LinkedIn (LNKD) Jeffrey Weiner on Q1 2016 Results - Earnings Call Transcript

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LinkedIn Corp. (NYSE:LNKD)

Q1 2016 Earnings Call

April 28, 2016 5:00 pm ET

Executives

Matt Sonefeldt - Vice President, Investor Relations

Jeffrey Weiner - Chief Executive Officer & Director

Steven J. Sordello - Chief Financial Officer & Senior Vice President

Analysts

Daniel Salmon - BMO Capital Markets (United States)

Scott Devitt - Stifel Financial Corp.

Tom White - Macquarie Capital (NYSE:USA), Inc.

Yoni Yadgaran - Credit Suisse Securities (USA) LLC (Broker)

Youssef Squali - Cantor Fitzgerald Securities

Kunal Madhukar - SunTrust Robinson Humphrey, Inc.

Eric J. Sheridan - UBS Securities LLC

Peter C. Stabler - Wells Fargo Securities LLC

Mark A. May - Citigroup Global Markets, Inc. (Broker)

Heath Terry - Goldman Sachs & Co.

Operator

Ladies and gentlemen, welcome to the LinkedIn First Quarter 2016 Earnings Conference Call. As a reminder, this conference is being recorded and will be available for replay from the Investor Relations section of LinkedIn's website following this call. I will now turn the call over to Matt Sonefeldt. Thank you, sir. You may now begin.

Matt Sonefeldt - Vice President, Investor Relations

Good afternoon. Welcome to LinkedIn's first quarter of 2016 results call. Joining me today to discuss our results are 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 which are subject to various risks and uncertainties. These include statements relating to expected member growth and engagement, our product offerings including mobile and our product deployment process, the results of our R&D efforts, revenue including revenue growth rates in our three product 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 in 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 discuss some non-GAAP measures in talking about the company's performance. Reconciliations to the 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 through the Investor Relations section of the LinkedIn website.

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

Jeffrey Weiner - Chief Executive Officer & Director

Thank you, Matt, and welcome to today's conference call. I'll 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 results that exceeded our plan. I want to highlight three key themes from the quarter. First, engagement materially strengthened across our member platform, driven by our new Flagship experience. Second, our core monetization 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 are pleased with the performance thus far. Members are engaging at record levels with the more relevant and comprehensive feed. 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 edits, connections made, and messages sent.

Additionally, we saw record levels of activity 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%. As job seekers 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 rollout of a number of emerging growth drivers. The next generation of 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 InMails 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 feed engagement resulted in more opportunities for marketers to reach their target audiences. We also began piloting the sale of 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 as 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 of 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 continued to make good progress simplifying the integration with CRM systems, enabling seat holders to see more value faster.

We also remain focused working with customers globally to help measure and drive their ROI. For example, Sales Navigator influenced $350 million in closed business at HCL, a global business services firm, demonstrating the significant potential of social selling.

Regarding Learning & Development, we are now turning our attention from integrating the Lynda.com team to integrating their technology and content. Two examples are the launch of 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 app 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 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'll now turn it over to Steve for a deeper dive into our operating metrics and financials.

Steven J. Sordello - Chief Financial Officer & 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 of 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're 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 years in existing customer spending. We also continued to see engagement increase across our product suite, as measured by jobs posted, job applications, and InMails sent. In addition, we saw a better than expected impact from pricing, while churn levels were consistent with last year, helping maintain per customer spending growth.

For new customers, growth remained 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 a positive impact from increased engagement and product improvements.

Learning & Development continues to be an area of 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 continued 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 right-rail inventory, an area we'll continue to explore throughout 2016.

The decision to focus primarily on Sponsored Content began to pay off in the first quarter, and we'll continue to focus our investment to better integrate the Lead Accelerator technology into the Sponsored Content platform.

Premium Subscriptions 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 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; Job Seeker; Recruiter Lite; and Sales Navigator, we saw healthy growth in the 20% range in the first quarter.

In terms of geography, non-U.S. sales represented 39% of overall revenue, consistent with last year, or 41% on a constant currency basis. We saw better than expected results in EMEA 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 million a year ago, and free cash flow was $75 million in light of our continued investments in data centers 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 data centers and facilities to support our long-term growth. In terms of data centers, 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 a 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 will end the call with our outlook for the second quarter and an updated view of the full year. For the second quarter, we expect revenue of approximately $885 million to $890 million, representing approximately 25% percent growth. Adjusted EBITDA of between $225 million to $230 million, a 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 between $3.65 billion and $3.70 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 derivative related to our Chinese JV.

A 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 in 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 through 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-and-Answer Session

Operator

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

Daniel Salmon - BMO Capital Markets (United States)

Hey, good afternoon, everyone. A 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 maybe update us on the 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 down the road?

Jeffrey Weiner - Chief Executive Officer & Director

Yeah, absolutely. So with regard to the integration of team and technology, that's now one team. It's 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 LLA technology, we've been able to significantly accelerate conversion tracking, which is going to be a meaningful driver of increased ROI on a 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 the transition away from LLA. And Sponsored Content remains our fastest-growing business at scale. So very pleased with that.

With regard to off-net, again, this increasing focus on Sponsored Content enables us to start piloting the sale of Sponsored Content beyond linkedin.com. It's 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, we 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 over time.

Operator

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

Scott Devitt - Stifel Financial Corp.

Thank you, and congratulations on the solid results. As I look back, it was a pretty smooth first three-and-a-half years after the IPO, and then three of the past five quarters have displayed more bumpiness in results and forecasts, which has led to more volatility in the stock. And I was wondering if you can talk about what you think has been making the business less predictable in the recent past, and how you think about consistency and predictability of the business now that you seem to have hit a more stabilized rate of growth?

And then secondly, I would love to just see how you're thinking strategically about managing cash flow. Steve, you mentioned a bit about CapEx, and then also separately, on your philosophy now with SBC, stock-based compensation. Thank you.

Jeffrey Weiner - Chief Executive Officer & Director

Hey, Scott, thanks for the question. With regard to visibility and what's changed, I think over time as 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 continued 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're performing as well as I've seen us in terms of understanding where we want to take the business from this point going forward. And it's an interesting segue into the 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 specifically.

Steven J. Sordello - Chief Financial Officer & Senior Vice President

Yeah. Yeah, Scott, in terms of the CapEx question and cash flow question, as you know, we've been and will continue to be this year in a pretty heavy investment CapEx across data centers and facilities. We've undertook the last couple years a pretty significant expansion in data centers, which will improve a number of areas, site reliability, site 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's been heavy investment there as well. We believe we'll be exiting that later in 2017, but this is an area where I think these are longer-term investments that we should see more step functions down when we're through these stages. Again, this year is kind of, I think, the peak period.

In terms of stock-based comp, SBC is an area of focus for us. We recognize it is an expense. Our goal has been over time 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 focus on areas like this. Talent is critical in this industry, and we want to make sure that we're balancing the trade-offs appropriately. But we believe over time that this number will continue to fall as a ratio to sales.

Scott Devitt - Stifel Financial Corp.

Thank you. And congrats again on getting back on track.

Jeffrey Weiner - Chief Executive Officer & Director

Thanks, Scott. Appreciate it.

Operator

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

Tom White - Macquarie Capital (USA), Inc.

Great. Thanks for taking my question. I think last quarter you guys commented on maybe a bit of what seemed to be kind of macro-related softness for Talent Solutions in EMEA and APAC. I don't know if you touched on that in the prepared remarks, but maybe just an update of what you're seeing there.

And then just on the guidance, if I'm doing my back of the envelope arithmetic right here, it looks like you took up kind of the full year by a bit more than the first quarter beat, but the kind of the EBITDA outlook for the full year is, you're sort of holding the back half or holding the back half despite the beat in 1Q. So is there some sort of increased investment kind of contemplated now versus when you gave guidance last? Just any color there. Thank you.

Steven J. Sordello - Chief Financial Officer & Senior Vice President

Sure. So on the macro side, I would say no real change since last quarter fundamentally. APAC 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. In EMEA we're not really seeing any change versus last quarter and broadly not seeing customers acting any differently than what we expected.

In terms of the top line, yeah, that's correct. We flowed through the beat and then also increased the remainder of the year. I think on the EBITDA side, there's a number of areas that we are continuing to invest in. I would say that as we look at our investment profile going forward, on a relative basis, we're putting more into building products, particularly on the monetization side, and quota reps. And we've reached a 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've talked about on prior quarters on systems within Marketing Solutions and Talent Solutions, so the weight of the investments in those areas.

I would like to highlight that we're talking about leverage, but we're still very focused on investing in growth. We have very large addressable markets, and we want to make sure that we're optimizing the investment to enable addressing those markets in the optimal way. So that's how we're thinking about this year, incrementally more investment in kind of building monetization products and quota reps.

Operator

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

Yoni Yadgaran - Credit Suisse Securities (USA) LLC (Broker)

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 opportunity to build what you believe to be a global economic graph and the kind of $100 billion opportunity that comes with that. I'm curious if you could maybe give us an update on how you see LinkedIn progressing towards that, and what are some of the opportunities for monetization on either the consumer or enterprise side that you think you guys have yet to kind of tap into or address?

Jeffrey Weiner - Chief Executive Officer & Director

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 delineate, we consider there to be a difference between our vision and our mission. Our mission, of course, to connect the world's professionals to make them more productive and successful.

With regard to the vision, with regard to the economic graph frame, there's essentially six pillars. So there's our members, and those are members of the global workforce and the members of LinkedIn. There's companies, there are the jobs available at those companies, the skills required to obtain those jobs, higher educational organizations and vocational training facilities to facilitate the acquisition of skills to obtain those opportunities; and then lastly, a publishing platform that facilitates the sharing of professionally relevant knowledge by our members, customers, companies, universities, et cetera.

So LinkedIn essentially is manifesting that graph. And with the acquisition of lynda, that really rounded out our ability to provide the skills and the coursework necessary to obtain those economic opportunities. So for us, that was, as we've talked about historically, kind of the last piece of that puzzle with regard to six pillars.

In terms of tracking progress against each of them, we have a very clear sense of what those addressables are. So by way of example, with regard to members, 788 million or so professionals and knowledge workers, students, pre-professionals in the world, three billion people in the global workforce. When it comes to the number of companies, somewhere on 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 products, 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 & Development.

Operator

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

Youssef Squali - Cantor Fitzgerald Securities

Thank you very much. Maybe, Steve, can you just comment on the linearity of the business? Because I think you're guiding – if you look at your Q1 FX adjusted growth was 38% – you're guiding for 25%. That's a pretty strong deceleration. Maybe just help us bridge 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 customer additions, which was 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 end, let's call it Recruiter product that you kind of mentioned last quarter as needing to go after the SMB opportunity both here and overseas? Thanks.

Steven J. Sordello - Chief Financial Officer & Senior Vice President

Yeah, Youssef, on the guidance, so you would need to FX adjust the Q2 as well, which is approximately three points as well as growth in terms of the comp. You know what, I would say relative to guidance is Q1 was solid pretty much across the board starting with engagement. I think that Talent Solutions is obviously a larger and larger base. We feel good about some of the product development we have in there, but it's growing off a larger base.

For the rest of the business, there's a couple of underlying components. For Marketing Solutions, we'll start to lap the period where the wind down of the LLA product – the standalone LLA product was starting to build, so that comp will become a little bit more difficult. And then within lynda, obviously we'll overlap the acquisition in Q2. And then within the Premium category, we'll start to overlap the free trial period where the comp has been a little bit easier.

And then on top of that, I think we also overlay some prudence on the guidance given just the number of variables we have across the business, and so taking all of that into account is how we get to the guidance.

Jeffrey Weiner - Chief Executive Officer & Director

With regard to some of the progress we continue to make in Talent Solutions and where we're taking that road map going forward, the focus remains on our core Recruiter product and the focus remains on our enterprise customers, our larger enterprise customers. And there's still multiple billions of dollars of headroom there in terms of the immediate addressable. That will continue to be the focus, that will continue to be the core of our Talent Solutions efforts. So what does that mean specifically? We're in the process right now of rolling out our next gen version of Recruiter, and thus far we've been very pleased with the results.

We wanted to simplify the process through which folks can get value from Recruiter, create 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 InMails, so we're pleased with the progress there. That will continue to roll out remainder of this year. We've added two additional SKUs 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're 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, our talent branding efforts, in a sense, you could think of those as individual applications. And where we'd ultimately like to take this part of the businesses is to add a platform foundation, and with that platform in place, we're going to be able to accelerate 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 develop. 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 an opportunity there and there's an automated sourcing capability that we believe could add value, but that is secondary at best behind the core of our business, which is going to continue to focus on enterprise.

Operator

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

Kunal Madhukar - SunTrust Robinson Humphrey, Inc.

Hi. Thanks for taking the question. This is Kunal for Bob. A quick question on the member growth. How much of that came from China? And specifically with regard to the Tianji shut down in late December? And yeah, that's it. On the member growth, please?

Jeffrey Weiner - Chief Executive Officer & Director

Yeah, China continues to be one of our fastest sources of member growth on a daily basis. We recently surpassed 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, Chitu. And when we factor that in, the Chitu 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 of something?

Operator

Matt Sonefeldt - Vice President, Investor Relations

Well, he's gone.

Jeffrey Weiner - Chief Executive Officer & Director

If that was with regard to – something with regard to a competitive dynamic, it hasn't had much impact at all on the growth that we've been seeing. We've been very pleased with growth there. I would add, we increasingly want to focus on engagement, and once growth in engagement is where we'd 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 J. Sheridan - UBS Securities LLC

Thanks for taking the question. I think one of the big debates that occurred over the last couple of months with respect to the company is the runway for growth longer-term in the Talent business. Jeff, I wanted to know if you'd take the opportunity to just think about some of the buckets of growth, the buckets of penetration you see in the Talent business, some of those big opportunities you're trying to address, just sort of frame that debate for investors. Thanks.

Jeffrey Weiner - Chief Executive Officer & Director

Yeah, so it would start with the core of the business which is enterprise in our major geos, North America, EMEA, Asia-Pacific. We address that core through continued investment and improvements and 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. We've got Connectifier through an acquisition that we're excited about and the launch of our Referrals business.

And then as I mentioned earlier, 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.

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 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 product, 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, very large area of opportunity for us going forward.

Another area of potential upside, something we don't talk as much about, our talent branding capabilities in Talent Media, which enable companies to help prospects understand why those companies are the best places to work, has grown over time, 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. So all of those things will add up to enable us to continue to reach that upside.

Steven J. Sordello - Chief Financial Officer & Senior Vice President

And I'll just add, 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 and media that we plan. And as we spoke about before, because of our data, we have visibility into a subset of that based on our members and the products and pricing which is roughly a $12 billion TAM. And we still have significant headroom, particularly among the enterprise customers. We're less than, obviously less than 20% penetrated on that TAM today, so just giving some numerical numbers in terms of the opportunity.

Jeffrey Weiner - Chief Executive Officer & Director

There's one other thing I would add. We have a tendency and you could hear it in some the questions that we're asked about Recruiter and specific SKUs. One of the things that I'm not sure people are as focused on is the growth of our jobs offering for members, and what that does for the Talent Solutions ecosystem. So a lot of focus, a lot of questions about the growth of Flagship and we're very pleased with the acceleration in uniques, in 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 jobseekers 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 the true north there is 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 is open.

Peter C. Stabler - Wells Fargo Securities LLC

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 the customer adopts revamped Recruiter, are they seeing any sort of up-sell or is this kind of a revenue neutral refresh of the product? And then secondly, just wanted to follow up on Eric's question, and your kind of list of opportunities within the enterprise segment. I didn't hear you talk about, let's say, number of seats per enterprise customer. It sounded much more like product-driven initiatives. Is that fair? Thanks so much.

Steven J. Sordello - Chief Financial Officer & Senior Vice President

Yes, I'll jump in. On the next gen Recruiter, I think the idea of this product is to expand within the client base. It's basically very similar pricing, and the utility of the product is geared 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. Now as I mentioned earlier, we've had success with pricing increases historically, particularly as we've moved to segment-based 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 on average seats per customer despite the fact that we've been growing our customer base pretty rapidly. Next gen Recruiter, the goal there is to help that ratio. Again, it's to deepen within these accounts.

Operator

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

Mark A. May - Citigroup Global Markets, Inc. (Broker)

Thanks. I'm just curious, at least relative to your earnings forecast, a decent upside in the quarter came from what we refer to as other marketing services line, which I think would include the Bizo Lead Accelerator revenue. Just curious if part of what drove the difference versus your guidance was maybe a slower than expected wind-down of that product, and if so, 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 you in SEO and other ways where you can frame kind of the size of that business, the growth of that business. And sorry for the long-winded question, but I know SEO is a big part of that. If you could comment on how you're doing in terms of SEO ranking in odd job searches, thanks.

Steven J. Sordello - Chief Financial Officer & Senior Vice President

Yeah, Mark, 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, around $10 million, about 5% of the overall business of the $20 million we expect for the year. So the beat 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 click-through rates. And we also believe that that had to do with more focus, which was part of the decision on the Sponsored Content platform. So the beat was virtually all Sponsored Content.

Jeffrey Weiner - Chief Executive Officer & Director

So picking up on the theme of focus, that's actually in part what's been driving the improvement in the job search experience on LinkedIn. Historically, we really focused on the passive recruiter use case through our Recruiter product to sell that product to recruiters. And more recently, over the last 18 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 led to completely overhauling the desktop product, enhancing first launching and then enhancing the standalone mobile application, thinking about the right points of distribution from our Flagship mobile application into the Job Seeker app, which has really paid 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 built on top of a platform that has dramatically increased the liquidity of our jobs offering and jobs' comprehensiveness. So a little bit more than a 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've indexed materially more than that on a global basis and will be bringing those jobs online as well over time.

With regard to SEO, 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 job searches with real insight, meaningful insight, in terms of who you know at a company, how to get your foot in the door. And over time, we're 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 & Co.

Great. Thanks. I'm wondering if you can give us a sense, on Sales Navigator, obviously you 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 masking a faster growth and adoption of the product, or the number of seats associated with the product. And then if you could also, just on the desktop revamp, 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.

Steven J. Sordello - Chief Financial Officer & Senior Vice President

Yeah, Heath. So on the first question, I think the Sales Solutions business growing in – about 55% year-on-year, I'd say the callouts there are continued product improvement and traction. This is a business that the field side of it's growing at a material faster rate than the online side 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're continuing to build out the product, really focused on driving more sticky daily type of value and activity. We talked last quarter about CRM integration being critical. We're – we made progress, a lot of progress there, search functionality, et cetera, so we're very pleased with the traction that we're getting in that product. We always talk about this as one of our longer-term emerging growth drivers and it's still in its early days.

Jeffrey Weiner - Chief Executive Officer & Director

With regard to the desktop revamp, interestingly enough, one of the byproducts of the re-imagination of the mobile application was not only acceleration of mobile engagement but desktop engagement as well. So the same acceleration that we saw in unique sessions and page views in mobile, we have also seen in desktop. So the rising tide has lifted the boats in both channels, both mobile and desktop.

This desktop revamp, the primary objective is to actually unify the front-end frameworks upon which we developed 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're also going to be 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 over to Mr. Jeff Weiner.

Jeffrey Weiner - Chief Executive Officer & Director

Thank you all for your time, I appreciate it as always, and we'll see you again next quarter. Take care.

Operator

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

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