LinkedIn Is a Major Growth Driver for Microsoft

LinkedIn is shaping up to be one of Microsoft’s best growth drivers six years after purchasing it,...
LinkedIn Is a Major Growth Driver for Microsoft
Written by Matt Milano
  • LinkedIn is shaping up to be one of Microsoft’s best growth drivers six years after purchasing it.

    LinkedIn is the professional networking site Microsoft purchased in 2016 for more than $26 billion. The platform provides a way for professionals to connect with others in their field, search for jobs, post articles, and more. Microsoft has continued investing in the platform and integrating it with its other tools and services. The company’s strategy is paying off, with a report from Seeking Alpha revealing that LinkedIn is now one of Microsoft’s biggest growth drivers.

    LinkedIn is part of Microsoft’s Business & Productivity segment, which is already seeing massive growth.

    We looked further into the company’s growth driven by the Business & Productivity segment (comprised of Office Products, LinkedIn and Dynamics). This major segment makes up 32.1% of its total revenue in 2021.

    According to Seeking Alpha, despite having a smaller portion of the social networking market, LinkedIn is punching above its weight class in terms of the value it generates:

    While LinkedIn only represents a small percentage at 11% of the selected Social Networking Sites’ total users which is dominated by Facebook (META) followed by Twitter (TWTR) and Reddit, LinkedIn stands out as a multi-sided platform combining social media with the recruiting platform. Compared to Facebook and Instagram, which has a higher growth rate in terms of average revenue per user, LinkedIn had a stable average ARPU growth of 23% since 2017.

    LinkedIn’s value to Microsoft is also driven by the results it delivers, providing 4.4x higher cost-per-click than Facebook, 12.84x higher than Twitter, and 0.48x higher than Instagram. Similarly, is 277% more effective at lead generation than Facebook and Twitter.

    Thus, we forecasted its growth based on its 5-year average user growth rate of 11% and ARPU growth of 10.8%. All in all, we projected LinkedIn’s revenues to grow at an average rate of 22.9% annually through 2024 as it attracts more users and monetizes its user base.

    Seeking Alpha’s report is good news for LinkedIn and Microsoft and shows the latter knew exactly what it was doing when it bought the networking site.

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