Last week, social networking giant LinkedIn (LNKD: Charts, News) announced surprisingly robust second quarter earnings, which topped and matched expectations for its top and bottom line growth, respectively. The Mountain View, California-based website, often referred to as the “Facebook for job-seekers”, posted adjusted earnings of 16 cents per share, or $18.1 million, on revenue of $228 million. Analysts had expected LinkedIn to earn 16 cents per share on revenue of $216 million. This was a 60% increase in adjusted earnings per share and 89% increase in revenue from the prior year quarter. Although LinkedIn’s stock is still trading with a feverish trailing P/E of 927, shares are up over 72% since the beginning of the year.
Excluding its adjustments, which included stock compensation expenses and other items, LinkedIn earned 3 cents per share, or $2.8 million, a 38% decline from the 4 cents per share, or $4.5 million, it earned in the previous year. The company attributed this decline to increased spending aimed at recruiting more employers seeking employees. LinkedIn’s costs surged 93% to $214.7 million. Sales and marketing expenses more than doubled to $75.7 million.
For the third quarter, LinkedIn expects revenue between $235 million to $240 million, slightly higher than the average analyst estimate of $236 million. For the full year, LinkedIn raised its full year revenue guidance from a range between $880 million and $900 million to a range between $915 million and $925 million it had forecast in May. Analysts had expected the company to generate revenue of $907 million for the full year.
The company attributed its positive earnings and outlook to a growing user base and more money earned from recruitment services. LinkedIn’s user base grew from 161 million members to 175 million members in the second quarter. Mobile apps on Apple’s (AAPL: Charts, News) iOS devices and Android’s mobile devices attracted more users and generated more website visits. 23% of LinkedIn’s page views came from mobile devices, up from 10% in the prior year quarter. 15% of new sign-ups originated from mobile devices. CEO Jeff Weiner emphasized the importance of revenue generated from mobile devices. “It’s important to recognize that when we talk about mobile monetization, it goes beyond advertising,” he commented. Weiner also hinted at improved, upcoming mobile apps that would be more optimized for smartphone and tablet users, but declined to provide additional details.
LinkedIn’s homepage was renovated last month, to highlight activities, articles read and work profile changes, which increased the number of visits to “record levels”, stated the company. Due to its focus on building professional networks, LinkedIn has had more success than its consumer-focused rivals Facebook (FB: Charts, News) and Zynga (ZNGA: Charts, News). Facebook, which made its market debut in May, has lost nearly half of its market value after a disappointing IPO and lackluster second quarter earnings. Zynga, the maker of several popular Facebook games, has fared even worse, with shares down over 70% since its December 2011 IPO, as users purchased less virtual goods in its games.
Weiner remains optimistic that LinkedIn will thrive in an economic downturn. “People increasingly turn to LinkedIn for help when the economy is difficult,” he stated. Although bullish sentiment remains strong, LinkedIn shares are still fundamentally volatile, trading at 91 times forward earnings with a 5-year PEG ratio of 2.7. Shares have traded in a high-beta 52-week range between $55.98 and $120.63.
Other News About LNKD
Facebook Vs. LinkedIn: Buy The Bargain, Sell The Bubble
Which is the bargain, and which is the bubble?
Is The Social Media Bubble Finally Popping?
Is this the second coming of the dot-com bust?
Other Stocks in the News
Salesforce Allies with Twitter
Salesforce pairs up with Twitter to bolster its social networking initiatives.
Knight Capital handed $400m lifeline after trading debacle
Knight Capital’s nightmare continues.
Copyright 2012 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc.
No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions.
We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.