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LinkedIn Targets More Ad Revenue

Posted on Wednesday, May 9th 2012

EMarketer estimates that professional social networking site LinkedIn will see strong growth in the years to come. The researcher predicts that LinkedIn’s advertising revenues will grow to $405.6 million by the year 2014, compared with $154.6 million reported last year. They go on to predict that by 2014, U.S. advertisers will contribute 60% of LinkedIn’s advertising revenues.

LinkedIn’s Financials
LinkedIn (NYSE: LNKD) Q1 revenues grew 168% over the year to $188.5 million, ahead of the market’s expectations of $178.8 million. The company added 14 million subscribers during the quarter to end with 145 million total. Adjusted EPS of $0.15 grew 150% over the year and was ahead of the Street’s target of $0.09.

By segment, revenues from hiring solutions were 121% higher than the previous year’s at $100 million. Marketing solutions grew 73% over the year to $48 million and premium subscriptions of $38 million were 91% higher than the previous year.

By region, domestic revenues accounted for 64% of revenues at $120.8 million. International revenues continued to grow and at $67.6 million accounted for 36% of revenues compared with 31% contribution a year ago. LinkedIn is seeing impressive growth in Latin America, Asia Pacific and Europe.

LinkedIn projected current fiscal revenues of $850-$890 million with an EBITDA projection of $173 million. The market was looking for revenues of $877 million for the year. For the current quarter, LinkedIn has projected revenues of $210-$215 million, ahead of the Street’s target of $208 million.

LinkedIn’s Mobile Focus
LinkedIn is focused on expanding its mobile device reach. According to analysts, visitors to the site from a mobile device grew 275% and represented 22% of LinkedIn’s members. A year ago, mobile users accounted for 8% of LinkedIn’s total member base. Recently, the company released its first iPad app. Along with the existing mobile device features, the iPad app comes with a calendar integration app. Users can now synchronize their calendars with LinkedIn and if they are meeting people who have LinkedIn profiles, the app will integrate that information to display on the calendar relevant user data such as available photograph and work connections among other things.

LinkedIn’s Features Grow
Over the last quarter, LinkedIn has also added several features to help drive user engagement and offer customers more value. Earlier this year, the company rolled out Talent Pipeline with five charter customers including PepsiCo, Pfizer, Red Hat, Netflix, and First Citizens Bank. The product lets recruiters and hiring managers connect, manage and track their targets irrespective of the source of the candidate. It will be available to all of their recruiting customers during the current quarter. Additionally, LinkedIn released the Follow Company button for the more than 2 million organizations that already have active LinkedIn company pages. The move will help users wanting to track these companies using their LinkedIn IDs.

LinkedIn’s Acquisitions
LinkedIn continued to make acquisitions during the quarter and last month, announced plans to acquire San Francisco-based SlideShare for $118.75 million. SlideShare was founded in 2006 to let users upload and share presentations on its site. The company has raised $3 million in venture funding so far and reported over 9 million presentations uploaded on the site. ComScore estimates 29 million unique visitors have landed on SlideShare’s pages this March. LinkedIn believes that by adding presentations to its offerings, the company would be able to offer members increased value, as professionals will be able to present their capabilities, experience and knowledge more effectively on the slides. This means more time spent on the site, and consequently, higher degree of advertising revenue.

LinkedIn stock is trading at $1o5.07 with a market capitalization of $10.7 billion. It touched a high of $122.70 a year ago, a strong performance, considering that last year, LinkedIn had debuted on the Exchange at a list price of $45.00.

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