LinkedIn is often referred to in the same breath as Twitter, FaceBook, Zynga and Groupon as a ‘social media’ company. But they are as different as chalk and cheese. LinkedIn’s business model, if not ‘as old as the hills’, is at least as old as TechMarktView’s! LinkedIn sells subscriptions to corporates. In LinkedIn's case the ‘corporates’ are mainly recruitment companies. The data they sell is willingly provided by 187m people who like to be on a ‘jobs board’ even if they are not actively seeking a new job…yet. What they are not is a ‘Facebook for Corporates’ – the average time users spend on the LinkedIn site is a fraction of that spent on FaceBook.
We have always liked this corporate subscription model…
Other differences were made clear when LinkedIn announced their Q3 results last week. Revenues grew a massive 81% yoy to $252m – obviously now a $1b annualised revenue company. Profits (yep, they really are now making real PROFITS) of $2.3m were reported. ‘Talent solutions’ now represents 55% of revenues and grew a massive 95% yoy. ‘Premium subscriptions ‘were up 74% a $50m and even advertising was up 60% at $64m – a quarter of revenues.
Finally, whereas almost every social media stock is trading at a massive discount to their IPO price, at $113, Linkedin is 150% up on its May 11 $45 IPO price.
Guidance is for further growth. LinkedIn seems to have developed a sound business based on an old business model utilising the very latest technology. Boom or bust, companies will always be looking for talent and punters will always be looking for the next job opportunity.
What’s not to like?