Upwork (UPWK) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $192.7M, up 1% year-over-year, marking a record first quarter with net income more than doubling to $37.7M and adjusted EBITDA of $56.0M, reflecting a 29% margin.

• Profitability and cash generation hit record levels, driven by strong cost discipline, operational efficiencies, and reduced marketing and vendor spend.

• AI investments, including Uma and the Objective AI acquisition, accelerated platform innovation, user engagement, and productivity.

• Business Plus and Enterprise segments fueled growth among larger clients, with Business Plus active clients more than doubling quarter-over-quarter.

• Active clients declined 7% year-over-year, but GSV per active client increased 3% to $4,912.

Financial highlights

• Gross margin reached 78.3%, and adjusted EBITDA margin was a record 29.1% in Q1 2025.

• GAAP net income for Q1 was $37.7M, up 105% year-over-year; diluted EPS rose to $0.27 from $0.13.

• Free cash flow for Q1 was $30.8M, more than doubling year-over-year.

• GSV for Q1 was $988M, with take rate increasing to 18.3% from 17.7% year-over-year.

• Ads and monetization revenue grew 23% year-over-year.

Outlook and guidance

• FY2025 revenue guidance reiterated at $740M–$760M; adjusted EBITDA guidance raised to $190M–$200M (26% margin at midpoint).

• Q2 2025 revenue expected between $184M–$189M; adjusted EBITDA $45M–$49M.

• Non-GAAP diluted EPS for 2025 expected between $1.05 and $1.10.

• Stock-based compensation for 2025 projected at $60M–$65M.

• Marketplace and Enterprise revenues are expected to decline for the remainder of 2025 due to macroeconomic headwinds.