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Takeaway: Our tracker suggests an improving selling environment into 3Q15, reinforcing our view that mgmt was crying wolf with its organic guide down.

KEY POINTS

  1. TRACKER SUGGESTS IMPROVING SELLING ENVIRONMENT: Our LNKD JOLTS tracker is accelerating through the first two months of 3Q15, suggesting an improving selling environment.  Our tracker has produced a relatively tight correlation with LNKD's Talent Solutions ARPA dating back to 1Q11 (~0.75).  As a reminder, our LNKD Talent Solutions TAM analysis suggest the bulk of that TAM is in the upsell opportunity (ARPA) vs. new account volume.  See 2nd note below for detail.  
  2. GUIDANCE = WORST-CASE SCENARIO: We suspect LNKD all but removed Display Advertising revenue from its guidance (see 1st note below), so that headwind is more than baked into estimates.  That said, we see Talent Solutions as the swing factor moving forward.  LNKD should handily beat rebased 2H15 consensus TS revenue estimates barring a considerable deceleration in both ARPA and LCS account growth (see scenario analysis below).  LNKD's salesforce ramp into the improving selling environment would suggest the opposite.  

See the notes below for supporting detail/analysis on our LNKD Long thesis, and let us know if you would like to disucss.  As a reminder, we our hosting our quarterly Internet BEST IDEAS Update call next Tuesday.  

Hesham Shaaban, CFA


@HedgeyeInternet 

LNKD: Tracker Update (Talent Solutions) - LNKD   ARPA vs. JOLTS 3Q15 2

LNKD: Tracker Update (Talent Solutions) - LNKD   TS Scen 2015 3Q15 2 

LNKD: Tracker Update (Talent Solutions) - LNKD   2015 Guidance 2Q15

LNKD: Notes from 10-Q & IR
08/26/15 10:35 AM EDT
[click here

LNKD: New Best Idea (Long)
07/14/15 08:00 AM EDT
[click here]