Upwork Inc. (NASDAQ: UPWK) shares surged 12.61% in Tuesday's trading session following the release of its impressive first-quarter 2025 financial results and raised full-year guidance. The online freelance marketplace operator reported adjusted earnings of $0.34 per share, significantly surpassing the analyst consensus estimate of $0.26. Revenue came in at $192.71 million, beating the expected $188.32 million and representing a slight increase from $190.94 million in the same period last year. Notably, the company achieved record profitability with a net income of $37.7 million, more than doubling from $18.4 million in Q1 2024.

Upwork's focus on AI-driven growth appears to be paying off, with CEO Hayden Brown noting the early impact of strategic product investments in AI on customer productivity and engagement. The company reported that gross services volume (GSV) from AI-related work grew 25% year-over-year in Q1 2025, while GSV from prompt engineering increased by 52%. Additionally, freelancers working on AI-related projects continued to earn a premium of over 40% per hour compared to non-AI work. The company also saw positive momentum in its Business Plus and Enterprise offerings, with Business Plus active clients more than doubling from Q4 2024 to Q1 2025.

In light of its strong performance, Upwork raised its full-year 2025 adjusted earnings per share guidance to a range of $1.14 to $1.18, up from the previous range of $1.05 to $1.10. This revised outlook, coupled with the company's strategic focus on AI and enterprise solutions, has fueled investor optimism. Analysts have responded positively, with Citizens JMP reiterating a Buy rating and setting a price target of $18.00. However, Citigroup slightly reduced its target price to $18 from $19. The positive results and outlook suggest that Upwork's strategic initiatives, including investments in AI capabilities and monetization strategies, are beginning to pay off, driving the significant stock price increase.