LinkedIn Corporation (NYSE: LNKD) shares plummet 40% today after the earnings release yesterday. Despite the higher-than-expected revenue and profit, the adjusted guidance disappointed investors and leads to the crashing stock price.
LinkedIn Stock Price
The professional services and social networking company reported that revenue grew 34% to $862 million, compared to a 37% in the previous quarter and 44% in the Q4 2014. Net loss was $8 million with a diluted GAAP EPS of -$0.06, comparing to $0.02 year-over-year and -$0.36 in the previous quarter. On a non-GAAP basis, diluted EPS was $0.94, surpassing analysts’ estimate of $0.78. Adjusted EBITDA was $249 million, with a 29% growth year-over-year.
Geographically, 61% of total revenue came from US, 25% from EMEA, 8% from APAC and 5% from other Americas. On the segment level, Talent Solutions had the largest growth (45%) year-over-year and now make up 62% of the total revenue. Another 21% of the total revenue came from Marketing Solutions and 17% from Premium Subscriptions. The company had 414 million cumulative members in the fourth quarter with 19% growth, comparing to 25% in the Q4 2014. Mobile Unique Visiting Members had a growth of 26% year-over-year, three times faster than other member activities.
Jeffrey Weiner, the CEO of LinkedIn pointed out the progress the company achieved in 2015 including the “re-imagined flagship app” launched in December and “improved algorithms as well as easier tools to follow publishers”.
He said, “The year-over-year growth rate for members sharing content has nearly doubled since launching the new flagship app, accelerating to nearly 40% year-over-year. And some third-party publishers are seeing materially increased traffic coming from LinkedIn, in some cases greater than three times previous levels.” In addition, increasingly more members are using LinkedIn to search career opportunities, benefited from key member investment throughout 2015 such as increased job listings and the jobs app.
In 2016, the company plans to enhance their core hiring products by rolling out new LinkedIn Recruiter and Referrals product as well as the acquisition of Connectfier. “Our strategy in 2016 will increasingly focus on a narrower set of high value, high impact initiatives with the goal of strengthening and driving leverage across our entire portfolio of businesses”, said the CEO.
The company expects the revenue to be approximately $820 million for Q1 2016 with adjusted EBITDA of approx. $190 million and Non-GAAP EPS of $0.55. For the full year, the company expects the revenue between $3.6 and $3.65 billion, a growth of 20% to 22% year-over-year and non-GAAP EPS of $3.05 to $3.2. Steven J. Sordello, the CFO expressed that the outlook reflects concerns over the economic conditions in EMEA and APAC regions. “We're seeing positive early engagement trends from the new flagship launch, but it's too early to incorporate the impact into our guidance”