Upwork — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $185.6 million, a decrease from $201.7 million in the third quarter of 2025.
• GAAP net income was $31.8 million, an 8% increase year-over-year from $29.3 million.
• GAAP diluted earnings per share were $0.25, compared to $0.21 in the third quarter of 2025.
• Adjusted EBITDA was $63.8 million, a 7% increase year-over-year from $59.6 million.
• Adjusted EBITDA margin was 34.4%, up from 30.0% in the third quarter of 2025.
• Gross profit was $141.3 million, down 9% year-over-year, with a gross margin of 76% compared to 77% in the prior year period.
• Operating expenses were $106.7 million, a 15% decrease year-over-year.
• Cash provided by operating activities was $65.9 million, down 12% from $75.1 million in the third quarter of 2025.
• Free cash flow was $53.9 million, down 22% from $69.4 million in the third quarter of 2025.
• Total assets were $931.1 million as of September 30, 2026, compared to $1.3 billion as of December 31, 2025.
• Cash and cash equivalents were $228.0 million as of September 30, 2026, down from $294.4 million at the end of 2025.
• Debt, current was $0 as of September 30, 2026, compared to $359.8 million at the end of 2025, following the repayment of convertible senior notes.
• Deferred revenue was $8.6 million as of September 30, 2026, up from $7.8 million at the end of 2025.

Guidance and Future Outlook:

• Fourth quarter 2026 revenue guidance is $169 million to $177 million.
• Fourth quarter 2026 adjusted EBITDA guidance is $51 million to $55 million.
• Fourth quarter 2026 non-GAAP diluted EPS guidance is $0.30 to $0.32.
• Full year 2026 revenue guidance is $742 million to $750 million.
• Full year 2026 adjusted EBITDA guidance is $236 million to $240 million.
• Full year 2026 non-GAAP diluted EPS guidance is $1.45 to $1.47.
• The company expects to deliver consistent long-term value through a durable, high-margin business model.

Business Segments and Product Lines:

• Gross Service Volume (GSV) was $914.1 million for the quarter, down 10.1% year-over-year.
• Active clients numbered 717,000, a 10% decrease year-over-year from 794,000.
• GSV per active client was $5,418, an 8% increase year-over-year.
• GSV from freelancers with AI skills reached an estimated annualized run rate of nearly $450 million, up 55% year-over-year.
• GSV from the Business Plus offering for SMBs increased 13% quarter-over-quarter and 132% year-over-year.
• Business Plus active clients grew 9% quarter-over-quarter and 154% year-over-year.
• 40% of active clients on Business Plus in Q3 2026 had their first Upwork spend on that offering.
• The Upwork Model Context Protocol (MCP) server saw weekly active users increase 20x since its August launch, with AI agents making nearly 50 million requests.
• Upwork Now, a public beta connecting clients with immediately available freelancers, launched and is available through the MCP server.
• Lifted, the enterprise segment, signed three new logos and was recognized as a leader in Everest Group's 2026 Contractor of Record and Contingent Employer of Record Solutions PEAK Matrix Assessment.
• Lifted acquired WorkMotion, a Berlin-based employer of record (EOR), to strengthen the enterprise offering and reduce third-party EOR dependency.

Market and Competitive Landscape:

• Upwork is positioning itself as a capability wherever work begins by integrating AI agents and human talent.
• The company is doubling down on its enterprise strategy through the Lifted platform and the WorkMotion acquisition.
• Upwork is capturing growing global demand for contingent work and AI-enabled services.

Risks and Challenges:

• The press release references forward-looking statements subject to inherent uncertainties, known and unknown risks, and changes in circumstances outside the company's control.
• Actual results may differ materially from expectations due to competitive environment, technological changes, and market conditions.
• Specific risk factors are detailed in the company's Quarterly Report on Form 10-Q for the three months ended June 30, 2026, and future filings.

Management Commentary and Tone:

• CEO Hayden Brown stated the company executed strongly with strategic growth pillars gaining momentum.
• Management emphasized a focus on sustained profitability and disciplined execution.
• CFO Erica Gessert highlighted the company's strong free cash flow profile and financial flexibility to navigate market dynamics.
• The tone regarding the WorkMotion acquisition and AI initiatives was transformational, aiming to capture new opportunities.

Other Key Points:

• Erica Gessert will step down as CFO on January 1, 2027, remaining in an advisory role, while Peter Sanborn is appointed as the new CFO.
• The company repaid $361.0 million in convertible senior notes during the nine months ended September 30, 2026.
• Transaction-related costs of $5.7 million were incurred in connection with the WorkMotion acquisition.
• Restructuring costs of $4.3 million were incurred in the third quarter of 2026 related to the May 2026 announcement.
• Upwork has facilitated more than $30 billion in total transactions since its founding.