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LinkedIn Q3 EPS, revenue beat estimates helped by new business lines

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LinkedIn (NYSE:LNKD) climbed in early trading after the corporate networking site posted better-than-expected third-quarter profit and revenue, boosted by new business lines including news content and client-management services.

Shares surged as much as 8.7 percent to $220.50 at 8:30 a.m. in New York. The stock had lost 6.4 percent this year through yesterday.

Profit excluding certain costs was 52 cents a share in the July-to-September quarter, the Mountain View, California-based company said in a statement yesterday. Analysts on average had projected profit of 47 cents.

Revenue rose 45 percent to $568.3 million, above Wall Street’s consensus of $557.7 million.

"LinkedIn made significant progress against several long-term strategic investments we began this year," the company’s chief executive officer Jeff Weiner said in the statement. "During the third quarter, we took meaningful steps in increasing the scale and relevance of job listings, growing the professional publishing platform, and expanding our member network in new geographies and demographics."

LinkedIn has been building out new products, such as a news business with sponsored updates and tools to help salespeople looking for clients, to make up for slower growth in recruiting, where the market is becoming saturated. The company has also expanded into regions such as China.

Overall, LinkedIn’s net loss widened to $4.26 million, or $0.03 per share, from a net loss of $3.4 million, or $0.03 per share, a year earlier.

Looking forward, the company said that revenue will be $600 million to $605 million in the fourth quarter. That was lower than analysts’ average projection for sales of $611.8 million. Profit before certain costs in the fourth quarter will be about $0.49 per share, also lagging behind the $0.52 average estimate.

Membership in the recent period increased to 332 million, up 6.1 percent from 313 million in the prior quarter.

Unlike Twitter and Facebook, which make most of their money from advertising, LinkedIn relies mainly on its "talent solutions" business for revenue, charging businesses and headhunters that use its site to find job candidates. This segment accounted for 61 percent of the quarter's revenue, while advertising and premium subscription revenue took in 29 and 21 percent each, respectively.

In the third quarter, sales in the talent solutions segment rose 45 percent to $344.6 million, compared with 62 percent growth in last year’s third quarter.

Revenue in the advertising business, called marketing solutions, rose 45 percent to $109.2 million, and sales from premium subscriptions rose 43 percent to $114.5 million.

LinkedIn said 47 percent of its traffic came from mobile, as the company builds out its suite of applications tailored to handheld devices.

 

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