LinkedIn EPS Triples, Revenue Up 81%, Crushing Forecasts

Investor's Business Daily

LinkedIn (LNKD) blew past fourth-quarter expectations on global membership gains and diversified revenue streams, sending shares sharply higher late Thursday.

The social networking site for professionals earned 35 cents a share excluding various items, up 192% vs. a year earlier. That blasted past estimates of 19 cents, as polled by Thomson Reuters.

Q4 revenue rose 81% to $303.6 million, above the consensus $279.5 million.

Martin Pyykkonen, research analyst with Wedge Partners, said LinkedIn continues to perform "extremely well" but must continue its brisk international expansion to maintain growth rates.

LinkedIn shares rose 10% after hours to about 136, which would be a new high. In Thursday's regular stock market session, LinkedIn fell 1%.

CEO Jeff Weiner, in a post-earnings conference call with analysts, called 2012 a "transformative year" as LinkedIn revamped its underlying infrastructure and accelerated product introduction.

About 27% of users accessed the site via mobile devices, up from 15% in Q4 2011.

Broad, Varied GrowthLinkedIn expects Q1 revenue at $305 million to $310 million, above the consensus for $301 million. For the year the networking giant sees $1.41 billion to $1.44 billion, in line with estimates.

LinkedIn has three sources of revenue. Its largest is Talent Solutions, which gets fees from companies and headhunters trying to find prospective hires. Revenue from this group rose 90% to $161 million. That was a slight slowdown from Q3's 95% gain. The group represented 53% of Q4 revenue vs. 51% a year ago.

LinkedIn's second revenue source is Marketing Solutions, which sells ads. Revenue in this group rose 68% to $83.2 million, picking up from Q3's 60% gain. It represented 27% of revenue.

Revenue from Premium Subscriptions, which charges users for extra services, rose 79% to $59.4 million, above the 74% growth in the prior quarter.

New Features CitedOver the past few months, LinkedIn has upgraded or added several features to its site that has driven higher usage. This includes a redesigned home page and other services that have increased the number of times users share or promote postings. LinkedIn also added an endorsement feature that recognizes colleagues for specific skills, and a Twitter-like follow capability.

LinkedIn ended 2012 with 202 million members, up 8% from the end of Q3 and up 36% from a year ago. That's far smaller than Facebook (FB), which boasts more than 1 billion users. But the larger networker relies heavily on advertising and thus faces a greater struggle in adapting to the shift to mobile users.

LinkedIn said it adds about two members per second. About 64% of new members in Q4 came from international markets.

Overseas growth is key for LinkedIn to maintain its momentum, said Pyykkonen.

"The U.S. market is not yet saturated but there is more international growth available to them," he said.

LinkedIn added five languages in the quarter for a total of 19.

Michael Graham, research analyst at Canaccord Genuity, in a research report said competition could intensify but LinkedIn currently enjoys a dominant position in professional networking.

"Other large social networks like Facebook and Google+ have not made significant threats to LinkedIn's," he wrote.

View Comments