After reporting a strong Q2, LinkedIn shares jump 11%

LinkedIn came out ahead of revenue expectations with $363.7 million for the quarter

Financial trends and news by Steven Loeb
August 2, 2013
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After coming out away ahead of expectations in its second quarter earnings report on Thursday, shares of LinkedIn are shooting up in early trading on Friday.

The stock is currently up 11.03%, or $23.50, to $236.50 a share.

Investors were encouraged by increased member growth, and the fact that LinkedIn has further room to grow.

"The total addressable market (TAM) for LNKD remains large and we see strong top-line growth continuing in the foreseeable future. EBITDA margins are currently in the mid 20s but longer-term can reach high 30s or low 40s,in our opinion, as the company obtains greater scale," Sterne Agree analyst Arvind Bhatia wrote.

"Marketing Solutions will continue to decelerate—we estimate 23% revenue growth in this segment in 4Q against a tough comp—but we believe the shift toward Sponsored Updates will be highly accretive over time as LinkedIn’s audience moves toward mobile and the company capitalizes on its professional publishing platform. In the meantime, as Marketing Solutions transitions, we believe Talent and Premium will continue to drive strong growth," said JP Morgan analyst Doug Anmuth.

In the earnings report, LinkedIn posted non-GAAP earnings per share of 38 cents on revenue of $363.7 million, up 59% from $228.2 million in the year-ago period. Analysts had been projecting EPS of 31 cents a share on revenue of $354 million.

Net income for the quarter was $3.7 million, compared to net income of $2.8 million for the second quarter of 2012. Non-GAAP net income for the second  quarter was $44.5 million, compared to $18.1 million for the first quarter of 2012

Adjusted EBITDA for the second quarter was $88.6 million, or 24% of revenue, compared to $50.4 million for the second quarter of 2012, or 22% of revenue.

In previous earnings report, LinkedIn had projected revenue in the range of $342 and $347 million for the second quarter, while adjusted EBITDA was expected to range between $77 million and $79 million.

“Accelerated member growth and strong engagement drove record operating and financial results in the second quarter,” Jeff Weiner, CEO of LinkedIn, said in a statement. “We are continuing to invest in driving scale across the LinkedIn platform in order to fully realize our long-term potential.”

Talent Solutions took in $205.1 million, or 59% of total revenue, up 69% from a year ago, when it accounted for 53% of total revenue.

Revenue from Marketing Solutions was $85.6 million during the quarter, an increase of 36% year-to-year. It accounted for 56% of total revenue, compared to 53% in Q2 2012.. Premium Subscriptions brought in 20% of total revenue, or $73 million, up 68% year to year.

A total of $224.3 million, or 62%, of LinkedIn’s revenue came from the U.S., while $139.4 million, or 38%, came from international markets.

LinkedIn is expecting revenue in the range of $367 million and $373 million for the third quarter, while adjusted EBITDA is expected to range between $81 million and $83 million. 

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