LinkedIn Q1'16 Earnings Conference Call: Full Transcript

Operator:

Ladies and gentlemen, welcome to the LinkedIn First Quarter 2016 Earnings Conference Call. During the call all participants will be in a listen-only mode. After the presentation, we will conduct the question-and-answer session. As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section of LinkedIn website following this call. I’ll now turn the call over to Matt Sonefeldt thank you. You may now begin.

Matt Sonefeldt:Head of Investor Relations:

Good afternoon. Welcome to LinkedIn’s first quarter 2016 results call. Joining me today to discuss our results, our CEO, Jeff Weiner and CFO, Steve Sordello.

Before we begin I would like to remind you that during the course of this call, management will make forward-looking statements with are subject to various risks and uncertainties. These include statements relating to expected number of growth and engagement, our product offerings including mobile on our productive deployment process, the results of our R&D efforts, revenue including revenue growth rates of our three products lines, Talent Solutions, Marketing Solutions, and Premium Subscriptions, adjusted EBITDA, depreciation and amortization, stock-based compensation, share dilution, taxes, free cash flow and CapEx, the product mix between online and field sales, churn rate and expenses. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. A discussion of risks and uncertainties related to our business is contained in our filings with the Securities and Exchange Commission in particular the section entitled risk factors and our quarterly and annual reports and we refer you to these filings.

Also I would like to remind you that during the course of this call, we may discussion some non GAAP measures in talking about the company’s performance. Reconciliations to most directly comparable GAAP financial measures are provided in the tables in our earnings release. This call is also being broadcast on the web and is available to the Investor Relations section of the LinkedIn website.

With that I will turn the call over to our CEO, Jeff Weiner.

Jeff Weiner:Chief Executive Officer:

Thank you Matt and welcome to today’s conference call. I will start by summarizing the operating results for the first quarter of 2016 and I’ll recap some of the key milestones as we continue to execute on our strategy. Q1 was a strong start to the year as LinkedIn once again delivered result that exceeded our plan. I want to highlight three key themes from the quarter.

First, engagement materially strengthening across our member platform driven by our new flagship experience. Second, our core modernization products Recruiter and Sponsored Updates showed continued growth while our emerging strategic investments such as Sales Navigator and Learning & Development continued to show progress. And third we saw significant improvements in our ability to increase ROI across the business. For Q1, overall revenues grew 35% to $861 million.

We delivered adjusted EBITDA of $222 million and non-GAAP EPS of $0.74. In the quarter, cumulative members grew 19% to 433 million our strongest net add quarter since the beginning of 2014. Our core operating metrics saw accelerated growth. Unique visiting members grew 9% to an average of 106 million members a month and member page views grew 34%.

Page views per unique visiting member hit an all time high in Q1 with 23% year-over-year growth. Q1 marked the first full quarter for our new mobile flagship experience and we’re pleased with the performance thus far. Members are engaging at record levels with the more relevant and comprehensive feeds. During the quarter viral actions increased more than 80%, daily shares were up nearly 40% and traffic to third-party publishers grew more than 150%. We also continue to see significant growth in other core engagement metrics such as profile at its connections made and messages sent.

Additionally we saw record level of activities in our Jobs products. Total jobs unique visitors hit a record high in Q1, up more than 20% versus last year. Job applicants from our mobile flagship app also reached record highs up more than 50%. And as job secrets find more value on LinkedIn, our hiring business directly benefits.

For Talent Solutions in Q1 we strengthened our core Recruiter product while also laying the groundwork for the roll out of a number of emerging growth drivers. The next generation Recruiter unveiled late last year is the foundation of our long-term growth strategy. Recruiters are experiencing greater success with the new product and effectiveness has increased substantially. Currently the number of candidates viewed per search is up more than 40% and e-mails per search are up more than 30%. By the end of Q2 we expect the majority of our customers to have converted to the new version of Recruiter.

Additionally, newer products such as Referrals and Connectifier are coming online to help customers drive a greater share of hiring through LinkedIn. And the increased member engagement with jobs is already delivering a stronger pipeline of potential candidates to our existing customers.

In Marketing Solutions our redoubled focus on sponsored content is already paying dividends. In Q1, sponsored content grew nearly 80% now representing 56% of total Marketing Solutions revenue. On top of greater demand, increased engagement resulted in more opportunities for marketers to reach their target audiences. We also began piloting the sales sponsored content through off network inventory.

In addition by virtue of leveraging our LinkedIn lead accelerator team and technology, conversion tracking and enhanced campaign analytics are coming online faster than we expected. By the end of 2016 we anticipate a sponsored content customer will be able to expand targeting using their own data such customer account lists, use conversion tracking to better measure their return on investment and leverage improved tools including APIs to better manage their campaigns. All which will ultimately drive even higher ROI.

In addition to our core businesses Sales Solutions and Learning & Development represent two longer term focus areas. For Sales Solutions we continue to focus on enhancing Sales Navigator to become the primary system of engagement for sales professionals. During the quarter, we continue to make good progress simplifying the integration with CRM systems enabling C holders to see more value faster. We also remain focused working with customers globally to help measuring drive their ROI.

For example, Sales Navigator influenced $350 million in closed business at HCL, a global businesses services firm demonstrating the significant potential of social selling.

Regarding Learning & Development, we are now turning our attention from integrating the linkedIn.com team to integrating our technology and content. Two examples of launched linkedIn learning paths aggregating relevant content from across linkedIn relating to a specific topic or course and testing deeper integration into relevant LinkedIn subscription packages.

On the enterprise side, we continue to build out the comprehensiveness of our content library to meet the growing demand from our corporate customers.

In closing, Q1 represented a strong quarter for both our member platform and business lines with increasing engagement via our flagship apps strengthening the foundation for continued growth across our diverse enterprise offerings. At the same time we remain focused on long term profitability by driving greater leverage and ROI across on our entire portfolio.

Lastly, I want to thank all of our employees who have continued to make this possible while embodying our culture and values. I will now turn it over to Steve for a deeper dive into our operating metrics and financials.

Steven J. Sordello:Chief Financial Officer and Senior Vice President:

Thanks Jeff. As a reminder I will discuss growth rates on a year-over-year basis unless indicated otherwise and non-GAAP financial measures exclude items such as stock-based compensation expenses, amortization in intangibles, and the tax impacts of these adjustments. We achieved strong performance during the quarter underscoring progress across member engagement and in our core and emerging businesses. We also improved the return on our investment as revenue growth was accompanied by an increase in adjusted EBITDA margin year-over-year.

With respect to revenue, in Q1 we generated $861 million in total sales, growth of 35% year-over-year or 38% on a constant currency basis. Talent Solutions revenue comprised of Hiring and Learning & Development increased to $558 million, up 41% year-over-year and represented 65% of sales versus 62% last year. Within Hiring, revenue grew 27% year-over-year or 30% on a constant currency basis.

For Field Sales we are encouraged by solid fundamentals. Existing customers continue to grow their spend with LinkedIn. Larger enterprises represent approximately 70% of customer spend and we’ve seen healthy growth over the past couple of years in existing customer spending. We also continue to see engagement increase across our product suite as measured by jobs posted, job applications, and in mail sent. In addition we saw a better than expected impact from pricing while churn levels were consistent with last year helping maintain core customer spending growth. For new customers, growth remains strong as we added a healthy level of new accounts with modest acceleration in large enterprise customer additions.

Our online channel composed of online jobs and subscription products for individual job seekers and recruiters benefited from two factors. First, new subscribers continued shifting to Job Seeker and Recruiter Lite from premium subscription. This shift dates back to Q4 2014 subscriber on boarding changes which we will begin to lap in the second half of 2016. More importantly, we saw positive impact from increased engagement and product improvement. Learning & Development continues to be an area of a longer term focus and contributed $55 million during the quarter. Important initiatives in 2016 include integrating learning content into the LinkedIn platform and beginning to grow our enterprise effort given the building early demand with corporate customers.

Marketing Solutions increased 29% to $154 million or 31% on a constant currency basis and represented 18% of revenue versus 19% last year. Sponsored Content continues its strong performance growing nearly 80% in the quarter. Product improvements drove significant improvements in click-through resulting in increased ROI for customers. Growth in delivered impressions came from greater feed engagement and strong customer demand.

Sponsored content strength also helped ease the secular transition from display. As expected, premium display declined approximately 30% and now represents roughly 10% of overall Marketing Solutions. As mentioned last quarter we are testing programmatic sales in write inventory an area we will continue to explore throughout 2016. The decision to focus primarily on sponsored content began to payoff in the first quarter and we will continue to focus our investment to better integrate the lead accelerator technology into the sponsored content platform. Premium subscription grew to $149 million up 22% year-over-year or 25% growth on a constant currency basis and contributed 17% of revenue versus 19% last year.

Sales Solutions grew approximately 55% year-over-year and now represents 40% of premium subscription revenue. The Field channel is growing substantially faster than individual online subscriptions and enterprise customers continue to see increased value in Sales and Navigator. Within these customers, high product satisfaction and lower churn give us conviction in the future potential of this business. The remainder of Premium Subscriptions comes from our general subscriptions SKU. This product grew approximately 7% year-over-year muted in part by the previously discussed changes in subscriber on boarding.

Looking across the four individual subscription products on the LinkedIn platform, Gen Subs, Jobseeker, Recruiter Lite, and Sales Navigator, we saw healthy growth in the 20% range in the first quarter. In terms of geography, non-US sales represented 39% of overall revenue consistent with last year, up 41% on a constant currency basis. We saw better than expected results across all of our product lines and by channel, Field Sales contributed 62% of revenue consistent with last year.

Moving to the non-GAAP financials, adjusted EBITDA was $222 million, a 26% margin. Depreciation was $95 million, amortization of intangibles was $47 million, and stock compensation totaled $146 million. GAAP net loss was $46 million resulting in a $0.35 loss per share compared to a loss of $43 million and $0.34 last year. Non-GAAP net income was $99 million resulting in earnings of $0.74 per share compared with $73 million and $0.57 last year.

The balance sheet remains well positioned with $3.2 billion of cash and marketable securities. Operating cash flow was a record $252 million versus $165 a year ago and free cash flow was $75 million in light of our continued investments in datacenters and facilities.

With respect to CapEx, we expect to see increased leverage beginning in 2017 as we exit what has been a period of strategic investment in datacenters and facilities to support our long term growth. In terms of datacenters, we will complete building out the majority of our global footprint by the end of 2016, on track with the plan we originally discussed in 2014. We have begun to realize improved reliability and increased site speed made possible by our new self managed infrastructure. We will also improve our cost structure given that we expect to realize greater than 40% in future OpEx savings within cost of revenue.

For facilities we have executed on our plan that aligns our global office footprint with our long term business needs and we plan to exit our growth investment cycle in late 2017.

Turning to guidance. I went in the call with our outlook for the second quarter and an updated due at the full year. For the second quarter we expect revenue of approximately $885 million to $890 million representing approximately 25% growth, adjusted EBITDA of between $225 million to $230 million at 26% margin, and non-GAAP EPS of between $0.74 and $0.77 per share. For the full year we’ve increased our outlook and now expect revenue of between $3.65 billion and $3.7 billion, a range of 22% to 24% year-over-year growth, adjusted EBITDA of approximately $985 million to $1.005 billion, a 27% margin and non-GAAP EPS of approximately $3.30 to $3.40 per share.

For stock-based compensation, our 2016 equity grant will result in 100 basis points of GAAP margin expansion this year versus prior guidance. Overall, stock compensation is an area of focus and we expect to see continued progress towards lowering this expense as a percentage of revenue going forward.

For 2016, we expect approximately $150 million for Q2 and $580 million for the full year, Depreciation of approximately $93 million for Q2 and $395 million for the full year with second quarter amortization of approximately $44 million and $173 million for the full year. For other expenses, on a non-GAAP basis we expect approximately $2 million for Q2 and $4 million for the full year and on a GAAP basis, we expect $16 million for the second quarter and $63 million for the full year. This includes GAAP only convertible accretion expenses and the impact from the financial derivatives related to Chinese JV.

Our non-GAAP tax rate of 23% for Q2 and the full year also as it relates to tax as mentioned last quarter we expect to take a GAAP charge of approximately $100 million in the second quarter of 2016, the result of a valuation allowance against our deferred tax assets. As this is a non cash charge, this will not impact our non-GAAP results.

For share count, on a GAAP basis we expect 134 million fully diluted weighted shares in Q2 and an average of 135 million for the full year and on a non-GAAP basis we expect 136 million fully diluted weighted shares on Q2 and for the full year.

In closing we are off to a good start to 2016. We are building momentum in member engagement, achieved solid results in our core and emerging businesses and generated strong adjusted EBITDA and record operating cash flow. Finally, we are positioned to create greater leverage to increasing profitability and growing free cash flow.

As we invest for the long term, we will continue to pursue the realization of our mission while focusing on capturing the large and growing opportunity ahead of us.

Thank you for your time and we’ll now take questions.

Question & Answer

Operator:

Your first question comes from the line of Dan Salmon with BMO Capital Markets. Your line is open.

Daniel Salmon:BMO Capital Markets:

Hey. Good afternoon everyone. Sort of related two part question around Marketing Solutions. Could you expand a little bit Jeff more on how you’re integrating the lead accelerator technology and the team back into the core platform for Marketing Solutions and then also may be update us on status of any off network advertising work, how the transition is playing out there and how you may or may not come back and look at that opportunity on the road?

Jeff Weiner:

Yes absolutely. So with regard to the integration of team and technology, that’s now one team is one LinkedIn Marketing Solutions R&D team very focused on sponsored content at its core and with regard to infrastructure and being able to leverage the technology we’ve been able to significantly accelerate conversion tracking which is going to be a meaningful driver of increased ROI on going forward basis. We continue to enhance our targeting capabilities. We’re able to accelerate further development of our API capabilities.

So when it’s all said and done, the acceleration and the degree of integration certainly exceeded our expectations following a transition away from -- and sponsored content remains our fastest growing business at scale, so very pleased with that. With regard to ofnet again this increasing focused on sponsored content enables us to start piloting the sale of sponsored content beyond LinkedIn.com. Still very early days there. We’ve seen some encouraging signs in terms of some of the key drivers but in terms of overall scale, I want to make sure we can deliver quality clicks at the kind of scale we’d ultimately like to achieve and so we’re going to continue to keep an eye on that overtime.

Operator:

Your next question comes from the line of Scott David with Stifel. Your line is open.

Scott David:Stifel:

Thank you and congratulations on this solid results. As I look back it was a pretty smooth first two and half years after the IPO and then 3 and past five quarters have displayed more bumpiness in results and forecast which is led to more volatility in stock. I was wondering if you can talk now what you think are making the business less predictable in the recent past and how you think about the consistency and predictability of the business how do you seen a more stabilized rate of growth and then secondly would love to just hear how you’re thinking strategically about managing cash flow, Steve you mentioned a bit about CapEx and then also separately on your philosophy with SPC stock-based compensation? Thank you.

Jeff Weiner:

Hey Scott thanks for the question. With regard to visibility and what’s changed I think overtime it’s the business has grown as our scope has grown, as the complexity has grown to some extent that’s going to be expected. The question is how we manage through it and how we continue to improve. We have continue to focus on improving operational excellence across the board.

We continue to focus on fewer things done better we continue to grow more sophisticated with regard to our controls our visibility into performance and I credit the team managing through this volatility can be a challenge and I think we are performing as well as well I have seen us in terms of understanding where we want to take the business from this point going forward and it’s an interesting second part of your question because leverage and ROI discipline is certainly a part of that so Steve maybe you can talk a little bit more specific..

Steven J. Sordello:

Yes Scott in terms of the CapEx question and cash flow question as you know we have been and we continue to be this year in a pretty heavy investment CapEx across datacenter and facilities we have undertook the last couple of years a pretty significant expansion and datacenters in data centers which will improve a number of a -- liability side speed, efficiencies and we’re exiting that this year. So we expect to start to see more leverage on the cash flow. On the facility side there has been and heavy investment there as well. We believe we’ll be exiting that later in 2017. But this is an area where I think this are longer term investment that we should see more step functions down when we’re through these stages.

Again this year, this year is kind of I think that’s the peak period. In terms of stock-based comp SBC is an area focus for us we recognize it is and is an expense our goal has been overtime to try to drive that down long -term to a 10% of revenue basis it’s about 17% today. Obviously we always want to think long term as we focused on areas like this talents is critical in this industry and you want to make sure that we’re balancing the trade of support really but we believe overtime that this number will continue to fall as a ratio to sales.

Scott David:

Thank you and congrats again on getting back on track.

Jeff Weiner:

Thanks Scott appreciate it.

Operator:

Your next question comes from the line of Tom White with Macquarie your line is open.

Thomas White:Macquarie:

Great. Thanks for taking my question, I think last quarter you guys commented on may be a bit of what seem to be kind of macro related softness for town solution in EMEA and APAC because may I don’t know if you touched on the prepared remarks but may be just an update of what’s you’re seeing there and then just on the guidance if I am doing my right here it looks like you took up the kind of full year by a bit more than the first quarter peak but that kind of EBITDA looks for the full years your sort of holding the back half holding the back half despite the bid in 1Q. So is there some sort of increased investments kind of contemplated now versus when we gave guidance last just any color there. Thank you.

Jeff Weiner:

So on the macro side I would say no real change since last quarter of fundamentally APEC area continuing to be impacted by FX in China and some of the commodity overlay Europe as we mentioned was better than expected I think that was more execution than macro. Oil and gas continues to be weak -- we will not really seeing any change versus last quarter and broadly not seeing customer’s app any differently than what we expected. In terms of the top-line, yes, that’s correct we flow through bid and then also increase the remainder of the year. I think on the EBITDA side, there is number areas that we are continuing to invest in and I would say that as you look at our investment profile going forward on a relative basis, we are putting more into building product particular on the monetization side and quarter reps and we reached as scale as an organization where we expect to start to see more leverage on the support side and so I think what you’re seeing in terms of the back half investment is much more investment in areas like our talent solutions platform which we talked about in prior quarters on systems within marketing solutions and talent solutions.

So the way that the investments in those areas I would like to highlight that. We are talking about leverage, but we are still very focused investing in growth, we have very large addressable markets and we want to make sure that were optimizing the investment to enable a dressing those markets in the optimal way so that’s how we are thinking about this year incrementally one investment and kind of building monetization products and in quite a rapid.

Operator:

Your next question comes from the line of Stephen Ju with Credit Suisse. Your line is open.

Yoni Yadgaran:Credit Suisse:

Hey guys this is Yoni on for Stephen. So a question for Jeff if I may so in the past you guys have spoken about the opportunity to build when you boost to be a global economic graph and the kind of $100 billion opportunity that comes with that. I am curious if you can may be give us an update on how you see LinkedIn progressing towards that and what are some of the opportunities for monetization on the use of consumer or enterprise side do you think you guys have yet to -- to address.

Jeff Weiner:

Sure, so with regard to the economic graph framework which is how we manifest our vision to create economic opportunity for every member of the global workforce and to just briefly doing that we consider to be a difference between our vision and our mission on mission of course to connect the worlds professional to make them more productive and successful. With regard to the vision, with the sort of the economic graph frame there essentially six pillars, so there is our members and those are members of the global workforce and the members of LinkedIn. There is companies, there are the jobs available at those companies the skills required to obtain those jobs higher educational organizations and vocational training facilities that facilitate the acquisition and skills to obtain those opportunities and then lastly, a publishing platform that facilitates to sharing a professionally relevant knowledge by our members, customers, companies, universities et cetera. So LinkedIn essentially is manifesting that graph and with the acquisition of Linda that really rounded out our ability to provide the skills and the course work necessary to obtain those economic opportunities.

So for us that was as we’ve talked about historically kind of the last piece of that regard to the six pillars. In terms of tracking progress against each of them we have a very clear sense what those addressable are so by we have example with regard to remembers $788 million or so professionals and knowledge workers students fee professionals in the worlds 3 billion people in the global workforce. When it comes to the number of companies somewhere in the order of 60 million to 70 million plus companies in the world et cetera et cetera and so when we think about our longer term roadmap we’re thinking about how to build infrastructure we’re thinking about how to build product we’re thinking about how to build technology that enables us to grow from where we are today to where we ultimately want to be.

With regard to monetizing the graph it’s the way we monetize today talent solutions marketing solutions sales solutions and most recently learning and development

Operator:

your next question comes from the line Youssef H. Squali with Cantor Fitzgerald. Your line is open.

Youssef H. Squali:Cantor Fitzgerald Securities:

Thank you very much maybe Steve I think you can you just comment on linearity of the business because I think you’re guiding if you look at your Q1 FX adjusted growth was 38% you are guiding for 25% that’s a pretty strong deceleration maybe just help us breach that gap and then maybe Jeff if we look at the within hiring solutions I think you said you’re seeing modest acceleration in large enterprise customization is pretty surprising to us obviously on the positive side can you help us understand what drove that how sustainable it is and maybe where are you with building the lower and let’s call it product that kind of mentioned last quarter as meeting to go after the S&B opportunity both here and overseas? Thanks.

Jeff Weiner:

Yes on the guidance so you would need at that suggest need to FX adjust for Q2 as well which is approximately $3.2 lowest growth in terms of the comp. I would say relative to guidance is Q1 with solid pretty much across the board starting with engagement I think the talent solutions is obviously larger and larger base we feel good about some of the products development we have in there but its growing up a larger base.

For the rest of the business there is a couple of underlying components for marketing solutions we will start to lap the period where the wind down the LLA product to standalone LLA product which starting to build so that come a little bit more difficult and then within obviously we will overlap the acquisition in Q2 and then within the premium category we will start to overlap the three trial period where the comp has been a little bit year earlier easier and then top of that I think we also overlay some prudent on the guidance given just member variables we have across the business and so taking all of that into account is how we get to the guidance.

Steven J. Sordello:

With regard to some of the progress we can continue to make in see making talent solutions and we will taking that roadmap going forward the focus remains on our core recruiter product and the focus remain on our enterprise customers our larger enterprise customers and they are still multiple billions of dollars of in terms of the media is addressable that will continue to be the focus that will continue to be the core account solutions efforts. So what is that mean specifically we are in the process right now are rolling our next gen version of recruiter and that’s far we have been very pleased with the results we wanted to simplify the process through which folks can get value from recruiter greater efficiencies and effectiveness and you heard some of those stats earlier in terms of the number of profile views the number of searches, the number of e-mails. So we are pleased with the progress there that will continue to rollout remainder of this year.

We’ve added two additional skews that we’re excited about with regard to Connectifier which was a recent acquisition and Referrals which we believe has really interesting potential. In terms of where we are taking that road map going forward we’d like to create a platform for our suite of talent solutions products. So each of those products Recruiter, Connectifier, Referrals in our Talent branding efforts in a sense you could think of those of individual applications and where we would ultimately like to take this part of the business is to add a platform foundation and with that platform in place, we’re going to be able to accelerated the rate with which we can add new functionality, new applications and potentially, further down the road those wouldn’t necessarily need to be limited to applications that we developed, but you could imagine a world where third parties could also be developing for that Talent solutions environment. With regard to SMB specifically, there remains and opportunity there and there is an automated sourcing capability that we believe could add value but that is secondary best behind the core of our business which is going to be the continue to focus on enterprise.

Operator:

Your next question comes from the line of Robert Peck from SunTrust. Your line is open.

Kunal Shah:SunTrust:

Hi, thanks for taking the question. This is Kunal for Bob. Quick question on the member growth how much of that came from China and specifically with regard to the D&D shutdown in late December and yes that’s it on November growth place.

Steven J. Sordello:

Yes China continues to be one of our fastest sources of member growth on a daily basis. We’ve recently so past 20 million members. So very pleased with the progress there interestingly enough that is not capturing the growth of the new localized mobile app that we launched in China T2 and when we factored that in the T2 app is now growing at relatively similar rates to the extension of our global platform. So we’re pleased with that. I didn’t quite get the second part of your question you mentioned the shutdown or something.

Operator:

Please press star, one to reenter the queue.

Steven J. Sordello:

If that was with regard to something with regard to a competitive dynamic it hasn’t had much impacted all on the growth that we have been seen. We have been very pleased with growth there. I would add we increasing going to focused on engagement and once growth and engagement we like them to be we’ll start to focus increasingly on monetization there in China.

Operator:

Your next question comes from the line of Eric Sheridan with UBS. Your line is open.

Eric Sheridan:UBS:

Thanks for taking the question. I think one of the big the bids to occurred in the last couple of months with respect to the company. Is the run way for growth longer term in the Talent business. Jeff if you take the opportunity to just think about some of the buckets, the buckets of penetration you see in the Talent business some of those big opportunities you’re trying address just sort of frame that bid for investors. Thanks.

Jeff Weiner:

Yes. So it would start with the core of the business which is enterprise in our major GO North America, EMEA, Asia-Pacific we addressed that core through continued investment and improvements and innovations in Recruiter next-gen Recruiter is a big part of that. Adding new skills which historically we won’t doing as quickly as we are now. So our two new skills we’ve got Connectifier through an acquisition we are excited about and the launch of our Referrals business and then as I mentioned earlier in terms of future evolution, you are going to see us develop a platform that will enable us to further accelerate the rate with which we are able to launch new functionality continue to improve our Talent Solutions suite.

After that core I think staffing is a very interesting opportunity for us. It’s a large and growing opportunity for us and we think can continue to add value there in more specific ways catering to the needs of staffing agencies and their recruiters specifically and we do see some points of delineation in terms of what they are looking for versus our core Recruiter product. So we believe there is upside there. There is going to be upside through continuing to invest in specific verticals.

So attracting financial services have always been very strong for us. We believe that HealthCare is really interesting area, very large area of opportunity for us going forward. Another area potential upside something we don’t talk as much about our talent branding capabilities and talent media which enable companies to help prospects understand why those companies are the best places to work, has grown overtime has achieved meaningful scale and continues to grow at very healthy rates and we are going to be investing in our company pages and career pages capability. So all of those things will add up to enable us to continue to reach our upside.

Steven J. Sordello:

And I’ll just add we haven’t when we talk about the TAM in this market it hasn’t really changed top down. It’s still a $27 billion TAM when you consider the markets recruiting jobs in media that we plan. And as we spoke about before because of our data. We have visibility into subset of that based on our numbers and the products and pricing which is roughly a $12 billion TAM and we still have significant headroom particularly in enterprise customers we’re less than 20% penetrated in that TAM today so just giving some numerical numbers in terms of the opportunity.

Jeff Weiner:

There is one other thing I would add. We have a tendency you can hear in some of the questions that were asked about Recruiter and specific SKUs. One other things that I am not sure people are as focused on it’s the growth of our jobs offering for members and what that does for the Talents Solutions ecosystem. So a lot of focus, lot of questions about the growth of flagship and we’re very pleased with the acceleration and unique feed sessions page views engaged, feed sessions et cetera, one of the things that we’re also very happy about is the fact that our jobs experience for active job seekers has become one of the fastest growing sources of engagement on LinkedIn.com and the more folks that are engaging in that active job search, the more applications, the more applicants and ultimately that you know there’s confirmed hires for our customers. And so we think that’s also going to create a positive dynamic for our Talent Solutions ecosystem.

Operator:

Your next question comes from the line of Peter Stabler with Wells Fargo Securities. Your line in open.

Peter Stabler:Wells Fargo:

Hi. Thanks for taking the questions. Just two quick ones going back to the revamped Recruiter, Jeff, could you remind us the pricing dynamics here. As a customer adopts revamped Recruiter, are they seeing any sort of up sell or is this kind of a revenue neutral refreshed product? And then secondly just wanted to follow up on Eric’s question and your kind of list of opportunities within the corporate enterprise segment, I didn’t hear you talk about let’s say number of seats per enterprise customer. It sounded much more like a product driven, a product driven initiative. Is that fair. Thanks so much.

Steven J. Sordello:

Yes I’ll jump in on the next-gen Recruiter. I think the idea of this product is to expand within the client base its basically very similar pricing and the utility of the product is not just for hardcore recruiters but a broader base of recruiters within companies and so the goal with this product is to have deeper penetration at similar pricing. As I mentioned earlier we have had success with pricing increases historically particularly as we move to segment base pricing so that’s the strategy with next gen recruiter in terms of the seats per customer obviously that aligns we basically have held between three to four an average seat per customer despite the fact that we have been growing our customer base pretty rapidly on next gen recruiter the goal there is to help that ratio again it’s the deepen within these accounts.

Operator:

Your next question comes from the line of Mark May with Citi. Your line is open.

Mark May:Citi:

Thanks I am just curious at least our end forecast do you upside in the quarter team from what we refer to as the other marketing services which I think would include the seller greater revenue just curious if part of what drove the difference versus your guidance was maybe slower than expected wind down of that product and so can held that is that one of the factors that plays into the guidance that’s been asked about and just curious you mentioned job search and can you give us a sense of maybe a little more detail on exactly how that’s going clearly a big opportunity you guys have some differentiated content to help and another other where you can frame kind of the size of that business so the growth of that business and sort of the long question but as has big part that if you could comment on how you’re doing in terms of CEO ranking and our job searchers thanks

Jeff Weiner:

Yes, Mike I’ll take the first part. So in terms of the guidance and results, LLA contribution in the quarter came in right where we thought round $10 million about 5% of the overall business of the $20 million we expect for the year. So the really came primarily from sponsored content and that was driven I think by a few primary areas one was higher feed engagement from the volume side higher ROI in terms of rates and we also believe that have to do with more focus which was part of the decision on the sponsored content platform so the was virtually all sponsored content

Steven J. Sordello:

So picking up on the theme of focus that’ actually been driving the improvement in the job search experience handling then historically we really focused on the passive recruited use case through our recruited product sell that product to recruiters and more recently over the last 19 months or so we started to expand that focus to also include active job seekers people that were searching for a job looking at job posts from our customers and that focus let to completely overhauling the best our product enhancing first launch and enhancing a standalone mobile application thinking about right point of distribution from our flagship mobile application into the job seeker app which has really pay dividends for us and then continuing to improve how we are surfacing the right job the right member at the right time all of that has been build on top of the platform that is dramatically increased the liquidity of our jobs offering and jobs comprehensive comprehensiveness. So, a little bit more than couple of years ago we were at about 350,000 jobs available on LinkedIn. Today that number is well north of 6.5 million approaching 7 million jobs we have index materially more than that on a global basis and we will be bringing those jobs online as well overtime.

With regard to SCO the combination of that job liquidity with our unique content we think is going to enable us to do some different things some interesting things with regard to the data that accompanies jobs searches with real insight, meaningful insight. In terms of who we know the company how to get your foot in the door and overtime we are also excited about the opportunity to provide information like salary data which we can do a really unique job of by virtue of our relationship with members.

Operator:

Your next question comes from the line of Heath Terry with Goldman Sachs. Your line is open.

Heath Terry:Goldman Sachs:

Great. Thanks. I am wondering if you can give us a sense on sales navigator. Obviously saw the slight increase or acceleration in growth. Can you give us a sense of I guess if there was any difference in pricing this quarter that might be -- a faster growth in adoption of the product or the number of seats associated with product and then if you could also just on the desktop reinvest can you give us a sense of what the timeline looks like for starting to see some of the upgrades that you’ve done to the mobile app making their way to desktop. Thanks.

Jeff Weiner:

Yes, Heath. So on the first question I think the sales solutions business growing in at about 55% year-on-year. I say the callout there are continued product improvement and traction and this is a business that the field side of its growing at material faster rate than the online site today which is expected and the enterprise component in terms of churn and product quality in terms of NPS is much stronger than the SMB which is to be expected and I think encouraging. And so we are continuing to build out the product really focused on driving more sticky daily type of value and activity. We talk last quarter about -- integration being critical where we made progress a lot of progress there so its functionality etcetera.

So we are pleased with attraction that we are getting in that product we always talked about this one of our longer term emerging growth drivers and it’s still in its early days. With regard best revamp interesting we one of the buy products of the re-imagination of the mobile application with not only acceleration and mobile engagement but desktop engagement as well. So the same acceleration that we saw in unique sessions in page using mobile we have also seen in desktop. So the rising tide has lifted the both channels both mobile and desktop.

This desktop revamp the primary objective is to actually unified front end framework upon which we develop these products and that’s going to enable us to be developing far more efficiently on a going forward basis. As a result of that, we are also going to able to improve the product obviously greater consistency between mobile and desktop as well and so that should play out over the remainder of this year.

Operator:

Thank you ladies and gentlemen I will now turn the call back to Mr. Jeff Weiner.

Jeff Weiner:

Thank you all for your time. Appreciate it as always and we will see you again next quarter. Take care.

Operator:

Thank you ladies and gentlemen. This concludes today’s conference call. You may now disconnect.