UPWORK, INC (UPWK): Results of Operations and Financial Condition
UPWORK, INC (UPWK) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Upwork Reports Second Quarter 2026 Financial Results 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 $6
How this was made
The 30-second read
Why it matters
Traders can update models immediately using the provided guidance ranges (revenue, adjusted EBITDA, non-GAAP EPS) and reconcile them against Q2 cash flow weakness and GAAP earnings decline.
Market read
This is a primary earnings-and-guidance disclosure with explicit numeric ranges, making it directly tradable for near-term expectation setting.
What to watch
GSV per active client rose 5% YoY while active clients fell 4%, implying mix and monetization improvements may not fully translate into broader user growth.
GSV per Active Client Reaches Record $5,230 Marking Eighth Consecutive Quarter of Sequential Growth
Revenue decreased 2% year-over-year and GSV decreased 4% year-over-year, while adjusted EBITDA increased 12% year-over-year and adjusted EBITDA margin was 33%. GAAP net income, operating cash flow, and free cash flow declined year-over-year.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $191.7 million | – | decreased 2% year-over-year |
| GSVother | $966,439 (In thousands) | – | (3.6) % |
| GSV per active clientother | $5,230 | – | increased 5% year-over-year |
| Active clientsother | 763,000 | – | (4) % |
| Gross profitGAAP | $146,372 (In thousands) | – | (3) % |
| Gross profit marginGAAP | 76 % | – | -135 bps |
| Operating expensesGAAP | $118,235 (In thousands) | – | (1) % |
| Net incomeGAAP | $25.4 million | – | a decrease of 22% year-over-year |
| Profit marginGAAP | 13 % | – | -353 bps |
| Diluted earnings per shareGAAP | $0.20 | – | – |
| Adjusted EBITDAnon-GAAP | $64.1 million | – | up 12% year-over-year |
| Adjusted EBITDA marginnon-GAAP | 33 % | – | 415 bps |
| Cash provided by operating activitiesother | $46.9 million | – | (35) % |
| Free cash flownon-GAAP | $35.9 million | – | (45) % |
| Six months ended June 30, 2026 GSVother | $1,952,461 (In thousands) | – | (1.9) % |
| Six months ended June 30, 2026 gross profitGAAP | $297,214 (In thousands) | – | (2) % |
| Six months ended June 30, 2026 gross profit marginGAAP | 77 % | – | -124 bps |
| Six months ended June 30, 2026 operating expensesGAAP | $236,359 (In thousands) | – | 2 % |
| Six months ended June 30, 2026 net incomeGAAP | $56,865 (In thousands) | – | (19) % |
| Six months ended June 30, 2026 adjusted EBITDAnon-GAAP | $121,479 (In thousands) | – | 7 % |
| Six months ended June 30, 2026 adjusted EBITDA marginnon-GAAP | 31 % | – | 221 bps |
| Six months ended June 30, 2026 cash provided by operating activitiesother | $69,893 (In thousands) | – | (36) % |
| Six months ended June 30, 2026 free cash flownon-GAAP | $48,843 (In thousands) | – | (49) % |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Marketplace revenueRevenue decreased 2% year-over-year. | $166,858 (In thousands) | – | (2) % |
| Enterprise revenueLifted 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. | $24,802 (In thousands) | – | 2 % |
Third quarter of 2026 and full year 2026 outlook
- RevenueThird quarter of 2026: $176 million to $184 million; full year 2026: $730 million to $750 million
- NoteThird quarter of 2026 adjusted EBITDA: $50 million to $54 million
- NoteThird quarter of 2026 diluted weighted-average shares outstanding: 130 million to 133 million
- NoteThird quarter of 2026 non-GAAP diluted EPS: $0.31 to $0.33
- NoteFull year 2026 adjusted EBITDA: $225 million to $235 million
- NoteFull year 2026 diluted weighted-average shares outstanding: 132 million to 135 million
- NoteFull year 2026 non-GAAP diluted EPS: $1.38 to $1.43
Capital returns
- 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.
What drove it
- GSV per active client of $5,230 increased 5% year-over-year and marked the eighth consecutive quarter of sequential growth.
- GSV from AI-related work increased more than 22% year-over-year in Q2 2026.
- GSV from AI Strategy & Consulting grew over 50% year-over-year in Q2 2026.
- Q2 2026 GSV from the 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.
- Q2 2026 GSV from the EOR offering within Enterprise Solutions increased 29% year-over-year.
Concerns
- GSV decreased 4% year-over-year to $966.4 million.
- Revenue decreased 2% year-over-year to $191.7 million.
- Active clients were 763,000, compared with 796 (In thousands) as of June 30, 2025.
- Gross profit margin was 76 %, compared with 78 %, a change of -135 bps.
- GAAP net income was $25.4 million, a decrease of 22% year-over-year.
- Cash provided by operating activities and free cash flow decreased 35% and 45%, respectively.
What to watch
- Execution against third-quarter revenue guidance of $176 million to $184 million.
- Execution against third-quarter adjusted EBITDA guidance of $50 million to $54 million.
- Whether AI-related work, AI Strategy & Consulting, and Business Plus continue their reported growth.
- Enterprise customer migration to the new Lifted platform and the expanded enterprise go-to-market team.
- Trends in active clients, GSV, GSV per active client, gross profit margin, operating cash flow, and free cash flow.
Balance sheet and cash flow
- 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 was $35.9 million, compared to free cash flow of $65.6 million in the second quarter of 2025.
- Six months ended June 30, 2026 cash provided by operating activities was $69,893 (In thousands), compared to $109,479 (In thousands) in 2025.
- Six months ended June 30, 2026 free cash flow was $48,843 (In thousands), compared to $96,416 (In thousands) in 2025.
Analysis
Upwork reported second-quarter revenue of $191.7 million, down 2% year-over-year, alongside GSV of $966.4 million, down 4% year-over-year. Active clients were 763,000, while GSV per active client reached a record $5,230 and increased 5% year-over-year. The release frames the transaction trend as a mix shift away from lower-complexity work and toward higher-value AI talent, more complex projects, and new SMB and enterprise work categories.
Marketplace revenue was $166,858 (In thousands), down 2%, while enterprise revenue was $24,802 (In thousands), up 2%. AI-related work GSV increased more than 22% year-over-year, and AI Strategy & Consulting grew over 50% year-over-year. Business Plus showed reported growth in GSV and active clients, while Enterprise Solutions EOR GSV increased 29% year-over-year. Management also cited the end-of-June migration of the first wave of enterprise customers to the new Lifted platform and an expanded go-to-market team.
Profitability showed divergent GAAP and adjusted measures. GAAP net income was $25.4 million, down 22% year-over-year, and gross profit margin was 76 %, down -135 bps. Adjusted EBITDA was $64.1 million, up 12% year-over-year, with adjusted EBITDA margin of 33 %, up 415 bps. Operating expenses were $118,235 (In thousands), down 1%, but cash provided by operating activities was $46.9 million and free cash flow was $35.9 million, down 35% and 45%, respectively.
Capital allocation included $109.7 million returned through repurchases during the six months ended June 30, 2026, covering 8.3 million shares, with $254.3 million remaining authorization. Third-quarter guidance calls for 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. Full-year guidance calls for revenue of $730 million to $750 million and adjusted EBITDA of $225 million to $235 million. Key points for the next report are execution against these targets, active-client trends, AI and Business Plus growth, enterprise migration progress, and cash-flow performance.
Management, verbatim
In the second quarter, Upwork demonstrated solid execution against our strategic plan in a challenging operating environment.
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.
Hayden Brown, president and CEO of Upwork Inc.
Not in the filing
stated, not guessed- GAAP operating income
- GAAP diluted weighted-average shares outstanding for the second quarter of 2026
- Non-GAAP net income for the second quarter of 2026
- Actual non-GAAP diluted EPS for the second quarter of 2026
- Total revenue prior-year dollar amount
- Total revenue prior-quarter amount and quarter-over-quarter change
- GSV per active client prior-year dollar amount
- Prior-quarter amounts and quarter-over-quarter changes for GSV, revenue, gross profit, gross profit margin, operating expenses, net income, profit margin, adjusted EBITDA, adjusted EBITDA margin, operating cash flow, and free cash flow
- Cash balance
- Debt balance
- Dividend information
- Third-quarter and full-year gross margin guidance
- Third-quarter and full-year operating-expense guidance
- Third-quarter and full-year tax-rate guidance
- Prior-quarter outlook for comparison
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The 8-K (Item 2.02) contains Upwork’s Q2 2026 financial results and management’s outlook, including guidance for Q3 and full-year 2026.
Ticker impact
Upwork reported Q2 2026 results and issued Q3 2026 and full-year 2026 revenue and adjusted EBITDA guidance in an 8-K.
Likely choppy reaction risk, with focus on whether Q3 revenue and adjusted EBITDA ranges offset the YoY decline in GAAP earnings and free cash flow.
The filing includes concrete Q2 prints (revenue, adjusted EBITDA, FCF) plus explicit Q3 and FY 2026 guidance ranges, which are direct inputs to earnings models and near-term expectations.
Market effects
Reinforces demand shift toward higher-value AI talent and more complex work on online marketplaces, supporting the narrative for AI-enabled labor platforms.
Limited, primarily US-listed growth/marketplace sentiment.
Moderate, as the marketplace serves global contingent work and enterprise hiring workflows.
Counterpoint
Despite adjusted EBITDA growth, the sharp YoY decline in free cash flow suggests cash conversion pressure that could cap upside if it persists.
Key entities
- companyUpwork Inc.
Nasdaq-listed human and AI-powered work marketplace reporting Q2 2026 results and issuing Q3 and FY 2026 guidance.
- executiveHayden Brown
CEO quoted on execution against the strategic plan and demand shift toward high-value AI talent.
