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The call balanced notable operational and product progress—strong profitability (Q1 adjusted EBITDA beat), meaningful cost reductions, rapid SMB and AI-related growth, and enterprise pipeline gains—against near-term demand softness concentrated in the smallest contracts, a lowered/widened revenue outlook, and a sizable workforce reduction with related one-time costs. Management is confident in longer-term AI and enterprise opportunities and has strengthened profitability guidance despite top-line uncertainty.
Upwork narrowed and updated 2026 guidance: full‑year revenue of $760–$790 million, adjusted EBITDA of ~$250–$260 million (≈33% margin) and non‑GAAP diluted EPS of $1.50–$1.55, with stock‑based compensation of ~$60–$65 million; Q2 guidance is $187–$193 million revenue, $56–$59 million adjusted EBITDA (30–31% margin) and Q2 non‑GAAP EPS of $0.35–$0.37. Management announced a restructuring expected to reduce costs by an estimated $70 million annualized (≈24% workforce reduction), drive roughly $40 million of incremental 2026 savings, and incur one‑time charges of $16–$23 million (mostly this quarter). They now expect to reach a 35% adjusted EBITDA margin in H2 (more than two years ahead of plan), while assuming continued product growth (Lifted GSV guide of 25% and Business+ GSV up 34% Q/Q); other disclosed metrics included a marketplace take rate of 19.4%, AI work = 8% of GSV (AI‑at‑risk GSV ≈10%, down from 11% a year ago), AI GSV >$300M annualized growing >40% YoY, 11% of job posts in the AI category, and ~20% of the enterprise net‑new pipeline tied to AI.
Reported a $10 million adjusted EBITDA beat for Q1; raised full-year 2026 adjusted EBITDA guidance to $250M–$260M (approx. 33% margin) and now expect to reach the 35% adjusted EBITDA margin target in the back half of 2026 (more than 2 years ahead of schedule). Q2 adjusted EBITDA guide of $56M–$59M (30%–31% margin).
Announced restructuring to reduce annualized operating expenses by an estimated $70M and deliver approximately $40M of savings in 2026; expects one-time charges of $16M–$23M (majority recognized this quarter).
Business+ is the fastest-growing product in company history with GSV growth of 34% quarter-over-quarter, expanding Upwork's reach into the SMB market opportunity (~$530B).
AI-related work annualized GSV exceeded $300M and grew >40% year-over-year; AI-related jobs comprised ~8% of marketplace GSV in Q1 and ~11% of job posts, indicating leading-edge demand that is accelerating supply/demand mix.
Enterprise pipeline expanded meaningfully in the quarter (3x growth for new clients and 9x for existing clients); Lifted product on track with customer migrations starting in June and management maintaining a previously-stated ~25% GSV growth outlook for Lifted.
Marketplace take rate reported at 19.4%; company emphasizes ample cash position with flexibility to pay down debt, pursue M&A, or return capital to shareholders.
Launched multiple AI features (Upwork app in ChatGPT, Ooma enhancements, human-supervised agent beta) and is exploring an AI data opportunity leveraging ~3M job posts/year; human-supervised agents receiving positive feedback and slated for roll out this year.
Good day, and thank you for standing by. Welcome to Upwork Q1 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker, Gary Fuges, VP of Investor Relations at Upwork.
Thank you, and welcome to Upwork's discussion of its first quarter 2026 financial results. Joining me today are Hayden Brown, Upwork's President and Chief Executive Officer; and Erica Gessert, Upwork's Chief Financial Officer. Following management's prepared remarks, they will be happy to take your questions. But first, I'll review the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. Forward-looking statements include all statements other than those of historical fact. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties and assumptions. Our actual results could differ materially from the expectations reflected in any forward-looking statements.
For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC website and on our Investor Relations website as well as the risks and other important factors discussed in today's earnings press release. Additional information is also available in our quarterly report on Form 10-Q for the quarter ended March 31, 2026, which was filed today. In addition, references will be made t...