LinkedIn CEO: rapid product release behind awesome Q4

A plethora of new releases drove engagement up and led to the better-than-expected quarter

If you're in the top 1% of LinkedIn profiles viewed on the business network (like my boss Bambi Francisco), then you've probably just received an email notice telling you to share the good news. These emails are just one of the many that LinkedIn has been pushing out, to help bring people (and their friends) back to the thriving network. 

Indeed, it's the product releases, new designs, personalization features that have been driving so much of the engagement in the final three months of last year. The result: earnings and revenue that beat Wall Street's expectations.

The company owes its performance to the success of its new products, said Jeff Weiner, CEO of LinkedIn, who got on the call with analysts, following the release of LinkedIn's fourth quarter earnings report, late Wednesday. 

On the release, shares of LinkedIn shot up 10% to $135, in after-hours trading. 

And, nothing on the call seems to have tempered enthusiasm for the shares. 

Weiner started off by sharing the recent milestone: the company's passing of 200 million members. Its membership has grown 39% from a year ago and the company is adding two new members each second. 

LinkedIn averaged 155 million unique visitors in the fourth quarter, according to comScore, and in December it was the 25th most visited website in the world. 

The company generated 9.8 billion pageviews, excluding mobile, growing 28% year to year. Member pageviews grew 67% in Q4, the highest amount of pageview growth in 2012.

Accelerated product innovations

Weiner credited this user growth to the new products delivered by LinkedIn during the year, which came from an accelerated product schedule, from once every two weeks to twice a day. Over the last four months of 2012, Weiner said, the company introduced more new products than during any other similar amount of time in the company's history.

"The products we delivered throughout the year drove number engagements and financial results to record levels in the fourth quarter."

The product innovation strategy is built around three themes: simplify, grow and every day.

• Simplify: making it easier for members to unlock value from LinkedIn's core products. 

In July, the site redesigned its homepage to allow members to "discover, share and discuss the professional information that is most relevant to them." Homepage page views are up 70% since the redesign. In October, LinkedIn introduced an updated profile, and, on average, the amount of members updating their profiles doubled versus Q4 2011.

• Grow: expanding global membership and expanding monetization efforts to benefit members and customers. 

Product localization continues to be a stong driver of member growth, Weiner said. In 2012, LinkedIn added five new languages, bringing the total to 19. 64% of all LinkedIn members come from markets outside the United States.

In March, LinkedIn debuted a new version of People You May Know, which resulted in member invitations increasing 80% from 2011 to 2012. This led to more connections per member. 

In terms of monetization, LinkedIn added products to add value to its corporate customers across all aspects of talent acquisition. For example, they are using Talent Pipeline, which was introducted in October 2011, and Jobs on Mobile, which was introcuded six months ago. Nearly 20% of job use and nearly 30% of job viewers come from mobile devices.

The company is also focused on growing the value of the recruiter platform, which is already in French, and will soon be in German, and Portuguese. 

Within marketing solutions, LinkedIn updated company pages, introduced status updates and released new analytics and APIs. The number of status updates posted by companies increased more than seven times in 2012. 

For the past few months, Weiner said, the company has been testing out the potential for companies to promote sponsored content on and a stream of updates on member homepages on both desktop and iPad streams. Based on the testing, LinkedIn is planning on bringing this to smartphones as well. 

In Premium services, LinkedIn focuses on specific verticals, including outbound sales professionals. The sales solutions, inlcuding sales navigator, represent the company's fastest growing premium product.

• Every day: help members build out their professional identities and gain valuable insights.

For example, endorsements, which allow members to recognize the skills of their colleagues. In just four months, there have been one billion endorsements. 

In October, LinkedIn introduced "influencers" to make the service a professional publishing platform. The most popular influencer is Richard Branson, with over 1.3 million followers. There have been posts with over one million views. The success of influencers has helped drive eight times more traffic to LinkedIn Today content.

Mobile products are also key to delivering value every day, Weiner said, and they are the company's fastest growing consumer service. In the fourth quarter, LinkedIn averaged 27% of unique visiting members coming from mobile apps, versus 15% the year prior. 

The strategy going forward

In 2013, said Weiner, the strategy will remain the same.

"For our members we will continue to build great products that deliver on the value propositions of identity, insights and everywhere. And for our enterprise customers, we will focus on transforming the way they hire, market, and sell on a global basis."

Fourth quarter numbers

LinkedIn posted non-GAAP earnings per share of 35 cents on revenue of $303.6 million, up 81% from $167.7 million in the year-ago period, and well above the consensus estimates compiled by Thomson Reuters of 19 cents a share on revenue of $279.5 million. 

Net income for the fourth quarter was $11.5 million, up 40%  from net income of $6.9 million for the fourth quarter of 2011. Non-GAAP net income for the fourth quarter was $40.2 million, 65% higher than the $13.3 million it posted for the fourth quarter of 2011.

Adjusted EBITDA for the fourth quarter was $78.6 million, or 26% of revenue, compared to $34.4 million for the fourth quarter of 2011, or 21% of revenue.

For the full year 2012, revenue increased 86% to $972.3 million from $522.2 million.

For the first quarter of 2013, LinkedIn is projecting revenue between $305 million and $310 million. Adjusted EBITDA is expected to range between $67 million and $69 million. The company expects depreciation and amortization in the range of $25 million to $27 million, and stock-based compensation in the range of $32 million to $34 million.

For the full year 2013, revenue is expected to range between $1.41 billion and $1.44 billion. Adjusted EBITDA is expected to range between $315 million and $330 million. The company expects depreciation and amortization in the range of $130 million to $135 million, and stock-based compensation in the range of $160 million to $165 million.

For the record, Barack Obama was the most viewed LinkedIn profile in 2012, with more than 526,000 views. 

(Image source: https://blogs.wsj.com)