Social media professional network company LinkedIn Corporation (LNKD, Financial) posted a 35% increase in revenue, at $638 million, in the first quarter of 2015, compared to $473 million revenue earned in the same period last year.
“For Q1, overall revenues grew 35% to $638 million. We delivered adjusted EBITDA of $160 million and non-GAAP EPS of $0.57. In Q1, our platform continued to show strong engagement powered by ongoing investments in mobile, global expansion content and jobs,” CEO Jeff Weiner said at the earnings call, “During Q1, cumulative numbers grew 23% to $364 million, unique visiting members grew 18% to an average of 97 million per month, and member page views grew 30%, well ahead of unique member growth. We continue to see a healthy increase in member page views per unique visiting member demonstrating growing organic engagement. In addition, mobile continues to grow at double the rate of overall member activity and now represents more than half of all traffic to LinkedIn.”
Adjusted EBITDA stood at $160 million for Q1 of 2015, while GAAP earnings per diluted share stood at $0.34, up from $0.11 from the first quarter of 2014. But net loss attributable to common stockholders was up from $13 million, or 11 cents per share, last year to $43 million, about 34 cents per share, in the first quarter of 2015.
Business outlook 2015
Although the California-based company exceeded estimates predicted by analysts with revenue growth boosted by sales of services to recruiters and premium subscriptions to job seekers, LinkedIn warned investors that profits for the coming months of this year were likely to see a downturn because of a strong dollar, falling ad sales in Europe and a change in assigning new accounts within the company’s sales force. Earlier in April, LinkedIn announced its $1.5 billion acquisition of educational video content generating website Lynda.com. The company expects revenues from this acquisition to only amount to something by the end of this year. LinkedIn has also increased its research spending and continues to exceed internal goals regarding engineering and operations hiring.
The updated forecast for 2015 is for $2.90 billion revenue earned or profit of $1.90 per share. Earlier, it had forecasted earnings of $2.93 to $2.95 billion or $2.95 per share.
“For the second quarter, we expect revenues of between $670 million and $675 million, 26% growth at the midpoint. We expect adjusted EBITDA of approximately $120 million, an 18% margin. Excluding the Lynda impact, the margin would be approximately 22% and for non-GAAP EPS we expect approximately $0.28 per share,” said CFO Steve Sordello, “For the full-year, we expect revenue of approximately $2.9 billion, 31% year-over-year growth. We expect adjusted EBITDA of approximately $630 million, a 22% margin. Again, excluding Lynda's impact on margin would be approximately 24% and for non-GAAP EPS we expect approximately $1.90 per share.”
Market reactions
The share market seems to have lost faith in social media companies. In the last week, three social media stock saw a fall from grace. Microblogging companies Twitter Inc’s (TWTR, Financial) shares are down by almost 25% after its quarterly financials failed to beat estimates. Yesterday, crowd-sourced review website Yelp Inc. (YELP, Financial) saw a 23% decline in share price, after it too posted earnings that failed to impress.
LinkedIn shares fell by a massive 20.81% to $199.65, after the closing bell rang on Thursday. Shares had already taken a 1.95% tumble to $252.13 during trading hours. Investors, reportedly, have lost their confidence in social media companies and their ability to justify their huge valuations. But unlike, Yelp and Twitter, which now carry lowered financial performance expectations; LinkedIn is still not in the red. LinkedIn’s Class A common stock carries a one year forward P/E of 584.43 and 18 of 28 analysts polled, by Zacks Investment Research, maintain the "Strong Buy" rating given to its stock.
