- 4Q15 = REALLY MESSY: LNKD produced a relatively small top-line beat on what appeared to be a soft 4Q15 guide when they issued it. During the call, mgmt introduced a lot noise through the announced sunset of its Lead Accelerator product and what sounded/read as its plan to stop disclosing LCS accounts. Mgmt also stated that Talent Solutions add-ons and renewals both declined on a y/y basis; both factors are reflected in LNKD’s ARPA, which suggests the selling environment is deteriorating.
- GUIDANCE = RECESSION: LNKD’s Talent Solutions guidance breakdown is calling for a sharp deceleration in organic revenue growth from 32% in 4Q15 to ~20% in 2016. That’s basically implying a recession since its guidance translates to sharply declining ARPA and/or net new LCS Account growth; at a magnitude that is well in excess of anything it's ever reported for either of those metrics (see analysis below). More likely than not, this is an egregiously sandbagged guidance release given how sudden the deceleration is that's baked into it.
- NOT SURE WHAT'S LEFT TO PLAY FOR: On either the short or long side. The sandbag/recession guide should give LNKD at least a couple quarters of breathing room before another short opportunity might emerge. But even if LNKD winds up producing upside over the next two prints, we're not sure anyone is really going to chase that with this print in the rear view mirror and macro concerns looming. That said, we're staying on the sidelines for now.
Let us know if you have any questions or would like to discuss in more detail.