Do LinkedIn’s Earnings Leave Facebook in the Dust?
LinkedIn (NYSE:LNKD) has shown it has the necessary growth drivers to keep its impressive momentum going. Its fourth-quarter results beat analysts’ expectations on Thursday, just as they have done every quarter since the company went public in May 2011.
It is through this streak that LinkedIn proves how vastly different its business model is from that of Facebook (NASDAQ:FB), despite the obvious similarities between the two. The professional networking company generates some revenue from advertising, like Facebook does, but it makes most of its money by selling subscriptions to employers, headhunters, and others.
Analysts and investors alike anticipated that the company would post strong results for the fourth quarter. The fact that the company surpassed 2 million account-holders for the first time earlier this year helped, but of course, that is not always an indicator of profitability. For all of its users, Facebook has had a very difficult time monetizing its social network, especially its mobile platform.
Investors’ confidence in LinkedIn’s ability to continue its growth trajectory has been evident in its skyrocketing stock price. Shares of LinkedIn hit an all-time high of $127.45 in late January, and the stock continued to trade near that price ahead of the earnings release. Analysts were similarly confident, predicting that the company would report earnings of 19 cents per share on revenue of $280 million…
But LinkedIn’s earnings soared, and its shares followed suit. In the hour following the company’s release, shares jumped up approximately 10 percent in after-hours trading, hitting $136.12. That was a far cry from its $45 per share debut price.
Fourth-quarter revenue rose 81 percent compared to the year-ago quarter. The business social networking company posted adjusted earnings of 35 cents per share on sales of $303.6 million in the three-month period ended December 31, 2012. Of that figure, premium subscriptions generated $59.4 million, up 79 percent from a year ago and representing 20 percent of the total revenue. Net income also increased to $11.5 million from $6.9 million in the same quarter last year.
The company’s guidance for the next quarter indicates that the upward momentum will continue. LinkedIn expects to report revenue of $305 million to $310 million, above the $300.9 million predicted by analysts polled by FactSet.
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