Upwork Shares Jump 10% on Q2 Earnings Beat & Robust 2025 Guidance

Upwork UPWK shares have jumped 10.2% since it reported second-quarter 2025 results on Aug. 6. The momentum can be attributed to better-than-expected results as well as robust 2025 guidance.

In second-quarter 2025, UPWK reported non-GAAP earnings of 35 cents per share, surpassing the Zacks Consensus Estimate by 34.62% and jumping 35% year over year. Revenues of $195 million climbed 0.9% year over year and beat the consensus mark by 4.58%. 

For 2025, revenues are now expected between $765 million and $775 million. Adjusted EBITDA is expected between $206 million and $214 million. The company remains on track to achieve the 35% adjusted EBITDA margin target. Upwork now expects 2025 earnings between $1.24 per share and $1.27 per share.

The Zacks Consensus Estimate for 2025 earnings is pegged at $1.14 per share, suggesting year-over-year growth of 9.6%. The consensus mark for revenues is pegged at $772.6 million, indicating year-over-year growth of 0.4%.
 

Upwork Inc. Price, Consensus and EPS Surprise

Upwork Inc. price-consensus-eps-surprise-chart | Upwork Inc. Quote

Upwork shares have dropped 19.4% year to date, underperforming the Zacks Computer & Technology sector’s 13.8% return.

Upwork Q2 Top-Line Details

Marketplace revenues (87.5% of revenues) climbed 2.3% year over year to $170.7 million. Enterprise revenues (12.5% of revenues) fell 7.8% year over year to $24.3 million. 

Ads and monetization revenues increased 17% year over year. Freelancer Plus subscription revenues grew 13% year over year, and Connects revenues increased 19% year over year.

Active clients were 796,000 at the end of the reported quarter. Gross Services Volume (GSV) per client increased 5% year over year to $5,002. GSV from AI-related work accelerated to 30% year-over-year growth in the reported quarter compared with 25% year-over-year growth in the previous quarter. GSV in the Prompt Engineering subcategory grew 51% year over year. Average GSV per active client engaged in AI work is more than three times larger than average GSV per active client across the Marketplace.

GSV from Business Plus gained traction with larger clients in the small and medium business space, jumping 190% sequentially, and active clients increasing 45%. New customers represented 35% of active Business Plus clients in the reported quarter.

Uma adoption increased 24% sequentially. UPWK’s GSV and revenues benefited from improved search and match capabilities, which also lifted average spend per contract by 4% and increased Connects revenues by 3% compared to the prior feature set. Uma Proposal Writer improvements led to a 58% increase in freelancers utilizing Uma to submit a proposal compared to the baseline experience.

Upwork Q2 Operating Details

Upwork’s second-quarter 2025 non-GAAP gross margin expanded 30 basis points (bps) to 77.8%. 

In the reported quarter, operating expenses as a percentage of revenues fell 740 bps year over year to 50.7%. Research and development, and sales and marketing expenses declined 330 bps and 500 bps, respectively. However, general and administrative expenses increased 90 bps year over year.

Adjusted EBITDA margin expanded 810 bps year over year to 29.3%.

Third-quarter operating margin expanded 760 bps year over year to 27.1%.

Upwork’s Balance Sheet Details

As of June 30, 2025, UPWK had cash and cash equivalents, restricted cash and funds held in escrow, including funds in transit balance of $507 million. Cash and cash equivalents and marketable securities were $635 million.

Long-term debt as of June 30, 2025, was $359 million.

In the reported quarter, cash provided by operating activities was $72.5 million, while free cash flow hit $65.6 million.

Upwork announced the acquisition of Bubty and an agreement to acquire Ascen in the reported quarter.

UPWK Provides Q3 Guidance

Upwork now expects third-quarter 2025 revenues between $190 million and $195 million. Earnings are now expected between 28 cents per share and 30 cents per share.

Third-quarter 2025 adjusted EBITDA is expected between $47 million and $51 million.

Zacks Rank & Stocks to Consider

Upwork currently carries a Zacks Rank #3 (Hold).

Lumentum LITE, Cisco Systems CSCO, and Vipshop VIPS are some stocks worth considering in the broader Zacks Computer and Technology sector. While Vipshop currently sports a Zacks Rank #1, Cisco and Lumentum carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lumentum shares have jumped 38.5% year to date. Lumentum is set to report its second-quarter 2025 results on Aug. 12.

Cisco Systems shares have appreciated 21.3% year to date. Cisco is set to report its fourth-quarter fiscal 2025 results on Aug. 13.

Vipshop shares are up 13.9% year to date. Vipshop is set to report its second-quarter 2025 results on Aug. 14.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research