LinkedIn Sails Past Expectations, but Can It Continue Growing User Engagement?

Asa Mathat / AllThingsD.com

First quick take on LinkedIn’s numbers as they hit the wire.

EPS of 35 cents per share on revenue of $303 million, a new record for the company and way above the street’s initial consensus, which was an expected EPS of 19 cents on revenue of $279.5 million.

“We exited 2011 having successfully revamped our underlying development infrastructure,” Jeff Weiner, LinkedIn CEO, said in a statement. “Based on that investment, we said that 2012 would be a year of accelerated product innovation, and it was. The products we delivered throughout the year drove member engagement and financial results to record levels in the fourth quarter.”

The bulk of that revenue came from LinkedIn’s “Talent Solutions” group, with revenue totaling $161.0 million, a 90 percent jump compared to the fourth quarter of 2011. And sales growth rates for the company have moved steadily upward over the past year, from 81 percent a year ago previous to a healthy 101 percent during Q4 of 2012.

But revenues increased across all three of LinkedIn’s categories; its ad sales group saw a 68 percent year-on-year jump to $83.2 million, while the subscriptions saw a 79 percent year-on-year jump to $59.4 million.

The company ended the year with about 202 million active users on the platform, a growth of cumulative membership of nearly 40 percent year-on-year. The largest growth opportunity going forward, like many other U.S.-based Web companies, is international; more than 64% of LinkedIn members now come from international markets, the company said.

The biggest question going forward, however, is if LinkedIn can keep those 200 million-plus users on its platform actively engaged on a regular basis. As I argued previously, one of LinkedIn’s major challenges is to convince its users that it’s a daily destination site to return to for business insights, updates and opinion, not just a repository for one’s online resume.

Part of the company’s efforts here involve the new LinkedIn “Influencer” program, where heavily promoted guest bloggers — usually celebrities in the entrepreneurial space — are asked to write posts most often associated with business and leadership issues. LinkedIn says this has been a successful effort thus far, helping to drive an eight-fold increase to traffic associated with LinkedIn Today content over the last year.”

We’ll see if that growth can be sustained in the long term, and what sort of products the company will add in 2013 to ride the success out.

Something to keep in mind: LinkedIn didn’t address its mobile performance in the initial numbers released. Perhaps Weiner will address that on the call at 2:00 pm ET.

Oh, and the street seemed to take the news well: Shares of LinkedIn soared by nearly 11 percent in after-hours on the news, trading at 136.54 per share.

Check out LinkedIn’s Q4 earnings presentation below.

LinkedIn Q4 2012 Earnings Call from LinkedIn