Upwork (UPWK) investor relations material

Executive summary

• Q1 2026 revenue grew 1% year-over-year to $195.5 million, with strong profitability and a $10 million adjusted EBITDA beat, despite market volatility and macroeconomic headwinds.

• AI adoption accelerated, with AI-related work GSV up over 40% year-over-year and now representing 8% of marketplace GSV; AI Integration & Automation sub-category grew over 50%.

• Strategic focus on larger, complex work, SMB acceleration, and enterprise clients is yielding results, with Business Plus GSV up 34% quarter-over-quarter and 39% of active clients net new.

• Announced a major restructuring plan in May 2026, including a 24% workforce reduction and $16–$23 million in pre-tax charges, to drive efficiency and profitable growth.

• Positioned as a human and AI-powered work marketplace, addressing a $1.3 trillion market opportunity by 2028 across SMB, enterprise, and agentic AI segments.

Financial highlights

• Q1 2026 revenue reached $195.5 million, up 1% year-over-year; GSV was $987.1 million, flat year-over-year.

• Adjusted EBITDA was $57.4 million (29.4% margin), exceeding guidance by $10 million; net income was $31.5 million, down from $37.7 million in Q1 2025.

• Marketplace take rate rose to 19.4%–19.8%, up year-over-year.

• Gross margin declined to 77%–77.2% due to higher amortization of internal-use software.

• Free cash flow was $12.9 million, down 58% year-over-year.

Outlook and guidance

• Full-year 2026 revenue guidance: $760–$790 million; adjusted EBITDA: $250–$260 million (33% margin), with a target of 35% margin in the back half of the year.

• Q2 2026 revenue expected at $187–$193 million; adjusted EBITDA at $56–$59 million; non-GAAP diluted EPS: $0.35–$0.37.

• Non-GAAP diluted EPS for 2026 guided to $1.50–$1.55.

• Gross margin expected to remain below prior year levels in 2026 due to increased amortization costs.

• Human-supervised agent product launch planned for 2H 2026 to further support SMB AI adoption.