LinkedIn reported a better than expected fourth quarter revenue growth. The company revenue for the quarter grew by 44% and is at USD 643 million. For the full year period, the company has reported revenue of USD 2,219 million, an increase of 45% compared to 2013.
The company breaks out its earnings by three business units: Talent Solutions, Marketing Solutions and Premium Subscriptions. Talent Solutions, which contributes around 57% to the revenue mix, grew by 41% in fourth quarter on yearly basis and by 46% in full year period compared to 2013. Even though the revenue from Talent Solutions grew by 41% in the fourth quarter, it couldn’t keep the pace with the company’s overall revenue growth rate of 44% and that is due to growth coming in from Marketing Solutions.
Marketing Solutions, which has contributed 24% to the revenue mix, grew by 56% in the last quarter on yearly basis and by 46% in full year period compared to 2013. The other unit from where company has generated 19% of revenue is Premium Subscriptions, which in the last quarter grew by 38% on yearly basis and by 42% in full year period compared to 2013.
US market contributes 60% to the company’s revenue and non-US market such as Europe, Asia-Pacific and Latin America contributes 40%. This time around non-US revenues grew by 45% on yearly basis, faster than the US revenue growth and that’s because of Chinese market where company has managed to double its member base to 8 million in past one year.
The company also noted that it now has over 3 million active job listings on its platform, a 10x increase from last year. The site now has 93 million monthly unique visitors up from 76 million a year ago.
Company share price ahead of the release of earning result spiked by 14% and hit all-time high level of USD 271. The share price rose not only due to the release of company’s better than expected earning result but the guidance that the company has given to the market for FY15. Company in FY15 projects adjusted earnings of USD 2.95 per share on revenues of USD 2.93 billion to USD 2.95 billion which is more than the streets expectation on USD 2.73 per share on revenues of USD 2.94 billion.
The guidance given by the company indicates the revenue for the company will grow in the range of 32%-33% compared to 2013. Non-GAAP EPS for the company will see growth of 42.5% in 2015 as guided by the company.
Company currently is trading at Price Earnings multiple of 89x FY15 earnings guidance. Company’s current Market Cap to Sales is at 15X FY15 revenue forecast.
How Business Units are driving the Company
Talent Solutions is one of the main business unit for the company as it contributes on an average 60% to the company’s revenue. In this segment of business, LinkedIn specializes in selling ultra-high-end tools to corporate recruiters, so they can search systematically through the Linkedin’s member databases and find exactly the sort of people they might want to hire.
Marketing Solutions contributes on an average 20% to the company’s revenue. Company in a conference call highlighted the variety of growth initiatives in this segment. Sponsored updates in which listed company pay to show and highlight the news, analysis or other content that interest the likely job candidates for the company. Company said now such material account for about one-third of Marketing Solutions revenue.
Company now is stepping in as a content publisher. The company highlighted that 200 million members now have the ability to publish long content on the site. As of now such content is distributed and shared for free, but company is looking to develop ways to make it a partial paid service for content creators in order to get their work read more broadly.