LinkedIn Delivers Robust 1Q Numbers

Zacks

LinkedIn Corporation (LNKD) reported adjusted net earnings of 5 cents per share in the first quarter of 2012, much better than the Zacks Consensus Estimate of 2 cents.

Revenues

Revenues in the quarter stood at $188.5 million, up 100.6% from $93.9 million in the first quarter of 2012. The company witnessed stupendous revenue growth across all three product segments.

Segment wise, Hiring Solutions products totaled $102.6 million, up a massive 121.3% year over year. This segment represented 54.4% of the total revenue in the first quarter of 2012.

Marketing Solutions products increased 73.2% year over year to $47.5 million. Marketing Solutions revenue represented 25.2% of the total revenue.

Premium Subscriptions products totaled $37.9 million, an increase of 91.0% year over year. Premium Subscriptions represented 20.0% of the total revenue in the reported quarter.

Geographically, U.S. revenues totaled $120.8 million, and represented 64.0% of revenues in the first quarter of 2012. Revenue from the international market amounted to $67.6 million, and represented 36.0% of the total revenue in first quarter 2012.

Operating Results

The company reported operating income of $10.6 million, up from the year-ago level of $1.3 million. Operating income increased as revenue grew at a higher rate than cost and expenses.

Net profit on a GAAP basis in the first quarter was $5.0 million versus $2.1 million in the first quarter of 2011. Excluding special items like amortization of intangibles, non-GAAP earnings per share was 5 cents compared with 3 cents per share earned in the first quarter of 2011.

Balance Sheet

LinkedIn Corporation ended the quarter with cash and cash equivalents of $342.3 million versus $339.0 million in the prior quarter. Accounts receivable in the quarter was $116.3 million compared with $111.4 million in the previous quarter, and there was no long-term debt. Total deferred revenue in the quarter was $174.8 million, up from $139.8 million in the previous quarter.

Guidance

The company expects revenue in the range of $210.0 million to $215.0 million for the second quarter of 2012. Adjusted EBITDA is expected in the range of $40.0 million to $42.0 million. Moreover, depreciation and amortization is projected in the range of $18.5 million and $19.5 million, and stock-based compensation is expected in the range of $18.0 million to $19.0 million.

The company expects full-year 2012 revenue in the range of $880.0 million to $900.0 million. Adjusted EBITDA is expected between $170.0 million and $175.0 million. The company expects depreciation and amortization in the range of $75.0 million to $85.0 million, and stock-based compensation in the range of $80.0 million to $90.0 million.

Conclusion

LinkedIn commands a leadership position in the emerging online professional networking segment. The company has attained worldwide popularity and has grown steadily over the last few quarters. LinkedIn reported impressive first quarter numbers, and witnessed considerable revenue upside across segments. The company did particularly well in the Hiring solution segment (up 121.3% y/y).

The company reported consistent top-line growth, and effectively implemented certain cost control measures to improve its bottom line. Currently, competition is not severe in the professional networking space, but IT majors like Facebook, Google (GOOG) and Microsoft (MSFT) are expected to enter the market soon. Hence, the competitive scenario could change rapidly over the next few years.

The company has a Zacks #3 Rank (implying a Hold rating).

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