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LinkedIn Shares Slump on Lowered Guidance

The company still beat analysts' expectations for the quarter.

Ken Wolter / Shutterstock

LinkedIn again beat analysts’ expectations with its fourth-quarter earnings report, yet shares fell on Thursday afternoon as the company lowered its financial outlook for the coming year.

LinkedIn expects revenue of around $460 million over the first quarter of 2014, down from the estimates of $470 million. And for the full year of 2014, LinkedIn expects revenue of $2.02 billion to $2.05 billion, also lower than the expected $2.165 billion.

Shares tumbled about 12 percent in after-hours trading, hovering around $197.23.

Something worth noting: LinkedIn has a history of conservative guidance. This story isn’t anything new.

Part of that comes from increased reinvestment into its business. “When you talk about conservatism in guidance, we try to take a best stab at what the business will project,” CFO Steve Sordello said on a conference call with analysts on Thursday. “There’s a number of very heavy investments in 2014, and we’re looking at it from a very long-term perspective.”

That includes investing in moving the company’s business into China, increasing headcount and building three major data centers over the next two years, among other expenditures.

The financials came alongside of LinkedIn’s largest acquisition to date, as the company announced it will purchase Bright, a data-driven job-seeking company based in San Francisco.

“Ultimately, our members won’t need to find jobs, the relevant jobs will find them,” CEO Jeff Weiner said on the call.

That, too, affected LinkedIn’s guidance numbers, as the Bright acquisition won’t actually yield any revenue in 2014.

Investor wariness over the guidance prevailed, despite a slim earnings beat for the company in the fourth quarter. LinkedIn reported earnings per share of 39 cents on revenue of $447.2 million. That edges out analysts’ expectations of EPS of 38 cents on revenue of $437.84 million.

As always, the bulk of the company’s revenue came from the Talent Solutions group, raking in $245.6 million, a year-over-year increase of 53 percent. The rest came from LinkedIn’s marketing group, at $113.5 million, and the premium subscriptions group, at $88.1 million.

One last high note: The company hit the 277 million user mark last quarter.

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