LinkedIn Q1: Revenue beats street but weak outlook sends stocks plunging

LinkedIn offered revenue guidance far below estimates, in the range of $670 million and $675 million. Analysts had expected revenue of $717.5 million.
Written by Natalie Gagliordi, Contributor

It was a tough week on Wall Street for social media stocks.

On Tuesday shares of Twitter plummeted following a premature earnings release and a softened outlook.

Then LinkedIn published its first quarter earnings and revenue Thursday after the bell -- with similarly devastating results.

The social network for professionals reported a net loss of $43 million, or 34 cents per share (statement).

Non-GAAP earnings were 57 cents per share on a revenue of $638 million, up 35 percent year-over-year.

Those numbers lined up with expectations, as Wall Street was looking for earnings of 56 cents per share on revenue of $636 million.

But LinkedIn's revised outlook for the current quarter sent the company's stocks in a tizzy. LinkedIn offered revenue guidance far below estimates, in the range of $670 million and $675 million, with projected earnings of 28 cents per share.

Analysts had expected earnings per share of 74 cents on revenue of $717.5 million.

As a result, LinkedIn's shares tumbled 25 percent in after market trading.

For the fiscal year, LinkedIn expects revenue of $2.9 billion.

In prepared remarks, LinkedIn CEO Jeff Weiner said the first quarter was one of solid growth in member engagement, which is helping to push the company along its strategic roadmap.

Much of LinkedIn's growth as of late has been centered on the company's Economic Graph concept, around which LinkedIn hopes to digitally map the global workforce by creating profiles for every worker and company in the world.

LinkedIn bolstered its efforts on that front with the recent acquisition of the subscription-based online learning portal lynda.com. At a price tag of $1.5 billion, the deal represented LinkedIn's largest acquisition to date.

Shortly before the lynda.com purchase, LinkedIn also acquired the predictive analytics startup Refresh as well as the online recruiting and talent platform Careerify.

Steve Sordello, LinkedIn CFO, noted the acquisitions in the earnings release, calling them "important strategic investments to better position the business to execute on our long-term roadmap."

Additional numbers from the report:

  • Premium subscription revenue totaled $122 million, an increase of 28 percent year-over-year.
  • Marketing product revenue totaled $119 million, an increase of 38 percent year-over-year.
  • The number of unique visiting members accessing LinkedIn via mobile devices surpassed 50 percent.
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