Microsoft’s (MSFT - Free Report) LinkedIn recently announced its intention to acquire Glint, a startup based in Redwood City, CA. Notably the terms of the impending development have not been disclosed by both the parties. Nevertheless, the deal is reportedly sealed at around $400 million to more than $500 million according to CNBC sources familiar with the development.
Glint’s robust employee engagement platform is a key catalyst behind the deal. The startup leverages the real-time survey data to assess employee feedback on the organization, including work culture, management health, and compensation, to mention a few.
The real-time feedback enables the employers to enhance talent management capabilities on a dynamic basis. With a notable database of employees, LinkedIn attempts to offer custom learning programs for enterprises, consequently utilizing the feedback to provide actionable solutions.
Per the deal, Glint will continue to function as a standalone entity under LinkedIn’s umbrella. Techcrunch revealed that per Pitchbook, Glint was last valued at around $220 million as on November 2017.
Founded in 2013, privately held venture capital-funded company boasts of a notable customer base comprising Alphabet’s (GOOGL - Free Report) Waymo, Intuit, Sky, Dropbox, Pandora, Dish Network, and United Airlines, among others.
Apart from People Success Platform, Glint presently offers Employee Engagement, Team Effectiveness, Employee Lifecycle, and Manager Effectiveness solutions.
Glint buyout is anticipated to conclude during the second quarter of fiscal 2019. LinkedIn intends to integrate Glint within its team over the upcoming 12-18 months.
The buyout is anticipated to strengthen LinkedIn’s commitment to fortify its platform with comprehensive solutions aimed at enhancing employee engagement, consequently bolstering Microsoft’s top-line.
Providing Comprehensive Workforce Solutions: Focal Point
LinkedIn is striving to deliver more HR friendly tools to enterprises. The Glint buyout is in sync with LinkedIn’s strategy to offer end-to-end HR management solutions to businesses.
LinkedIn sees a lot of potential in Glint’s employee management software aimed at talent retention, and employee training and development methods.
The complementarities of LinkedIn and Glint will enable the now parent company to meaningfully deal with complex HR problems pertaining to talent acquisition, retention and management.
Daniel Shapero, Vice President, Talent Solutions at LinkedIn,said, “With LinkedIn’s insights into the larger workforce alongside Glint’s internal view into employee engagement and skills, we will be able to help talent leaders answer all those difficult questions.”
We believe that enhanced engagement will drive LinkedIn’s revenues, going ahead. Notably, in the fourth quarter of fiscal 2018, LinkedIn revenues surged 37.2% from the year-ago quarter (34% on a constant currency basis) to $1.46 billion.
LinkedIn sessions were up more than 41%, reflecting acceleration in engagement. Mobile sessions were up more than 55% from the year-ago quarter.
Robust performance of LinkedIn’s subscription products comprising membership, recruitment and education programs remain key catalysts.
Glint buyout is anticipated to enable LinkedIn provide HR with cost-effective methods to recruit new employees and enhance retention by training the existing ones.
What the Investors Need To Know?
Shares of Microsoft have returned 31.2% year to date, substantially outperforming the industry’s rally of 24.7%.The stock has also fared better than the S&P 500 index’s rise of 9.4%.
This outperformance can primarily be attributed to its rapidly expanding efforts in AI and Internet of Things (“IoT”) based developments. Focus on enhancing Azure, Dynamics 365 and LinkedIn on a dynamic basis continues to remain a key catalyst.
With Glint buyout, LinkedIn is anticipated to enhance and expand its services portfolio, loaded with training tools, CRM capabilities and analytical insights.
Per Technavio data, the global corporate e-Learning market is projected to witness a CAGR of around 11% from 2018 to 2022. Further, Grand View Research estimates the global human resource management market to see a CAGR of 10.4% to reach $30 billion by 2025.
The aforementioned reports reinforce our views on prospects of LinkedIn post Glint buyout.
Microsoft is putting its best foot forward to gain a competitive edge in the AI, cloud computing, CRM markets at different levels, from strengthening automated systems to adding employee management tools by adding small players with promising capabilities.
Notably, LinkedIn is expected to give more insights on how it intends to shape Glint post the buyout at its Talent Connect annual conference at Anaheim, CA, scheduled from October 9-11.
Zacks Rank & Other Stocks to Consider
Microsoft sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the same industry are Salesforce.com (CRM - Free Report) and SS&C Technologies Holdings, Inc. (SSNC - Free Report) , both flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The projected long-term earnings growth rate for Salesforce and SS&C are 25% and 13.5%, respectively.
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