Key Points
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Upwork is working to make artificial intelligence (AI) a tailwind, rather than a crisis.
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Management expects growth to reaccelerate in 2026.
Shares of Upwork (NASDAQ: UPWK) sank on Tuesday after the freelancer marketplace reported a decline in active clients.
By the close of trading, Upwork’s stock price was down more than 19%.
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Navigating AI trends
Upwork’s fourth-quarter revenue rose 4% year over year to $198.4 million. The company’s gross services volume (GSV) — the total dollar value of all transactions facilitated by its platform — increased 3% to $1 billion.
Upwork is making inroads with small and midsize businesses. GSV from its Upwork Business Plus offering for SMBs increased 24% sequentially.
The work marketplace is also investing aggressively in artificial intelligence (AI). AI-powered search recommendations helped boost GSV by over $100 million in 2025. Moreover, annualized GSV from AI-related work climbed more than 50% to over $300 million in the fourth quarter.
Still, active clients on Upwork’s platform fell 6% to 785,000. This understandably concerning decline likely spooked investors.
However, during a conference call with analysts, chief financial officer Erica Gessert noted that Upwork’s churn rate improved throughout 2025 — and the company expects to report active client growth in the first quarter of 2026.
Growth is set to accelerate
In turn, Upwork’s 2026 guidance includes:
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Revenue of $835 million to $850 million, compared to $787.8 million in 2025
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Adjusted earnings per share of $1.43 to $1.48, compared to $1.41
“Our diversified growth path across AI, SMB, and enterprise gives us confidence in our guidance of 4% to 6% GSV growth and 6% to 8% revenue growth for the year,” Gessert said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.