LinkedIn 2012 Annual Report Download - page 33

one of the most influential, affluent and highly educated audiences on the Internet. However, potential
customers may not be familiar with our solutions or may prefer other more traditional products and
services for their talent, advertising and marketing needs.
The rate at which we expand our customer base or increase our customers’ renewal rates may decline
or fluctuate because of several factors, including the prices of our solutions, the prices of products and
services offered by our competitors, reduced hiring by our customers or reductions in their talent or
marketing spending levels due to macroeconomic or other factors and the efficacy and cost-effectiveness
of our solutions. If we do not attract new customers or if our customers do not renew their agreements
for our solutions, renew on less favorable terms, or do not purchase additional functionality or offerings,
our revenue may grow more slowly than expected or decline.
Ultimately, attracting new customers and retaining existing customers requires that we continue to
provide high quality solutions that our customers value. In particular, our Talent Solutions customers will
discontinue their purchases of our solutions if we fail to effectively connect them with the talent they seek,
and our premium subscribers will discontinue their subscriptions if they do not find the networking and
business opportunities that they value. Similarly, customers of our Marketing Solutions will not continue
to do business with us if their advertisements do not reach their intended audiences. Therefore we must
continue to demonstrate to our customers that using our Marketing Solutions is the most effective and
cost-efficient way to maximize their results. Even if our Marketing Solutions are providing value to our
customers, advertisers are sensitive to general economic downturns and reductions in consumer spending,
among other events and trends, which generally results in reduced advertising expenditures and could
adversely affect sales of our Marketing Solutions. If we fail to provide high quality solutions and convince
customers of our value proposition, we may not be able to retain existing customers or attract new
customers, which would harm our business and operating results.
Because we recognize most of the revenue from our Talent Solutions and our Premium Subscriptions over the
term of the agreement, a significant downturn in these businesses may not be immediately 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 during previous quarters. Consequently, a
decline in new or renewed agreements in any one quarter may not significantly impact our revenue in that
quarter but will negatively affect our revenue in future quarters. In addition, we may be unable to adjust
our fixed costs in response to reduced revenue. Accordingly, the effect of significant declines in the sales
of these offerings may not be reflected in our short-term results of operations.
We depend on world class talent to grow and operate our business, and if we are unable to hire, retain and
motivate our personnel, we may not be able to grow effectively.
Our future success will depend upon our continued ability to identify, hire, develop, motivate and
retain world class talent. Our ability to execute efficiently is dependent upon contributions from all of our
employees, in particular our senior management team. Key institutional knowledge remains with a small
group of long-term employees and directors whom we may not be able to retain. We may not be able to
retain the services of any of our long-term employees or other members of senior management in the
future. We do not have employment agreements other than offer letters with any key employee, and we
do not maintain key person life insurance for any employee. In addition, from time to time, there may be
changes in our senior management team that may be disruptive to our business. If our senior management
team, including any new hires that we may make, fails to work together effectively and to execute our
plans and strategies on a timely basis, our business could be harmed.
Our growth strategy also depends on our ability to expand and retain our organization with world
class talent. Identifying, recruiting, training and integrating qualified individuals will require significant
time, expense and attention. In addition to hiring new employees, we must continue to focus on retaining
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