LinkedIn share price slumps as Q1 losses soar to $43m

LinkedIn revenues grow to $638m but are offset by losses of $43m

LinkedIn has reported revenue growth of 35 percent to $638m in its 2015 first-quarter financial results, but losses rose to $43m and caused the firm’s share price to tumble.

The $30m increase in losses on the $13m in the same quarter a year earlier caused LinkedIn to lower its expected earnings for the second quarter, resulting in a stock price slump of 25 percent.

This drop effectively wiped around $7bn from LinkedIn’s market price, about a quarter of its company value, in minutes.

LinkedIn blamed the rise in losses on the strong US dollar and its effect on foreign exchange rates. The firm also cited its pending acquisition of Lynda, a US education site which LinkedIn is buying for £1.5bn in a deal due to close in the second quarter.

Steve Sordello, LinkedIn’s chief financial officer, admitted that the short-term impact of the acquisition will hit revenues.

“In the short-term, we also anticipate the integration will impact Lynda.com’s existing enterprise revenue as well as Talent Solutions [LinkedIn’s recruitment business] as we pilot different approaches to cross-selling products,” he said during LinkedIn’s Q1 earnings call (PDF).

“We view this as a short-term opportunity cost as we take initial steps to pursue the large enterprise learning and development market.”

Sordello added that Lynda is predicted to generate $20m to $25m in additional 2015 revenue for LinkedIn.

Despite the losses, LinkedIn revenues rose by $165m compared with the $473m reported in the first quarter of 2014.

Revenues were driven predominately by the Talent Solutions business which grew by 36 percent to $396m and represented 62 percent of the company’s total Q1 revenue.

LinkedIn’s ‘marketing solutions’ products saw revenues grow by 38 percent to £119m, while its ‘premium subscriptions’ business pulled in $122m, an increase of 28 percent over the same quarter last year.

LinkedIn’s biggest market is the US, which contributed $389m, or 61 percent, of the quarterly revenue.

LinkedIn also reported a hike in the number of members viewing its site on mobile devices, surpassing 50 percent in unique visits.

The firm highlighted continued development of its mobile capabilities, citing the launch of the LinkedIn Job Search app for Android as an example.

Social networking companies suffered hefty losses in the first quarter of this year. Twitter reported a loss of $162m which resulted in a slump in share price, while Facebook enjoyed soaring revenues but saw a fall in profits.

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1 May 2015 | 11:10 am – Source: v3.co.uk

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