Upwork Inc. (NASDAQ:UPWK) shares plunged more than 20% after the company cut its full-year revenue guidance due to macroeconomic headwinds impacting client behavior.
The online workplace platform reported a Q1 loss per share of $0.01, $0.09 better than the analyst estimate of a loss of $0.10 per share, while revenue for the quarter came in at $160.8 million versus the consensus estimate of $159.01M.
However, the company said "unanticipated softness in certain client behavior due to macroeconomic uncertainty, which was most pronounced with our Enterprise customers and large businesses in the self-service Marketplace," caused it to reduce its full-year 2023 revenue guidance to between $655M and $670M.
Upwork is currently trading at $6.50 per share premarket.
Reacting to the report, Roth MKM analysts maintained a Buy rating but cut the firm's price target on the stock to $12 from $17 per share.
"The 2Q outlook was below expectations," the analysts wrote. "UPWK lowered 2023 Revenue again while materially raised EBITDA outlook based on 97% reduction in planned brand marketing spend leading to $80mn in annualized cost savings. We believe Gen AI remains a significant wildcard for UPWK & FVRR (Neutral). We slash Rev ests but raise EBITDA."
They expect UPWK shares to stay weak near-term.
Goldman Sachs analysts maintained a Buy rating and a $17 price target on the stock.
They wrote: "In its Q1'23 earnings report and forward commentary, Upwork framed the macro environment as challenging (for the second consecutive quarter) with a mix of higher spend growth from retained clients but dual offsetting factors from weaker growth in spend from newly acquired clients and overall slowed new client growth."
"We would expect that investors begin to analyze UPWK through a prism of whether shifts in generative AI (in this particular case, in terms of form/function/demand for work) might cause a mixture of headwinds or tailwinds for that longer-term narrative" they added.