LinkedIn (LNKD), the largest network of professionals online, reported Q1 earnings after the bell Thursday, beating on both the top and bottom lines for the quarter. Revenues of $473 million in the quarter beat the Zacks consensus estimate of $466 million, representing a 46% gain year over year.
Earnings reached -$0.08 per share (discounted for amortization of a non-recurring item; LinkedIn's non-GAAP headline number was 38 cents per share). This amounts to a pretty big miss on the bottom line — the Zacks consensus was looking for earnings of a penny in the quarter.
Talent Solutions — now accounting for 58% of LinkedIn's business — grew 50% year over year, which is what analysts had been expecting. LinkedIn now has 276 million users. Marketing was up 36% from Q1 2013 to $102 million, and Premium Subscribers brought in $96 million for the quarter.
Full-year revenue guidance, however, fell beneath the Zacks consensus of $2.09 billion to a range of $2.06 – $2.08 billion. So far in the after-market, this has helped cause a 3% sell-off after LNKD shares gained 5% in regular Thursday trading.
The real story with a growth play like LinkedIn — a la Facebook (FB), Netflix (NFLX), et. al. — is not so much earnings per share as a growing audience. And as long as growth projections — however big, and 50% growth is still a good number — remain in-line with analysts' projections, it's going to be tough for a company like LinkedIn to gather much momentum from here, especially after being up considerably today.
The Chinese-language LinkedIn was launched in beta form, which is potentially very good news down the road. LinkedIn currently has 4 million Chinese users, but is targeting 140 Chinese workers, which would grow the company another 50% all by itself. But with full-year revenue guidance now below where we were expecting, it's unclear from the earnings release when this great China boon is expected to take place.
LinkedIn shares got hit hard when momentum stocks sold off in March; LNKD is still down over 20% year to date. With a 9% run-up this week, clearly investors were pricing in some good news. And LinkedIn seem to doing fine overall — just not great. So when does greatness of LinkedIn bestow itself? That's what we'd all like to know.
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