LinkedIn Posts Loss, Revenue Gains

by Mark Walsh, Nov 3, 2011, 6:34 PM

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LinkedIn has been on a roll since the spring -- going public with a hot IPO, beating Wall Street forecasts in its first publicly reported quarter, and hosting a townhall meeting on jobs last month with President Obama. With the release of third-quarter earnings Thursday, the company maintained steep revenue growth but posted its first loss.

The professional networking site reported revenue for the three months ending in September of $139.5 million, up 126% from a year earlier. It posted a loss of $1.6 million or 2 cents a share -- compared to a profit of 4 million, or 2 cents a share, a year ago. Both figures, however, beat analysts’ average expectations of $128.7 million in revenue and a 4-cent loss.

Driving LinkedIn's growth during the quarter was a 63% increase in registered users from a year ago to 131.2 million. That translates into adding more than two members a second. Traffic increased 64% % to 87.6 million monthly visitors and page views were up 80% to 7.6 billion, according to comScore.

The increase in users was roughly on par with the prior quarter's growth of 61%, but traffic growth slowed somewhat from the 83% gain in the second quarter.

Leading the way again in revenue growth for LinkedIn was its hiring solutions business, which helps companies recruit job candidates through the site and was up 160% to $71 million. LinkedIn’s advertising business more than doubled to $40.1 million, and its subscription revenue increased 81% to $28.4 million. Hiring services accounted for 44% of sales, advertising 29%, and premium subscriptions, 20%.

U.S. sales made up two-thirds of overall revenue in the quarter, with international making up the balance. At the same time, LinkedIn also invested more heavily to expand in the quarter, adding a net 280 employees. The company plans to continue aggressive hiring in the current quarter.

In its earnings report, LinkedIn also noted that people accessing the site via mobile devices grew strongly as the company released updated iOS and Android apps. Mobile page views were up 400% from a year ago, accounting for more than 10% of all page views and more than 12% of total unique visits.

During its earning conference call, LinkedIn executives indicated that users show materially higher levels of engagement through mobile platforms and that the company will focus on how to better monetize the higher levels of interaction in mobile during 2012.

LinkedIn said it expects to report EBITDA profit in the range of $83 million to $85 million, and revenue of $508 million to $512 million for the full year. That’s up from its prior projection of $65 million and $70 million in adjusted profit, and revenue of $475 million to $485 million.

The company Thursday also filed for a secondary stock offering to raise additional capital, although it did not say how much equity it plans to sell. Proceeds will be used for working capital and general corporate purposes. LinkedIn raised more than $350 million in its May IPO, and its stock has since traded at roughly double the offering price of $45.

However, the stock price fell in after-hours trading Thursday, down about 8.5% to $80, on news of the quarterly loss.

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