Mobile Users Drive LInkedIn's Profit This Quarter
After two difficult quarters, LinkedIn Corp.’s quarterly revenue and profit beat analysts’ estimates. The world’s biggest professional networking site said that investments in its mobile app and growth from emerging markets have paid off. The company also raised its financial forecast for the year post the upbeat results, according to a press release. Overall, LinkedIn said it hit 396 million members in the third quarter.
The professional online network has spent heavily this year to boost its appeal to its core corporate customers, capitalize on advertising growth and overhaul its mobile presence. Chief Executive Jeff Weiner mentioned that the company now has an overhauled mobile app.
According to reports, 55% of LinkedIn’s traffic had come through the mobile app in the third quarter, up from 53% in the second quarter. The company believes a lot of these growth are coming from the emerging markets. India is LinkedIn’s second-largest market and executives said they would like to develop products tailored to the Indian market. This is similar to the approach it already takes in China, where LinkedIn has launched Chitu, a professional networking app designed for the Chinese market. LinkedIn said it has more than 13 million members in China, up from 10 million in July and four million in February.
LinkedIn also announced an alliance with advisory firm EY, previously known as Ernst & Young, where the firms would work together to help other companies strengthen their customer relationships through social analytics.
The California firm said it draws about 60% of its revenue from its largest division, Talent Solutions, a platform for recruiters to search for candidates. LinkedIn says it now has nearly 40,000 enterprise contracts under contract. That sets LinkedIn apart from other social media companies that draw most of their revenue from advertising.
Revenue in that unit rose 46%, to $502 million, including $41 million from lynda.com, the training-video company that LinkedIn bought earlier this year. Its marketing division generated nearly $140 million in revenue, while premium subscriptions chipped in about $138 million, it said in the statement.
LinkedIn said it continued to see a slump in premium display advertising, which now accounts for 15% of the revenue earned by the company’s marketing solutions division, down from 30%. The company said it expects its advertising growth to come from sponsored updates, the smaller ads placed in users’ feeds which account for nearly half of LinkedIn’s marketing revenue.
For the last three months ended Sept. 30, the company posted a loss of $40.5 million, compared with a loss of $4.3 million, in the same period a year earlier. However, revenue rose 37% to $779.6 million, from $568.3 million in the year-ago period. The company’s bright outlook was in contrast to the prior two quarters, when LinkedIn lowered forecasts to reflect pressure on its core business, currency fluctuations and higher spending.
For the fourth quarter, LinkedIn said it expects revenue for the year of $2.975 billion to $2.98 billion, up from a prior forecast of $2.94 billion. Weiner stated, “Our commitment to investing in our long-term roadmap continues to lay the foundation for future growth of the company.”In Q3, we replaced the traditional Inbox with Messaging, a more lightweight and casual communications interface. While still early, but we have already seen a double digit percentage increase in the number of messages sent between members, and a significant lift in one day reply rates. Messaging is already available for our English-language members, and we are in the process of completing the roll out globally.
LinkedIn also added a number of enhancements across our member value propositions during this quarter, including replacing the email inbox with a new messaging experience, expanding the publishing platform to include German, French, and Portuguese languages and developing the next generation of LinkedIn’s mobile flagship experience, it said.
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