LinkedIn Corp (NYSE:LNKD) will host a conference call to discuss its first quarter financial results and business outlook on Thursday, May 1st, 2014, at 2:00 p.m. Pacific Time, following the release of the Company's financial results. Jeff Weiner, CEO, and Steve Sordello, CFO, will host the webcast.
Wall Street anticipates that the professional social site will earn $0.34 per share for the quarter, which is $0.11 less than last year's profit of $0.45 per share. iStock expects LinkedIn to beat Wall Street's consensus number. The iEstimate is $0.37, three cents more than expected, but downside risk is in play as you will read.
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Sales, unlike earnings, are expected to increase, rising 43.7% year-over-year (YoY). LinkedIn's consensus revenue estimate for Q1 is $466.57 million, more than last year's $324.70 million.
LinkedIn Corporation operates an online professional network. The company, through its proprietary platform, allows members to create, manage, and share their professional identity online; build and engage with their professional networks; access shared knowledge and insights; and find business opportunities.
Although LNKD's business model is different from many websites in that it generates revenue from subscriptions and advertising versus ads alone, all websites depend on traffic i.e. visitors.
Fortunately, LinkedIn.com is quantified, so we have a strong sense of how many unique visitors made their way to the website. Based on the numbers provided by Quantcast.com, and the percent difference between quantcast and LNKD's reported results, we project 195,733,708 unique visitors in Q1.
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Now last year, the average visitor viewed 258.67 pages on LinkedIn, and based on the company's 2013 revenue, LNKD generated revenue of $0.0027 per page view on a monthly basis. iStock knows we are getting into the weeds here, but stay with us. It will all come together in a minute.
Now, there was a fairly strong correlation between page views growth and the increase in average revenue per page view (ARPPV), 24% versus 27%, respectively. Page views grew by 6.96% based on our page view estimate for Q1. Using the 14% premium for ARPPV versus page view growth, quarterly revenue would come in at $441.159 million in Q1, well below the street's current consensus. In fact, it's way, way below the lowest estimate of $458.03 million.
With sales of $441.159 million and Wall Street's current net margin interest of 8.78%, earnings per share would be $0.32 and below the street's current outlook.
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Overall: Numbers and their relationships don't remain static from quarter-to-quarter; leaving room for revenue and EPS to be better than our hypothetical suggests. However, a slowdown in the growth of unique visitors and page views could lead to disappointing numbers for LinkedIn Corp (NYSE:LNKD), which could result in a negative reaction from investors.
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