Upwork (UPWK) Jefferies Software, Internet & AI Conference summary

Market environment and business performance

• Enterprise and SMB segments showed strong growth, with enterprise revenue unimpacted by macro headwinds and on track for 25% GSV growth this year.

• SMB Business Plus product grew 34% quarter-on-quarter and is the fastest-growing product, targeting businesses with 250+ employees.

• Marketplace Basic, serving very small businesses, experienced spending declines due to economic pressures, impacting top-line guidance.

• Volatility in small business spending was widespread across categories, not limited to specific work types or AI impact.

• Customer feedback highlighted reduced budgets and increased caution in labor and service spending.

AI impact and automation trends

• Smallest jobs on the platform are increasingly automated, with 10% of GSV exposed to high automation risk, down from 11% a year ago.

• Accelerated automation in Q1, especially for contracts under $500, but offset by rapid growth in AI-related work categories.

• AI-related work now exceeds $300 million annualized run rate, growing 40% year-over-year.

• New product launching soon: human-supervised AI agent solution, currently in beta, to meet demand for quality-controlled AI-assisted work.

• AI is a minority factor in workforce reductions; most changes stem from operational efficiency and cost discipline.

Operational efficiency and profitability

• Headcount reduced from 850 to 480 over several years, driven by efficiency, process improvements, and selective AI automation.

• 80% gross margins and a digital acquisition model support profitability; cost base optimized without cutting key investments in marketing, enterprise, SMB, or AI.

• Margin improved from -1% in 2022 to 29% in 2025, with a 35% target expected to be reached two years early.

• Higher-margin products like enterprise, SMB, and ads/monetization are driving profitability.

• Internal AI tools (Claude Code, Claude Cowork, Linear) and third-party solutions (Forethought/Zendesk) enhance productivity and customer support.