Upwork’s first quarter results were well received by the market, reflecting the company’s continued execution on cost discipline and investments in platform enhancements. Management attributed the quarter’s performance to improved customer experience, particularly through search and recommendation upgrades, and highlighted growing spend from larger clients. CEO Hayden Brown pointed to the resilience of Upwork’s core marketplace, noting that “GSV per active client grew year-over-year for the first time in six quarters.” She emphasized how product improvements, including AI-driven features, contributed to positive customer spend dynamics even as macroeconomic headwinds persisted.
Is now the time to buy UPWK? Find out in our full research report (it’s free).
Upwork (UPWK) Q1 CY2025 Highlights:
- Revenue: $192.7 million vs analyst estimates of $188.5 million (flat year on year, 2.2% beat)
- Adjusted EPS: $0.34 vs analyst estimates of $0.27 (25% beat)
- Adjusted EBITDA: $56.01 million vs analyst estimates of $48.33 million (29.1% margin, 15.9% beat)
- The company reconfirmed its revenue guidance for the full year of $750 million at the midpoint
- Management raised its full-year Adjusted EPS guidance to $1.16 at the midpoint, a 7.9% increase
- EBITDA guidance for the full year is $195 million at the midpoint, above analyst estimates of $185.5 million
- Operating Margin: 20.1%, up from 6.8% in the same quarter last year
- Gross Services Volume: 812,000, down 60,000 year on year
- Market Capitalization: $1.79 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Upwork’s Q1 Earnings Call
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Eric Sheridan (Goldman Sachs) asked about the macroeconomic assumptions underlying guidance and the monetization of AI features. CFO Erica Gessert explained that current guidance incorporates both slight macro headwinds and improving customer spend from platform enhancements, while CEO Hayden Brown detailed how AI-related projects command a 40% premium in freelancer earnings.
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Bernie McTernan (Needham & Company) inquired if the focus on large clients was driven by market shifts or internal strategy. Brown clarified that the strategy was intentional, stemming from the launch of Business Plus and a concerted effort to serve larger organizations.
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Ronald Josey (Citi) requested more detail on search and recommendation upgrades and their benefits. Brown cited new semantic search and dashboard enhancements, while Gessert pointed to increased average hours per contract and higher fixed price spend per contract as evidence of successful product improvements.
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Brad Erickson (RBC Capital Markets) questioned how AI trends and macro pressures affect client funnel and hiring. Brown responded that AI continues to be a net positive, driving category growth, and Gessert noted 25% year-over-year growth in GSV from AI-related work.
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Matt Shidler (Scotiabank) pressed for clarity on margin guidance and reinvestment plans. Gessert acknowledged a conservative approach to guidance, noting that increased investments in AI and enterprise are planned for the coming quarters to support future growth.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the adoption and impact of new AI-powered features, particularly Uma’s evolution from point solutions to a broader workflow companion; (2) the pace of large client expansion through Business Plus and enterprise channels; and (3) Upwork’s ability to sustain or grow gross services volume per client despite ongoing macroeconomic uncertainty. Execution on product innovation and successful reinvestment will be critical signposts for future performance.
Upwork currently trades at $13.55, up from $13.31 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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