LinkedIn Corporation (NYSE:LNKD), the world's largest
professional network on the Internet, reported results for the
first quarter of 2016. The transcript with prepared remarks is
contained within this press release. In addition, a supplemental
presentation will be made available on the investor relations
section of the LinkedIn website at http://investors.linkedin.com.
“LinkedIn delivered strong financial results and growth across
our core product lines,” said Jeff Weiner, CEO of LinkedIn. “As a
result of our new mobile experience, members are increasing their
activity on LinkedIn, helping drive strong levels of engagement
across the platform."
Total revenue increased 35% year-over-year to $861 million.
Talent Solutions revenue increased 41%
year-over-year to $558 million.
- Hiring revenue contributed $502 million in revenue, up 27%
year-over-year.
- Learning & Development contributed $55 million in
revenue.
Marketing Solutions revenue increased 29%
year-over-year to $154 million.
Premium Subscriptions revenue increased 22%
year-over-year to $149 million.
Adjusted EBITDA was $222 million, or 26% of revenue.
GAAP net loss attributable to common stockholders was $46
million and non-GAAP net income was $99 million.
GAAP diluted EPS was $(0.35), compared to last year's
performance of $(0.34). Non-GAAP diluted EPS was $0.74, compared to
$0.57 last year.
"We are off to a good start in 2016 with strength in our core
and emerging businesses," said Steve Sordello, CFO of LinkedIn. "We
continue to invest heavily in innovation and in our core products,
while at the same time driving focus and scale to enable growth and
leverage across the business."
Business Outlook
LinkedIn is providing guidance for the second quarter and full
year 2016. Further details are in the transcript below and a
supplemental presentation will be made available on the investor
relations section of our website at
http://investors.linkedin.com:
- Q2 2016 Guidance: Revenue is expected to range
between $885 million and $890 million. Adjusted EBITDA is expected
to range between $225 million and $230 million. Non-GAAP EPS is
expected to range between $0.74 and $0.77. The company expects
depreciation of approximately $93 million, amortization of
approximately $44 million, and stock-based compensation of
approximately $150 million. The company also expects approximately
134 million GAAP fully-diluted weighted shares and 136 million
non-GAAP fully-diluted weighted shares.
- Full Year 2016 Guidance: Revenue is expected
to range between $3.65 billion and $3.70 billion. Adjusted EBITDA
is expected to range between $985 million and $1.005 billion.
Non-GAAP EPS is expected to range between $3.30 and $3.40. The
company expects depreciation of approximately $395 million,
amortization of approximately $173 million, and stock-based
compensation of approximately $580 million. The company also
expects approximately 135 million GAAP fully-diluted weighted
shares and 136 million non-GAAP fully-diluted weighted shares.
Prepared Remarks — Jeff Weiner, CEO LinkedIn
Corporation
Q1 was a strong start to the year as LinkedIn once again
delivered results that exceeded our plan. I want to highlight three
key themes from the quarter. First, engagement materially
strengthened across our member platform, driven by our new flagship
experience. Second, our core monetization products — Recruiter and
Sponsored Updates — showed continued growth, while our emerging
strategic investments such as Sales Navigator and Learning &
Development continue to show progress. And third, we saw
significant improvements in our ability to increase ROI across the
business.
For Q1, overall revenues grew 35% to $861 million. We delivered
adjusted EBITDA of $222 million, and non-GAAP EPS of $0.74
cents.
In the quarter, cumulative members grew 19% to 433 million, our
strongest net-add quarter since the beginning of 2014. Our core
operating metrics saw accelerated growth — unique visiting members
grew 9% to an average of 106 million members a month and member
page views grew 34%. Page views per unique visiting member hit an
all-time high in Q1, with 23% year-over-year growth.
Q1 marked the first full quarter for our new mobile flagship
experience, and we are pleased with the performance thus far.
Members are engaging at record levels with the more relevant and
comprehensive feed. During the quarter, viral actions increased
more than 80%, daily shares were up nearly 40%, and traffic to
third-party publishers grew more than 150%. We also continue to see
significant growth in other core engagement metrics, such as
profile edits, connections made, and messages sent.
Additionally, we saw record levels of activity in our jobs
products. Total jobs unique visitors hit a record high in Q1, up
more than 20% versus last year. Job applicants from our mobile
flagship app also reached record highs, up more than 50%.
As job seekers find more value on LinkedIn, our hiring business
directly benefits.
For Talent Solutions, in Q1 we strengthened our core Recruiter
product while also laying the groundwork for the roll-out of a
number of emerging growth drivers.
The next generation of Recruiter, unveiled late last year, is
the foundation of our long-term growth strategy. Recruiters are
experiencing greater success with the new product, and
effectiveness has increased substantially. Currently, the number of
candidates viewed per search is up more than 40%, and InMails per
search are up more than 30%. By the end of Q2, we expect the
majority of our customers to have converted to the new version of
Recruiter.
Additionally, newer products such as Referrals and Connectifier
are coming online to help customers drive a greater share of hiring
through LinkedIn. And the increased member engagement with jobs is
already delivering a stronger pipeline of potential candidates to
our existing customers.
In Marketing Solutions, our re-doubled focus on Sponsored
Content is already paying dividends. In Q1, Sponsored Content grew
nearly 80%, now representing 56% of total Marketing Solutions
revenue. On top of greater demand, increased feed engagement
resulted in more opportunities for marketers to reach their target
audiences. We also began piloting the sale of sponsored content
through off network inventory.
Additionally, by virtue of leveraging our LinkedIn Lead
Accelerator team and technology, conversion tracking and enhanced
campaign analytics are coming online faster than we expected. By
the end of 2016, we anticipate a Sponsored Content customer will be
able to expand targeting using their own data such as customer
account lists, use conversion tracking to better measure their
return on investment, and leverage improved tools including APIs to
better manage their campaigns, all of which will ultimately drive
even higher ROI.
In addition to our core businesses, Sales Solutions and Learning
& Development represent two longer-term focus areas. For Sales
Solutions, we continue to focus on enhancing Sales Navigator to
become the primary system of engagement for sales professionals.
During the quarter, we continued to make good progress simplifying
the integration with CRM systems, enabling seat holders to see more
value faster. We also remain focused working with customers
globally to help measure and drive their ROI. For example, Sales
Navigator influenced $350 million in closed business at HCL, a
global business services firm, demonstrating the significant
potential of social selling. Regarding Learning & Development,
we are now turning our attention from integrating the Lynda.com
team, to integrating their technology and content. Two examples are
the launch of LinkedIn Learning Paths, aggregating relevant content
from across LinkedIn relating to a specific topic or course, and
testing deeper integration into relevant LinkedIn subscription
packages. On the enterprise side, we continue to build out the
comprehensiveness of our content library to meet the growing demand
from our corporate customers.
In closing, Q1 represented a strong quarter for both our member
platform and business lines, with increasing engagement via our
Flagship app strengthening the foundation for continued growth
across our diverse enterprise offerings. At the same time, we
remain focused on long-term profitability by driving greater
leverage and ROI across our entire portfolio.
Lastly, I want to thank all of our employees, who have continued
to make this possible while embodying our culture and values.
I'll now turn it over to Steve for a deeper dive into our
operating metrics and financials.
Prepared Remarks — Steve Sordello, CFO LinkedIn
Corporation
We achieved strong performance during the quarter, underscoring
progress across member engagement, and in our core and emerging
businesses. We also improved the return on our investment, as
revenue growth was accompanied by an increase in adjusted EBITDA
margin year-over-year.
With respect to revenue, in Q1 we generated $861 million in
total sales, growth of 35% year-over-year, or 38% on a constant
currency basis.
Talent Solutions revenue, comprised of Hiring and Learning &
Development increased to $558 million up 41% year-over-year, and
represented 65% of sales versus 62% last year.
Within Hiring, revenue grew 27% year-over-year, or 30% on a
constant currency basis.
For field sales, we’re encouraged by solid fundamentals:
- Existing customers continue to grow their spend with LinkedIn:
- Larger enterprises represent approximately 70% of customer
spend, and we’ve seen healthy growth over the past couple years in
existing customer spending. We also continued to see engagement
increase across our product suite, as measured by jobs posted, job
applications, and inMails sent.
- In addition, we saw a better than expected impact from pricing,
while churn levels were consistent with last year, helping maintain
per customer spending growth.
- For new customers, growth remained strong as we added a healthy
level of new accounts, with modest acceleration in large enterprise
customer additions.
Our online channel, composed of online jobs and subscription
products for individual job seekers and recruiters, benefited from
two factors.
- First, new subscribers continued shifting to Job Seeker and
Recruiter Lite from Premium Subscriptions. This shift dates back to
the Q4’14 subscriber on-boarding changes, which we will begin to
lap in the 2nd half of 2016.
- More importantly, we saw a positive impact from increased
engagement and product improvements.
Learning & Development continues to be an area of
longer-term focus, and contributed $55 million during the quarter.
Important initiatives in 2016 include integrating learning content
into the LinkedIn platform, and beginning to grow our enterprise
effort, given the building early demand with corporate
customers.
Marketing Solutions increased 29% to $154 million, or 31% on a
constant currency basis, and represented 18% of revenue versus 19%
last year.
- Sponsored Content continued its strong performance, growing
nearly 80% in the quarter. Product improvements drove significant
improvements in click through, resulting in increased ROI for
customers. Growth in delivered impressions came from greater feed
engagement and strong customer demand.
- Sponsored Content strength also helped ease the secular
transition from display. As expected, Premium Display declined
approximately 30%, and now represents roughly 10% of overall
Marketing Solutions. As mentioned last quarter, we are
testing programmatic sales in right-rail inventory, an area we will
continue to explore throughout 2016.
- The decision to focus primarily on Sponsored Content began to
payoff in the first quarter, and we’ll continue to focus our
investment to better integrate the Lead Accelerator technology into
the Sponsored Content platform.
Premium Subscriptions grew to $149 million up 22%
year-over-year, or 25% growth on a constant currency basis, and
contributed 17% of revenue versus 19% last year.
- Sales Solutions grew approximately 55% year-over-year, and now
represents 40% of Premium Subscription revenue.
- The Field channel is growing substantially faster than
individual online subscriptions, and enterprise customers continue
to see increased value in Sales Navigator. Within these customers,
high product satisfaction and lower churn give us conviction in the
future potential of this business.
The remainder of Premium Subscriptions comes from our General
Subscriptions SKU.
- This product grew approximately 7% year-over-year, muted in
part by the previously discussed changes in subscriber
on-boarding.
- Looking across the four individual subscription products on the
LinkedIn platform (Gen Subs, Job Seeker, Recruiter Lite, and Sales
Navigator), we saw healthy growth in the 20% range in the first
quarter.
In terms of geography, non-US sales represented 39% of overall
revenue, consistent with last year, or 41% on a constant currency
basis. We saw better than expected results in EMEA across all of
our product lines. By channel, field sales contributed 62% of
revenue, consistent with last year.
Moving to the non-GAAP financials, adjusted EBITDA was $222
million, a 26% margin.
Depreciation was $95 million, amortization of intangibles was
$47 million, and stock compensation totaled $146 million.
GAAP net loss was $46 million, resulting in a $0.35 cent loss
per share, compared to loss of $43 million and $0.34 cent loss per
share last year.
Non-GAAP net income was $99 million, resulting in earnings of
$0.74 cents per share, compared with $73 million and $0.57 cents
last year.
The balance sheet remains well positioned with $3.2 billion of
cash and marketable securities. Operating cash flow was a record
$252 million versus $165 million a year ago, and free cash flow was
$75 million in light of our continued investments in data centers
and facilities.
With respect to capex, we expect to see increased leverage
beginning in 2017 as we exit what has been a period of strategic
investment in data centers and facilities to support our long-term
growth.
- In terms of data centers, we will complete building out the
majority of our global footprint by the end of 2016, on track with
the plan we originally discussed in 2014. We have begun to realize
improved reliability and increased site speed, made possible by our
new self-managed infrastructure. We will also improve our cost
structure given that we expect to realize greater than 40% in
future opex savings within cost of revenue.
- For facilities, we have executed on a plan that aligns our
global office footprint with our long-term business needs and we
plan to exit our growth investment cycle in late 2017.
Turning to guidance, I will end the call with our outlook for
the second quarter and updated view of the full year.
For the second quarter, we expect:
- Revenue of approximately $885-890 million, representing
approximately 25% percent growth.
- Adjusted EBITDA of between $225-230 million, a 26% margin.
- Non-GAAP EPS of between $0.74 -$0.77 cents per share.
For the full year, we’ve increased our outlook and now
expect:
- Revenue between $3.65 and $3.70 billion, a range of 22% to 24%
year-over-year growth.
- Adjusted EBITDA of approximately $985 million - $1.005 billion,
a 27% margin.
- And non-GAAP EPS of approximately $3.30 to $3.40 per
share.
- For stock-based compensation, our 2016 equity grant will result
in 100 basis points of GAAP margin expansion this year vs prior
guidance. Overall, stock compensation is an area of focus and we
expect to see continued progress towards lowering this expense as a
percentage of revenue going forward.
- For 2016, we expect approximately $150 million for Q2 and $580
million for the full year.
- Depreciation of approximately $93 million for Q2 and $395
million for the full year, with second quarter amortization of
approximately $44 million and $173 million for the full year.
- For other expenses, on a non-GAAP basis we expect approximately
$2 million for Q2 and $4 million for the full year. On a GAAP
basis, we expect $16 million for the second quarter, and $63
million for the full year; this includes GAAP-only convertible
accretion expenses and the impact from the financial derivative
related to our Chinese JV.
- A non-GAAP tax rate of 23% for Q2 and for the full year.
- Also as it relates to tax, as mentioned last quarter, we expect
to take a GAAP charge of approximately $100 million in the second
quarter of 2016, the result of a valuation allowance against our
deferred tax assets. As this is a non-cash charge, this will not
impact our non-GAAP results.
- And for the share count:
- On a GAAP basis, we expect 134 million fully diluted weighted
shares in Q2, and an average of 135 million for the full year.
- On a non-GAAP basis, we expect 136 million fully diluted
weighted shares in Q2 and for the full year.
In closing, we are off to a good start to 2016. We have building
momentum in member engagement, achieved solid results in our core
and emerging businesses, and generated strong adjusted EBITDA and
record operating cash flow. Finally, we are positioned to create
greater leverage through increasing profitability and growing free
cash flow.
As we invest for the long term, we will continue to pursue the
realization of our mission while focusing on capturing the large
and growing opportunity ahead of us.
LINKEDIN
CORPORATION |
TRENDED
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In
thousands) |
(Unaudited) |
|
As of |
|
March 31, 2015 |
|
June 30, 2015 |
|
September 30, 2015 |
|
December 31, 2015 |
|
March 31,2016 |
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1,017,287 |
|
|
$ |
450,991 |
|
|
$ |
631,725 |
|
|
$ |
546,237 |
|
|
$ |
759,451 |
|
Marketable securities |
2,512,588 |
|
|
2,582,435 |
|
|
2,457,607 |
|
|
2,573,145 |
|
|
2,400,187 |
|
Accounts receivable |
424,787 |
|
|
449,500 |
|
|
457,975 |
|
|
603,060 |
|
|
582,726 |
|
Deferred commissions |
60,259 |
|
|
58,585 |
|
|
56,453 |
|
|
87,706 |
|
|
80,783 |
|
Prepaid expenses |
62,800 |
|
|
75,669 |
|
|
72,752 |
|
|
62,992 |
|
|
76,414 |
|
Other current assets |
141,798 |
|
|
118,718 |
|
|
136,225 |
|
|
61,949 |
|
|
68,835 |
|
Total current assets |
4,219,519 |
|
|
3,735,898 |
|
|
3,812,737 |
|
|
3,935,089 |
|
|
3,968,396 |
|
Property and equipment, net |
755,396 |
|
|
793,034 |
|
|
906,189 |
|
|
1,047,005 |
|
|
1,139,032 |
|
Goodwill |
359,739 |
|
|
1,492,972 |
|
|
1,508,946 |
|
|
1,507,093 |
|
|
1,597,268 |
|
Intangible assets, net |
122,826 |
|
|
456,233 |
|
|
418,050 |
|
|
373,087 |
|
|
334,048 |
|
Other assets |
80,684 |
|
|
78,645 |
|
|
70,788 |
|
|
148,925 |
|
|
170,623 |
|
TOTAL ASSETS |
$ |
5,538,164 |
|
|
$ |
6,556,782 |
|
|
$ |
6,716,710 |
|
|
$ |
7,011,199 |
|
|
$ |
7,209,367 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
85,104 |
|
|
$ |
109,715 |
|
|
$ |
123,329 |
|
|
$ |
162,176 |
|
|
$ |
161,523 |
|
Accrued liabilities |
206,826 |
|
|
256,958 |
|
|
296,794 |
|
|
316,792 |
|
|
257,371 |
|
Deferred revenue |
585,812 |
|
|
629,671 |
|
|
621,411 |
|
|
709,116 |
|
|
787,621 |
|
Total current liabilities |
877,742 |
|
|
996,344 |
|
|
1,041,534 |
|
|
1,188,084 |
|
|
1,206,515 |
|
CONVERTIBLE SENIOR
NOTES, NET |
1,092,715 |
|
|
1,104,010 |
|
|
1,115,439 |
|
|
1,126,534 |
|
|
1,138,264 |
|
OTHER LONG-TERM
LIABILITIES |
146,504 |
|
|
238,001 |
|
|
241,532 |
|
|
201,128 |
|
|
225,023 |
|
Total liabilities |
2,116,961 |
|
|
2,338,355 |
|
|
2,398,505 |
|
|
2,515,746 |
|
|
2,569,802 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
|
REDEEMABLE
NONCONTROLLING INTEREST |
5,536 |
|
|
25,784 |
|
|
26,296 |
|
|
26,810 |
|
|
27,321 |
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
|
|
|
|
|
Class A and Class B common
stock |
13 |
|
|
13 |
|
|
13 |
|
|
13 |
|
|
13 |
|
Additional paid-in capital |
3,420,045 |
|
|
4,268,731 |
|
|
4,405,911 |
|
|
4,588,578 |
|
|
4,779,628 |
|
Accumulated other comprehensive
income (loss) |
1,085 |
|
|
(2,877 |
) |
|
6,632 |
|
|
9,124 |
|
|
7,502 |
|
Accumulated deficit |
(5,476 |
) |
|
(73,224 |
) |
|
(120,647 |
) |
|
(129,072 |
) |
|
(174,899 |
) |
Total stockholders’ equity |
3,415,667 |
|
|
4,192,643 |
|
|
4,291,909 |
|
|
4,468,643 |
|
|
4,612,244 |
|
TOTAL LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY |
$ |
5,538,164 |
|
|
$ |
6,556,782 |
|
|
$ |
6,716,710 |
|
|
$ |
7,011,199 |
|
|
$ |
7,209,367 |
|
|
LINKEDIN
CORPORATION |
TRENDED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands,
except per share data) |
(Unaudited) |
|
|
Three Months Ended |
|
March 31, 2015 |
|
June 30, 2015 |
|
September 30, 2015 |
|
December 31, 2015 |
|
March 31,2016 |
|
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
637,687 |
|
|
$ |
711,735 |
|
|
$ |
779,595 |
|
|
$ |
861,894 |
|
|
$ |
860,650 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization shown separately
below) |
88,406 |
|
|
100,086 |
|
|
111,368 |
|
|
118,998 |
|
|
117,528 |
|
Sales and marketing |
229,636 |
|
|
261,271 |
|
|
265,454 |
|
|
291,768 |
|
|
301,786 |
|
Product development |
165,580 |
|
|
190,133 |
|
|
202,682 |
|
|
217,265 |
|
|
237,620 |
|
General and administrative |
97,313 |
|
|
142,389 |
|
|
118,871 |
|
|
120,161 |
|
|
127,650 |
|
Depreciation and amortization |
73,972 |
|
|
99,004 |
|
|
117,901 |
|
|
129,595 |
|
|
142,285 |
|
Total costs and expenses |
654,907 |
|
|
792,883 |
|
|
816,276 |
|
|
877,787 |
|
|
926,869 |
|
Loss from
operations |
(17,220 |
) |
|
(81,148 |
) |
|
(36,681 |
) |
|
(15,893 |
) |
|
(66,219 |
) |
Other expense,
net: |
|
|
|
|
|
|
|
|
|
Interest income |
1,985 |
|
|
2,017 |
|
|
2,798 |
|
|
3,771 |
|
|
4,973 |
|
Interest expense |
(12,597 |
) |
|
(12,694 |
) |
|
(12,773 |
) |
|
(12,818 |
) |
|
(12,841 |
) |
Other, net |
(4,035 |
) |
|
(1,723 |
) |
|
(10,684 |
) |
|
(7,035 |
) |
|
(4,190 |
) |
Other expense, net |
(14,647 |
) |
|
(12,400 |
) |
|
(20,659 |
) |
|
(16,082 |
) |
|
(12,058 |
) |
Loss before income
taxes |
(31,867 |
) |
|
(93,548 |
) |
|
(57,340 |
) |
|
(31,975 |
) |
|
(78,277 |
) |
Provision (benefit) for
income taxes |
10,572 |
|
|
(26,048 |
) |
|
(10,429 |
) |
|
(24,064 |
) |
|
(32,961 |
) |
Net loss |
(42,439 |
) |
|
(67,500 |
) |
|
(46,911 |
) |
|
(7,911 |
) |
|
(45,316 |
) |
Accretion of redeemable
noncontrolling interest |
(109 |
) |
|
(248 |
) |
|
(512 |
) |
|
(514 |
) |
|
(511 |
) |
Net loss attributable
to common stockholders |
$ |
(42,548 |
) |
|
$ |
(67,748 |
) |
|
$ |
(47,423 |
) |
|
$ |
(8,425 |
) |
|
$ |
(45,827 |
) |
Net loss per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.34 |
) |
|
$ |
(0.53 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.35 |
) |
Diluted |
$ |
(0.34 |
) |
|
$ |
(0.53 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.35 |
) |
Weighted-average shares
used to compute net loss per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
125,471 |
|
|
128,241 |
|
|
130,716 |
|
|
131,583 |
|
|
132,779 |
|
Diluted |
125,471 |
|
|
128,241 |
|
|
130,716 |
|
|
131,583 |
|
|
132,779 |
|
|
LINKEDIN
CORPORATION |
TRENDED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In
thousands) |
(Unaudited) |
|
|
Three Months Ended |
|
March 31, 2015 |
|
June 30, 2015 |
|
September 30, 2015 |
|
December 31, 2015 |
|
March 31,2016 |
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(42,439 |
) |
|
$ |
(67,500 |
) |
|
$ |
(46,911 |
) |
|
$ |
(7,911 |
) |
|
$ |
(45,316 |
) |
Adjustments to reconcile net loss
to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
73,972 |
|
|
99,004 |
|
|
117,901 |
|
|
129,595 |
|
|
142,285 |
|
Provision for doubtful accounts and
sales returns |
1,795 |
|
|
3,280 |
|
|
3,373 |
|
|
4,269 |
|
|
7,746 |
|
Amortization of investment
premiums, net |
5,514 |
|
|
5,001 |
|
|
5,362 |
|
|
4,457 |
|
|
4,160 |
|
Amortization of debt discount and
transaction costs |
11,189 |
|
|
11,322 |
|
|
11,456 |
|
|
11,592 |
|
|
11,730 |
|
Stock-based compensation |
103,109 |
|
|
145,491 |
|
|
126,874 |
|
|
134,800 |
|
|
146,104 |
|
Excess income tax benefit from
stock-based compensation |
(18,198 |
) |
|
18,198 |
|
|
1,726 |
|
|
(13,965 |
) |
|
(1,698 |
) |
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
29,489 |
|
|
(21,887 |
) |
|
(9,168 |
) |
|
(147,895 |
) |
|
11,932 |
|
Deferred commissions |
7,067 |
|
|
1,535 |
|
|
3,094 |
|
|
(38,204 |
) |
|
8,844 |
|
Prepaid expenses and other
assets |
(34,629 |
) |
|
(1,957 |
) |
|
(9,568 |
) |
|
(11,865 |
) |
|
(29,495 |
) |
Accounts payable and other
liabilities |
(40,725 |
) |
|
55,959 |
|
|
58,854 |
|
|
26,838 |
|
|
(45,086 |
) |
Income taxes, net |
5,629 |
|
|
(22,876 |
) |
|
(15,659 |
) |
|
(3,373 |
) |
|
(34,998 |
) |
Deferred revenue |
63,359 |
|
|
72 |
|
|
(7,739 |
) |
|
88,268 |
|
|
75,979 |
|
Net cash provided by operating
activities |
165,132 |
|
|
225,642 |
|
|
239,595 |
|
|
176,606 |
|
|
252,187 |
|
INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Purchases of property and
equipment |
(90,121 |
) |
|
(72,462 |
) |
|
(166,653 |
) |
|
(178,010 |
) |
|
(177,480 |
) |
Purchases of investments |
(454,281 |
) |
|
(632,774 |
) |
|
(809,448 |
) |
|
(915,977 |
) |
|
(465,424 |
) |
Sales of investments |
438,409 |
|
|
141,452 |
|
|
391,914 |
|
|
268,727 |
|
|
168,434 |
|
Maturities of investments |
482,840 |
|
|
417,115 |
|
|
536,891 |
|
|
521,548 |
|
|
470,456 |
|
Payments for intangible assets and
acquisitions, net of cash acquired |
(4,161 |
) |
|
(650,681 |
) |
|
(20,030 |
) |
|
(2,975 |
) |
|
(40,430 |
) |
Changes in deposits and restricted
cash |
(1,382 |
) |
|
(1,877 |
) |
|
10,461 |
|
|
(602 |
) |
|
3,025 |
|
Net cash provided by (used in)
investing activities |
371,304 |
|
|
(799,227 |
) |
|
(56,865 |
) |
|
(307,289 |
) |
|
(41,419 |
) |
FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities |
26,739 |
|
|
3,364 |
|
|
1,255 |
|
|
46,456 |
|
|
125 |
|
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS |
(6,775 |
) |
|
3,925 |
|
|
(3,251 |
) |
|
(1,261 |
) |
|
2,321 |
|
CHANGE IN CASH AND CASH
EQUIVALENTS |
556,400 |
|
|
(566,296 |
) |
|
180,734 |
|
|
(85,488 |
) |
|
213,214 |
|
CASH AND CASH
EQUIVALENTS—Beginning of period |
460,887 |
|
|
1,017,287 |
|
|
450,991 |
|
|
631,725 |
|
|
546,237 |
|
CASH AND CASH
EQUIVALENTS—End of period |
$ |
1,017,287 |
|
|
$ |
450,991 |
|
|
$ |
631,725 |
|
|
$ |
546,237 |
|
|
$ |
759,451 |
|
|
LINKEDIN
CORPORATION |
TRENDED
SUPPLEMENTAL REVENUE INFORMATION |
(In
thousands) |
(Unaudited) |
|
|
Three Months Ended |
|
March 31, 2015 |
|
June 30, 2015 |
|
September 30, 2015 |
|
December 31, 2015 |
|
March 31,2016 |
|
|
|
|
|
|
|
|
|
|
Revenue by
product: |
|
|
|
|
|
|
|
|
|
Talent Solutions |
|
|
|
|
|
|
|
|
|
Hiring |
$ |
396,375 |
|
|
$ |
425,812 |
|
|
$ |
460,838 |
|
|
$ |
486,746 |
|
|
$ |
502,391 |
|
Learning & Development |
— |
|
|
17,558 |
|
|
41,273 |
|
|
48,593 |
|
|
55,256 |
|
Total Talent Solutions |
396,375 |
|
|
443,370 |
|
|
502,111 |
|
|
535,339 |
|
|
557,647 |
|
Marketing Solutions |
119,192 |
|
|
140,037 |
|
|
139,549 |
|
|
182,550 |
|
|
154,147 |
|
Premium Subscriptions |
122,120 |
|
|
128,328 |
|
|
137,935 |
|
|
144,005 |
|
|
148,856 |
|
Total |
$ |
637,687 |
|
|
$ |
711,735 |
|
|
$ |
779,595 |
|
|
$ |
861,894 |
|
|
$ |
860,650 |
|
|
|
|
|
|
|
|
|
|
|
Revenue by geographic
region: |
|
|
|
|
|
|
|
|
|
United States |
$ |
389,258 |
|
|
$ |
444,531 |
|
|
$ |
484,300 |
|
|
$ |
527,719 |
|
|
$ |
526,416 |
|
International |
|
|
|
|
|
|
|
|
|
Other Americas (1) |
38,066 |
|
|
39,904 |
|
|
43,505 |
|
|
46,500 |
|
|
45,362 |
|
EMEA (2) |
156,563 |
|
|
168,771 |
|
|
187,286 |
|
|
217,624 |
|
|
217,601 |
|
APAC (3) |
53,800 |
|
|
58,529 |
|
|
64,504 |
|
|
70,051 |
|
|
71,271 |
|
Total International revenue |
248,429 |
|
|
267,204 |
|
|
295,295 |
|
|
334,175 |
|
|
334,234 |
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
637,687 |
|
|
$ |
711,735 |
|
|
$ |
779,595 |
|
|
$ |
861,894 |
|
|
$ |
860,650 |
|
|
|
|
|
|
|
|
|
|
|
Revenue by geography,
by product: |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
Talent Solutions |
$ |
240,752 |
|
|
$ |
277,772 |
|
|
$ |
309,935 |
|
|
$ |
328,772 |
|
|
$ |
341,534 |
|
Marketing Solutions |
77,412 |
|
|
91,761 |
|
|
93,362 |
|
|
114,955 |
|
|
98,361 |
|
Premium Subscriptions |
71,094 |
|
|
74,998 |
|
|
81,003 |
|
|
83,992 |
|
|
86,521 |
|
Total United States revenue |
$ |
389,258 |
|
|
$ |
444,531 |
|
|
$ |
484,300 |
|
|
$ |
527,719 |
|
|
$ |
526,416 |
|
International |
|
|
|
|
|
|
|
|
|
Talent Solutions |
155,623 |
|
|
165,598 |
|
|
192,176 |
|
|
206,567 |
|
|
216,113 |
|
Marketing Solutions |
41,780 |
|
|
48,276 |
|
|
46,187 |
|
|
67,595 |
|
|
55,786 |
|
Premium Subscriptions |
51,026 |
|
|
53,330 |
|
|
56,932 |
|
|
60,013 |
|
|
62,335 |
|
Total International revenue |
$ |
248,429 |
|
|
$ |
267,204 |
|
|
$ |
295,295 |
|
|
$ |
334,175 |
|
|
$ |
334,234 |
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
637,687 |
|
|
$ |
711,735 |
|
|
$ |
779,595 |
|
|
$ |
861,894 |
|
|
$ |
860,650 |
|
|
|
|
|
|
|
|
|
|
|
Revenue by
channel: |
|
|
|
|
|
|
|
|
|
Field sales |
$ |
393,251 |
|
|
$ |
440,476 |
|
|
$ |
479,547 |
|
|
$ |
551,279 |
|
|
$ |
535,957 |
|
Online sales |
244,436 |
|
|
271,259 |
|
|
300,048 |
|
|
310,615 |
|
|
324,693 |
|
Total |
$ |
637,687 |
|
|
$ |
711,735 |
|
|
$ |
779,595 |
|
|
$ |
861,894 |
|
|
$ |
860,650 |
|
______________ |
|
|
|
|
|
|
|
|
|
(1)
Canada, Latin America and South America |
(2)
Europe, the Middle East and Africa (“EMEA”) |
(3)
Asia-Pacific (“APAC”) |
|
LINKEDIN
CORPORATION |
TRENDED
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
(In thousands,
except per share data) |
(Unaudited) |
|
|
Three Months Ended |
|
March 31, 2015 |
|
June 30, 2015 |
|
September 30, 2015 |
|
December 31, 2015 |
|
March 31,2016 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income and
net income per share: |
|
|
|
|
|
|
|
|
|
GAAP net loss
attributable to common stockholders |
$ |
(42,548 |
) |
|
$ |
(67,748 |
) |
|
$ |
(47,423 |
) |
|
$ |
(8,425 |
) |
|
$ |
(45,827 |
) |
Add back: stock-based
compensation |
103,109 |
|
|
145,491 |
|
|
126,874 |
|
|
134,800 |
|
|
146,104 |
|
Add back: non-cash interest expense
related to convertible senior notes |
11,189 |
|
|
11,322 |
|
|
11,456 |
|
|
11,592 |
|
|
11,730 |
|
Add back: amortization of
intangible assets |
11,778 |
|
|
29,474 |
|
|
46,466 |
|
|
46,989 |
|
|
47,323 |
|
Add back: accretion of redeemable
noncontrolling interest |
109 |
|
|
248 |
|
|
512 |
|
|
514 |
|
|
511 |
|
Add back: fair value adjustment on
other derivative |
— |
|
|
— |
|
|
6,900 |
|
|
1,900 |
|
|
2,300 |
|
Income tax effects and adjustments
(1) |
(11,096 |
) |
|
(47,378 |
) |
|
(41,331 |
) |
|
(61,624 |
) |
|
(62,672 |
) |
NON-GAAP NET
INCOME |
$ |
72,541 |
|
|
$ |
71,409 |
|
|
$ |
103,454 |
|
|
$ |
125,746 |
|
|
$ |
99,469 |
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted shares |
125,471 |
|
|
128,241 |
|
|
130,716 |
|
|
131,583 |
|
|
132,779 |
|
Add back: dilutive shares under the
treasury stock method |
2,827 |
|
|
2,224 |
|
|
1,825 |
|
|
2,020 |
|
|
1,259 |
|
NON-GAAP DILUTED SHARES |
128,298 |
|
|
130,465 |
|
|
132,541 |
|
|
133,603 |
|
|
134,038 |
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP DILUTED NET
INCOME PER SHARE |
$ |
0.57 |
|
|
$ |
0.55 |
|
|
$ |
0.78 |
|
|
$ |
0.94 |
|
|
$ |
0.74 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(42,439 |
) |
|
$ |
(67,500 |
) |
|
$ |
(46,911 |
) |
|
$ |
(7,911 |
) |
|
$ |
(45,316 |
) |
Provision (benefit) for income
taxes |
10,572 |
|
|
(26,048 |
) |
|
(10,429 |
) |
|
(24,064 |
) |
|
(32,961 |
) |
Other expense, net |
14,647 |
|
|
12,400 |
|
|
20,659 |
|
|
16,082 |
|
|
12,058 |
|
Depreciation and amortization |
73,972 |
|
|
99,004 |
|
|
117,901 |
|
|
129,595 |
|
|
142,285 |
|
Stock-based compensation |
103,109 |
|
|
145,491 |
|
|
126,874 |
|
|
134,800 |
|
|
146,104 |
|
ADJUSTED EBITDA |
$ |
159,861 |
|
|
$ |
163,347 |
|
|
$ |
208,094 |
|
|
$ |
248,502 |
|
|
$ |
222,170 |
|
______________ |
|
|
|
|
|
|
|
|
|
(1)
Excludes accretion of redeemable noncontrolling interest. |
|
Quarterly Results Webcast and Conference
Call
LinkedIn will host a webcast and conference call to discuss its
first quarter 2016 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 our website.
Upcoming Events
Management will participate in upcoming financial Q&A
discussions at industry events on May 10th, May 24th, and June 6th.
LinkedIn will post a link to these events on its investor relations
website, http://investors.linkedin.com/ for both the live and
archived webcasts.
About LinkedIn
LinkedIn connects the world’s professionals to make them more
productive and successful and transforms the ways companies hire,
market, and sell. Our vision is to create economic opportunity for
every member of the global workforce through the ongoing
development of the world’s first Economic Graph. LinkedIn has
offices around the world.
Non-GAAP Financial Measures To supplement its
condensed consolidated financial statements, which are prepared and
presented in accordance with US 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 US 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 peer operating results.
Non-cash interest expense related to convertible senior notes.
In November 2014, the company issued $1.3 billion aggregate
principal amount of 0.50% convertible senior notes. In accordance
with GAAP, the company separately accounted for the value of the
conversion feature as a debt discount, which is amortized in a
manner that reflects the company’s non-convertible debt borrowing
rate. Accordingly, the company recognizes imputed interest expense
on its convertible senior notes of approximately 4.7% in its
statement of operations. The company excludes the difference
between the imputed interest expense and coupon interest expense,
net of any capitalized interest, 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 the non-GAAP measures
facilitates comparisons to historical operating results and
comparisons to peer 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 the non-GAAP
measures facilitates comparisons to historical operating results
and comparisons to peer operating results.
Accretion of redeemable noncontrolling interest. The accretion
of redeemable noncontrolling interest represents the accretion of
the company's redeemable noncontrolling interest to its redemption
value. The company excludes the accretion 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 operating performance. In addition, excluding
this item from the non-GAAP financial measures facilitates
comparisons to historical operating results and comparisons to peer
operating results.
Fair value adjustment on other derivative. These adjustments
represent the changes in fair value of the cash settlement feature
for the preferred shares in the company's joint venture. The
company excludes these fair value adjustments because they are
non-cash in nature and the company believes that the non-GAAP
financial measures excluding this item provide meaningful
supplemental information regarding operating performance. In
addition, excluding this item from the non-GAAP financial measures
facilitates comparisons to historical operating results and
comparisons to peer operating results.
Income tax effects and adjustments. The company adjusts
non-GAAP net income by considering the income tax effects of
excluding stock-based compensation and the amortization of acquired
intangible assets. The company uses a static non-GAAP tax rate for
evaluating its operating performance as well as for planning and
forecasting purposes. This projected 10-year weighted average
non-GAAP tax rate eliminates the effects of non-recurring and
period specific items, which can vary in size and frequency and
does not necessarily reflect the company's long-term operations.
Based on the company's current forecast, a tax rate of 23% has been
applied to its non-GAAP financial results for the current period.
This rate will be adjusted annually, if necessary. The company
believes that adjusting for these income tax effects and
adjustments provides additional transparency to the overall or
“after tax” effects of excluding these items from its non-GAAP net
income.
Dilutive shares under the treasury stock method. During
periods with a net loss, the company excludes certain potential
common shares from its GAAP diluted shares because their effect
would have been anti-dilutive. On a non-GAAP basis, these shares
would have been dilutive. As a result, the company has included the
impact of these shares in the calculation of its non-GAAP diluted
net income per share under the treasury stock method.
For more information on the non-GAAP financial measures, please
see the “Trended 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 or non-GAAP EPS guidance
to net loss or GAAP EPS guidance because it does not provide
guidance for either other income (expense), net, or GAAP provision
for income taxes, which are reconciling items between net loss and
adjusted EBITDA and non-GAAP EPS. As items that impact net loss 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 loss 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, non-GAAP EPS, depreciation and
amortization, stock-based compensation and fully-diluted weighted
shares for the second quarter of 2016 and the full fiscal year
2016. 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 - our core value of putting members first, which may
conflict with the short-term interests of the business; 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 and
expansion into new areas and businesses; 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; privacy, security and data
transfer concerns, as well as changes in regulations, 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
U.S. 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 Class A 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,
2015, and additional information will also be set forth in our Form
10-Q that will be filed for the quarter ended March 31, 2016,
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 April 28, 2016, and
LinkedIn undertakes no duty to update this information.
Press:
press@linkedin.com
Investor:
Matthew Danziger
mdanziger@linkedin.com
650-426-6104
Kristin Altorfer
kaltorfer@linkedin.com
408-604-6630
Matt Sonefeldt
msonefeldt@linkedin.com
650-605-0861
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