LinkedIn shares slump, despite revenue up 126%

Company gives positive revenue guidance in the fourth quarter

Shares of LinkedIn slumped 8% to $80, in after-hours trading, after the business network's first quarterly results as a publicly-traded company showed an expected net loss, despite a significant upswing in revenue.  

For its third quarter, ending September 30, LinkedIn reported revenue rocketed 126% to $139.5 million from $61.8 million in the same period last year. It was the eight straight quarter of accelerating revenue growth. At the same time, the Mountain View, Calif.-company posted a net loss of 2 cents a share, or $1.6 million, down from a profit of $4 million in the year-ago period. Analysts were expecting a loss of 4 cents. 

Still shares sank, most likely due to LinkedIn's (NASDAQ: LNKD) incredible run. Shares rose 3.5% to $87.50 on Thursday, before the report. And, shares have risen 20% since the start of October. The stock, which has been trading around $90, is twice the $45 price that the company debuted at in its May IPO.  

While the market would have liked more growth, LinkedIn executives expressed confidence in the company's ability to grow revenue and profits. 

"LinkedIn had a strong third quarter, with significant, broad-based growth across all of our revenue streams, member engagement metrics, geographies, and sales channels," said Jeff Weiner, CEO of LinkedIn, in a statement. "Our results underscore the long-term strength of our global platform and our business model."

Additionally, LinkedIn said it expects to generate between $154 million and $158 million, well above analysts' forecast of $147.94 million. 

How LinkedIn has been growing

In recent months, LinkedIn has flushed out its business model by adding several paid features for recruiters and job searchers including the announcement last month for a specific recruiter tool that will debut in the first half of 2012.

The hiring solutions offered by the company totaled $71 million for the quarter, a 160% jump from last year and now represents more than half of the company's revenue. This is the biggest revenue generator for the company.

At least two-thirds of the company’s revenue is derived from fees that it charges companies for additional tools and access to user data while only one-third is from traditional advertising.

Premium subscription revenue totaled $28.4 million, an increase of more than 80% over the same quarter last year, and marketing solution offerings/products totaled $40.1 million (more than double the results from Q3 last year).

The LinkedIn is still buzzing from the recent Barack bump it received from a town hall hosted through the site in October and the company’s intent to expand its office space and staff, including a doubling the space it holds in Mountain View, Calif. to 190,000 square feet and housing additional employees at an office space in downtown San Francisco.

LinkedIn’s second quarter earning, in August, showed that the company was adding nearly two new members per second – that’s 173,000 per day – and would put the estimate for the end of September at about 132 million.

In the early days of summer, LinkedIn had more than 1,500 employees and at least 120 million members. The report today shows that LinkedIn stayed on target and crested to 131.2 million members, a 63% increase from the same period last year.

"The company posted its eighth straight quarter of accelerated revenue growth and achieved record engagement on the LinkedIn platform," said Steve Sordello, CFO of LinkedIn. "We delivered strong adjusted EBITDA and record levels of operating and free cash flow. LinkedIn plans to maintain a long-term perspective with investment in our key strategic areas."

In a market filled with talks of infaltion and devaluation, LinekedIn can finally take a breath with these numbers. Strong revenue growth and usership hitting the target will allow the company to brush off the continued comparisions that people are making between it and the Groupon woes. Now people will wait to see what the orignial stockholders do on Nov. 21 when their 180 IPO lock expires.

Image Sources -- Simplyzesty.com and Letsgodine.com