What happened
Shares of Upwork (UPWK 3.07%) stock tumbled nearly 10% on Monday after the freelance worker marketplace announced that it will suspend doing business in Russia and Belarus and is withdrawing its financial guidance both for the first quarter of 2022 and for all of fiscal 2022.
As of 1:55 p.m. ET, Upwork stock is down 9.5%.
Image source: Getty Images.
So what
Upwork isn't leaving the Commonwealth of Independent States immediately -- but soon enough. Shutting down "all business operations in Russia and Belarus, [won't take] full effect [until] May 1, 2022." However, the company has already begun "shutting down support for new business generation in each country."
In a statement, Upwork said:
Over the coming days, customers in Russia and Belarus will no longer be able to sign up for new accounts, initiate new contracts, or be visible in search. Existing contracts with talent and clients in the region will remain open, with final billing due by May 1, 2022.
At that point, the company will have exited both markets entirely.
Now what
How big of a deal is this for Upwork? Management notes that
approximately 10% of Upwork's total revenue in 2021 was derived from work where either the talent or the client was located in the region, with Ukraine representing approximately 6% and Russia and Belarus representing approximately 4% combined.
With respect to Ukraine, Ukrainian clients can technically continue to work via Upwork. Effectively, however, even the Ukrainian business will decline as Upwork notes that it has "experienced a meaningful decrease in activity from talent in the region, most notably in Ukraine."
In light of this, Upwork announced it is "withdrawing its previously issued first-quarter and full-year 2022 guidance." Given that the company already wasn't expected to earn any profit, the news now is probably going to be even worse.
