LinkedIn Corp. (NYSE: LNKD) will host a conference call to discuss its third quarter financial results and business outlook on Oct. 29, 2013, at 2:00 p.m. Pacific Time, following the release of the company's financial results.
Founded in 2003, Silicon Valley-based LinkedIn connects the world's professionals. With more than 238 million members worldwide, including executives from every Fortune 500 company, LinkedIn is the world's largest professional network on the Internet.
The company has a diversified business model with revenue coming from Talent Solutions, Marketing Solutions, and Premium Subscriptions products.
Wall Street expects LinkedIn to earn 32 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies 45.5 percent growth from 22 cents a share in the same quarter last year.
LinkedIn's earnings have managed to surpass Street estimates in all of the past four quarters, with upside surprise ranging between 22.60 and 100 percent. The consensus estimate remained unchanged over the past 90 days, and one analyst has raised the earnings view in the last month.
Quarterly revenue is projected to grow 52.90 percent to $385.42 million from $252.03 million in the corresponding quarter prior year. The company forecasts third quarter revenue of $367 million and $373 million.
LinkedIn is witnessing solid growth in membership as employees know that more and more employers are accessing LinkedIn for their recruitment needs, creating more sign-ups and paid premium features offered by the site.
The company's investments in developing new products have lead to higher user engagement and better advertising opportunities. Recently, LinkedIn launched a tool called Intro that shares user information on iPhone email. It also works with Gmail, Yahoo Mail, AOL Mail, while the company plans to update the feature to suit Microsoft's Outlook.com and Exchange email.
The Street would look at how LinkedIn's efforts to improve ad revenue a! re faring as it currently represents about 20 percent of total sales.
The company launched sponsored updates late July, letting more than 3 million companies with profiles target users on their front pages. The move would allow business to test sponsored updates apart from the traditional usage of display ads, thereby opening up a new source of revenue. The market should look for more updates on this front.
For the first two months of the quarter, worldwide comScore data for LinkedIn sites showed 41 percent growth in unique visitors globally, 54 percent growth in total minutes, and 34 percent growth in total page views.
US desktop data suggested a 33 percent rise in unique visitors, a 38 percent growth in total minutes, and a 23 percent increase in total page views. U.S. mobile data for LinkedIn showed that unique mobile visitors and total user minutes (for iPhone + Android) were up significantly by 45 percent and 72 percent, respectively.
In August, LinkedIn announced the launch of University Pages and opened its platform to high school students (age 13 and up) on Sept. 12.
"We expect these launches to have contributed to member growth and engagement during the quarter. Longer term, we believe this widens the funnel for member acquisition (resulting in lower member acquisition costs) and will enable new forms of monetization," UBS analyst Eric Sheridan wrote in a note to clients.
The Street would look forward to management's broader thoughts around its strategy in this arena going forward.
Meanwhile, UBS proprietary data suggests an 85 percent increase in the number of job US job postings listed on LinkedIn, and an 84 percent increase internationally. These high levels of growth are encouraging and would boost Talent Solutions unit, which accounts for 56 percent of sales.
Revenue from Talent Solutions products climbed 69 percent to $205.1 million for the second quarter. The segment includes LinkedIn Job Slots and the LinkedIn Corporate Solutions suite.
"We ! model a 57% increase in corporate solutions customers and a 2.5% increase in revenue per customer," Sheridan noted.
Marketing Solutions revenue is another key segment, and it would be driven by recent engagement initiatives and increased advertiser interest in reaching LinkedIn's demographic (high-income professionals and business decision makers).
Marketing Solutions, which represents 24 percent of total revenue, recorded sales growth of 36 percent to $85.6 million in the last quarter.
Revenue from Premium Subscriptions products advanced 68 percent to $73.0 million in the second quarter. The third quarter too is expected to witness similar level of growth.
The 2013 revenue outlook could be another focus as the company has raised the forecast last quarter. The company sees full year 2013 revenue of $1.455 billion to $1.475 billion. Analysts currently expect the company to post revenue of $1.51 billion for the full year.
For the second quarter, LinkedIn earned $3.7 million, 3 cents a share, compared to $2.8 million or 3 cents a share for the year-ago quarter. Excluding items, it earned 38 cents a share, better than the 31 cents expected by the Street. Revenue for the second quarter rose 59 percent to $363.66 million and topped Street's revenue view of $353.85 million for the second quarter.
In LinkedIn's short history as a public company, the stock has traded down after both of its prior third quarter earnings reports for an average of a 3 percent loss. The stock has outperformed the market by 78 percent this year.
"The options market is currently implying a one-day move of 10%, which is higher than the stock's average absolute move post Q3 results (3%.)," Sheridan added.
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