LinkedIn Q1 2014 Earnings Call
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Transcript of LinkedIn Q1 2014 Earnings Call
Q1’14 ResultsMay 2014
2
Safe harbor
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“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 second quarter of 2014 and the full fiscal year 2014. 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 international operations; 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 for the year ended December 31, 2013, and additional information will also be set forth in our Form 10-Q that will be filed for the quarter ended March 31, 2014, 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 presentation is as of May 1, 2014, and LinkedIn undertakes no duty to update this information.
Who we are
4
Connect the world’s professionals to make them more productive
and successful
Our mission
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Create economic opportunity for every member of the global
workforce
Our vision
6
What we do
7
Our member value propositions
Professional IdentityBe the professional
profile of record
NetworkConnect all of the
world's professionals
KnowledgeBe the definitive professional
publishing platform
8
Growing global network
300Members worldwide
>2 NewMembers per second
186MMonthly unique visitors
1 As of 4/18/2014 based on internal estimates | 2 Average monthly number of unique visitors for Q1’14 according to comScore using LinkedIn + SlideShare
1 2 3
9
HirePower 50% of the
world’s hires
MarketBe the most effective
platform with marketers to engage with
SellBe the start of every
sales opportunity
Our customer value propositions
10
Our operating priorities
TalentBuild a world
class team
TechnologyCreate data driven
development at scale
ProductDevelop products our members love
MonetizationScale profitable business lines
11
Key metrics and results
12
Engagement metricsQ
1’11
Q2’
11
Q3’
11
Q4’
11
Q1’
12
Q2’
12
Q3’
12
Q4’
12
Q1’
13
Q2’
13
Q3’
13
Q4’
13
Q1’
14
296
277
259
238
218
202
187174
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
Q4’
13
Q1’
14
142139
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
Q4’
13
Q1’
14
11.5
10.6
11.611.7
11.1
9.8
8.99.39.4
7.67.67.17.1
Page views, comScore (bn)
1 As of 3/31/14 based on internal metrics | 2 comScore metrics reflect LinkedIn.com desktop traffic only, not including SlideShare and mobile traffic 13
2 21
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
Q4’
13
Q1’
14
$473$447
$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%
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
Q4’
13
Q1’
14
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
15
55%
25%
20%
$447
58%
22%
20%
$473
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
Q4’
13
Q1’
14
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%
16
61%
24%
8%
$4477%
$473
60%
25%
8%
7%
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
Q4’
13
Q1’
14
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
17
61%
39%
$447
58%
42%
$473
Adjusted EBITDAQ
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
Q4’
13
Q1’
14
$117$111
$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
1
Net income (loss) & cash flow
Q1 2014 Q4 2013 Q1 2013
GAAP net income (loss) ($13.4) $3.8 $22.6
Non-GAAP net income $47 $48 $52
GAAP EPS ($0.11) $0.03 $0.20
Non-GAAP EPS $0.38 $0.39 $0.45
Operating cash flow $129 $82 $104
Free cash flow $40 $25 $60
Cash, cash equivalents & marketable securities $2,306 $2,329 $830
1 In $ millions | 2 Attributable to common stockholders | 3 EPS is based on fully-diluted weighted share count | 4 Free cash flow is calculated by subtracting purchases of property and equipment from operating cash flow 19
4
3
3
,
1
1
1
1
1
2,
Non-GAAP reconciliations1
Three months Three monthsended mar 31 ended mar 31
2014 2013 Non-GAAP net income and net income per share
GAAP net income (loss) attributable to common stockholders ($13,445) $22,616Add back: accretion of redeemable noncontrolling interest 126 --Add back: stock-based compensation 67,769 33,939Add back: amortization of intangibles 4,813 2,841Income tax effect of non-GAAP adj. (11,914) (6,995)
Non-GAAP NET INCOME $47,349 $52,401
GAAP diluted shares 120,967 115,398Add back: dilutive shares under the treasury stock method 3,884 --
NON-GAAP diluted shares 124,851 115,398
NON-GAAP DILUTED NET INCOME PER SHARE $0.38 $0.45
Adjusted EBITDA
GAAP net income ($13,319) $22,616Provision for income taxes 13,581 718Other (income) expense, net (1,026) 308Depreciation and amortization 49,740 25,806Stock-based compensation 67,769 33,939
ADJUSTED EBITDA $116,745 $83,387
201 In thousands, except per share data
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 Q4’13 Q1’14
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) $3.8 ($13.3)
Provision (benefit) 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 9.5 13.6
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) (1.8) (1.0)
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 42.8 49.7
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 57.2 67.8
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 $111.4 $116.7
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
1
Guidance
Q2 2014 FY 2014
Revenue $500-505 $2,060-2,080
Adjusted EBITDA $118-120 $505-510
Depreciation & amortization ~$53 ~$225
Stock-based compensation ~$75 ~$305
22
1
1 All guidance figures are approximate values | 2 Values are in $ millions
, 2
Thank you
23
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