Q2 2026 Upwork Inc Earnings Call Transcript
Key Points
- Upwork Inc (UPWK) delivered Q2 revenue of $191.7 million at the high end of guidance and adjusted EBITDA of $64.1 million, exceeding the high end of guidance, driven by disciplined cost management.
- Business Plus GSV grew 174% year-over-year, and GSV per active client reached a record $5,230, up 5% year-over-year, marking the eighth consecutive quarter of sequential growth.
- AI-related GSV grew 22% year-over-year to an annualized run rate of approximately $330 million, with AI strategy and consulting category up 51% year-over-year.
- Enterprise GSV per account grew 7% year-over-year, the highest level in over three years, and EOR solutions GSV grew 29% year-over-year, with Lifted on track for approximately 25% GSV growth in 2026.
- The launch of the Upwork MCP server enables agentic interactions and integration with AI tools like ChatGPT and Claude, positioning the company to benefit from AI-driven demand and new acquisition channels.
- Cost per new contract start improved 22% quarter-over-quarter, and the company plans to increase paid acquisition investments by $5 million to $10 million in the back half of the year.
- Non-GAAP gross margin remained near record levels at 77%, and the company closed a new $150 million revolving credit facility to support capital allocation and share repurchases.
- Upwork Inc (UPWK) faces persistent near-term AI and macro headwinds, with an acceleration in AI-related automation impacting demand for low-complexity work.
- Google SEO changes have dampened new customer acquisition, with accelerated negative impact in Q2 and expectations of further deterioration in Q3 and Q4.
- Active client count declined to 763,000, pressured by AI automation, search trends, labor market conditions, and the company's strategy to focus on client value over volume.
- Full-year 2026 revenue guidance was lowered to $730 million to $750 million, reflecting the heightened pace of AI automation and no improvement in the labor market.
- Q3 2026 revenue guidance of $176 million to $184 million implies a sequential decline, and adjusted EBITDA margin is expected to be lower at 29% midpoint.
- The pace of AI-related automation has accelerated, leading to a pull-forward in erosion of the business segment most exposed to AI, with no clear timeline for stabilization.
- Free cash flow in Q2 was impacted by one-time restructuring payments, and the company incurred restructuring charges related to the $70 million OpEx reduction plan.
Good day. Thank you for standing by. Welcome to Upwork second-quarter 2026 earnings conference call. (Operator Instructions) Please note today's conference may be recorded.
I will now hand the conference over to your speaker host, Peter Sanborn, Chief Business Officer. Please go ahead.
Thank you, and welcome to Upwork's discussion of its second-quarter 2026 financial results. Joining me today is Hayden Brown, Upwork's President and Chief Executive Officer. Following our prepared remarks, we will be happy to take your questions, but first, I'll review the Safe Harbor statement.
During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. Forward-looking statements include all statements other than those of historical fact. These statements are not guarantees of future performance but rather are subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations
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