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LinkedIn Corporation (LNKD - Analyst Report) reported adjusted net earnings of 13 cents per share in the fourth quarter of 2012, well above the Zacks Consensus Estimate of 1 cent.

Revenues

Total revenues in the reported quarter were $303.6 million, up 81.0% from $167.7 million in the year-ago quarter. Strong performance in all of its segments drove the upside in revenues. Segment-wise, revenue from the Talent Solutions (previously named Hiring Solutions) products was $161.0 million, up 90.0% from the year-ago quarter.

Revenue from the Marketing Solutions was $83.2 million, up 27.0% from the year-ago quarter. This segment contributed 27.0% to the revenues in the fourth quarter of 2012, as against 30.0% in the year-ago period.

Premium Subscriptions recorded revenue of $59.4 million, up 79.0% from the year-ago period. As a percentage of total revenues, the segment’s contribution remained unchanged at 20%, compared with the year-ago period.

In the U.S., the company generated revenue of $189.0 million, approximately 62.0% of the total revenues in the quarter under review. Revenue from international markets totaled $114.6 million, approximately 38.0% of total revenues in the fourth quarter of 2012.

Operating Results

The company witnessed higher R&D, sales & marketing and administrative expenses, down to 23.0% of total revenues from 31.7% in the year-ago period. G&A expense, as a percentage of total revenues, declined to 13.2% versus 14.6% last year. Moreover, the company reported operating income of $26.7 million, up from the year-ago level of $10.0 million.

Net profit on a GAAP basis, in the fourth quarter of 2012, was $11.5 million or 10 cents versus a loss of $6.9 million or 6 cents in the fourth quarter of 2011. Excluding special items like amortization of intangibles but including stock-based compensation, non-GAAP earnings came at $14.3 million or 13 cents per share.

Balance Sheet

LinkedIn ended the quarter with cash and cash equivalents of $270.4 million versus $676.6 million in the prior quarter. Accounts receivable in the quarter was $203.6 million compared with $156.4 million in the previous quarter. Total deferred revenues in the quarter were $257.7 million, up from $209.0 million in the previous quarter.

Guidance

The company expects first-quarter 2013 revenues in the range of $305.0–$310.0. Whereas, adjusted EBITDA is expected to range between $67.0 million and $69.0 million. Depreciation and amortization is expected in the range of $25.0 million to $27.0 million.

For full year 2013, total revenues are expected to range between $1.41 billion and $1.44 billion. Adjusted EBITDA is expected between $315 million and $330 million. Moreover, depreciation and amortization is expected between $130.0 million to $135.0 million.

Conclusion

Upbeat results for the fourth quarter of fiscal 2012 keep us optimistic on the stock. Reported earnings have also exceeded our estimates. LinkedIn, a leader in the emerging online professional networking segment, has gained popularity across the globe and has grown steadily over the recent past.

The Talent Solutions and Premium Subscription segments were particularly strong. Moreover, the cost-control measures aided bottom-line improvement.

Linkedln currently carries a Zacks Rank #3 (Hold). In the current scenario, the company does not face intense competition in the professional networking space. However, the emergence of companies like ValueClick Inc. could change the scenario rapidly over the next few years.

Though we remain on the sidelines for Linkedln, other stocks in the technology space like CA Inc. (CA - Analyst Report), carrying a Zacks Rank #2 (Buy), and Symantec Inc. (SYMC - Analyst Report), carrying a Zacks Rank #1 (Strong Buy), are worth considering.

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