Online work marketplace Upwork (NASDAQ:UPWK) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 3.6% year on year to $198.4 million. On the other hand, next quarter’s revenue guidance of $194.5 million was less impressive, coming in 3.1% below analysts’ estimates. Its non-GAAP profit of $0.36 per share was 15.5% above analysts’ consensus estimates.
Is now the time to buy Upwork? Find out by accessing our full research report, it’s free.
Upwork (UPWK) Q4 CY2025 Highlights:
- Revenue: $198.4 million vs analyst estimates of $197.6 million (3.6% year-on-year growth, in line)
- Adjusted EPS: $0.36 vs analyst estimates of $0.31 (15.5% beat)
- Adjusted EBITDA: $52.86 million vs analyst estimates of $51.63 million (26.6% margin, 2.4% beat)
- Revenue Guidance for Q1 CY2026 is $194.5 million at the midpoint, below analyst estimates of $200.7 million
- Adjusted EPS guidance for the upcoming financial year 2026 is $1.46 at the midpoint, beating analyst estimates by 1.8%
- EBITDA guidance for the upcoming financial year 2026 is $245 million at the midpoint, above analyst estimates of $242.9 million
- Operating Margin: 14.3%, up from 7.1% in the same quarter last year
- Free Cash Flow Margin: 28.9%, down from 34.4% in the previous quarter
- Gross Services Volume: 785,000, down 47,000 year on year
- Market Capitalization: $2.47 billion
“2025 marked the year we rebuilt Upwork for the age of human-plus-AI collaboration, turning global change into a definitive tailwind, all while demonstrating strong financial performance,” said Hayden Brown, president and CEO, Upwork Inc.
Company Overview
Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ:UPWK) is an online platform where businesses and independent professionals connect to get work done.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Upwork’s sales grew at a mediocre 8.4% compounded annual growth rate over the last three years. This wasn’t a great result compared to the rest of the consumer internet sector, but there are still things to like about Upwork.
This quarter, Upwork grew its revenue by 3.6% year on year, and its $198.4 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for flat sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 6.4% over the next 12 months, a slight deceleration versus the last three years. This projection doesn't excite us and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.
Gross Services Volume
Customer Growth
As a gig economy marketplace, Upwork generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Upwork struggled with new customer acquisition over the last two years as its gross services volume have declined by 2.1% annually to 785,000 in the latest quarter. This performance isn't ideal because internet usage is secular, meaning there are typically unaddressed market opportunities. If Upwork wants to accelerate growth, it likely needs to enhance the appeal of its current offerings or innovate with new products. 
In Q4, Upwork’s gross services volume once again decreased by 47,000, a 5.6% drop since last year. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t moving the needle for customers yet.
Revenue Per Customer
Average revenue per customer (ARPC) is a critical metric to track because it measures how much the company earns in transaction fees from each customer. This number also informs us about Upwork’s take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.
Upwork’s ARPC growth has been excellent over the last two years, averaging 9.5%. Although its gross services volume shrank during this time, the company’s ability to successfully increase monetization demonstrates its platform’s value for existing customers. 
This quarter, Upwork’s ARPC clocked in at $252.75. It grew by 9.8% year on year, faster than its gross services volume.
Key Takeaways from Upwork’s Q4 Results
It was encouraging to see Upwork beat analysts’ EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance slightly exceeded Wall Street’s estimates. On the other hand, its number of customers declined and its revenue guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 22.7% to $14.49 immediately following the results.
Upwork underperformed this quarter, but does that create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
/Microsoft%20sign%20at%20the%20headquarters%20by%20VDB%20Photos%20via%20Shutterstock.jpg)
