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LinkedIn’s Product Expansion

Posted on Tuesday, May 7th 2013

According to market reports, the worldwide talent acquisition and staffing services was estimated to be worth $27 billion last year.  LinkedIn (Nasdaq:LNKD) may be the largest professional network, but it still has a huge market opportunity to tap into, and the company is focusing on expanding their products to get a bigger piece of the pie.

LinkedIn’s Financials
LinkedIn’s Q1 revenues grew 72% over the year to $324.7 million, ahead of the market’s expectations of $315 million. EPS of $0.45 was significantly ahead of the Street’s target of $0.30 for the quarter.

By segment, revenues from Talent Solutions grew 80% to $184.3 million. Marketing Solutions’ revenues grew 56% over the year to $74.82 million, while Premium Subscription revenues grew 73% to $65.6 million.

International revenues continued to increase and make up a bigger share of total rvenues. Revenues from the U.S. grew to account for 62% of the quarter’s revenues at $201.4 million. International revenues accounted for the remaining $123.3 million, which represents 38% of revenues compared with 36% a quarter ago.

The company ended the quarter with membership growing from 202 million a quarter ago to 225 million. The number of unique visitors to the site was up 29%, and page views grew 63% over the year. Mobile device usage is increasing for LinkedIn as well. Thirty percent of their unique visitors came through mobile devices, compared with 27% a quarter ago and 19% a year ago. According to a comScore report, including SlideShare’s traffic, LinkedIn is now the 22nd most visited website in the world.

For the current quarter, LinkedIn projects revenues of $342 million-$347 million, falling short of the market’s expectations of $360 million. They projected the fiscal year’s revenues to be $1.43 billion-$1.46 billion, again missing the Street’s projections of $1.50 billion. EBITDA projections of $330 million-$345 million for the year were also short of market projections of $363 million.

LinkedIn’s Improving Product Line
LinkedIn is working to add content to their website to improve user engagement and to increase advertising revenues from the site. As part of their product enhancement, last quarter they released a new version of Search. The upgraded Search feature helps with delivering more relevant search results. The service includes capabilities such an improved auto-complete, suggested phrasing using a new algorithm, save results, and the ability to search across different product categories. They expect to grow this search feature to deliver a more personalized experience and to turn LinkedIn into more of a social network than a database for resumes.

Recently, LinkedIn gave members the ability to add media content to their profiles. Users will be able to create personalized professional brands through presentations, videos, and pictures. They expect the ability to help improve user engagement.

Earlier last month, they also released a new contact management system which lets members integrate e-mail, address books, and calendars with their LinkedIn network. Members will also be able to track relevant conversations and they will be notified about opportunities to stay connected with their network of professionals.

Last month, LinkedIn also acquired the newsreader for web and mobile, Pulse, for an estimated $90 million. Pulse was founded in 2010 by Stanford students Akshay Kothari and Ankit Gupta and had received $9.8 million in venture funding to date. Pulse is a news aggregator app that collates news and articles from multiple sources and topics and presents them in a new format to the user. The app has become one of the leading news apps on iTunes and has more than 30 million users globally who access more than 10 million stories each day. Analysts aren’t sure how LinkedIn plans to leverage Pulse’s capabilities. LinkedIn claims that the acquisition will help “build new professional content products.

Their stock is trading at $167.92 with a market capitalization of $19.29 billion. It touched a 52-week high of $202.91 earlier this month, but has been falling since owing to the disappointing projections.


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