LNKD Linkedin Corp. Class A

By Deepa Seetharaman 

LinkedIn Corp. calmed skittish investors by surpassing first-quarter earnings expectations and boosting its full-year outlook.

The optimistic report was a contrast to the downbeat forecast LinkedIn offered three months ago, triggering a selloff that cut its value nearly in half. On Thursday, the professional online network's shares climbed more than 8% after-hours.

First-quarter revenue rose 35% to $860.7 million, from $637.7 million a year earlier. Analysts expected LinkedIn to report first-quarter revenue of $828.5 million, according to Thomson Reuters.

LinkedIn reported a loss of $45.8 million, or 35 cents a share, compared with a loss of $42.5 million, or 34 cents a share, a year ago.

Excluding stock-based compensation and some other expenses, LinkedIn said it would have earned 74 cents a share, compared with 57 cents on that basis a year earlier. Analysts expected LinkedIn to report adjusted earnings of 60 cents a share.

LinkedIn said it now expects 2016 revenue of $3.65 billion to $3.7 billion, $50 million more than it projected three months ago. Excluding stock-based compensation and some other expenses, it expects to earn $3.30 to $3.40 a share, up from a projection of $3.05 to $3.20 three months ago.

The disappointing outlook in February sparked a share-price decline that at one point wiped away more than three years of stock-market gains.

The projection reflected a slowdown in its higher-margin online sales business, economic pressures overseas and a decision to shelve an ad product, executives said. LinkedIn shares were down 45% for the year as of Thursday's close.

For the second quarter, LinkedIn said it anticipates adjusted earnings of 74 cents to 77 cents a share, above analyst expectations for 71 cents. Revenue is expected to come in between $885 million and $890 million, straddling analyst estimates for $886 million.

About two-thirds of LinkedIn's revenue comes from its talent-solutions division, which helps corporate recruiters identify job candidates. The unit generated $558 million in revenue, up 41% from $396 million a year ago.

Chief Executive Jeff Weiner told analysts that the company plans to revamp its Recruiter product. Executives said LinkedIn has about seven million jobs posted on its site, up from 350,000 a few years ago.

LinkedIn said revenue in its marketing-solutions unit rose to $154.1 million, from $119 million a year ago. About 56% of this revenue came from "sponsored content" that appears within users' LinkedIn feeds. This was one of the company's fastest-growing ad products last year.

At the company's third business unit, premium subscriptions, revenue rose to $148.9 million, compared with $122 million last year.

Investors have been worried about LinkedIn's reliance on stock-based compensation to recruit employees amid the sharp stock slide in the stock. Over the past two years, LinkedIn's stock-based compensation has accounted for 16% of revenue -- less than Twitter Inc.'s 39%, but about double Facebook Inc.'s 8%, according to RBC Capital Markets.

At a conference in February, LinkedIn Chief Financial Officer Steve Sordello said LinkedIn's goal was to drive this ratio down to 10%. In the first quarter of 2016, this ratio was about 17%.

LinkedIn said it plans to dole out $580 million in stock-based compensation this year, down from its previous forecast of about $630 million. Mr. Sordello said the change in the forecast would boost profit margins by about one percentage point.

"Overall, stock compensation is an area of focus and we expect to see continued progress towards lowering this expense as a percentage of revenue going forward," Mr. Sordello said in a statement.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

April 28, 2016 18:38 ET (22:38 GMT)

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