) reported adjusted loss per share of 8 cents as
better-than-expected revenue was offset by significantly higher
investments and a higher share count. As a result, comparisons
with both the Zacks Consensus Estimate (earnings of a cent) and
the year-ago earnings (22 cents) were unfavorable.
The investments were related to the launching of a Chinese
website, product development for the Marketing Solutions segment,
a publishing platform in mobile and for infrastructure
development in general. Though these investments are impacting
operational performance in the short run, they are necessary for
member growth and user engagement in the long term.
Top-line numbers were encouraging, with LinkedIn seeing strong
performance across all its business segments.
Revenues for the quarter not only increased 45.7% on a
year-over-year basis to $473.2 million but also came ahead of the
Zacks Consensus Estimate of $468.0 million. Reported revenues
also surpassed management's forecasted range of $455 to $460
Segment-wise, revenues from Talent Solutions were up 49.7%
from the year-ago quarter to $275.9 million. Revenues from
Marketing Solutions increased 36.1% on a year-over-year basis to
$101.8 million. LinkedIn garnered $95.5 million revenues from
Premium Subscriptions which increased 45.6% on a year-over-year
LinkedIn's cumulative members increased 36% year over year to
296 million at the end of the first quarter. The company
witnessed 26% increase in Unique visiting members and 43%
year-over-year increase in member page views. The company crossed
300 million members in Apr 2014.
International expansion remains a focal point for LinkedIn.
During the quarter, the company launched a Chinese language
website to expand its presence in the leading Internet market of
China. Considering the growth potential of the country which has
a huge Internet surfing population, LinkedIn's expansion in the
country bodes well.
The company's mobile engagement was noteworthy as mobile
represented 42% of its traffic. During the quarter, the company
introduced Recruiter Solutions for Android-based devices and an
updated version of the same for
LinkedIn has also expanded its Sponsored Updates, part of the
Marketing Solutions segment, through the launch of two Certified
Marketing Partner programs - Sponsored Updates Partners and
Content Partners. The company is reported to have 3,000 active
customers for the Sponsored Update campaigns. With these
initiatives the company is expected to witness not only customer
growth but also bring in repeat business from account
Geographically, LinkedIn's revenues from the Americas
increased 40.4% on a year-over-year basis. Revenues from the
Europe, Middle East & Africa region grew 56.9%. Asia-Pacific
recorded revenue growth of 60.8% on a year-over-year basis.
Operating expenses (excluding amortization but including
stock-based compensation expense) increased 57.3% year over year.
As a percentage of revenues, operating expenses increased from
91.9% to 99.1% with operating margins shrinking from 8.1% to 0.9%
from last year.
LinkedIn's adjusted net loss (excluding amortization,
accretion of redeemable non-controlling interest but including
stock-based compensation) on proportionate tax basis came in at
$9.4 million or 8 cents per share compared with a net profit of
$24.9 million or 22 cents per share reported in the year-ago
Balance Sheet & Cash Flow
LinkedIn ended the quarter with cash and cash equivalents of
$508.9 million versus $803.1 billion in the previous quarter.
Total deferred revenue in the quarter was $479.6 million, up from
$392.2 million in the previous quarter. The company generated
$128.9 million in cash flow from operation compared to $82.5
million reported in the previous quarter.
LinkedIn provided its second-quarter and upped its fiscal 2014
outlook. For the second quarter, the company expects its revenues
to range between $500 million and $505 million (mid-point $502.5
million). Although lower than the Zacks Consensus Estimate of
$507 million, the mid-point of the revenue guidance is 38% higher
than the year-ago quarter revenues. LinkedIn expects adjusted
EBITDA in the range of $118 to $120 million.
For fiscal 2014, LinkedIn expects now revenues in the range of
$2.06 to $2.08 billion (previous forecast $2.02 to $2.05
billion). The Zacks Consensus Estimate is pegged at $2.11
billion. Adjusted EBITDA is expected in the range of $500 to $510
million, up from the previous forecast of $490 million.
LinkedIn remains a leader in the emerging online professional
networking segment with increasing worldwide popularity and
steady growth 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.
We believe that LinkedIn's initiatives to increase advertising
revenues through product launches and partnership programs are
praiseworthy. Advertisers are also taking a note of the company's
growing user base, in our view.
We believe the investments in strategic products are necessary
for LinkedIn as other companies like
) are looking for a position in the professional space.
Thus, investors should not read much into the bottom-line miss
and should rather be encouraged by nearly 45% to 50% top-line
growth recorded by LinkedIn in the past few quarters.
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