First Twitter then Facebook and now LinkedIn has succeeded in posting strong earnings while beating the analyst predictions. The company reported earnings of 55 cents per share and revenue of $712 million. Analysts estimated that the company would bring in 30 cents per share on $680.3 million in revenue.
As the news broke, LinkedIn stocks jumped more than 14% after-hours. However, the stock settled, then dropped, and hovered at -1.2% before the earnings call.
Here are the key takeaways from the LinkedIn Q2 2015 earnings report:
1. 33% YOY increase in revenues
LinkedIn reported its second quarter earnings today, posting revenue of $712 million, an increase of 33 percent over last year at this time.
Providing a breakdown, LinkedIn said that Talent Solutions revenue (inclusive of Learning & Development) was $443 million, an increase of 38% compared to the same quarter last year. Marketing Solutions revenue was $140 million, an increase of 32% compared to the same quarter last year and Premium Subscriptions revenue was $128 million, an increase of 22% compared to the same quarter last year.
Sponsored Updates remained strong during the quarter, now contributing approximately 45 percent of overall Marketing Solutions. 80% of Sponsored Updates now comes from mobile. However, Display revenue continued to decline, decreasing approximately 30% year-over-year versus a 10% decline in the first quarter. The decline isn’t a worry for LinkedIn since it has decided to move away from display and focus on product areas. “We continue to shift our portfolio towards native content marketing and lead generation,” informed Steve Sordello, CFO LinkedIn Corporation.
The company said it was expecting revenue between $745 million and $750 million in the third quarter, along with earnings of 42 cents per share. Analysts expected guidance of 42 cents per share on revenue of $744.4 million for the third quarter.
2. 70% users are international
The career-focused social media network has always shown a strong global user growth. Nearly 70 percent of LinkedIn members are from outside the United States, including 10 million in China.
LinkedIn further reported that it has added 16 million people since Q2 to push its total to 380 million generating 35 billion pageviews.. That’s a 21 percent jump since Q2 of 2014. The company reported 97 million unique visiting members during the quarter, up 16 percent since 2014 but the same total who visited last quarter.
Unique visiting members to jobs-related pages improved approximately 40% year-over-year, while the recently launched Job Search app reached more than 3 million activation from approximately 1 million during the first quarter. In addition, the number of jobs on the platform also increased to nearly 4 million from approximately 1 million last year.
Interestingly, LinkedIn hasn’t revealed specific numbers on how mobile is shaping the growth but has just informed that its flagship desktop and mobile product experience, is leading to approximately 60% increase in year-over-year feed engagement, and search traffic is growing meaningfully faster than overall member activity.
3. China, second largest market for new signups
From early last year LinkedIn became serious with the Chinese market by opening an official presence in the country. LinkedIn is also the only social network that has agreed to work under the laws and regulations of the Chinese government. Today China is the second largest market for new signups behind the US.
Sharing more details of the LinkedIn growth in the Chinese market, Jeff Weiner, CEO LinkedIn stated that the company has built strategic relationships with many of the largest Chinese web platforms including WeChat, QQMail, Alibaba, and Alipay.
LinkedIn has also launched a professional networking app designed exclusively for the Chinese market. “Also, this month, our local Chinese development team beta-launched a new app called ‘Chitu’. Chitu, our first professional networking app designed exclusively for the Chinese market, is currently invitation-only. Despite that, early interest is strong, reaching tens of thousands of signups in the first three days since launch,” said Jeff.
4. Lynda contributed $18 million in revenue
LinkedIn seemed to be pretty positive about the future growth of Lynda which the company had acquired earlier this year for $1.5 billion. Lynda, an online learning company was founded in 1995 by technical skill instructional book author Lynda Weinman and co-founder Bruce Heavin. Lynda has long been the go-to resource for online learning on subjects like Photoshop, basic HTML, CSS, management practices and many more, offering instructional videos and tutorials from industry experts and vets long before e-learning was at anywhere near the level of interest it enjoys today.
Lynda now has more than 6,800 total courses and 280,000 videos across five languages. The content team has continued to launch new features, and is adding more than 150 courses per month. It has also contributed to the Q2 results of $18 million in revenue. “We are increasingly encouraged by Lynda’s long-term potential as we gain greater familiarity with Lynda’s core assets.”
LinkedIn now expects $90 million from Lynda for the full year versus the original guidance of $40 million, impacted by “an earlier than expected close, a lower than anticipated deferred revenue write-down, and moderate over-performance in the early-going.”
However, during the earnings call, the stock fell more than 7 percent, during comments about the incremental impact of the company’s core profitability related to the guidance change for Lynda.