Shares of Upwork (NASDAQ:UPWK), a marketplace for businesses to hire freelancers, fell sharply on Thursday. The stock was down 19.8% as of 12:15 p.m. EST.
The stock's decline is primarily due to Upwork's lowered full-year outlook and its softer-than-expected guidance for Q4.
Upwork's third-quarter results were solid, with revenue rising 23% year over year to $78.8 million. This was driven primarily by a 25% jump in marketplace revenue to $70.7 million.
The company's generally accepted accounting principles (GAAP) loss per share was $0.03, an improvement from a loss per share of $0.20 in the year-ago quarter. Non-GAAP EPS was $0.02, up from a non-GAAP loss per share of $0.04 in the third quarter of 2018.
But Upwork lowered its outlook for full-year adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), because management said encouraging sales momentum in enterprise and strong client spending retention signal that "now is the time to increase investing in sales to drive long-term, profitable growth."
Upwork said it expects full-year adjusted EBITDA to be between 1% and 1.5% of revenue, lower than a previous outlook for the key profitability metric to be between 1% and 2% of revenue. In addition, Upwork now expects full-year revenue between $301 million and $301.5 million. The midpoint of this guidance range is lower than a previous forecast for revenue between $300 million and $304 million.
Further, Upwork's guidance for fourth-quarter revenue between $79 million and $79.5 million was below analysts' average forecast for revenue during the period of $82.3 million.