What happened

Freelancing facilitator Upwork (NASDAQ:UPWK) dropped more than 10% in early trading Friday before closing the day down "only" 5.2%.

Upwork had announced Q4 earnings the night before. The company "beat" on sales, reporting $67.3 million versus the Wall Street consensus level of $65.5 million. It may have (or may not have, depending on how you read the numbers) beat on earnings, as well.

Upwork reported losing $0.05 per share as calculated according to GAAP accounting standards but earning $0.03 per share, pro forma. Analysts had predicted a $0.04 per-share loss.

Cartoon characters confused by falling stock chart.

Image source: Getty Images.

So what

Whether or not Upwork "beat earnings," Q4 clearly marked an improvement for the company. One year ago, 2017's fourth quarter saw the company report a net loss of $0.35 per share (GAAP) on sales of only $59.7 million. Thus, Upwork certainly lost less money in Q4 this year and also grew its sales by 23% year over year. Gross profit margins earned on revenues also eked out a small gain, rising to 69%.

For the full year, sales grew 25%, to $253.4 million, and Upwork reported a $0.01 per-share pro forma loss (and a $0.38 per-share loss under GAAP).

Upwork also reported positive free cash flow -- in this case, operating cash flow minus capital expenditures and capitalized software costs -- of $6.9 million for the full year.

Check out the latest earnings call transcript for Upwork.

Now what

Looking forward -- and this is where the news appears to have turned bad enough to spark a sell-off -- Upwork told investors it expects to book revenue of $68 million or $69 million in the first quarter of 2019 and between $298 million and $304 million in revenue for the full year.

Analysts were hoping Upwork would do at least $70 million in sales in Q1 and roughly $300 million for the full year. The fact that Upwork might do a bit better than that by year end doesn't seem to have offset investor worries that Upwork might miss earnings in Q1.