LinkedIn Q3 results: a social network in rude health

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LinkedIn is in rude health. Its Q3 financial results completely demolished analysts expectations. That’s no hyperbole, it beat them by 80%.

The professional social network, which now has 187-million members, is one of the few not to have fallen prey to post-IPO blues — up nearly 70% in the year since it went public.

Revenue for the third quarter was US$252-million, an increase of 81% compared to US$139.5-million in the third quarter of 2011.

Net income for the third quarter was US$2.3-million, compared to a net loss of US$1.6-million for the third quarter of 2011. Non-GAAP net income for the third quarter was US$25.1-million, compared to US$6.6-million for the third quarter of 2011.

“The last few months mark the most significant period of product development in the company’s history,” the company said. “This accelerated pace of innovation is fundamental to our goal of driving greater engagement on the LinkedIn platform”.

A big part of LinkedIn’s success is that has multiple revenue streams, and all three of the main ones of doing well.

Talent Solutions (previously named Hiring Solutions) is performing particularly well however. Revenue from its products totalled US$138.4-million, an increase of 95% compared to the third quarter of 2011. Revenue from the division represented 55% of total revenue in the third quarter of 2012, compared to 51% in the third quarter of 2011.

Marketing solutions meanwhile rose 60% year-over-year and premium subscription revenue was up 74% year-over-year.

“Increased member activity led to sustained growth across our talent, marketing, and premium product lines, resulting in record levels of adjusted EBITDA as well as record operating and free cash flow,” said Steve Sordello, CFO of LinkedIn. “We expect a strong finish to the year behind momentum in both our engagement and monetization platforms.”

The results even seem to have surpassed LinkedIn’s own expectations. In the wake of the results, it adjusted its expected revenue range for the year upward to US$939 to US$944-million from the prior range of US$915 to US$925-million.

According to LinkedIn CEO Jeff Weiner, the results come primarily come from LinkedIn’s increasing efforts to push engagement on the platform.

“LinkedIn had a strong third quarter with all of our key operating and financial metrics showing solid growth. The last few months mark the most significant period of product development in the company’s history. This accelerated pace of innovation is fundamental to our goal of driving greater engagement on the LinkedIn platform.”

Those efforts to push engagement include a redesigned homepage, the introduction of notifications and endorsements as well as revamped company pages.

The strategy’s clearly been working, and if you have shares in LinkedIn, good call.

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