In the last few years there has been an influx of initial public offerings. A lot of these companies are Internet-based and come with a lot of hype and high valuations. These three companies all posted first-quarter earnings in the beginning of May. Here is what investors can expect for this year.
LinkedIn Corp (NYSE:LNKD) recently posted its quarterly earnings. For the quarter, earnings per share were $0.45. This is a 200% increase from the same time last year. It was also much higher than the $0.31 expected EPS. Revenue rose 72%.
Growth is strong and investors should see this continued growth as a success indicator. The company has beat EPS estimates and had strong growth rates since its IPO two years ago. The real news is that second-quarter guidance has been lowered.
Total revenue is expected to be $344 million and net income is expected to be $78 million. Total revenue for the year is expected to jump slightly to $1.45 billion.
For investors, this may mean that extremely high growth rates for LinkedIn Corp (NYSE:LNKD) are a thing of the past. Total subscribers grew 12.5% at the end of 2012, reaching 225 million. The user base has continued to grow and now roughly 30% of its users are using the service from a mobile device. This will present an interesting challenge for its Marketing Solutions department. Mobile advertising is a major opportunity for online companies and there aren’t many companies that have been able to master it yet.
As recruiters and companies turn to online avenues for job postings, LinkedIn Corp (NYSE:LNKD) is already in a strong position to benefit. Investors should not worry about the lower guidance for the year. LinkedIn is still poised for strong growth and will continue to lead the online post-IPO pack.
Next, we come to Zillow Inc (NASDAQ:Z), whose stock has already grown 200% since it had its initial public offering in July of 2011.
On May 7, the company announced first-quarter earnings for 2013. Total revenue hit a record and increased 71% from the same period last year. Revenue hit $39 million for the quarter. Total revenue is expected to increase this year as the housing market grows. The company expects upwards of $182 million for this year.
It hit an all-time high for website traffic, as well. Its total subscribers now number 34,000.
It had a net loss of $3.7 million or, $0.11 per share. This was due to an increase in marketing and other investments to improve the performance of the company this year and in the coming years. This net loss for the quarter is not a sign of bad things to come. Instead, it is a sign of a company preparing for growth.
Net income is expected rise in the next two years due to an increase in services and offerings. The company launched a new marketplace in February and began an extensive social media campaign in April.
Total net income will be lower this year due to the increased investments in marketing. The real gains won’t occur until 2014. Investors should hold on for the next year and watch this company continue to grow.
Like Zillow Inc (NASDAQ:Z), Yelp Inc (NYSE:YELP)’s stock price has also risen 200% since its IPO last March. The company announced its earnings for the first quarter on May 1. Total earnings per share missed estimates by $0.05, coming in at a loss of $0.08 per share. The company did reach new revenue highs of $46.1 million.
The company has been expanding its mobile platform and started mobile advertising. Roughly one third of all local advertisements for restaurants came in the form of mobile ads. This area will continue to grow in the future. Companies will need to begin adapting to mobile advertising trends. Yelp is already ahead of the curve.
Yelp Inc (NYSE:YELP) is also expanding internationally. During the first quarter of this year, it opened its operations in New Zealand. This trend is likely to continue in 2013.
Total views and reviews are up over 40% each for this quarter. Revenue is expected to increase and losses are expected to decline as the company pushes mobile advertising and continues its expansion efforts. The company isn’t expected to be profitable for another year, so now may be an excellent time for investors to consider Yelp for their portfolio.
Final thoughts
Internet companies are poised for rapid growth as more users subscribe to online services. Companies that can capture mobile advertising and mobile monetization will benefit the most in the coming years. These three companies have great growth potential. Investors should seriously consider these stocks for their portfolios.
The article Internet IPO Update: Big Growth and Big Potential originally appeared on Fool.com and is written by Austin Higgins.
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