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LinkedIn Builds A Significant Media Business

Posted on Thursday, Nov 6th 2014

According to an eMarketer report published earlier this year, the US social network ad revenues are projected to grow 31% this year to $5.82 billion. Social networking giant Facebook remains the advertising leader with an estimated $3.95 billion in revenues. Twitter is a distant second with ad revenues from the US growing 88% this year to $790.5 million. Professional network LinkedIn is expected to be the third largest player with US ad revenues growing 40% to $327 million. eMarketer expects LinkedIn’s ad revenues to grow 38% next year to $450.2 million.

LinkedIn’s Financials
LinkedIn’s (NYSE: LNKD) third quarter revenues grew 45% over the year to $568 million, ahead of the market’s expectations of $558 million. EPS of $0.52 was also significantly ahead of the Street’s estimated earnings of $0.48 per share for the quarter.

By segment, revenues from Talent Solutions grew 45% to $345 million driven by the growth in job listings. Advertising revenues grew 40% to $109 million and premium subscriptions grew 43% to bring in the remaining $114 million in revenues.

Their efforts in international expansion are also delivering results. The US accounted for 60% of their revenues at $343 million, growing 40% over the year. Revenues from EMEA markets grew 55% to $139.7 million and Asia Pacific grew 60% over the year to $48.9 million driven by strong adoption in China. Revenues from other Americas grew 35% over the year with more than 75% of their user base outside the US.

LinkedIn ended the quarter with their member base growing 28% to 332 million worldwide. Mobile user base continued to report strong growth with traffic tripling over the year to account for more than half of their total traffic.

For the current quarter, LinkedIn projected revenues of $600 million-$605 million and an EPS of $0.49. The market was projecting revenues of $612 million with an EPS of $0.52. LinkedIn expects to end the year with revenues of $2.175 billion-$2.185 billion and an EPS of $1.89. The market was looking for the year’s revenues of $2.2 billion and an EPS of $1.86.

LinkedIn’s Improved Offerings
LinkedIn recently introduced Limited Listings, a listing aggregation service. By leveraging the technology acquired through Bizo, LinkedIn has been able to provide a service that consolidates listings from across the globe. The solution has been successful and has helped LinkedIn deliver more 2 million job listings during the quarter. That is a significant increase over the second quarter’s job listings of nearly 1 million.

LinkedIn also initiated the launch of an all new Sales Navigator, a social selling service. The tool is focused on sales professionals and will help them manage and grow relationships with prospects, existing customers, and key accounts. Using the standalone Sales Navigator tools, the sales professional are able to search for new customers by identifying potential leads and contacts and also ensure that they build better customer relationships.

Earlier this quarter, an iOS version of the tool was also released to ensure the tool’s presence in the mobile ecosystem. The tool successfully integrates with other applications including and Microsoft Dynamics. While users will be able to download the app for free, they will need a paid membership to access its features. The membership starts at $99.99 per month.

The market is pleased with LinkedIn’s continually improving operational and financial metrics. Their stock is trading close to 52-week high levels of $238.43 with a market capitalization of $29.6 billion. It touched a high of $239.17 in December last year. The stock had recovered significantly from the 52-week low of $136.02 it touched in May this year.

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