02-May-14 09:52 ET In PlayLinkedIn: Earnings Recap & Street Reaction (154.55 -6.67) : LNKD shares are trading lower by 3.7%, continuing its downside momentum this year (shares -25% YTD as momentum stocks were out of favor). Today's move followed a disappointing fiscal year 2014 outlook. LNKD raised its guidance for FY14, but that raise still came in below expectations. We would note, however, that LNKD typically guides conservatively.
Earnings Recap:
Linkedin (LNKD) reproted Q1 (Mar) earnings of $0.38 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $0.34; revenues rose 45.7% year/year to $473 mln vs the $466.34 mln consensus and $455-460 mln guidance; EBITDA $116.7 mln vs. $112 mln ests and $106-108 mln guidance.
Co issues in-line guidance for Q2, sees Q2 revs of $500-505 mln vs. $504.81 mln Capital IQ Consensus Estimate; sees Q1 EBITDA $118-120 mln vs. $121 mln estimates.Co raises guidance, below estimates for FY14, raises FY14 EBITDA to $505-510 mln from $490 mln vs. the $518 mln consensus; raises revs to $2.06-2.08 bln from $2.02-2.05 bln vs. $2.11 bln Capital IQ Consensus Estimate.
Conference Call Comments:
Price increase done last year has flowed through naturally; have not seen any negative impacts; helping ARPU and will continue to play through.Just north of 25% for 60% goal of customer hires.Margins: 80% gross margin target for long term; See a G&A 9-10%; Sees margin profile of around 30%; projection for 2014 is 25$ up from prior projection of 24%. Notes a lot of infrastructure spend going on right now to invest for the future.No change to plans in China; not primary focus but certainly an area of interest; seeing increased demand in China due to its growing presence.
Street Reaction:
FBR notes, LNKD's outlook slightly disappointed, overshadowing a revenue and adjusted EBITDA beat of 1.4% and 4.5%, respectively. Results showed good execution, but they believe comments hinted at likely further growth moderation ahead. Namely, lower user engagement guidance on tough comps, talent solutions' growth to be driven more by increased penetration of existing accounts, and an aspiration of powering 50% of hiring vs. a current ~25%. They are reducing their price target to $141 (from $190).Stifel notes, results showed slight upside to guidance and estimates. But for the first time the company provided some insight into gross ad growth (vs. reported net) that indicates lower-teen growth in 1Q vs. the upper-teen, lower-20% range through last year.However, it also points to much lower churn (~2%/mo) which resulted in 42.5% growth in the base vs. 49% in 4Q. The firm says, the LNKD story is moving more toward increased penetration of client recruiting budgets (company thinks it can get to half) vs. an investment of sheer number of net corporate clients. The firm lowered its target to $240 from $285. Needham says despite FY14 revenue guidance falling below expectations, they continue to view LinkedIn as a top large cap Internet holding. The company faces little competition in its core Talent Solutions market, and they believe Sponsored Updates could continue to drive upside through the year. While higher investment levels reduce leverage in the near-term, they expect innovative products to reduce the friction related to connecting members with job opportunities and drive incremental future revenues. They continue to recommend LinkedIn to investors given its market leadership and clear path for long-term growth.
Telsey Advisory Group lowers their LNKD tgt to $219 from $300. Quarterly results were impressive, as co beat consensus on the top and bottom line for the 11th consecutive quarter since its May 2011 IPO. 43% of the company's MAUs are now accessing the LinkedIn platform via mobile devices. With management expecting this penetration rate to exceed 50% before year-end, continued investment in unique mobile products for recruiters, marketers and job seekers will ultimately drive the mapping and monetization of the Economic Graph. |
