Strengths
First Mover: LinkedIn Corp (NYSE:LNKD) has established itself as the dominant firm in the professional networking category by making the most out of its first-mover status. LinkedIn, along with competing social firms like Facebook Inc (NASDAQ:FB) and Twitter, have very strong positions in the broader social media category.
User Traffic: LinkedIn’s user base has been growing rapidly and now has more than 225 million members. LinkedIn has done very well in growing internationally, users outside the U.S. now make up 64% of cumulative users. And the company is increasingly becoming a bigger Internet platform over time. According to comScore, LinkedIn and Slideshare now have more than 170.4 million monthly unique visitors, and it ranks as the 22nd most visited web property in the world.
Revenue Model: LinkedIn Corp (NYSE:LNKD) has a solid business model with revenues flowing in from three different streams, including Premium subscriptions, Marketing solutions and Talent solutions. However, LinkedIn largely remains a recruitment portal with its hiring solutions business, which makes up more than half of the revenues for the company. And LinkedIn has been growing its revenues rapidly by taking away more recruitment dollars from competitors like Careerbuilder and Monster Worldwide, Inc. (NYSE:MWW). LinkedIn grew its top-line revenues by 72% Y/Y, and has been eating Monster Worldwide, Inc. (NYSE:MWW)’s lunch. In the last quarter, Monster’s revenues declined 9% Y/Y and its bottom-line decreased 24% on a Y/Y basis.
Corporate Clients & Add-Ons: LinkedIn has been adding corporate clients rapidly at double-digit rates consistently for a number of quarters. LinkedIn added more than 1,700 corporate customers in 1Q13, which brings the total number of corporate customers on LinkedIn to more than 18,000. Some of these clients spend a lot of money on LinkedIn’s services and have long-term contracts with the company, which translate into a steady stream of growing revenues.
Weaknesses
Mobile Strategy: LinkedIn Corp (NYSE:LNKD) now gets roughly 30% of its unique visitors from mobile apps, which is a pretty sizable increase from 19% a year ago. However, the company’s monetization of this increasingly large mobile user base hasn’t gained much traction. The company did make inroads to developing a more user-friendly presence with its acquisition of Pulse, which has already seen more than 30 million activations.
User Engagement: LinkedIn’s user engagement has accelerated in the last two quarters, but the company should take more measures to improve its user engagement levels. LinkedIn’s user engagement as measured by total page views on desktop has risen to 11.6 billion page views in a single quarter, partially driven by the increased number of users. The company’s ability to actively engage its user traffic through more initiatives like Influencers might drive more users to visit its platform regularly, relative to other social media sites.
Dependency on Online Recruitment: The company’s fortunes are heavily tied to the size and the growth of the online recruitment space. LinkedIn is heavily dependent on the revenues from its talent solutions business, which is increasingly being a bigger contributor for the company’s total sales. In Q1 2010, revenues from talent solutions made up only 38% of the company’s total revenues, which notched up to 57% in the 1Q13. As a result, LinkedIn is increasingly being viewed as a career solutions portal, and not a social media or networking platform.
Opportunities
Publishing and content platform: LinkedIn Corp (NYSE:LNKD) has done a commendable job of ramping up its platform as a publishing and content platform. The company’s initiatives towards building an Influencers platform have been very successful in driving business leaders and thought leaders to publish their opinions and share with millions of LinkedIn users. In addition, other LinkedIn assets like Slideshare and Pulse have paved the way for enabling the company to establish itself as a content publisher on the web. LinkedIn can ramp up its user engagement levels even more by building on the success of its Influencers division and coming up with more innovative initiatives.
