LinkedIn beats the street, sinks 10% on weak guidance

LinkedIn saw revenue of $447.2 million on EPS of 39 cents, but Q1 guidance falls $10M short

Financial trends and news by Steven Loeb
February 6, 2014
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Shares of LinkedIn sank more than 10% to $202, in after-hours trading Thursday, even though the company posted better-than-expected fourth-quarter earnings. 

Investors, however, disappointed with the guidance for the first quarter of 2014, showed their discontent by essentially wiping out all the gains shares had in earlier trading. The stock had gone up 4.24%, or $9.09, to $223.45, in regular trading.

In the earnings report, LinkedIn posted non-GAAP earnings per share of 39 cents on revenue of $447.2 million, up 47% from $303 million in the year-ago period.

Analysts had been expecting EPS of 38 cents a share on revenue of $438.1 million. 

Net income for the quarter was $3.8 million, compared to net income of $11.5 million for the fourth quarter of 2012. Non-GAAP net income for the second quarter was $46.8 million, compared to $25.1 million for the fourth quarter of 2012.

Adjusted EBITDA for the fourth quarter was $111.4 million, or 25% of revenue, compared to $78.6 million for the fourth quarter of 2012, when it was 26% of revenue.

These numbers also beat LinkedIn's own estimates which had been to see revenue in the range of $415 million and $420 million for the fourth quarter, while adjusted EBITDA was expected to range between $98 million and $100 million. 

“Solid fourth quarter performance capped another successful year where improvements in scale and relevance across our platform led to strong member engagement,” Jeff Weiner, CEO of LinkedIn, said in a statement. “Moving forward, we are investing significantly in a focused number of long-term initiatives that will allow us to realize our vision to create economic opportunity for every member of the global workforce.”

Talent Solutions took in $245.6 million, up 53% year to year. This sector represented 55% of the company's quarterly revenue, compared to 53% a year ago.

Revenue from Marketing Solutions was $113.5 million during the quarter, an increase of 36% year to year. It accounted for 25% of total revenue, compared to 27% in Q4 2012.. Premium Subscriptions brought in 20% of total revenue, or $88.1 million, up 48% year to year.

A total of $271.1 million, or 61% of LinkedIn’s revenue, came from the U.S., while $176.1 million, or 39%, came from international markets.

The company is expected Q1 2014 to see revenue between $455 and $460 million, with adjusted EBITDA expected to range between $106 million and $108 million. 

Analysts had been expecting revenue for the quarter to be $470 million.

For the full year 2014, revenue is expected to range between $2.02 billion and $2.05 billion. Adjusted EBITDA is expected to be approximately $490 million.

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