Media

LinkedIn Earnings vs. Facebook, Where the Tail Wags the Dog

Jon C. Ogg

Published: April 28, 2016 4:41 pm

Last Updated: January 13, 2020 10:08 am

It was not that long ago that LinkedIn Corp. (NYSE: LNKD) saw its shares tank after earnings. Now we are seeing a solid reaction — and one might wonder if this is a chasing of Facebook Inc. (NASDAQ: FB) after the social media giant blew out earnings expectations on Wednesday. The two companies may be categorized the same, but the reality is that they are quite different in reality. LinkedIn is considered the social network for professionals, while Facebook is for everything else.

LinkedIn posted a net loss on a GAAP basis of $46 million, but its non-GAAP net operating income was $99 million. This translated to a comparable jump in earnings to $0.74 per share. That is against $0.57 per share last year. Total revenue increased 35% to $861 million. The Thomson First Call estimates were only $0.60 EPS and $828.5 million in revenues.

Shares were indicated up higher, but investors should keep in mind that there were many moving parts to this report with an overlap seen here. LinkedIn’s Talent Solutions revenue increased 41% to $558 million. Its Hiring revenue segment revenues grew 27% to $502 million. Marketing Solutions revenue increased 29% to $154 million, and its Premium Subscriptions revenue rose 22% to $149 million. LinkedIn’s adjusted EBITDA was $222 million, or 26% of revenue.

LinkedIn’s guidance was as follows:

• Second Quarter of 2016 — Revenue is expected to range between $885 million and $890 million. Adjusted EBITDA is expected to range between $225 million and $230 million. Non-GAAP EPS is expected to range between $0.74 and $0.77. The company also expects about 136 million non-GAAP fully-diluted weighted shares.
• Full Year 2016 — Revenue is expected to range between $3.65 billion and $3.70 billion. Adjusted EBITDA is expected to range between $985 million and $1.005 billion. Non-GAAP EPS is expected to range between $3.30 and $3.40. The company also expects about 136 million non-GAAP fully-diluted weighted shares.

Thomson First Call had estimates for the second quarter of $0.71 EPS and $886 million in revenues. The consensus estimates for all of 2016 were $3.19 EPS and $3.67 billion in revenue. Other details for the quarter were listed as follows:

• cumulative members grew 19% to 433 million, its strongest net-add quarter since the beginning of 2014.
• core operating metrics saw accelerated growth — unique visiting members grew 9% to an average of 106 million members a month and member page views grew 34%.
• Page views per unique visiting member hit an all-time high in Q1, with 23% year-over-year growth.
• viral actions on its feed were shown to have increased more than 80%, daily shares were up nearly 40%, and traffic to third-party publishers grew more than 150%.

Jeff Weiner, CEO of LinkedIn, said:

LinkedIn delivered strong financial results and growth across our core product lines. As a result of our new mobile experience, members are increasing their activity on LinkedIn, helping drive strong levels of engagement across the platform.

CFO Steve Sordello said:

We are off to a good start in 2016 with strength in our core and emerging businesses. We continue to invest heavily in innovation and in our core products, while at the same time driving focus and scale to enable growth and leverage across the business.

Investors should consider that the end of day sell-off might have tempered some expectations. That being said, Facebooks’s gain of 7.2% to $116.73 acted to keep a floor under LinkedIn shares.

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LinkedIn shares closed up 3.5% at $123.01 and the after-hours reaction had LinkedIn shares up over 3% more at $128.00. LinkedIn’s 52-week range is $98.25 to $258.39 and its consensus analyst target price is $164.28.

To further show how different LinkedIn and Facebook are to the public and to investors, maybe the market caps of each at Thursday’s closing bell spells it all out. LinkedIn’s market cap was about $16.4 billion, and Facebook’s market cap was $342 billion.

Can the tail wag the dog? Maybe — Facebook’s last share price in the after-hours was up another 0.6% at $117.45, versus a daily and all-time high of $120.79.