By Cat Zakrzewski
LinkedIn Corp. on Thursday reported a surprising increase in its
second-quarter profit, a sign that the professional network is
seeing success as it shifts strategies in multiple segments.
LinkedIn has been overhauling both its recruiting tools and
advertising segments. The company wants users to stay on the site
longer and use it as a social platform, not just to update their
résumés and search for jobs.
"We saw good progress in executing on transitions across our
business," said Steve Sordello, chief financial officer of
LinkedIn.
However, LinkedIn continued to see declines in its
display-advertising business, which contributed to the company
lowering its forecast in April. In the second quarter, display
revenue fell 30%, wider than the 10% drop in the first quarter.
Overall, the company's marketing-solutions unit, which primarily
sells advertising on LinkedIn properties, saw revenue rise 32% to
$140 million.
LinkedIn noted that its sponsored updates had a strong second
quarter, more than doubling year over year. The company has been
hopeful that a shift toward sponsored updates would offset declines
in demand for traditional display ads.
Still, shares of LinkedIn fell 6.3% to $213.05 in after-hours
trading after initially rallying more than 10% on its quarterly
results.
For the quarter ended in June, LinkedIn reported a loss of $67.7
million, or 53 cents a share, wider than its year-ago loss of $1
million, or a penny a share.
However, excluding stock-based compensation and other items,
earnings rose to $71 million, or 55 cents a share, from $63
million, or 51 cents a share, and finished well above the average
analyst estimate of 30 cents a share.
Total revenue, meanwhile, increased 33% to $711.7 million,
surpassing the company's forecast for revenue of $670 million to
$675 million, and the average analyst estimate on Thomson Reuters
of $680 million.
LinkedIn said its Lynda.com acquisition contributed $18 million
in second-quarter sales.
This was the company's first earnings report since it closed its
acquisition of Lynda.com in May for $1.5 billion. The company's
largest acquisition to date gives LinkedIn a library of
professional training services that it hopes will encourage
LinkedIn members to spend more time on the professional
network.
On the back of its strong second quarter, LinkedIn raised its
full-year revenue forecast to $2.94 billion after cutting it to
$2.9 billion in April. The company said it expects per-share
earnings excluding items of $2.19 for the full year, up from
$1.90.
LinkedIn has been trying to make its site more mobile-friendly.
In the second quarter, the company said, 52% of all traffic to
LinkedIn came from mobile devices.
Revenue from LinkedIn's biggest division, Talent Solutions, a
platform recruiters can use to search for candidates on the site,
increased 38% to $443.4 million. The company raised prices for its
recruiting platform earlier this year.
LinkedIn also attracts about a fifth of its revenue from premium
subscribers. In the second quarter, revenue in that segment rose
22% to $128.3 million.
For the third quarter, LinkedIn projected earnings excluding
certain items of 43 cents a share on revenue between $745 million
and $750 million. Analysts, on average, were expecting earnings of
43 cents a share on revenue of $744 million.
The company is testing two new apps, following Facebook Inc.'s
lead by unbundling its services and offering a portfolio of apps.
Still the company lags behind competitors like Facebook and
Twitter, Inc. Both saw increases in advertising revenue boosted by
mobile in their reports this week.
A recent American Customer Satisfaction Index report found
LinkedIn was the lowest-ranking social media site. Premium
subscribers paying for extra features gave the company particularly
low scores. LinkedIn has been responding to user complaints by
retooling its messaging system as well as reducing the number of
emails users receive.
Write to Cat Zakrzewski at cat.zakrzewski@wsj.com
Corrections & Amplifications
LinkedIn lost $1 million in the year-ago quarter. An earlier
version misstated the figure.
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