LinkedIn Reports Solid Third Quarter Ahead Of Microsoft Merger

LinkedIn reported solid third quarter results with revenue and and earnings that beat estimates, about five months after Microsoft announced it would buy LinkedIn for $26.2 billion in cash, the largest acquisition in the software company’s history. LinkedIn shares rose less than 1% to $188.7 at 5:20 p.m. ET in after-hours trading, while Microsoft shares rose less than 1% to $60.1 at that time.

Microsoft said in June it is paying $196 per share in an all-cash deal that is expected to close some time this year. The price Microsoft is offering is a validation of the Mountain View, Calif.-based company’s growth prospects, after LinkedIn’s shares tanked by more than 40% in February.

Revenue in the third quarter, ending Sept. 30, was $960 million, the highest in the company’s history, up 23% from the same period a year earlier and topping the $959 million expected among analysts. (See the full results here.) 

The company posted a net profit of $9 million, or 6 cents a share, compared with a year-earlier loss of $46.9 million, or 36 cents a share. Excluding certain expenses, LinkedIn said it would have earned $163 million, or $1.18 a share, beating estimates of 91 cents per share on that basis.

LinkedIn said that in light of the pending merger, it will not update its outlook for the full year and will not host a conference call for its third quarter results. The company previously issued full-year revenue guidance of $3.65 billion to $3.7 billion and net income, excluding certain expenses, of $3.30 per share and $3.40 per share.

LinkedIn “talent-solutions business,” which mainly serves corporate recruiters, generates about two-thirds of the company’s sales. Revenue in that unit rose 24% from the same period a year earlier to $623 million. LinkedIn's "learnings solutions" business, which includes Lynda.com, represented about $67 million in revenue in the "talent-solutions" unit.

The marketing-solutions unit, which sells advertising on LinkedIn properties, grew 26% from a year earlier, to $175 million. Sponsored content continues to be LinkedIn’s fasted growing business within this unit, making up more than 60% of sales during the third quarter.

Premium subscriptions sales rose 17% year-over-year to $162 million. LinkedIn reported 467 million users in the third quarter, up from 450 million users in the second quarter. The company said monthly active users rose 6% year-over-year to 106 million people, and page views per unique user grew 20% year-over-year. Mobile now represents 60% of all traffic to LinkedIn. 

“In Q3, continued product investments across our platform drove another quarter of strong engagement and financial performance,” LinkedIn CEO Jeff Weiner said in a statement. “As we look forward, our combination with Microsoft creates the opportunity for us to dramatically increase the impact and scale with which we deliver value to our members and customers.”

At the time the deal was announced, Microsoft said Weiner would stay on as LinkedIn’s chief executive, reporting to Microsoft CEO Satya Nadella. Founded in 2002, LinkedIn went public in 2011. Microsoft said the social network for professionals would “retain its distinct brand, culture and independence.” The deal could make a host of integrations between Microsoft and LinkedIn possible across tools such as Office, Outlook, Calendar and Skype. Even Microsoft’s personal AI assistant Cortana could come into the fold, providing tasks such as telling users the professional background of a business partner before a meeting. 

LinkedIn’s stock had fallen about 16% this year as of the close on Thursday. LinkedIn fell less than 1% to $188.6 during regular trading on Thursday.