LinkedIn’s fourth quarter report revealed a healthy three months for the professional social media network, but a weaker outlook caused investors to worry. The company also announced its largest acquisition yet.
LinkedIn’s revenues stood at $447.2 million for the fourth quarter of 2013, beating Reuters’ estimate of $437.88 million by more than $9 million. The company’s earnings were also higher than anticipated, with non-GAAP diluted earnings per share at $0.39, trumping Reuters’ expectations by a cent. Net income dropped 67 percent from $11.5 million in fourth quarter 2012 to $3.8 million for the fourth quarter 2013.
But the company’s outlook has left investors worried. LinkedIn forecasted revenue for the first quarter of 2014 to be between $455 million and $460 million. The average estimate of analysts compiled by Reuters predicted sales for that quarter of more than $469 million last week.
LinkedIn will hope its most recent acquisition boosts revenue in quarters to come. The Mountain View-based social titan announced it had acquired Bright, an online job-hunting portal. The roughly $120 million deal involves nearly three-quarters stock and more than one-quarter cash. After it is finalized, “several members of Bright’s team” will head to LinkedIn, according to a release.
Bright’s solutions line up well with those of LinkedIn, as the startup’s platform uses algorithms and data science to connect employees and potential employers. Revenue for LinkedIn’s “Talent Solutions” division jumped by 53 percent since fourth quarter last year, and made up 55 percent of total revenue for Q4 2013, 2 percent more than Q4 2012. Bright.com leverages technology that assigns users Bright Scores, numbers that measure how compatible a person is with a job listing. In the past, LinkedIn has picked up ventures like Rapportive, SlideShare and Pulse to keep its services sharp and dive into new industries.
Premium subscriptions made up $88.1 million (19.7 percent) of total revenue, while the talent solutions segment made $245.6 million (54.9 percent) over the quarter and marketing solutions brought in $113.5 million (25.4 percent) . Over the three year period, 61 percent of revenue came from the United States, while international markets accounted for $176.1 million.
LinkedIn expects the acquisition, and the better engagement with job seekers which could follow, will boost slowing user acquisition numbers. This past quarter, LinkedIn had more members on its platform than ever before, 277 million. That was an increase of 37.1 percent from the previous year, which is more than 2 percent less than the jump recorded between Q4 2012 and Q4 2011 at 39.3 percent.
Following news that sales wouldn’t exceed analyst projections for Q1 2014, LinkedIn’s shares took a tumble. According to the NASDAQ, prices in after-hours trading reached a high of $230 at 4:02:05 then fell 16.9 percent to a low of $191.13 less than two minutes later. As of 10:46 a.m. in California, shares traded at $208.05, and the company’s market cap stood at $24.84 billion.
Although investors seem shaken by the company’s less-than-stellar forecasts, Bright has the potential to improve revenue and user numbers for the long term. LinkedIn continues to make steady progress, and won’t be too worried by a perceived slowdown in the next quarter.