Upwork Inc.

Hello, and thank you for standing by. Welcome to Upwork fourth quarter 2025 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I will now like to hand the conference over to Gary Fugis, Vice President of Investor Relations. You may begin.

Thank you and welcome to Upwork's discussion of its fourth quarter and full year 2025 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 statements of historical fact. These statements are not guaranteed future performance, but rather are subject to a variety of risks, uncertainties, and assumptions. And our actual results could differ materially from 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 will also be available on our annual report on Form 10-K for the year ended December 31st, 2025, when filed. In addition, reference will be made to certain non-GAAP financial measures, Adjusted EBITDA, adjusted EBITDA margin, and free cash flow are non-GAAP financial measures, and all other financial measures are GAAP unless cited as non-GAAP. Information regarding non-GAAP financial measures, including reconciliations to their most directly comparable GAAP financial measures, can be found in the press release that was issued this afternoon on our investor relations website at investors.upwork.com. Finally, unless otherwise noted... Reported figures around it, comparisons to the fourth quarter of 2025 are to the fourth quarter of 2024 and comparisons of the full year 2025 are to the full year 2024. With that, I'll now turn the call over to Hayden.

Good afternoon and welcome to Upwork's fourth quarter and full year 2025 earnings call. In 2025, we completed a three-year journey to fundamentally transform the business and position Upwork to extend our leadership in the AI era. We reinvented our product, customer experience, and operations to enable Upwork to become the human plus AI solution for the market. Today, we're seeing the early benefits of the new Upwork in our full year 2025 financial performance, which included over $4 billion in GSV, $788 million in revenue, and $226 million in adjusted EBITDA. Both revenue and adjusted EBITDA were at record levels, with revenue growth of 2.4%, and adjusted EBITDA margin of 29%. And we finished the year with a strong Q4 that included year-over-year growth of 3% in GSV, 4% in revenue, and a 27% adjusted EBITDA margin. We're entering the year well positioned to accelerate growth and generate strong margins in 2026 and beyond by capitalizing on the $1.3 trillion market opportunity in front of us. In this new era of work, Reshaped by AI, Upwork is positioned to lead the shift toward flexible, skills-based talent. I'll unpack our fourth quarter operating achievements across the three growth pillars we shared at our November Investor Day, AI, SMB, and Enterprise, and share our 2026 goals for each. Erica will discuss our Q4 and full-year 2025 financial performance and 2026 guidance, and then we'll take your questions. There's no doubt that AI is reshaping how work gets done. From what we see every day on our platform, AI and humans do their best work together. Our research published in November shows that human plus agent collaboration increases job completion rates by up to 70% compared to agents working alone. And we're not an outlier. Third-party reports from Anthropic, LinkedIn, and Workday further support Upwork's vision for a future of work that keeps humans at the center, with AI amplifying their results. We're evolving the Upwork marketplace to harness this reality. In Q4, we embedded more AI functionality in the marketplace that helped clients and talent work together more easily, generated more than 50% GSV growth from AI-related work on the platform, and laid the foundation to integrate agents to deliver work outcomes. With respect to Upwork's AI-native marketplace, we continue to advance our search and recommendation functionality and UMA, Upwork's AI agent, to help clients hire faster and more effectively. In total, we estimate that these improvements contributed $100 million in incremental GSV in 2025. In Q4, we introduced AI-generated work summaries to give clients a richer, multidimensional view of a freelancer's experience and to enable more confident and better fit hiring decisions. this new feature is already delivering an increased spend per client. By continuously adding AI functionality to our marketplace, we're removing friction between talent and clients and improving monetization in our platform. We're also seeing strong, durable growth in AI-related work as companies move from AI experimentation to execution, as business leaders work to translate AI promises into tangible business impact. many are turning to independent professionals to help with strategy, integration, and implementation. GSV from AI-related work surpassed $300 million on an annualized basis in Q4, up more than 50% from the prior year. This performance was driven by categories like generative AI and creative production, and AI integration and automation, which nearly doubled year over year in Q4. Further, in Q4, we saw the number of clients engaging in AI work increase over 50% year over year, with GSV from these clients exceeding our average spend per client by about three times. While this is still a minority of the total work done in the Upwork marketplace, AI work is becoming more material every day and is an exciting indicator of our AI tailwind. Finally, on agents. In Q4, we outlined our AI agent strategy and introduced the Human and Agent Productivity Index, or HAPI, the first of its kind real-world evaluation framework measuring agent performance with humans in the loop. Early learnings validated that human plus agent collaboration delivers superior outcomes to agents alone, and this is shaping our next phase with agent-human pairs already in testing in our product today and rolling out to all customers by year end. Turning to our second growth pillar, SMBs remain a major growth driver for Upwork, and we're seeing strong traction here with Business Plus, our purpose-built SMB solution. Since launching at the end of 2024, Business Plus has scaled quickly, demonstrating the strength of the product and its fit with this segment. In Q4, we kicked off new targeted marketing efforts with the launch of our first dedicated campaign, going after small businesses. This campaign highlights how Business Plus addresses SMBs' most pressing needs, from access to top talent to team-based hiring and credit-based payment terms. In Q4, active Business Plus clients grew 49% sequentially, with 38% of these clients being new to Upwork. Business Plus is one of our fastest-growing products ever, and its clients spend almost 2.5 times more. than our marketplace average. These results position Business Plus as a scalable, high-value growth engine at the center of our SMB strategy. Turning to enterprise, 2025 was a pivotal year with the introduction of Lifted. Enabled by the acquisition of two companies, Lifted's offering is designed to support every major contingent work contract type and integrate directly into the workflows used by the world's largest companies. Enterprise customers tell us they want these capabilities and can't get them from anyone else in the market today. In Q4, we focused on bringing teams and platforms together and finalized and launched the first phase of a go-to-market strategy to expand with existing customers and pursue a focus set of about 3,000 prioritized enterprise accounts, each with more than $50 million in annual contingent spend. Today, Listed has built a strong pipeline including dozens of existing and new logos, and is already seeing early success. Lyfted has already won two new clients. Given that enterprise sales cycles can take a year or more, we're encouraged by this early progress and remain confident in our ability to execute on the ambitious growth targets for Lyfted that we outlined in our investor day. Looking ahead to 2026, we're continuing to build on the progress we made last year across our three growth pillars. In AI, we're taking our AI native marketplace to the next level. In 2025, UMA was like Tesla's self-driving mode, powerful, capable, and ready to take the wheel. In 2026, UMA will become a Waymo chauffeur for clients and talent, transforming a client's goals into job requirements, postings, and recruiting plans, coordinating with talent and AI agents, and managing projects from inception to delivery. we're launching a fundamentally different customer experience powered by our growing data moat. This means customers can get more complex, higher value work done even more easily on the platform, leveraging the data and insights we've built over time. We're also continuing to nurture growth in our AI work categories. Demand for AI skilled talent continues to increase. Our recent in-demand skills report found that demand for top AI-enabled skills more than doubled year over year, and that human expertise commands a premium across work categories. We're helping talent develop and deploy deeper AI skills, including through our partnership with OpenAI to offer AI training, certifications, and upskilling to global independent professionals on Upwork. Through a range of ecosystem partners like OpenAI, we see an opportunity to continue to extend our reach in new ways. With respect to AI agents, in 2026, we will deepen human agent collaboration across the marketplace. Our work with third-party agent developers will enable us to offer a differentiated human and AI experience for delivering high-quality work outcomes. Our unique human and AI agent benchmark provides both a critical training ground for agents and a quality bar for ensuring great work outcomes. With spend on AI agents projected to reach $120 billion by 2028, we're positioning Upwork to capture a meaningful share of this emerging market. For SMB, 2026 is about expanding and scaling our offering. We're doubling down on SMB-specific features for onboarding, team hiring, and AI-driven curation, and running targeted marketing programs for Business Plus to drive broader adoption As we said in our November Investor Day, our goal for Business Plus is to double in GSV, to represent over 5% of our total annual GSV in 2026. At the end of Q4, we're already pacing ahead of plan to reach these 2026 targets, underscoring our early progress in capturing more of the $530 billion SMB market. Finally, in enterprise, our 2026 playbook also remains consistent with what we shared at our investor day. Our focus of the first half of the year is on integration and implementation of the lifted platform as we continue to nurture the growing pipeline of enterprises interested in this solution. On the back of sales efforts that are already underway, we expect ramping the lifted business in the second half of this year and then driving scale in 2027 as we unlock the $650 billion enterprise market opportunity. In parallel, we'll look to accelerate our roadmap and time to market through targeted acquisitions. Through thoughtful M&A over the last two and a half years, we successfully raised our game in AI and enterprise. We'll continue to look for strategic investments that further accelerate our AI, SMB, and enterprise growth initiatives. 2025 marked the capstone year in our transformation of Upwork. we rebuilt a company for the age of human plus AI work while demonstrating strong financial performance. Now we're positioned to lead as the operational backbone for customers navigating this new era. The opportunity ahead is massive, and we're entering 2026 prepared to build on our momentum. With that, I'll turn it over to Erica. Thanks, Hayden.