Upwork Revenue Falls Faster as Profit Recovers

The Tip Desk · November 10, 2026 · 3 min read

Third-quarter revenue was $185.6 million, down 8% from a year earlier, while GAAP net income rose 8% to $31.8 million.

Upwork Inc. (UPWK), the human and AI-powered work marketplace, reported third-quarter revenue of $185.6 million, down 8% from a year earlier, after a 2% year-over-year decline in the second quarter. Gross-to-settle volume fell 10.1% to $914.1 million, a sharper drop than the 4% year-over-year decline in the prior quarter.

GAAP net income was $31.8 million, or $0.25 a share, reversing a 22% year-over-year decline in the second quarter. Adjusted EBITDA rose 7% to $63.8 million, a 34.4% margin.

The profit recovery sat against a smaller top line. Marketplace revenue declined 9% to $159.3 million. Enterprise revenue declined 3% to $26.3 million. Active clients fell 10% to 717,000. GSV per active client rose 8% to $5,418, accelerating from a 5% year-over-year increase in the prior quarter.

Gross profit was $141.3 million, and the gross margin compressed 115 basis points to 76%. Operating expenses fell 15% to $106.7 million, including research and development of $34.9 million versus $47.5 million a year earlier. Income from operations was $34.6 million.

Cash provided by operating activities declined 12% to $65.9 million. Free cash flow declined 22% to $53.9 million.

GSV from freelancers with AI-skills increased 55% year-over-year, reaching an estimated annualized run rate of nearly $450 million. The Model Context Protocol server, launched in August, had weekly active users up 20 times since launch, nearly 50 million AI-agent requests, and more than $3 million in estimated annualized Connects revenue. The company also launched a public beta of Upwork Now, which connects clients with freelancers who are online and ready to start working immediately.

Business Plus GSV increased 13% quarter-over-quarter and 132% year-over-year, after 24% quarter-over-quarter and 174% year-over-year growth in the second quarter. Business Plus active clients grew 9% quarter-over-quarter and 154% year-over-year. Forty percent of active clients on Business Plus had their first Upwork spend on the offering.

Lifted acquired WorkMotion, a Berlin-based employer of record, to directly employ contingent talent across more than 30 countries. The company said the acquisition is expected to strengthen the enterprise offering, reduce third-party EOR dependency, and deliver more consistent pricing. Lifted also signed three new logos and was named a leader in Everest Group’s Contractor of Record and Contingent Employer of Record PEAK Matrix Assessment for 2026.

President and CEO Hayden Brown said the company is doubling down on its enterprise strategy with the WorkMotion deal and that the MCP server is opening the marketplace to AI agents as a new class of client. Chief Financial Officer Erica Gessert said the focus remains on sustained profitability and disciplined execution.

Upwork guided fourth-quarter 2026 revenue to $169 million to $177 million and adjusted EBITDA to $51 million to $55 million. Full-year 2026 revenue guidance is $742 million to $750 million and adjusted EBITDA guidance is $236 million to $240 million. Non-GAAP diluted EPS is guided at $0.30 to $0.32 for the fourth quarter and $1.45 to $1.47 for the full year.

Gessert, CFO since April 2023, will step down on January 1, 2027, and remain in an advisory role for several months. Chief Business Officer Peter Sanborn was appointed as the next CFO.