UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

________________________________________________

FORM 10-Q

_____________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-38678

________________________________________________

UPWORK INC.

(Exact Name of Registrant as Specified in its Charter)

________________________________________________

Delaware		46-4337682
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
475 Brannan Street, Suite 430
San Francisco,	California	94107
(Address of principal executive offices)		(Zip Code)

(650) 316-7500

(Registrant’s telephone number, including area code)

_______________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share	UPWK	The Nasdaq Stock Market LLC

_______________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No ☒

As of June 30, 2024, there were 132,006,676 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

		Page
Special Note Regarding Forward-Looking Statements		1
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	2
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	66
Item 3.	Defaults Upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	67
Item 6.	Exhibits	69
Signatures		70

Unless otherwise expressly stated or the context otherwise requires, references in this Quarterly Report on Form 10-Q, which we refer to as this Quarterly Report, to “Upwork,” “Company,” “our,” “us,” and “we” and similar references refer to Upwork Inc. and its wholly owned subsidiaries.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws. All statements contained in this Quarterly Report, other than statements of historical fact, including any statements regarding our future operating results and financial position, our business strategy and plans, potential growth or growth prospects, active clients, future research and development, sales and marketing, and general and administrative expenses, provision for transaction losses, our plans with respect to share repurchases, and our objectives for future operations, are forward-looking statements. Words such as “believes,” “may,” “will,” “estimates,” “potential,” “continues,” “anticipates,” “intends,” “expects,” “could,” “would,” “projects,” “plans,” “targets,” and variations of such words and similar expressions are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections as of the date of this filing about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, “Risk Factors” in this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report and in other documents we file from time to time with the Securities and Exchange Commission, which we refer to as the SEC, that disclose risks and uncertainties that may affect our business. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. In addition, the forward-looking statements in this Quarterly Report are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update such statements for any reason after the date of this Quarterly Report or to conform statements to actual results or revised expectations, except as required by law.

You should read this Quarterly Report and the documents that we reference herein and have filed with the SEC or incorporated by reference as exhibits to this Quarterly Report with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.

1

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

UPWORK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)	June 30, 2024		December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	182,803	$	79,641
Marketable securities	314,941		470,457
Funds held in escrow, including funds in transit	218,656		212,387
Trade and client receivables – net of allowance of $4,893 and $5,141 as of June 30, 2024 and December 31, 2023, respectively	116,522		103,061
Prepaid expenses and other current assets	22,743		17,825
Total current assets	855,665		883,371
Property and equipment, net	28,149		27,140
Goodwill	118,219		118,219
Intangible assets, net	2,258		3,048
Operating lease asset	2,627		4,333
Other assets, noncurrent	1,645		1,430
Total assets	$	1,008,563	$	1,037,541
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	5,863	$	5,063
Escrow funds payable	218,656		212,387
Accrued expenses and other current liabilities	49,811		58,192
Deferred revenue	10,766		17,361
Total current liabilities	285,096		293,003
Debt, noncurrent	357,008		356,087
Operating lease liability, noncurrent	4,835		6,088
Other liabilities, noncurrent	528		1,288
Total liabilities	647,467		656,466
Commitments and contingencies (Note 6)
Stockholders’ equity
Common stock, $0.0001 par value; 490,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 132,006,676 and 137,272,754 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	13		14
Additional paid-in capital	615,012		674,918
Accumulated other comprehensive income (loss)	(529)		205
Accumulated deficit	(253,400)		(294,062)
Total stockholders’ equity	361,096		381,075
Total liabilities and stockholders’ equity	$	1,008,563	$	1,037,541

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

UPWORK INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except per share data)	2024		2023		2024		2023
Revenue	$	193,129	$	168,611	$	384,066	$	329,469
Cost of revenue	43,852		40,882		88,045		81,309
Gross profit	149,277		127,729		296,021		248,160
Operating expenses
Research and development	52,465		43,246		105,381		87,727
Sales and marketing	47,333		59,069		95,184		124,069
General and administrative	29,924		28,983		61,925		58,270
Provision for transaction losses	1,774		2,547		2,701		9,248
Total operating expenses	131,496		133,845		265,191		279,314
Income (loss) from operations	17,781		(6,116)		30,830		(31,154)
Other income, net	5,620		3,982		12,342		46,982
Income (loss) before income taxes	23,401		(2,134)		43,172		15,828
Income tax provision	(1,181)		(1,857)		(2,510)		(2,652)
Net income (loss)	$	22,220	$	(3,991)	$	40,662	$	13,176
Net income (loss) per share:
Basic	$	0.17	$	(0.03)	$	0.30	$	0.10
Diluted	$	0.17	$	(0.03)	$	0.30	$	(0.18)
Weighted-average shares used to compute net income (loss) per share
Basic	131,436		134,142		133,809		133,492
Diluted	138,266		134,142		140,798		135,049
Other comprehensive income (loss), net of tax:
Net unrealized holding (loss) gain on marketable securities, net	$	(143)	$	297	$	(734)	$	2,220
Total comprehensive income (loss)	$	22,077	$	(3,694)	$	39,928	$	15,396

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

UPWORK INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share amounts)	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Three Months Ended June 30, 2024	Shares	Amount		Shares	Amount
Balances as of March 31, 2024	133,118,345	$	13	(175,000)	$	(2,138)	$	627,007	$	(386)	$	(275,620)	$	348,876
Issuance of common stock upon exercise of stock options	159,907	—		—	—		664		—		—		664
Stock-based compensation expense	—	—		—	—		19,678		—		—		19,678
Issuance of common stock for settlement of RSUs	1,344,711	—		—	—		—		—		—		—
Tides Foundation common stock warrant expense	—	—		—	—		187		—		—		187
Issuance of common stock in connection with employee stock purchase plan	414,159	—		—	—		2,917		—		—		2,917
Repurchase of common stock	(3,030,446)	—		175,000	2,138		(35,441)		—		—		(33,303)
Unrealized loss on marketable securities	—	—		—	—		—		(143)		—		(143)
Net income	—	—		—	—		—		—		22,220		22,220
Balances as of June 30, 2024	132,006,676	$	13	—	$	—	$	615,012	$	(529)	$	(253,400)	$	361,096

(In thousands, except share amounts)	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Three Months Ended June 30, 2023	Shares	Amount
Balances as of March 31, 2023	133,464,264	$	13	$	613,887	$	(1,162)	$	(323,782)	$	288,956
Issuance of common stock upon exercise of stock options	50,842	—		177		—		—		177
Stock-based compensation expense	—	—		18,733		—		—		18,733
Issuance of common stock for settlement of RSUs	991,476	—		—		—		—		—
Tides Foundation common stock warrant expense	—	—		187		—		—		187
Issuance of common stock in connection with employee stock purchase plan	377,015	—		2,564		—		—		2,564
Unrealized gain on marketable securities	—	—		—		297		—		297
Net loss	—	—		—		—		(3,991)		(3,991)
Balances as of June 30, 2023	134,883,597	$	13	$	635,548	$	(865)	$	(327,773)	$	306,923

(In thousands, except share amounts)	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
Six Months Ended June 30, 2024	Shares	Amount
Balances as of December 31, 2023	137,272,754	$	14	$	674,918	$	205	$	(294,062)	$	381,075
Issuance of common stock upon exercise of stock options and common stock warrants	197,557	—		770		—		—		770
Stock-based compensation expense	—	—		36,763		—		—		36,763
Issuance of common stock for settlement of RSUs	2,198,932	—		—		—		—		—
Tides Foundation common stock warrant expense	—	—		375		—		—		375
Issuance of common stock in connection with employee stock purchase plan	414,159	—		2,917		—		—		2,917
Repurchase of common stock	(8,076,726)	(1)		(100,731)		—				(100,732)
Unrealized loss on marketable securities	—	—		—		(734)		—		(734)
Net income	—	—		—		—		40,662		40,662
Balances as of June 30, 2024	132,006,676	$	13	$	615,012	$	(529)	$	(253,400)	$	361,096

(In thousands, except share amounts)	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Deficit
Six Months Ended June 30, 2023	Shares	Amount
Balances as of December 31, 2022	132,368,265	$	13	$	592,900	$	(3,085)	$	(340,949)	$	248,879
Issuance of common stock upon exercise of stock options	274,093	—		935		—		—		935
Stock-based compensation expense	—	—		38,774		—		—		38,774
Issuance of common stock for settlement of RSUs	1,864,224	—		—		—		—		—
Tides Foundation common stock warrant expense	—	—		375		—		—		375
Issuance of common stock in connection with employee stock purchase plan	377,015	—		2,564		—		—		2,564
Unrealized gain on marketable securities	—	—		—		2,220		—		2,220
Net income	—	—		—		—		13,176		13,176
Balances as of June 30, 2023	134,883,597	$	13	$	635,548	$	(865)	$	(327,773)	$	306,923

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

UPWORK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In thousands)	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	40,662	$	13,176
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for transaction losses	2,433		5,442
Depreciation and amortization	6,775		3,878
Amortization of debt issuance costs	921		1,177
Accretion of discount on purchases of marketable securities, net	(8,159)		(6,154)
Amortization of operating lease asset	1,706		1,611
Tides Foundation common stock warrant expense	375		375
Stock-based compensation expense	36,180		38,337
Gain on early extinguishment of convertible senior notes	—		(38,945)
Changes in operating assets and liabilities:
Trade and client receivables	(16,158)		(6,957)
Prepaid expenses and other assets	(5,133)		(1,464)
Operating lease liability	(3,129)		(2,866)
Accounts payable	701		(3,371)
Accrued expenses and other liabilities	(6,847)		(5,141)
Deferred revenue	(7,381)		(3,490)
Net cash provided by (used in) operating activities	42,946		(4,392)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(194,299)		(254,119)
Proceeds from maturities of marketable securities	321,846		307,410
Proceeds from sale of marketable securities	35,394		149,859
Purchases of property and equipment	(775)		(135)
Internal-use software and platform development costs	(5,637)		(6,072)
Net cash provided by investing activities	156,529		196,943
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in escrow funds payable	6,269		16,197
Proceeds from exercises of stock options	770		935
Proceeds from employee stock purchase plan	2,917		2,564
Repurchase of common stock	(100,000)		—
Net cash paid for early extinguishment of convertible senior notes	—		(171,327)
Net cash used in financing activities	(90,044)		(151,631)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	109,431		40,920
Cash, cash equivalents, and restricted cash—beginning of period	296,418		295,231
Cash, cash equivalents, and restricted cash—end of period	$	405,849	$	336,151
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	463	$	837
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES:
Property and equipment purchased but not yet paid	$	118	$	124
Internal-use software and platform development costs incurred but not yet paid	$	134	$	93

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

UPWORK INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1—Organization and Description of Business

Upwork Inc., which is referred to as the Company or Upwork, operates a work marketplace that connects businesses, which are referred to as clients, with independent talent. Independent talent on the Company’s work marketplace, which are referred to as talent, and, together with clients, as customers, include independent professionals and agencies of varying sizes and are an increasingly sought-after, critical, and expanding segment of the global workforce. The Company is incorporated in the state of Delaware and is headquartered in San Francisco, California.

Unless otherwise expressly stated or the context otherwise requires, the terms “Upwork” and the “Company” in these notes to the condensed consolidated financial statements refer to Upwork and its wholly owned subsidiaries.

Note 2—Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, which is referred to as U.S. GAAP, and applicable rules and regulations of the SEC regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which is referred to as the Annual Report, filed with the SEC on February 15, 2024.

The condensed consolidated balance sheet as of December 31, 2023 included herein was derived from the audited financial statements as of that date but does not include all disclosures including notes required by U.S. GAAP.

The condensed consolidated financial statements include the accounts of Upwork and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair statement of the financial position, results of operations, changes in stockholders’ equity and cash flows for the interim periods, but do not purport to be indicative of the results of operations or financial condition to be anticipated for the full year ending December 31, 2024. Prior period presentation has been revised to conform to the current period presentation as of June 30, 2024.

In 2023, the Company changed the name of its Upwork Enterprise offering to Enterprise Solutions. Concurrently, to align with customer needs and internal decision-making, the Company combined Enterprise Solutions and Managed Services into a suite of Enterprise offerings. To conform to the current period presentation as of June 30, 2024, the Company presents revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer reports revenue from its Enterprise Solutions offering in Marketplace revenue.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods presented. Such estimates include, but are not limited to: the useful lives of assets; assessment of the recoverability of long-lived assets; goodwill impairment; standalone selling price of material rights and the period of time over which to defer and recognize the consideration allocated to the material rights; allowance for expected credit losses; liabilities relating to transaction losses; stock-based compensation; and

6

accounting for income taxes. Management bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. The Company evaluates its estimates, assumptions, and judgments on an ongoing basis using historical experience and other factors and revises them when facts and circumstances dictate.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

Summary of Significant Accounting Policies

The significant accounting policies applied in the Company’s audited consolidated financial statements, as disclosed in the Annual Report, are applied consistently in these unaudited interim condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

The Company has reviewed the accounting pronouncements issued during the six months ended June 30, 2024 and concluded they were either not applicable or not expected to have a material impact on the Company’s condensed consolidated financial statements.

In December 2023, the Financial Accounting Standards Board, which is referred to as the FASB, issued Accounting Standards Update, which is referred to as ASU, 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact this ASU will have on the footnotes included in the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the new disclosures that will be added to the footnotes included in the Company’s consolidated financial statements for the year ending December 31, 2024.

Note 3—Revenue

Disaggregation of Revenue

See “Note 9—Segment and Geographical Information” for the Company’s revenue disaggregated by type of service and geographic area.

Remaining Performance Obligations

As of June 30, 2024, the Company had $5.1 million of remaining performance obligations associated with the transaction price that has been allocated to unexercised material rights related to the Company’s arrangements with talent subject to tiered service fees. In May 2023, the Company retired its tiered service fee structure for talent and introduced a simplified flat service fee of 10%. This change took effect for new contracts and existing contracts that would have otherwise been subject to a 20% fee under the former tiered service fee model. Contracts under the former tiered service fee model that had a 5% fee retained that rate for those contracts through the end of 2023. With this change to the Company’s tiered service fee structure, the Company no longer allocates a portion of the transaction price to unexercised material rights. As of June 30, 2024, the Company expects to recognize substantially all of the $5.1 million

7

of remaining performance obligations associated with unexercised material rights related to tiered service fees over the next 12 months, with an immaterial amount recognized thereafter.

The Company has applied the practical expedients and exemptions and does not disclose the value of remaining performance obligations for: (i) contracts with an original expected length of one year or less; and (ii) contracts for which the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation under the series guidance.

Contract Balances

The following table provides information about the balances of the Company’s trade and client receivables, net of allowance and contract liabilities included in deferred revenue and other liabilities, noncurrent:

(In thousands)	June 30, 2024		December 31, 2023
Trade and client receivables, net of allowance	$	116,522	$	103,061
Contract liabilities
Deferred revenue	10,766		17,361
Deferred revenue (component of other liabilities, noncurrent)	4		790

During the three and six months ended June 30, 2024, changes in the contract liabilities balances were a result of normal business activity and deferral, and subsequent recognition, of revenue related to arrangements with talent subject to tiered service fees and related allocation of transaction price to material rights.

Revenue recognized during the three and six months ended June 30, 2024 that was included in deferred revenue as of March 31, 2024 and December 31, 2023 was $8.9 million and $13.0 million, respectively. Revenue recognized during the three and six months ended June 30, 2023 that was included in deferred revenue as of March 31, 2023 and December 31, 2022 was $9.8 million and $15.2 million, respectively.

Note 4—Fair Value Measurements

The Company defines fair value as the exchange price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance describes three levels of inputs that may be used to measure fair value:

•Level I—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets;

•Level II—Observable inputs other than Level I prices, such as unadjusted quoted prices for similar assets or liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level III—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on the Company’s own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

The categorization of a financial instrument within the fair value hierarchy is based upon the lowest level of input that is significant to its fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the assets or liabilities.

8

The Company’s financial instruments that are carried at fair value consist of Level I and Level II assets as of June 30, 2024 and December 31, 2023. The following tables summarize the Company’s available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category reported as cash equivalents or marketable securities as of June 30, 2024 and December 31, 2023:

(In thousands) June 30, 2024	Amortized Cost		Unrealized Gain		Unrealized Loss		Fair Value		Cash Equivalents		Marketable Securities
Level I
Money market funds	$	108,360	$	—	$	—	$	108,360	$	108,360	$	—
Treasury bills	137,436		—		(203)		137,233		23,277		113,956
U.S. government securities	19,020		4		(106)		18,918		—		18,918
Total Level I	264,816		4		(309)		264,511		131,637		132,874
Level II
Commercial paper	25,575		—		—		25,575		—		25,575
Corporate bonds	133,226		68		(231)		133,063		—		133,063
Commercial deposits	14,377		—		—		14,377		—		14,377
Asset-backed securities	5,100		—		(12)		5,088		—		5,088
Foreign government and agency securities	3,973		—		(9)		3,964		—		3,964
Total Level II	182,251		68		(252)		182,067		—		182,067
Total	$	447,067	$	72	$	(561)	$	446,578	$	131,637	$	314,941

(In thousands) December 31, 2023	Amortized Cost		Unrealized Gain		Unrealized Loss		Fair Value		Cash Equivalents		Marketable Securities
Level I
Money market funds	$	4,782	$	—	$	—	$	4,782	$	4,782	$	—
Treasury bills	291,611		109		—		291,720		13,955		277,765
U.S. government securities	26,213		3		(18)		26,198		—		26,198
Total Level I	322,606		112		(18)		322,700		18,737		303,963
Level II
Commercial paper	35,699		—		—		35,699		—		35,699
Corporate bonds	92,979		189		(12)		93,156		—		93,156
Commercial deposits	15,371		—		—		15,371		—		15,371
Asset-backed securities	14,728		2		(42)		14,688		—		14,688
Foreign government and agency securities	3,075		5		—		3,080		—		3,080
U.S. agency securities	4,506		—		(6)		4,500		—		4,500
Total Level II	166,358		196		(60)		166,494		—		166,494
Total	$	488,964	$	308	$	(78)	$	489,194	$	18,737	$	470,457

Additionally, the Company deposits funds held in escrow in interest-bearing and non-interest-bearing cash accounts. The interest earned on the interest-bearing accounts is included in revenue in the Company’s condensed consolidated statement of operations and comprehensive income (loss). As of June 30, 2024 and December 31, 2023, the fair value of the Company’s funds held on behalf of customers and held in interest-bearing cash accounts was measured using Level I inputs.

9

Unrealized Investment Losses

The following tables summarize, for all debt securities classified as available-for-sale in an unrealized loss position as of June 30, 2024 and December 31, 2023, the aggregate fair value and gross unrealized loss by the length of time those securities have been continuously in an unrealized loss position.

(In thousands)	Less Than 12 Months				12 Months or Longer				Total
Duration of unrealized losses June 30, 2024	Fair Value		Unrealized loss		Fair Value		Unrealized loss		Fair Value		Unrealized loss
Treasury bills	$	137,233	$	(203)	$	—	$	—	$	137,233	$	(203)
U.S. government securities	14,819		(78)		2,860		(28)		17,679		(106)
Corporate bonds	79,151		(231)		—		—		79,151		(231)
Asset-backed securities	—		—		4,907		(12)		4,907		(12)
Foreign government and agency securities	3,631		(9)		—		—		3,631		(9)
Total	$	234,834	$	(521)	$	7,767	$	(40)	$	242,601	$	(561)

(In thousands)	Less Than 12 Months				12 Months or Longer				Total
Duration of unrealized losses December 31, 2023	Fair Value		Unrealized loss		Fair Value		Unrealized loss		Fair Value		Unrealized loss
U.S. government securities	$	15,381	$	(15)	$	5,182	$	(3)	$	20,563	$	(18)
Corporate bonds	24,062		(10)		552		(2)		24,614		(12)
Asset-backed securities	6,598		(20)		7,348		(22)		13,946		(42)
U.S. agency securities	1,995		(1)		2,505		(5)		4,500		(6)
Total	$	48,036	$	(46)	$	15,587	$	(32)	$	63,623	$	(78)

For available-for-sale marketable debt securities with unrealized loss positions, the Company does not intend to sell these securities, nor does it anticipate that it will need to or be required to sell the securities. As of June 30, 2024 and December 31, 2023, the decline in fair value of these securities was due to increases in interest rates and not due to credit related factors. As of June 30, 2024 and 2023, the Company considered any decreases in market value to be temporary in nature and did not consider any of the Company’s marketable securities to be other-than-temporarily impaired. The Company did not record any impairment charges with respect to its marketable securities during each of the three and six months ended June 30, 2024 and 2023.

During the three months ended June 30, 2024 and 2023, interest income, net was $6.2 million and $4.8 million, respectively. During the six months ended June 30, 2024 and 2023, interest income, net was $13.9 million and $10.3 million, respectively. Interest income, net is included in other income, net in the Company’s condensed consolidated statement of operations and comprehensive income (loss).

Note 5—Balance Sheet Components

Cash and Cash Equivalents, Restricted Cash, and Funds Held In Escrow, Including Funds In Transit

The following table reconciles cash and cash equivalents, restricted cash, and funds held in escrow that are restricted as reported in the condensed consolidated balance sheets as of June 30, 2024 and

10

December 31, 2023 to the total of the same amounts shown in the condensed consolidated statement of cash flows for the six months ended June 30, 2024:

(In thousands)	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	182,803	$	79,641
Restricted cash	4,390		4,390
Funds held in escrow, including funds in transit	218,656		212,387
Total cash, cash equivalents, and restricted cash as shown in the condensed consolidated statement of cash flows	$	405,849	$	296,418

Property and Equipment, Net

Property and equipment, net consisted of the following:

(In thousands)	June 30, 2024		December 31, 2023
Internal-use software and platform development	$	53,148	$	47,096
Leasehold improvements	11,857		11,644
Computer equipment and software	7,314		6,605
Office furniture and fixtures	2,745		2,745
Total property and equipment	75,064		68,090
Less: accumulated depreciation	(46,915)		(40,950)
Property and equipment, net	$	28,149	$	27,140

For the three months ended June 30, 2024 and 2023, depreciation expense related to property and equipment, excluding internal-use software and platform development, was $0.6 million and $0.8 million, respectively. For the six months ended June 30, 2024 and 2023, depreciation expense related to property and equipment, excluding internal-use software and platform development, was $1.3 million and $1.5 million, respectively.

For each of the three months ended June 30, 2024 and 2023, the Company capitalized $3.6 million of internal-use software and platform development costs. For the six months ended June 30, 2024 and 2023, the Company capitalized $6.1 million and $6.4 million of internal-use software and platform development costs, respectively.

For the three months ended June 30, 2024 and 2023, amortization expense related to the capitalized internal-use software and platform development costs was $2.6 million and $1.1 million, respectively. For the six months ended June 30, 2024 and 2023, amortization expense related to the capitalized internal-use software and platform development costs was $4.7 million and $2.3 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

(In thousands)	June 30, 2024		December 31, 2023
Accrued compensation and related benefits	$	18,636	$	25,872
Accrued indirect taxes	12,552		13,171
Accrued vendor expenses	8,513		8,844
Operating lease liability, current	3,812		5,687
Accrued payment processing fees	3,780		2,090
Accrued talent costs	1,668		1,415
Other	850		1,113
Total accrued expenses and other current liabilities	$	49,811	$	58,192

11

Stockholders’ Equity

2024 PSU Awards

During the three months ended March 31, 2024, the compensation committee of the Company’s board of directors, which is referred to as the compensation committee, approved the grant of performance stock unit awards to certain members of the Company’s leadership team under the Company’s 2018 Equity Incentive Plan, which are referred to as the 2024 PSU Awards. These awards were granted on March 18, 2024, which is referred to as the PSU Grant Date.

Up to fifty percent of the total number of shares subject to the 2024 PSU Awards are eligible to vest based on the Company’s achievement of certain financial performance targets in the fiscal year ending December 31, 2025 and up to the remaining fifty percent of the total number of shares subject to the 2024 PSU Awards are eligible to vest based on the Company’s achievement of certain financial performance targets in the fiscal year ending December 31, 2026. For each year, the financial performance targets consist of year-over-year revenue growth and adjusted EBITDA margin targets that were established by the compensation committee at the time of grant, which is referred to as the PSU Performance Condition. In order to receive the vested PSUs, a recipient must remain in continuous service with the Company until the compensation committee certifies the achievement of the PSU Performance Condition for the applicable year, which is referred to as the PSU Service Condition. The dates on which such certification takes place are referred to as Certification Dates.

The Company classifies the 2024 PSU Awards as equity awards. Stock-based compensation expense related to the 2024 PSU Awards is a component of operating expenses in the Company’s condensed consolidated statements of operations and comprehensive income (loss) and is recognized over the longer of the expected achievement period for the PSU Performance Condition and the PSU Service Condition, which is 23 months and 35 months for the shares eligible to vest under the 2024 PSU Awards based on performance in each of the years ending December 31, 2025 and 2026, respectively. The grant date fair value of the 2024 PSU Awards was determined using the Company’s closing common stock price on the PSU Grant Date multiplied by the number of 2024 PSU Awards that were probable of vesting on the PSU Grant Date. At each reporting date prior to the Certification Dates, the number of 2024 PSU Awards that are probable of vesting will be reassessed and any changes are reflected in stock-based compensation expense for the period.

Share Repurchase Program

During 2023, the Company’s board of directors authorized the repurchase of up to $100.0 million of shares of the Company’s outstanding common stock, which is referred to as the Share Repurchase Program. Repurchases of the Company’s common stock under the Share Repurchase Program may be made from time to time on the open market (including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended), in privately negotiated transactions, or by other methods, at the Company’s discretion, and in accordance with applicable securities laws and other restrictions. The Share Repurchase Program has no expiration date and will continue until otherwise suspended, terminated, or modified at any time for any reason. The Share Repurchase Program does not obligate the Company to repurchase any dollar amount or number of shares, and the timing and amount of any repurchases will depend on market and business conditions.

During the three and six months ended June 30, 2024, the Company repurchased and subsequently retired 2.9 million and 8.1 million shares of its common stock for an aggregate amount of $33.1 million and $100.0 million at an average price of $11.60 and $12.38 per share, including fees associated with the repurchases, respectively. As of June 30, 2024, the Company had no remaining balance available for repurchases under the Share Repurchase Program.

During the three months ended March 31, 2024, the Company repurchased 0.2 million shares of its common stock that were recorded as treasury stock in the Company’s condensed consolidated balance sheet as of March 31, 2024 and retired in April 2024. As of June 30, 2024, the Company did not hold any shares of treasury stock.

12

Note 6—Commitments and Contingencies

Letters of Credit

In conjunction with the Company’s operating lease agreements, as of June 30, 2024 and December 31, 2023, the Company had irrevocable letters of credit outstanding in the aggregate amount of $0.8 million. The letters of credit are collateralized by restricted cash in the same amount. No amounts had been drawn against these letters of credit as of June 30, 2024 and December 31, 2023.

Contingencies

The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Potential contingencies may include various claims and litigation or non-income tax matters that arise from time to time in the normal course of business. Due to uncertainties inherent in such contingencies, the Company can give no assurance that it will prevail in any such matters, which could subject the Company to significant liability or damages. Any claims, litigation, or other contingencies could have an adverse effect on the Company’s business, financial position, results of operations, or cash flows in or following the period that claims, litigation, or other contingencies are resolved.

As of June 30, 2024 and December 31, 2023, the Company was not a party to any material legal proceedings or claims, nor is the Company aware of any pending or threatened litigation or claims, including non-income tax matters, that could reasonably be expected to have a material adverse effect on its business, operating results, cash flows, or financial condition. Accordingly, the amounts accrued for contingencies for which the Company believes a loss is probable were not material as of June 30, 2024 and December 31, 2023.

Indemnification

The Company has indemnification agreements with its officers, directors, and certain key employees to indemnify them while they are serving in good faith in their respective positions. In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to clients, business partners, vendors, and other parties, including, but not limited to, losses arising out of the Company’s breach of such agreements, claims related to potential data or information security breaches, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from the Company’s products and services or its acts or omissions. In addition, subject to the terms of the applicable agreement, as part of the Company’s Enterprise Solutions and certain other premium offerings, the Company indemnifies clients that subscribe to worker classification services for losses arising from worker misclassification. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the facts and circumstances involved in each particular provision.

13

Note 7—Debt

The following table presents the carrying value of the Company’s debt obligations as of June 30, 2024 and December 31, 2023:

(In thousands)	June 30, 2024			December 31, 2023
Convertible senior notes	$	360,998		$	360,998
Total debt	360,998			360,998
Less: unamortized debt issuance costs	(3,990)			(4,911)
Debt, noncurrent	$	357,008		$	356,087
Weighted-average interest rate	0.76		%	0.77		%

Convertible Senior Notes Due 2026

In August 2021, the Company issued 0.25% convertible senior notes due 2026, which are referred to as the Notes. The Notes were issued pursuant to and are subject to the terms and conditions of an indenture between the Company and Computershare Trust Company, National Association (as successor in interest to Wells Fargo Bank, National Association), as trustee, which is referred to as the Indenture. The Notes were offered and sold in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. As of June 30, 2024 and December 31, 2023, $361.0 million aggregate principal amount of the Notes remained outstanding.

The Notes are senior, unsecured obligations of the Company and bear interest at a rate of 0.25% per year. Interest will accrue from August 10, 2021 and is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2022, and the principal amount of the Notes will not accrete. The Notes will mature on August 15, 2026, unless earlier redeemed, repurchased, or converted in accordance with the terms of the Notes.

Holders may convert all or any portion of their Notes, in multiples of $1,000 principal amount at the option of the holder (i) on or after May 15, 2026, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date, and (ii) prior to the close of business on the business day immediately preceding May 15, 2026, only upon satisfaction of certain conditions and during certain periods specified as follows:

•during any calendar quarter commencing after the calendar quarter ending on December 31, 2021, if the last reported sale price of the Company’s common stock is greater than or equal to 130% of the conversion price for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter of the conversion price on each applicable trading day;

•during the five consecutive business day period after any five consecutive trading day period, which is referred to as the Measurement Period, in which the trading price (as defined in the Indenture) per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day;

•if the Company calls such Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; and

•upon the occurrence of specified corporate events described in the Indenture.

Upon conversion, the Notes may be settled in shares of the Company’s common stock, cash or a combination of cash and shares of the common stock, at the election of the Company. The Notes have an initial conversion rate of 15.1338 shares of common stock per $1,000 principal amount of Notes, which is subject to adjustment in certain circumstances. This is equivalent to an initial conversion price of approximately $66.08 per share of the Company’s common stock. The conversion rate is subject to customary adjustments under certain circumstances in accordance with the terms of the Indenture. In

14

addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the Indenture) occur or if the Company issues a notice of redemption with respect to the Notes prior to the maturity date, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Company may redeem for cash all or any portion of the Notes (subject to a partial redemption limitation), at the Company’s option, on or after August 20, 2024, if the last reported sale price per share of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest, if any, to, but excluding, the redemption date. No sinking fund is provided for the Notes, which means that the Company is not required to redeem or retire the Notes periodically.

Upon the occurrence of a fundamental change (as defined in the Indenture), subject to certain conditions, holders have the right to require the Company to repurchase for cash all or a portion of their Notes at a price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest thereon, if any, until, but excluding, the fundamental change repurchase date.

The Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

For each of the three months ended June 30, 2024 and 2023, interest expense was $0.2 million and amortization of the issuance costs was $0.5 million related to the Notes.

For the six months ended June 30, 2024 and 2023, interest expense was $0.5 million and $0.6 million, respectively, and amortization of the issuance costs was $0.9 million and $1.2 million, respectively, related to the Notes.

As of June 30, 2024 and December 31, 2023, the if-converted value of the Notes did not exceed the outstanding principal amount. As of June 30, 2024, the total estimated fair value of the Notes was $320.4 million and was determined based on a market approach using actual bids and offers of the Notes in an over-the-counter market on the last trading day of the period. The Company considers these assumptions to be Level II inputs in accordance with the fair value hierarchy described in “Note 4—Fair Value Measurements.”

Capped Calls

In connection with the issuance of the Notes, the Company entered into privately negotiated capped call transactions, which are referred to as the Capped Calls, with various financial institutions.

Subject to customary anti-dilution adjustments substantially similar to those applicable to the Notes, the Capped Calls cover the number of shares of the Company’s common stock initially underlying the Notes. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event a conversion of the Notes is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the Notes its common stock price per share exceeds the conversion price of the Notes, with such reduction subject to a cap based on the cap price. If, however, the market price per share of common stock, as measured under the terms of the Capped Calls, exceeds the cap price of the Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of common stock exceeds the cap price of the Capped Calls. The initial cap price of the Capped Calls is $92.74 per share of common stock, which represents a premium of 100% over the last reported sale price of the

15

common stock of $46.37 per share on August 5, 2021, and is subject to certain customary adjustments under the terms of the Capped Calls; provided that the cap price will not be reduced to an amount less than the strike price of $66.08 per share.

The Capped Calls are separate transactions and are not part of the terms of the Notes. The Capped Calls meet the criteria for classification as equity and, as such, are not remeasured each reporting period and are included as a reduction to additional paid-in-capital within stockholders’ equity.

Note 8—Net Income (Loss) per Share

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except share and per share data)	2024		2023		2024		2023
Numerator:
Basic: net income (loss)	$	22,220	$	(3,991)	$	40,662	$	13,176
Gain on early extinguishment of convertible senior notes, net of tax	—		—		—		(38,525)
Interest expense related to convertible senior notes, net of tax	646		—		1,292		638
Diluted	$	22,866	$	(3,991)	$	41,954	$	(24,711)
Denominator:
Weighted-average shares used to compute net income (loss) per share, basic and diluted
Basic	131,435,839		134,141,525		133,808,901		133,492,087
Options to purchase common stock	1,069,292		—		1,165,090		—
Common stock issuable upon vesting of restricted stock units and performance stock units	—		—		63,660		—
Common stock issuable upon exercise of common stock warrants	297,737		—		297,761		—
Common stock issuable in connection with convertible senior notes	5,463,045		—		5,463,045		1,556,641
Diluted	138,265,913		134,141,525		140,798,457		135,048,728
Net income (loss) per share:
Basic	$	0.17	$	(0.03)	$	0.30	$	0.10
Diluted	$	0.17	$	(0.03)	$	0.30	$	(0.18)

16

The following potentially dilutive shares were excluded from the computation of diluted net income (loss) per share because including them would have been anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Options to purchase common stock	1,996,063	3,577,554	1,900,265	3,577,554
Common stock issuable upon exercise of common stock warrants	—	350,000	—	350,000
Common stock issuable upon vesting of restricted stock units and performance stock units	12,558,255	10,332,782	12,494,595	10,332,782
Common stock issuable in connection with employee stock purchase plan	963,958	1,821,635	963,958	1,821,635
Common stock issuable in connection with convertible senior notes	—	5,463,045	—	5,463,045
Total	15,518,276	21,545,016	15,358,818	21,545,016

Note 9—Segment and Geographical Information

The Company operates as one operating and reportable segment for the purpose of allocating resources and evaluating financial performance.

The following table sets forth total revenue by type of service for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023
Marketplace (1)	$	166,786	$	142,308	$	331,116	$	278,984
Enterprise (1)	26,343		26,303		52,950		50,485
Total revenue	$	193,129	$	168,611	$	384,066	$	329,469

(1) To conform to the current period presentation as of June 30, 2024, the Company presents revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer reports revenue from its Enterprise Solutions offering, previously referred to as Upwork Enterprise, in Marketplace revenue.

17

The Company generates its revenue from talent and clients. The following table sets forth total revenue by geographic area based on the billing address of its talent and clients for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023
Talent
United States	$	28,373	$	21,983	$	56,140	$	44,443
India	14,700		12,041		29,169		23,469
Philippines	14,764		10,818		29,320		21,184
Rest of world (1)	53,508		43,655		106,899		85,057
Total talent	111,345		88,497		221,528		174,153
Clients
United States	59,522		59,423		119,282		114,874
Rest of world (1)	22,262		20,691		43,256		40,442
Total clients	81,784		80,114		162,538		155,316
Total revenue	$	193,129	$	168,611	$	384,066	$	329,469

(1) During each of the three and six months ended June 30, 2024 and 2023, no single country included in the Rest of world category had revenue that exceeded 10% of total talent revenue, total clients revenue, or total revenue.

Substantially all of the Company’s long-lived assets were located in the United States as of June 30, 2024 and December 31, 2023.

18

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with the section titled “Risk Factors” and the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, as well as assumptions that may never materialize or that may be proven incorrect. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors,” and in other parts of this Quarterly Report.

Overview

Independent talent is an increasingly sought-after, critical, and expanding segment of the global workforce. We operate the world’s largest work marketplace that connects businesses with independent talent from across the globe, as measured by gross services volume, which we refer to as GSV. GSV represents the total amount that clients spend on our offerings as well as additional fees we charge to talent and clients for other services. We define talent as customers that advertise and provide services to clients through our work marketplace, and we define clients as customers that seek and work with talent through our work marketplace. Talent includes independent professionals and agencies of varying sizes. Clients on our work marketplace range in size, from independent professionals and small businesses to Fortune 100 companies.

Financial Highlights

Over the past several quarters, we implemented a number of initiatives that positively impacted Marketplace revenue and Marketplace take rate, including (i) retiring the tiered service fee structure for talent working with clients on our Marketplace offering in favor of a flat fee, (ii) increasing the number of virtual tokens, which we refer to as Connects, needed by talent to bid on projects, (iii) deploying ads products on our work marketplace, and (iv) introducing new features, with a focus on machine learning and generative artificial intelligence. These initiatives, along with others, resulted in an increase in Marketplace revenue of $24.5 million, or 17%, and $52.1 million, or 19%, for the three and six months ended June 30, 2024, as compared to the same periods in 2023, respectively. Marketplace take rate also benefited from these initiatives, increasing to 18.0% and 17.9% for the three and six months ended June 30, 2024, respectively, as compared to 15.0% and 14.9% in the same periods in 2023, respectively.

During the three months ended June 30, 2024, we generated net income of $22.2 million and adjusted EBITDA of $40.8 million, as compared to a net loss of $4.0 million and adjusted EBITDA of $14.4 million during the same period in 2023. During the six months ended June 30, 2024, we generated net income of $40.7 million and adjusted EBITDA of $74.2 million, as compared to net income of $13.2 million and adjusted EBITDA of $11.4 million during the same period in 2023. These improvements were primarily a result of cost-saving measures we implemented in 2023, including reducing our investments in brand marketing and vendor spend. We expect these measures will continue to positively impact net income and adjusted EBITDA in 2024, as compared to 2023. Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with generally accepted accounting principles in the United States, which we refer to as U.S. GAAP. See “Key Financial and Operational Metrics—Non-GAAP Financial Measures” below for a definition of adjusted EBITDA, information regarding our use of adjusted EBITDA, and a reconciliation of adjusted EBITDA to net income, the most directly comparable financial measure prepared under U.S. GAAP.

Key Financial and Operational Metrics

We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic

19

decisions. As of and for the three and six months ended June 30, 2024 and 2023, our key financial and operating metrics were as follows:

	Three Months Ended June 30,						% Change		Six Months Ended June 30,						% Change
(In thousands, except percentages)	2024			2023					2024			2023
GSV	$	1,008,267		$	1,036,507		(2.7)	%	$	2,017,063		$	2,039,852		(1.1)	%
Marketplace revenue (1)	$	166,786		$	142,308		17	%	$	331,116		$	278,984		19	%
Marketplace take rate (1)	18.0		%	15.0		%	3	%	17.9		%	14.9		%	3	%
Net income (loss)	$	22,220		$	(3,991)		*		$	40,662		$	13,176		*
Adjusted EBITDA (2)	$	40,835		$	14,362		*		$	74,160		$	11,436		*

*Not meaningful

(1) To conform to the current period presentation as of June 30, 2024, we no longer report revenue from our Enterprise Solutions offering in Marketplace revenue and Marketplace take rate. See “—Marketplace Revenue” below for additional information.

(2) Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with U.S. GAAP. See “—Non-GAAP Financial Measures” below for the definition of adjusted EBITDA, information regarding our use of adjusted EBITDA, and a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable financial measure prepared under U.S. GAAP.

	As of June 30,				% Change
(Active clients are in thousands)	2024		2023
Active clients	868		822		6	%
GSV per active client	$	4,745	$	4,987	(5)	%

For a discussion of limitations in the measurement of our key financial and operational metrics, see “Risk Factors—We track certain performance metrics with internal tools and do not independently verify such metrics. Certain of our performance metrics may not accurately reflect certain details of our business, are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business” in Part II, Item 1A of this Quarterly Report.

Gross Services Volume (GSV)

GSV represents the amount of business transacted through our work marketplace. The primary component of GSV is client spend, which we define as the total amount that clients spend on our offerings. GSV also includes fees charged to talent and clients, such as for transacting payments through our work marketplace, purchases of Connects, talent memberships, and foreign currency exchange.

Growth in the number of active clients and GSV per active client are the primary drivers of GSV.

Marketplace Revenue

Marketplace revenue is the primary driver of our business, and we believe it provides comparability to other online marketplaces. Marketplace revenue represents the majority of our revenue and is derived from our Marketplace offerings, which include all offerings other than our Enterprise offerings—Enterprise Solutions (previously referred to as Upwork Enterprise) and Managed Services. We generate Marketplace revenue from both talent and clients. Marketplace revenue is primarily generated from talent service fees, and to a lesser extent, client marketplace fees. We also generate Marketplace revenue from fees for premium offerings, such as our Upwork Payroll offering, as well as purchases of Connects, talent memberships, and other services, such as foreign currency exchange when clients choose to pay in currencies other than the U.S. dollar. To conform to the current period presentation as of June 30, 2024,

20

we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering in Marketplace revenue.

Our Marketplace revenue is primarily generated from the service fees paid by talent as a percentage of the total amount talent charges clients for services accessed on our Marketplace offering. Therefore, Marketplace revenue is correlated to GSV, and we believe that our Marketplace revenue will grow as GSV grows, although they could grow at different rates. For a discussion of how we measure and evaluate the correlation between Marketplace revenue and Marketplace GSV, see “—Marketplace Take Rate” below.

Marketplace Take Rate

Marketplace take rate measures the correlation between Marketplace revenue and Marketplace GSV and is calculated by dividing Marketplace revenue by Marketplace GSV. We define Marketplace GSV as GSV derived from our Marketplace offerings. Marketplace take rate is an important metric because it is the key indicator of how well we monetize spend on our work marketplace from our Marketplace offerings. To conform to the current period presentation as of June 30, 2024, we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering in Marketplace revenue.

Active Clients and GSV per Active Client

We define an active client as a client that has had spend activity on our work marketplace during the 12 months preceding the date of measurement. GSV per active client is calculated by dividing total GSV during the four quarters ended on the date of measurement by the number of active clients on the date of measurement. We believe that the number of active clients and GSV per active client are indicators of the growth and overall health of our business. The number of active clients is a primary driver of GSV and, in turn, Marketplace revenue.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, adjusted EBITDA is a non-GAAP measure that we believe is useful in evaluating our operating performance.

We define adjusted EBITDA as net income (loss) adjusted for stock-based compensation expense; depreciation and amortization; other income (expense), net, which includes interest expense; income tax benefit (provision); and, if applicable, certain other gains, losses, benefits, or charges that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future. Adjusted EBITDA is not prepared in accordance with, and is not an alternative to, financial measures prepared in accordance with U.S. GAAP.

21

The following table presents a reconciliation of net income (loss), the most directly comparable financial measure prepared in accordance with U.S. GAAP, to adjusted EBITDA for each of the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023
Net income (loss)	$	22,220	$	(3,991)	$	40,662	$	13,176
Add back (deduct):
Stock-based compensation expense	19,238		18,437		36,180		38,337
Depreciation and amortization	3,629		1,854		6,775		3,878
Other income, net (1)	(5,620)		(3,982)		(12,342)		(46,982)
Income tax provision	1,181		1,857		2,510		2,652
Other (2)	187		187		375		375
Adjusted EBITDA	$	40,835	$	14,362	$	74,160	$	11,436

(1) During the six months ended June 30, 2023, we recognized a gain of $38.9 million on the early extinguishment of a portion of our 0.25% convertible senior notes due 2026, which we refer to as the Notes, which is included in other income, net in the condensed consolidated statement of operations and comprehensive income (loss).

(2) During each of the three and six months ended June 30, 2024 and 2023, we incurred $0.2 million and $0.4 million, respectively, of expense related to our Tides Foundation warrant.

We use adjusted EBITDA as a measure of operational efficiency. We believe that this non-GAAP financial measure is useful to investors for period-to-period comparisons of our business and in understanding and evaluating our operating results for the following reasons:

•adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as stock-based compensation expense; depreciation and amortization; other income (expense), net, which includes interest expense; income tax benefit (provision); and, if applicable, certain other gains, losses, benefits, or charges that are non-cash or are significant and the result of isolated events or transactions that have not occurred frequently in the past and are not expected to occur regularly in the future, all of which can vary substantially from company to company depending upon their financing, capital structures, and the method by which assets were acquired;

•our management uses adjusted EBITDA in conjunction with financial measures prepared in accordance with U.S. GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance; and

•adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our core operating results, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their U.S. GAAP results.

Our use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are as follows:

•adjusted EBITDA excludes stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;

22

•although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

•adjusted EBITDA does not reflect: (a) changes in, or cash requirements for, our working capital needs; (b) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (c) tax payments that may represent a reduction in cash available to us; and

•other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, which reduces the usefulness of this measure for comparative purposes.

Because of these and other limitations, you should consider adjusted EBITDA along with other financial performance measures, including net income (loss) and our other financial results prepared in accordance with U.S. GAAP.

Components of Our Results of Operations

Revenue

Marketplace Revenue. Marketplace revenue represents the majority of our revenue and is generated from our Marketplace offerings. Under these Marketplace offerings, we generate revenue from both talent and clients.

Enterprise Revenue. Enterprise offers two lines of service—Enterprise Solutions and Managed Services.

Our Enterprise Solutions offering includes access to additional product features, premium access to top talent, professional services, custom reporting, and flexible payment terms. Revenue from our Enterprise Solutions offering includes all client fees, subscriptions, and talent service fees.

Through our Managed Services offering, we are responsible for providing services and engaging talent directly or as employees of third-party staffing providers to perform services for clients on our behalf. The talent providing services in connection with our Managed Services offering include independent talent and agencies of varying sizes. Under U.S. GAAP, we are deemed to be the principal in these Managed Services arrangements and therefore recognize the entire GSV of Managed Services projects as Managed Services revenue, as compared to recognizing only the percentage of the client spend that we receive, as we do with our Marketplace and Enterprise Solutions offerings.

Cost of Revenue, Gross Profit, and Gross Margin

Cost of Revenue. Cost of revenue consists primarily of the cost of payment processing fees, amounts paid to talent to deliver services for clients under our Managed Services offering, personnel-related costs for our services and support personnel, third-party hosting fees for our use of Amazon Web Services, and the amortization expense associated with capitalized internal-use software and platform development costs. We define personnel-related costs as salaries, bonuses, benefits, travel and entertainment, and stock-based compensation costs for employees and the costs related to other service providers we engage.

Gross Profit and Gross Margin. Our gross profit and gross margin may fluctuate from period to period. Such fluctuations may be influenced by our revenue, the mix of payment methods that our clients choose, the timing and amount of investments to expand hosting capacity, our continued investments in our services and support teams, the timing and amounts paid to talent in connection with our Managed Services offering, and the amortization expense associated with capitalized internal-use software and platform development costs. In addition, gross margin will be impacted by fluctuations in our revenue mix between Marketplace revenue and Enterprise revenue.

23

Operating Expenses

Research and Development. Research and development expense primarily consists of personnel-related costs. Research and development costs are expensed as incurred, except to the extent that such costs are associated with internal-use software and platform development that qualifies for capitalization.

Sales and Marketing. Sales and marketing expense consists primarily of expenses related to advertising and marketing activities, as well as personnel-related costs, including sales commissions, which we expense as they are incurred.

General and Administrative. General and administrative expense consists primarily of personnel-related costs for our executive, finance, legal, human resources, and operations functions; outside consulting, legal, and accounting services; impairment expense; and insurance.

Provision for Transaction Losses. Provision for transaction losses consists primarily of losses resulting from fraud and bad debt expense associated with our trade and client receivables balance and transaction losses associated with chargebacks. Provisions for these items represent estimates of losses based on our actual historical incurred losses and other factors.

Other Income, Net

Other income, net consists primarily of interest income that we earn from our operating investments, namely our deposits in money market funds and investments in marketable securities, interest expense on our outstanding borrowings, as well as gains and losses from foreign currency exchange transactions.

Income Tax Provision

We account for income taxes in accordance with the asset and liability method. Under the asset and liability method, deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. We currently maintain a full valuation allowance on all deferred tax assets, including net operating loss carryforwards and certain domestic tax credits. We regularly evaluate the need for a valuation allowance based on all available positive and negative evidence. Given our recent current and anticipated future earnings, some portion of our U.S. valuation allowance may be released in the near future.

24

Results of Operations

The following table sets forth our condensed consolidated results of operations for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023
Revenue
Marketplace (1)	$	166,786	$	142,308	$	331,116	$	278,984
Enterprise (1)	26,343		26,303		52,950		50,485
Total revenue	193,129		168,611		384,066		329,469
Cost of revenue (2)	43,852		40,882		88,045		81,309
Gross profit	149,277		127,729		296,021		248,160
Operating expenses
Research and development (2)	52,465		43,246		105,381		87,727
Sales and marketing (2)	47,333		59,069		95,184		124,069
General and administrative (2)	29,924		28,983		61,925		58,270
Provision for transaction losses	1,774		2,547		2,701		9,248
Total operating expenses	131,496		133,845		265,191		279,314
Income (loss) from operations	17,781		(6,116)		30,830		(31,154)
Other income, net	5,620		3,982		12,342		46,982
Income (loss) before income taxes	23,401		(2,134)		43,172		15,828
Income tax provision	(1,181)		(1,857)		(2,510)		(2,652)
Net income (loss)	$	22,220	$	(3,991)	$	40,662	$	13,176

(1) To conform to the current period presentation as of June 30, 2024, we present revenue from Enterprise Solutions and Managed Services together as Enterprise revenue in prior periods and no longer report revenue from our Enterprise Solutions offering in Marketplace revenue.

(2) Includes stock-based compensation expense as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023
Cost of revenue	$	497	$	490	$	963	$	910
Research and development	8,106		6,903		15,476		14,532
Sales and marketing	3,393		2,998		6,329		6,566
General and administrative	7,242		8,046		13,412		16,329
Total stock-based compensation	$	19,238	$	18,437	$	36,180	$	38,337

25

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Revenue

	Three Months Ended June 30,								Six Months Ended June 30,
(In thousands, except percentages)	2024		2023		Change				2024		2023	Change
Marketplace (1)	$	166,786	$	142,308	$	24,478	17	%	$	331,