10 Quick Take-Outs from LinkedIn Q1 Results

By Adam Fraser

LinkedIn has learned a lot about the harsh realities of life as a listed company in the last quarter. Having lost more than 40% in value when it announced its last results, the market received its Q1 2016 results (released end of April) more favourably with the stock bouncing up 15%.

The Q1 results were generally very strong – with growth in revenue, profit and users from the equivalent quarter a year earlier. Importantly there was growth across all areas of the business – Talent Solutions, Marketing Solutions and Subscriptions and the guidance for future quarters was stronger than expected.

If you want to dive into the full detail you can find the financials, investor presentation and investor conference call. If you just want the headlines, here are 10 key take-aways:

1. Members grew to 433m, from 414m in the prior quarter (4.6% growth) and 364m a year earlier (19.0% growth).
2. Unique visiting members (ie active members) were 106m, up on the prior quarter of 100m and 9.3% higher than the 97m active users a year ago. It is still interesting to see that less than 25% of total members are actually active on the platform and surprising we don’t hear more from management about strategies to drive dormant members to active; this would appear to be the lowest hanging fruit to true user growth.
3. 58% of monthly users are accessing LinkedIn via a mobile, up from 50% a year earlier but still well below the 90+% of Facebook’s users who access via mobile . The recent release of its new app is assisting here.
4. Talent Solutions remains the dominant division, driving 65% of LinkedIn’s revenue in Q1 2016, which is up on 62% from the same quarter in 2015. Marketing solutions (driven by sponsored updates) and subscriptions (driven by sales navigator) continue to contribute just under 20% each. LinkedIn’s attempts to diversify away from relying on recruitment related revenue remain only a partial success.
5. Financials for the quarter were strong, with revenue of $861m (35% increase on prior year) and EBITDA of $222m (39% increase on the prior year).
6. LinkedIn provided guidance for FY16 revenue of approx $3.7bn and adjusted EBITDA of $1bn. This was above market expectations, which helped the share price
7. Importantly, a key engagement metric moved higher in the quarter with member page views increasing to 45bn from 37bn in the previous quarter and 34bn a year ago. Higher page views shows growth in true organic activity, a key metric for a social network liked LinkedIn.  During the quarter, viral actions increased more than 80%, daily shares were up nearly 40%, and traffic to third-party publishers grew more than 150%. All important metrics.
8. LinkedIn remains a reasonably US centric platform, with the USA contributing 61% of total group revenue, which is flat on both the prior quarter and a year ago
9. LinkedIn continues to focus on (and invest in) its big data and predictive analytics capability; last quarter it announced it had acquired a tech start up Connectifier further boosting its ability to identify and match job searchers and seekers.  The next generation of Recruiter, unveiled late last year, is the foundation of LinkedIn’s long-term growth strategy. Initial results are promising, with the number of candidates viewed per search up more than 40%, and InMails per search up more than 30%. By the end of Q2, the majority of customers are expected to have converted to the new version of Recruiter.
10. Other focus areas are driving integration to CRM for Sales Navigator and integrating technology from Lynda.com into the overall online training offerings.

In summary a much improved set of results for LinkedIn compared to the prior quarter, with revenue, users and engagement metrics all moving in the right direction. LinkedIn should not get complacent as apps such as Glass Door circle, but it remains very well positioned in the B2B content, network and marketing space.