Professional-networking website LinkedIn reported an unexpected second-quarter profit and said revenue more than doubled as business customers spent more on hiring services.
The shares jumped as much as 12 per cent in extended trading yesterday after LinkedIn said profit before certain costs was $10.8 million, or 10 cents a share. That compared with an average analyst estimate for a loss of 1 cent, according to data compiled by Bloomberg.
LinkedIn's third-quarter sales forecast also exceeded projections.
LinkedIn, which in May became the first US social network to hold an initial public offering, has been hiring sales staff and adding features to attract recruiters and professionals. The California-based company, which has 115.8 million members, gets revenue from advertising, subscriptions for premium services and by offering recruiting tools to corporations.
"Everyone understands their strong position with recruiters," said Ken Sena, an analyst at Evercore Partners in New York. "The question is how much revenue can they build among consumers, and I think they did a very good job demonstrating that they can."
Shares of LinkedIn surged as high as $106.97 in trading after regular hours. The stock's value has more than doubled since its debut on the New York Stock Exchange. The shares earlier lost $10.13, or 9.6 per cent, to $95.52, giving LinkedIn a market value of about $9.14 billion.
Second-quarter revenue soared to $121 million, LinkedIn said. Sales from hiring services almost tripled to $58.6 million.
Advertising revenue more than doubled to $38.6 million, and sales from premium subscriptions increased 60 percent to $23.9 million.
In last year's second quarter, the company had profit before some costs of $6.44 million, or 7 cents a share.
Net income in the recent period was $4.51 million, or 4 cents, LinkedIn said.
Third-quarter revenue will be $121 million to $125 million, the company said. Analysts had projected $113.9 million, according to Bloomberg data.
Global stocks plummeted yesterday amid concerns about a slowing economy. LinkedIn chief financial officer Steven Sordello said a slump could hurt LinkedIn's growth, though people looking to their connections to find work would continue to be drawn to the site, he said.
"When there's a lot of dislocation in the marketplace, people turn to solutions like LinkedIn where they leverage their networks to get the help they need," he said on a conference call with analysts yesterday.
LinkedIn plans to increase spending on marketing and product development in the second half, Mr Sordello said.
"2011 remains an investment year," he said. "We plan to take a long-term perspective and
invest aggressively in product engineering and infrastructure."
Bolstered by publicity from its IPO, LinkedIn passed Myspace in June to become the second-largest social network in the US, with 33.9 million visitors, up 63 per cent from a year earlier, according to ComScore.
LinkedIn members can post their profiles on the site for free and use it to find jobs, while companies pay to give their recruiters more information about potential hires.
LinkedIn got 68 per cent of its second-quarter revenue from business services and premium subscriptions, and 32 percent came from advertising and marketing on its site.
LinkedIn's IPO helped usher in a wave of technology offerings, the most since the dot-com bubble burst in 2000, according to Bloomberg data. LinkedIn raised $352.8 million in its IPO, selling 7.84 million shares at $45 apiece.
Evercore's Sena, who rates the stock "equalweight" and has a price target of $70, said this quarter's results don't change his view on the shares.
"We're already significantly bullish in our estimates," he said. "We have trouble getting to a valuation that approaches near to where it's currently trading at."
Bloomberg
