Why TaskUs Stock Dropped Today

What happened

Shares of TaskUs (NASDAQ:TASK) were down 14% as of 2 p.m. ET Thursday, according to data provided by S&P Global Market Intelligence, after the digital services outsourcing specialist lowered its full-year guidance despite posting better-than-feared second-quarter 2023 results.

So what

Indeed, TaskUs' quarterly revenue declined 7% year over year, to $229.2 million, translating to non-GAAP (adjusted) net income of $31.8 million, or $0.32 per share. Analysts, on average, were expecting lower earnings of $0.29 per share on revenue of $227.3 million. TaskUs also generated healthy cash flows this quarter, with cash from operations of $38.5 million and free cash flow of $28.7 million.

However, management noted that macro headwinds are still an issue for the business.

"While the industry saw challenging market dynamics and a slowdown in client volumes in the second quarter, we continued to make progress on our three-tier growth strategy," stated TaskUs Co-Founder and CEO Bryce Maddock. "Despite this progress, the continued volatility in the macro environment has impacted client volumes and we have updated our full-year outlook to reflect this."

Now what

For the third quarter, TaskUs expects revenue of $220 million to $222 million -- well below the $229 million most analysts were modeling. For the full-year 2023, TaskUs now anticipates revenue of $900 million to $910 million, down from its previous guidance range of $925 million to $950 million and below consensus estimates for $932 million.

In the end, this certainly doesn't make TaskUs a broken business. But given continued macro headwinds and this guidance reduction despite the Q2 beat, it's no surprise to see the stock falling today.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TaskUs. The Motley Fool has a disclosure policy.