Linkedin results seem poor and on its continued path to collapse. The were masked by a single area of US marketing solutions strength.
- Break even net income of $3.7M for the quarter, and loss for the year of $15M
- (at least) 12th consecutive decline in Quarter over quarter revenue growth at 44%.
- Surprise rapid deceleration of Talent solutions (41% growth) and Premium subscriptions (38%). Even faster deceleration in the US at 36% and 37% respectively.
- Marketing solutions was a bright spot of 56% growth sustaining overall wall street expectations, but marketing solutions spike is more prone to be a one time spike in revenue. The performance was almost entirely due to general US advertising strength. (72% growth)
- Stock based compensation grew substantially higher (65%) than revenue. As did depreciation and amortization (also 65%)
- record low member (25%) and corporate solutions customer (36%) growth.
- substantial drop in revenue growth for every region other than US. With APAC region even more pronounced decline than EMEA.
- (More expensive) Field sales as a percentage of revenue reached a record high jumping to 64% of revenue compared to annual average of about 60%. Online sales channel showed a record low growth of 30% (compared to previous low of 37%)
- Real operating cashflow (operating cashflow less purchases of equipment) for the year, fell over 80% to $20M from $160M. That includes the insanely high $320M in stock based compensation that is excluded from cashflow. So, Operating cash loss for the year was $300M. The operating cash loss in 2013 was "only" $33M
- Revenue growth forecasts in continuning substantial decline for the year to below 33%. With break even $10M operating profit.
- Revenue growth forecast for Q1 of only 31%, with operating loss of at least $22M.
- An extra 5%+ in share dillution is forecast for the year.
- The break even ($10M) operating profit forecast is prior to $56M in financing costs, and $80M in taxes, and so a total loss forecast of $146M. Over 10 times greater than 2014.
Difference with last year's guidance
The most important metric where linkedin failed, is they still had a loss for the year despite sales being 10% higher than their guidance. Its proof that they have no profit margin, and may be simply buying sales.
All of the social media companies enjoyed a good year in advertising rate growth. Still, that source of growth is also decelerating rapidly for all of them, with 2015 social ad spending expected to grow 19% vs 65% in 2014)
Comparison to Monster Worldwide
MWW is a somewhat similar job matching platform. It is guiding profitability for 2015, and excluding intangibles charge, lost less than LNKD in 2014. It trades at approximately its net asset value. While LNKD talent solutions growth has likely caused MWW's sales declines over the years, the fact that MWW can still be profitable while LNKD cannot, underscore's LNKD poor business model.
While LNKD usually beats its own guidance numbers, and so they may be set lower than what they will actually deliver, an even greater concern than the mere 33% growth they forecast is the 10x expanding losses, and the sharp deterioration in most of their business segments this past quarter other than US marketing solutions.