LinkedIn beats in Q1, shares drop 27% on weak guidance

LinkedIn posted revenue of $638M, and EPS of 57 cents, but lowered outlook is displeasing investors

Shares of LinkedIn are getting shelled in after-hours trading on Thursday, dropping over 27%, despite the company posting better-than-expected first-quarter earnings. The stock had gone down 2%, or $5.15, to $252 a share, in regular trading.

In the earnings report, LinkedIn posted non-GAAP earnings per share of 57 cents on revenue of $638 million, an increase of 35% compared to $473 million in the first quarter of 2014.. Analysts had been expecting EPS of $0.56 on revenue of $636 million.

Net loss for the quarter was $43 million, compared to net loss of $14 million for the first quarter of 2013. Non-GAAP net income for the second quarter was $73 million, compared to $47 million a year ago.

“Q1 was a solid quarter in which we made meaningful progress against our multi-year strategic roadmap,” said Jeff Weiner, CEO of LinkedIn. “During the quarter, we maintained steady growth in member engagement while achieving strong financial results.”

So what is causing LinkedIn's stock to take such a  massive hit? As it usually seeems to be, the company presented weaker than expected guidance for the next quarter and full year.

It now expects Q2 revenue of between $670 million $675 million, with EPS of $0.28, which is far below a consensus of $717.5 million and $0.74. For the full year 2015, LinkedIn expects revenue of $2.9 billion and EPS of $1.90, below a consensus of $2.98 billion and $3.03.

The reason for the lowered guidance seems to have to do with LinkedIn's acquisition of Lynda.com in Aparil for $1.5 billion, its largest purchase ever. 

Talent Solutions took in $396 million in revenue in Q1, up 36% year-to-year. This sector represented 62% of the company's quarterly revenue.

Revenue from Marketing Solutions was $119 million during the quarter, an increase of 38% year to year. It accounted for 19% of total revenue, the same as Q1 last year. Premium Subscriptions brought in $112 million,.e.

A total of $389 million, or 61% of LinkedIn’s revenue, came from the U.S., while $248 million, or 39%, came from international markets.

(Image source: io9.com)