) fell 8.48% in after-hours trading as the professional
networking company reported adjusted earnings of 5 cents per
share which lagged the Zacks Consensus Estimate of 8 cents.
Moreover, earnings declined 56.8% from the year-ago quarter.
LinkedIn's revenues not only increased 47.3% on a
year-over-year basis to $447.2 million but also came ahead of the
Zacks Consensus Estimate of $439.0 million. Revenues were buoyed
by strong performance across all its business segments.
Segment-wise, revenues from Talent Solutions were up 52.6%
from the year-ago quarter to $245.6 million. Revenues from
Marketing Solutions increased 36.4% on a year-over-year basis to
$113.5 million. LinkedIn garnered $88.1 million revenues from
Premium Subscriptions which increased 48.3% on a year-over-year
LinkedIn's cumulative members increased 37% year over year to
277 million at the end of the fourth quarter. The company
witnessed 31% increase in Unique visiting members and 48%
increase in member page views year over year.
During the quarter, LinkedIn launched innovative products in
the mobile segment and expanded its product offerings in the
Marketing Solutions segment. The company's mobile engagement was
noteworthy as mobile represented 41% of traffic to LinkedIn.
Geographically, LinkedIn's revenues from the Americas
increased 44.9% on a year-over-year basis. Revenues from the
Europe, Middle East & Africa region grew 54.9%. The
Asia-Pacific recorded revenue growth of 54.6% on a year-over-year
Despite the strong revenue performance, a 57.6% year-over-year
increase in operating expenses (excluding amortization) impacted
LinkedIn's operating margins. As a percentage of revenues,
operating expenses increased from 90.3% to 96.5%. This primarily
led to a contraction in operating margins (down from 9.8% to
3.5%) of the similar magnitude over the same period of time.
LinkedIn's adjusted net income (excluding amortization but
including stock-based compensation) came in at $6.7 million or 5
cents per share compared with $14.3 million or 13 cents in the
Balance Sheet & Cash Flow
LinkedIn ended the quarter with cash and cash equivalents of
$803.1 million versus $1.69 billion in the prior quarter. Total
deferred revenue in the quarter was $392.2 million, up from
$331.2 million in the previous quarter. The company generated
$82.5 million in cash flow from operation compared to $126.0
million reported in the previous quarter.
LinkedIn provided its first-quarter and fiscal 2014 outlook.
For the first quarter, the company expects its revenues to range
between $455 million and $460 million, lower than the Zacks
Consensus Estimate of $469 million. LinkedIn expects adjusted
EBITDA in the range of $106 to $108 million.
For the fiscal 2014, LinkedIn expects revenues in the range of
$2.02 to $2.05 billion, lower than the Zacks Consensus Estimate
of $2.17 billion. Adjusted EBITDA is expected to be approximately
LinkedIn's fourth-quarter top line benefited the most from its
Talent Solution and Premium Subscription businesses, which
continue to grow substantially. The company, which is a leader in
the emerging online professional networking segment, has gained
worldwide popularity and has grown steadily in the recent past.
The company's traction in the mobile segment is also encouraging.
Synergies from the acquisitions are also expected to positively
impact results in the long run.
However, the company's revenue guidance is below the Zacks
Consensus Estimate, which is expected to remain an overhang,
going forward. Margins continue to lag due to heavy investments
in product innovations and marketing strategies. The company is
expected to continue its investments in the near term which might
We believe the investments in strategic products are necessary
as LinkedIn faces stiff competition in the professional
networking space from the likes of
). Additionally, the emergence of companies like ValueClick could
change the scenario rapidly over the next few years, as they
introduce new services at regular intervals.
Currently, LinkedIn has a Zacks Rank #5 (Strong Sell).
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