LinkedIn follows up IPO with strong 2011 outlook

NEW YORK/LOS ANGELES Fri Aug 5, 2011 10:12am IST

The sign up page of Linkedin.com is seen in Singapore, May 20, 2011. REUTERS/David Loh/Files

The sign up page of Linkedin.com is seen in Singapore, May 20, 2011.

Credit: Reuters/David Loh/Files

Related Topics

NEW YORK/LOS ANGELES (Reuters) - LinkedIn Corp projected faster-than-expected 2011 revenue growth after chalking up a surprise second-quarter profit, as the professional networking site sets off to prove it can fulfill the promise of its monster IPO and rich valuation.

Shares of the company -- whose services are used by professionals seeking jobs or contacts and companies hoping to fill vacancies -- climbed almost 5 percent in after-hours trade, recouping some of their 9.6 percent loss during the regular session in which markets tanked.

They have more than doubled since LinkedIn's monster May debut, when it became the first prominent U.S. social networking site to go public, whetting the appetite of investors for a Facebook IPO while fanning fears of another dotcom bubble reminiscent of the late 1990s.

Investors pored over the company's first full results report for clues as to whether the stock's lofty valuation at more than 30 times 2010 sales was justified. They picked out healthy growth in both revenue and members.

The Mountain View, California company had warned it will not be profitable in 2011 as it shovels funds into expansion -- hiring field sales representatives and launching new products. But investors brushed off those concerns for now.

"We see great things for it. Some of what is happening in the marketplace is, investor demand for social media companies is taking precedence over the cash value of the underlying shares," said Evercore Partners analyst Ken Sena.

"They did set the bar really low. The numbers needed to be good to support the lofty valuation."

LinkedIn will now try to sustain its growth both by encouraging its 120 million-odd members to consistently use the site and seek out new international audiences, though the U.S. job market struggles to get out of a persistent slump.

It forecast third quarter revenue of $121 million to $125 million, ahead of analysts' projections for $111.8 million. And the company foresees revenue of $475 million to $485 million in 2011, again ahead of estimates for $467.7 million.

FROM LIVING ROOM TO NYSE

LinkedIn is one of clutch of closely watched Internet social media companies -- including Groupon, Zynga, Twitter and Facebook -- that have stoked investor interest and seen their valuations balloon.

The company -- started in the living room of ex-PayPal executive Reid Hoffman who co-founded the company in 2002 -- makes money by selling premium subscriptions to its members and by helping companies with hiring and marketing.

Its membership base -- a closely watched metric as the underpinnings of its hiring and advertising business model -- climbed to 115.8 million at the end of June, up 61 percent.

LinkedIn said second-quarter revenue leapt 120 percent to $121.0 million, surpassing an average forecast of $104.73 million according to Thomson Reuters I/B/E/S.

Second-quarter net profit rose slightly to $4.5 million from $4.3 million a year earlier. Excluding certain items, it earned 4 cents a share, outstripping forecasts for a loss of 3 cents a share.

In particular, revenue from hiring solutions, or services that help companies hire employees -- which makes up the bulk of the social network's business -- surged 170 percent to $58.6 million, racing past expectations.

Revenue from marketing solutions jumped 111 percent to $38.6 million, while sales of premium subscriptions rose a more sedate 60 percent to $23.9 million.

Shares of the company gained about 5 percent to $99.80 in after-hours trade, after shedding more than 9 percent of their value to close at $95.52 in regular NYSE trading.

(Editing by Gary Hill, Richard Chang and Bernard Orr)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Wal-Mart India

Wal-Mart India

Murali Lanka appointed as Wal-Mart India operations chief  Full Article 

Microsoft Earnings

Microsoft Earnings

Microsoft sales beat Street hopes, cloud profits up.  Full Article 

Special Report

Special Report

Why Madrid's poor fear Goldman Sachs and Blackstone  Full Article 

U.S. Economy

U.S. Economy

Spectre of no-inflation world looms over Fed's return to normal  Full Article 

Insider Trading

Insider Trading

Rengan Rajaratnam, SEC to settle civil insider trading charge.  Full Article 

Market Watch

Market Watch

Betting on the beaten up? Investors pin hopes on stocks in Europe, Japan.  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage