Weaker outlook sparks worries over LinkedIn
LINKEDIN, the professional online network, announced disappointing full year revenue forecast of $2bn (£1.2bn) last night, below expectations of $2.2bn, causing shares to plummet as much as 15 per cent in after hours trading.
Despite its weaker outlook LinkedIn reported solid results for the fourth quarter of 2013, with revenue increasing by 47 per cent to $447.2m beating analysts expectations.
“Solid fourth quarter performance capped another successful year where improvements in scale and relevance across our platform led to strong member engagement,” said LinkedIn chief executive Jeff Weiner.
“Moving forward, we are investing significantly in a focused number of long-term initiatives that will allow us to realise our vision to create economic opportunity for every member of the global workforce.”
LinkedIn reported a net income of $3.8m for the fourth quarter, compared to a net income of $11.5m for the fourth quarter 2012.
Unlike other social networks, like Twitter and Facebook, LinkedIn makes the majority of its revenue from selling subscriptions to recruiters looking to find candidate employees from its pool of users.
The company’s decline in after hours trading mirrored that of Twitter on Wednesday night. Twitter disappointed investors with slowing active user growth leading to a 24 per cent drop in its share price yesterday.
LinkedIn saw its user base grow seven per cent to 277m last quarter, a drop from the previous two quarters which showed user growth of nine per cent.
LinkedIn also said it would pay $120m in cash and stock to buy online job search service Bright, which it said should help improve online matches while broadening its user base.
LinkedIn’s priority is now finding ways to make money out of the company’s mobile applications through features such as “sponsored updates”. Mobile accounted for 38 per cent of total users in the third quarter.