Upwork (UPWK) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $192.7 million, up 1% year-over-year, surpassing guidance and marking a record first quarter, with GAAP net income of $37.7 million and adjusted EBITDA of $56 million (29% margin).

• Net income more than doubled from Q1 2024, with diluted EPS rising to $0.27 from $0.13 year-over-year, reflecting strong cost discipline and operational efficiencies.

• AI investments, including Uma and Objective AI integration, are driving platform innovation, user engagement, and productivity gains.

• Business Plus and Enterprise segments are fueling growth among larger clients, with Business Plus active clients more than doubling quarter-over-quarter and 37–40% being new customers.

• The business demonstrated resilience and industry-leading performance despite macroeconomic uncertainty and a 7% decline in active clients.

Financial highlights

• Gross margin reached a record 78–78.3%, and adjusted EBITDA margin was a record 29–29.1%.

• Free cash flow for Q1 was $30.8 million, more than doubling year-over-year.

• Marketplace take rate increased to 18.3% from 17.7% year-over-year, supported by ads and monetization products.

• GSV for Q1 was $987.7–988 million, exceeding expectations, with GSV per active client up 3% year-over-year.

• Ads and monetization revenue grew 23% year-over-year.

Outlook and guidance

• Q2 2025 revenue expected between $184 million and $189 million; Q2 adjusted EBITDA guidance is $45–$49 million (25% margin at midpoint).

• Full-year 2025 revenue guidance reiterated at $740–$760 million; full-year adjusted EBITDA guidance raised to $190–$200 million (26% margin at midpoint).

• Non-GAAP diluted EPS for 2025 expected between $1.05 and $1.10.

• Stock-based compensation for 2025 projected at $60–$65 million.

• Marketplace and Enterprise revenues are expected to decline for the remainder of 2025 due to macroeconomic headwinds.