Most investors are familiar with LinkedIn Corp (NYSE:LNKD), but seem to be unfamiliar with the company’s products, clients, and revenue streams. LinkedIn is the largest professional network on the internet with 218 million registered users, and has the potential to monetize on all those users by offering many different services at different prices. The company classifies revenues in three reporting lines – Talent Solutions, Marketing Solutions, Premium Subscriptions. Within each segment there are various products that the company sells, many of which are innovative, profitable, and relatively unknown.
Talent Solutions
LinkedIn Corp (NYSE:LNKD) offers a corporate recruiting platform through its Talent Solutions products, allowing businesses to scan the company’s vast talent pool to search potential candidates. The line of products pose a direct competition to the traditional offline products and services such as head hunters.
LinkedIn charges its corporate solutions customers on a subscription basis, at a substantial discount to the typical 21% of the first year salary charged by recruiters and head hunters. To put things in perspective, the fees associated with hiring a new employee with a $100,000 a year salary would cost around $21,000 in headhunter fees. The most expensive LinkedIn Corp (NYSE:LNKD)’s Recruiter product costs less than $5,000 per seat, so the potential cost savings for the customer are tremendous, making LinkedIn’s products extremely attractive.
Talent Solutions represents LinkedIn’s fastest growing segment, bringing in $523.6 million in 2012 compared to $260.9 million the year before.
Marketing Solutions
LinkedIn Corp (NYSE:LNKD) sells highly-targeted advertisements throughout its entire website using display ads, sponsored posts, and other formats. These, in conjunction with tools for analytics, are the core offerings that generate Marketing Solutions revenue. The ads are sold on a cost per impression or per click basis, so the key to the company’s future growth is in growing the user base and level of user engagement.
In terms of users, LinkedIn ended 2012 with 116 million unique users, a 26% growth from 2011. The company grew their page views to 37.5 billion in 2012 (up 27% from 2011) while maintaining 30% growth in its implied cost per impression. All this resulted in an impressive 66% growth of the Marketing Solutions revenue stream totaling $258.3 million in 2012. Advertisers are recognizing the value of the LinkedIn Corp (NYSE:LNKD) network and the ability for the platform to only display highly targeted and relevant add displays.
Premium Subscriptions
LinkedIn offers other subscription products such as Personal Plus, Business, Business Plus, and Executive Products. These offer access to premium features not available to users with a free membership. These premium accounts are offered to recruiters, sales professionals, and job seekers, and vary in price from $9.95 to $99.95 per month.
