAAP net income and non-GAAP diluted EPS guidance to GAAP diluted EPS is not available without unreasonable effort. UPWORK INC.RECONCILIATION OF GAAP TO NON-GAAP RESULTS(In thousands, except for percentages and share data)(Unaudited) (1) During the three and six months ended June 30, 2026, we incurred $13.8 million in costs related to the execution of the restructuring announced in May 2026. Of this amount, $12.8 million is included in Other, while the remaining amount is allocated between stock-based compensation and Other income, net. (2) For each of the three months ended June 30, 2026 and 2025, we incurred $0.2 million of expense related to the warrant to purchase 500,000 shares of our common stock at an exercise price of $0.01 per share issued to the Tides Foundation in 2018, and for each of the six months ended June 30, 2026 and 2025, we incurred $0.4 million of such expense. (3) During the three and six months ended June 30,2025, we incurred acquisition-related costs of $2.5 million in connection with our business combinations. These costs primarily consist of legal, accounting, and other professional fees, and are recorded in general and administrative expenses in the condensed consolidated statements of operations. UPWORK INC.RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW(In thousands)(Unaudited)