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LinkedIn Sales Forecast Lags Estimates Amid Shift to Mobile

LinkedIn Sales Forecast Lags Estimates Amid Shift to Mobile
LinkedIn, founded a decade ago to connect recruiters and job seekers, is adding features and content to appeal to people who use the site from smartphones. Photographer: David Paul Morris/Bloomberg

May 2 (Bloomberg) -- LinkedIn Corp., the biggest online professional-networking service, forecast second-quarter sales that trailed analysts’ estimates, raising concern that efforts to boost mobile advertising will be slow to kick in.

Revenue in the current period will be $342 million to $347 million, the Mountain View, California-based company said today in a statement. That missed the $359.7 million average analyst projection, according to data compiled by Bloomberg.

LinkedIn, founded a decade ago to connect recruiters and job seekers, is adding features and content to appeal to people who use the site from smartphones. The company revamped its mobile app and agreed last month to buy Pulse, a service that lets users access news on handheld devices. Still, mobile-ad revenue may not be rising on pace with the transition to wireless computing, said Aaron Kessler, an analyst at Raymond James & Associates Inc.

“It could be the desktop-to-mobile shift, and they don’t have as much advertising on mobile,” said Kessler, who has the equivalent of a hold rating on the stock and is based in San Francisco. LinkedIn’s ad business came in weaker than projected, Kessler said.

LinkedIn shares dropped as much as 12 percent in extended trading. They had gained 3.5 percent to $201.67 at the close in New York. The stock has more than quadrupled since the company’s initial public offering almost two years ago.

Estimate Shortfall

The results come a day after Facebook Inc., the biggest social-networking site, reported revenue that beat analysts’ predictions, with its mobile business making up about 30 percent of ad sales. LinkedIn and Facebook, like many popular Web applications, are testing ways to make money from mobile ads.

LinkedIn’s full-year sales forecast also trailed estimates. The company said 2013 revenue will be $1.43 billion to $1.46 billion, compared with the average analyst estimate of $1.5 billion, according to data compiled by Bloomberg.

LinkedIn didn’t break out mobile revenue in its release. Total sales in the first quarter climbed 72 percent to $324.7 million from $188.5 million a year earlier, LinkedIn said in the statement. Analysts on average had estimated $318.2 million. Net income more than quadrupled to $22.6 million, or 20 cents a share, from $5 million, or 4 cents, a year ago.

LinkedIn’s biggest revenue generator is still its talent-solutions product, aimed at helping recruiters fill jobs. Sales in that unit jumped 80 percent to $184.3 million. Ad revenue increased 56 percent to $74.8 million, while premium-subscription sales rose 73 percent to $65.6 million.

Membership increased 7.9 percent from the fourth quarter to 218 million. That number has about doubled since the IPO.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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