LinkedIn shows webtastic social media firms how it's done

Actual profits


LinkedIn stuck its tongue out at all its social media rivals with better-than-expected revenue and a tidy profit for the second quarter.

While web firms like Facebook, Groupon and Zynga have seen their stocks tumble amid mounting losses and growing concern over how they will continue to grow revenue, LinkedIn's net profit of $2.8m and its higher revenue forecast for the year have pushed shares up 8 per cent in pre-market trading.

Revenue at the professional network grew 89 per cent from the same quarter last year to $228.2m, more than the average analyst forecast tallied by Thomson Reuters I/B/E/S of $216.3m. LinkedIn now thinks it will have full year revenue of between $915m and $925m instead of $880m to $900m.

LinkedIn's ways of making money from its users are more diverse from the social networks like Facebook. The business network runs subscription services and has proven popular with professionals who want to make contacts and look for jobs. Hiring Solutions, the jobs unit at the network, bagged just under half of the revenue for the firm.

LinkedIn's IPO was the one that set the bar for social networks going public, bursting onto the market in 2011 with a $45 a share offering that almost immediately doubled. While there have been peaks and troughs since that, the shares have never gone gotten close to the opening price, $63 has been the lowest they've sunk.

The hotly anticipated Facebook IPO a year later saw the shares open slightly higher than the asking price of $38, briefly hitting $45 before sliding under the initial offering. Since then, the network's stocks have continued to suffer, making the idea that the Nasdaq's tech issues on the day were entirely to blame for the fall a bit unlikely.

Facebook's first-ever earnings report in July didn't make investors feel any better either. Although revenue grew a healthy 32 per cent from the previous quarter, it showed a slowdown from growth of 100 per cent in that quarter from 2010. The social network also failed to make a profit, posting a loss of $157m, and the shares are currently trading at around $20. ®


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