LinkedIn's Quarterly Loss Worsens, Though Revenue Grows -- 3rd Update
August 04 2016 - 7:13PM
Dow Jones News
By Deepa Seetharaman
Professional online network LinkedIn Corp. reported both its
highest-ever revenue and its largest loss as a public company in
one of its final quarterly reports before it is set to be bought by
Microsoft Corp.
Second-quarter revenue rose 31%, to $932.7 million, from $711.7
million, driven by its cornerstone talent-solutions division, which
helps corporate recruiters identify job candidates. Revenue from
this unit jumped 35% to $597 million as LinkedIn added customers
and prior customers boosted spending.
At the same time, the Mountain View, Calif. company posted a
loss of $119.3 million, or 89 cents a share, compared with the
year-ago loss of $67.7 million, or 53 cents a share. The loss,
driven largely by a $101 million expense related to the company's
tax assets, was LinkedIn's largest since going public in 2011,
according to FactSet data. LinkedIn said it wrote down the value of
its deferred tax assets because it no longer expects to realize
them.
Excluding certain expenses, LinkedIn said it would have earned
$1.13 a share. Analysts, on average, had expected the company to
post earnings of 78 cents per share on that basis, according to
Thomson Reuters.
"Results are reassuring given this is Microsoft's largest deal
by a factor of 3x and clearly demonstrate LinkedIn's dominant
position in the professional social network," UBS analyst Brent
Thill said.
Microsoft agreed in June to buy LinkedIn for $26.2 billion,
betting LinkedIn can bolster its software offerings. For LinkedIn,
the deal offers an opportunity to reaccelerate growth by tapping
Microsoft's large customer base.
In a regulatory filing, LinkedIn reiterated that it expects the
deal to close in 2016. The company said it expects
transaction-related costs of about $100 million.
The Microsoft deal also provides an exit for LinkedIn
shareholders after the stock tumbled from a peak of $269 in
February 2015 to as low as $101.11 last February after the company
issued a disappointing outlook, which it attributed to a slowdown
in its higher-margin online sales business and a decision to shelve
an ad product.
Microsoft agreed to pay $196 per LinkedIn share, a 50% premium
to the social network's price before the deal. The stock has traded
in a tight range since then, closing Thursday at $192.01 and barely
moving after the earnings report.
LinkedIn's current business model and results don't reflect the
potential of the Microsoft deal, Wedbush analyst Steve Koenig said
in an email, adding that LinkedIn content could help Microsoft
differentiate its products.
Outside the talent-solutions group, LinkedIn said revenue from
its marketing-solutions unit rose 29% to $181 million, with about
60% coming from "sponsored content" or ads that appear within
users' LinkedIn feeds. This is one of the company's fastest-growing
ad products.
Premium subscriptions revenue increased 21% to $155 million.
LinkedIn ended the quarter with 9,906 employees, up 13% from the
previous year. The company said it would continue to expand its
workforce in 2016 but at a slower pace than in 2015. Stock-based
compensation costs in the quarter were roughly $145 million, or
roughly 16% of its revenue.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
August 04, 2016 18:58 ET (22:58 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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