LinkedIn Posts Loss, But Revenue Up 46%

LinkedIn reported a first-quarter loss on increased expenses but had better-than-expected revenue.

The social networking site on Thursday said revenue rose 46% to $473.2 million as sales were up by double digits across each of its three main business lines: recruiting services, premium subscriptions and advertising.

LinkedIn had a loss of $13.4 million compared with a profit of $22.6 million in the same period a year ago. Expenses were higher as a result of its acquisition of data-driven jobs site Bright and its expansion into China in the quarter.

Minus certain expenses, LinkedIn said it would have earned 38 cents a share, down from 45 cents a year ago. Wall Street analysts, on average, had projected adjusted earnings of 34 cents a share for LinkedIn on revenue of $467 million. "The first quarter was strong for LinkedIn in terms of our member engagement and financial results," said Jeff Weiner, CEO of LinkedIn, in the company’s earnings release.

Breaking out sales, the company’s recruiting business, called Talent Solutions, grew 50% to $275.9 million, accounting for 59% of overall revenue. Premium Subscriptions rose 46% to $95.5 million (22% of sales) while the ad business -- Marketing Solutions -- was up 36% to $101.8 million. That rate was flat with the prior quarter.

The company recently announced hitting the milestone of 300 million members worldwide, with about a third of the total in the U.S. With its push into China, however, LinkedIn’s user base could take on an increasingly international profile. But the U.S. still makes up 60% of total revenue.

LinkedIn is in the process of transitioning from a reliance on traditional display advertising and sponsorships to a focus on native advertising through its Sponsored Update ads that run within users’ news feeds. The company has previously said phasing in the in-stream unit across the desktop and mobile could affect ad growth this year.

During the earnings conference call Thursday, LinkedIn said Sponsored Updates accounted for 19% of total ads sales, up from 13% in the fourth quarter of 2013. 

To help encourage adoption of the format, LinkedIn last week announced a new partner program for Sponsored Updates in which outside companies like AdStage, Brand Networks and SHIFT will provide ad tools to help marketers run their campaigns on the site. It also announced a set of partners to help with content development.

Despite the steps LinkedIn has taken over the last two years to become a content platform to keep people sticking around, comScore data showed that unique desktop users declined in March (down 1%) for the second straight month. Page views also dipped 1%. Analyst Tom White of Macquarie Securities attributed the usage declines partly to the user shift to mobile devices.

LinkedIn said in the earnings call that mobile accounted for 43% of monthly visitors in the first quarter. 

Looking ahead, LinkedIn expects revenue in the second quarter to range between $500 million and $550 million. The company raised revenue guidance to $2.06 billion to $2.08 billion, from its prior estimate for $2.02 billion to $2.05 billion.

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