LinkedIn forecast first-quarter revenue and profit below Wall Street estimates as growth slows in its ads business and its hiring services face pressure outside North America.
The news dragged its shares 28% lower after the bell on Wall Street last night.
The operator of the world's largest online network for professionals reported its slowest growth in quarterly online ad revenue in more than two years.
Online ad revenue growth slowed to 20% in the fourth quarter from 56% a year earlier as automated ads offered by Alphabet's Google make its traditional ad displays less attractive to advertisers.
LinkedIn has been spending heavily on expansion by buying companies, hiring sales personnel and growing its presence in China and other markets outside the US as it tries to strengthen its core recruitment services business.
The business, which connects recruiters and job seekers, is now facing pressure in Europe, the Middle East, Africa and Asia-Pacific due to "current global economic conditions," its chief financial officer Steve Sordello said last night.
The company said it would phase out an online ad product, Lead Accelerator, in the first half of 2016, which would hurt its revenue by at least $50m this year.
"While initial demand was solid, the product required more resources than anticipated to scale," Sordello said.
LinkedIn forecast an adjusted profit of about 55 cents per share for the first quarter, way below the average analyst estimate of 74 cents, according to Thomson Reuters.
Its revenue forecast of about $820m also missed analysts' expectations of $866.9m by a wide margin.
The company said its total expenses surged 30% in the quarter ended December 31.
LinkedIn reported a net loss of $8.4m, or 6 cents per share, compared with a year-earlier profit.
Excluding items, the company earned 94 cents per share, higher than the average analyst estimate of 74 cents.
But its revenues jumped about 34% to $861.9m. Revenues from recruitment services rose 45%, accounting for nearly two-thirds of the company's overall revenue.
