Recruitment Drives LinkedIn Revenue as Company Nears IPO

Next week, when LinkedIn is likely to begin offering its stock for sale, the 8-year-old company could find itself worth $3.3 billion.

According to filings with the Securities and Exchange Commission, a total of 7.84 million shares will be offered to the public at a price estimated to be somewhere between $32 and $35 a share. Of the total, LinkedIn will sell 4,827,804 shares, while existing stockholders, the venture capital investors, will sell the balance.

At the upper end of the price estimate, LinkedIn would be worth more than half again as much as Monster. (Stock held by the founders, other early investors, and executives, totals 89,547,185 and is factored in the total company valuation.) Monster’s market cap today is $2.04 billion.

Now why compare to Monster? Because increasingly LinkedIn is emerging as a social networking job board.

The company’s updated prospectusit first filed for an IPO in January –shows its revenue from recruitment services has been steadily growing over the years. Last year, recruitment accounted for 42 percent of the company’s total revenue.

As recently as three years ago, recruitment was the smallest share, behind revenue from premium subscriptions and marketing products. In 2008, recruitment was 22 percent of total company revenue.

In the prospectus supplement, LinkedIn noted that its Corporate Solutions — the recruitment product bundle sold to employers — increased 85 percent from 2008, when the product launched, to 2009. Between 2009 and 2010 the number of Corporate Solutions customers increased 144 percent. At the end of 2010, LinkedIn said it had 3,900 Corporate Solutions customers.

LinkedIn also reported that it turned a profit last year, earning $15.4 million on revenue of $243 million. Its prospectus suggests that it expects to be profitable this year, noting that it doesn’t anticipate using any of the capital from the offering to fund operations. Instead, LinkedIn will use the money “primarily for general corporate purposes, including working capital, sales and marketing activities, general and administrative matters and capital expenditures. We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement our business…”

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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