1 Overlooked LinkedIn Metric

LinkedIn (NYSE: LNKD  ) had a great second quarter. Accelerating growth in membership, unique visitors, and page views assured investors that the company's growth story is far from over. But one metric has received very little attention. That stops now.

Where's Waldo?
For the most part, LinkedIn's selected company metrics and financials that it compiles for analysts is very helpful. But I'm baffled as to why the company doesn't include members by region. Sure, they've made it easy to see what region the revenue is coming from. But that's not enough for me. I want to track international membership growth.

Fortunately, the company provides the percentage of international members in the prepared remarks of its earnings calls. Definitely not as useful as understanding membership growth on a region-by-region basis, but it's still enough for us to paint a picture of LinkedIn's international growth opportunity.

International growth
Thanks to a brief mention in the earnings calls, I went back to the prepared remarks of every earnings call since the company IPO'd. Here's what the trend looks like.


Source: Data retrieved from LinkedIn's corrected earnings call transcripts for respective quarters shown, except Q2 2013. Q2 2013 members were retrieved from Seeking Alpha transcript.

LinkedIn's international member base is growing faster than its domestic member base. This definitely isn't a surprise, but it's interesting to see the trend as a whole. LinkedIn's international member base is growing rapidly.

LinkedIn already has a strong presence in the United States. Worldwide, however, the company may only be scratching the surface. For instance, if Facebook's (NASDAQ: FB  ) international composition is at all indicative of where LinkedIn could get someday, LinkedIn still has plenty of room to run. Facebook's international monthly active users account for 83% of revenue, considerably higher than LinkedIn's current international revenue composition of 65%. And Facebook's international member base continues to grow faster than its domestic member base, too.


Source: Facebook Q2 earnings slides.

Sure, Facebook isn't a professional network -- it's a social network. Nevertheless, LinkedIn's international member composition seems to be heading that direction anyway.

Why is LinkedIn's international growth so important?
If LinkedIn can establish itself early on as the go-to professional network on the Internet in countries around the globe, then it can more easily protect its competitive position. That's the power of a network effect, arguably one of the strongest forms of competitive advantages: with every additional user that joins the platform the platform becomes incrementally more useful for everyone -- professionals, advertisers, and recruiting businesses.

Even though this metric isn't highlighted in the company's selected financial data for analysts, investors interested in LinkedIn should keep tabs on it. The larger it becomes, the greater impact international members will have on the company's overall growth rates.

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