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World – LinkedIn: rising revenues tempered by increased costs

30 October 2013

LinkedIn (LNKD: NYSE) the online professional network reported revenue during the third quarter of 2013 of USD 393 million, an increase of +56% compared with revenue of USD 252 million for the same period last year. During Q3 2013 LinkedIn’s membership surpassed 259 million members, a year-on-year increase of +38%.

The company reported a pre-tax profit of USD 4.8 million, a decrease of -20% compared with a pre-tax profit of USD 6 million a year ago. Increased costs associated with sales & marketing, product development, and general & administrative costs resulted in a net loss of USD 3.4 million for the three months ending 30 September 2013, this compares with a net profit of USD 2.3 million last year.

Financial analysts noted that, while the company’s fundamental performance was excellent, the latest results and outlook were slightly mixed relative to formal expectations.

Jeff Weiner, CEO of LinkedIn, commented: “Increased member growth and engagement helped drive strong financial results in the third quarter. We continue to deliver value to professionals through investment in core products and strategic initiatives; such as mobile, students, and the professional publishing platform.”

Revenue from the company’s Talent Solutions business, the company’s largest business segment, reported a year-on-year increase of +62% from USD 138.4 million to USD 224.7 million. Talent Solutions represented 57% of the company’s total revenue for the third quarter 2013 compared with 55% in Q3 2012.

LinkedIn’s Marketing Solutions business also reported growth, revenue rose by +38% to USD 88.5 million from USD 64 million. Marketing Solutions represented 23% of LinkedIn’s total revenue, a small drop from 25% of company revenue during the same period in 2012.

Revenue from the company’s smallest business segment, Premium Subscriptions, grew by +61% to USD 79.8 million from USD 49.6 million, year-on-year. Premium Subscription continued to represent 20% of LinkedIn’s total revenue.

Regionally, the United States remains LinkedIn’s largest market, revenue in the region increased to USD 245.3 million from USD 162.4 million, equating to year-on-year growth of +51%. Revenue from the United States represented 62% of total company revenue for the period.

Excluding the United States, revenue from the Americas increased by +57.9% to USD 27 million from USD 17.1 million in the third quarter compared with a year ago.

In Europe, the Middle East, and Africa revenue increased by +65.3% to USD 90.1 million from USD 54.5 million, year-on-year. Whilst in Asia-Pacific, revenue increased during Q3 2013 by +69.4% to USD 30.5 million from USD 18 million in Q3 2012.

Looking forward, the company expects Q4 2013 revenue of between USD 415 million and USD 420 million, slightly below prior estimates. However, for the full year, revenue expectations have been revised upwards to approximately USD 1.5 billion.

Following the release of the financial results yesterday, the company’s share price closed up +1.7% at USD 247.14, an increase of USD 136.4% compared with a year ago. Based on its current share price, the company has a market value of USD 29.2 billion.        

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