What happened
The stock of Upwork (UPWK 3.40%), the freelance-jobs marketplace, crashed in Friday morning trading. Analysts had forecast Upwork would lose $0.05 per share on $131.8 million in revenue in fiscal Q4 2021. When the company reported its results last night, however, it actually met -- or even arguably beat -- those numbers.
Nevertheless, Upwork stock is down 14.2% as of 9:40 a.m. ET.
Image source: Getty Images.
So what
In the context of a pandemic that has upset traditional models of employment in the U.S., Upwork grew its revenue 29% year over year to $136.9 million, while maintaining its 72.9% gross profit margin on those revenues. Upwork's problem, though, actually appeared farther down the income statement, where it became apparent that operating costs had surged more than 58% year over year, with big increases in the money spent on research and development, marketing, and (especially) on administrative costs.
This added spending pushed Upwork into an operating loss for the quarter and cost Upwork an $0.18 per-share loss on the bottom line -- reversing the company's tiny $0.01 per-share profit earned in the previous year's Q4. (Note that this was the company's loss when calculated according to generally accepted accounting principles (GAAP). The $0.05 loss was non-GAAP).
Now what
That wasn't the end of the bad news. Adding insult to investors' injury-already-sustained, Upwork proceeded to warn investors that it expects to lose between $0.11 and $0.13 per share, non-GAAP, in Q1 2022, versus analysts' expectation of a $0.03 per-share profit. For the full year, Upwork says it will lose money, as well -- between $0.08 and $0.11, versus Wall Street's projection of a $0.21 per-share profit.
Long story short, Upwork may have beat estimates by a small margin in Q4, but it still lost a lot of money -- and plans to keep on losing money and missing estimates all year long.
