LinkedIn Announces Second Quarter 2013 Financial Results

LinkedIn Announces Second Quarter 2013 Financial Results

MOUNTAIN VIEW, Calif., Aug. 1, 2013 (GLOBE NEWSWIRE) -- LinkedIn Corporation
(NYSE:LNKD), the world's largest professional network on the Internet, with
more than 238 million members, reported its financial results for the second
quarter of 2013:

  *Revenue for the second quarter was $363.7 million, an increase of 59%
    compared to $228.2 million in the second quarter of 2012.
    
  *Net income for the second quarter was $3.7 million, compared to net income
    of $2.8 million for the second quarter of 2012. Non-GAAP net income for
    the second quarter was $44.5 million, compared to $18.1 million for the
    second quarter of 2012. Non-GAAP measures exclude tax-affected stock-based
    compensation expense and tax-affected amortization of acquired intangible
    assets.
    
  *Adjusted EBITDA for the second quarter was $88.6 million, or 24% of
    revenue, compared to $50.4 million for the second quarter of 2012, or 22%
    of revenue.
    
  *GAAP diluted EPS for the second quarter was $0.03; Non-GAAP diluted EPS
    for the second quarter was $0.38.

"Accelerated member growth and strong engagement drove record operating and
financial results in the second quarter," said Jeff Weiner, CEO of LinkedIn.
"We are continuing to invest in driving scale across the LinkedIn platform in
order to fully realize our long-term potential."

Second Quarter Financial Details and Operating Summary

  *Talent Solutions: Revenue from Talent Solutions products totaled $205.1
    million, an increase of 69% compared to the second quarter of 2012. Talent
    Solutions revenue represented 56% of total revenue in the second quarter
    of 2013, compared to 53% in the second quarter of 2012.
    
  *Marketing Solutions: Revenue from Marketing Solutions products totaled
    $85.6 million, an increase of 36% compared to the second quarter of 2012.
    Marketing Solutions revenue represented 24% of total revenue in the second
    quarter of 2013, compared to 28% in the second quarter of 2012.
    
  *Premium Subscriptions: Revenue from Premium Subscriptions products totaled
    $73.0 million, an increase of 68% compared to the second quarter of 2012.
    Premium Subscriptions represented 20% of total revenue in the second
    quarter of 2013, compared to 19% in the second quarter of 2012.

Revenue from the U.S. totaled $224.3 million, and represented 62% of total
revenue in the second quarter of 2013. Revenue from international markets
totaled $139.4 million, and represented 38% of total revenue in the second
quarter of 2013.

Revenue from the field sales channel totaled $209.2 million, and represented
58% of total revenue in the second quarter of 2013. Revenue from the online,
direct sales channel totaled $154.4 million, and represented 42% of total
revenue in the second quarter of 2013.

GAAP net income for the second quarter was $3.7 million, compared to net
income of $2.8 million for the second quarter of 2012. Non-GAAP net income for
the second quarter was $44.5 million, compared to $18.1 million in the second
quarter of 2012.

Adjusted EBITDA for the second quarter was $88.6 million, or 24% of revenue,
compared to $50.4 million for the second quarter of 2012, or 22% of revenue.

GAAP diluted EPS was $0.03 for the second quarter based on 116.6 million
fully-diluted weighted shares outstanding compared to $0.03 for the second
quarter of 2012 based on 112.3 million fully-diluted weighted shares
outstanding. Non-GAAP diluted EPS was $0.38 for the second quarter based on
116.6 million fully-diluted weighted shares outstanding compared to $0.16 for
the second quarter of 2012 based on 112.3 million fully-diluted weighted
shares outstanding.

"LinkedIn operated at a high level in the second quarter, evidenced by strong
engagement, steady growth, and increasing levels of adjusted EBITDA and cash
flow," said Steve Sordello, CFO of LinkedIn. "We continue to make long-term
investments against our operating priorities in order to add increased value
for our members and customers."

For additional information, please see the "Selected Company Metrics and
Financials" page on LinkedIn's Investor Relations site.

Second Quarter Highlights and Strategic Announcements

In the second quarter of 2013:

  *LinkedIn membership grew to 238 million, as growth accelerated to 37%
    year-over-year. This strength was driven primarily by product
    optimization, and represents the first membership growth acceleration
    since the third quarter of 2011.
    
  *The Influencer Program added professional luminaries including Bill Gates,
    Japan's Prime Minister Shinzo Abe, Senator Elizabeth Warren, Jamie Dimon,
    and Burberry CEO Angela Ahrendts. LinkedIn's professional publishing
    platform contributed to homepage traffic more than doubling compared with
    last year.
    
  *LinkedIn revamped its mobile phone experience with the introduction of new
    iOS and Android apps.Mobile activity has increased, with mobile homepage
    engagement rising over 40%, and increasing levels of social actions,
    article views, and mobile profile edits when compared to the past version.
    
  *LinkedIn launched a new version of its flagship Recruiter platform for
    Talent Solutions customers resulting in increased customer
    engagement.LinkedIn also launched CheckIn, which enables student members
    to engage with recruiters at on-campus hiring events.

Business Outlook

LinkedIn is providing guidance for the third quarter and full year of 2013:

  *Q3 2013 Guidance: Revenue is expected to range between $367 million and
    $373 million. Adjusted EBITDA is expected to range between $81 million and
    $83 million. The company expects depreciation and amortization in the
    range of $38 million to $40 million, and stock-based compensation in the
    range of $49 million to $51 million.
    
  *Full Year 2013 Guidance: Revenue is revised upwards to range between
    $1.455 billion and $1.475 billion. Adjusted EBITDA is also revised
    upwards to range between $340 million and $355 million. The company
    expects depreciation and amortization in the range of $135 million to $140
    million, and stock-based compensation in the range of $183 million to $188
    million.

Quarterly Conference Call

LinkedIn will host a webcast/conference call to discuss its second quarter
2013 financial results and business outlook today at 2:00 p.m. Pacific Time.
Jeff Weiner and Steve Sordello will host the webcast, which can be viewed on
the investor relations section of the LinkedIn website at
http://investors.linkedin.com/. This call will contain forward-looking
statements and other material information regarding the company's financial
and operating results. Following completion of the call, a recorded replay of
the webcast will be available on the website.

About LinkedIn

Founded in 2003, LinkedIn connects the world's professionals to make them more
productive and successful. With more than 238 million members worldwide,
including executives from every Fortune 500 company, LinkedIn is the world's
largest professional network on the Internet. The company has a diversified
business model with revenue coming from Talent Solutions, Marketing Solutions
and Premium Subscriptions products. Headquartered in Silicon Valley, LinkedIn
has offices across the globe.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and
presented in accordance with GAAP, the company uses the following non-GAAP
financial measures: adjusted EBITDA, non-GAAP net income, and non-GAAP diluted
EPS (collectively the "non-GAAP financial measures"). 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. The company uses these non-GAAP financial
measures for financial and operational decision making and as a means to
evaluate period-to-period comparisons. The company believes that they provide
useful information about operating results, enhance the overall understanding
of past financial performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in its financial
and operational decision making.

The company excludes the following items from one or more of its non-GAAP
measures:

Stock-based compensation. The company excludes stock-based compensation
because it is non-cash in nature and because the company believes that the
non-GAAP financial measures excluding this item provide meaningful
supplemental information regarding operational performance and liquidity. The
company further believes this measure is useful to investors in that it allows
for greater transparency to certain line items in its financial statements and
facilitates comparisons to competitors' operating results.

Amortization of acquired intangible assets. The company excludes amortization
of acquired intangible assets because it is non-cash in nature and because the
company believes that the non-GAAP financial measures excluding this item
provide meaningful supplemental information regarding operational performance
and liquidity. In addition, excluding this item from various non-GAAP measures
facilitates internal comparisons to historical operating results and
comparisons to competitors' operating results.

Income tax effect of non-GAAP adjustments. The company adjusts non-GAAP net
income by including the income tax effects of excluding stock-based
compensation and the amortization of acquired intangible assets. The company
believes that the inclusion of the income tax effects provides additional
transparency to the overall or "after tax" effects of excluding these items
from non-GAAP net income.

For more information on the non-GAAP financial measures, please see the
"Reconciliation of GAAP to Non-GAAP Financial Measures" table in this press
release. This accompanying table has more details on the GAAP financial
measures that are most directly comparable to non-GAAP financial measures and
the related reconciliations between these financial measures. Additionally,
the company has not reconciled adjusted EBITDA guidance to net income guidance
because it does not provide guidance for either other income (expense), net,
or provision for income taxes, which are reconciling items between net income
and adjusted EBITDA. As items that impact net income are out of the company's
control and/or cannot be reasonably predicted, the company is unable to
provide such guidance. Accordingly, a reconciliation to net income is not
available without unreasonable effort.

Safe Harbor Statement

"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995: This press release and the accompanying conference call contain
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 third 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 June30, 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 August1,
2013, and LinkedIn undertakes no duty to update this information.



LINKEDIN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


                                             June 30,    December 31,
                                             2013        2012
ASSETS                                                   
CURRENT ASSETS:                                          
Cash and cash equivalents                     $ 262,670   $ 270,408
Short-term investments                        610,728     479,141
Accounts receivable, net                      203,585     203,607
Deferred commissions                          29,710      30,232
Prepaid expenses                              26,785      14,344
Other current assets                          30,672      21,065
Total current assets                          1,164,150   1,018,797
Property and equipment, net                   292,715     186,677
Goodwill                                      150,831     115,214
Intangible assets, net                        38,284      32,780
Other assets                                  41,980      28,862
TOTAL ASSETS                                  $ 1,687,960 $ 1,382,330
LIABILITIES AND STOCKHOLDERS' EQUITY                     
CURRENT LIABILITIES:                                     
Accounts payable                              $ 74,605    $ 53,559
Accrued liabilities                           106,118     104,077
Deferred revenue                              331,187     257,743
Total current liabilities                     511,910     415,379
DEFERRED TAX LIABILITIES                      22,905      27,717
OTHER LONG TERM LIABILITIES                   42,128      30,810
Total liabilities                             576,943     473,906
COMMITMENTS AND CONTINGENCIES                            
STOCKHOLDERS' EQUITY:                                    
Class A and Class B common stock              11          11
Additional paid-in capital                    1,055,870   879,303
Accumulated other comprehensive income (loss) (64)        260
Accumulated earnings                          55,200      28,850
Total stockholders' equity                    1,111,017   908,424
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 1,687,960 $ 1,382,330



LINKEDIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)


                                      Three Months Ended  Six Months Ended
                                      June 30,            June 30,
                                      2013      2012      2013      2012
Net revenue                            $ 363,661 $ 228,207 $ 688,366 $ 416,663
Costs and expenses:                                               
Cost of revenue (exclusive of
depreciation and amortizationshown    49,264    30,367    91,648    55,500
separately below)
Sales and marketing                    122,276   75,740    231,693   141,624
Product development                    95,608    60,080    176,280   107,173
General and administrative             56,225    30,974    99,009    55,828
Depreciation and amortization          32,193    17,548    57,999    32,430
Total costs and expenses               355,566   214,709   656,629   392,555
Income from operations                 8,095     13,498    31,737    24,108
Other expense, net                     (252)     (668)     (560)     (444)
Income before income taxes             7,843     12,830    31,177    23,664
Provision for income taxes             4,109     10,019    4,827     15,864
Net income                             $ 3,734   $ 2,811   $ 26,350  $ 7,800
                                                                 
Net income per share of common stock:                             
Basic                                  $ 0.03    $ 0.03    $ 0.24    $ 0.08
Diluted                                $ 0.03    $ 0.03    $ 0.23    $ 0.07
Weighted-average shares used to                                   
compute net income per share:
Basic                                  111,214   104,185   110,334   103,198
Diluted                                116,627   112,317   116,017   111,813



LINKEDIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


                                      Three Months Ended  Six Months Ended
                                       June 30,            June 30,
                                      2013      2012      2013      2012
OPERATING ACTIVITIES:                                             
Net income                             $ 3,734   $ 2,811   $ 26,350  $ 7,800
Adjustments to reconcile net income to
net cash provided by operating                                    
activities:
Depreciation and amortization          32,193    17,548    57,999    32,430
Provision (benefit) for doubtful       1,639     (227)     2,953     (290)
accounts and sales returns
Stock-based compensation               48,354    19,323    82,293    31,949
Excess income tax benefit from         (5,003)   (8,110)   (17,559)  (10,367)
stock-based compensation
Changes in operating assets and                                   
liabilities:
Accounts receivable                    8,577     (16,949)  (272)     (22,457)
Deferred commissions                   1,185     (1,636)   543       (2,073)
Prepaid expenses and other assets      (8,448)   (10,699)  (17,846)  (20,274)
Accounts payable and other liabilities 24,313    16,144    20,815    26,816
Income taxes, net                      3,522     11,617    (726)     14,484
Deferred revenue                       14,099    17,176    73,444    52,195
Net cash provided by operating         124,165   46,998    227,994   110,213
activities
INVESTING ACTIVITIES:                                             
Purchases of property and equipment    (93,184)  (37,604)  (137,467) (59,691)
Purchases of investments               (98,715)  (116,065) (256,925) (179,377)
Sales of investments                   17,389    24,304    76,420    24,304
Maturities of investments              33,897    38,361    45,127    60,726
Payments for intangible assets and     (6,321)   (40,297)  (6,547)   (47,900)
acquisitions, net of cash acquired
Changes in deposits and restricted     (3,488)   (648)     (3,543)   (2,702)
cash
Net cash used in investing activities  (150,422) (131,949) (282,935) (204,640)
FINANCING ACTIVITIES:                                             
Proceeds from issuance of common stock 7,681     14,214    19,738    23,891
from employee stock options
Proceeds from issuance of common stock 11,500    7,718     11,500    7,718
from employee stock purchase plan
Excess income tax benefit from         5,003     8,110     17,559    10,367
stock-based compensation
Other financing activities             797       (176)     813       (140)
Net cash provided by financing         24,981    29,866    49,610    41,836
activities
EFFECT OF EXCHANGE RATE CHANGES ON     (993)     (787)     (2,407)   (81)
CASH AND CASH EQUIVALENTS
CHANGE IN CASH AND CASH EQUIVALENTS    (2,269)   (55,872)  (7,738)   (52,672)
CASH AND CASH EQUIVALENTS—Beginning of 264,939   342,248   270,408   339,048
period
CASH AND CASH EQUIVALENTS—End of       $ 262,670 $ 286,376 $ 262,670 $ 286,376
period
SUPPLEMENTAL DISCLOSURES OF NONCASH                               
INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment
recorded in accounts payable and       $ 8,032   $ 5,984   $ 36,103  $ 17,402
accrued liabilities
Vesting of early exercised stock       $ 256     $ 1,858   $ 547     $ 2,630
options
Issuance of ClassA common stock and
stock options for business             $ 40,927  $72,461   $ 40,927  $ 72,461
combinations



LINKEDIN CORPORATION
SUPPLEMENTAL REVENUE INFORMATION
(In thousands)
(Unaudited)
                                                        
                             Three Months Ended  Six Months Ended
                             June 30,            June 30,
                             2013      2012      2013      2012
Revenue by product:                                      
Talent Solutions              $ 205,092 $ 121,592 $ 389,376 $ 224,152
Marketing Solutions           85,593    63,105    160,389   111,055
Premium Subscriptions         72,976    43,510    138,601   81,456
Total                         $ 363,661 $ 228,207 $ 688,366 $ 416,663
                                                        
Revenue by geographic region:                            
United States                 $ 224,277 $ 147,253 $ 425,680 $ 268,102
Other Americas ^(1)           26,857    15,047    51,033    27,056
Total Americas                251,134   162,300   476,713   295,158
EMEA ^(2)                     84,691    50,057    159,848   92,902
APAC ^(3)                     27,836    15,850    51,805    28,603
Total                         $ 363,661 $ 228,207 $ 688,366 $ 416,663
                                                        
Revenue by channel:                                      
Field sales                  $ 209,227 $ 129,448 $ 393,198 $ 230,919
Online sales                 154,434   98,759    295,168   185,744
Total                         $ 363,661 $ 228,207 $ 688,366 $ 416,663
                                                        
(1)Canada, Latin America and South America
(2)Europe, the Middle East and Africa ("EMEA")
(3)Asia-Pacific ("APAC")



LINKEDIN CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
                                                                  
                                        Three Months Ended Six Months Ended
                                        June 30,           June 30,
                                        2013      2012     2013      2012
Non-GAAP net income and net income per                             
share:
GAAP net income                          $ 3,734   $ 2,811  $ 26,350  $ 7,800
Add back: stock-based compensation       48,354    19,323   82,293    31,949
Add back: amortization of intangible     5,677     1,851    8,518     3,159
assets
Income tax effect of non-GAAP            (13,307)  (5,933)  (20,302)  (7,923)
adjustments
NON-GAAP NET INCOME                      $ 44,458  $ 18,052 $ 96,859  $ 34,985
                                                                  
GAAP AND NON-GAAP DILUTED SHARES         116,627   112,317  116,017   111,813
                                                                  
NON-GAAP DILUTED NET INCOME PER SHARE    $ 0.38    $ 0.16   $ 0.83    $ 0.31
                                                                  
Adjusted EBITDA:                                                   
Net income                               $ 3,734   $ 2,811  $ 26,350  $ 7,800
Provision for income taxes               4,109     10,019   4,827     15,864
Other expense, net                       252       668      560       444
Depreciation and amortization            32,193    17,548   57,999    32,430
Stock-based compensation                 48,354    19,323   82,293    31,949
ADJUSTED EBITDA                          $ 88,642  $ 50,369 $ 172,029 $ 88,487

CONTACT: LinkedIn Corporate Communications Team
         press@linkedin.com

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