LinkedIn Corp. Earnings: Is This Catalyst Still Kickin'?

When LinkedIn reported fourth-quarter results, the world's largest online network of professionals gave investors a reason to view the company's growth prospects skeptically. When it provided much weaker-than-expected guidance for 2016, shares were slammed. But one critical catalyst that only has a small impact on the company today could help prevent further deceleration in growth as it becomes a more meaningful portion of the company's business. I'm talking about China.

Image source: LinkedIn.

China, meet LinkedInUnlike social network peer Facebook, LinkedIn isn't banned from China. So it's definitely a unique and special opportunity for LinkedIn to have the chance to expand in this market. And given the size of enormous market, the country represents a significant opportunity for the company. Indeed, LinkedIn estimates that one in five of the world's knowledge workers are located in China. With all this in mind, you can bet LinkedIn is set on taking advantage of this opportunity.

But it wasn't until 2014 that LinkedIn began taking the China market seriously. In early 2014, 5 million of the company's 277 million members were located in China, but they were only able to access the service through an English-based version of the site. This all changed in February 2014, when LinkedIn launched a Chinese-language version of the network for professionals.

After announcing its simplified Chinese-branded site, the company boldly proclaimed in a blog post it believed it could eventually connect over 140 million Chinese professionals.

Since 2014, LinkedIn has continued to ramp up its efforts in China. The company's next big move happened in 2015, when LinkedIn launched a complete pure-play, localized version of LinkedIn called Chitu, hoping to deepen its roots and expand its reach in the country.

As of Q3 last year, LinkedIn said its members in China had increased from 4 million in February to 13 million.

But does China remain a potentially meaningful catalyst for LinkedIn today?

"Our fastest-growing market" In Q4, management was excited about the China market.

"China continues to be our fastest-growing market in terms of new users," said LinkedIn CEO Jeff Weiner in the company's fourth-quarter earnings call. Weiner went on to note that growth has been a priority in the market, but now it will also "begin to invest increasingly in engaging those members."

And LinkedIn is putting its money where its mouth is. After LinkedIn CFO Steven Sordello noted during the company's fourth-quarter earnings call that LinkedIn is "still very clearly in investment mode," he listed China as one of the company's "ongoing" investments into 2016.

When LinkedIn reports first-quarter results on Thursday, look for management to provide an update on its China market. Specifically, maybe management will share how many members are located in the country, and whether or not management still believes there's potential to connect 140 million professionals in the market.

While the company is unlikely to provide much information about LinkedIn's China market in the company's first-quarter press release, management usually discusses the market during its earnings call. The earnings call is scheduled for 2:00 p.m. PT and will be available for investors to listen to live at the company's "Investor Home" portion of its website.

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Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and 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.

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