Upwork’s Strategic Embrace of AI Could Push the Stock to $25, According to Experts!

Crucially, Upwork’s profitability metrics improved dramatically. The company recorded an adjusted EBITDA margin of 29% in Q1, by far its highest ever for a quarter. This was partly due to disciplined cost cuts in late 2022 and 2023 (Upwork reduced operating expenses, especially Sales & Marketing spend, to prioritize efficiency). Both Goldman Sachs and Needham analysts noted that the EBITDA beat was due to lower-than-expected S&M expenditure. While such a high margin isn’t expected every quarter (management indicated they will reinvest some of those gains back into AI and growth initiatives, so margins will moderate), it demonstrated the underlying leverage in Upwork’s model. The company also generated robust free cash flow in Q1. According to a Seeking Alpha analysis, Upwork now has $620 million in cash on its balance sheet, minimal debt, and achieved a 10% free cash flow yield (when accounting for net cash). This healthy financial position means Upwork can continue funding R&D (like AI development) without needing external financing, a plus in the current high-rate environment.