Upwork Q3 Earnings Call Highlights

Key Points

• Upwork exceeded Q3 guidance, reporting $914 million in gross services volume, $186 million in revenue and $63.8 million in adjusted EBITDA. Profitability improved as the marketplace take rate rose to 20.0% and adjusted EBITDA margin reached 34.4%.
• Higher-value and enterprise offerings gained momentum. Business Plus revenue grew 120% year over year, while GSV per active client reached a record $5,418; Upwork also acquired WorkMotion to expand its international direct-employment capabilities.
• AI initiatives are scaling quickly, with AI-skilled talent GSV increasing 55% to $112 million and MCP-driven work growing more than 150% month over month in October. Upwork raised its full-year 2026 adjusted EBITDA outlook to $236 million–$240 million and announced CFO Erica Gessert’s planned January 1 departure, with Peter Sanborn succeeding her.

Upwork NASDAQ: UPWK reported third-quarter results above its guidance range as the freelance-work platform emphasized its shift toward higher-value, more complex work, larger clients and AI-enabled demand channels.

Gross services volume, or GSV, totaled $914 million in the third quarter, while revenue reached $186 million. Adjusted EBITDA was $63.8 million, exceeding the high end of the company’s outlook, President and Chief Executive Officer Hayden Brown said during the company’s earnings call.

“Our platform continued its rotation toward higher value, more complex work, and larger clients,” Brown said. The company’s strategy is centered on enterprise customers, small and medium-sized businesses and AI-related work.

Profitability and monetization

Chief Financial Officer Erica Gessert said Upwork’s marketplace take rate rose 110 basis points year over year to 20.0%, supported by adoption of higher-margin products, advertising and monetization offerings. Revenue from Freelancer Plus subscriptions increased 25% from a year earlier, while the company also cited continued growth in revenue from Connects, its proposal-submission product for freelancers.

Non-GAAP operating expenses were $84 million, or 45% of revenue, compared with 50% of revenue in the prior-year period. Adjusted EBITDA margin was 34.4%.

Free cash flow was $53.9 million during the quarter, representing 84% conversion from adjusted EBITDA. Gessert said the company’s cost-management efforts and monetization initiatives have created stability and flexibility for revenue and margins as the business manages a changing demand environment.

Active clients totaled 717,000 in the quarter, reflecting Upwork’s focus on higher-value customers, according to Gessert. GSV per active client reached a record $5,418, up 8% year over year and marking the ninth consecutive quarter of sequential growth in that measure. Contracts worth $100,000 or more rose 7% year over year, while GSV per contract increased 9% to a record level.

Business Plus and enterprise expansion

Business Plus, Upwork’s offering for larger businesses, generated 120% year-over-year revenue growth and 132% GSV growth in the third quarter. The product represented 8% of total GSV, exceeding the company’s prior 5% target. Brown said 40% of active Business Plus clients made their first Upwork spend through the product.

Brown said customers have responded to Business Plus features that provide access to highly rated talent, team-based hiring tools, consolidated invoicing and Net 30 payment terms. He added that Upwork sees an opportunity to further develop the product for larger businesses and potentially introduce additional tiers over time.

In enterprise, Upwork continued migrating customers from its legacy Upwork Enterprise service to Lifted, its platform for contingent workforce management and direct employment. The company signed three net-new enterprise customers in healthcare, retail and technology during the quarter and said its enterprise pipeline expanded.

The company also announced the acquisition of WorkMotion, a global employer-of-record provider. Brown said the acquisition accelerates Lifted’s ability to offer direct employment solutions internationally, complementing the company’s U.S. and Canadian capabilities following its earlier acquisition of Ascen.

WorkMotion is growing revenue by more than 20% annually, according to management. Upwork expects the acquisition to contribute about $4 million of revenue in the fourth quarter, reflecting only a couple of months of recognition. Inclusive of WorkMotion, the company expects Lifted GSV growth to exceed 30% year over year in 2026.

AI initiatives gain traction

GSV from talent with AI skills on their profiles rose 55% year over year to $112 million in the third quarter. Brown said this metric replaces the company’s previous measure of AI-related GSV, which relied on clients explicitly identifying AI needs in job postings. As AI capabilities become more embedded in work, clients are less likely to describe those needs separately in postings, he said.

Upwork launched its Model Context Protocol, or MCP, server in August, allowing AI agents and users of tools such as Claude and ChatGPT to access the marketplace for tasks such as drafting job posts, searching for talent and submitting proposals. GSV from work started through the MCP server increased more than 150% month over month in October.

The company also announced the public beta of Upwork Now, which connects clients and AI agents with freelancers who are online and available to begin work immediately. Brown said Upwork Now uses the company’s existing economic model, but could help capture fast-turnaround needs and accelerate the start of customer spending.

Gessert said Connects usage through the MCP server reached an annual revenue run rate of more than $3 million during the quarter. Brown said the early usage demonstrates that Upwork’s existing monetization mechanisms can extend into new AI-driven channels.

Outlook and leadership transition

For full-year 2026, Upwork raised its adjusted EBITDA outlook to $236 million to $240 million, representing a 32% margin at the midpoint. The company forecast full-year revenue of $742 million to $750 million and non-GAAP diluted earnings per share of $1.45 to $1.47.

• Fourth-quarter revenue is expected to be $169 million to $177 million.
• Fourth-quarter adjusted EBITDA is projected at $51 million to $55 million.
• Fourth-quarter non-GAAP diluted EPS is expected to be $0.30 to $0.32.

Management said it expects marketplace take rate to continue advancing in the fourth quarter, though the growing contribution of Lifted is expected to lower the company’s overall take rate sequentially. Upwork also expects some adjusted EBITDA margin pressure from WorkMotion integration costs, marketing-spend timing and a greater mix of Lifted revenue.

Looking toward 2027, Gessert said growth rates could remain pressured in the first half by lower-value work leaving the platform and changes in digital search traffic. She said the company expects improving growth rates in the second half as it laps those pressures and benefits from Business Plus, monetization products and Lifted growth.

Upwork also announced that Gessert will step down as CFO on Jan. 1 and remain in an advisory role for several months. Chief Business Officer Peter Sanborn will succeed her as CFO. Brown said Sanborn has helped shape the company’s strategy, corporate development efforts, partnerships and AI product initiatives since joining Upwork in 2024.

About Upwork (NASDAQ:UPWK)

Upwork Inc operates a global work marketplace that connects businesses with independent professionals and agencies. Clients use the platform to find, evaluate, hire and manage talent for projects across areas such as software development, design, marketing, writing, consulting, customer support and administrative services.

The company provides tools for talent discovery, project collaboration, communications, time tracking, contract management and payments. Its offerings serve both individual clients and larger organizations, with features designed to support recurring engagements, contingent-work programs and enterprise talent management.

Upwork was formed in 2015 through the merger of Elance and oDesk, two online freelance-work platforms, and began trading publicly on the Nasdaq stock exchange in 2018.

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