LinkedIn, Up 12%, Masters Art Of A Very Bullish Earnings Call

　　LinkedIn didn’t just delight investors today with a bullish earnings report that sent its stock up 12% by the end of after-hours trading. Company CEO Jeff Weiner and his sidekick, chief financial officer Steve Sordello, also mastered the art of making LinkedIn’s future sound bright, without committing themselves to any specific targets beyond the company’s traditional earnings and revenue guidance for the rest of the year.
　　Bringing good news to Wall Street can be just as tricky — even treacherous — as communicating during troubled times. Get too ebullient about products that haven’t yet been launched, or potential customers that haven’t yet been signed on, and today’s upbeat remarks can lead to a subsequent stock-price cave-in and investor outrage if promised breakthroughs don’t happen. LinkedIn’s challenges are especially intense because the company now sports a remarkable $23.5 billion market capitalization. That’s more than 14 times its annualized revenue run rate, and a vastly bigger multiple of its earnings.
　　But Weiner and Sordello played their cards carefully. Here are some of the key points from the call, followed by some deconstruction of what they didn’t say:
　　LinkedIn’s membership has expanded to a record 238 million people, up 37% from a year earlier. That’s the first acceleration in membership growth since late 2011.
　　- Audience engagement is high, too. Citing comScore data, Weiner said LinkedIn averaged 189 million unique visitors a month in the quarter, counting both the flagship LinkedIn site and the separate SlideShare site. LinkedIn’s new Contacts service, which helps members keep track of their dealings with other people on th site, piloted in a small way in April, with early users viewing 2.5 times more pages.
　　- Financial performance measures are surging across the board. Second quarter revenue climbed 59%, to $363.7 million, from a year earlier. Net income rose 32%. Profit margins — as measured by adjusted earnings before interest, taxes, depreciation and amortization — expanded to 24% of revenue, up from 22% the year earlier.
　　- LinkedIn’s Talent Solutions division, which delivers tools for corporate recruiters, remains the company’s biggest and fastest-growing operation. Its revenue jumped 69% in the quarter and now accounts for 56% of LinkedIn’s total revenue, up from 53% a year earlier. LinkedIn’s marketing solutions business (mostly advertising and job listings), grew 36%, while premium subscriptions expanded revenue 68%.
　　- Looking ahead, LinkedIn slightly raised its estimates for full-year 2013 performance, predicting revenue of between $1.445 and $1.475 billion, along with EBITDA of $340 million to $355 million.
　　How much room is there for LinkedIn to keep expanding at this rate? Weiner was asked if there’s an upper limit to how many people might ever join LinkedIn, which caters to managers, executives and skilled white-collar workers. Overall, he said, there are 600 million people in the world who fit that bill. But he said his long-term dream is to expand LinkedIn in ways that would make it relevant to all 3.1 billion people on earth with a job.
　　Similarly, Scardello talked about the ways that Talent Solutions’ products could connect with many more businesses outside the U.S. “There’s still a lot of headroom there,” he said.
　　Such answers let LinkedIn reassure Wall Street without promising too much. Analysts can feel a bit more confident that LinkedIn can keep growing in ways that will justify the stock’s current value and perhaps even provide room for more price appreciation down the road. (LinkedIn stock has already surged more than 85% this year.) But Weiner and Scardello didn’t promise any specific amount of growth.
　　If the company hits a slow spell, LinkedIn’s leaders can just position those big goals on the horizon as a little more distant than analysts might have realized.