LinkedIn Earnings Preview: Expecting Strong Growth In The First Quarter

-5.48%
Downside
196
Market
185
Trefis
LNKD: LinkedIn logo
LNKD
LinkedIn

LinkedIn (NASDAQ:LNKD) is scheduled to report its earnings for the first quarter of 2015 on Thursday, April 30. Since its stock price rose by over 60% over the last  year, expectations are high for the company. We expect LinkedIn to easily beat its initial guidance of 31% revenue growth in Q1, fueled by strong demand across business segments and a  robust increase in member engagement. This will further be driven by initiatives such as redesigning member profiles, expanding the mobile ecosystem and publisher network, strengthening jobs listings, and foraying into newer geographies. We also expect some improvement in profitability owing to operating leverage and increased efficiency.

See our complete analysis for LinkedIn

More Information On The Lynda Acquisition Is Awaited

Relevant Articles
  1. Can LinkedIn’s New Salary Benchmark Tool Drive Premium Memberships?
  2. LinkedIn Reports Solid Q3 Earnings; Microsoft Merger On Track
  3. What To Expect From LinkedIn’s Q3 Earnings
  4. LinkedIn’s Next Move To Increase Its User Base In India
  5. Why Is LinkedIn Focusing On India?
  6. Here’s How LinkedIn Can Benefit From Expanding Pro-Finder?

Recently, LinkedIn announced the acquisition of Lynda.com (an online learning company), in a deal valued at approximately $1.5 billion, its biggest acquisition t0 date. The online learning platform hosts high-quality video tutorials on wide-ranging subjects from 3D animation to business courses. The deal will help LinkedIn connect people to the requisite skills required for job opportunities. It could also help boost the professional networking site’s popularity among students; further, it could be used to propel the engagement on the platform. Though the deal is expected to close in Q2 2015, we will looking for updates on this acquisition during the earnings call. Specifically, we are interested to know how closely the two platforms will be integrated and how it could impact monetization in the coming quarters.

Growth Strategies Will Continue To Drive Higher Engagement

We expect LinkedIn to report healthy increase in user and engagement metrics during Q1 2015, helped by several growth strategies. While the cumulative members will cross 350 million, engagement as measured by member page views per unique visiting member will also see robust growth, in our view.

We will track progress against several growth strategies during the earnings call. LinkedIn’s efforts to strengthen its mobile ecosystem could continue to gain traction; hence, the share of mobile devices in overall unique traffic could cross the 49% level seen in Q4 2014. Additionally, LinkedIn is drastically raising the number of job listings on its platform to enhance its value proposition among job seekers and employers. The number of job listings surpassed 3 million at the end of Q4 2014, as compared to 2 million at the end of Q3 2014. We expect a sharp increase in this metric during the latest quarterly results.

Building the publishing platform is another strategy through which LinkedIn aims to make its platform more sticky for users. We expect expansion in weekly long-form posts and in the reach of the publishing feature this quarter. Additionally, we will also be keenly eyeing results from its international expansion as this is a major growth driver for the company’s stock. We think the proportion of international in overall revenues could cross 40%, and a large majority of new member additions could come from countries outside the U.S. in Q1 2015. Specifically, China could continue to account for a significant share of this growth.

Broad-Based Growth Across Business Segments Is Expected

We expect broad-based growth across all the business segments — Talent Solutions, Marketing Solutions, and Premium Subscriptions during Q1 2015. This will be fueled by both expansion in customer base as well as increased business with existing customers. Robust demand across products such as Recruiter, Bizo, Sponsored Updates, and Sales Navigator will propel earnings during the quarter. However, we also forecast a slight revenue headwind owing to integration of sales force, changes in Premium subscriptions, and currency movements.

We will revise our $186 price estimate for LinkedIn’s stock, post the earnings release.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research