LinkedIn has just reported Q1 2013 revenues of $324.7 million, up 72% year-on-year. Net income for the quarter was $22.6 million, a huge rise of $5.0 million from 2012. Non-GAAP earnings per share were $0.45.
Revenues and EPS soundly beat stock analyst First Call's estimates of $317 million in revenues and EPS of $0.31. LinkedIn also beat its own guidance from last quarter, when it said it expected between $305 million and $310 million in revenues.
Here are the highlights:
- Revenue for the first quarter was $324.7 million, an increase of 72% compared to $188.5 million in the first quarter of 2012.
- Net income for the first quarter was $22.6 million, compared to net income of $5.0 million for the first quarter of 2012. Non-GAAP net income for the first quarter was $52.4 million, compared to $16.9 million for the first quarter of 2012. Non-GAAP measures exclude tax-affected stock-based compensation expense and tax-affected amortization of acquired intangible assets.
- Adjusted EBITDA for the first quarter was $83.4 million, or 26% of revenue, compared to $38.1 million for the first quarter of 2012, or 20% of revenue.
- GAAP diluted EPS for the first quarter was $0.20; Non-GAAP diluted EPS for the first quarter was $0.45.
Nevertheless, shares of the work-focused social network, however, are down nearly 11% in after-hours trading on news that next quarter won’t be quite as rosy.
UPDATE: LinkedIn (NYSE:LNKD) shares ended the trading on May 3, 2013 at $175.59 or down $26.08 or -12.93%.
First Call had estimated revenues of Q2 of $359 million, but today LinkedIn issued guidance that it expects sales of between $342 million and $347 million. That’s up between 50% and 52% on the same quarter a year ago, and is a sign of how growth is slowing. This slide from the earnings presentation says everything about the company’s revenue decline:
The company says it now has 225 million users, up from 200 million last quarter. Judging by some of the product launches in the last few weeks it may have been that LinkedIn is laying the groundwork for how it will better monetize the users it has longer term as other revenue streams and customer acquisition decelerate. The new launches have included upgraded, more media-enhanced profiles; a Contacts update to add in more “personal assistant” life organizing features; new iPhone and Android apps; an expanded search engine; @mentions in status updates; Klout-style endorsements; and a Recruiter homepage redesign for the site’s most dedicated user vertical.
62% of LinkedIn's revenues in Q1 2013 were generated from the U.S. This is down from 64% in Q1 2012. 23% of LinkedIn's revenues in Q1 2013 were generated from the Europe, the Middle East, and Africa. No change from Q1 2012. This is how LinkedIn's revenues were distributed by geography:
Here is how different divisions of the company have performed this past quarter:
- Talent (Recruiting) Solutions revenue was $184.3 million, up 80% over last year. Talent Solutions revenue was 57% of total revenue in the first quarter of 2013, versus 54% last year.
- Marketing (Advertising) Solutions revenue was $74.8 million, up 56% compared to the first quarter of 2012. Marketing Solutions revenue declined by 2 percentage points to make up 23% of total revenue in the first quarter of 2013.
- Premium (Paid Subscribers) Subscriptions products revenue was $65.6 million, up 73% compared to the first quarter of 2012. It remained level at 20% of total revenue for Q1.
The U.S. remains the biggest market for the company, with $201.4 million in revenue, 62% of the total. That’s the same proportion as the previous quarter, and has generally been declining over the last several years. International markets sales were $123.3 million.
LinkedIn continues to have a heavy amount of its sales coming from its “field sales channel”: $184 million compared to $140.7 million online. Field sales, involving actual people, are more costly for LinkedIn and so the company will likely be trying to increase its online sales in quarters ahead to improve earnings as growth slows.
We’re just about to listen to the call and will update with details from there.
COMMENTARY: On Thursday, May 2, 2013, LinkedIn executives warned that its advertising business will undergo "a more moderate growth" than its other services. Its fledgling, mobile-oriented "newsfeed" ads - or promotions that appear directly in a users' stream of content - remained in testing and would only be introduced gradually.
LinkedIn Finance Chief Steve Sordello said on a conference call on Thursday.
"We're seeing some encouraging early signs but it's off a very small scale right now."
The weaker-than-expected forecast came as LinkedIn's financial results for the first three months of the year blew past analysts estimates, marking the eighth consecutive quarter the company topped Wall Street targets.
The winning streak has helped drive the stock up 74 percent since the start of the year, creating what some analysts said were overheated Wall Street expectations.
Needham & Co analyst Kerry Rice said.
"The stock is somewhat a victim of its own success. They had a really big acceleration in Q4. So I think the market kind of expected similar results in Q1 and throughout 2013."
LinkedIn said that Q2 2013 revenue would range from $342 million to $347 million, below the $359.3 million expected on average by analysts.
Although LinkedIn hiked its full-year revenue forecast by $20 million on Thursday, the high end of the forecast range was below the average analyst estimate of $1.49 billion, according to Thomson Reuters I/B/E/S.
LinkedIn's CFO Steve Sordello released the following slide show for stock analysts prior to the earnings conference call:
Courtesy of an article dated May 2, 2013 appearing in TechCrunch and LinkedIn's announcement dated May 2, 2013 appearing in the LinkedIn Blog and an article dated May 2, 2013 appearing in the Chicago Tribune