LNKD | Good Print, No Chase (1Q16)

04/29/16 10:34AM EDT

KEY POINTS

  1. 1Q16 = SOLID BEAT/SOFT RAISE: No big surprise on the beat after the scary 2016 guidance offered up on its last call.  Talent Solution revenue came in ahead of expectations, albeit notably decelerating in its legacy Hiring segment from 32% to 27% y/y growth.  However, LNKD produced unexpected accelerations in both Marketing Solutions & Premium Subscriptions revenue growth.  LNKD raised 2016 guidance largely inline with the 1Q beat; 2Q guidance edged above consensus.  
  2. NO NEW RED FLAGS: We avoided this print largely becuase we didn't know how mgmt was going to address the street, which we suspect may carry more weight than its reported metrics this year after the 4Q15 fallout on largely self-inflicted wounds.  However, mgmt handled themselves much better on the call this time around.  The focus of mgmt commentary was more on LNKD's long-term prospects and less so on the current environment.  Mgmt did address the EMEA/APAC concerns raised during the last call by suggesting that both markets are performing as expected.  Interestingly, revenues actually accelerated in both markets... 
  3. BUT NOT MUCH OF A CHASE: The stock is up only 2%, which is a fairly muted chase given the -45% YTD drawdown.  The lack of buy-side enthusiasm for what was largely a flawless print suggests the 4Q15 fallout is still top of mind, which also suggests there could be a ton of downside the next time LNKD doesn't handily beat/raise estimates.  1Q16 could be one of LNKD’s better prints of the year given the inevitable step-up in sell-side estimates, which generally tend to exceed guidance by a wide margin.  That said, we suspect LNKD could be closer to its ceiling than its floor this year.  We remain on the sidelines for now.

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

Hesham Shaaban, CFA
Managing Director


@HedgeyeInternet 

© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.