Upwork is a buy, this analyst says

Roth Capital Markets analyst Rohit Kulkarni says during its investor day, Upwork (Upwork Stock Quote, Chart, News, Analysts, Financials NASDAQ:UPWK) laid out a “credible multi-year plan” to re-accelerate gross services volume and expand margins, driven by an AI-native product overhaul and a push further upmarket.

In a Nov. 14 update, he reiterated a “Buy” rating and $22.00 target, calling management’s 2026 targets “above our expectations” and noting he was “surprised by their confidence” in sustaining high-single-digit GSV growth through 2028.

Upwork operates a global online marketplace connecting businesses with freelance talent for short and long-term projects. Founded in 2013, it is headquartered in San Francisco.

Kulkarni said Upwork’s strategy rests on five pillars. The first is the shift to an AI-native marketplace: Uma, its generative AI layer, now assists roughly 70% of job posts across search, matching, proposal drafting and messaging. Management expects deeper platform-wide AI integration in 2026 and the introduction of both first- and third-party agents in 2027. The company sees material tailwinds as enterprises undertake new AI projects and as full-time roles become increasingly fractionalized. For fiscal 2025, Upwork expects AI-driven platform optimizations to deliver a $100-million GSV uplift, with AI-category work reaching a $300-million run rate.

The second pillar is the upmarket expansion through Business Plus, a premium offering for growth-stage SMBs. Before any marketing spend, active Business Plus clients rose 36% quarter-over-quarter in Q3, with GSV per client running at 2.5 times the marketplace average. These customers hire faster, retain better and lift take rates, Kulkarni said. Upwork began dedicated marketing for the product in October and expects Business Plus to represent more than 5% of marketplace GSV in 2026.

The third catalyst is Lifted, Upwork’s enterprise platform built from its Ascen and Bubty acquisitions. Targeted at large contingent-work budgets, it unifies worker types, external suppliers and compliance workflows. Management estimates it can reduce total cost of ownership for enterprise clients by 10%–30%, addressing a global TAM of more than $650-billion by 2028. Commercial scaling is expected to begin in 2027, though near-term revenue will be minimal. Investments to ramp Lifted are expected to be a two-point drag on 2026 Adjusted EBITDA.

Kulkarni said margin expansion is also central to the thesis. Upwork reaffirmed its long-term Adjusted EBITDA margin target of 35% and expects six percentage points of expansion in 2025. Since 2022, headcount has been reduced by more than 20%; sales expense is down 35%; marketing spend is down 55%; and AI-assisted development now accounts for up to 35% of code output, lowering cost per line of code by more than 30%. Management forecasts $216-million of free cash flow in 2025, with roughly 97% conversion from Adjusted EBITDA.

Finally, he said an ongoing mix shift toward larger, higher-value projects is improving unit economics and supporting a structurally higher take rate, which Upwork expects to reach the low- to mid-20-per-cent range by 2028. Average project size rose 12% year-over-year in Q3, with GSV per active client up 5%. Upwork now hosts more than 18 million professionals across 10,000 skills, including over 250,000 AI specialists.

Kulkarni expects Upwork to generate $223.8-million in Adjusted EBITDA on $787.7-million in revenue in fiscal 2025, increasing to $240-million in EBITDA on $824-million in revenue in fiscal 2026.

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