LinkedIn’s 2Q earnings soar as growth accelerates

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SAN FRANCISCO (AP) - LinkedIn Corp.’s first quarterly update since its ballyhooed IPO reassured investors who believe it’s smart to buy into the hype surrounding a promising crop of Internet companies.

The second-quarter results announced Thursday not only included the rapid revenue and membership growth that LinkedIn’s professional networking website needed to show to justify its lofty stock price, but also delivered an impressive increase in earnings when analysts were bracing for a loss.

It marked the first update since LinkedIn’s initial public offering of stock in May. The company’s shares immediately doubled from their IPO price of $45 and have remained in that range since then. LinkedIn’s performance is being closely watched amid a stirring debate about whether investors are overvaluing Internet companies and setting the stage for a devastating collapse like the one that occurred in the sector a decade ago.

LinkedIn’s quarterly update served as a reminder that there is at least one significant difference in the latest Internet frenzy: some of today’s online companies are making money, unlike those of late 1990s and 2000.

LinkedIn earned $4.5 million, or 4 cents per share, in the April-June period. That contrasted with earnings of $938,000, or 2 cents per share, at the same time last year.

Revenue more than doubled from last year to $121 million while membership climbed 61 percent to 116 million.

Analysts, on average, had projected a loss of 4 cents per share on revenue of $104.5 million, according to FactSet.

The pleasant surprise injected some exuberance into a dreary stock market. LinkedIn shares surged $7.46, or nearly 8 percent, to $102.98 in extended trading to nearly recover a sharp downturn during the regular trading session.

LinkedIn’s earnings in the most recent quarter represented the most money the company has made in any three-period so far in its 8-year history.

Losses could loom ahead, though. LinkedIn has indicated it’s willing to sacrifice short-term earnings to increase spending on technology and new product development. .

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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