Upwork (UPWK.O): Accelerating AI and SEO Headwinds Weigh on 2H26 Outlook as Visibility Remains Limited

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11 Aug 2026 07:18:10 ET │ 16 pages

Upwork (UPWK.O)

Accelerating AI and SEO Headwinds Weigh on 2H26 Outlook as

Visibility Remains Limited

CITI'S TAKE

Although UPWK’s 2Q26 results were in-line / better than FactSet consensus

expectations, the lowered FY26 outlook reflects continued challenges given AI

automation trends of lower complexity work and accelerating SEO-related

headwinds impacting traffic in the quarter. That said, we note continued take

rate-expansion trends given adoption of Business Plus and Lifted as UPWK’s

AI-related spend (for higher-value / complex workloads) rose 22% Y/Y to a

$330M ARR (+$30M Q/Q). We are encouraged by improving profitability

following UPWK’s May RIF, though incremental marketing investments in

2H26 are likely to temper near-term upside in our view. Following 2Q26

results, and with shares -19% after hours to $7.95, we maintain our

Neutral/High Risk rating and lower our TP to $8.50. (from $10 prior).

1) SEO Headwinds and AI Automation Headwinds Likely to Continue: Although 2Q

GSV results were in-line with our projections, we note headwinds accelerated

throughout 2Q as Google’s AI-Overviews became a larger portion of total search,

impacting traditional SEO initiatives, as continued AI automation trends for lesscomplex work. Key here, these headwinds are expected to persist into 2H26 and, in

our view, are likely incorporated into guidance. That said, AI-related GSV grew +22%

Y/Y to a ~$330M ARR (vs. ~$300M in 1Q) and Upwork’s recent MCP integrations

into AI workflows could improve discovery and customer acquisition over time as

demand stabilizes.

n

Neutral / High Risk

Price (10 Aug 26 17:10)

US$7.95

Target price

US$8.50↓

from US$10.00

Expected share price return

6.9%

Expected dividend yield

0.0%

Expected total return

6.9%

Market Cap

US$993M

Price Performance

(RIC: UPWK.O, BB: UPWK US)

2) Mix Shift Toward Enterprise and Higher-Value Customers Supports Take Rate

Expansion: 2Q’s 19.8% take rate compares to 19.4% in 2Q25 as Business Plus (GSV

+24% Q/Q, active clients +16% Q/Q) and early traction from Lifted (which began in

June) drove take rates as Connects monetization and Dynamic Pricing initiatives

…