Founded in 2003 and headquartered in Mountain View, CA, LinkedIn (LNKD) is a leader in online professional networking. With more than 450 million members worldwide, the company is the world's largest online professional network.
They have a diversified business model with Talent Solutions, Marketing Solutions, and Premium Subscriptions products operating segments.
Strong Q2 Results
The company reported better-than-expected results for the second quarter of 2016, with strong year-over-year growth in both the top and the bottom lines.
Revenues surged 31% to $932.7 million, from $711.7 million, driven mainly by 35% increase in revenues at Talent Solutions to $597 million. However, the loss increased to $0.89 cents per share, from $0.53 per share, on a GAAP basis, mainly due to a $101 million expense related to tax assets.
Adjusted earnings (including stock-based compensation) came in at $0.06 per share, significantly better than the Zacks Consensus Estimate for a loss of $0.06 per share and the loss of $0.30 per share recorded a year-ago .
The company did not provide any updated guidance in view of its pending merger with Microsoft.
Analysts have raised their estimates for the company after strong results. Zacks Consensus Estimates for the current and next year have surged to $1.01 per share and $1.68 per share, from $0.35 and $0.83 before the results.
Microsoft to Acquire LinkedIn; Salesforce Tries to Block the Deal
In June, Microsoft reported an agreement to acquire LinkedIn for $26.2 billion or $196 per share. Microsoft expects that the deal will result in new opportunities for their Office suite. This would be Microsoft’s largest acquisition ever. The merger is expected to be completed in the fourth quarter subject to shareholder and regulatory approval.
Salesforce.com, which had also tried to acquire LinkedIn and was outbid by Microsoft, is pushing regulators to block the deal, arguing it would hurt completion.
It is reported that competition with Salesforce forced Microsoft to raise its bid significantly.
The company continues to invest in improving its products and services, which could hurt profits in the shorter term, but these investments will drive member growth and user engagement over the longer term. The stock is not cheap, but it is worth a look due to its excellent growth potential.
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