LinkedIn hits $5B in quarterly revenue for the first time, and its TikTok pivot pays off
Remember when everyone said Microsoft paid for LinkedIn? Nearly a decade later, the $26.2 billion “billion-plus” acquisition now generates that much revenue every 15 months.
With Wall Street focused on Microsoft’s Azure growth estimates and OpenAI calculations, LinkedIn quietly surpassed $5 billion in quarterly revenue for the first time in the Redmond company’s December quarter, up 11%. That puts the enterprise communications network at an annual operating average of more than $20 billion.
LinkedIn is known for its recruiting and job posting tools, but given the overall weakness in the job market, recent growth has been fueled by LinkedIn Marketing Solutions, its advertising business.
On Microsoft’s earnings call with analysts, CEO Satya Nadella noted that paid video ads on LinkedIn grew 30% year over year. That happened amid the platform’s push into short-form video, a format pioneered by TikTok that LinkedIn tends to adapt to professional content, such as career advice, industry hot takes, and company announcements delivered in live clips.
He noted that LinkedIn had double-digit growth in members for the quarter. The platform had nearly 1.3 billion members as of October, according to Microsoft’s first-quarter earnings call.
Premium subscriptions surpassed $2 billion in annual revenue for the first time last year, Microsoft said at the time, with subscriber growth nearly 50% over the past two years.
The company does not report profits for individual units. LinkedIn sits within Productivity and Business Processes, which includes Microsoft 365 and Dynamics. That segment posted $20.6 billion in operating income with a profit of $34.1 billion, an operating margin of 60%.
Besides, Microsoft’s finances don’t offer much of a window into LinkedIn.
However, a footnote in Microsoft’s 10-Q filing points to a potential cloud on the horizon: a 310 million euro (about $335 million) fine from the Irish Data Protection Commission.
The October 2024 ruling found that LinkedIn violated the GDPR, the European Union’s data privacy law, by using member data to analyze behavior and target advertising. Regulators determined that LinkedIn’s consent procedures were not “freely provided” or “adequately informed,” and ordered the company to bring its data processing into compliance.
LinkedIn said it believes it complied with the law and is appealing the decision. The trial begins in December.
Microsoft has taken a set amount that includes a possible fine. But the fine itself is not a big problem. If the appeal fails, LinkedIn could be forced to adjust its advertising algorithms for Marketing Solutions, the same line of business that currently drives its growth.
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