Everything You Need To Know About LinkedIn's Q2 2012 Earnings

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Investors Mosaic
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LinkedIn (LNKD) posted a rock solid Q2 and solidified itself as a best-of-breed company in the social networking industry, perhaps taking the gold medal from Facebook (FB). In this article we'll take a deep dive into LinkedIn's quarter, but the bottom line is that the company has built a fantastic business model with three avenues for revenue growth, customers who are willing to pay for the product, and flawless execution by management. While valuation is extremely rich, it won't matter as long as the company is growing revenue 88% year over year.

Let's take a look at the key metrics: members, unique visitors, and customers.

LinkedIn Key Metrics

These key metrics illustrate the health of the business as members grew 50% year over year, unique visitors to the website grew 30% year over year, and paying customers grew 99% year over year. The LinkedIn ecosystem is growing nicely and creating a very powerful barrier to entry.

The health of the ecosystem is attracting corporate recruiters to the platform and customers who are willing to pay money to access LinkedIn's database of members and connect with them online. As noted above, customer count increased 99% year over year.

LinkedIn Customers

Total revenue of $228 million grew 88% year over year, driven by the health of the ecosystem outlined above as both users and recruiters are finding value on the platform. The following chart is beautiful if you are an investor in LinkedIn.

LinkedIn

While revenue growth slowed to 88% year over year, this rate was impressive and exceeded Wall Street expectations of +78%. We expect revenue grow to decelerate over the coming quarters, but this is simply a function of tough comparisons and the "law of large numbers" becoming a factor.

LinkedIn Revenue Growth

Taking a closer look at all the revenue segments -- premium subscriptions, marketing solutions, and hiring solutions -- demonstrates that performance is

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