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LinkedIn Corp (LNKD): Coming of Age

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Linkedin CorporationProfessional networking giant LinkedIn Corp (NYSE:LNKD) has managed to silence skeptics when it posted year-end figures. The rapidly growing company has not only managed to demonstrate its ability to grow revenue and members but also laid out the foundation for getting users to frequent the platform. And most importantly the company’s business has been growing profitably, unlike numerous other young tech companies.

A major concern for LinkedIn’s investors previously has been the deceleration in user engagement in terms of the number of pages viewed. However, the company introduced newer products like notifications, influencers and endorsements, which have been very successful in driving users to the site. Cumulative page views on desktop are up 10% quarter-over-quarter and ended at 9.8 billion view at year end.

Other metrics of member engagement including comments, likes and shares are at all-time highs. The success of the LinkedIn Crop influencers and SlideShare paves the way for content marketing by companies on LinkedIn’s platform, which represents a big monetization opportunity for the company. And also, the LinkedIn’s presentation sharing site, SlideShare saw very high levels of user traffic with more than 47 million unique users, which is up 68% year-over-year.

LinkedIn now has more than 202 million members across more than 200 countries, which represents a growth of 39% year-over-year. An improved technological infrastructure aided in driving user engagement and monetization as well. The addressable market share for LinkedIn is roughly 600 million professionals around the globe.

The addressable market share of LinkedIn is much lower than social networking rival Facebook Inc (NASDAQ:FB), but the mission of both the companies differ substantially in terms of the user segments they want to reach.

The threat of Facebook is still present but Facebook is more focused on global consumer engagement, and less on the professional networking aspect.

LinkedIn’s global reach is very apparent, at the end of 2012 almost 64% of total LinkedIn members are from outside the U.S. With an increased focus and heavy investments in product innovation, user engagement should gain momentum in the future. At the end of 2012, LinkedIn was the 25th most visited web property in the world.

The company recorded its first year with almost $1 billion in revenues. In 2012, LinkedIn’s top line grew a staggering 86% year-over-year and ended at $972.3m. Its bottom line is going in the right direction, and now stands at $22 million for 2012. Its EPS is up substantially as well and stood at $0.19 which is up from $0.11 from last year. As a result the stock has been hitting new all-time highs for the past few days.

Once again revenues from Talent solutions saw rapid growth and came in at $161 million, which is a 90% year-over-year increase. LinkedIn’s hiring segment has been the major driver of total revenues accounted for more than 53% of total revenue in the Q4 2012. LinkedIn’s talent solutions should gain more customers as the firm continues to roll out localized versions of its web portal and also recruiting solutions, along with a price increase in certain developed markets.

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