- Active clients fell 4% to 763,000 in Q2 2026, while revenue declined 2% to $191.7 million, reflecting faster-than-expected automation of low-complexity freelance jobs by AI.
- Spending per active client rose 5% to a record $5,230, with average contract hours hitting 100, indicating clients are opting for larger, more complex projects.
- AI-related work GSV grew over 22% year over year, particularly in AI Strategy & Consulting, which grew more than 50%.
- Upwork cut its full-year revenue outlook to $730-$750 million from $760-$790 million, citing ongoing AI automation and labor market challenges.
- Shares fell roughly 20% in after-hours trading following the guidance cut.
- Upwork had previously identified about 10% of gross services volume (GSV) as more exposed to AI automation.
Upwork has revised its 2026 revenue forecast down to $730 million to $750 million, a decrease from the previous estimate of $760 million to $790 million. This adjustment follows a 4% decline in active clients, now totaling 763,000, and a 2% revenue decline in Q2 2026, attributed to the rapid automation of low-complexity freelance jobs by AI.1
Despite the drop in active clients, spending per client has surged by 5% to a record $5,230, marking the eighth consecutive quarter of sequential growth. The average contract hours have also reached a record 100 hours, indicating a trend towards larger, more complex projects as clients adapt to the evolving freelance landscape.
AI-related work has seen significant growth, increasing over 22% year over year, particularly in AI consulting. Businesses are increasingly seeking talent to effectively implement AI rather than merely access it. Brown noted that nearly half of freelancers reported their most recent project involved AI, although only 16% of job postings explicitly mentioned it.3
The company has identified that about 10% of its gross services volume (GSV) is vulnerable to AI automation, with the latest data showing a faster erosion than previously anticipated. Business Plus GSV has risen 174% year over year, as larger SMB customers turn to Upwork for more complex, recurring needs.
Overall, while Upwork faces challenges from AI automation, it is also witnessing a shift in client behavior towards more substantial projects, reflecting a changing freelance market.
“The company now expects third-quarter revenue of $176 million to $184 million, with management assuming 'a heightened pace of AI-related automation and no improvements in the labor market.' Shares fell roughly 20% in after-hours trading, while AI-related work GSV grew over 22% year over year.”
Pluang
PYMNTS.com
