Shares of Upwork (NASDAQ: UPWK) declined 19.2% in March, according to data from S&P Global Market Intelligence, despite strong quarterly results from the freelancing platform's recent IPO.
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Upwork stock initially fell more than 10% on March 1 alone -- then settled to close down around 5%, the first trading day after Upwork's fourth-quarter report hit the wires. But that's not to say the report was bad; quarterly revenue climbed 23% to $67.3 million, translating to adjusted (non-GAAP) net income of $2.7 million, or $0.03 per share, swinging from a per-share loss of $0.27 in the same year-ago period.
Analysts, on average, were expecting an adjusted loss of $0.04 per share on lower revenue of $65.5 million.
Upwork CEO Stephane Kasriel explained the company's relative strength, saying, "With macro-trends such as the skills shortages business are facing and the rise of remote work, plus our investments in product innovation, brand awareness, and sales infrastructure, we remain emboldened by our long-term opportunity."
To be sure, by the end of 2018, Upwork's number of core clients increased 22% year over year to more than 105,000, while client-spend retention increased 9 percentage points year over year to 108%.
What's more, Upwork told investors to expect full-year 2019 revenue of $298 million to $304 million, the midpoint of which represents growth of 18.8% and stands slightly above analysts' expectations. That said -- and this could help explain its stock decline -- Upwork also anticipates first-quarter revenue of $68 million to $69 million, which was slightly below consensus estimates at the time for $70 million.
That "slow" start to 2019 notwithstanding, it likely didn't help that Upwork stock still stands around 30% above its $15-per-share IPO held just six months ago. But if the company makes a habit of underpromising and overdelivering as it did in the fourth quarter, and as it distances itself from its post-IPO volatility, I suspect the pullback could be short-lived.
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