linkedin q3 2013 earnings call

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Presentation given by CEO Jeff Weiner, and CFO Steve Sordello, at LinkedIn Q3 2013 Earnings Call. For more information, check out http://investors.linkedin.com/.

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Page 1: LinkedIn Q3 2013 Earnings Call
Page 2: LinkedIn Q3 2013 Earnings Call

Q3’13 EarningsOctober 2013

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Page 3: LinkedIn Q3 2013 Earnings Call

Safe harbor

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements about our products, including our investments in products, technology and other key strategic areas, certain non-financial metrics, such as member growth and engagement, and our expected financial metrics such as revenue, adjusted EBITDA, depreciation and amortization and stock-based compensation for the fourth quarter of 2013 and the full fiscal year 2013. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions.  If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

The risks and uncertainties referred to above include - but are not limited to - risks associated with: our limited operating history in a new and unproven market; engagement of our members; the price volatility of our Class A common stock; general economic conditions; expectations regarding the return on our strategic investments; execution of our plans and strategies, including with respect to mobile products and features; security measures and the risk that they may not be sufficient to secure our member data adequately or that we are subject to attacks that degrade or deny the ability of members to access our solutions; expectations regarding our ability to timely and effectively scale and adapt existing technology and network infrastructure to ensure that our solutions are accessible at all times with short or no perceptible load times; our ability to maintain our rate of revenue growth and manage our expenses and investment plans; our ability to accurately track our key metrics internally; members and customers curtailing or ceasing to use our solutions; our core value of putting members first, which may conflict with the short-term interests of the business; privacy and changes in regulations in the United States, Europe or elsewhere, which could impact our ability to serve our members or curtail our monetization efforts; litigation and regulatory issues; increasing competition; our ability to manage our growth; our ability to recruit and retain our employees; the application of US and international tax laws on our tax structure and any changes to such tax laws; acquisitions we have made or may make in the future; and the dual class structure of our common stock.

Further information on these and other factors that could affect the company’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the company’s Annual Report on Form 10-K that was filed for the year ended December 31, 2012, and additional information will also be set forth in our Form 10-Q that will be filed for the quarter ended September 30, 2013, which should be read in conjunction with these financial results.  These documents are or will be available on the SEC Filings section of the Investor Relations page of the company's website at http://investors.linkedin.com/.  All information provided in this release and in the attachments is as of October 29, 2013, and LinkedIn undertakes no duty to update this information.

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Page 4: LinkedIn Q3 2013 Earnings Call

Who we are

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Page 5: LinkedIn Q3 2013 Earnings Call

Connect the world’s professionals to make them more productive

and successful

Our mission

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Page 6: LinkedIn Q3 2013 Earnings Call

Create economic opportunity for every member of the global

workforce

Our vision

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Page 7: LinkedIn Q3 2013 Earnings Call

What we do

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Page 8: LinkedIn Q3 2013 Earnings Call

IdentityThe professional profile of record

InsightsThe definitive

professional publishing platform

EverywhereWork wherever our

members work

The value we create for our members

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Page 9: LinkedIn Q3 2013 Earnings Call

Growing global network

259M+Members worldwide

>2 NewMembers per second

184MMonthly unique visitors

1 As of 9/30/13 based on internal estimates | 2 Average monthly number of unique visitors for Q3’13 according to comScore using LinkedIn + SlideShare

1 1 2

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Page 10: LinkedIn Q3 2013 Earnings Call

HireEnable passive recruiting

at massive scale

MarketMost effective way for companies to engage

with professionals

SellTransform cold calls into warm prospects

The value we create for our customers

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Page 11: LinkedIn Q3 2013 Earnings Call

Our operating priorities

TalentBuild a world

class team

TechnologyCreate data driven

development at scale

ProductDevelop products our members love

MonetizationScale profitable business lines

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Page 12: LinkedIn Q3 2013 Earnings Call

Key metrics and results

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Page 13: LinkedIn Q3 2013 Earnings Call

Engagement metricsQ

1’11

Q2’

11

Q3’

11

Q4’

11

Q1’

12

Q2’

12

Q3’

12

Q4’

12

Q1’

13

Q2’

13

Q3’

13

259

238

218

202

187

174

161

145

131

116

102

Members (mn)

Q1’

11

Q2’

11

Q3’

11

Q4’

11

Q1’

12

Q2’

12

Q3’

12

Q4’

12

Q1’

13

Q2’

13

Q3’

13

142143

132

116110

106103

9288

82

75

Unique visitors, comScore (mn)

Q1’

11

Q2’

11

Q3’

11

Q4’

11

Q1’

12

Q2’

12

Q3’

12

Q4’

12

Q1’

13

Q2’

13

Q3’

13

11.611.7

11.1

9.8

8.99.39.4

7.67.67.17.1

Page views, comScore (bn)

1 comScore metrics reflect LinkedIn site only, not including SlideShare 13

1 1

Page 14: LinkedIn Q3 2013 Earnings Call

Revenue

Q1’

10

Q2’

10

Q3’

10

Q4’

10

Q1’

11

Q2’

11

Q3’

11

Q4’

11

Q1’

12

Q2’

12

Q3’

12

Q4’

12

Q1’

13

Q2’

13

Q3’

13

$393

$364

$325$304

$252$228

$188$168

$139$121

$94$82

$62$55$45

% Y/YNet revenue ($mn)

0%

20%

40%

60%

80%

100%

120%

140%

14

160%

Page 15: LinkedIn Q3 2013 Earnings Call

Revenue by productQ

1’10

Q2’

10

Q3’

10

Q4’

10

Q1’

11

Q2’

11

Q3’

11

Q4’

11

Q1’

12

Q2’

12

Q3’

12

Q4’

12

Q1’

13

Q2’

13

Q3’

13

Talent Solutions Marketing Solutions Premium Subscriptions

38%32%30%

40%

33%27%

44%

30%

25%

44%

34%

22%

49%

29%

21%

48%

32%

20%

51%

29%

20%

51%

30%

20%

54%

25%

20%

53%

28%

19%

55%

25%

20%

53%

27%

20%

57%

23%

20%

56%

24%

20%

57%

23%

20%

$45 $55 $62$82 $94

$121$139

$168$188

$228$252

$304$325

$364

$393

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Page 16: LinkedIn Q3 2013 Earnings Call

Revenue by geographyQ

1’10

Q2’

10

Q3’

10

Q4’

10

Q1’

11

Q2’

11

Q3’

11

Q4’

11

Q1’

12

Q2’

12

Q3’

12

Q4’

12

Q1’

13

Q2’

13

Q3’

13

US EMEA APAC Other Americas

73%

20%73%

20%

74%

18%

71%

20%

69%

21%

68%

21%5%

67%

21%6%

67%

21%

6%

64%

23%

7%

65%

22%

7%

64%

22%

7%

62%

23%

8%

62%

23%

7%

62%

23%

8%

62%

23%

8%

$45 $55 $62$82

$94$121

$139

$168$188

$228$252

$304$325

$364

$393

5%

5%5%

6%

6%

6%

7%

7%

7%

7%

7%

7%

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Page 17: LinkedIn Q3 2013 Earnings Call

Revenue by channelQ

1’10

Q2’

10

Q3’

10

Q4’

10

Q1’

11

Q2’

11

Q3’

11

Q4’

11

Q1’

12

Q2’

12

Q3’

12

Q4’

12

Q1’

13

Q2’

13

Q3’

13

Field Online

53%

47%

55%

45%

54%

46%

59%

41%

54%

46%

55%

45%

53%

47%

57%

43%

54%

46%

57%

43%

57%

43%

59%

41%

57%

43%

58%

42%

58%

42%

$45 $55 $62$82

$94$121

$139

$168$188

$228$252

$304$325

$364

$393

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Page 18: LinkedIn Q3 2013 Earnings Call

Adjusted EBITDA

Q1’

10

Q2’

10

Q3’

10

Q4’

10

Q1’

11

Q2’

11

Q3’

11

Q4’

11

Q1’

12

Q2’

12

Q3’

12

Q4’

12

Q1’

13

Q2’

13

Q3’

13

$93$89

$83$79

$56$50

$38$34

$25$26

$13$16

$11$11$9

% of revenueAdj EBITDA ($mn)

0%

10%

20%

30%

181 Adjusted EBITDA is a Non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to net income please see slide 21.

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP

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Page 19: LinkedIn Q3 2013 Earnings Call

Net income (loss) & cash flow

Q3 2013 Q2 2013 Q3 2012

GAAP net income (loss) ($3.4) $3.7 $2.3

Non-GAAP net income $47 $44 $25

GAAP EPS ($0.03) $0.03 $0.02

Non-GAAP EPS $0.39 $0.38 $0.22

Operating cash flow $126 $124 $88

Free cash flow $43 $31 $54

Cash, cash equivalents & short-term investments $2,272 $873 $677

1 In millions | 2 EPS is based on fully-diluted weighted share count | 3 Free cash flow is calculated by subtracting purchases of property and equipment from operating cash flow 19

3

2

2

,

1

1

1

1

1

Page 20: LinkedIn Q3 2013 Earnings Call

Non-GAAP reconciliations1

Three Months Three Months Nine Months Nine MonthsEnded Sep 30 Ended Sep 30 Ended Sep 30 Ended Sep 30

2013 2012 2013 2012Non-GAAP net income and net income per share

GAAP net income (loss) ($3,363) $2,302 $22,987 $10,102Add back: stock-based compensation 54,445 26,798 136,738 58,747Add back: amortization of intangibles 3,832 3,770 12,350 6,929Income tax effect of non-GAAP adj. (8,120) (7,732) (28,422) (15,655)NON-GAAP NET INCOME $46,794 $25,138 $143,653 $60,123

GAAP diluted shares 113,940 113,618 117,090 112,420Add back: dilutive shares under treasury stock method 5,248

- - -NON-GAAP DILUTED SHARES 119,188 113,618 117,090 112,420NON-GAAP DILUTED NET INCOME PER SHARE $0.39 $0.22 $1.23 $0.53

Adjusted EBITDA

GAAP net income (loss) ($3,363) $2,302 $22,987 $10,102Provision for income taxes 8,155 4,406 12,982 20,270Other (income) expense, net (156) (672) 404 (228)Depreciation and amortization 33,767 23,122 91,766 55,552Stock-based compensation 54,445 26,798 136,738 58,747

Adjusted EBITDA $92,848 $55,956 $264,877 $144,443

201 In thousands, except per share data

Page 21: LinkedIn Q3 2013 Earnings Call

Non-GAAP adjusted EBITDA reconciliation(In millions) (Unaudited)

Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13

GAAP net income (loss) $1.8 $4.3 $4.0 $5.3 $2.1 $4.5 ($1.6) $6.9 $5.0 $2.8 $2.3 $11.5 $22.6 $3.7 ($3.4)

Provision for income taxes 1.0 0.7 0.5 1.4 (0.3) 5.4 4.4 1.5 5.8 10.0 4.4 15.2 0.7 4.1 8.2

Other (income) expense, net 0.3 0.4 (0.4) 0.3 (0.4) 0.0 1.8 1.6 (0.2) 0.7 (0.7) 0.0 0.3 0.3 (0.2)

Depreciation and amortization 3.9 4.2 4.8 6.6 8.2 9.6 11.6 13.8 14.9 17.5 23.1 24.3 25.8 32.2 33.8

Stock-based compensation 1.9 2.0 2.2 2.7 3.8 6.8 8.5 10.6 12.6 19.3 26.8 27.6 33.9 48.4 54.4

Adjusted EBITDA $9.1 $11.5 $11.1 $16.3 $13.3 $26.3 $24.7 $34.4 $38.1 $50.4 $56.0 $78.6 $83.4 $88.6 $92.8

211 Adjusted EBITDA is a Non-GAAP financial measure. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP

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Page 22: LinkedIn Q3 2013 Earnings Call

Guidance

Q4 2013 FY 2013

Revenue $415-420 ~$1,500

Adjusted EBITDA $98-100 ~$364

Depreciation & amortization $43-45 ~$136

Stock-based compensation $55-57 ~$193

22

1

1 All guidance figures are approximate values | 2 In millions

, 2

Page 23: LinkedIn Q3 2013 Earnings Call

Thank you

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Page 24: LinkedIn Q3 2013 Earnings Call

©2013 LinkedIn Corporation. All Rights Reserved.