Q2 2025 Upwork Inc Earnings Call
His presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated messages by senior Hennis Reyes. Please note that today's conference maybe recorded.
Now I'll hand, the conference over to your Speaker host Tim.
Meehan Vice President of Investor Relations. Please go ahead.
Thank you and welcome to <unk> discussion of its second quarter 2025 financial results.
Joining me today are Hayden Brown, <unk>, President and Chief Executive Officer, and Eric I guess, there <unk> 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 security laws.
Forward looking statements include all statements other than statements of historical fact these.
These statements are not guarantees of future performance, but rather are subject to a variety of risks uncertainties and assumptions.
Our actual results may 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.
Information will be set forth in our quarterly report on Form 10-Q for the quarter ended June 32025, when filed and.
In addition reference will be made to certain non-GAAP financial measures 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 Dot up work Dot com.
Unless otherwise noted reported figures are rounded comparisons of the second quarter of 2025 are to the second quarter of 2020 for 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.
Now I'll turn the call over to Hayden.
Good afternoon, and welcome to <unk> second quarter 2025 earnings call.
<unk> delivered another record quarter on both the top and bottom lines, we generated our highest ever Q2 revenue of $194 9 million with our outperformance driven by AI enhancement of the platform accelerated client hiring in AI related work as a monetization strategies and are thriving.
Business class offering.
We also exceeded our guidance by generating net income of $32 7 million and adjusted EBITDA of $57 1 million, resulting in a 16, 8% profit margin and 29, 3% adjusted EBITDA margin.
Based on our performance in the first half of the year and positive momentum we are raising our full year guidance for both revenue and adjusted EBITDA.
Our strong results and increased guidance underscores the success of our AI and M&A strategies, and attracting and converting larger clients in the marketplace.
This increase is driven in part by a more than $80 million in year lift in GSV attributable to our AI and customer experience enhancements.
Our innovation velocity was on display in our summer 2025 upward updates announced on July 20 <unk>.
This product release was rooted in our unique ability to combine the worlds best human talent with cutting edge AI to deliver unparalleled outcomes and pioneering customer experiences. We're seeing the fruits of evolving Umar outbreaks mindful AI into a more fully capable always on AI work agent.
Clients can now leverage Umar interview talent on their behalf and find the right fit saving them time on manual reviews. This capability also helps freelancers find work faster interviewing on their own time and showcasing their skills more effectively than a cover letter can.
New <unk> powered upward video meetings generate transcripts summaries and action items, which enhanced collaboration proposed project milestones and turn meetings into real progress.
Innovation, velocity was on display in our summer. 2025, upwork updates announced on July 23rd.
We completed the integration of objective AI AI need of search technology, and released several core search and recommendation enhancements, including contextually aware ummah powered search these drove a 4% lift in average spend per contract and 3% increase in connects revenue compared to our prior feature set.
This product release was rooted in our unique ability to combine the world's best human Talent with Cutting Edge, AI to deliver unparalleled outcomes and pioneering customer experiences.
We are seeing the fruits of evolving Uma outworked. Mindful AI. Each way, more fully capable always on AI work agents.
<unk>.
Finally, our re imagined AI driven job posting experience provides tailored actionable tips to clients based on our differentiated trove of work interaction data.
Clients can now leverage Uma to interview Talent on their behalf and find the right fit saving them time on manual reviews. This capability also helps Freelancers find work faster interviewing on their own time and showcasing their skills more effectively than a cover letter cam.
And on the talent side, whom our proposal writer enhancements led to a 58% increase in freelancers utilizing houma to submit a bid compared to the previous product experience.
New Uma powered upwork video meetings generate transcripts summaries and action items which enhance collaboration proposed project milestones and turn meetings into real progress.
Our strategy to rapidly grow AI work across categories is also working as GSV from AI related work accelerated to 30% year over year growth from 25% in the first quarter.
Businesses are coming to upward to access our pool of 250000, AI experts offering more than 365 unique AI skills. This were expense everything from model tuning and generative design to.
We completed the integration of objective AIS. AI native search technology and release several core search and recommendation enhancements, including contextually aware Uma powered search. These drove a 4% lift in average spend per contract and 3%, increase in connects Revenue compared to our prior feature set.
Finally, a reimagined. Aiden job. Posting experience provides tailored actionable tips to clients. Based on our differentiated Trove of work interaction data
Integration and prompt engineering for example, one of the largest multinational CPG companies is tapping into AI developer talent on our work to build AI powered interactive personalized ordering systems and to redesign the user experience for some of the worlds most recognizable brands.
And on the talent side, Uma proposal writer enhancements. Led to a 58% increase in Freelancers. Utilizing Uma to submit a bid compared to the previous product experience.
The number of clients posting AI jobs grew 38% year over year, a positive future GSE signal as clients engaging in AI work spend more than three times as much as the average client on the platform GSV.
Our strategy to rapidly grow AI work across categories is also working as gsv from AI related. Work accelerated to 30% year-over-year growth from 25% in the first quarter.
GSV from prompt engineering grew 51% year over year in Q2 and categories that not long ago seem to ripe for AI substitution like accounting and bookkeeping video and animation and contract law are actually being augmented and accelerated by AI tools, leading to category growth due to demand for human creative.
<unk> and judgment.
While we continue to see the simplest task and smallest projects substituted by AI in some categories like riding and translation. Our GSV is now outperforming expectations, we expect AI augmentation to continue across many categories on our platform supporting growth of GSV per active client.
Businesses are coming to upwork to access our pool of 25000. A experts offering more than 365 unique AI skills. This work spans everything from model tuning and generative design to llm integration and prompt engineering. For example, 1 of the largest multinational, cpg companies is tapping into AI developer Talent on upwork to build AI powered, interactive personalized ordering systems and to redesign the user experience for some of the world's most recognizable brands.
The number of clients posting AI jobs, grew 38% year-over-year, a positive future GSC signal. As clients, engaging in AI work spend more than 3 times as much as the average client on the platform.
With accelerating momentum in AI work and much higher average spend AI as an important growth multiplier for us in.
In our marketplace business, plus our premium plan for teams and larger SMB clients continues to exceed our goals and attracting and expanding share of wallet with larger customers.
Gsv from prompt, engineering grew 51% year-over-year in Q2 and categories that not long ago. Seemed ripe for AI substitution like accounting and bookkeeping video and animation, and contract. Law are actually being augmented and accelerated by AI tools. Leading to category growth due to demand for human creativity and judgment.
Active business plus clients increased 45% quarter over quarter, while GSV from those clients surged, 190% quarter over quarter importantly business plus appeals to both existing customers as well as new prospects, 35% of business plus clients in Q2 were brand new to us.
While we continue to see the simplest tasks and smallest projects substituted by AI in some categories like writing and translation. Our gsv is now outperforming expectations.
Work.
Business plus a success is a key beachhead for our strategy to serve larger businesses in our marketplace with a differentiated and tailored value proposition.
We expect AI augmentation to continue across many categories on our platform supporting growth of gsv per active client with accelerating momentum, and AI work and much higher. Average, spend AI is an important growth multiplier for us.
In our Marketplace.
Add the monetization offerings were a strong contributor in the quarter as revenue from these products grew 17% year over year, including 19% year over year growth in connects revenue and 13% year over year growth and a freelancer plus subscription revenue these products empower freelancers to improve their visibility.
Business. Plus our Premium plan for teams and larger SMB. Clients continues to exceed our goals in a tracking and expanding share of wallet with larger customers.
And increase the yield on their efforts, while also expanding our take rate.
In the second quarter, we made huge strides on our strategy to expand our share of wallet with large enterprise customers, which is a transformational opportunity today, we are announcing two acquisitions by our new wholly owned foreign enterprise subsidiary. These acquisitions complete our feature set and enterprise.
Active business plus clients increased, 45% quarter over quarter. While gsv from those clients, surged, 190% quarter over quarter, importantly business plus appeals to both existing customers, as well as new prospects, 35% of business plus clients in Q2 were brand new to upwork
Business plus is success is a keybed for our strategy to serve larger businesses, in our marketplace, with a differentiated and tailored value proposition.
Together with our existing capabilities enable us to offer a unique highly differentiated solution.
We've always been the best in class provider of independent contractor talent and management for enterprises to tap into the remainder of our clients' contingent work spend spending employer of record staff augmentation statement of work and other contract types, we historically relied on EUR partners.
Ads and monetization offerings were a strong contributor in the quarter, as revenue. From these products, grew 17% year-over-year, including 19% year-over-year growth, and connects revenue and 13% year-over-year growth in freelancer Plus subscription Revenue.
These products and power Freelancers to improve their visibility and increase the yield on their efforts while also expanding our take rate.
And workarounds to deploy our IC talent management solution for other contract types.
While this approach enabled us to support a variety of programs for our clients our reliance on partners and lack of a more versatile and deeply integrated workforce management solution limited our ability to deploy our tremendous talent pool against the full range of opportunities enterprise customers approached us with.
Which is a transformational opportunity. Today we are announcing 2 acquisitions, by our new wholly owned, upwork Enterprise subsidiary. These Acquisitions complete our feature set in Enterprise and together with our existing capabilities, enable us to offer a unique highly differentiated solution.
We therefore made the decision to bring these critical capabilities in house doing so positions up work with a single digitally native contract agnostic and global solution that Holistically supports contingent work program needs.
We've always been the best-in-class provider of independent, contractor, talent and management for Enterprises.
This is why I am so excited to share the update on our M&A progress today in.
To tap into the remainder of our clients, contingent work, spend spending employer of record staff, augmentation statement of work and other contract types. We historically, relied on eer partners and workarounds to deploy our IC talent management solution for other contract types.
In Q2, our wholly owned subsidiary acquired Bhakti a contingent workforce management platform built to support large enterprises are enterprise subsidiary has also signed a definitive agreement to acquire <unk>, a digitally native employment solution for contingent W. Two work.
While this approach enabled us to support a variety of programs for our clients, our alliance on partners, and lack of a more versatile and deeply integrated, workforce management solution, limited our ability to deploy our tremendous talent pool against the full range of opportunities, Enterprise customers approached us with
We expect that transaction to close in the second half of this year.
We therefore made the decision to bring these critical capabilities. In-house.
This combination of assets completes our enterprise offering, bringing talent sourcing contracting and workforce management in a unified experience purpose built for large companies and every type of contingent work.
Doing so positions up work with a single digitally, native contract agnostic and Global solutions, that holistically supports contingent work program needs.
This is a powerful combination.
This is why I am so excited to share the update on our m&a progress today.
It accelerates our ability to capture a greater share of the 650 billion contingent workforce Tam and we expect it to begin driving meaningful GSV and revenue growth starting in late 2026.
Underpinning all of this our rapidly expanding AI workflows across our company.
Our focused and disciplined efforts to reinvent our processes with AI or increasing our internal efficiency and therefore margin profile, while allowing our teams to spend their time wisely on the highest impact work.
In Q2, our wholly owned subsidiary, acquired bumpy, a contingent workforce management, platform built to support large Enterprises. Our Enterprise of City area has also signed a definitive agreement to acquire a sin. A digitally native employment solution for contingent. W2 work. We expect that transaction to close in the second half of this year.
Over 35% of our deployed code is now AI generated and in our search team fine tuned LLM evaluations of match quality have reduced our model iteration time and cost by over 70%.
this combination of assets, completes our Enterprise offering bringing Talent, sourcing Contracting and workforce management in a unified experience purpose-built for large companies and every type of contingent work,
this is a powerful combination.
This is how we are now able to deliver faster higher quality product releases.
Q2 was a standout quarter.
It accelerates our ability to capture a greater share of the 650 billion dollar contingent Workforce Tam. And we expect it to begin driving meaningful gsv and revenue growth starting in late 2026.
Our three pronged strategy centered on AI as a monetization in enterprise is exceeding our expectations and bolsters our confidence in a GSV growth outlook for 2026.
Today, our platform is more powerful our customers are more engaged our team is more effective and our opportunity is bigger than ever.
Underpinning. All of this are rapidly expanding AI workflows across our company, our focused and disciplined efforts to reinvent. Our processes with AI are increasing our internal efficiency and therefore margin profile while allowing our teams to spend their time wisely on the highest impact work.
I'd like to thank our incredible team for their talent and dedication and our customers for their trust and partnership with that I'll turn it over to Erica.
Over 35% of our deployed code is now ai generated and in our search team, fine-tuned llm evaluations of match, quality have reduced our model iteration time and cost by over 70%.
Thanks Hayden.
We delivered an outstanding second quarter with revenue of $194 9 million and better than expected performance across all financial metrics.
This is how we are now able to deliver faster, higher quality product releases.
Quarter's results clearly demonstrate the significant advancement of our AI efforts and product enhancements, resulting in growth of our core marketplace business, including business plus.
Q2 was a standout quarter, our 3-prong strategy centered on AI as I monetization. And Enterprise is exceeding, our expectations and bolsters our confidence in a gsv growth outlook for 2026.
Our focused disciplined approach to margin expansion, while investing in growth was evident across our business as our adjusted EBITDA margin hit a new record high of 29, 3%.
Today, our platform is more powerful. Our customers are more engaged. Our team is more effective, and our opportunity is bigger than ever.
<unk> our guidance range.
This was driven by strong revenue outperformance alongside our continued cost optimization efforts, including internal investments in AI enablement.
I'd like to thank our incredible team for their talent and dedication and our customers for their trust and partnership with that, I'll turn it over to Erica.
Thanks Hayden.
We are firmly on track to achieve our 35% adjusted EBITDA margin target and we are raising our full year 2025 revenue and adjusted EBITDA guidance.
We delivered an outstanding second quarter with revenue of 194.9 million and better than expected performance across all Financial metrics.
While the macro environment remains difficult to predict we continue to outperform peers and our own plans, while investing in future growth levers.
The quarter's results, clearly demonstrate the significant advancement of our AI efforts and product enhancements. Resulting in growth of our core Marketplace business, including business. Plus
Second quarter GSV of $1 billion was stronger than expected due to successful product improvements, we've made to the marketplace, including search and match and business plus we are encouraged by early positive signals that our GSV growth levers are beginning to bend the GSV curve.
Our focused disciplined approach to margin expansion. While investing in growth, was evident across our business as our adjusted. Evita margin, hit a new record high of 29.3% exceeding. Our guidance range
Average GSV proactive client continued on its positive growth trajectory rising 5% year over year and surpassing $5000 for the first time since 2022. This marks the second consecutive quarter of positive year over year growth and the fourth consecutive quarter of sequential growth.
This was driven by strong Revenue outperformance alongside our continued cost optimization efforts including internal investments in AI enablement.
We are firmly on track to achieve our 35% adjusted EBITDA margin target, and we are raising our full-year 2025 revenue and adjusted EBITDA guidance.
Once again GSV per active client grew year over year in every major client segment, with particularly strong growth of 16% year over year and our very large client segment.
While the macro environment remains difficult to predict, we continue to outperform peers and our own plans while investing in future growth levers.
Our hours per contract in Q2 were also the highest ever as our platform attracts larger jobs and more complex work.
1 billion with stronger than expected due to successful product improvements. We've made to the marketplace, including search and match and business Plus
Our active client count continues to exhibit the cumulative effect of the top of funnel demand pressure that we've noted for the past few quarters.
We are encouraged by early positive signals that our gsv growth. Levers are beginning to bend the gsv Curve,
We are addressing the challenging demand environment by focusing on quality over quantity and targeting our marketing spend on higher LTV clients.
average gsv proactive client continued on its Positive Growth trajectory Rising 5% year-over-year and surpassing 5,000 for the first time since 2022.
In recent quarters. We've also been extensively testing new marketing channels and are seeing strong yield from alternative channels to traditional SCM and SCO.
This marks the second consecutive quarter of Positive year-over-year Growth and the fourth consecutive quarter of sequential growth.
The success of this strategy is evident as overall spend per contract grew for the third consecutive quarter, increasing 11% year over year in Q2, and representing our highest ever average spend per contract over any 12 month period.
Once again, gsv proactive client, grew year-over-year in every major client segments, with particularly strong growth of 16% year-over-year in our very large client segments.
Our hours per contract in Q2 were also the highest ever as our platform attracts larger jobs and more complex work.
This along with the enhanced AI powered customer experience improvements we have been building over the past few quarters contributed to Q2 marketplace revenue growth of two 3% year over year.
Our active client count continues to exhibit the cumulative effect of the top of funnel demand pressure that we have noted for the past few quarters.
As Hany mentioned, we are excited to announce two strategic acquisitions by our newly formed up work enterprise focused subsidiary the.
We are addressing the challenging demand environment by focusing on quality over quantity and targeting our marketing spend on higher LTV clients.
The combination of these assets is a game changer for our customers.
In recent quarters, we have also been extensively, testing new marketing channels and are seeing strong yield from alternative channels to traditional sem and SEO.
Having a full stack contract agnostic enterprise solution will solve key customer pain points and enable us to unlock this massive enterprise market in an expanded way.
We expect these deals will have a minor GSV and revenue benefit to the second half of this year with an expected mid single digit contribution to revenue.
The success of the strategy is evident as overall spend per contract, grew for the third consecutive quarter, increasing 11% year-over-year in Q2 and representing our highest ever average. Spend for contract over any 12-month period.
This along with the enhanced AI powered customer experience improvements. We've been building over the past few quarters.
The combination of additional Opex from these new businesses as well as integration and expansion costs will have a dilutive impact of approximately $10 million on adjusted EBITDA in the back half of 2025.
Contributed to Q2 Marketplace, Revenue growth of 2.3% year-over-year.
All of which is contemplated in our raised adjusted EBITDA guidance.
As Hayden mentioned, we are excited to announce 2 strategic acquisitions. By a newly formed. Upwork Enterprise focused subsidiary.
We expect these acquisitions to contribute to top line growth in 2026 and to be meaningfully GSV revenue and adjusted EBITDA accretive in 2027 longer term. We expect this strategy to be a strong driver for both top and bottom line growth.
The combination of these assets is a game-changer for our customers.
Having a full stack contract. Agnostic Enterprise solution, will solve key, customer pain points and enable us to unlock this massive Enterprise Market in an expanded way.
In the second quarter enterprise revenue was down sequentially due to ongoing pressure from internal budget cuts at a handful of larger customers.
We expect these deals will have a minor gsv and revenue benefit to the second half of this year with an expected mid single digit contribution to revenue
Some of whom had prominent lay offs in the first half of the year.
As a reminder, we also paused the majority of our sales efforts on our traditional enterprise plans in the first half of the year as we retooled our enterprise strategy. We expect the enterprise business now part of our newly formed subsidiary to return to growth in 2026 on the back of the new capabilities. The two acquisitions will contribute to our.
The combination of additional Opex from these new businesses as well as integration and expansion costs. We'll have a dilutive impact of approximately 10 million on adjusted, Evita in the back, half of 2025.
All of which is contemplated in our raised adjusted Eva dog guidance.
Offering and a renewed sales approach.
Our marketplace take rate was 18, 5% in Q2 compared to 18.0% in the second quarter of 224, as we successfully introduced new ways to price to value in the marketplace.
We expect these Acquisitions to contribute to Topline growth in 2026 and to be meaningfully gsv revenue and adjusted Eva dog. Creative in 2027 longer term. We expect this strategy to be a strong driver for both top and bottom line growth.
While successful new pricing tests have led to strength in take rate in the first half of the year, we expect relatively stable take rates through the rest of 2025 as we continue to test approaches to drive both GSV and revenue in 2026 and beyond.
In the second quarter, Enterprise Revenue was down, sequentially due to ongoing pressure from internal budget cuts at a handful of larger customers.
Some of whom had prominent layoffs in the first half of the year.
As a reminder, we also paused the majority of our sales efforts on our traditional Enterprise plans in the first half of the year as we retool our Enterprise strategy.
non-GAAP gross margin reached 77, 8% as we execute disciplined cost management across every part of our business.
non-GAAP operating expense was $98 9 million in the second quarter or 51% of revenue compared to 58% of revenue in the second quarter of 2024.
We expect the Enterprise business. Now, part of our newly formed subsidiary to return to growth in 2026 on the back of the new capabilities. The 2 acquisition will contribute to our offering and our renewed sales approach.
Our Marketplace take rate was 18.5% in Q2 compared to 18.0% in the second quarter of 2024.
Adjusted EBITDA was $57 1 million in the second quarter, leading to a record second quarter. Adjusted EBITDA margin of 29, 3%. We reported GAAP net income of $32 7 million for the second quarter, a 47% increase over Q2, 2024 and a record for <unk>.
As we successfully introduced new ways to price to value in the marketplace.
Any second quarter in our company's history.
While successful new pricing tests have led to strength and take rate. In the first half of the year. We expect relatively stable, take rates through the rest of 2025, as we continue to test, approaches to drive, both gsv and revenue in 2026 and Beyond.
These all time highs in profitability and cash generation are enabling us to strategically put capital to work to grow our business and further extend our market leadership position.
Non-GAAP growth margin reached 777.8% as we execute disciplined cost management across every part of our business.
<unk> by today's marketplace results and enterprise subsidiary acquisitions free cash flow for the second quarter was $65 6 million in.
Non-gaap operating expense was 98.9 million in a second quarter or 51% of Revenue compared to 58% of Revenue. In the second quarter of 2024.
In the quarter, we utilized $38 million in cash to buy back $2 9 million shares as part of our commitment to driving long term shareholder value at.
At these levels, we expect to be active in the share repurchases in the back half of this year.
Cash and cash equivalents were approximately $635 million at the end of the second quarter.
Adjusted Evita was 57.1 million in the second quarter leading to a record second quarter adjusted, Evita margin of 29.3%. We reported gaap net, income of 32.7 million for the second quarter of 47% increase over Q2 2024 and a record for any second quarter in our company's history.
Now turning to guidance.
For the third quarter of 2025, we expect to generate revenue in the range of $190 million to $195 million.
For adjusted EBITDA in the third quarter, we are guiding to a range of $47 million to $51 million, which represents an adjusted EBITDA margin in the range of 25% to 26%.
Ally put Capital to work to grow our business and further extend our Market leadership position. Exemplified by today's Marketplace, results, and Enterprise subsidiary acquisitions.
Free cash flow for the second quarter was 65.6 Million.
Included in this guidance is the absorption of incremental costs related to the acquisitions of both <unk> and <unk> as well as incremental spend to support the expansion of the enterprise business.
In the quarter, we utilized 38 million in cash to buy back. 2.9 Million shares as part of our commitment to driving long-term shareholder value.
Even as we invest in future growth, we will achieve meaningful year over year margin improvement in 2025, and we are reiterating our long term adjusted EBITDA margin target of 35%.
At these levels, we expect to be active in the Sherry purchases in the back half of this year.
Cash and cash equivalents were approximately $635 million at the end of the second quarter.
Now turning to guidance.
As a result of our strong execution and encouraging early impact from our numerous platform enhancements. We are increasing our full year revenue guide to be in the range of $765 million to $775 million.
For the third quarter of 2025, we expect to generate Revenue in the range of 190 to 195 million.
While this guidance does include some minimal top line benefit from the announced enterprise subsidiary acquisitions. The vast majority of the revenue guidance raise is due to the continued strength in our marketplace business.
For adjusted ebit on the third quarter, we are guiding to arrange a 47 to 51 million which represents an adjusted, Evita margin in the range of 25 to 26%.
Included in this guidance is the absorption of incremental costs related to the Acquisitions of both a sin and Bub tea, as well as incremental spend to support the expansion of the Enterprise business.
We are also increasing our full year adjusted EBITDA guidance to be in the range of $206 million to $214 million or 27% adjusted EBITDA margin at the midpoint. This represents a more than five point margin expansion versus 2024.
Even as we invest in future growth, we will achieve meaningful. Year-over-year margin Improvement in 2025 and we are reiterating our long-term adjusted Evita margin Target of 35%
We expect full year 2025, non-GAAP diluted EPS to be between $1 14, and $1.18 up from our 2024 results.
We are building the foundation for accelerated multiyear growth and this is reflected in our increased 2025 guidance ranges.
As a result of our strong execution and encouraging. Early impact from our numerous platform enhancements we are increasing our full year Revenue guide to be in the range of 765 to 775 million.
We are on the path to top line growth in 2026, driven by multiple well developed catalysts.
While this guidance does include some minimal Topline benefits from the announced Enterprise subsidiary Acquisitions the vast majority of the revenue, guidance Rays is due to the continued strength in our Marketplace business.
On stock based compensation, we have been taking meaningful steps to reduce our SBC expense and these actions will have a lasting benefit on a recorded stock based compensation and GAAP profitability stock.
Stock based comp is expected to be between 60 and $65 million for the year.
We are also increasing our full year. Adjusted evot dog guidance to be in the range of 206 to 214 million or 27% adjusted Evita margin at the midpoint. This represents a more than 5 point margin expansion versus 2024.
In closing Q2, 2025 was a standout quarter that reflects the strength of our strategy the power of our platform and the exceptional execution of our team we.
We expect full year 2025 non-GAAP diluted EPS to be between $1.14 and $1.18.
Up from our 2024 results.
We delivered record profitability exceeded guidance on every major financial metric and raised our full year outlook.
We are building the foundation for Accelerated multi-year growth and this is reflected in our increased 2025 guidance ranges.
All while navigating an uncertain macro environment.
Our disciplined cost management, expanding gross margins and ability to bend, the GSV curve underscore the effectiveness of our strategy and the speed of our execution.
We are in the path to Topline growth in 2026 driven by multiple well-developed catalysts.
On stock-based compensation, we have been taking meaningful steps to reduce our SBC expense.
We are making bold strategic moves to unlock long term growth accelerating our enterprise transformation with two game changing acquisitions and delivering fully integrated AI enabled customer experiences.
And these actions will have a lasting benefit on our recorded stock-based compensation and GAAP profitability.
Stock-based comp is expected to be between 60 and 65 million for the year.
As we move into the second half of the year, we are confident in our ability to drive continued operational excellence, while investing in durable profitable growth.
In closing, Q2 2025 was a standout quarter that reflects the strength of our strategy, the power of our platform and the exceptional execution of our team.
We delivered record profitability.
We remain focused on increasing value for our clients for our talent and for our shareholders and we are just getting started with that we will be happy to take your questions.
Exceeded guidance on every major Financial metric and raised our full year outlook. All while navigating an uncertain macro environment.
Ladies and gentlemen asked some minor if you would like to ask a question at this time you will need to press star one on your Touchtone telephone and wait for your name to be announced to enjoy a question simply press star. One again, please stand by while we compile the Q&A roster.
our discipline cost management, expanding gross, margins and ability to bend the gsv curve underscore, the effectiveness of our strategy, and the speed of our execution,
We are making bold strategic moves to unlock long-term growth.
And our first question coming from the lineup.
Accelerating our Enterprise transformation with 2 game changing Acquisitions and delivering fully integrated. AI enabled customer experiences.
<unk> Chen with UBS. Your line is now open.
Hi, good afternoon, Thanks for taking my question.
as we move into the second half of the year, we are confident in our ability to drive, continued, operational excellence, while investing in durable profitable growth,
So I wanted to ask about the acquisition.
You talk about these assets in particular, you know how.
Maybe give an example of how they will work when you integrate into your upward platform and and.
We remain focused on increasing value, for our clients, for our talent and for our shareholders and we are just getting started with that. We will be happy to take your questions.
ladies and gentlemen, as a reminder,
Kind of how things will flow through the revenue in DSV. It in terms of how you're going to report it. Thank you.
if you would like to ask a question at this time, you will need to press star 1 1 on your touchtone, telephone, and wait for your name to be announced.
Thanks, Josh we've always been best in class and offering our enterprise clients talent through the independent contracting model and we provided a range of solutions such as employer of record and other contracting types through our partners and extensions are workarounds of our platform. Historically this partnership approach.
To enjoy your questions. Simply press star 1 1, again please, stand by while we compile, the Canna roster,
in our first question, coming from the line of
Josh Chen with UBS Yin is now open.
Hi, good afternoon. Thanks for taking my questions.
Really limited our ability to serve the full range of opportunities that enterprise customers approached upon so that includes other engagement types like employer of record. Some type of managed services and staff augmentation clients have been asking us to expand into these spaces, because they love our strengthened independent contracting they love our digitally native platform.
Um, yes, I wanted to ask about the Acquisitions. Um, so could you talk about kind of these Assets in particular, you know, how you may be giving an example of how they will work? Once you integrate into your upwork platform and, and, um, you know, kind of how things will flow through the revenue and and gsv in in terms of how you're going to report it, thank you.
And they wanted to use us for broader parts of their contingent work program.
With these acquisitions were really bringing into up work a fully comprehensive digitally native set of solutions that combine our incredible talent pool with Bob He is workforce management system and a sense contingent employment solution in each of those businesses and their products were purpose built for enterprises. So.
Going forward, we're going to be able to serve enterprises and all of these different ways across their full contingent programs meeting them, where they are integrating into their existing efforts and really not requiring major change management on their side. We've had the benefit of piloting both Buffy and <unk> together, along with our solution and not really showed us how.
<unk>. This combination is going to be and give us tremendous confidence that this is the right solution that will open up this tremendous 650 billion dollar enterprise opportunity.
Josh, we've always been best-in-class and offering our Enterprise clients Talent through the independent Contracting model and we've provided a range of solutions such as Employer record and other Contracting types through our partners and extensions or workarounds of our platform historically. This partnership approach, really limited our ability to serve the full range of opportunities that Enterprise customers approached us on so that includes other engagement types. Like, uh, employer record, some type of Management Services and staff. Augmentation clients have been asking us to expand into these spaces because they love our strength and independent Contracting. They love our digitally native platform and they wanted to use us for broader parts of their contingent work programs.
And Justice is Erika maybe I'll just hit the question on GSV and revenue like I said.
These transactions are immediately GSV and revenue accretive in 'twenty 'twenty five.
With these Acquisitions. We're really bringing into upwork a fully comprehensive, digitally native set of solutions. That combine, our incredible talent pool with bbt's, workforce management system, and a sense, contingent employment solution, and each of those businesses and their products were purpose-built for Enterprises.
A very small approximately $5 million or so of benefit in the back half of 2025 revenue.
And so.
Contribute some topline growth as we enter 2026.
As he described.
These enterprises have long sales cycles and market, we're going after very large multimillion dollar contracts with both our existing enterprise customers and enter new enterprise customers, we expect to see much more meaningful GSV and revenue accretion in late 2026.
So going forward, we are going to be able to serve Enterprises in all of these different ways across their full contingent programs meeting them where they are integrating into their existing, uh, efforts and really not requiring major change management on their side. We've had the benefit of piloting, both bti and Ascend together along with our solution. And that really showed us how effective this combination is going to be and gave us tremendous confidence that this is the right.
Exclusion that will open up this tremendous, 650 billion, Enterprise opportunity.
Okay, perfect and thank you for the color there and then maybe if I can ask about the macro situation I guess some of the employment oriented data points have kind of softened in recent months.
How are you seeing the the macro environment impacting your business kind of through Q2 and.
Recognizing that you are taking other steps to kind of offset them, but just curious what kind of macro shape are you embedding into the second half. Thank you.
And just this is Erica. Maybe I'll just hit the question on on June 3rd. Like I said, uh, you know, these transactions are immediately GSB and revenue are creative in 2025. They'll have a very small approximately 5 million dollars or so benefit in the back half of a 2025 Revenue. Um, and so that. So and they'll contribute some Topline growth as we enter 2026.
Yeah, I'll comment on the macro Josh so the environment right now continues to be unpredictable, we really haven't seen notable changes from the prior quarter and so the slower acquisition environment that we've been experiencing for a while now it does weigh on things like our active client metrics, but we're now lapping those trends we have been executing extremely well.
You know, it changed, you know, these these Enterprises have long sales cycles and we are going after very large multi-million dollar contracts with both our existing, Enterprise customers and, and new Enterprise customers. So we expect to see much more, meaningful, GSP and revenue accretion in late 2026.
And we are increasingly successful in offsetting these macro pressures through the things we can't control things like AI enablement of our platform growth in our categories. Our enterprise strategy, which we just discussed so if you look at our Q2 beat on the increased revenue guide that we just shared it really reflects our confidence in our own initiatives. Despite.
Not anticipating we're seeing any changes in the macro now or in the near term as we said for a while we do look at a lot of factors here, but we feel that this is a very prudent outlook and we're excited about what we're delivering.
Okay, perfect. Yeah, thank you for the for the color there. And then, um, maybe if I can ask about the, the macro situation, I guess some of the employment oriented data points have kind of softened, in in recent months. Um, how are you seeing the the macro environment, impacting your business kind of through Q2 and, you know, recognizing that you're taking other steps to kind of offset them, but I was just curious. What kind of macro shape are you embedding into the second half? Thank you.
Perfect. Thank you for the color and congrats on the quarter.
Thanks.
Thank you.
Our next question coming from the line of Maria <unk> with Canaccord. Your line is now open.
Great. Thanks, so much for taking my question isn't that congrats on the acquisition.
Kim can we maybe dive a little bit deeper on your comments around building the GSV curve.
I guess what contributed the most to take rate expansion. This quarter. So should we think about AI enhancements, maybe monetization products like other sort of newer offerings like business plan.
And sort of now with the two acquisitions.
You announced today, maybe talk about the opportunity going forward, especially as you think about some of the gap between your platform and other platforms our solutions out there on the take rate.
Yeah, I'll comment on the macro Josh. So the environment right now continues to be unpredictable, we really haven't seen notable changes from the prior quarter and so the you know the slower acquisition environment that we've been experiencing for a while. Now does weigh on things like our active client metrics. But we're now lapping, those Trends we have been executing extremely well and we're increasingly successful and offsetting these macro pressures through the things we can control. Things like AI enablement of our platform growth in our AI categories, our Enterprise strategy which we just discussed. So if you look at our Q2 beat and the increase Revenue guide that we just shared it, really reflects our confidence in our own initiatives, despite not anticipating or seeing any changes in the macro now or in the near term as you said for a while, you know, we do look at a lot of factors here, but we feel that this is a very prudent Outlook and we're excited about what we're delivering.
Perfect, thank you for the color and like, congrats on the quarter.
Okay, Hey, Maria I'll, I'll talk a little bit about take rate and then maybe I'll hand, it to him. She can talk a little bit about some of the opportunities that we're seeing which are really exciting out of GSV front.
Thank you. Our next question, I'm coming from the line of Maria, rips with can of corn. Your line is now open.
In terms of take rate expression and Q2, we've talked a lot about.
Uh great thanks so much for taking my questions and that congrats on the Acquisitions. Uh, can can we maybe dive a little bit deeper or sort of on your comments around bending, the G Suite curve?
The experimentation that we'd be doing on the platform this year.
A lot of time and effort that goes into kind of a value based take rate strategies. So there are quite a number of things that are contributing to two that take rate benefit. It's about 50 basis points that we've seen year over year in Q2.
One of which is some of the supply and demand experimentation that we've implemented in the platform. We started in may with a.
I guess what contributed the most to take great expansion this quarter. So should we think about AI enhancement? Maybe monetization products like other uh sort of new offerings, like business plan and sort of now with this 2 Acquisitions. Uh sort of that you announced today maybe talk about the opportunity going forward especially as you think about sort of the gap between your platform and other platforms or Solutions out there on the take rate.
Kind of a range.
A larger range of kind of a freelancer fees on the on the freelancer side looking at adjusting the fees.
According to the amount of free Mr supply on the platform, we've seen some nice tick rate benefits there along with other kind of year over year growth, 19% growth in connects.
And 13% growth in freelancer, plus so actually quite a number of contributors and we're seeing actually that this is just the beginning and a lot more benefits to come from some of the experimentation we're doing.
Hey, do you want to talk to the GSE opportunity sure overall, we're seeing a lot of bright spots in terms of our GSV performance here on some of the things that are unlocking it so notably the three pronged strategy, we announced the beginning of the year is actually working were seeing the AI features that we're building on the platform are driving volume and velocity and that means we've seen this 80 million.
2025, GSV uplift just from a customer experience improvements alone and not going to sustain further in 2026 and beyond we're also seeing great strengthen our AI work categories. So just views up 30% year over year in Q2, which is an acceleration versus Q1 definitely demand there is extremely strong and that's becoming more evident.
To the, you know, they take great benefit. It's about, uh, 50 basis points that we've seen year over year in Q2, uh, 1 of which is some of the supply and demand experimentation that we've implemented on the platform. We started in May with, uh, a kind of a ring, a a larger range of kind of freelance or fees on the on the freelancer side, looking at uh, adjusting the fees. Uh, according to the amount of freelancer Supply on the platform, we've seen some nice take great benefits there along with other, um, kind of year-over-year growth, 19% growth, in connects
<unk> enterprise is obviously going to be a bigger opportunity and to address what you are saying there. We've really we've really set ourselves up with a game changing offering that led our sales team go to existing and new accounts and really engage with them on a multimillion dollar opportunities. So these are even bigger than what we were able to do before and that is it.
Um, and 13% growth in freelancer plus. So actually quite a number of contributors, uh, and we're seeing actually the this is just the beginning and a lot more benefits to come from some of the experimentation we're doing.
Are they going to contribute over time to enterprise performance overall on both growth and again. These are take rate accretive solutions relative to our marketplace. There is going to help us there as well.
Alright, that's very helpful. And then can you maybe talk about how you are prioritizing investments in AI enterprise and that at the monetization against other forms of returning capital to shareholders.
Yes sure.
Look you know our ability to expand margins and really and invest in organic growth is proven with over 28 percentage points of margin expansion over the past two years and the growth catalysts that we've been investing in over the last few years are really starting to show. Some strength is starting to bend the GSE curve as we've described.
Hey, you want to talk to the GSP the opportunity? Sure. Overall, you know, we're seeing a lot of bright spots in terms of our gsv performance here and some of the things that are unlocking it. Um, so notably, you know, the 3 prong strategy, we announced the beginning of the year is absolutely working. We're seeing the AI features that we're building on the platform are driving volume and velocity. And that means we've seen this 80 million dollar, 2025 gsv uplift, just from Ai and customer experience improvements alone. And that's going to sustain further in 2026 and Beyond. We're also seeing great strength in our AI work categories. So GSP is up 30% year-over-year in Q2 which is an acceleration versus q1. Definitely demand there is extremely strong and that's, you know, becoming more evident Enterprises going to be a bigger opportunity and to address uh what you're saying there, you know.
At the same time, we've also been able to execute on some really smart inexpensive high ROI M&A.
And that's helping drive the growth objectives that we're starting to see success and pressured headroom and objective and now most recently with MTN.
We've really set ourselves up with a game-changing offering that lets our sales team go to existing and new accounts and really engage with them on multi-million dollar opportunities. So, these are even bigger than what we were able to do before, and that is really going to contribute over time to Enterprise performance overall on both growth. And again, these are rated Creative Solutions relative to our Marketplace, so it's going to help us there as well.
And last but not least we've been able to do this while we're also returning capital to shareholders. So far executing $170 million a share buy back just the last 18 months. So you can really expect why are the same from us we're going to be focusing our investment in organic growth with really clear new prospects.
Right, that that's very helpful. And then can you maybe talk about how you your, your prioritizing sort of investments, in Ai and the prize and that uh, as in monetization against other forms of returning, Capital to shareholders?
And really focusing in on using our strong free cash flow yield and balanced balance sheet, both to accelerate our growth strategy with M&A and to continue our capital return.
Yeah, sure Maria. Um look you know, our ability to expand margins and really and invest in organic growth is proven with over 20. Percentage points of margin expansion over the past 2 years and the growth Catalyst that we've been investing in over the last 2 years are really starting to shift and starting to bend the GST curve as we've described.
Got it that's very helpful. Thank you so much.
Thank you.
Okay.
Our next question coming from the line of Ron Josey with Citi. Your line is now open.
Um, at the same time, we've also been able to execute on some really smart inexpensive, High Roi m&a, um, and that's helping Drive the growth objectives that we're starting to see success in first, with Headroom and objective. And now, most recently with the mtns and last but not least, we've been able to do this. While we're also returning Capital to shareholders.
Joe Your line is open please check your mute button.
So far, we have executed $170 million of share buybacks just in the last 18 months. So, you can really expect more of the same from us. We're going to be focusing our investment on organic growth with really clear geo prospects.
Okay. We'll go to the next person run. Please can I. Please ask a question.
Um, and really focusing in on using our strong, Free Cash Flow. Yoga balance balance sheet, both to accelerate our growth strategy with m&a and to continue our Capital return.
Our next question coming from the line of Rohit Kulkarni with Roth Capital Partners. Your line is now open.
Got it. That's uh, that's very helpful. Thank you so much.
Thank you.
Thank you for the question. This is Jared o'steen on for Rohit Kulkarni.
Christopher <unk> business plus continued to grow substantially I was curious if you could talk a little bit more just the evolution of how new customers are using the platform and anything to the behavior, you're seeing of more mature cohorts.
Our next question comes from the line of Ron Josie with City. Your line is now open.
Is open. Please check your mute button.
Yeah, it's clear from the growth we're seeing in business plus that this product is meeting a really clear need in the market. So we built this offering really for larger smbs and teams that have bigger work needs from us and what we're seeing so far is business plus clients convert faster they spend more than a typical marketplace.
Okay, uh, welcome to the next person. Uh, Ron, please keep up if you have a question.
And they are adopting across the board high value features like access to our expert by the talent and AI powered talent sourcing and Shortlisting. So this all contributed to that big GSV growth of 190% quarter over quarter and business plus in the 45% growth in clients and it really is showing that the offering is resonating I would say.
Our next question, coming from the line of Rohit, Co Kearney with Rod Capital Partners, your line is now open.
Thank you for the question. This is Jared Osteen on for realhit Kuhl Kearney.
The fact that 35% of business plus clients are entirely new to upper <unk> is showing that they want. These features too we're seeing their adoption very similar to our established customers and really taking up some of these new products and features that are available through business class and there is there's not a real difference in terms of how they look at new versus existing it's more of that.
Great to see business plus continuing to grow substantially. I was curious if you could talk a little bit more to the evolution of how new customers are using the platform and anything to the behavior. You're seeing of more mature cohorts,
Business plus overall is just such a great segment for us.
Performing even more strongly than typical marketplace customers. So we really see this as a material revenue growth driver in 2026, because its really just kind of building up steam now.
I would just add we.
We continue to see very strong after client retention overall, it's been a very steady metric for us in our retain clients grew 2% year over year in Q2 so.
And it really is showing that the offering is resonating.
Another bright spot in terms of drivers behind our TSV proactive growth overall.
Thank you very much.
Yes.
Thank you and our next question coming from the line of Brent Thill with Jefferies. Your line is now open.
Hi, Thank you this is John Gulf of Greenville.
Maybe some more questions regarding booked in ethane.
I guess a cure.
To hear more about the distinction between that and the marketplace and business plus side of the business I mean.
I would say the fact that 35% of business plus clients are entirely new to upwork is showing that they want these features too, we're seeing their adoption, very similar, to our established customers and really taking up, uh, you know, some of these new products and features that are available through business plus. And there's, you know, there's not a real difference in terms of how they look, you know, new versus existing. It's more that business plus overall is just such a great segment for us, uh, you know, performing even more strongly than uh, typical Marketplace customers. So we really see this as a material Revenue growth driver in 2026 because it's really just kind of building up steam now,
I've been very very distinctly separate what about if you have clients who want to migrate from one to the other how would that work.
<unk> signed a multimillion dollar contracts is.
He is a recognition of that upfront or is it spread out as a use.
I would just add we um, you know, we we continue to see very strong active client retention overall, that's been a very steady metric for us. And I retain clients through 2% year-over-year in Q2. So um, just another bright spot in terms of, you know, drivers behind the our, our gsv proactive growth overall.
Thank you very much.
The labor pool, and maybe one more what how is the margin profile compare thank you.
So the distinction is actually pretty big between the marketplace business and the types of customers on deals that are key unlock.
Thank you. And our next question. Coming from the line of Brent still with Jeffrey seal on his Melvin.
Unlock for us.
Hi, thank you. This is John again for Brent Hill, um maybe some more questions regarding both p and FN. Um,
We look at our core marketplace business, we have a lot of very small and small business customers, who are doing sometimes its programmatic work for us, but with us, but they don't need the type of features and functionality that very large enterprise customers do you think about the top few thousand enterprise businesses in the world. They have very complex needs of our clients are Robert.
I guess.
That here's to hear more about the distinction between that and the marketplace and business. Plus, uh, started business. I mean,
Are. Are there very very distinctly separate. Uh, what about if you have clients that want to migrate from 1 to the other? How would that work? And
Adding our own auditing integrating with existing tool and not where <unk> really come in with some capabilities that are tailored for these very big tens of millions of dollars or greater.
You know if they do sign multi-million dollar contracts is is a recognition of that upfront or is it spread out as they use?
Um, the labor pool and and maybe 1 more. Uh what how is the margin profile? Compared, thank you.
So it's a very different customers that the functionality and the needs are very different to the question about migrating suddenly if a customer starts with us in the marketplace that we will have a very clear upgrade path for them to move into our enterprise offerings.
But right now we're really focused on kind of a different set of customers, who really are better and would probably only start with us with all of these robust capabilities that we've added in.
For John. So, the distinction is actually pretty big between the marketplace business and the types of customers and deals that buggy and Ascent unlock for us. You know, if we look at our core Marketplace business, we have a lot of very small and small business customers who are doing, you know, sometimes it's programmatic work for us but with us, but they don't need the type of features and functionality that very large Enterprise customers do.
I'll just add a couple of things and maybe hit a couple of questions on revenue recognition and margin profile, but first of all just to be Super clear business plus is targeted at more of the SMB market. It has curtailed set of <unk>.
End of enterprise grade solutions, mostly focus on expert and a talent and other things and we have seen virtually zero downgrades from our from our core enterprise business. So these are really different sets of products targeted at different types of businesses.
Terms of the go forward enterprise subsidiary with <unk> integrated them.
So if you think about, you know, the top few thousand Enterprise businesses in the world, they have very complex needs around compliance. I'd rather reporting around auditing around integrating with existing tools and that's where Buffy and SSN really come in with new capabilities that are tailored for these very big you know, tens of millions of dollars or greater uh programs. So it's a it's a very different customer set the functionality. And the needs are very different to the question about migrating. Certainly, if a customer, you know, starts with us in the marketplace, we will have a very clear upgrade path for them to move into our Enterprise offerings. Uh, but right now we're really
Contracts will be recognized as there as as the work is executing just like our enterprise business is today, so really no change there. The one the one thing about the go forward businesses. The majority of these contracts are likely to be a gross revenue recognition contracts, but that will largely be a presentation issue and overall.
Really focus on kind of a different set of customers who really are best served and would probably only start with us with all of these robust capabilities that we've added in.
Number one no change at all to our adjusted EBITDA margin target of 35% and number two we expect that.
Enterprise business unit with its huge growth potential will be meaningfully EBITDA accretive starting in 2007.
Thank you.
Thank you.
Our next question coming from the line of Matthew <unk> with citizens Bank. Your line is now open.
Thank you so much for taking my questions. My first one I just wanted to ask on the testing of that freelancer fees. Just how widely is rolled out across the platform today and how should we think about that being rolled out maybe in the back half of this year and into 2026 any color there would be helpful.
Uh, I'll just add a couple things and and, and maybe hit a couple of questions on uh, Revenue recognition and margin profile. But first and foremost just to be super clear business plus is targeted at more of the SMB Market. It has a, a curtailed set of of, of kind of Enterprise grade Solutions mostly focused on Expert bit of talent and other things. Um, and we have seen virtually Zero downgrades from our from our core Enterprise business. So these are really different sets of products, targeted at different types of businesses. Um, in terms of the go forward Enterprise subsidiary with of and integrated, um, you know, these these contracts will be recognized as their as as the work is executed, just like our Enterprise business is today so really no change there. The 1, the 1 uh thing about the go forward. Business is the majority of of, of these countries are likely to be a gross revenue recognition, uh, contracts. But, that'll really largely be a presentation issue and overall, you know, there's number 1. No change at all to our
Sure.
The changes in the testing around the variable fee is still not fully rolled out excuse me to all.
You know just the Eva margin Target of 35% and number 2 we expect that you know that Enterprise business unit with its huge growth, potential will be you know, meaninglessly ibida, a creative starting in 2027.
Types are freelancers and that because we're still fine tuning exactly what that approach needs to look like so I'd say, it's still early in that implementation and we have a lot of runway to to move forward with that one thing to note about that is it really does drive both GSV and revenue because these fee changes actually drive more matching and <unk>.
Thank you.
Thank you. Our next question, coming from the lineup, Matthew condom with Citizens Bank Elon is now open.
So we expect that the impact from typically positive not just on take rate, but also on GSV in 2026.
Great. That's great. That's helpful color and then I just want to ask a follow up just specifically on AI efficiencies internally.
Thank you so much for taking my questions. My first 1, I just wanted to ask on the testing of the freelancer fees. Um, just how widely is this rolled out across the platform today? And how should we think about that being rolled out, maybe in the back half of this year and into 2026? Um, any car there would be helpful,
You called out some stuff in the in the press release around customer support but also just coding can you just talk about where we are as far as the efficiencies that you can drive further cost reductions that you can implement through AI.
Sure.
Implementation is a huge priority for us and is certainly gaining momentum and having impact both internally and on our margin structure for us it's not about replacing people were really focused on helping our people be more effective effective and impactful. So we've been implementing AI workflows across the company and engineering and product development, we are seeing 35% of <unk>.
So, I would say, you know, it's still early in that implementation, and we have a lot of runway to move forward with that. One thing to note about that is it really does drive both Gross Service Volume (GSV) and revenue because these fee changes actually drive more matching. And so, we expect that, you know, the impact from these things will be positive, not just on take rate, but also on GSV in 2026.
Code ship is touched by our generated by AI customer support is another area were seeing impact our agents are actually able to have faster response time handle higher volumes of tickets in finance and HR. That's another area, where we're using AI for things like forecasting and analyzing our internal employee feedback. So we've done a lot here, but there.
Great. That's great. That's that's helpful caller. And then I just want to ask a follow-up. Just specifically on AI efficiencies internally, um, you call that some stuff in the in the press release around uh, customer admin support but also just coding. Can you just talk about where we are as far as the efficiencies that you can drive further and cost reductions that you can Implement through AI?
It's definitely more to do and again, that's helping our margin structure, but what we're most excited about is our team is more effective and more productive because of this.
Thank you.
Thank you.
And I'm showing no further questions in the <unk> at this time, ladies and gentlemen that does conclude our conference for today. Thank you all for your participation and you may now disconnect.
Sure. Uh, you know, AI implementation is a huge priority for us and is certainly gaining momentum and having an impact both internally and on our margin structure for us. It's not about replacing people. We're really focused on helping our people be more effective effective and impactful. So we've been implementing AI workflows across the company and, and hearing and product development. We're seeing 35% of code shipped is touched by our generated, by AI. Customer support is another area we're seeing impact. Our agents are actually able to have faster response times handle higher, volumes of tickets uh in finance and HR. That's another area where we're using AI for things like forecasting and analyzing our internal employee feedback. So we've done a lot here but there's definitely more to do. And again, it does.
To open our margin structure. But what we're most excited about is our team is more effective and more productive because of this
Thank you.
Thank you. I am showing no further questions in the Q&A queue at this time. Gentlemen, this concludes the conference for today. Thank you all for your participation, and you may now disconnect.