3 Ways LinkedIn Corp Plans to Grow Its Largest Business

By Markets Fool.com


Image source: LinkedIn

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LinkedIn is a growth stock. Last quarter, the online network generated $861 million of revenue -- up 35% from the same quarter last year. And management believes LinkedIn's business will continue to grow: It's projecting second quarter revenue up 25% on an annual basis, and full-year revenue growth between 22% and 24%.

Much of that growth is likely to come from LinkedIn's talent solutions, its largest business segment. Talent solutions generated almost 65% of LinkedIn's sales last quarter, and almost three-quarters of its revenue growth. If LinkedIn's business is going to continue growing, talent solutions will certainly play a large role.

During LinkedIn's April earnings call, CEO Jeff Weiner laid out the opportunity for the segment, and the factors he believes will help drive its growth going forward.

Adding more products

We address the core [of our talent solutions business] through continued investment and improvements in innovation in Recruiter. Next-gen Recruiter is a big part of that. Adding new SKUs -- which historically we weren't doing as quickly as we are now -- so two new SKUs...in terms of future evolution, you're going to see us develop a platform that will enable us to further accelerate the rate with which we're able to launch new functionality, continue to improve our talent solutions suite.

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LinkedIn's talent solutions segment is further divided into two categories: hiring, and learning and development. Hiring generates the bulk of talent solutions sales (about 90% last quarter), and generates about 58% of LinkedIn's total revenue by itself. Most of that comes from just one product, LinkedIn Recruiter. Last fall, LinkedIn launched an updated version of Recruiter, which management calls next-gen Recruiter. At the same time, LinkedIn announced a new product under the hiring banner: LinkedIn Referrals. Whereas Recruiter is a tool designed to help professional recruiters fill openpositions, Referrals makes it easier for workers to recommend their LinkedIn contacts for openpositions. Referrals remains in its early days, but could eventually drive further revenue. Other new products could come over time.

Targeting staffing agencies

I think staffing is a very interesting opportunity for us...we 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're looking for, versus our core Recruiter products. So we believe there's upside there.There's going to be upside through continuing to invest in specific verticals, so tech and financial services have always been very strong for us. We believe that healthcare is a really interesting area, a very large area of opportunity for us going forward.

Staffing agencies, which specialize in finding temporary workers, already rely on LinkedIn's hiring tools to help fill openpositions. But their needs vary from other recruiters, who are generally looking to fill full-time positions on a permanent basis. LinkedIn has offered no concrete plans for targeting staffing agencies in particular, but look for the company to roll out new, more focused products in the years ahead. The staffing industry is massive: In the U.S., staffing agencies hire around 16 million employees each year.

Helping companies brand themselves

Another area of potential upside...[is] our talent branding capabilities and talent media, which enable companies to helps prospects understand why those companies are the best places to work. [It] has grown over time, [and] has achieved meaningful scale, and continues to grow at very healthy rates. And we're going to be investing in our company pages and career pages capability.

Companies need talented recruiters to seek out and find the best employees, but they also need help establishing reputations as great places to work. LinkedIn offers companies opportunities to make strides in this category with company-branded landing pages. It's not a significant portion of LinkedIn's business today, but it could help fuel the company's growth over time.

The article 3 Ways LinkedIn Corp Plans to Grow Its Largest Business originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.