LinkedIn Corp (LNKD): What Raymond James Think?

LinkedIn Corp (LNKD): What Raymond James Think?

Raymond James retained ‘market perform’ rating on LinkedIn Corp (NYSE:LNKD) after the company posted its strong second quarter results.

LinkedIn Corp (LNKD): What Raymond James Think?

Earlier, LinkedIn Corp (NYSE:LNKD) beat analyst estimates for the second quarter, reporting earnings of 38 cents per share on revenue of $364 million. The company also raised its full-year guidance to between $1.455 billion and $1.475 billion.

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Aaron Kessler of Raymond James in the recent research note, observes LinkedIn’s strong second quarter results come despite facing marketing headwind.

Conservative guidance for LinkedIn

Aaron Kessler feels LinkedIn’s third quarter revenue guidance at the midpoint of 4 percent is below the analyst’s estimate. While LinkedIn Corp (NYSE:LNKD) anticipates revenues of $367 to $373 million, the guidance falls short of Raymond’s consensus previous estimates of $389 / $384 million.

Also the analyst feel the company’s EBITA is 14 percent below their estimates. LinkedIn’s EBITDA guidance is for $81-83 million, which is again below Raymond’s consensus previous estimates of $95/$88 million.

Aaron Kessler of Raymond James terms LinkedIn Corp (NYSE:LNKD)’s guidance as conservative, as he anticipates better performance from the company. The analyst sticks to his earlier estimates on LinkedIn.

Improved top and bottom line

LinkedIn’s second quarter revenue was $364 million beating Raymond’s estimates of $358.6/$354.0 million.

The professional network company posted improved gross margin of 87.5 percent which is higher than Raymond’s estimates by 30 bps.

However, Aaron Kessler notes LinkedIn’s EBITDA margin at 24.4 percent was below analyst’s estimates of 24.6 percent.

Better product optimization initiatives

Raymond James analyst notes LinkedIn’s registered members reached 238 million users, up from 174 million clocked last year. Aaron Kessler feels the increase in membership has been driven primarily due to product optimization initiatives undertaken by the professional network company.

Besides, the analyst feels company’s enhanced marketing solutions too yielding substantial benefits to LinkedIn Corp (NYSE:LNKD). The professional network company could reap benefits from its marketing solutions, despite facing headwinds from some large deals last year.

LinkedIn’s also benefited from strong unique visitor growth, besides experiencing strong growth from self-service ads.

Aaron Kessler notes LinkedIn’s revenue from marketing solutions and premium subscriptions were above the analyst’s estimates, while talent solutions revenue fell a shade below the analyst’s estimates.

The professional network company’s channel optimization strategy too seems to be working well. LinkedIn Corp (NYSE:LNKD)’s revenue from the field sales channel of $209.2 million represents 58 percent of its total revenue, showing an year-on-year increase of 62 percent.

LinkedIn’s revenue from online sales channel too improved to $154.4 million, showing an increase of 56 percent over previous year. The professional network company’s registered members too grew to a record 238 million, showing 37 percent increase over previous year.

Aaron Kessler of Raymond James notes during the second quarter, 33 percent of unique visiting members of LinkedIn Corp (NYSE:LNKD) were attributable to mobile, showing 23 percent increase over previous year.

Enthused by LinkedIn Corp (NYSE:LNKD)’s strong performance, Raymond James analyst increased Non-GAAP EPS for LinkedIn Corp (NYSE:LNKD) by 6.5 percent to $2.08.

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