LinkedIn Has Strong Quarter But Forecast Disappoints

Oct 29, 2013
This article is part of a series called Financial.

LinkedIn 3rd Q 2013 revenueLinkedIn lost money in the third quarter, yet on an adjusted basis, it again soared past what the financial markets were predicting, earning 39 cents a share on revenue of $393 million. But what it said about the future sent its after-hours stock price down $8 a share.

Despite beating Wall Street’s third-quarter estimate of 32 cents on $385 million, LinkedIn said the fourth quarter would come in as much as $23 million below analysts’ expectations. In its third-quarter financial report, released just hours ago, the company said that it expects the quarter’s revenue to fall somewhere between $415 and $420 million. Analysts were looking for $438.1 million for the quarter and a total of $1.51 billion for the year.

However, it’s not unusual for LinkedIn’s forecast to underestimate — sometimes as much as a few points — what it actually delivers during a quarter.

In addition to lowering expectations, the financial report also showed LinkedIn lost $3.4 million or 3 cents a share. That was largely due to accounting for stock options and amortization of intangibles, charges that are largely accounting requirements and not so much out-of-pocket expenses. Financial analysts usually discount these financial components when computing earnings.

As has been the case since before the company went public in 2011, by far the biggest share of its revenue came from recruiting. Its Talent Solutions products brought in $225 million during the quarter, which accounted for 57 percent of total revenue.

Users continue to join at the rate of two per second, growth the company has sustained for several quarters. Members now number 259 million worldwide with 142 million visitors coming to the site monthly.

Mobile continues to be the fastest-growing way users interact with LinkedIn. Company officials said during a conference call with analysts that mobile users are significantly more active consumers of LinkedIn content than those on desktops. During the quarter, LinkedIn launched “Sponsored Updates,” the company’s first  advertising product specifically for mobile uses.

University pages, similar to company pages, were launched over the summer and have grown to more than 1,500 pages. These pull together a broad range of content, alumni connections, and campus information that the schools manage.

These product launches, and those coming in the future, are part of LinkedIn’s grand plan to connect every working person in the world to every open job in the world, both permanent and staffing positions. The vision is long term, company officials said, but is being realized one step at a time.

This article is part of a series called Financial.
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