- Freelance-work platform Upwork ( NASDAQ: UPWK ) fell 18% Thursday even though UPWK raised forward guidance and exceeded consensus estimates when it released Q2 earnings Wednesday after the bell.
- The company late Wednesday boosted its forward guidance to $612M to $617M of full-year revenue, up from the $590M-$601M previously forecast.
- The higher forecast would represent a 22% year-over-year gain at a midpoint $614.5M. However, that's still lower than 35% growth reported in 2021, as well as the company's 26% revenue increase during Q2.
- UPWK's stock has also underperformed the broader market over the past year, losing around 67%:
- Meanwhile, the company's Q2 operating expenses expanded 29.4% to $139.09M, led by sales and marketing expenses that rose almost 38% Y/Y to $63.28M. If expenditures increase faster than the revenue, that could impact UPWK's bottom line going forward.
- Upwork ( UPWK ) also saw a larger impact on revenue in Q2 vs. Q1 due to the winding down of all contracts with talent and clients in Russia and Belarus following the Ukraine War's outbreak.
- However, the company said it expects the war's impact on revenue during Q3 and Q4 to be slightly less than it was during Q2.
- Still, Upwork ( UPWK ) also reported some softening in client acquisition and retention trends, particularly in Europe and among small- and medium-sized businesses ((SMBs)).
- That had analysts adjusting price targets on the stock lower following Wednesday's earnings release. For instance, JMP Securities lowered its UPWK price target to $33 from a previous $45, although the firm kept an Outperform rating on the shares.
- Meanwhile, Goldman Sachs reiterated a Buy rating on the stock, but lowered its price target from $31 to $30.
- MKM Partners likewise cut its UPWK price target to $28 from an earlier $31, but also maintained the stocks' Buy rating.
- All in, Upwork ( UPWK ) gets a Buy rating on average from Wall Street analysts, but a Hold rating by Seeking Alpha's Quant Rating system .
- Read Seeking Alpha authors' most recent analysis on the stock here .
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Why did Upwork stock sink today? Guidance points to a revenue slowdown