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LinkedIn Corp (NYSE:LNKD)
Gross Profit
$1,454 Mil (TTM As of Mar. 2014)

LinkedIn Corp's gross profit for the three months ended in Mar. 2014 was $411 Mil. LinkedIn Corp's gross profit for the trailing twelve months (TTM) ended in Mar. 2014 was $1,454 Mil.

Gross Margin is calculated as gross profit divided by its revenue. LinkedIn Corp's gross profit for the three months ended in Mar. 2014 was $411 Mil. LinkedIn Corp's revenue for the three months ended in Mar. 2014 was $473 Mil. Therefore, LinkedIn Corp's Gross Margin for the quarter that ended in Mar. 2014 was 86.80%.

LinkedIn Corp had a gross margin of 86.80% for the quarter that ended in Mar. 2014 => Durable competitive advantage

During the past 5 years, the highest Gross Margin of LinkedIn Corp was 87.09%. The lowest was 78.48%. And the median was 85.57%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

LinkedIn Corp's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=1528.545 - 202.908
=1,326

LinkedIn Corp's Gross Profit for the quarter that ended in Mar. 2014 is calculated as

Gross Profit (Q: Mar. 2014 )=Revenue - Cost of Goods Sold
=473.193 - 62.455
=411

LinkedIn Corp Gross Profit for the trailing twelve months (TTM) ended in Mar. 2014 was 314.397 (Jun. 2013 ) + 339.565 (Sep. 2013 ) + 389.354 (Dec. 2013 ) + 410.738 (Mar. 2014 ) = $1,454 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

LinkedIn Corp's Gross Margin for the quarter that ended in Mar. 2014 is calculated as

Gross Margin (Q: Mar. 2014 )=Gross Profit (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=411 / 473.193
=86.80 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

LinkedIn Corp had a gross margin of 86.80% for the quarter that ended in Mar. 2014 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

LinkedIn Corp Annual Data

Dec09Dec10Dec11Dec12Dec13
Gross_Profit 000009404418471,326

LinkedIn Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Gross_Profit 144163198218267282314340389411
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