LinkedIn soars 12% on strong Q2 rev, upped forecasts

Despite limits to LinkedIn’s ad inventory, shares maintain strong demand

LinkedIn (NYSE:LNKD) stock opened Friday up more than 13%, trading around $106 per share.

Shares of the Mountain View-based professional networking company are surging Thursday because the company reported strong revenue in its second quarter, thanks to growth from ads and hiring tools.

LinkediIn climbed $11.35 to $104.86 in early trading Friday morning, after rising 7% in after-hours trading Thursday, right after the business network reported that it had raised its sales forecast for the year.

"Overall, we continue to believe LinkedIn is operating extremely well and has significant room for growth ahead driven by the secular shift toward enterprise hiring, expanded field sales efforts, and new products," said analyst Doug Anmuth of JP Research, in a note. "LinkedIn continues to stand out from the broader group of recently public Internet companies—we would expect shares to respond favorably in the near-term and for LinkedIn to maintain its large premium multiple."

Anmuth also maintains his target price of $135 but reminds investors of the company's "macro weakness and a softer hiring environment" as areas to keep a eye on.

Meanwhile, Facebook (NASDAQ:FB) is struggling to stay above $20 as it hovers at an all-time-low days after releasing no forescast and weaker than expected numbers.

Late Thursday, LinkedIn said revenue grew 89% to $228.2 million in its second quarter, exceeding consensus estimates of $216 million by 6%, and even besting its own range between $210 million and $215 million. At the same time, LinkedIn said it earned 3 cents a share, or 16 cents on an adjusted basis, which only met analysts' consensus estimates of 16 cents a share. 

But LinkedIn did raise its revenue for the full year to a range of $915 million to $925 million, up from a prior estimate of $880 million to $900 million, and nicely above analysts' forecasts of $910 million. For the current quarter, the company sees revenue of $235 million to $240 million, above consensus estimates of $235.2 million.  

“LinkedIn had a strong second quarter with all of our key operating and financial metrics showing solid performance,”CEO Jeff Weiner said in a statement. “Our ongoing investment in product innovation drove healthy engagement as measured by unique visiting members and member page views, and our three revenue streams all experienced significant growth.” 

User numbers - 2/3rd from international

LinkedIn said that its monthly active users (MAUs) came in at 174 million, up roughly 6% from 161 million reported in April, up 50% from the same period a year ago. That now means that two people are signing up for LinkedIn every second!

In each of the last two quarters, LinkedIn has grown just above 8% in its usership numbers.

In fact, this places LinkedIn as the 26th most visited Web property. 

International has also recently been a driver of user growth as of late. On the earnings call late Thursday, Weiner explained that 63% of users are coming from nternational markets. As another part of the international growth, LinkedIn is available in 18 languages with more to come in this current quarter.

LinkedIn also does not break out the amount of time spent on the site by users and executives explained that they are not aiming for people to spend more time on the site, since productivity is key. Weiner even specified that the company is "more about helping people save time, not pass the time."

Mobile strategy 

As part of its growth strategy, LinkedIn has also placed some big bets on mobile that are starting to pay off, but are still in the very early stages. Currently, more than 15% of new members are coming on board from the various mobile properties, that is up from 10% last quarter.

Weiner also spoke about how the company is in the early stages of monetizing mobile opportunities and has see a lot of promise with its few blue chip advertisers such as Shell which started earlier this summer, but it is was too early to really break those numbers out specifically.

It was a little odd, however, that LinkedIn did not specifically break out any mobile numbers for the earnings release or call, especially when it disclosed in Q1 that mobile made up 22% of LinkedIn’s visitors.

The company did state, however, that it “received positively, and engagement trends are encouraging.” 

We do know that the recent changes to the mobile apps and homepage were focus on more social sharing of news updates and company changes which has been responsible with more user engagement and 150% more sharing of items since May.

Recruitment features and revenue

The most promising and growing arm of LinkedIn's recruitment and hiring package. This past quarter the revenue from recruiting tools totaled $121.6 million, up 107% compared to the second quarter of 2011. These tools also are doing more heavy lifting than before -- making up 53% of total revenue versus 48% in Q2 2011. Weiner was very excited by this growth explained that more tools, clients and upgrades are to be expected in this area of their revenue properites.

This section of the LinkedIn business provides the company the most distance from Facebook and creates strong relationships with Fortune 500 companies looking for better tools to recruit valid talent acorss the globe. 

As word continues to circulate that Facebook could be creating a more central and optimized job board, rather than rely on apps to do this service (like BranchOut), LinkedIn shows its strength in providing value for both the job provider as well as the job seeker.

Advertising revenue

Revenue coming from marketing and advertising efforts totaled $63.1 million, up 64% from Q2 last year. This revenue stream represented 28% of total revenue in the second quarter of 2012, compared to 32% in the second quarter of 2011, which has some investors concerned that the company may be challenged in adding big marketing clients.

Premium subscriptions

This revenue stream that truly separates LinkedIn from other social networks like Facebook and G+ brought in $43.5 million in Q2. That is up 82% from Q2 2011. Premium subscriptions have held steady percentage-side -- making up 19% of total revenue in the second quarter of 2012, compared to 20% of revenue in the second quarter of 2011.