Upwork Inc. Q3 FY2025 earnings call

AI-Native Platform: Continued investment in transforming the Upwork marketplace into an AI-native platform. Product enhancements to Uma, such as sourcing and interviewing talent, drafting proposals, and project management tasks, are eliminating manual work. Uma Recruiter doubled talent acceptance rates, and Uma proposal writing saw a 15% increase in generated proposals. ### AI Category Growth: Significant contributors to GSV and revenue growth included targeted AI customer experience and product innovations, with AI category growth on the marketplace. ### Business Plus Adoption: Robust adoption of Upwork Business Plus, with active clients on Business Plus growing 36% quarter-over-quarter. ### Enterprise Expansion: Launch of new subsidiary Lifted, which is expected to be meaningfully accretive to GSV, revenue, and adjusted EBITDA in 2027. Lifted is progressing well, with strong top-of-funnel interest and invitations to large RFPs.

In Q3 2025, Upwork achieved significant financial results. Revenue reached $201.7 million, a first-time quarterly revenue exceeding $200 million. GAAP net income was $29.3 million, and adjusted EBITDA was $59.6 million with an adjusted EBITDA margin of 29.6%. GSV grew 2% year-over-year. Marketplace revenue grew 4% year-over-year, and enterprise revenue increased 3% year-over-year. The marketplace take rate was 18.9% in Q3, and gross margin was 77.3%.

Q4 2025: Expected revenue range of $193 million to $198 million, adjusted EBITDA range of $49 million to $52 million (25%-26% margin). ### Full-Year 2025: Increased revenue guide to $782 million to $787 million, adjusted EBITDA guide to $222 million to $225 million (28% margin at midpoint), and non-GAAP diluted EPS between $1.35 and $1.37 (30% increase at midpoint from 2024).

Integration Risks: Potential challenges in integrating acquired enterprise assets, including margin dilution in the short term as costs are absorbed and integrated. ### Seasonality Risks: Q4 typically has seasonal slowdowns due to client project wrapping up before the holiday season and managed services side slowdowns. ### Market Risks: Risks related to forward-looking statements, including potential differences between actual results and expectations, as outlined in SEC filings and earnings press release.

Q: Drivers of hours per contract and difference in AI-related work impact.

A: Erica Gessert said hours per contract driven by quality focus, Business Plus, and AI work; AI work is a growth driver, not a headwind.

Q: Competing in bids for Lifted business and key criteria.

A: Hayden Brown said Lifted is now considered for full suite of contingent work, competing with staffing companies, and differentiating with full-stack, digital, modular solution.

Q: Future GSV growth drivers and Q4 guidance.

A: Erica Gessert said AI category acceleration, Business Plus growth, and lifted strategy are drivers; Q4 has seasonality with lighter GSV due to holiday and legacy enterprise solution absence.

Q: Free cash flow sustainability and stock buyback strategy.

A: Erica Gessert said free cash flow conversion is strong, expecting sustainable generation; stock buyback will continue as part of capital allocation to return capital to shareholders.

Q: Variable freelance fee testing and Uma Proposal writer.

A: Erica Gessert said variable fees are experimented with, expecting more categories in 2026; Uma Proposal writer is accelerating the flywheel, contributing to incremental GSV.

Q: Sales and marketing leverage, ChatGPT as customer acquisition channel.

A: Erica Gessert said will moderate margin expansion for organic growth; Hayden Brown said ChatGPT is a small but promising channel with high conversion and intent.