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LinkedIn Had Good News and Bad News

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LinkedIn Had Good News and Bad News

Aug 3 2015, 10.15am GMT


LinkedIn Corp., which released its second quarter earnings on Thursday, reported an unexpected increase in profit in an indication that its strategic shift is bearing dividends.

The company has been modifying its recruiting tools as well as the approach to its advertising segment. Users tend to spend very little time on LinkedIn, using the service to update resumes and to do job searches, while the company wants visitors to the site to stay logged on for longer periods and to make more use of it as social platform.

This quarterly report was the first from LinkedIn since the completion of the acquisition of Lynda.com in May for $1.5 billion. This has been the company’s biggest acquisition thus far, giving LinkedIn access to a substantial library of professional training services. The rationale is that LinkedIn members will spend more time logged on to the professional network. The Lynda.com acquisition resulted in additional sales revenue of $18 million for the second quarter.

The company reported a loss of $67.7 million which relates to 53 cents per share for the second quarter of 2015 compared to a loss of $1 million in the same period last year.

Recalculation, excluding stock based and other special items, meant that earnings rose to $71 million which means a return of 55 cents a share, up from the $63 million and 53 cents a share in the second quarter of 2014. The EPS is well above the analyst forecast of 30 cents a share and resulted in a jump of almost 10% in the share price before retreating. The price fell back in the face of investor belief that the better than expected earnings were the result of the Lynda.com purchase rather than from a recovery of LinkedIn’s core business.

The revenue for the quarter increased by 33% to $711.7 million which exceeded the company’s own revenue forecast of $670 - $675 million. The figure also beat the average analyst estimate on Thomson Reuters of $68 million.

LinkedIn revised its full year revenue estimate upwards to $2.94 billion from the $2.9 billion it had forecast in April. Expectations for earning for the full year were increased from $1.90 a share to a revised figure of $2.19 a share.

Meanwhile, two news apps are being tested in an attempt to follow the Facebook example and to unbundle its services by offering a portfolio of apps. The company lags very far behind other social platform sites such as Facebook and Twitter with regard to advertising revenue, where both opposition companies had reported increases in advertising.

One of the problems facing LinkedIn is that subscribers rate it as the lowest ranking social media site, according to a recent American Customer Satisfaction index. Premium subscribers who pay for additional features gave the company particularly low ratings. LinkedIn has remodeled its messaging system as well as reduced the number of emails subscribers received in its efforts to improve the user opinion of its range of services.

MT4 Chart: LinkedIn

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