LinkedIn have had a third quarter and with quarterly revenues up 81% to $252m, they are set to have annual revenues of $1bn.
It’s still staggering how on revenues of $252 million they still only make less than 1% profit of $2.3m, although being fair to them, their EBITDA is $56m – 22% of revenue.
Their income is split as follows:
- 55% Hiring Solutions (recruitment)
- 25% Marketing Solutions (advertising)
- 20% Premium Subscriptions (sales and headhunting)
This is a healthy mix – I’m still concerned how many Internet businesses are based on an advertising model. It works so well for some (Google), not necessarily for others (Facebook) and I prefer mixed models where it’s closer to a freemium or retail model (Spotify, Amazon and LinkedIn).
LinkedIn have successfully implemented the freemium model perfectly – most users can get value from the site without paying a penny. Users who want more information about other people’s profile, or want to contact people they’re not connected to, or look at who’s been looking at their own profile, can upgrade.
LinkedIn has become synonymous with Internet based recruitment and B2B business networking. Two thirds of LinkedIn’s revenue comes from the US, so there’s still huge opportunity in Europe and Asisa (22% and 7% respectively). To continue the B2B toolset acquisition, I would expect them to buy an events organiser such as EventBrite.