Earnings preview:
Will LinkedIn's earnings top Wall St. views again?
LinkedIn's 2Q earnings to put untarnished record for exceeding analysts' estimates on the line
Associated Press
July 29, 2013
SAN FRANCISCO (AP) -- LinkedIn Corp.'s unblemished record of exceeding analysts' financial projections will be put to the test Thursday when the online professional networking service is scheduled to release its second-quarter earnings.
WHAT TO WATCH FOR: It's getting tougher for LinkedIn to deliver pleasant surprises because the bar keeps getting higher with each passing quarter. For instance, analysts surveyed by FactSet are calling for the Mountain View, Calif., company to deliver revenue $7 million above the high end of LinkedIn's own forecasts.
The optimistic outlooks stems from LinkedIn's track record since the company went public in May 2011. LinkedIn has produced earnings and revenue above analysts' predictions in all eight quarters as a public company, prodding Wall Street to conclude management has been lowballing the projections.
LinkedIn has been richly rewarded for its performance. The company's stock is not far from its peak of $209.39, which is nearly five times above its initial public offering price of $45.
The networking service has thrived by establishing itself as the go-to place for employers to find talented workers and for people to get job tips and other advice to manage their careers. It doesn't cost anything for people to set up a personal profile anchored by their resume, helping LinkedIn attract 218 million members through March. Based on its rate of growth in past quarters, LinkedIn should have ended June with 232 million to 235 million members.
LinkedIn makes most of its money by charging employers, headhunters and perpetual job seekers fees to gain additional access to its member's profiles and other data. Some of those fees were raised in the second quarter, a change that should give a lift to LinkedIn's revenue.
The company is also trying to boost its advertising sales by allowing more commercial messages to be displayed within its user's feeds, much like Facebook does on its social network. LinkedIn has been adding more material from outside contributors in an effort to get its members to visit its website more frequently and linger for longer periods, creating more opportunities for them to see ads.
WHY IT MATTERS: LinkedIn is playing an increasingly important role in the economy as it changes the way that people find jobs and the way that employers fill them. The company's lofty stock price is also giving LinkedIn a more significant piece of investment portfolios.
WHAT'S EXPECTED: Analysts are forecasting earnings of 31 cents per share on revenue of $354.5 million, according to FactSet. The earnings forecast doesn't include the company's expenses for employee stock compensation.
LAST YEAR'S QUARTER: The company earned $2.8 million, or 3 cents per share, on revenue of $228 million. Its profit would have worked out to 16 cents per share if not for the costs of employee stock compensation and charges unrelated to its ongoing business.
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