This afternoon will be a huge moment for the young social media industry. Twitter, LinkedIn, and Yelp are all scheduled to release holiday quarter earnings results after the close. Here’s what to expect from each one of them.
LinkedIn (NYSE:LNKD) has strung together 2 large earnings beats in a row bolstered by strength in mobile. Its mobile presence gives LinkedIn the ability to better target users and sell more compelling advertising products to marketers. While mobile and marketing solutions are expected to be hot areas of growth for LinkedIn, the core of its business still remains in Talent Solutions.
Revenue from the Talent Solutions segment comprised 61% of the company’s total sales last quarter. As a social network for professionals, enabling users to find employers and employees is at the heart of the company’s identity.
One reason to be optimistic about LinkedIn’s future is that the company is firing on all cylinders. Last quarter LinkedIn saw 40%+ year over year growth in all of its major segments which include Talent Solutions (both field sales and online sales), Marketing Solutions, and Premium Subscriptions. LinkedIn has guided that it will earn 49 cents per share this quarter on between $600 million and $605 million in revenue. Investors aren’t taking that forecast too seriously.
Wall Street estimates that the social network for business will earn 54 cents per share and bring in $619 million in revenue. Contributing analysts on Estimize believe those numbers are more realistic but still not quite high enough. The Estimize community is forecasting a 1 cent beat against the Wall Street earnings consensus and a revenue print that is a smidgen ahead of the Street’s view.
The crowd at Estimize is predicting that Twitter (NYSE:TWTR) will report in-line with Wall Street’s estimates today. In the wake of its IPO Twitter beat earnings estimates each quarter up until October when it recorded results in-line with the Street’s EPS consensus but exceeded on revenues.
One unusual thing happening this quarter on the Estimize paltform is that we’re seeing a split between the community and a few of the top performing internet analysts. NILS1975 who has been the most accurate analyst on Estimize 2 quarters in a row is making a bullish call here on Twitter.
Even though Twitter has mostly beat Wall Street expectations, the stock’s movement has been more closely linked with its monthly active user (MAU) growth than anything else. Investors often compare Twitter’s MAUs to Facebook’s. Facebook has been able to accrue so many users that it makes Twitter’s 250 million MAUs look tiny in comparison.
Robert Peck, Internet Equity Analyst at SunTrust (NYSE:STI), pointed out in a note last month that implied MAU guidance for the current quarter is light. However, he also said that Twitter could be approaching what he calls its own ‘Facebook (NASDAQ:FB) moment’. Peck wrote, “We believe Twitter is set to ramp a better on-boarding experience for mobile, content discoverability (“While you were away…”), and deeper integration with automatic apps (like the ESPN deal) that could drive material improvements in revenues and EBITDA.”
If he’s right Twitter could be near an inflection point which propels both MAUs and the company’s bottom line.
Yelp
Local business reviews network Yelp (NYSE:YELP) is also scheduled to report today after the close. If there’s one area where Yelp stands out its on mobile. Yelp has been way ahead of the curve in offering location based services, which are coveted by advertisers. Contributors on Estimize project that Yelp will report in-line on earnings and beat by 1% on revenues.
This afternoon Yelp is expected to report profits of 7 cents per share. That’s up from a loss of 3 cents per share in the fourth quarter of last year. Finally Yelp may be on the path to its first profitable year in company history in 2015.
In the third quarter Yelp got a big boost from improving core metrics. Users submitted 5.3 million business reviews last period, the largest quarterly increase to date. 45% of those new reviews came from mobile and total mobile MAUs were up 46% year over year. Engagement may be great at Yelp, but there’s a fear among investors that revenue growth may be beginning to slow.
The Estimize community is predicting that year over year revenue growth will come in at 55% this quarter. That’s great in a vacuum, but it’s a downturn from the 61% to 71% range of improvement that Yelp has recorded over the past 2 years. Two areas which could fuel gains for Yelp this year are local business advertising accounts and expanded platform offerings.
In the third quarter of 2014 local business accounts were up a massive 51% year over year to 86,200. The other potential catalyst is what Yelp calls closing the business loop. This means adding more services to its platform other than reviews and search to tie customers and businesses together. Yelp Platform recently added transactions and reservations. There’s a chance we could see more such features like an online delivery system sometime later this year.