LinkedIn Results Once Again Exceed Expectations

On Thursday, LinkedIn, the “professional” social network with over 200 million members, had reported quarterly profits that doubled the high expectations held by the investors.

The company earned $40.2 million (£25.5m) in the fourth quarter of 2012, a serious improvement when compared to $13 million it made in the same quarter a year earlier. The news lifted the stock price 10 percent, which means it doubled in value over the past 12 months.

Analysts suggest that the social network’s strong growth is caused by its subtle shift from networking to recruitment – a very important market in the current economic conditions.

Seeing double

LinkedIn was founded in December 2002 and had its IPO in May 2011.

In its latest earnings call, the company reported revenue increase of 81 percent year-on-year. A lot of the growth was driven by the international earnings that also more than doubled in the last year, and now account for 38 percent of the business. According to LinkedIn, most of its users now login outside of the US, and the company is particularly interested in the developing markets of China and Brazil.

LinkedIn has also improved its services for jobseekers, at the time when traditional job search websites are seeing a slowdown. The social network offers increasingly more tools to recruiters, and more ways for members to showcase their skills. For example, ‘endorsements’ launched in September, allow users to instantly promote people they have worked with by clicking on a corresponding skill listed on their profile.

LinkedIn said that sales from job-recruitment tools rose 90 percent over the year, and now account for more than half of the company’s overall revenue. Meanwhile advertising, the main source of income for Facebook, represents just a quarter of LinkedIn’s earnings.

The company has also worked hard to improve its mobile service. During a conference call with analysts, LinkedIn CEO Jeff Weiner said about 27 percent of the site’s visitors last quarter came from mobile apps, a 15 percent jump from a year ago, reports CNN.

These results mean that LinkedIn has been beating earnings forecasts for seven consecutive quarters, in some of the toughest economic conditions of the last two decades. The company is widely seen by analysts as a safe investment with solid stock performance. However, some questions remain as to how long this growth can be sustained before the company saturates its core markets.

Meanwhile, Facebook has recently posted net profit of just $53 million (£33.5m) for 2012, a massive drop from the $1 billion (£633m) it reported for 2011. However in the last quarter of 2012, revenue from mobile apps accounted for 23 percent of its advertising earnings – up from 14 percent the previous quarter.

In the same quarter, for the first time in its nine-year history, Facebook reported more daily users on mobile apps than from the Web. The stock of the world’s largest social network currently trades at 25 percent below IPO price.

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