Why we believe LinkedIn can reach 100,000 corporate customers

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LinkedIn (NASDAQ:LNKD)  had 33,271 corporate customers at the end of 2014. [1] This number has doubled in the last two years from 16,409 in 2012. An increasing number of companies is using social media for talent solutions, according to the 2014 Social Recruiting Survey, Jobvite. This survey mentions that 73% of the recruiters plan to invest more in social recruiting.  The most popular social network used for recruiting is LinkedIn. In the next five to seven years, we expect the corporate customer count to increase substantially and touch the 100,000 mark.

We feel this is achievable based on the following grounds:

See our complete analysis for LinkedIn

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Three million companies use LinkedIn, thus presenting a strong business opportunity:

A blog post on LinkedIn in 2013 mentioned that it reached a milestone of 3 million company pages of which 500,000 pages were added in the last 12 months [2]. These companies spanned the globe and represented 148 industries.  LinkedIn’s corporate customers in 2014 accounted for only 0.1% of its total company pages, suggesting significant room for growth. Our long term estimate of 100,000 corporate customers still represents a conservative figure of 3.3% of the total company pages on LinkedIn.

Opportunity to expand in AsiaPacific

LinkedIn had 347 million registered members from 200 countries at the end of December 2014 [3]. This is a strong indicator of LinkedIn’s global presence and its ability to attract and engage professionals around the world. While around 50% of these members come from U.S. and other North American countries, close to 32% are from EMEA and APAC accounts for only 18% (65 million). The membership growth in 2014 was the highest in the APAC region (32% as opposed to 21% in North America) indicating an untapped and growing market in Asia.

Around 60% of the revenues for LinkedIn’s talent solutions business come from the U.S. There is a tremendous scope for the company to expand in other regions, especially Asia Pacific.

Since its launch in Simplified Chinese in 2014, LinkedIn has doubled its Chinese membership from four million English language members to more than eight million. [1] Again, this is a very small percentage of its total users as well as the total working population in China. As far as Asia is concerned, LinkedIn is still scratching the surface.

More than 50 million registered businesses exist

There were 42 million registered businesses in the world in 2005. [4] This number might be overstated as several businesses might have closed down and not reported. Between 2005 and 2012 27 million new businesses were registered globally. [5] Discounting the over reporting factor and accounting for an increase in the number of registered businesses in the last 3 years, we can still assume that there would be at least 50 million registered businesses’ globally. Given LinkedIn’s reach across regions and industries, there is a huge potential market yet to be captured. Based on the above, our estimate of 100,000 corporate customers by 2021 definitely seems achievable if not surpassable, given the huge recruitment market and increasing use of social media for recruitment.

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Notes:
  1. LinkedIn SEC Filings [] []
  2. Infographic published by LinkedIn []
  3. LinkedIn SEC filings []
  4. World BankIndicators, Econ Stats Report []
  5. World Bank Data []