Shares of freelance marketplace Upwork (UPWK 1.14%) fell as much as 12.4% in trading on Thursday after reporting third-quarter 2021 financial results. Shares closed the day down 10.8%.
Revenue was up 34% in the quarter to $128 million, but the company's net loss more than tripled to $9.3 million, or $0.07 per share. Analysts were expecting a profit of $0.01 per share, so the loss didn't go over well with investors.
To make matters worse, Upwork is seeing a sharp slowdown in growth. Revenue for the fourth quarter is expected to be $130 million to $132 million, up only slightly sequentially, and non-generally accepted accounting principles (GAAP) loss is expected to be $0.03 to $0.05 per share. Analysts were expecting a loss of just $0.02 in the quarter, although the average revenue estimate was for $129.4 million.
The freelance marketplace business isn't growing nearly as quickly as it was during the depths of the pandemic, but that doesn't mean that the growth story is over. Companies and workers are just getting used to more "normal" operating environments, and that's meant less business flowing through Upwork.
I see a lot of tailwinds for this business, but the company needs to match its costs with its growth opportunities to generate a profit. This may be a longer growth story than investors expected, but in the long term this is still a great growth stock, and freelance work isn't going anywhere.