While investors focused on LinkedIn's (NYSE:LNKD.DL) better-than-expected revenue and earnings when the professional social network reported third-quarter results last month, there were some key items discussed during the earnings call following the release that were overlooked. Indeed, perhaps one of the most notable tidbits shared by the company during the earnings release was also one of the most overlooked.
The important comment from management came when Linked CEO Jeff Weiner was discussing the company's plans for its recently acquired Lynda.com, a portal of videos for learning and training. Here's what many investors likely missed.
Lynda.com as a platform
Yes, Lynda.com's revenue is already ramping faster than expected under LinkedIn's leadership. Yes, costs are coming down more rapidly than anticipated. These are both encouraging trends. But neither of these facets of LinkedIn's new business inspired the most intriguing comment from Linkedin management about Lynda.com made during the earnings call.
This overlooked narrative began in the prepared remarks of the earnings call, when management mentioned a plan to go beyond growing Lynda.com's existing business and to launch "more integrated consumer and enterprise products in 2016."
Potentially signaling a new growth opportunity for Lynda.com, which contributed $41 million to the company's $780 million in revenue during the quarter, analysts were unsurprisingly intrigued, and one analyst proceeded to ask Weiner for more details.
When asked about this comment, Weiner said LinkedIn is planning several different ways to expand Lynda.com's business, including new potential courses, verticals, and even the idea of Lynda.com as a platform.
The latter of these three mentioned extensions of Lynda.com's core business is particularly interesting. Weiner explained:
Another potential scenario is to start to think about Lynda more as a platform, where enterprises that have already created their own courses, their own knowledge base, would be able to leverage our infrastructure and our assets to improve the way that their employees are learning and developing.
In other words, LinkedIn could market Lynda.com as an internal enterprise platform for storing and viewing in-house training videos. The value of Lynda.com as an internal enterprise video platform would be twofold. Both the infrastructure and Lynda.com's existing library of videos would add value. By accessing Lynda.com's existing library of videos, not only would corporations have access to training their business couldn't otherwise provide, but companies wouldn't invest resources in creating videos that have already been made by others.
With LinkedIn considering such dramatic new ways to deliver value with Lynda.com, no wonder management referred to it as one of its "future growth drivers for the company."
While the idea of making Lynda.com available as a platform for enterprise clients may not sound exciting, investors should realize that even if this represents only a fraction of the upside potential for Lynda.com as a whole, it could be meaningful for LinkedIn's business. The company estimates that the addressable market for learning and development is equal to about a quarter of LinkedIn's total addressable market. So, excellent execution with a platform like this could reasonably add 5% to 10% to the company's bottom line over the long haul.
Of course, it's too early to price an opportunity like this into the stock, but it's an add-on opportunity worth keeping an eye on as Lynda.com develops under LinkedIn's umbrella.