LinkedIn 2012 Annual Report Download

Download and view the complete annual report

Please find the complete 2012 LinkedIn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

26APR201314060142
April 2013
To Our Shareholders:
2012 was a transformative year for LinkedIn. We exited 2011 having successfully revamped our product
development infrastructure, and 2012 was a year of accelerated product innovation based on that
investment. The products we delivered throughout the year drove record levels of member engagement
and financial results.
LinkedIn remains focused on its mission to connect the world’s professionals to make them more
productive and successful. Our vision, to create economic opportunity for each of the world’s more than
three billion professionals, galvanizes our employees and our culture. That culture remains one of our
strongest competitive advantages and fuels our product strategy to help members connect, find, and be
found through their professional identities; provide valuable insights making members more successful in
their careers; and enable LinkedIn to work everywhere our member work.
By leveraging our new development infrastructure, we set out to make products that would simplify the
member experience on LinkedIn, grow our platform, and create daily value for LinkedIn members. Strong
member engagement metrics emphasizes the value we continue to create throughout the ecosystem. In
2012, we added 57 million new members, ending the year with approximately 202 million members in
total, and maintaining our pace of adding approximately two members per second to LinkedIn. We
celebrated passing the 200 million member milestone in December, up from less than 100 million
members just two years ago.
As measured by comScore, excluding Slideshare, unique visitors to LinkedIn grew 29% versus 2011 to an
average of 109 million. Pageviews, as measured by comScore and excluding Slideshare and mobile member
engagement, rose 27% versus 2011 to 37 billion, and when including mobile engagement, our growth was
substantially higher.
Our Simplify, Grow, Everyday strategy led to one of the most dynamic periods of product development in
our history, culminating in stronger engagement growth in the fourth quarter.
Simplify: In 2012, we made great strides towards making it easier for members to unlock value from our
core products and services. In the spring, we introduced a more visual version of People You May Know.
This was the first refresh of many of our pillar products throughout the year. In July, we redesigned the
Homepage, leading to all-time highs in status updates and social activity, including comments, shares and
likes. During the fall, we introduced a new version of the LinkedIn Profile, the professional profile of
record, and in the fourth quarter, on average, the number of members updating their profiles doubled
versus the fourth quarter of 2011.
Grow: Grow embodies two priorities: expanding our global membership and extending our monetization
efforts to benefit both members and customers. Product localization continued to drive strong member
growth in 2012. LinkedIn is now available in 19 languages around the world, and more than 64% of all
LinkedIn members now come from outside the U.S.
In terms of monetization, we increased the value delivered to corporate Talent Solutions customers by
improving the Recruiter platform. We launched and subsequently witnessed strong uptake of Talent
Pipeline, allowing vastly improved candidate search and organization. Recruiter is also now available for
the first time in multiple languages with the addition of French, German, and Portuguese. Also, reflecting
the larger engagement shift to mobile, we made jobs on mobile available to LinkedIn members yielding
strong results. More than 20% of jobs views and nearly 30% of jobs viewers came from mobile devices in
the fourth quarter.
In Marketing Solutions, we introduced several new products, including simplified and redesigned
Company Pages, Targeted Status Updates, and new analytics and APIs for customers. These changes

Table of contents

  • Page 1
    ... to LinkedIn members yielding strong results. More than 20% of jobs views and nearly 30% of jobs viewers came from mobile devices in the fourth quarter. In Marketing Solutions, we introduced several new products, including simplified and redesigned Company Pages, Targeted Status Updates, and new...

  • Page 2
    ... on LinkedIn with Company Status Updates to followers, increasing more than seven-fold in 2012. Within Premium Subscriptions, we focused on creating value for specific verticals, including outbound sales professionals. Our Sales Solutions suite of products, which include Sales Navigator, is...

  • Page 3
    ... Mountain View, CA 94043 (Address of principal executive offices) (Zip Code) (650) 687-3600 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Class A Common Stock, par value $0.0001 per share Securities registered...

  • Page 4
    ...Data ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership...

  • Page 5
    ... manage our growth; • our ability to develop effective solutions for mobile devices; • our ability to retain our existing subscribers and our Talent Solutions and Marketing Solutions customers; • our ability to successfully enter new markets and manage our international expansion; • our...

  • Page 6
    ...Our principal executive offices are located at 2029 Stierlin Court, Mountain View, CA 94043, and our telephone number is (650) 687-3600. Our website address is www.linkedin.com. We completed our initial public offering in May 2011 and our Class A common stock is listed on the New York Stock Exchange...

  • Page 7
    ...by making our products and services available via open application programming interfaces, or APIs, and embeddable widgets to enable access to our solutions anywhere professionals work. • Increase Monetization While Creating Value for Our Members. We intend to leverage our unique business model to...

  • Page 8
    ... by expanding our sales, technical and support operations in additional international locations. Our Solutions Our solutions are designed to make professionals more productive and successful and to connect talent with opportunity at massive scale. To date our focus has been to develop products that...

  • Page 9
    ... • LinkedIn Connections. Once two members are connected, their profile information is shared and, subject to privacy settings, each member has access to the other member's list of connections for further networking. Connections across the network are classified to three degrees: first degree...

  • Page 10
    ...recent updates and recommend products and services. • Apply with LinkedIn. Apply with LinkedIn enables members to submit their profiles for job applications by clicking the ''Apply with LinkedIn'' button on company websites. Member can choose to update their profiles in real time, and members will...

  • Page 11
    ..., and Windows Mobile. • Robust set of APIs. We believe that every modern business application is more useful and productive if it is personalized according to a professional's profile and his or her network of connections. In 2009, we launched a public website that allows any developer to agree...

  • Page 12
    ... relevant member profiles. TalentMatch customers can view these recommendations and directly message relevant candidates. • Jobs You May Be Interested In (JYMBII). We use profile data to display relevant job postings to members even if they are not conducting a job search. Job recommendations are...

  • Page 13
    ... including rich media. • Custom Groups. Advertisers can set-up a Group around a topic, company or product and customize content in key modules of the group. Polls, videos, feeds, and news can be included in these custom modules. • Sponsorships. Marketers can sponsor specific areas of our website...

  • Page 14
    ... also offer subscriptions to InMail, Profile Organizer and LinkedIn for Salesforce on a standalone basis. Sales, Marketing and Customer Support Depending on the specific product, we sell our Talent and Marketing Solutions offline through our field sales organization or online on our website. We sell...

  • Page 15
    ... relating to their accounts and how to use our features and products. Self-service support is available through our website and customers can also contact us via e-mail. We have specific premium support teams dedicated to premium subscribers, online advertisers, and our Talent Solutions customers...

  • Page 16
    ...or use of our intellectual property could make it more expensive to do business and harm our operating results. Companies in the Internet, social media technology and other industries may own large numbers of patents, copyrights, and trademarks and may frequently request license agreements, threaten...

  • Page 17
    ... and targeted audiences for their products or services. Other companies that provide content for professionals could develop more compelling offerings that compete with our Premium Subscriptions and adversely impact our ability to sell and renew subscriptions to our members. Additionally, companies...

  • Page 18
    ... laws regarding privacy and protection of member data. We post on our website our privacy policy and user agreement, which describe our practices concerning the use, transmission and disclosure of member data. Any failure by us to comply with our posted privacy policy or privacy related laws and...

  • Page 19
    ... the future cause our operating results to fluctuate. In particular, we expect sales of Talent Solutions to be weaker in the first quarter of the year due to budgetary cycles and sales of our Marketing Solutions to be weaker in the third quarter of the year as Internet usage during the summer months...

  • Page 20
    ... notifications of new information posted on our investor relations website in real time by signing up for email alerts and RSS feeds. Further corporate governance information, including our certificate of incorporation, bylaws, governance guidelines, board committee charters, and code of conduct...

  • Page 21
    ... control could interfere with access to our services. A key element to our continued growth is the ability of our members, users (whom we define as anyone who visits one of our websites through a computer or application on a mobile device, regardless of whether or not they are a member), enterprises...

  • Page 22
    ... harm to the future growth of our business that may result from interruptions in our service as a result of system failures. If our security measures are compromised, or if our websites are subject to attacks that degrade or deny the ability of members or customers to access our solutions, or if our...

  • Page 23
    ... result in enterprises and professional organizations blocking access to our services or refusing to purchase our Talent or Marketing Solutions or Premium Subscriptions. Our decisions may not result in the long-term benefits that we expect, in which case our member engagement, business and operating...

  • Page 24
    ...if third parties we work with, such as customers, vendors or developers, violate applicable laws or our policies, such violations may also put our members' information at risk and could in turn have an adverse effect on our business. Public scrutiny of Internet privacy issues may result in increased...

  • Page 25
    ... the growth of our business. Any costs incurred as a result of this potential liability could harm our business and operating results. Many individuals are using devices other than personal computers to access online services. If users of these devices do not widely adopt solutions we develop for...

  • Page 26
    ... the way members and users access our websites and services from personal computers to mobile devices; • the unproven nature of our business model; • changes in our pricing policies or those of our competitors; • our ability to increase sales of our products and solutions to new customers and...

  • Page 27
    ...application developers, could also launch new products and services that compete with us and that could gain market acceptance quickly. We also expect our existing competitors in the markets for Talent Solutions and Marketing Solutions to continue to focus on these areas. A number of these companies...

  • Page 28
    ... our Marketing Solutions, we compete with online and offline outlets that generate revenue from advertisers and marketers. To the extent competitors are better able to provide customers with cost-effective access to attractive demographics, either through new business models or increased user volume...

  • Page 29
    ...and our websites and mobile applications are available in numerous other languages. We expect to continue to expand our international operations in the future by opening offices in new jurisdictions and expanding our offerings in new languages. However, we have limited operating history as a company...

  • Page 30
    ...expanding our base of members, enterprises, advertisers, corporate customers and other partners, and increasing their engagement with our services, and will depend largely on our ability to maintain member trust, be a technology leader and continue to provide high-quality solutions, which we may not...

  • Page 31
    .... In addition, if our customers do not comply with our terms of service, they also may be able to abuse our products and services and provide access to our solutions to unauthorized users. However, we may not be able to detect any or all of these types of activities in a timely manner and, even if...

  • Page 32
    ... renew their subscriptions, renew on less favorable terms, or fail to purchase additional solutions, we may not achieve our revenue projections, and our operating results would be harmed. In order to grow our business, we must continually attract new customers, sell additional solutions to existing...

  • Page 33
    ... reflected in our operating results. We recognize revenue from sales of our Talent Solutions and Premium Subscriptions over the terms of the agreements, which is typically 12 months. As a result, a significant portion of the revenue we report in each quarter is generated from agreements entered into...

  • Page 34
    ... have policies that could result in access to our content, services or features being blocked. Any restrictions on the use of our services by our members and users could lead to the loss or slowing of growth in our member base or the level of member engagement. If Internet search engines...

  • Page 35
    ...and mobile devices. If government regulations relating to the Internet or other areas of our business change or Internet access providers are able to block, degrade, or charge for access to certain of our products and services, we could incur additional expenses and the loss of members and customers...

  • Page 36
    ... of our control, such as: increases in expenses that are not deductible for tax purposes, the tax effects of restructuring charges or purchase accounting for acquisitions, changes related to our ability to ultimately realize future benefits attributed to our deferred tax assets, including those...

  • Page 37
    ...business to acquisition integration challenges; • implementation or remediation of controls, procedures, and policies at the acquired company; • integration of the acquired company's accounting, human resource, and other administrative systems, and coordination of product, engineering, and sales...

  • Page 38
    ... of companies perceived by investors to be comparable to us or in valuation metrics, such as our price to earnings ratio, could impact our stock price. Additionally, the stock markets have at times experienced extreme price and volume fluctuations that have affected and might in the future affect...

  • Page 39
    ... networking sector, and as publicly traded securities in these industries become more available, investors who have purchased or may in the future purchase securities in this sector may choose to sell LinkedIn securities that they have already purchased in favor of other companies, and/or choose to...

  • Page 40
    ... reports about our business, our share price and trading volume could decline. The trading market for our Class A common stock depends, to some extent, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts...

  • Page 41
    ...of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their Class A common stock after price appreciation...

  • Page 42
    ..., 2011 (the date our common stock commenced trading on the NYSE) through December 31, 2012 of the cumulative total return for our Class A common stock, the S&P 500 Index and the SNL Kagan New Media Index. Such returns are based on historical results and are not intended to suggest future performance...

  • Page 43
    .../12 LinkedIn Corporation S&P 500 SNL Kagan New Media 23APR201322175397 Index Period Ending 5/18/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 LinkedIn Corporation ...100.00 S&P 500 ...100.00 SNL Kagan New Media ...100.00 Issuer Purchases of Equity Securities 200...

  • Page 44
    ... in the future. 2012 Year Ended December 31, 2011 2010 2009 (in thousands, except per share data) 2008 Consolidated Statements of Operations Data: Net revenue ...Costs and expenses: Cost of revenue (exclusive of depreciation and amortization shown separately below) ...Sales and marketing ...Product...

  • Page 45
    ... is a key financial measure used by the compensation committee of our board of directors in connection with the payment of bonuses to our executive officers. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating...

  • Page 46
    ... 2011. Our future growth will depend, in part, on our ability to increase our member base and member engagement on both desktop and mobile, which we believe will result in increased sales of our Talent Solutions (formerly Hiring Solutions), Marketing Solutions and Premium Subscriptions to new and...

  • Page 47
    ... of the year as a result of decreased Internet usage by professionals during the summer months. We believe that a higher number of registered members will result in increased sales of our Talent Solutions, Marketing Solutions and Premium Subscriptions, as customers will have access to a larger pool...

  • Page 48
    ... Solutions and Premium Subscriptions, as customers will have access to a larger pool of professional talent. Growth in unique visitors will be driven by our international expansion, growth in the number of registered members and improvements to features and products that drive traffic to our website...

  • Page 49
    ... these sales. Our online sales channel allows members to purchase solutions directly on our website. Members can purchase Premium Subscriptions as well as certain lower priced products in our Talent Solutions and Marketing Solutions, such as job postings and self-service advertising. This channel is...

  • Page 50
    ... is a key financial measure used by the compensation committee of our board of directors in connection with the payment of bonuses to our executive officers. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating...

  • Page 51
    ...facts and circumstances related to each deliverable. Key factors that we considered in developing our BESPs include: (1) historical sales prices, (2) prices we charge for similar offerings, (3) sales volume, and (4) geographies. Because we generally have neither VSOE nor TPE for our Talent Solutions...

  • Page 52
    ... volatilities of traded options in our industry peers' common stock because the volume of activity was relatively low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility...

  • Page 53
    ...test new features and functionalities related to our website, assess the ongoing value of capitalized assets or determine the estimated useful lives over which the costs are amortized, the amount of website and internal-use software development costs we capitalize and amortize could change in future...

  • Page 54
    ... These estimates are updated quarterly based on factors such as change in facts or circumstances, changes in tax law, new audit activity, and effectively settled issues. We follow specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the...

  • Page 55
    ...specifications. Revenue from providing access to the LinkedIn Recruiter product is recognized ratably over the subscription period, which consists primarily of annual subscriptions that are billed monthly, quarterly, or annually. We also earn revenue from the placement of job postings on our website...

  • Page 56
    ... approximately two months. Premium Subscriptions. Revenue from Premium Subscriptions is derived from selling various subscriptions to customers that allow users to have further access to premium services via our LinkedIn.com website. We offer our members monthly or annual subscriptions. Revenue from...

  • Page 57
    ... Our cost of revenue primarily consists of web hosting costs related to operating our website and salaries, benefits and stock-based compensation for our production operations, customer support, infrastructure and advertising operations teams. Credit card processing fees, direct costs related to...

  • Page 58
    ... consist of salaries, benefits, stock-based compensation, travel expense and incentive compensation for our sales and marketing employees. In addition, sales and marketing expenses include customer acquisition marketing, branding, advertising, public relations costs, and commissions paid to agencies...

  • Page 59
    ... in 2012 compared to 2011. The increase was primarily attributable to an increase in headcount related expenses of $101.4 million as a result of our focus on developing new features and products to encourage member growth and engagement. We also experienced increases in facilities and related costs...

  • Page 60
    ... amortization expenses increased $36.7 million in 2012 compared to 2011. The increase in depreciation expense of $30.5 million was primarily a result of our continued investment in expanding our technology infrastructure in order to support continued growth in our member base, and to a lesser extent...

  • Page 61
    ... the increase in income before taxes, non-deductible stock-based compensation expense, development costs funded by our international subsidiaries and non-deductible acquisition-related expenses. The effective tax rates as of December 31, 2012 and December 31, 2011 were 62% and 48%, respectively. The...

  • Page 62
    Annual Report on Form 10-K. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period. Dec 31, 2012 Sep 30, 2012 For the Three Months Ended Jun 30, Mar 31, Dec 31, Sep 30, 2012 2012 2011 2011 (in thousands, except per share ...

  • Page 63
    ...the Three Months Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2012 2012 2012 2012 2011 2011 2011 2011 (as a percentage of revenue) Consolidated Statements of Operations Data:(1) Net revenue ...Costs and expenses: Cost of revenue ...Sales and marketing ...Product development...

  • Page 64
    ...) Mar 31, 2011 Other Financial and Operational Data: Adjusted EBITDA(1) ...$ 78,587 $ 55,956 $ 50,369 $ 38,118 $ 34,424 $ 24,661 $ 26,346 $ 13,282 Number of registered members (at period end) 201,912 187,419 173,945 160,566 144,974 131,186 115,808 101,528 LinkedIn Corporate Solutions customers (at...

  • Page 65
    ... and short-term investment balances, together with cash generated from operations, will be sufficient to meet our working capital expenditure requirements for at least the next 12 months. Operating Activities Operating activities provided $267.1 million of cash in 2012, primarily resulting from our...

  • Page 66
    ... specifically related to the build out of our data centers, as well as payments for intangible assets and strategic acquisitions. We also continued to invest in technology hardware to support our growth, software to support website functionality development, website operations and our corporate...

  • Page 67
    ... December 31, 2012 and 2011, respectively. This amount was invested primarily in money market funds and highly liquid investment grade fixed income securities. The cash, cash equivalents and short-term marketable securities are held for working capital purposes. Our investment policy and strategy is...

  • Page 68
    ... foreign currency forward contracts outstanding as of December 31, 2012 would experience a loss (gain) of approximately $3.9 million. Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become...

  • Page 69
    ... 8. Financial Statements and Supplementary Data LINKEDIN CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets ...Consolidated Statements of Operations ...Consolidated Statements of Comprehensive Income...

  • Page 70
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of LinkedIn Corporation Mountain View, California We have audited the accompanying consolidated balance sheets of LinkedIn Corporation and subsidiaries (the ''Company'') as of December 31, 2012 and 2011, and the related...

  • Page 71
    LINKEDIN CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share data) December 31, 2012 2011 ASSETS CURRENT ASSETS: Cash and cash equivalents ...Short-term investments ...Accounts receivable (net of allowance for doubtful accounts of $3,774 and December 31, 2012 and 2011, respectively)...

  • Page 72
    LINKEDIN CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Year Ended December 31, 2012 2011 2010 Net revenue ...Costs and expenses: Cost of revenue (exclusive of depreciation and amortization separately below) ...Sales and marketing ...Product development ......

  • Page 73
    LINKEDIN CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited) Year Ended December 31, 2012 2011 2010 Net income ...Other comprehensive income: Change in unrealized gains on investments, net of tax ...Less: reclassification adjustment for net gains included in net ...

  • Page 74
    ...stock purchase plan ...- - - - 164,367 Issuance of common stock related to acquisitions ...- - - - 129,203 Vesting of early exercised stock options Repurchase of unvested early exercised stock options 21,830) Stock-based compensation Income tax benefit from employee stock option exercises Change...

  • Page 75
    ... Preferred Stock Shares BALANCE-December 31, 2011 ...Issuance of common stock upon exercise of employee stock options ...Issuance of common stock upon vesting of restricted stock units ...Issuance of common stock in connection with employee stock purchase plan ...Issuance of common stock related to...

  • Page 76
    ...Provision for doubtful accounts and sales returns ...Stock-based compensation ...Excess income tax benefit from the exercise of stock options ...Changes in operating assets and liabilities: Accounts receivable ...Deferred commissions ...Prepaid expenses and other assets ...Accounts payable and other...

  • Page 77
    ... protection of customers' information and privacy concerns; security measures related to the Company's website; rates of revenue growth; engagement and usage of the Company's solutions; management of the Company's growth; new markets and international expansion; protection of the Company's brand and...

  • Page 78
    ...-term investments as other-than-temporarily impaired as of December 31, 2012 and 2011. Deferred Commissions Deferred commissions are the incremental costs that are directly associated with non-cancelable subscription contracts primarily related to sales of the Company's Talent Solutions. Deferred...

  • Page 79
    ... lease term or expected useful lives of the improvements. Depreciation expense totaled $70.0 million, $39.5 million and $18.6 million for the years ended December 31, 2012, 2011 and 2010, respectively. Website and Internal-Use Software Development Costs The Company capitalizes its costs to develop...

  • Page 80
    ... two months. • Premium Subscriptions-The Company sells various subscriptions to customers that allow users to have further access to premium services via its LinkedIn.com website. The Company offers its members monthly or annual subscriptions. Revenue from Premium Subscription services is...

  • Page 81
    ... in sales and marketing expense in the accompanying consolidated statements of operations. The Company incurred advertising costs of $3.6 million, $2.4 million and $0.7 million for the years ended December 31, 2012, 2011 and 2010, respectively. Stock-Based Compensation Stock-based compensation...

  • Page 82
    ... Comprehensive Income In June 2011, the FASB issued new authoritative guidance on comprehensive income that eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, the Company must report comprehensive income in either...

  • Page 83
    ... using pricing models that use observable market inputs and, therefore, are classified as Level 2. 3. Acquisitions Fiscal 2012 Acquisitions Slideshare On May 17, 2012, LinkedIn completed its acquisition of Slideshare, Inc. (''Slideshare''), a San Francisco, California-based privately held provider...

  • Page 84
    ...as post-acquisition compensation expense. In connection with these post-acquisition arrangements, the Company issued 198,915 shares of non-vested Class A common stock with a total fair value of $20.9 million and could pay retention bonuses up to $17.0 million. Other acquisitions In 2012, the Company...

  • Page 85
    ...acquisition date. As a result of these acquisitions, the Company recorded identifiable definite-lived intangible assets of $5.9 million, which was comprised of $3.3 million related to workforce in place, $2.2 million related to developed technology, and $0.4 million related to non-compete agreements...

  • Page 86
    ..., 2011: Cash ...Cash equivalents: Money market funds . Short-term investments: U.S. treasury securities Agency securities ... Total cash, cash equivalents, and short-term investments ... The following table presents available-for-sale investments by contractual maturity date as of December 31, 2012...

  • Page 87
    ... $ 12,249 102,965 $115,214 Accumulated Amortization December 31, 2012: Developed technology . . Trade name ...Patents ...Non-compete agreements Customer relationships . . Other intangible assets . . December 31, 2011: Developed technology . . Non-compete agreements Other intangible assets . . IPR...

  • Page 88
    ...$(2,903) $(610) Basic and diluted net income per common share is presented in conformity with the two-class method required for participating securities. Immediately prior to the completion of the Company's IPO on May 19, 2011, all shares of outstanding preferred stock automatically converted into...

  • Page 89
    ... number of common shares outstanding, including potential dilutive common shares assuming the dilutive effect of outstanding stock options using the treasury stock method. Immediately prior to the consummation of the Company's IPO of its Class A common stock in May 2011, all outstanding shares...

  • Page 90
    ... stockholders ...Denominator: Number of shares used in basic calculation ...Weighted average effect of dilutive securities Add: Conversion of preferred stock in connection with initial public offering ...Conversion of Class B to Class A common shares outstanding ...Employee stock options ...RSUs and...

  • Page 91
    ...): Year Ended December 31, 2012 2011 2010 Employee stock options ...Restricted stock units ...Total ...10. Commitments and Contingencies Aggregate Future Lease Commitments 28 36 64 418 88 506 3 - 3 The Company leases its office facilities under operating lease agreements, the longest of which...

  • Page 92
    ... of their status or service as directors or officers with the Company. The terms of such obligations may vary. 11. Stockholders' Equity Initial Public Offering In May 2011, the Company closed its IPO of 9,016,000 shares of its Class A common stock, which included 6,003,804 shares of Class A common...

  • Page 93
    ...shares of common stock authorized, none of which were issued and outstanding as of December 31, 2012 and 2011. Common Stock Reserved for Future Issuance As of December 31, 2012, the Company had reserved shares of common stock for future issuances in connection with the following: Options outstanding...

  • Page 94
    ... compensation, subject to any plan limitations. The ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company's Class A common stock on the first trading day of the offering...

  • Page 95
    ... difference between the Company's closing stock price of its common stock and the exercise price of outstanding, in-the-money options. The Company's closing stock price as reported on the New York Stock Exchange as of December 31, 2012 was $114.82. The total intrinsic value of options exercised was...

  • Page 96
    ... Company's historical experience. The following table presents the weighted-average assumptions used to estimate the fair value of options granted during the periods presented, excluding assumed acquisition-related stock options: Year Ended December 31, 2012 2011 2010 Volatility Expected Risk-free...

  • Page 97
    ...of stock-based compensation related to stock-based awards to employees and nonemployees on the Company's consolidated statements of operations during the periods presented (in thousands): Year Ended December 31, 2012 2011 2010 Cost of revenue ...Sales and marketing ...Product development ...General...

  • Page 98
    ...31, 2012 2011 2010 U.S. federal taxes at statutory rate ...State income taxes, net of federal benefit Foreign rate differential ...Permanent differences ...Stock-based compensation ...Change in valuation allowance ...Research and development credits ...Transaction-related expenses ...Other ...Total...

  • Page 99
    ... of the Company's deferred tax assets and liabilities for the periods presented (in thousands): December 31, 2012 2011 Deferred tax assets: Accruals and reserves ...Net operating loss carryforwards Tax credit carryforwards ...Stock-based compensation ...Other ...Total deferred tax assets ...Less...

  • Page 100
    ... tables present the Company's revenue by product line, as well as revenue and long-lived assets by geographic region for the periods presented (in thousands): Year Ended December 31, 2012 2011 2010 Net revenue by product: Talent Solutions ...Marketing Solutions . . Premium Subscriptions Total...

  • Page 101
    ... Revenue Service. In the twelve months ended December 31, 2012 and 2011, matching contributions were $7.0 million and $3.3 million, respectively. 15. Subsequent Events In February 2013, the Company entered into additional purchase commitments with a provider of data center space for total future...

  • Page 102
    ...31, 2012. Deloitte & Touche, an independent registered public accounting firm, has audited the consolidated financial statements included in this Form 10-K and, as part of the audit, has issued a report, included herein, on the effectiveness of LinkedIn's internal control over financial reporting as...

  • Page 103
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of LinkedIn Corporation Mountain View, California We have audited the internal control over financial reporting of LinkedIn Corporation and subsidiaries (the ''Company'') as of December 31, 2012, based on...

  • Page 104
    ... None. PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item will be contained in our definitive proxy statement to be filed with the Securities and Exchange Commission in connection with our 2013 annual meeting of stockholders (the ''Proxy...

  • Page 105
    ... Schedules Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes herein. 3. Exhibits See the Exhibit Index immediately following the signature page of this Annual Report on Form 10...

  • Page 106
    ...(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LINKEDIN CORPORATION Dated: February 15, 2013 By: /s/ JEFFREY WEINER Jeffrey Weiner Chief Executive Officer and Director POWER OF ATTORNEY...

  • Page 107
    ... and Form of Stock Option Agreement under 2011 Equity Incentive Plan. 10.3+ Form of Indemnification Agreement by and between LinkedIn Corporation and each of its directors and executive officers. 10.4+ Offer Letter, between LinkedIn Corporation and Jeffrey Weiner, dated September 9, 2009, effective...

  • Page 108
    ... Purchase Agreement by and between LinkedIn Corporation and Reid Hoffman, dated June 13, 2008. Master Services Agreement by and between LinkedIn Corporation and Equinix Operating Co., Inc., dated February 27, 2008. Amendment No. 1 to the Master Services Agreement by and between LinkedIn Corporation...

  • Page 109
    ... 2012. First Amendment to Lease Agreement by and between LinkedIn Corporation and the Landlord, dated December 13, 2013. The Lease, as amended, has been assigned by Landlord to Kilroy Realty Corporation. List of subsidiaries. Consent of Deloitte & Touche LLP, independent registered public accounting...

  • Page 110
    Exhibit Number Exhibit Description Form Incorporated by Reference File No. Exhibit(s) Filing Date 24.1 Power of Attorney (see the signature page to this Annual Report on Form 10-K). Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities ...