LinkedIn Corporation (NYSE/LNKD) Stock Plunged on Q1 Earning

LinkedIn Corporation
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LinkedIn Corporation’s (NYSE/LNKD) stock price surged 11.7% in after hours trading on Thursday July 30th, before plunging 6.7%. Why? The company just released its earnings. (Source: LinkedIn, July 30, 2015.)

Both top and bottom line improved tremendously for the business social media giant. In the first quarter of fiscal 2015, revenue increased 35% year-over-year to $638 million. Adjusted net income grew a more impressive 55.3% to $73.0 million. This translated to adjusted earnings per share (EPS) of $0.57, a significant improvement from the $0.38 in the previous year’s period.

Investors liked the earnings report at first. Immediately after the news release, shares of LinkedIn were trading 11.7% higher at $26.61 apiece. But the enthusiasm did not last long, LinkedIn’s stock price started to drop at around 5:00 p.m. E.T. In early trading on Friday, the company’s shares were trading 6.7% down at $227.15.

“Q1 was a solid quarter in which we made meaningful progress against our multi-year strategic roadmap,” said LinkedIn’s CEO Jeff Weiner. “During the quarter, we maintained steady growth in member engagement while achieving strong financial results.”

All three segments of LinkedIn’s revenue showed significant growth. Talent Solutions revenue, which made up 62% of the company’s total revenue in the reporting quarter, came in at $396 million—a 36% increase year-over-year. Revenue from Marketing Solutions products surged 38% to $119 million. Revenue from Premium Subscriptions products increased 28% to $122 million.

Region-wise, every territory showed strong growth. Net revenue in the U.S. increased 37% year-over-year, Europe, the Middle East, and Africa (EMEA) surged 33%, Asia-Pacific jumped up 40%, while the other Americas improved by 19%.

Note that most of the revenue was generated from field sales. In the reporting quarter, field sales accounted for 62% of total revenue, with online sales bringing in the remaining 38%.

For the second quarter of fiscal 2015, LinkedIn expects revenue to be between $670 and $675 million. Adjusted EPS for the quarter is expected to be around $0.28. For the entire fiscal year, revenue is projected to be approximately $2.90 billion, with adjusted earnings of $1.90 per share.