Upwork (UPWK -1.59%), a leading online talent marketplace, reported its Q2 2025 financial results on August 6, 2025. The headline news: GAAP revenue surpassed expectations at $194.9 million, up from $193.1 million in Q2 2024 and above the analyst estimate of $187.6 million. Non-GAAP earnings per share were $0.35, while GAAP earnings of $0.24 per share missed estimates by $0.04. Despite record profitability and margin expansion, the platform’s active client base fell by 8.3% to 796,000. These results reflected operational discipline and growing AI-driven initiatives, even as topline growth remained modest.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.35 | $0.28 | $0.26 | 34.6% |
| Revenue | $194.9 million | $187.6 million | $193.1 million | 0.9% |
| Adjusted EBITDA | $57.1 million | $40.8 million | 39.9% | |
| Free Cash Flow | $65.6 million | $35.5 million | 84.8% | |
| Active Clients | 796,000 | 868,000 | (8.3%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
What Upwork Does and Where It’s Focused
Upwork connects businesses and freelancers worldwide, acting as an online marketplace for remote work. It helps companies hire, collaborate with, and pay professional talent across more than 125 categories. Its platform generates revenue by charging service fees and offering premium services to both businesses and freelancers.
Recent company strategy centers on leveraging artificial intelligence, expanding enterprise offerings, and investing in network effects—the value that grows as more users join. The current focus is on deepening engagement with both sides of the marketplace, launching more sophisticated AI tools, and pursuing enterprise clients through acquisitions and new service plans.
Second Quarter Highlights: Results, Risks, and Product Progress
For the quarter, GAAP revenue rose to $194.9 million, exceeding expectations and marking a record result for this period. Adjusted EBITDA, which measures earnings before interest, taxes, depreciation, and amortization, grew to $57.1 million—a 40% increase from a year earlier. Free cash flow (non-GAAP) almost doubled, reaching $65.6 million. Management delivered on cost discipline, cutting GAAP operating expenses by 10% year over year to $118.9 million. GAAP net income hit $32.7 million, a 47% year-over-year increase in GAAP net income.
However, several core business activity metrics showed pressure. The active client number dropped to 796,000 from 868,000 compared to Q2 2024. This decline raises questions about long-term platform growth and network effects. Still, gross services volume (GSV), which tracks the total contract value flowing through the platform, held steady at $1.00 billion, and GSV per active client rose 5% year-over-year. This points to bigger or more complex projects among remaining clients.
Product and technology investments were front and center this period. Upwork ramped up its AI work, notably with Uma, its AI agent. Uma saw a 24% jump in adoption quarter-over-quarter, and its Proposal Writer feature was used 58% more often in Q1 2025 compared to Q4 2024. More than 35% of engineering code deployed at Upwork now comes from AI tools, and prompt engineering—a fast-growing area—saw GSV climb 51% year-over-year. AI-enabled projects now make up a fast-increasing share of Upwork’s business, growing 30% year over year.
Enterprise initiatives are pacing change for the company. The acquisition of Bubty and the pending purchase of Ascen are aimed at attracting large businesses wanting tools to manage different types of contract workers. Though enterprise revenue (GAAP) fell 8% to $24.3 million, Business Plus—a premium plan for mid-market clients—reported strong results: GSV rose 190% quarter over quarter and the active client base grew 45%. Business Plus clients now represent a growing share of overall platform activity, suggesting traction with larger organizations.
Ads and promotional product revenue jumped 17% year-over-year, Connects (a way freelancers buy opportunities to pitch for jobs) revenue grew 19% year-over-year, and Freelancer Plus subscriptions climbed 13% year-over-year. Meanwhile, Upwork continued to buy back shares to offset dilution from its stock-based compensation program.
Management did not announce a dividend.
Looking Ahead: Guidance and Key Areas for Investors
Management raised its full-year guidance for FY2025. It now expects total revenue between $765 million and $775 million for FY2025, up from prior estimates of $740 million to $760 million for FY2025. Adjusted EBITDA guidance increased as well, moving to $206 million to $214 million for FY2025. For Q3 2025, revenue is expected to land between $190 million and $195 million, with non-GAAP EPS guidance of $0.26 to $0.28 for Q3 2025. Stock-based compensation is forecast between $60 million and $65 million for FY2025.
Investors will want to watch trends in active client counts, the impact of AI investments on project size and engagement, and continued uptake of Business Plus and other higher-margin offerings. Of note, management reiterated that meaningful take rate expansion—higher fees as a share of total transactions—will likely not arrive until 2026 and beyond. Management also flagged transitional challenges in its enterprise segment, but suggested evidence of early momentum from its new product offerings and recent M&A moves.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
