Upwork’s third quarter results were met with a significant positive market reaction, reflecting management’s success in reigniting growth after several challenging quarters. Leadership credited new AI-powered platform features and increased adoption of Upwork Business Plus by small and midsize businesses as key contributors. CEO Hayden Brown described the period as a turning point, noting that “the payoffs of our strategy are now visible.” The company also saw strong traction from AI-related projects and a return to growth in gross services volume, which had previously been pressured by macroeconomic headwinds.
Is now the time to buy UPWK? Find out in our full research report (it’s free for active Edge members).
Upwork (UPWK) Q3 CY2025 Highlights:
- Revenue: $201.7 million vs analyst estimates of $193.4 million (4.1% year-on-year growth, 4.3% beat)
- Adjusted EPS: $0.36 vs analyst estimates of $0.29 (25.9% beat)
- Adjusted EBITDA: $59.63 million vs analyst estimates of $50.12 million (29.6% margin, 19% beat)
- Revenue Guidance for Q4 CY2025 is $195.5 million at the midpoint, above analyst estimates of $192.2 million
- Management raised its full-year Adjusted EPS guidance to $1.36 at the midpoint, a 17.2% increase
- EBITDA guidance for the full year is $223.5 million at the midpoint, above analyst estimates of $212.7 million
- Operating Margin: 14.8%, up from 10.7% in the same quarter last year
- Gross Services Volume: 794,000, down 61,000 year on year
- Market Capitalization: $2.28 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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.
Our Top 5 Analyst Questions From Upwork’s Q3 Earnings Call
- Eric Sheridan (Goldman Sachs): Asked about early learnings from integrating enterprise acquisitions and the timeline for Lifted’s revenue impact. CEO Hayden Brown emphasized strong early demand but noted that large deals will take several quarters to close, with significant growth expected in late 2026 and 2027.
- Sang-Jin Byun (Jefferies): Inquired about drivers behind AI-related GSV acceleration. Brown highlighted platform improvements and new AI features as main contributors, with CFO Erica Gessert adding that inorganic contributions from acquisitions were modest for the quarter.
- Matthew Condon (Citizens): Sought clarity on freelancer demand trends and the sustainability of AI-driven improvements. Brown stated the broader macro environment was stable, attributing GSV growth to internal execution and ongoing expansion of AI workflows.
- Marvin Fong (BTIG): Questioned whether AI efficiency gains might reduce hours per contract. Gessert responded that AI projects are typically more complex and drive higher engagement, while Brown noted that any substitution risk is concentrated in low-value, short-term work.
- Ronald Josey (Citi): Asked about the impact and scaling of dynamic pricing and Uma Proposal writer features. Gessert reported early dynamic pricing results were limited but promising, and Uma’s proposal writing tool is enhancing both client and freelancer engagement.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will closely monitor (1) signs of increased enterprise contract wins and the pace of Lifted’s client onboarding, (2) continued growth in AI-related project adoption and resulting impact on gross services volume, and (3) further expansion of Business Plus among SMB clients. Execution on dynamic pricing and integration of recent acquisitions will also be important indicators of Upwork’s ability to sustain margin gains while investing in growth.
Upwork currently trades at $17.41, up from $15.62 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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