After a Strong Q2, LinkedIn Raises Outlook For the Year

Aug 2, 2012
This article is part of a series called Financial.

Down on the day. Up on the evening. If they’re not drinking champagne at LinkedIn HQ they should be. Not only did the company meet the optimistic 16-cent-a-share earnings estimate of Wall Street, it blew through the revenue guess, beating the $216 million estimate by a cool $12.5 million.

Net profit was lower than last year’s second quarter, because the company is spending at a faster pace as it aggressively grows domestically and especially abroad. Sales and marketing was the fastest growing expense category, more than doubling in cost.

But that spending, company officials say, is powering the expansion of the client base, which increased by some 1,600 customers during the second quarter, and prompted them to raise both their revenue and earnings expectations for the current quarter and the full year.

Now, LinkedIn says it will bring in between $235 million and $240 million in the 3rd quarter and $915-$925 million for the year. That puts it on track to meet, or even surpass Monster’s full-year revenue. (Monster reported a lackluster second quarter, and cautioned this morning that the third quarter would be below last year’s.)

LinkedIn’s report released minutes after the market closed today sent shares of the already pricey LinkedIn stock up 7.5 percent in after hours trading The stock not only regained the $2.13 per share it lost during the day, but has picked up another $4.84 as this is being written. LinkedIn stock is now selling at just over $100 a share.

CEO Jeff Weiner, in an almost laughable understatement, opened the conference call with analysts and investors this afternoon, saying the company’s second quarter was, “A strong one.”

Indeed it was. LinkedIn reported earning 16 cents a share on $228.21 million in revenue. That 89 percent increase over the same quarter in 2011 was eclipsed by the doubling of recruitment revenue, which went from $58.5 million in Q2 of 2011 to $121.6 million this year.

Recruitment sales now include a larger number of products, and have bigger dollars attached. The company, Weiner said, is “taking a larger and larger share of budget.” Churn, a measure of satisfaction, is at near lows.

Those metrics would make any investor jump. But wait, there was more. Weiner said LinkedIn continues to add new users at about the same two-person-a-second pace as it did in the first quarter of the year. Registered members now number 174 million, and they are increasingly joining via mobile devices.

Monthly unique visitors are also up, and now average 106 million; combined with the numbers from its SlideShare acquisition, LinkedIn is now the 26th most visited site in the world, Weiner reported. And 23 percent of those uniques come via portable device.

A test is underway now of a mobile ad delivery program, Weiner said, that is showing signs of success. In addition, he said, echoing comments by CFO Steve Sordello, LinkedIn’s redesigned homepage is increasing pageview count and user engagement, particularly as more content and more precisely tailored content is delivered to users.

The early June hack caused LinkedIn to disable the six million passwords that were accessed, Weiner said. Additional security measures were also taken, though the cost, he told an analyst who asked, was relatively small.

This article is part of a series called Financial.