LinkedIn Corp (NYSE:LNKD) shares fell 2.62% in after-hours trading Thursday after the company reported its first quarter results. Investors were concerned about the company’s ability to maintain its solid growth due to relatively weak current quarter and full year guidance. LinkedIn expects its Q2 revenues to come in the range of $500-$505 million, slightly below the consensus forecast of $505.1 million. The company forecasts full-year sales of $2.06-$2.08 billion, lagging the Wall Street consensus of $2.11 billion.
LinkedIn’s growth rate decelerates for the sixth consecutive quarter
Investors were also worried about the company’s decelerating growth. LinkedIn Corp (NYSE:LNKD)’s growth rate has been declining for the past six quarters. The Mountain View-based company reported a 46% increase in Q1 revenues, which came in at $473.2 million, beating the consensus estimate of $466.6 million. LinkedIn posted non-GAAP earnings of 38 cents per share, better than the Wall Street forecast of 34 cents.
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United States is still LinkedIn Corp (NYSE:LNKD)’s biggest market, accounting for 60% of its revenue. Its Talent Solutions revenues were $276 million, Marketing Solutions unit generates $102 million in sales and the Premium Subscription business brought in $96 million. BGC Partners analyst Colin Gillis said that LinkedIn’s growth rate is slowing because it is so bigger now. Historically, LinkedIn has almost always exceeded the upper end of its guidance.
International expansion key to LinkedIn’s future growth
Sterne Agee analysts Arvind Bhatia and Brett Strauser are of the same opinion as Gillis. Sterne Agee said that LinkedIn Corp (NYSE:LNKD) management has a track record of guiding conservatively. On an average, the company has exceeded its revenue guidance by 7% and EBITDA guidance by more than 20% over the past three years.
LinkedIn Corp (NYSE:LNKD)’s membership growth accelerated from 7% to 8.3% in the latest quarter. The company now has more than 300 million users worldwide. LinkedIn is investing heavily to expand its user base in China. The company said during the earnings call that international expansion will be key to fueling its revenue growth. In February, LinkedIn launched a Chinese-language website to offer localized service. The professional networking company has agreed to abide by Chinese censorship rules.