LinkedIn is one of the world’s largest professional networking platforms with over 850 million members worldwide. As a Microsoft-owned company and one of the most popular social media platforms for business professionals, LinkedIn generates significant revenue through multiple streams.
LinkedIn’s Revenue Streams
LinkedIn makes money through the following main revenue streams:
- Talent Solutions – Fees charged to recruiters and corporations using LinkedIn’s hiring and recruiting tools
- Marketing Solutions – Fees charged to advertisers for sponsored content, text ads, and other forms of advertising on LinkedIn
- Premium Subscriptions – Fees charged to individual users for premium services and features
- Sales Solutions – Fees charged to sales professionals and organizations using LinkedIn’s sales tools
Of these revenue streams, Talent Solutions makes up the largest share at around 60% of total revenue. Marketing Solutions accounts for about 25%, Premium Subscriptions 15%, and Sales Solutions 5% of revenue.
LinkedIn’s Revenue and Profit
In 2021, LinkedIn generated $10.3 billion in total revenue. This was a 46% increase from $7.1 billion in 2020. LinkedIn has achieved strong and steady revenue growth since being acquired by Microsoft for $26.2 billion in 2016.
LinkedIn’s revenue breakdown by segment in 2021 was:
- Talent Solutions: $6.26 billion
- Marketing Solutions: $2.52 billion
- Premium Subscriptions: $1.48 billion
- Sales Solutions: $535 million
LinkedIn achieved $3 billion in net income in 2021, up from $2.2 billion in 2020. This translates to a net profit margin of around 30%. LinkedIn has maintained profit margins above 25% over the last several years.
LinkedIn’s User Base
LinkedIn’s revenue growth has been driven by steady increases in its user base. As of Q1 2022, LinkedIn reported having:
- 850+ million members worldwide
- 303 million monthly active users
- Approximately 20 million corporate pages
- 75 million + paying members
LinkedIn added nearly 100 million new members over the past two years despite the pandemic. It is continuing to see double-digit growth rates in its user base.
Revenue Per User
With 303 million monthly active users and $10.3 billion in revenue in 2021, LinkedIn generated approximate revenue per user (ARPU) of $34.
This is relatively high compared to other social media platforms:
| Platform | ARPU |
|---|---|
| $34 | |
| $7.37 | |
| Snapchat | $3.20 |
| $6.83 |
LinkedIn’s much higher ARPU is fueled by its focus on professional networking and enabling revenue generation for its users. Other social platforms focus more on general socializing and sharing.
LinkedIn Premium Subscriptions
In addition to corporate services, LinkedIn generates revenue from premium subscriptions paid by individual users. There are the following premium membership options:
- Premium Career – $29.99/month or $239.88/year
- Premium Business – $47.99/month or $359.88/year
- Premium Sales – $64.99/month or $479.88/year
- Recruiter Lite – $99.95/month or $959.88/year
- Recruiter – $239.95/month or $2,495/year
Premium subscriptions provide users with features like seeing who viewed your profile, expanded search filters, unlimited InMail messages, and more profile views. As of 2021, LinkedIn had over 75 million paying members, up more than 15% year-over-year.
LinkedIn’s Advertising Business
LinkedIn’s Marketing Solutions include sponsored content, text ads, and dynamic ads targeted by location, industry, job function, and other criteria. Major categories include:
- Sponsored Content
- Sponsored InMail
- Dynamic Ads
- Text Ads
LinkedIn’s unique professional audience and intent-driven ad targeting makes it highly attractive to B2B advertisers. LinkedIn is increasingly competing with Facebook and Google for digital ad spend. Ad revenue was up over 50% in 2021.
Growth Drivers
LinkedIn’s revenue has consistently grown at a 40%+ rate over the past several years. The key growth drivers fueling this momentum include:
- Expanding user base, especially internationally
- Increasing premium subscriptions
- Growth of its talent solutions and recruiting marketplace
- Expanding marketing solutions and ad products
- Growing sales tools and lead generation solutions
LinkedIn is well-positioned to continue its strong growth trajectory given its leadership in professional networking, unique audience, and expanding product portfolio.
Competition
While LinkedIn dominates professional social networking, it faces increasing competition in areas like recruiting, marketing, and sales solutions. Major competitors include:
- Recruiting and talent solutions – Indeed, ZipRecruiter, Facebook, Glassdoor
- Marketing solutions – Facebook, Instagram, Google, Twitter
- Sales tools – Salesforce, HubSpot, Zoho, Oracle
However, LinkedIn retains significant competitive advantages from its brand, data, and platform network effects. It will be difficult for other players to replicate LinkedIn’s professional community and talent marketplace.
LinkedIn After the Microsoft Acquisition
Microsoft acquired LinkedIn for $26.2 billion in 2016. This provided LinkedIn with substantially more resources to accelerate growth.
Under Microsoft, LinkedIn has:
- Grown revenue from $3 billion in 2016 to over $10 billion in 2021
- Expanded its product offerings in recruiting, marketing, sales, online learning, and more
- Leveraged integration with Microsoft Office and tools like Outlook
- Expanded globally into new international markets
The Microsoft acquisition has supercharged LinkedIn’s growth. It has retained its brand independence while benefiting enormously from Microsoft’s resources and cross-platform integration.
LinkedIn’s Future Growth Potential
LinkedIn is forecast to generate continued rapid growth over the coming years. According to Morgan Stanley, LinkedIn’s revenue could reach $17 billion by 2024. Key trends contributing to future growth include:
- Increasing shift of marketing, recruiting, and sales spending toward professional digital platforms
- Further global user growth, especially on mobile devices
- Expansion into new industry verticals like online education and virtual events
- New revenue streams from integrations with Microsoft Office and other Microsoft properties
- Leveraging Microsoft AI capabilities like machine learning for product innovation
LinkedIn is already generating over $10 billion in annual revenue and significant profits, but still likely remains in the early stages of its growth story. The professional networking platform appears poised for continued expansion under Microsoft’s umbrella.
Conclusion
LinkedIn has established itself as one of the world’s most profitable and highest revenue social media platforms. It makes most of its money from selling talent solutions to recruiters and marketers, supplemented by growing subscription and advertising revenue streams. Under Microsoft, LinkedIn has accelerated growth and has many promising avenues to expand moving forward. While competition is increasing, LinkedIn remains the dominant professional social network with unique data assets, brand prestige, and an engaged user base.
