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LinkedIn: Jewel of the Social Media Crown

Posted on Thursday, Nov 8th 2012

Social media stocks, including giants like Facebook, may not have done well after listing on the stock market. But one social media company, LinkedIn (NYSE:LNKD), the largest online professional network, continues to outperform market estimates.

LinkedIn’s Financials
LinkedIn’s Q3 revenues grew 81% over the year to $252 million, ahead of the market’s expectations of $244.6 million. It shattered market projections of $0.11 EPS by reporting earnings of $0.22 for the quarter.

By segment, revenues from Talent Solutions, earlier known as Hiring Solutions, grew 95% to $138.4 million as the company added 1,700 new customers during the quarter. Marketing Solutions’ revenues grew 60% to $64 million, and revenues from Premium Subscriptions grew 74% to $49.6 million.

The United States contributed 64% of the quarter’s revenues and the international markets of EMEA accounted for 22%. The remaining 14% of revenues was contributed by the emerging Asian Pacific markets.

LinkedIn’s other statistics also remained impressive. During the quarter, membership grew 43% to 187 million, translating to two new members signed up per second. Members generated more than 8.9 billion page views, excluding mobile, reporting 17% growth over the year.

A comScore report estimates that LinkedIn had 110 million monthly unique visitors last quarter. Including its SlideShare visitors, the company reported 143 million unique visitors in September 2012, making it the 25th most visited web property in the world.

For the current quarter, LinkedIn projected revenues of $270 million-$275 million with adjusted EBITDA of $58 million-$60 million. LinkedIn expects to end the year with revenues of $939 million-$944 million and adjusted EBITDA of $202 million-$204 million. The Street was looking for revenues of $276 million for the quarter.

LinkedIn Highlights Its Growth Plan
As part of its growth plan, LinkedIn is looking at not only increasing member base, but also at improving monetization and user engagement levels.

During the recent quarter, it invested in improving its technology infrastructure to simplify the user interface and to redesign several of its pillar products. For instance, as part of this initiative, LinkedIn unified the interface for users, including the mobile app, Linkedin Today, and the core website. LinkedIn believes that these improvements have helped drive user engagement. It also redesigned the LinkedIn Profile, the page that maintains a user’s professional profile. LinkedIn claims that Profiles on the site are viewed 25 million times daily, and as part of the redesign, the new page will let members define and maintain identities and build networks through a simpler process.

The next area of focus is growing both the global membership base and improving the monetization capabilities of the total member base. To drive member growth, LinkedIn added six languages to its iPad app. The move will help the company cater to the more than 70% international visitors who access the website.  Today, the website is available in 13 languages and the company recently added a Dubai office, making the emirate the 26th location in which it has a physical presence.

To improve monetization, LinkedIn added features such as sponsored jobs, which lets businesses advertise key positions to the right talent for a premium. To build the monetization capabilities of its mobile apps, it is now displaying jobs on mobile apps and is also testing display ad revenues on the iPad app.

LinkedIn also added several new features during the quarter, such as endorsement and notifications. Endorsements let members recognize people on their network with special skills. Notifications which alert members to activity that is relevant to their profile and experience on LinkedIn.

As part of increasing user engagement, LinkedIn is building on its content base. It added features that let users follow thought leaders on their website. Similar to Twitter, users can follow leaders through LinkedIn, and LinkedIn also lets these thought leaders post long-form content on their site.

The market is reacting favorably to LinkedIn’s moves. The stock is trading at $104.21, with a market capitalization of $10.87 billion. It touched a high of $125.50 in September 2012.

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