With social networks Facebook and Twitter handily beating analyst estimates for Q2 earnings, LinkedIn today reported its Q2 results and showed that rising tides are lifting its boat, too. Revenue for the second quarter was $534 million and its EPS (non-GAAP diluted) was $0.51 as the company also raised its guidance for Q3 and the full year. The company’s stock is up by around 8% in after-hours trading to $195/share.
Analysts expected LinkedIn to post earnings per share (EPS) of $0.39 (non-GAAP diluted) on revenues of $511 million. As a point of comparison, last quarter, LinkedIn beat analysts’ estimates on sales of $473 million and EPS of $0.38. Today’s revenue numbers are up 47% on a year ago, when LinkedIn posted revenue of $364 million in Q2 2013.
“LinkedIn delivered strong financial results in the second quarter while maintaining investment in our member and customer offerings,” said Jeff Weiner, CEO of LinkedIn, in a statement. “We made significant progress against several key strategic priorities including increasing the scale of job opportunities on LinkedIn; expanding our professional publishing platform; and continuing the strategic shift towards content marketing through Sponsored Updates.”
LinkedIn, however, also posted a GAAP net loss for the quarter of $1.0 million, versus net income of $3.7 million a year ago. Non-GAAP, the net income was $63 million, versus $44 million in Q2 2013.
On the back of its generally strong results, LinkedIn also raised its revenue guidance for the quarter ahead and the full year, above the estimates from analysts. It says it expects to Q3 revenues of $543-547 million, versus First Call and FactSet revenue estimates of $541m. For the full year, it bumped up numbers by $75 million to $2.140-2.150 billion; First Call and FactSet both estimate $2.12 billion.
LinkedIn, a social network built around people’s professional/working connections, passed the 300 million registered user mark in Q1. But while LinkedIn has evolved into the most ubiquitous of the “professional” social networking platforms in places like the U.S. and Europe, many have wondered how the company’s growth will fare in the future. (Indeed, LinkedIn’s stock has been punished in quarters past because of the slowing revenue growth, even when LinkedIn has actually beaten estimates. At market close today, it was at around $180 per share, down significantly from a 52-week high of nearly $258/share.)
LinkedIn’s growth question is focused on a few key areas: in terms of picking up new users beyond the white-collar workers who are its current bread and butter; moving into new geographies; and maximising revenues on users that the company already has.
In the last quarter, LinkedIn made some key moves to bolster the third of these areas, building revenue potential from its current user base. They included the acquisition of Bizo for $175 million. Bizo provides targeting and analytics for business — technology that LinkedIn intends to integrate with its current products to, in LinkedIn’s own words, breat a “more powerful tool for brands that want to build stronger relationships with professionals.”
In other words, this will help build out LinkedIn’s advertising and marketing business — one area that people will be scrutinizing when they compare LinkedIn with other publicly-listed social networks like Facebook and Twitter, who are pushing hard on their ad sales, specifically in the area of mobile.
Mobile, overall, is another area where LinkedIn has been working hard to build a bigger audience. It already has a large audience accessing the site from mobile devices — some 40% of its 300 million users, the company has told me — so this is about trying to capitalize on that. In addition to relaunching its main mobile app, it’s also been looking at ways of expanding its audience through different apps and services — for example through its Connected app, a relaunch of its Contacts app that hints at how the company wants to build leverage new technology and concepts like anticipatory computing and AI to make interacting and using LinkedIn less taxing and more seamless. (More use, after all, translates to more data and more revenue opportunities for social networks.)
More to come.
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