Upwork Inc.

Upwork Inc. (Nasdaq: UPWK) connects businesses with independent talent through its marketplace and offers enterprise workforce services through Lifted. It reports one business segment, with Marketplace and Enterprise as revenue streams.

Third-quarter results

The table compares the three months ended September 30. Amounts are USD millions, except per-share figures.

Reported operating expenses fell by $19.4 million, more than covering a $14.6 million decline in gross profit. Research and development costs fell to $34.9 million from $47.5 million. Share-based compensation across the business was $9.2 million, versus $19.8 million.

Upwork had reduced its workforce by approximately 20% at September 30 under its May restructuring plan. Additional reductions are expected to be substantially completed by December 31.

Platform activity and monetization

Gross services volume, the total value transacted through Upwork's platforms and services, was $914.1 million, down 10.1%. It includes talent services and other paid services such as subscriptions and advertising products.

The active client count was 717,000, versus 794,000 a year earlier. An active client has spent money through an Upwork service during the preceding 12 months. Gross services volume per active client over those four quarters was $5,418, versus $5,036 a year earlier.

Marketplace revenue fell 9% to $159.3 million; Enterprise revenue fell 3% to $26.3 million. Marketplace take rate, revenue as a share of that marketplace's transaction value, increased to 20.0% from 18.9%. Upwork attributed the increase to advertising, Business Plus and variable service fees.

Earlier expectations and the new outlook

In August, Upwork forecast Q3 revenue of $176 million to $184 million and adjusted EBITDA of $50 million to $54 million. Results of $185.6 million and $63.8 million exceeded both ranges. Adjusted EBITDA removes interest, taxes, depreciation, amortization and selected share-compensation, restructuring and acquisition costs.

The annual revenue outlook rose to $742 million to $750 million from $730 million to $750 million. Adjusted EBITDA is now expected at $236 million to $240 million, versus $225 million to $235 million. Q4 revenue is forecast at $169 million to $177 million, with adjusted EBITDA of $51 million to $55 million.

Management expects challenges in attracting and retaining clients to continue through the remainder of 2026, citing AI's impact on some freelance work, changes in organic search traffic and economic uncertainty.

Cash flow and debt repayment

Q3 operating cash flow was $65.9 million, versus $75.1 million a year earlier. Free cash flow was $53.9 million, versus $69.4 million, after $4.2 million of property and equipment spending and $7.9 million of software-development spending.

For the first nine months, operating cash flow was $135.8 million, versus $184.6 million a year earlier. Property and equipment spending of $7.5 million and software-development spending of $25.7 million left $102.7 million of free cash flow.

Upwork repaid the full $361.0 million principal of its convertible notes when they matured on August 15. None remained at September 30. Cash was $228.0 million and marketable securities were $76.3 million at quarter end, before the WorkMotion purchase. Client escrow funds are held separately.

There were no share repurchases in Q3. Upwork had spent $109.7 million on repurchases during the first nine months, all in the earlier quarters.

Completed acquisitions and the finance transition

Lifted acquired all of WorkMotion Software GmbH on October 30, 2026, for approximately $129.7 million in cash, using cash on hand. Upwork expects the business to expand its employment services for global enterprise clients. Q3 included $5.7 million in transaction fees for the purchase.

Earlier completed acquisitions were Bubty on June 27, 2025, for $20.4 million and Ascen on August 18, 2025, for $40.8 million. Bubty supplies workforce-management software; Ascen provides employment services for contingent workers.

Chief Financial Officer Erica Gessert will step down on January 1, 2027, and remain temporarily as an adviser. Chief Business Officer Peter Sanborn has been appointed the next CFO.