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LinkedIn Beats on Earnings and Rev (Revised)

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LinkedIn Corporation reported adjusted net earnings of 22 cents per share in the first quarter of 2013, well above the Zacks Consensus Estimate of 5 cents.


Total revenue for the reported quarter was $324.7 million, up 72.3% from $188.5 million in the year-ago quarter. LinkedIn witnessed strong performance across all its business segments. Segment-wise, revenues from the Talent Solutions (previously named Hiring Solutions) products were $184.3 million, up 80.0% from the year-ago quarter.

Revenues from the Marketing Solutions were $74.8 million, up 56.0% from the year-ago quarter. This segment contributed 23.0% to the revenues in the first quarter of 2013, as against 25.0% in the year-ago period.

Premium Subscriptions recorded revenues of $65.6 million, up 73.0% from the year-ago period. As a percentage of total revenue, the segment’s contribution remained unchanged at 20%, compared with the year-ago period.

In the U.S., LinkedIn generated revenues of $201.4 million, approximately 62.0% of the total revenue in the reported quarter. Revenues from international markets totaled $123.3 million, which constituted around 38.0% of total revenue in the first quarter of 2013.

Operating Results

LinkedIn incurred higher R&D, sales & marketing and administrative expenses of 74.7% of total revenue up from 73.1% in the year-ago period. Moreover, the company reported operating income of $23.6 million, up from the year-ago level of $10.6 million.

Net profit on a GAAP basis, in the first quarter of 2013, was $22.6 million or 20 cents versus a loss of $4.9 million or 4 cents in the first quarter of 2012. Excluding special items like amortization of intangibles but including stock-based compensation, non-GAAP earnings came at $24.9 million or 22 cents per share compared with $6.1 million or 5 cents per in the year ago quarter.

Balance Sheet & Cash Flow

LinkedIn ended the quarter with cash and cash equivalents of $264.9 million versus $270.4 million in the prior quarter. Accounts receivable in the quarter was $212.6 million compared with $203.6 million in the previous quarter. Total deferred revenues in the quarter were $317.1 million, up from $257.7 million in the previous quarter. The company generated $103.9 million cash from operation, up from $63.2 million generated in the year ago quarter.


The company expects second-quarter 2013 revenues in the range of $342.0 to $347.0. Whereas, adjusted EBITDA is expected to range between $77.0 million to $79.0 million. Depreciation and amortization is expected in the range of $30.0 million to $32.0 million.

For full year 2013, totalrevenue is expected to range between $1.43 billion and $1.46 billion. Adjusted EBITDA is expected between $330.0 million and $345.0 million. Moreover, depreciation and amortization is expected between $130.0 million to $135.0 million.


Upbeat results for the first quarter of fiscal 2013 keep us optimistic on the stock. Reported earnings have also exceeded our estimates. LinkedIn has benefited the most from its Talent Solution and Premium Subscription businesses. The company, which is a leader in the emerging online professional networking segment, has gained popularity across the globe and grown steadily over the recent past.

Although the operating cost of the company increased in the reported quarter, LinkedIn was able to increase its operating profitability. In the current scenario, the company is posed with stiff competition in the professional networking space from companies like Facebook Inc. (FB - Free Report) and Google Inc. . Moreover, the emergence of companies like ValueClick Inc. could change the scenario rapidly over the next few years.

LinkedIn has a Zacks Rank #3 (Hold).

Disclaimer: We are reissuing this article to correct a mistake. The original article, issued [Friday, May 03, 2013], should no longer be relied upon.

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