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LinkedIn Keeps Exceeding Market Expectations

Posted on Thursday, Mar 5th 2015

Nothing seems to be slowing down LinkedIn’s (NYSE: LNKD) growth. While other social media stocks like Twitter have taken a bit of a beating due to the slowing down of their user growth statistics, LinkedIn has proved to be quite the opposite. Their continued investments in newer markets and offerings have helped them deliver strong results and drive their stock to a record high. LinkedIn has reported results for fifteen quarters so far since they went public and not once have they missed earning expectations. This quarter was no different.

LinkedIn’s Financials

LinkedIn’s fourth quarter revenues grew 44% over the year to $643 million, ahead of the market’s expectations of $617 million. EPS of $0.61 was also significantly ahead of the Street’s estimated earnings of $0.53 for the quarter.

By segment, revenues from Talent Solutions grew 41% to $369 million. Marketing Solutions revenues grew 56% to $153 million and revenues from premium subscriptions grew 38% to $121 million.

During the quarter, LinkedIn added 15 million members over the previous quarter. It grew 25% over the year to 347 million with unique visiting members growing 23% to 93 million per month. Member pageviews grew 34% over the year.

LinkedIn ended the year with revenues growing 45% to $2.22 billion. EPS for the year increased from $1.61 a year ago to $2.02.

For the current quarter, LinkedIn projected revenues of $618-$622 million and an EPS of $0.53. The market was projecting revenues of $646 million with an EPS of $0.55. LinkedIn expects to end the year with revenues of $2.93 billion-$2.95 billion and an EPS of $2.94. The market was looking for annual revenues of $2.94 billion with an EPS of $2.74.

LinkedIn’s Expanding Offerings

To keep marketers engaged with their platform, LinkedIn is growing their advertising products that will make advertising more relevant. Their new product Lead Accelerator allows marketers to view consumer behavior of those visiting their sites through the use of pixels. The product then integrates information collected from these pixels with the information about the user, such as their location and the industry in which they work to offer more focused advertisements. The move has been enabled through their partnership with AppNexus. So far, LinkedIn’s advertising efforts have been limited to their site. Using the new product, they will be able to serve ads on other 2,500 business-focused websites as well.  The product is currently being tested by Lenovo, Salesforce, and Groupon. It has received positive reviews from these customers. Analysts are now calling LinkedIn the “Facebook for professional ads”, given their focus on advertising.

LinkedIn’s Market Expansion

Over the last year, LinkedIn has been focused on expanding their international presence. Currently international operations account for 40% of their revenues. During the last quarter, more than 75% of their new members came from outside the US. LinkedIn recently expanded their presence in the Middle East by launching an Arabic language website.

During the year, LinkedIn has also expanded their presence in China. Unlike other technology companies, LinkedIn has manage to grow in the country through several compromises. In China, LinkedIn operates through a joint venture with two local companies: China Broadband Capital and a Chinese affiliate of Sequoia Capital. The relationship with the local companies has helped LinkedIn manage their government relationships better. Additionally, LinkedIn has followed censorship requirements levied by the country. Recently, they were awarded the Internet content provider (ICP) license to operate in China. While that would ease some of their operations in the country, it would also require them to store information about their Chinese users in China.

Their stock is trading at $265.23 with a market capitalization of $33.19 billion. It touched a 52-week high of $276.18 earlier this month after their results announcement.

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