LinkedIn Corp Jumps, Hits New High On Earnings Beat

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Shares of LinkedIn Corp are rocketing higher Friday after reporting an earnings beat yesterday after the closing bell.  Wall Street was expecting LinkedIn to report earnings per share of $0.53 on revenue of $617 million.  The networking social media site reported earnings per share of $0.61 on revenue of $643 million, thoroughly beating both earnings and revenue estimates.  Total revenue 2014 additionally came in at a growth rate of 45% year over year to $2.2 billion.  As a result, LinkedIn shares are trading around 13% higher to a new all time high of $270.

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Continued focus on mobile and business to business marketing

Breaking down fourth quarter revenue, 57% came from its traditional business of “talent solutions”, a service that helps pair individuals with businesses to fill job vacancies.  The next 24% came from marketing and the remaining 19% was from premium subscriptions.  LinkedIn CEO, Jeff Weiner told investors during the earnings call that “the fourth quarter capped another successful year for LinkedIn, which was marked by steady member growth and strong financial results, we continued to make significant progress against a number of multi-year, strategic initiatives including mobile, jobs, content, and global expansion” (Business Insider). The positive results come in spite of a pre-emptive downgrade prior to earnings release by BGC.

Earlier last year during summer 2014, LinkedIn acquired Bizo, a business to business marketing firm, in which the company hopes to turnaround and become a major source of revenue for LinkedIn.  LinkedIn paid $175 million to acquire the company and by 2017, management hopes it could be an additional $1 billion in revenue for the company.  As you can see, business to business marketing accounted for only 24% of fourth quarter revenue, as the company continues to put greater emphasis on that business.

LinkedIn could use more US users

LinkedIn currently has around 300 million members on its networking website.  However, 70% of those 300 million users reside outside the US.  Members based in China account for 8 million and a solid bulk of the international users.  The fact of the matter is that LinkedIn has been very successful internationally and in general.  However, with only 30% of its users coming from the US, it certainly seems that the company does have some more room to grow here domestically.

According to the Social Media Update 2014 by the Pew Research Center, Facebook still holds the commanding lead with 58% of all adults aged 18 and older.  LinkedIn comes second at a distant 23%, Pinterest holds 22%, Instagram at 21% and Twitter comes in last at 19%.

Pew Research Center
Pew Research Center

While LinkedIn is the second most popular social media site for adults, there is a serious gap between LinkedIn’s market share and Facebook’s.  This is certainly an area where management could focus on more and attempt to gain more American adult members.

Overall, LinkedIn reported excellent fourth quarter and full year 2014 results.  The stock is trading at a new all time high today and certainly future growth plans are in the works.  With 300 million total users, the site is a screaming success, but I would certainly like to see the company grab up more users domestically, but that is certainly nitpicking and the future certainly looks bright.

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