LinkedIn's Growth Slows -- WSJ
October 28 2016 - 3:03AM
Dow Jones News
By Jay Greene
LinkedIn Corp. posted solid but decelerating revenue growth in
its third quarter, highlighting a key reason for its pending merger
with Microsoft Corp.: market expansion.
The Mountain View, Calif., company on Thursday reported $960
million in sales, a 23% gain. In the year-earlier period, the
growth rate was 37%.
"The growth continues to decelerate at a quick rate," said UBS
analyst Brent Thill. "Execution hasn't been what they may have
wanted and Microsoft can help invigorate that."
In a quarterly regulatory filing Thursday, the company
acknowledged that it expects its growth rate to continue to
decrease. That is because its sales and membership rolls have grown
so large that maintaining rapid growth is unlikely.
"[Given] the large scale and critical mass of our network, we
believe member and engagement growth, as measured by our key
metrics, will decelerate over time and that this may impact the
growth of certain portions of our business," the company said in
the filing.
In June, Microsoft Corp. announced plans to buy LinkedIn for
$26.2 billion, a deal that is expected to close by the end of the
year.
Microsoft wants LinkedIn largely so it can weave data about
LinkedIn's members into its own offerings. That way, for example,
sales representatives using Microsoft's Dynamics software for
managing customer relationships could pick up useful tidbits of
background on potential customers from LinkedIn data.
Scenarios like that make LinkedIn's membership a key metric for
the software giant. LinkedIn has 467 million members, up 18% from a
year earlier, the company said. That growth helped fuel visits to
the site by 106 million unique members a month in the quarter, up
6%. Member page views grew 27%.
Access to data on LinkedIn members has become an area of
contention between Microsoft and rival Salesforce.com Inc., which
itself had bid on LinkedIn before the professional network decided
to negotiate exclusively with Microsoft. Last month, Salesforce
pledged to press regulators to block the deal, arguing that it
would hurt competition by giving Microsoft unfair control over
LinkedIn's vast pool of data.
Salesforce CEO Marc Benioff on Wednesday reiterated concerns
about too much data concentrated in Microsoft's possession. "When
you're the largest software company in the world, when you're
Microsoft, you need to be treated differently," Mr. Benioff said at
the WSJDLive conference in Laguna Beach, Calif.
While the deal has been cleared in the U.S., Canada and Brazil,
it is still under review in Europe.
In the quarter, LinkedIn's largest segment, its talent solutions
division, which helps corporate recruiters identify job candidates,
posted a 24% jump in revenue to $623 million as the company added
customers and prior customers boosted spending.
Revenue from its marketing solutions unit rose 26% to $175
million, with about two-thirds coming from "sponsored content" or
ads that appear within users' LinkedIn feeds. Those ads are among
the company's fastest-growing businesses.
Revenue rose 17% in the company's third business unit, premium
subscriptions, to $162 million.
Overall, LinkedIn posted a profit of $8.6 million, or 6 cents a
share, in the quarter, compared with a year-earlier loss of $47.4
million, or 36 cents a share.
Excluding merger-related transaction costs and some other
expenses, LinkedIn said it would have earned $1.18 a share,
compared with 78 cents on that basis a year earlier. Analysts
expected LinkedIn to report adjusted earnings of 91 cents a share,
according to Thomson Reuters.
Revenue grew to $959.8 million from $779.6 million a year
earlier. Analysts expected LinkedIn to report third-quarter revenue
of $959.35 million.
Shares, which have fallen 16% this year through Thursday's close
at $188.63, edged up a few cents to $188.74 in after hours
trading.
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
October 28, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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