Upwork Rolls Into the Human + AI Era

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2:48Hayden Brown:What essentially means is it's the total value of all transactions that occur on the Upwork platform. The company also said it'll see revenue growth of 13 % to 15 % and 20 % adjusted EBITDA compound annual growth rate through 2028. This comes after shares surged 13 % earlier this month after it reported third quarter results that beat expectations and raised its full year forecast. Delighted to have with us right here in our Bloomberg Interactive Broker Studio, Erica Gessert. She is the CFO, Chief Financial Officer of Upwork. Busy day for you.

3:19Erica Gessert:Very busy. Yeah, busy but great. A lot of exciting stuff going on. Well, investors like what they heard from you guys in terms of guidance. Talk to us about the outlook, what you're seeing, how much confidence you feel in the

3:31Hayden Brown:outlook and what it kind of tells us about U.S. economy and kind of the workforce.

3:35Erica Gessert:You know, we have, you know, our investor day was really timed perfectly for us. The reason our stock went up 13 percent after our earnings report was we, you know, at the beginning, at the end of 2024, we told our investors that we would, you know, take a year and really reinvest in our company and rebuild Upwork. And we said that we would return to GSB and revenue growth in 2026. Well, we did that two quarters early in Q3 of 2025. We reported GSB growth of 2%. We reported revenue growth of 4%. And what we told them then was that our results are going up and to the right right now. And that is because of really three investment areas.

4:12Erica Gessert:One is AI, one is SMB, expanding our relationships with SMB. And one is the outsized opportunity that we have with large enterprise. But AI is really one of the big stories for us because I don't know how well you follow Upwork, but we have had a bit of an overhang over our stock on the opposite side of the spectrum, thinking that we were going to be hurt by AI, whereas we are truly a beneficiary of AI. We now see about annualized volume of$300 million in GSB from the AI category on our platform, and that is accelerating. In Q3, it was over 50 % growth per year.

4:50Hayden Brown:So I want to remind everybody, Upwork is a hiring platform. You can go there to find talent in development and IT, AI services, design and creative sales and marketing, admin and customer support. It's this two-sided market. So you have a good view on what exactly the type of job that companies are hiring for and then also the availability of that labor. What does that picture and that balance look like right now?

5:13Erica Gessert:Yeah, you know, the last few years have been, as we all know, tough on the job market. And, you know, most companies in our industry were down double digits over the past few years in terms of both volume and revenue. Upwork was relatively flat for the past couple of years. So we were gaining share against staffing companies, even other online marketplaces, but still relatively flat. And it's really these investments that we've made in AI. We're actually seeing both the AI category itself increase. And that is really, like I say, accelerating. So this is AI work on the platform, but also the investments on the front end.

5:48Erica Gessert:So if you think about the hiring process and how that works, there's a lot of friction to it, right? A client comes onto our website. They post a job. They have to write it up. They have to search for talent. The talent has to write a job proposal. Well, now AI does all of that for both our clients and our talent. And it's making them find each other faster and kind of fulfill these jobs and get them done quicker. Those matches work? Like what percentage of the time or where is it that it's like, well, not not good. Well, no. So what the AI is doing is it's writing the job post. It's writing the job proposal.

6:20Erica Gessert:And of course, you know, there can be editing. Yeah. But but now we do have a interviewer. And and we also one of our one of our most successful very recent launches is UMA, which is our, you know, our AI companion on our site is now recruiting talent. So the client asks for a certain type of talent. UMA goes out within our 18 million strong talent base and identifies the right talent for that job. Now, we're seeing fill rates much higher using the using the A.I. recruiter than with a human recruiter. Why? Well, you know, I think we have one of the best data sets, honestly, on the planet. And if you think about what these what this A.I.

6:56Erica Gessert:is actually really good at, it's good at, you know, spinning lots and lots of data. Right. And so, you know, we've been building our platform is over 10 years old and we've been building this data set of, you know, what types of jobs match with which talent, you know, whether client client is price sensitive or, you know, maybe they're quality sensitive. And so the recruiter, the air crew is much better at scanning across all of this data than a human can be.

7:22Hayden Brown:Are you are you seeing demand stay stable, decrease or increase from the side of your platform that is looking for the workers?

7:32Erica Gessert:Yeah. So client demand. And I think, you know, what we are seeing is client demand has been where we have seen the biggest impact from, from, you know, I would say the job market and the economy writ large.

7:42Hayden Brown:Like if the economy is softer, then demand will go down from the client side. Yes.

7:47Erica Gessert:And if you think about that, if you think about, you know, our, our, our online marketplace is primarily SMB customers, right? And so small and medium sized business, small and medium sized business. So if you think about what's going on there, when inflation is high, you know, you know, this hits consumer wallets. It also hits SMB leaders. And then also when interest rates are high, they have lower access to capital. And so we do see the demand environment in terms of just pure volume of SMB hirers relatively flat in this right now. But what we are seeing is we are one of the few places where these SMB customers can actually access a very high quality AI talent and afford, you know, in an affordable way and quickly.

8:29Erica Gessert:And so as they're trying to implement AI work within their businesses, you know, this contingent marketplace that we offer is one of the best places they can find. What's your take on AI and the impact it's going to have on the labor force? So, you know, we have amazing data on this. And what we are seeing is that AI is not going to replace humans. What's going to, you know, humans with AI will replace humans without AI, right? And so we're seeing AI replace very simple tasks, but not the larger, more complex work. Because these AI agents are not that agentic. They have no judgment. They cannot complete complex tasks.

9:08Erica Gessert:So what we've seen over the years is jobs that are$300 and lower, those have gone down on our platform. So about two years ago, about 5 % of our work was job$300 and lower. Now it's about 3.5%. But at the same time, the AI jobs on our platform, clients who engage in AI work spend about three times what our normal kind of platform work does. And so, you know, we see that growing and growing because that work is more complex. It requires humans and, you know, humans using AI agents, but it requires humans in the loop.

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