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LinkedIn (LNKD) Q3 Earnings and Revenues Beat Estimates
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LinkedIn Corporation reported better-than-expected results for the third quarter of 2016. The professional networking company posted adjusted earnings (excluding accretion of redeemable non-controlling interest, amortization of intangible assets and non-cash interest expense but including stock-based compensation) on a proportionate tax basis of 39 cents. The Zacks Consensus Estimate was pegged at 27 cents. However, in the year-ago quarter, the company had incurred adjusted loss of 6 cents.
On a GAAP basis, LinkedIn reported earnings of 6 cents per share, while in the year-ago quarter, it had posted a loss of 36 cents.
LinkedIn’s third-quarter revenues surged 23.1% year over year to $959.8 million and came ahead of the Zacks Consensus Estimate of $956 million. The year-over-year upside was largely backed by the company’s ongoing investments in mobile, global expansion of content and jobs, and the acquisitions of lynda.com and Connectifier.
Segment-wise, revenues at Talent Solutions surged 24% from the year-ago quarter to $623 million. Revenues at Marketing Solutions jumped 26% to $175 million driven primarily by higher sponsored updates. LinkedIn garnered $162 million in revenues from Premium Subscriptions, up 17%.
LinkedIn’s cumulative member count rose 18% to 467 million at the third quarter end. The company witnessed a 6% increase in unique visiting members and a 27% surge in member page views.
Geographically, LinkedIn’s revenues from the U.S. increased 21.4% on a year-over-year basis to $588.2 million. International revenues, which comprise Other Americas (Canada, Latin America and South America), the Europe, Middle East & Africa (EMEA), and the Asia-Pacific (APAC) regions, jumped 25.8% to $371.6 million. Meanwhile, revenues from Other Americas, EMEA and APAC increased 16.3%, 25.6% and 33%, respectively.
Total costs and expenses in the quarter rose 14.8% to $936.7 million. As a percentage of revenues, total costs and expenses were 97.6%, compared with 104.7% a year ago.
On an adjusted basis (excluding amortization of intangible assets but including stock-based compensation), the company posted operating income of $66.2 million in the quarter under review, registering more than a six-fold jump over the year-ago quarter’s level of $9.8 million.
LinkedIn ended the quarter with cash, cash equivalents and marketable securities of $3.365 billion, compared with $3.312 billion in the preceding quarter. During the quarter, the company generated approximately $373.3 million in cash flow from operations, while that for the first nine months of 2016 was $957.9 million.
Our Take
LinkedIn, a leader in the emerging online professional networking segment, enjoys increasing popularity and steady growth worldwide. The company posted better-than-expected results in the third quarter and witnessed a strong year-over-year improvement on both fronts. Moreover, it recorded an impressive 18% surge in the cumulative member count.
However, the company has neither updated its outlook for 2016 nor did it hold a conference call, all because of its pending merger with Microsoft Corp. (MSFT - Free Report) . Notably, the two companies entered into a merger agreement on Jun 11, under which Microsoft will acquire LinkedIn for a total cash consideration of approximately $26.2 billion.
LinkedIn’s traction in the mobile segment is particularly impressive, owing primarily to the launch of its applications for Apple’s (AAPL - Free Report) iPhones and Android-based smartphones. Synergies from its acquisitions — Lynda.com, Newsle and Bizo — are expected to contribute to earnings through targeted marketing strategies over the long term, apart from enhancing user experience.
We believe that LinkedIn’s initiatives to boost advertising revenues through product launches and partnership programs are noteworthy. Meanwhile, advertisers are taking note of the company’s growing user base, in our view.
LinkedIn’s investments in strategic products are essential as its peers like Facebook and Twitter have started looking for opportunities to expand in the professional networking space.
On the flip side, continued investments in new and improved products and services might dent LinkedIn’s profits in the short term, even though, over the long run, these investments will drive member growth and user engagement.
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LinkedIn (LNKD) Q3 Earnings and Revenues Beat Estimates
LinkedIn Corporation reported better-than-expected results for the third quarter of 2016. The professional networking company posted adjusted earnings (excluding accretion of redeemable non-controlling interest, amortization of intangible assets and non-cash interest expense but including stock-based compensation) on a proportionate tax basis of 39 cents. The Zacks Consensus Estimate was pegged at 27 cents. However, in the year-ago quarter, the company had incurred adjusted loss of 6 cents.
On a GAAP basis, LinkedIn reported earnings of 6 cents per share, while in the year-ago quarter, it had posted a loss of 36 cents.
LinkedIn’s third-quarter revenues surged 23.1% year over year to $959.8 million and came ahead of the Zacks Consensus Estimate of $956 million. The year-over-year upside was largely backed by the company’s ongoing investments in mobile, global expansion of content and jobs, and the acquisitions of lynda.com and Connectifier.
Segment-wise, revenues at Talent Solutions surged 24% from the year-ago quarter to $623 million. Revenues at Marketing Solutions jumped 26% to $175 million driven primarily by higher sponsored updates. LinkedIn garnered $162 million in revenues from Premium Subscriptions, up 17%.
LinkedIn’s cumulative member count rose 18% to 467 million at the third quarter end. The company witnessed a 6% increase in unique visiting members and a 27% surge in member page views.
Geographically, LinkedIn’s revenues from the U.S. increased 21.4% on a year-over-year basis to $588.2 million. International revenues, which comprise Other Americas (Canada, Latin America and South America), the Europe, Middle East & Africa (EMEA), and the Asia-Pacific (APAC) regions, jumped 25.8% to $371.6 million. Meanwhile, revenues from Other Americas, EMEA and APAC increased 16.3%, 25.6% and 33%, respectively.
Total costs and expenses in the quarter rose 14.8% to $936.7 million. As a percentage of revenues, total costs and expenses were 97.6%, compared with 104.7% a year ago.
On an adjusted basis (excluding amortization of intangible assets but including stock-based compensation), the company posted operating income of $66.2 million in the quarter under review, registering more than a six-fold jump over the year-ago quarter’s level of $9.8 million.
LINKEDIN CORP-A Price, Consensus and EPS Surprise
LINKEDIN CORP-A Price, Consensus and EPS Surprise | LINKEDIN CORP-A Quote
Balance Sheet & Cash Flow
LinkedIn ended the quarter with cash, cash equivalents and marketable securities of $3.365 billion, compared with $3.312 billion in the preceding quarter. During the quarter, the company generated approximately $373.3 million in cash flow from operations, while that for the first nine months of 2016 was $957.9 million.
Our Take
LinkedIn, a leader in the emerging online professional networking segment, enjoys increasing popularity and steady growth worldwide. The company posted better-than-expected results in the third quarter and witnessed a strong year-over-year improvement on both fronts. Moreover, it recorded an impressive 18% surge in the cumulative member count.
However, the company has neither updated its outlook for 2016 nor did it hold a conference call, all because of its pending merger with Microsoft Corp. (MSFT - Free Report) . Notably, the two companies entered into a merger agreement on Jun 11, under which Microsoft will acquire LinkedIn for a total cash consideration of approximately $26.2 billion.
LinkedIn’s traction in the mobile segment is particularly impressive, owing primarily to the launch of its applications for Apple’s (AAPL - Free Report) iPhones and Android-based smartphones. Synergies from its acquisitions — Lynda.com, Newsle and Bizo — are expected to contribute to earnings through targeted marketing strategies over the long term, apart from enhancing user experience.
We believe that LinkedIn’s initiatives to boost advertising revenues through product launches and partnership programs are noteworthy. Meanwhile, advertisers are taking note of the company’s growing user base, in our view.
LinkedIn’s investments in strategic products are essential as its peers like Facebook and Twitter have started looking for opportunities to expand in the professional networking space.
On the flip side, continued investments in new and improved products and services might dent LinkedIn’s profits in the short term, even though, over the long run, these investments will drive member growth and user engagement.
Currently, LinkedIn carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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