Business

LinkedIn’s Big Leap Forward

The business-focused social network may not be nearly as big as Facebook, but it's something no other social network is: a Wall Street darling.

Thanks to a solid quarter that blew away expectations, LinkedIn, a favorite of the business and association world, is looking better than ever these days.

And the company’s recent financial results suggest that it’s starting to surge.

“During the past 18 months, we have exceeded our own expectations by a wide margin on the top line and passed through a higher profitability as a result,” said LinkedIn CFO Steven Sordello on Thursday evening. “Driven by new products and heightened member engagement, our results were especially strong in the second half of 2012.”

More details, and what this means to users:

By the numbers: The company had its best quarter ever, with revenue increasing by 81 percent to $304 million. On the stock market, the numbers helped boost LinkedIn significantly, with the stock rising 20 percent on Friday. The jump makes it an exception among web-based companies that have had recent initial public offerings, with Facebook, Groupon, Pandora, and Zynga all seeing declines in their stock price. LinkedIn, meanwhile, has seen its price more than triple.

How it did it: The biggest reason for its success? By mixing advertising and subscription services, it found an impressive business model that plays to both strengths. Many recruiters use the subscription service to find potential new candidates; the company’s “talent solutions” segment jumped by 90 percent to $161 million during the quarter, making it the largest part of the company’s business. LinkedIn worked to boost traffic, bolstering content offerings and adding stickier social features. As a result, traffic is up on the site by 67 percent in the quarter—a tantalizing number for advertisers.

Is membership a weakness? LinkedIn membership is still growing at a relatively slow rate, up only about 8 percent in each of the past three quarters. One thing that may trouble the network in the future is the challenge of building its base outside the United States. But considering the site recently passed 200 million users, the global challenge may not be keeping LinkedIn executives up too much at night.

With Facebook struggling to keep engagement up, is LinkedIn’s growing engagement (seen in its leap in traffic) and financial success a sign that it’s time to ratchet up your association’s presence there? Let us know your thoughts in the comments.

(Photo by nan palmero/Flickr)

Ernie Smith

By Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

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