Linkedin will likely announce
- 300M members (about 45% yoy growth)
- decline in monthly visitors year over year.
- 10% decline in page views
Linkedin actually reported comscore-based results for engagement that show a 7% or so increase in visitors, and 3% increase in page views. Comscore excludes mobile traffic, while the quantcast includes it. Last quarter's drop in mobile use continued this quarter.
- a record net income loss ($13.4M) ($0.11)/share. Trailing 4 quarters are now a net loss.
- First ever operating income loss.
- Continued decelerating revenue of $473M. A 46% yoy increase.
- A 38% growth forecast for next quarter, along with expected $9M loss
- increase in diluted shares to 124.8M
- record low corporate solutions customer growth of 42% yoy and 6% qoq. +1400 corporate solutions customers, lowest since +1300 in Q1 2012.
- 28% yoy growth in marketing solutions revenue per 1000 comscore pageviews to $8.27
The above admissions confirm the company's relative market saturation, and expected continued growth decline. The focus on existing customer leveraging suggests that relatively soon (less than 8 quarters) , near 0 growth could occur. You can upsell a customer once in a while at best. Certainly, sales productivity declines as you attempt more. There is also a limit to revenue per 1000 pageviews growth, and all increases generally harm pageview growth.
Further Quantcast data
- Even further deterioration in April. About 10% yoy drop in unique visitors. 15% drop in pageviews.
- No lasting apparent engagement impact from press releases of China launch.
- 33% or so decline in mobile pageviews.
- something to keep in mind are that daily active users are over 50x more at facebook
Linkedin's acquisition of Bright is to improve its job matching capabilities. It may make the service better, but its unclear how it will improve revenues or profitability.
While Twitter claims that its current massive stock based compensation is "only" related to its IPO, and will decrease in the future, Linkedin's executive compensation committee recently provided a generous increase, and we should have every expectation that Twitter will create a similar outcome.
Can Linkedin ever make money for public shareholders?
- It won't be in 2014.
- If it pursued its objective of signing up all 1.5B global workers, (5x growth) It will increase its costs per user (depreciation + cost of revenue) by 5x to 8x to $1.90-$3. If each user views 30 pages per quarter, and LNKD earns $10 CPM, then its potential marketing revenue is only $0.30 per user.
- The above point casts the most serious doubt over its eventual profitability. Its stated strategy is guaranteed to lose money.
- Its certain that growing up to that point will take significant sales and R&D effort certain to prolong losses. The marginal value of those 1.2B new users is certain to be lower than the existing 300M, and so even if sales and R&D are drastically cut after the goal achieved, no obvious prospect of profitability exists. Sales and Marketing increased 150bp this quarter to 35.2% of revenue.
- More generally, cutting sales and R&D after it has finished growing is going to signal competing ventures to take its share more cheaply than LNKD built it. For example Mopub (owned by twitter) is competing with google's mobile ad network by not charging publishers anything. It doesn't matter if there is no hope of profitability if investors are willing to pay Twitter founders so much for the illusion there might be. Cutting sales and R&D at Linkedin would bring its price multiples down to MWW (Monster Worldwide (which used to be about 10)).
- The only real possibility for Linkedin profitability is a cut in executive compensation. The prospect of that is the same as Congress voting itself a 94% pay cut based on its 6% approval rating. Linkedin executives have complete control of the company, and compensation committee, and will continue to pay themselves near the legal maximum.