Search Results for: linkedin

By Adam Fraser

LinkedIn has learned a lot about the harsh realities of life as a listed company in the last quarter. Having lost more than 40% in value when it announced its last results, the market received its Q1 2016 results (released end of April) more favourably with the stock bouncing up 15%.

The Q1 results were generally very strong – with growth in revenue, profit and users from the equivalent quarter a year earlier. Importantly there was growth across all areas of the business – Talent Solutions, Marketing Solutions and Subscriptions and the guidance for future quarters was stronger than expected.

If you want to dive into the full detail you can find the financials, investor presentation and investor conference call. If you just want the headlines, here are 10 key take-aways:

1. Members grew to 433m, from 414m in the prior quarter (4.6% growth) and 364m a year earlier (19.0% growth).
2. Unique visiting members (ie active members) were 106m, up on the prior quarter of 100m and 9.3% higher than the 97m active users a year ago. It is still interesting to see that less than 25% of total members are actually active on the platform and surprising we don’t hear more from management about strategies to drive dormant members to active; this would appear to be the lowest hanging fruit to true user growth.
3. 58% of monthly users are accessing LinkedIn via a mobile, up from 50% a year earlier but still well below the 90+% of Facebook’s users who access via mobile . The recent release of its new app is assisting here.
4. Talent Solutions remains the dominant division, driving 65% of LinkedIn’s revenue in Q1 2016, which is up on 62% from the same quarter in 2015. Marketing solutions (driven by sponsored updates) and subscriptions (driven by sales navigator) continue to contribute just under 20% each. LinkedIn’s attempts to diversify away from relying on recruitment related revenue remain only a partial success.
5. Financials for the quarter were strong, with revenue of $861m (35% increase on prior year) and EBITDA of $222m (39% increase on the prior year).
6. LinkedIn provided guidance for FY16 revenue of approx $3.7bn and adjusted EBITDA of $1bn. This was above market expectations, which helped the share price
7. Importantly, a key engagement metric moved higher in the quarter with member page views increasing to 45bn from 37bn in the previous quarter and 34bn a year ago. Higher page views shows growth in true organic activity, a key metric for a social network liked LinkedIn.  During the quarter, viral actions increased more than 80%, daily shares were up nearly 40%, and traffic to third-party publishers grew more than 150%. All important metrics.
8. LinkedIn remains a reasonably US centric platform, with the USA contributing 61% of total group revenue, which is flat on both the prior quarter and a year ago
9. LinkedIn continues to focus on (and invest in) its big data and predictive analytics capability; last quarter it announced it had acquired a tech start up Connectifier further boosting its ability to identify and match job searchers and seekers.  The next generation of Recruiter, unveiled late last year, is the foundation of LinkedIn’s long-term growth strategy. Initial results are promising, with the number of candidates viewed per search up more than 40%, and InMails per search up more than 30%. By the end of Q2, the majority of customers are expected to have converted to the new version of Recruiter.
10. Other focus areas are driving integration to CRM for Sales Navigator and integrating technology from Lynda.com into the overall online training offerings.

In summary a much improved set of results for LinkedIn compared to the prior quarter, with revenue, users and engagement metrics all moving in the right direction. LinkedIn should not get complacent as apps such as Glass Door circle, but it remains very well positioned in the B2B content, network and marketing space.

By Adam Fraser.

LinkedIn, like its distant cousin Twitter, is learning about the harsh realities of life as a listed company.

On the face of it, it’s Q4 results were very strong – with growth in revenue, profit and users. Yet Wall Street didn’t like the guidance it heard for FY2016 growth and smashed the stock down by 44%. Yep – almost half the value of the company lost in a single day. Listed company life may look glamorous but it’s a wild ride. And as Twitter is finding, negative sentiment around a stock price over a long enough period of time can seep into sentiment around the platform as a whole.

If you want the full detail you can plough through the financials, investor presentation and investor conference call. If you just want the headlines, here are 10 take-aways:

1. Members grew to 414m, from 396m in the prior quarter (4.5% growth) and 347m a year earlier (19.3% growth).
2. Unique visiting members (ie active members) were 100m, flat on prior quarter of 100m and 7.5% higher than the 93m active users a year ago. Interesting to see that less than 25% of total members are actually active on the platform. I am surprised we don’t hear more from management about strategies to drive dormant members to active, as this would appear to be the lowest hanging fruit to true user growth.
3. 57% of monthly users are accessing LinkedIn via a mobile, up from 49% a year earlier but still well below the 90+% of Facebook’s users who access via mobile . The recent release of its new app is assisting here.
4. Despite its noble attempts to diversify its income streams away from pure recruitment related activity, Talent Solutions remains the dominant division, driving 63% of LinkedIn’s revenue in FY2015, which is actually an increase on the FY2014 total of 60%. Marketing solutions (driven by sponsored updates) and subscriptions (driven by sales navigator) continue to contribute around 20% each.
5. Financials for the fourth quarter were strong, with revenue of $862m (34% increase on prior year) and EBITDA of $249m (39% increase on the prior year). Full year results showed revenue just under $3bn and EBITDA of $780m. Significant numbers, but the guidance for next year was the key focus of the market.
6. LinkedIn provided guidance for FY16 revenue of approx $3.6bn which was well below market expectations of around $3.9bn. EPS guidance was $3.05-$3.20 per share versus an expectation of $3.67. The management commentary around the reasons for the slowing growth were largely ambiguous. Credibility wasn’t helped by a $50m write down related to a previous acquisition. Result – a spooked market which smashed the stock.
7. A key engagement metric moved lower in the quarter with member page views dropping to 37bn from 38bn in the previous quarter. Whilst still a healthy increase on a year ago (30 bn) any hint of a decline in engagement is a key concern. Something to watch closely next quarter.
8. LinkedIn remains a reasonably US centric platform, with the USA contributing 60% of total group revenue
9. LinkedIn continues to focus on (and invest in) its big data and predictive analytics capability; it announced it had acquired a tech start up Connectifier further boosting its ability to identify and match job searchers and seekers
10. Management observed weakness across a few areas heading into 2016 – including, importantly, field sales growth in its Talent Solutions business as well as some global economic related headwinds.

It is important to distinguish between weakness in true operating activity versus delivering a lower outcome than the stock market had forecasted.  A 44% stock price correction in one day seems perhaps overdone, but there were enough worrying items in a mixed bag of results to justify a sell decision if that’s what you wanted to see. The market in its current mood is selling first and asking questions later.