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LinkedIn Slips on Lowball Guidance Yet Again

Stocks in this article: LNKD

NEW YORK (TheStreet) -- LinkedIn  (LNKD) management have a real confidence problem. Quarter after quarter, the company undermines future performance only to hit it out of the park when reporting actual figures months later.

So, here we go again. Immediately after LinkedIn reported its first-quarter results, shares sank into the red. In this case, the snap move was reaction to second-quarter and full-year sales growth estimates on the light side.

In after hours trading on Thursday, shares had fallen 3.2% to $156.05.

The professional social network guided for revenue in its June-ending quarter between $500 million and $505 million, a nudge lower than Thomson Reuters analyst average of $505.1 million. Full-year guidance gapped wider: management expects sales between $2.06 billion and $2.08 billion, less than forecasts for $2.11 billion.

At the high end of the full-year range, that assumes sales growth of 36%, a considerable slowdown from 57% growth in 2013 and 86.2% in 2012.

This isn't the first time management has issued conservative guidance, though, so the numbers should be digested with a grain of salt. Shares cratered in February after the Mountain View, Calif.-based company guided for full-year revenue of $2.05 billion, less than estimates of $2.16 billion at the time.

Or, take this quarter for example. First-quarter revenue came in at $473.2 million, a 46% year-over-year increase, but a quarter earlier, LinkedIn estimated quarterly sales of at most $460 million.

The difference between estimates and reality is even starker when looking at the company's bottom line. In the first three quarters of last year, LinkedIn adjusted net income came in 45%, 24% and 23% over analysts' estimates. In the fourth quarter, the earnings surprise was only up 1.6%, presumably as analysts began to factor a history of low-balling guidance into its earnings models.

This quarter, though, earnings surprises are back in the double-digits with adjusted net income of 38 cents a share coming in 4 cents, or nearly 12%, higher than analysts' forecasts.

In fact, since its float in mid-2011, LinkedIn hasn't had a single quarter of missed expectations. Once is a fluke, twice is coincidence, but three times is a trend.

The users who upload resumes to the site are forgiven for fudging the facts, but it's time the professional network stopped playing games and got down to business. 

--Written by Keris Alison Lahiff in New York.

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