But with this conservative guidance following the company's excellent results for the fourth quarter - boasting 34% and 54% year-over-year growth in revenue and non-GAAP EPS - the stock's 44% one-day decline may have been a bit exaggerated. Overall, there are definitely reasons for investors to be concerned. Following a great year for this channel, management expects only single-digit percentage growth in from self-serve in talent solutions.įinally, guidance negatively reflects the removal of $50 million in potential revenue from a marketing solutions product management decided to shut down after realizing it "required more resources than anticipated to scale." Third, guidance factors in tough comparisons for its self-serve products in talent solutions. Second, the company is accounting for a 2% headwind from unfavorable currency comparisons. So any pressure in field sales is going to be accretive to LinkedIn's overall business. Field sales are important to the company, as they represent the majority of Talent Solutions revenue, which is LinkedIn's biggest segment. For the cause for this expected weakness, management cited "current global economic conditions." Management noted its core field sales business exited 2015 at approximately 30% year-over-year growth an it expects this growth to decelerate to a mid-20% growth in 2016. To explain the deceleration in the company's growth, LinkedIn management pointed to a range of factors.įirst, management expects some weakness in its EMEA and APAC geographic segments, particularly in its field sales channel of its talent solutions segment. ![]() So it does make sense that the worse-than-expected guidance spooked some investors. There's no doubt about it: Rapid deceleration in growth when a company is investing heavily in its future heightens risk for owners. Investors count on growth to help scale unprofitable companies to a point they can begin reporting regular profits - so slower growth for companies in investment mode, like LinkedIn, often means delayed profits and a riskier roadmap to profitability. On a GAAP basis, LinkedIn lost $0.06 per share in Q4, down from $0.02 in the same period a year-ago quarter and it lost $1.29 for the full year, down from a loss of $0.13 in 2014. And slower-than-expected growth hurts even worse when GAAP losses have actually worsened recently, as has been the case for LinkedIn. Making matters worse, the pain of faster-than-expected deceleration in growth is compounded when a company isn't yet profitable on a GAAP basis. ![]() Last year's year-over-year revenue and non-GAAP EPS growth of 35% and 41% was well ahead of management's expectations for 20% to 22% and 7% to 13% growth in 2016 for these metrics, respectively. The implied deceleration is quite the slowdown. ![]() Asterisk for 2016 indicates the year's growth is based on management's guidance.
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