LinkedIn among most profitable Web companies

Professional networking site LinkedIn has maintained its growth with margins of 90 percent, well above all other social media sites and among the highest Web companies in returns.

LinkedIn made US$40.2 million in net income, which is equivalent to 35 cents a share and almost double its projected 19 cents a share, the seventh consecutive time the company has outdone projections made by analysts.

Revenue surged to $303.6 million above estimates of $301 million, as sales from international markets doubled.

The performance is as a majority of the site’s users are now based outside America, and as it seeks fresh and more appealing job markets such as Brazil and China.

Analyst Kerry Rice of Needham & Co attributes the performance to a focused management.

“You can pick out a lot of things that were great, from customer adds to accelerating revenue to growth in international. On top of that, guidance is pretty outstanding. And from a historical perspective, they’ll likely beat those numbers too,” said Rice.

LinkedIn’s success, which comes at a time when its rivals have been struggling, is credited to the introduction of more social media features to the jobseekers and recruiters dominated site, including personal blogs by successful people and influencers like Richard Branson and investor Mark Cuban.

The company, which went public at US$45 is now at US$135 a share, while its rival Facebook is 25 percent below its IPO price.

Its different approach to the market could also have paid off due to its success in having adopted a job market focus while many websites were more focused towards infotainment, with some having realised the potential of the job market too late. Facebook only released its Job Board tool in November last year.

LinkedIn’s success is also attributable to the introduction of creative products encouraging users to endorse colleagues for professional skills, which chief executive Jeff Weiner termed as creating “viral loops”.

Posted in: Social Media

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