Shares of Upwork (NASDAQ: UPWK) fell by 22.5% in November, according to data from S&P Global Market Intelligence, after the market focused on freelancers announced solid results for the third quarter of 2019, but continued to increase lowering the his forecasts for the whole year. To be sure, the Upwork stock plummeted by 14.7% on 7 November 2019, alone, the first day of trading after its quarterly update hit the wires.
More specifically on the first, Upwork’s quarterly revenue increased 23% year-on-year to $ 78.8 million, including a 25% increase in market segment revenue to $ 70.7 million and growth of 10.3 % in sales of managed services for $ 8.1 million. In conclusion, this translated into unadjusted net income (GAAP) of $ 1.8 million, or $ 0.02 per share, ranging from a corrected net loss of $ 0.04 per share over the same one-year period does. Analysts, on average, expected a loss of $ 0.05 per share on slightly lower revenues.
“Our business strategy is preparing us for a considerable market opportunity and is showing signs of success,” said Stephane Kasriel, CEO of Upwork. “We have made investments in sales, marketing and corporate products to better respond to staff needs and the results prove it.”
Kasriel added that, given the encouraging trends behind his business, “now is the time to increase investment in sales to drive profitable long-term growth”.
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Meanwhile, Upwork reduced its full-year 2019 forecast to request revenue from $ 301 million to $ 301.5 million (compared to $ 300 million to $ 304 million previously) and for EBITDA margins adjusted by 1% at 1.5% of revenue (down from 1% to 2% before).
If that revision of the orientation was not enough to lift investors’ anger, Upwork announced on Monday that Kasriel has informed the company’s board of directors that it will resign from its post at the end of this year. As such – and while Kasriel will remain on the board of Upwork during its annual shareholders’ meeting of 2020 – the board of directors has appointed Hayden Brown, current head of marketing and products for Upwork, to succeed Kasriel as CEO from 1 January 2020
Having coupled this executive turnover with the modest revenues and profits of Upwork, which seeks to consolidate its status as one of the most compelling growth stocks on the market, it is no surprise to see the stock retreat in response.