LinkedIn reignites sales after year of slowing growth

LinkedIn showed investors it can reignite sales after more than a year of slowing growth, with a forecast for third-quarter revenue that topped estimates. Revenue will be $543 million to $547 million in the current period, the Mountain View, California-based company said in a statement.

LinkedIn shares rose 7.3 per cent in extended trading. Chief executive officer Jeff Weiner has been branching out from recruiting and subscriptions, introducing a website in China and offering services for salespeople looking for new clients. He's also investing in original content and new smartphone applications for the largest professional-networking website. The measures helped to boost revenue by 47 per cent to $533.9 million in the second quarter, beating analysts' estimates as growth picked up again after five quarters of slowing sales. "For the past five quarters, they guided below Street estimates, and this is the first quarter for the past five quarters that they've guided above Street estimates -- it's definitely a positive," said Neil Doshi, an analyst at CRT Capital Group, who rates the stock a buy.

LinkedIn’s stock declined 3.6 per cent to $180.64 at yesterday’s close in New York ahead of the results. The company’s shares, which gained 89 per cent last year, has slumped 17 per cent this year.

LinkedIn reported a second-quarter net loss of $1.03 million, compared with net income of $3.73 million a year earlier.

Product expansion

LinkedIn's professional networking service has been expanding into new product categories and last week said it agreed to buy Bizo Inc., a business-marketing startup, for $175 million. Bizo will add $3 million in revenue in the current period and $6 million the next, Steve Sordello, LinkedIn's chief financial officer, said. Profit, excluding some items, was 51 cents a share in the second quarter, exceeding analysts' average estimate for 39 cents on revenue of $511 million. Membership increased to 313 million in the latest quarter, up 32 per cent from a year earlier.

“China has become the fastest-growing major market in terms of new members,” Weiner said.

LinkedIn also added more than 2,200 accounts within the recruiting services segment and had healthy renewal rates, Sordello said.

"They're still in the early innings of capturing a longer- term opportunity," said James Cakmak, an analyst at Telsey Advisory Group. "A suite of products improving the user experience and improving analytics will drive long-term value."

Separately, the company unveiled a new website for salespeople called Sales Navigator, which uses LinkedIn data to find potential customers. The product, which costs $1,200 a year, helps marketers manage their connections, drawing on relationships within their professional network.

“Salespeople have recognised that LinkedIn is not just a place to find a job -- far from it,” Mike Derezin, LinkedIn’s vice president of sales solutions, said in an interview. “It’s a place to grow and build relationships.”

By making a separate product, LinkedIn can tailor the experience more to the sales job and charge more for it, like it did for recruiters, Derezin said. “Everything that we wanted to see is coming into fruition: you see solid additions across corporate customers, the traction in sponsored updates is certainly there, and the long-awaited enterprise centric Sales Navigator solution has finally launched,” Cakmak said.

Bloomberg