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LinkedIn Corp  (NYSE:LNKD) Gross Profit: \$3,138 Mil (TTM As of Sep. 2016)

LinkedIn Corp's gross profit for the three months ended in Sep. 2016 was \$840 Mil. LinkedIn Corp's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was \$3,138 Mil.

Gross Margin % is calculated as gross profit divided by its revenue. LinkedIn Corp's gross profit for the three months ended in Sep. 2016 was \$840 Mil. LinkedIn Corp's Revenue for the three months ended in Sep. 2016 was \$960 Mil. Therefore, LinkedIn Corp's Gross Margin % for the quarter that ended in Sep. 2016 was 87.52%.

LinkedIn Corp had a gross margin of 87.52% for the quarter that ended in Sep. 2016 => Durable competitive advantage

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Gross Profit 440.74 846.79 1,325.64 1,924.97 2,572.05

 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Gross Profit 668.23 742.90 743.12 812.19 840.02

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.

Calculation

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. 2015 is calculated as

 Gross Profit (A: Dec. 2015 ) = Revenue - Cost of Goods Sold = 2990.911 - 418.858 = 2,572

LinkedIn Corp's Gross Profit for the quarter that ended in Sep. 2016 is calculated as

 Gross Profit (Q: Sep. 2016 ) = Revenue - Cost of Goods Sold = 959.787 - 119.772 = 840

Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was 742.896 (Dec. 2015 ) + 743.122 (Mar. 2016 ) + 812.188 (Jun. 20 ) + 840.015 (Sep. 2016 ) = \$3,138 Mil.

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

LinkedIn Corp's Gross Margin % for the quarter that ended in Sep. 2016 is calculated as

 Gross Margin % (Q: Sep. 2016 ) = Gross Profit (Q: Sep. 2016 ) / Revenue (Q: Sep. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 840 / 959.787 = 87.52 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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 87.52% for the quarter that ended in Sep. 2016 => Durable competitive advantage

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