Online work marketplace Upwork (NASDAQ: UPWK) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales were flat year on year at $194.9 million. Guidance for next quarter’s revenue was optimistic at $192.5 million at the midpoint, 2.7% above analysts’ estimates. Its non-GAAP profit of $0.35 per share was 27.1% above analysts’ consensus estimates.

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“Upwork delivered an exceptional second quarter, significantly outperforming across all key financial metrics. Our strong Marketplace performance was driven by AI features that delivered tremendous value to our full range of customers, from SMBs to large enterprises to talent,” said Hayden Brown, president and CEO, Upwork.

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 experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Upwork grew its sales at a decent 11.1% compounded annual growth rate. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.

This quarter, Upwork’s $194.9 million of revenue was flat year on year but beat Wall Street’s estimates by 3.9%. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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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 were flat at 796,000. 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 Q2, Upwork’s gross services volume decreased by 72,000, a 8.3% 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 impressive over the last two years, averaging 8.9%. Although its gross services volume were flat 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 $244.90. It grew by 10.1% year on year, faster than its gross services volume.

Key Takeaways from Upwork’s Q2 Results

We were impressed by Upwork’s optimistic revenue and EBITDA guidance for next quarter, which beat analysts’ expectations. As for the quarter, we were also excited its revenue and EBITDA outperformed Wall Street’s estimates. On the other hand, its gross services volume fell short of Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 12.3% to $13.48 immediately after reporting.

Upwork had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. 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.