LinkedIn beats Street, but stock takes a dive

The professional social network's first quarter is better than expected with $325 million in revenue, but investors aren't impressed.

LinkedIn offices
LinkedIn

LinkedIn earned 45 cents per share on revenue of $324.7 million in the first quarter, up 72 percent from the year-ago quarter. Though the results were good enough to handily beat analyst estimates, LinkedIn's shares are down around 10 percent in after-hours trading.

The professional social network, which now counts 225 million members, posted net income of $22.6 million.

"Q1 was a strong quarter for LinkedIn with member engagement and financial results reaching record levels," CEO Jeff Weiner said in a statement. "We remained focused on delivering great products that increasingly make LinkedIn the essential daily resource for global professionals."

Wall Street, which has been totally enamored with LinkedIn since its last earnings report, was anticipating adjusted earnings per share of 31 cents and revenue of more than $317 million.

LinkedIn Talent Solutions, or the suite of tools it sells to recruiters, was once again the company's major money-maker. Revenue from Talent Solutions grew 80 percent year over year to $184.3 million, and represented 57 percent of total revenue for the first quarter. LinkedIn made $74.8 million from its marketing products and $65.6 million from paid subscriptions, up 56 percent and 73 percent respectively from the year-ago quarter.

LinkedIn has managed to beat estimates every quarter since its May 2011 initial public offering, and it's been rewarded handsomely for doing so. The professional social network's share price has skyrocketed by 60 percent from $124.09 to $201.67 since its fourth quarter came in as a blowout . The stock started falling Thursday afternoon, however, immediately after the company posted its better-than-expected numbers.

Concern seems largely centered around the company's revised revenue estimates for the second quarter and the rest of the year. LinkedIn said it expects second-quarter revenue of between $342 million and $347 million, which would be below the $359.2 million consensus. The company also indicated that 2013 revenue would land between $1.43 billion and $1.46 billion, a range that is also below Wall Street's consensus of $1.49 billion.

LinkedIn, a 10-year-old company, has been on a product tear of late, though its most significant initiatives like overhauled mobile apps and LinkedIn Contacts weren't launched until after the close of the first quarter. In late March, the company also introduced a unified search experience as a way to push people to more of its content. Eventually, better search, by stimulating even more job searches, should help LinkedIn make more money from its cash cow: recruiter-friendly products.

LinkedIn closed Thursday at $201.67 per share. At the time of publication, shares are trading down around 10 percent at $180 on the after-hours market.

LinkedIn Q1 2013

 

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