LinkedIn Corp Earnings Preview: A Slight Beat Expected

LinkedIn Corp (NYSE:LNKD) is scheduled to release its third quarter earnings report Thursday. Analysts are expecting solid results that are possibly ahead of management’s guidance because they often guide conservatively, setting up the social network for a beat.

What to expect in LinkedIn’s earnings report

In a report dated Oct. 27, 2014, Cantor Fitzgerald analysts Youssef Squali, Naved Khan and Kip Paulson said they’re expecting to see double-digit growth in all of LinkedIn’s three business segments. Their estimates for tomorrow’s earnings report are slightly behind consensus estimates.

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They project revenue to be $556 million, compared to the FactSet consensus estimate of $558 million. They’re looking for EBITDA of $138 million, compared to the consensus estimate of $141 million. LinkedIn’s guidance was for revenue of between $543 million and $547 million and EBITDA of between $134 million and $136 million.

The Cantor Fitzgerald team expects to see non-GAAP earnings per share of 47 cents.

Expectations for LinkedIn’s business segments

They expect the social network’s Talent Solutions segment to continue to show solid growth as LinkedIn gains market share from traditional offline executive search firms and websites like and CareerBuilder. They also think the Professional Services segment will continue to show strength.

They expect LinkedIn to have added 1.5 million new Corporate Solutions customers, which would bring the total to 29.5 million. They expect $339 million in revenue for the segment, which is a 43% growth rate year over year.

The Cantor Fitzgerald team also believes that Newsfeed ads will be the main driver of growth in LinkedIn’s Marketing Solutions segment. The analysts note, however, that the continued transition to sponsored updates in the news feed will probably hold back the segment’s growth for now. They project $107 million in revenue for the segment, which is a 41% growth rate. In the long term, they believe this change will be positive for LinkedIn’s revenue growth just as it was for Facebook Inc (NASDAQ:FB).

The analysts expect to see member growth continue to be solid and for LinkedIn to hit about 329 million members as of the end of September. That’s a 27% growth rate year over year. They’re looking for $110 million in Premium subscription revenues, which would be a 38% growth rate.

What to expect in LinkedIn’s guidance

They’re expecting LinkedIn to buy for around $612 million in revenue and $157 million in EBITDA for the fourth quarter. Both numbers are in line with consensus estimates. For the full year, consensus suggests $2.18 billion in revenue and $561 million in EBITDA. The social network has guided for between $2.14 billion and $2.15 billion in revenue and between $545 million and $550 million in EBITDA.

The Cantor Fitzgerald team continues to rate LinkedIn as a Buy with a $250 per share price target.