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Takeaway: No lumps of coal in guidance this time. Also the acceleration in organic TS revenue growth essentially puts the Lynda decoy story to bed.

KEY POINTS

  1. GOOD PRINT: LNKD beat top-line estimates by roughly 3%, beating estimates across all segments while surprising with a considerable beat on EBITDA.  Naturally, some of its upside has to do with its sandbagged guidance (i.e. Display) over the last two prints, but the bulk of its top-line beat came from Talent Solutions.  LNKD produced accelerating organic Talent Solutions revenue growth in 3Q, with ARPU also accelerating from 2Q levels.  We suspect LNKD’s heavy investment in its salesforce within an improving selling environment is starting to pay off. 
  2. CLEAN GUIDANCE: LNKD raised guidance 2015 guidance by $37.5M at the midpoint, which is basically driven mostly the 3Q beat of $32.5M.  So 4Q guidance only translates to $5M raise, which wound up being only $1M above consensus estimates at the midpoint.  Granted, $5M is not a big raise by any extent, but it was clean; no big upside surprises from Lynda or organic cuts.  
  3. BUT NOT A SLEEPY LONG: The setup on LNKD can turn any given quarter, and naturally we are cautious staying long into the 2016 guidance release since this mgmt team is notoriously cautious with guidance.  The positives into 2016 is that LNKD will start comping past two pretty big drags on revenue growth (Display and Fx), and is still ramping its salesforce into 4Q.  The potential risk is that the selling environment, which is driven by the macro backdrop.  That said, if our tracker turns, we'll likely get out of the way.   

LNKD: Thank You Santa (3Q15) - LNKD   Sales Rep Slide

LNKD: Thank You Santa (3Q15) - LNKD   ARPA vs. JOLTS 3Q15 3

Let us know if you have any questions or would like to discuss in more detail.  

Hesham Shaaban, CFA


@HedgeyeInternet