GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

A Few Reasons Why LinkedIn Can See Solid Earnings Growth

August 19, 2014 | About:
kcpl

kcpl

0 followers

LinkedIn’s (LNKD) professional publishing platform is gaining steam and is on a roller coaster ride. The success is evident from its fantastic results in the second quarter of fiscal 2014. The company delivered a sequential improvement in the financials. It is ramping up its sales and has many new products in the pipeline. In addition, LinkedIn is expecting to benefit from the growing professional networking service segment. Let us have a closer look at LinkedIn’s underlying business.

An impressive performance

In the recently reported quarter, LinkedIn’s revenue clocked at $364 million, reporting a healthy 47% increase as compared to the same quarter a year ago. However, LinkedIn also reported a loss attributable to the common shareholders of $1 million. It lagged behind as compared to the profit of $3.7 million reported in the second quarter of fiscal 2013.

LinkedIn is growing as its recent results reveal. LinkedIn is pleased with the growth of the professional networking segment. The recent results by tech companies such as Twitter and Facebook were also an encouragement for LinkedIn. LinkedIn is continuing to invest in its member and customer offerings to enhance the overall offering of the platform, which will lead more customers to get linked with it.

Strategic moves

LinkedIn is also focusing on some strategic priorities. Under this, the company is increasing the scale of job opportunities. Moving ahead, LinkedIn is focusing on various aspects to improve its profitability. It is trying to make a bigger impression on the market by stretching its footprint. The company is geared up to push its sales.

The company finds corporate recruiters unreliable. So, LinkedIn has introduced a new version of Sales Navigator software. This new addition is expected to add 313 million users to LinkedIn’s database to offer sales people suggestions on potential customers, and then help them to find mutual acquaintances to get introductions. Also, the recent addition of Bizo by LinkedIn is expected to build a scalable and diverse business platform that will help customers add value to their profile over the entire LinkedIn network.

LinkedIn is seeing strength through its mobile segment. This segment continues to drive a growing share of engagement. With this segment, the company enables professionals to build and manage their identities to be more successful in their careers across multiple screens and devices. The company is putting solid effort here as this segment contributes about 45% of the total LinkedIn traffic.

Innovations

LinkedIn has also made some innovations to its overall appearance. It has revamped the design of profiles on its desktop site to make them more visually distinctive and personalized. The company also added a new facility to redesign the LinkedIn profile. It has helped members to define their identities more quickly and effectively. Further, the addition of Galene, which is new search architecture, has helped LinkedIn to see more user engagement. The company is expecting total page views to accelerate in the future.

It has also added Connected on iOS, which is a new mobile app, to its portfolio. This app is a smart move by the company to enhance its business. This is supported by the fact that active users of the app are using it on an average of more than four days per week. The catchy thing in this app is that it enables members to strengthen their professional relationship by delivering timely updates and opportunities to engage with the people in their network.

Another exciting effort by LinkedIn that will strengthen its long-term prospects is the acquisition of Newsle. Since it finds blogs and articles that mention people who may be professionally relevant and notifies within seconds after publication, it will be an attractive offer to the users, and this will lead to more user engagement as well. The company is aware of the growing level of mobile job interactions.

Conclusion

Looking at the financials, LinkedIn expects strong earnings growth in the future. Seeing the momentum at which the company is growing, it can be a good buy for the long run. Its earnings are expected to touch new highs as the company's earnings are expected to grow at a solid CAGR of 103.48%. There is a good chance that LinkedIn can turn out to be a good buy for the long run.


Rating: 2.0/5 (1 vote)

Voters:

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK