Upwork, Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 10 August 2026: press release. Guidance figures: 3 lowered, 3 new, 2 kept. The quarter’s numbers.

Key takeaways

• Adjusted EBITDA grew 12% year-over-year: Adjusted EBITDA increased 12% YoY to $64.1M, representing 33% of revenue. GAAP net income fell 22% YoY to $25.4M and diluted EPS was $0.20 versus $0.24 in Q2 2025. Company achieved operating leverage through disciplined cost management. Source
• GSV fell 4% but higher value per client: GSV decreased 4% YoY to $966.4M while active clients fell 4% to 763,000. However, GSV per active client grew 5% YoY to $5,230, indicating higher project complexity and average value per engagement. Source
• AI-related work grew 22% year-over-year: GSV from AI-related work increased more than 22% YoY in Q2 2026. AI Strategy and Consulting, the largest AI sub-category, grew over 50% YoY, becoming a material and sustained growth driver. Source
• Business Plus GSV grew 174% year-over-year: Q2 GSV from Business Plus offering increased 24% QoQ and 174% YoY. Active clients on Business Plus grew 16% QoQ and 219% YoY, demonstrating rapid expansion and adoption of premium SMB tier. Source
• Revenue and profit guidance cut substantially: Full year 2026 revenue guidance lowered to $730-750M from prior $760-790M. Adjusted EBITDA guidance cut to $225-235M from $250-260M. Non-GAAP EPS guidance reduced to $1.38-1.43 from $1.50-1.55. Source

“In the second quarter, Upwork demonstrated solid execution against our strategic plan in a challenging operating environment”

Hayden Brown, President and CEO

Guidance

What changed from last quarter

• Guidance lowered: Full year 2026 revenue guidance cut from $760-790 million to $730-750 million due to challenging operating environment. Source
• Guidance lowered: Full year 2026 adjusted EBITDA guidance reduced from $250-260 million to $225-235 million. Source
• Guidance lowered: Full year 2026 non-GAAP diluted EPS guidance lowered from $1.50-1.55 to $1.38-1.43 per share. Source

Adjusted EBITDA growth despite revenue decline

• Adjusted EBITDA grew 12% year-over-year: Adjusted EBITDA increased 12% YoY to $64.1M, representing 33% of revenue. GAAP net income fell 22% YoY to $25.4M and diluted EPS was $0.20 versus $0.24 in Q2 2025. Company achieved operating leverage through disciplined cost management. Source
• Gross margin compressed despite scale: Gross profit fell 3% YoY to $146.4M as gross margin declined 135 basis points to 76%. Cost of revenue increased as a percentage of total revenue to 24% from 22% prior year. Source

GSV declined while customer intensity increased

• GSV fell 4% but higher value per client: GSV decreased 4% YoY to $966.4M while active clients fell 4% to 763,000. However, GSV per active client grew 5% YoY to $5,230, indicating higher project complexity and average value per engagement. Source
• Marketplace revenue declined 2% year-over-year: Marketplace segment revenue was $166.9M, down 2% from Q2 2025, reflecting challenging macroeconomic conditions and lower-complexity work shifting to automation. Enterprise revenue grew 2% to $24.8M. Source

“We are on track with our enterprise strategy, staying disciplined in how we execute, and continuing to build the AI capabilities that will make Upwork essential infrastructure”

Hayden Brown, President and CEO

AI work accelerating with new integrations

• AI-related work grew 22% year-over-year: GSV from AI-related work increased more than 22% YoY in Q2 2026. AI Strategy and Consulting, the largest AI sub-category, grew over 50% YoY, becoming a material and sustained growth driver. Source
• Launched Claude Connector and MCP server: Upwork launched Claude Connector app inside Anthropic's Claude to embed marketplace at moment businesses plan work. Also deployed Model Context Protocol server enabling AI agents to source talent and manage work within client tools. Source

Business Plus driving SMB growth momentum

• Business Plus GSV grew 174% year-over-year: Q2 GSV from Business Plus offering increased 24% QoQ and 174% YoY. Active clients on Business Plus grew 16% QoQ and 219% YoY, demonstrating rapid expansion and adoption of premium SMB tier. Source
• Business Plus capturing new Upwork customers: 38% of active clients on Business Plus had their first Upwork spend on the offering in Q2, indicating the tier is effectively acquiring new platform customers rather than upgrading existing users. Source

Lifted platform migration and enterprise expansion

• Lifted migrated first wave to new platform: Lifted successfully migrated its first wave of enterprise customers onto its new platform at end of June and expanded go-to-market team with new head of sales. This represents key milestone in enterprise strategy. Source

Cash flow declined amid capital intensity

• Operating cash flow fell 35% year-over-year: Operating cash flow decreased 35% YoY to $46.9M while free cash flow dropped 45% to $35.9M. Decline driven by working capital changes and lower profitability compared to Q2 2025. Source
• Returned $109.7M to shareholders in first half: During first six months of 2026, Upwork repurchased 8.3M shares for $109.7M. As of June 30, $254.3M remained in repurchase authorization, providing continued flexibility for capital returns. Source

Full year guidance significantly reduced

• Revenue and profit guidance cut substantially: Full year 2026 revenue guidance lowered to $730-750M from prior $760-790M. Adjusted EBITDA guidance cut to $225-235M from $250-260M. Non-GAAP EPS guidance reduced to $1.38-1.43 from $1.50-1.55. Source

Coming up, per management

• Enterprise customer migration continuing: Lifted plans to migrate additional waves of enterprise customers onto its new platform following successful completion of first wave in June. Go-to-market team expansion is ongoing. Source
• Restructuring execution expected in Q4 2026: Workforce reduction of approximately 24% announced in May expected to be substantially complete by fourth quarter 2026. Estimated total restructuring charges of $16-23 million pre-tax.

Risks management discussed

• Demand: Lower-complexity work continues to shift toward automation, reducing the addressable market for freelance services and impacting revenue growth across the marketplace. Source
• External: Challenging operating environment impacting customer demand and spending on freelance services. Macro uncertainty led to material guidance reductions for full year 2026. Source
• Operational: Lifted platform migration and enterprise customer integration presents execution risk. Successful scaling of enterprise business depends on migrating existing customers and winning new logos. Source

Earlier plans management reported on

• Met: Lifted completed migration of first wave of enterprise customers onto new platform at end of June as committed in prior quarter guidance. Source
• On track: Management states company remains on track with enterprise strategy, maintaining disciplined execution and continued investment in AI capabilities. Source
• On track: Restructuring announced in May targeting 24% workforce reduction expected to be substantially complete by Q4 2026 with pre-tax charges of $16-23 million.

Summarised with AI from the documents the company filed with the SEC. Every point carries a quote that is checked word for word against the filing; a point whose quote is not found is left out. Source opens the filing at that line.