Shares of LinkedIn (NYSE:LNKD.DL) soared more than 7% briefly, and then settled to up just more than 2% in Thursday late trading, as investors cheered results and guidance that outperformed estimates. Here's a closer look at the Q2 totals versus Wall Street's projections:
|LNKD||Revenue||YOY Growth||EPS||YOY Growth|
|Consensus estimate||$680.08 million||27.4%||$0.30||(41.2%)|
|Q2 actual||$711.74 million||33.3%||$0.55||7.8%|
Commenting on the results, CEO Jeff Weiner said in prepared remarks for today's call with analysts:
Q2 cumulative members grew 21%, to 380 million, unique visiting members grew 16%, to an average of 97 million per month, and member page views grew 37%, an acceleration over Q1's growth rate and well ahead of unique member growth. Mobile continues to grow at double the rate of overall member activity, and now represents 52% of all traffic to LinkedIn.
What went right: Weiner also credited the lynda.com learning platform as a catalyst during the quarter, saying that LinkedIn is adding "more than 150 courses per month." He also noted that one promotional campaign outperformed expectations by 7x in terms of generating new subscribers. As a business unit, lynda.com added $17.6 million in revenue in the second quarter, pushing overall Talent Solutions sales up 37.6% year over year.
What went wrong: Premium subscriptions still remains the weakest part of LinkedIn's business, up just 22% over last year's Q2. Marketing Solutions revenue grew 31.5% over the same period as advertising-driven Sponsored Updates more than doubled to account for nearly 50% of segment sales. Helping publishers find their audience is proving to be good business for LinkedIn.
What's next: Looking ahead, LinkedIn expects $745 to $750 million in third-quarter revenue, resulting in $146 to $148 million in adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, and $0.43 a share of profit after accounting for stock-based compensation and other noncash items.
Analysts tracked by S&P Capital IQ had the company generating $744.44 million in revenue and $0.42 a share in adjusted earnings. That compares with $568.27 million and $0.52 a share in last year's Q3. Longer term, analysts have LinkedIn growing earnings by an average of 41.67% annually during the next three to five years.
In the meantime, investors shouldn't worry too much about the Premium Subscriptions group. So long as engagement remains high, the underlying business should continue to perform well. (In Q2, users engaged 60% more with LinkedIn feeds while jobs-related pages attracted 40% more unique visitors.)
Tim Beyers is usually linked into multiple projects at once. He's also a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission but didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool.
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