Shares of Upwork (NASDAQ: UPWK) came under pressure in late trade on Wednesday after the online freelancer platform reported its third-quarter results. The company beat earnings and revenue estimates but disappointed with its fourth-quarter outlook. The stock price fell as much as 7%, adding to its 40% decline since its March high. Third-quarter revenue grew 23% to $78.8 million, $1 million ahead of estimates and previous guidance. The adjusted loss per share was $0.03, compared to estimates of a $0.04 loss. This compares to a loss of $0.20 in the same period last year. On a non-GAAP basis, Upwork earned $0.02 – analysts expected this number to be zero. Outlook Misses Estimates For the fourth quarter, Upwork expects to earn revenue of $79 to $79.5 million. Analysts had expected fourth-quarter earnings to be as high as $82.3 million. Adjusted EBITDA is expected to be between -1% and 0% of revenue. For the full year, revenue is expected to be between $301 and $301.5 million. Adjusted EBITDA is expected to be between 1% and 1.5% of revenue. Increased Marketing Spend Keeps the Pressure on Operating Margins During the third quarter, the marketplace contributed 91% of revenue and continues to be the growth driver. The overall revenue growth rate of 23% compares to 16% in the first quarter and 19% last quarter. However, despite this re-acceleration, growth is still flat to down from prior quarters. The ‘take rate,’ which is the percentage of GSV the company earns, declined slightly to 14.3% from 14.5% in the last quarter. While R&D spending grew just 13% over the last year, sales and marketing expenses grew 33%. This reflects increased spending over the past few quarters on the marketing of new product initiatives. The gross margin now at 71.5% continues to improve sequentially and year over year. Operating expenses as a percentage of revenue increased slightly from last quarter to 75.2%. Fighting an Uphill Battle to Grow Revenue As a market leader, the company’s growth is now to an extent constrained by growth in its addressable market. The stock remains expensive given the likely growth rates. The management team seems to be doing a good job of refining the product-market fit and managing costs. However, while it has managed to reverse the downward trend in revenue growth, it took higher spending on marketing to do so. As a market leader, the company’s growth is now to an extent constrained by growth in its addressable market. The stock remains expensive given the likely growth rates.