Upwork (UPWK) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue grew 1% year-over-year to $195.5 million, with strong adjusted EBITDA of $57.4 million and net income of $31.5 million, despite a challenging demand environment and market volatility.

• AI-related work GSV grew over 40% year-over-year, now exceeding $300 million annualized and representing 8% of marketplace GSV; AI Integration & Automation sub-category up over 50%.

• Strategic focus on AI-powered work, SMB acceleration, and enterprise expansion is driving higher spend per client and positioning for future growth.

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

• Secured a $150 million revolving credit facility and announced a new $300 million share repurchase authorization to enhance financial flexibility.

Financial highlights

• Q1 2026 revenue was $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); net income was $31.5 million; free cash flow was $12.9 million.

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

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

• Active clients declined 3% year-over-year to 784,000, but GSV per active client increased 5%.

Outlook and guidance

• Full-year 2026 revenue guidance lowered to $760–$790 million due to demand uncertainty; adjusted EBITDA guidance raised to $250–$260 million (33% margin); non-GAAP diluted EPS guided to $1.50–$1.55.

• Q2 2026 revenue expected at $187–$193 million, with adjusted EBITDA of $56–$59 million and non-GAAP diluted EPS of $0.35–$0.37.

• Adjusted EBITDA margin target of 35% expected in the back half of 2026, over two years ahead of schedule.

• Ongoing cost management and restructuring expected to save $70 million annually, with $40 million impacting 2026.

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