KEY POINTS
- MILD IMPROVEMENT: Our LNKD ARPA tracker held its sequential improvement through 1Q16, showing a seasonal rebound, and a mildly improving trend with the March update. Granted, mgmt already reported 1Q16, so this update is more about what mgmt was likely seeing in the last full month before issuing 2Q guidance. As it stands now, our tracker suggests the selling environment remains stable and mgmt has more than enough cushion on the 2Q guide. As a reminder, our LNKD Hiring Solutions TAM analysis suggests that the bulk of that opportunity is in the upsell (ARPA) vs. new account volume. Note that LNKD stopped reporting its Talent/Hiring Solutions customer counts, so we will not be able to calculate its ARPA anymore, but we'll continue to provide tracker updates.
- TRICKY SETUP: LNKD's stock barely budged following a relatively flawless 1Q16 print (beat/raise + no new major red flags). Granted the stock had already climbed ~22% off its YTD lows leading into the print, but we're not sure how much of that was just beta. The question now is what does LNKD need to do to get the street to chase the next print. We're probably not alone is our expectation for another beat/raise (barring a turn in the selling environment), especially since LNKD's 2016 guidance is still basically implying a recession and/or a precipitous decline in salesforce productivity (declining ARPA and/or net new LCS account growth). We still suspect it will take more than one positive earnings release to regain the trust of the street after the 4Q15 release, question is whether 2Q16 would be enough. We remain on the sidelines for now.
See the note below for additional detail on LNKD's 1Q16 release. Let us know if you would like to discuss further.
Hesham Shaaban, CFA
Managing Director
@HedgeyeInternet
LNKD | Good Print, No Chase (1Q16)
04/29/16 10:34 AM EDT
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