What's Up With LinkedIn?

What’s up with LinkedIn?  Revenue, profits and membership, for starters.

LinkedIn’s first quarterly earnings report (August 4) since its May IPO showed an unexpected profit (4 cents a share), Y/Y revenue up 120% and membership up  61%.  As industry observers are most interested in its long term guidance, the company projected full year revenue of $475 million. 

Will LinkedIn fall short of long term expectations?  A look at its subscriber base may shed some light.  Market researcher Lab42 surveyed LinkedIn subscribers in July 2011.  Lab42 looked primarily at two things: what they use it for, and how often they use it.  

Here’s the primary use among LinkedIn subscribers:

Next, here’s the frequency of access:

 

However, here’s what I suspect is making Wall Street analysts cautious.  LinkedIn’s slides show reveals that in 2Q11:

• 82 million unique users performed 7.1 billion page views.  
• Subscriptions accounted for 20% of revenue, marketing solutions for 32%, and hiring solutions for a whopping 48% of revenue.

LinkedIn is a Rolodex, contact management aid, and prospect finder all rolled into one - and it’s a pretty good one at that.  But it’s nothing compared to the scale and variety of use of Twitter or Facebook (graphic below).  In short, there’s simply a much broader offering, larger user base, and a lot more going on at any time in both Twitter and Facebook.

It’s a simple matter of economics.  For advertisers, reach and frequency continue to be the Holy Grail.  Twitter and Facebook offer more of both.  That is why they are the better bet for attracting long term ad revenues.

LinkedIn will prosper, but the Wall Street calculus - driven by the voting of advertising dollars - favors higher market capitalizations on both Facebook and Twitter.