07 November 2012

Popular, profitable, cashed up: LinkedIn’s unstoppable momentum

Last week LinkedIn announced their September 2012 results.
 
Here's my summary of the most significant and relevant results:
 
Area
 June – September 2012
(USD$ millions)
June – September 2011
(USD$ millions)
Period-to-
period change
Total revenue
$252.0
$139.5
+81%
 - Talent solutions
$138.4
$71.0
+95%
 - Marketing solutions
$64.0
$40.1
+59%
 - Premium subscription
$49.6
$28.4
+74%
US revenue
$162.4
$94.0
+72%
Non-US revenue
$89.7
$45.4
+98%
Adjusted EBITDA
$56
$25
+124%
Global Membership as at end of the quarter
187 million people
131 million people
+43%
 
 The Talent (formerly Hiring) Solutions products (including LinkedIn Recruiter, Talent Direct, Recruitment ads, Career Pages, Talent Finder, Talent Pipeline and LinkedIn jobs) continue to be the star performer in the LinkedIn product suite, growing it’s financial impact to 55% of total LinkedIn revenue (up from 51% in Q3 2011).
 
This is clearly the aspect of the business that LinkedIn are pushing most aggressively with the recently introduced Talent Pipeline product having the greatest revenue upside as a compelling alternative Applicant Tracking System (ATS) for SME clients.
 
The Talent Solutions product is shaping as a real category killer because it offers what no other ATS can offer; self-service updating of candidate profiles. Every other ATS is burdened by the huge handicap of every piece of ATS data having to be uploaded, managed and updated by the owner of the ATS. This unmatchable difference will be causing ATS shareholders, and their employees, to seriously contemplate their future.
 
Other significant LinkedIn developments that were highlighted in the Q3 earnings report include:
  • Redesigned and simplified Homepage aiming to deliver a more social and relevant experience for members. Homepage traffic has increased more than 60% since its introduction.
     
  • Introduced Notifications, which alerts members to activity relevant to their experiences on LinkedIn. The rollouts of Notifications and the new Homepage have resulted in record levels of comments, likes, and shares. Comments specifically have increased more than four times since June.
     
  • Launched Endorsements, a new and easy way for members to recognise colleagues for specific skills. Since the introduction in late September, LinkedIn members have generated more than 200 million endorsements, and the number of members editing their profiles has more than doubled versus last year.
     
  • Revamped Company Pages were made available in early October to more than 2.6 million organisations with an active company profile on LinkedIn.
     
  • LinkedIn has revised its expected full year 2012 revenue range upward to $939 to $944 million from the prior range of $915 to $925 million.
     
Scarily, the future for LinkedIn looks to be one of cloudless blue skies, especially when you consider that the LinkedIn war chest is overflowing; cash, cash-equivalents and short term investments currently total USD$676 million, up from USD$387 million this time last year. That’s an increase of just over $1 million per working day, every working day of the past 12 months.
 
The LinkedIn leaders are focused on growing the level of user engagement as a key leg of LinkedIn’s strategy, and the focus of much of the product development and content growth.
 
This strategy is generating plenty of comment within the recruitment industry, both in Australia and in the USA.
 
Firebrand founder and CEO, Greg Savage teed off at LinkedIn at the RCSA’s recent International Conference reported by industry news service, ShortList, under the headline LinkedIn and SEEK are not our friends, says Firebrand boss.
 
Over on US-based ERE.net, RecruitLoop Founder and CEO, Michael Overell generated a storm of comments (41 and counting) with his provocative article of two weeks ago How LinkedIn Is Eating the Recruitment Industry.
 
Whatever your views on LinkedIn, one thing’s obvious; they are clearly delivering a range of products and services that both their customers want and the investment community supports.
 
Ignore LinkedIn at your peril.
 
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