Upwork is leaning towards AI trading for bigger “options,” says CFO

Upwork CFO Erica Gessert focuses on ensuring that freelance talent marketplaces have a “macro-independent lever for business” following what they call the “breakout quarter.” The Palo Alto, California-based platform offers an online marketplace for AI-backed global freelance talent, according to its website.

In the second quarter, Upwork reported that net income of 47% year-on-year reached $32.7 million in the quarter ended June 30, marking a record-breaking revenue of approximately $195 million. Meanwhile, adjusted Ebidta reached 40% to $57.1 million year-on-year, according to second-quarter revenue results announced on August 7th.

The strong growth of AI-related services has helped to drive these outcomes. This is also a factor that has been made possible by several strategic acquisitions in recent years. The company has made four acquisitions over the past three years. By integrating technology into AI tools from these acquisitions, Gessert said, “some of the great growth we showed in the second quarter.”

As part of its second quarter results, Upwork announced plans to acquire labor management company Bubty and acquire “digital native solutions for contingent W-2 workers,” according to revenue releases. According to company documents, the move follows the objective AI acquisition in 2024 and Headroom, an AI-powered video conferencing platform in 2023.

However, an important element of Upwork's M&A strategy is, “We wouldn't have had the flexibility or options to do this… if we didn't make this big push to increase profitability without worrying about access to the capital market. [and] Cash flow,” Gessert said.

Managing Integrated Pieces

CFOs play a key role in achieving the right balance between profitability and growth. “It's the job of the finance chief to remind the rest of the business that is profitability gives us options for growth and that's what's done for us,” Gessert said. For the second quarter, the company reported a jump of 85% of free cash flow to $65.6 million, according to its revenue report.

According to her LinkedIn profile, Gessert served in many roles in April 2023 after serving eight years at PayPal and eight years at PayPal. Her past roles include a six-year career at Telecommunications Provider Sprint, with positions such as VP, Finance Operations, PostPaid Marketing, CFO and Sprint Prepaid.

She said upcoming Upwork will use its balance sheet to “complete its growth strategy,” but it is unlikely that the company will announce another acquisition in the second half of 2025.

“We're never done in M&A,” Gessert said, but “You need to be aware that you don't overdo it all the time and make sure your team can handle the integrations that are happening.”

Creating spaces for integrating tools, processes and talent after the end of a transaction is often a sign of a successful acquisition. At Upwork, Gessert's team is responsible for everything from corporate development of the company's M&A strategy to integrating such acquisitions across the business.

When examining such transactions, she said, “What you want is a team that is the end-to-end head, and as if they're actually thinking through the impact of that position on the business.”

When integrating different aspects of the business you've acquired, it's always better to do it faster than slowing down “hard work.”

However, in Gessert's experience, the biggest stumbling block for a successful integration is in the cultural aspect. “We haven't spent enough time on our new team,” she said to make sure they feel part of the business.

Data, anywhere

Upwork is looking at potential use cases for artificial intelligence, both within its customer-facing platform and its own internal processes, Gessert said. AI-related work on Business's platform says the total amount clients spend on such services in the second quarter (what's going on in the AI world, and the acceleration of the work that's going on there.”