- SELLING ENVIRONMENT REMAINS STRONG: 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.
- 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.
- BUT IT'S UP TO MGMT: We suspect the street needs a clean beat on 3Q revenues/4Q15 guidance or we'll likely see another sell-off in the name. Fundamentally, there's nothing in the way of that (see Points 1 & 2), but the risk into any LNKD earnings release is a notoriously conservative mgmt team as it relates to its guidance. However, mgmt already played that card twice over the last two prints, and we suspect it now realizes that was a big mistake (especially two quarters in a row).
See the notes below for supporting detail/analysis on our LNKD Long thesis, and let us know if you would like to disucss.
LNKD: Notes from 10-Q & IR
08/26/15 10:35 AM EDT
LNKD: New Best Idea (Long)
07/14/15 08:00 AM EDT