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LinkedIn Delivers Strong 4Q - Analyst Blog

LinkedIn Corporation ( LNKD ) reported adjusted net earnings of 7 cent per share in fourth quarter 2011, much better than the Zacks Consensus Estimate of a loss of one cent.

Revenues

Revenues in the quarter were $167.7 million, up 105.3% from $81.7 million in the fourth quarter of 2010. The stupendous revenue growth can be attributed to an increase in the number of members paying for premium subscriptions that almost doubled year over year and marked the third consecutive quarter of subscriber growth. Moreover, the marketing programs and ad targeting capability continued to drive revenues in the quarter.

Segment wise, Hiring Solutions products totaled $84.9 million, up 136.2% year over year. This segment represented 50.0% of the total revenue in the fourth quarter of 2011

Marketing Solutions products increased 77.0% year over year to $49.5 million. Marketing Solutions revenue represented 30.0% of the total revenue.

Premium Subscriptions products totaled $33.3 million, an increase of 87.0% compared with the year-ago quarter. Premium Subscriptions represented 20.0% of the total revenue in the reported quarter.

Geographically, U.S. revenues totaled $112.0 million, and represented 67.0% of revenues in the fourth quarter of 2011. Revenue from the international market totaled $55.8 million, and represented 33.0% of the total revenue in the fourth quarter of 2011.

Operating Results

The company reported operating income of $10.03 million, up 42.0% from $7.1 million in the year-ago quarter. Operating income increased on the back of higher rate of revenue increase than cost and expenses.

Net profit on a GAAP basis in the fourth quarter was $6.9 million versus $5.3 million in the third quarter of 2010. Excluding special items, like amortization of intangibles non-GAAP earnings per share was 7 cents compared with 5 cents per share earned in the fourth quarter of 2010.

Balance Sheet

LinkedIn Corporation ended the quarter with cash, equivalents of $339.0 million versus $366.8 million in the prior quarter. Accounts receivable in the quarter was $111.4 million while there was no long-term debt. Total deferred revenue in the quarter was $139.8 million, up from $114.1 million in the previous quarter.

Guidance

The company expects revenue in the range of $170.0 million to $175.0 million for the first quarter of 2012. Adjusted EBITDA is expected in the range of $25.0 million to $27.0 million. Moreover, depreciation and amortization is projected in the range of $15.0 million to $17.0 million, and stock-based compensation is expected in the range of $13.0 million to $14.0 million.

The company expects full year 2012 revenue in the range of $840.0 million to $860.0 million. Adjusted EBITDA is expected between $155.0 million and $165.0 million. The company expects depreciation and amortization in the range of $70.0 million to $80.0 million, and stock-based compensation in the range of $65.0 million to $75.0 million.

Conclusion

LinkedIn commands a leadership position in the emerging online professional networking segment. The company has attained worldwide popularity and has grown steadily over the last few quarters. LinkedIn reported impressive fourth quarter numbers, and witnessed considerable revenue upside across segments. The company did particularly well in the Hiring solution segment (up 136.2 % y/y).

The company reported consistent top-line growth, and effectively implemented certain cost control measures to improve its bottom line. Currently, competition is not severe in the professional networking space, but IT majors like Facebook, Google ( GOOG ) and Microsoft ( MSFT ) are expected to enter the market soon. Hence, the competitive scenario could change rapidly over the next few years.

The company has a Zacks#3 rank (implying a Hold rating).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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