Upwork's Q1 2025 Earnings Call: Unpacking Contradictions in AI Growth, Economic Conditions, and Take Rate Strategy

AI as a driver of growth, economic and macroeconomic conditions, impact of AI on growth, economic headwinds and top-of-funnel weakness, take rate strategy and trajectory are the key contradictions discussed in Upwork's latest 2025Q1 earnings call.



Revenue and Earnings Growth:
- Upwork reported record revenue of $192.7 million for Q1 2025, exceeding the high end of their guidance range.
- The growth was driven by consistent cost discipline that led to record high adjusted EBITDA of $56 million and an adjusted EBITDA margin of 29%.

GSV and Client Dynamics:
- GSV per active client grew year-over-year for the first time in six quarters, increasing by 3% year-over-year.
- This growth was attributed to enhancements in search recommendations and customer experiences, despite a slight macro headwind affecting customer behavior at the top of the funnel.

AI and Technical Investments:
- AI-related GSV grew by 25% year-over-year, with specific categories like prompt engineering increasing by 52%.
- The integration of AI features through Uma, Upwork's Mindful AI, and the acquisition of Objective AI's technology are positively impacting key platform metrics.

Focus on Large Clients:
- The large client segment showed a significant increase in GSV per active client, growing by 11% year-over-year.
- This was due to strategic efforts to unlock spend from larger customers, including the launch of Business Plus and adjustments in the Enterprise strategy.