LinkedIn 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 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 131

  • 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
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131

10APR201419231192
April 2015
To Our Stockholders:
2014 was a strong year for LinkedIn. We continued to invest in several multi-year strategic initiatives,
including accelerating our mobile development, expanding globally, developing our content strategy,
and increasing the availability of jobs on LinkedIn. As we executed on these priorities throughout the
year, we also maintained solid growth across the member ecosystem and delivered record financial
results.
LinkedIn’s value proposition is simple: Connect to opportunity. For members, this translates into
connecting with their professional world, staying informed through professional news and knowledge,
and getting hired and building their careers. Today, nearly half of the world’s 770 million professionals
and students can access LinkedIn. Yet, our vision is to create economic opportunity for every member
of the global workforce—all 3 billion of them—by building the world’s first economic graph.
Throughout 2014, we made meaningful progress against several long-term objectives that will help us
realize this vision.
•Mobile. Members can now increasingly build their professional networks, find relevant
information, and identify opportunities across our multi-app portfolio, which now includes our
flagship LinkedIn app, Pulse, Job Search, and SlideShare. With respect to our customers, we
improved the Recruiter app for talent acquisition professionals, and we released a new Sales
Navigator app for outbound sales customers. As we exited the year, mobile accounted for
49 percent of unique visiting members to LinkedIn and is growing at double the rate of overall
member activity.
•Global expansion. In Q4, more than 75 percent of new members came to LinkedIn from outside
the US. China, with roughly one in five of the world’s professionals, emerged as a focus in 2014.
In February, we launched LinkedIn in Simplified Chinese, and Chinese membership has doubled
from four million English-language members pre-launch to now more than eight million members.
•Developing our content strategy. LinkedIn increasingly facilitates how members stay informed
through news and knowledge. In February, we introduced the ability to publish long-form content,
allowing members to establish their experience by sharing their professionally relevant insights.
By year’s end, we made long-form posting available to all 230 million English-language
members, and will continue to roll out publishing functionality on a global basis. We have now
surpassed more than 1 million long-form posts on the platform. In addition, our roster of
professional Influencers continues to deliver compelling content to members. Also, rich media
continues to grow on our platform. SlideShare now hosts more than 17 million presentations and
videos, demonstrating strong progress toward our goal of making it the largest repository of
professional knowledge on the Internet.
•Scale and relevance of jobs. Early in the year, we acquired Bright, and shortly after, we began
adding open job listings targeted to active job seekers. There are now more than three million
jobs available on LinkedIn, a greater-than 10x increase from a year ago. Part of our long-term
goal is to have every available job in the world on LinkedIn.
Healthy activity across our platform indicates the early success we’ve seen in our member-focused
investment. In 2014, cumulative membership grew 25% year over year to 347 million members, unique
visiting members grew 19 percent to an average of 87 million per month, and member pageviews grew
31 percent. We saw a year over year increase in member pageviews per unique visiting member,
demonstrating strengthening organic engagement. In addition, SlideShare continued to broaden
LinkedIn’s reach by approaching 70 million unique visitors in Q4.

Table of contents

  • Page 1
    ..., Job Search, and SlideShare. With respect to our customers, we improved the Recruiter app for talent acquisition professionals, and we released a new Sales Navigator app for outbound sales customers. As we exited the year, mobile accounted for 49 percent of unique visiting members to LinkedIn and...

  • Page 2
    ... Sponsored Updates continues to show strong momentum, and now accounts for approximately one-third of total Marketing Solutions revenue. In addition, the acquisition of Bizo led to a reimagined product suite that for the first time allows customers to build their brands, nurture prospects, and drive...

  • 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
    ... 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 of Certain Beneficial Owners and Management and Related...

  • Page 5
    ... to develop effective solutions for mobile devices; • our ability to protect our users' information and adequately address privacy concerns; • our ability to maintain an adequate rate of revenue growth; • the effects of increased competition in our market; • our ability to effectively manage...

  • Page 6
    ...enterprise customers; as well as an online, self-serve channel where we generate revenue from enterprise customers and individual members purchasing subscriptions. We strive to ensure that our Talent Solutions, Marketing Solutions and Premium Subscriptions products provide both a high level of value...

  • Page 7
    ...Record. We seek to create the primary professional profile for every professional worldwide. Members can increasingly represent their identities in the form of a dynamic portfolio versus a static resume through rich media and the ability to click to add skills and professional accomplishments. Using...

  • Page 8
    ... Marketing Solutions Premium Subscriptions LinkedIn Corporate Solutions (Recruiter, Job Slots, Recruitment Media, Career Pages, Talent Pipeline) LinkedIn Job Postings Recruiter Lite Job Seeker Free Solutions Enterprise Solutions (Display Ads, Sponsored InMails) Sponsored Updates LinkedIn Ads Ads...

  • Page 9
    ... and skills by sharing rich media content in their profiles. Additionally, members are able to both specify skills on their professional profiles and search for skills and expertise across our network, which surfaces key people within a community, top locations, related companies, relevant jobs, and...

  • Page 10
    ... of open jobs posted on LinkedIn. Jobs include suggestions for relevant positions through paid posts as well as open roles from companies' career sites, applicant tracking systems and third-party sites. • University Pages. University Pages provide students, prospective students, and alumni access...

  • Page 11
    ..., Connected, Job Search, Slideshare, Recruiter and Sales Navigator. • 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. We maintain a public website...

  • Page 12
    ... to advertise to our member base. Our targeting capabilities allow marketers to reach potential customers according to a number of attributes such as industry, function, seniority, and company size, among others. Our Marketing Solutions include Enterprise Solutions, Sponsored Updates, LinkedIn Ads...

  • Page 13
    .... Available via both field sales and self-service channels, Sponsored Updates are content-rich promoted updates that enable advertisers to share and amplify content marketing messages to a targeted audience. Sponsored Updates appear in the desktop and mobile streams of targeted members. LinkedIn Ads...

  • Page 14
    ...Turns contact records into rich profiles by allowing users to see LinkedIn information directly in Salesforce.com or Microsoft Dynamics. Sales, Marketing and Customer Support Sales Depending on the specific product, we sell our Talent and Marketing and Sales Solutions offline through our field sales...

  • 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 email. We have specific premium support teams dedicated to premium subscribers, online advertisers, and our Talent and Sales Solutions...

  • Page 16
    ... professional insights by utilizing our rich dataset. This engine enables us to provide our users with customized content and recommendations. For example, based on a member's profile, their second and third degree connections, their viewing and clicking history, and a host of other criteria...

  • Page 17
    ... newcomers to the recruiting industry, may partner with Internet companies, including social networking companies, to provide services that compete with our solutions, either on their own or as third party applications. If the efficiency and usefulness of our products to enterprises and professional...

  • Page 18
    ...is becoming increasingly competitive. Larger and more established companies may focus on professional networking and could directly compete with us. Smaller companies could also launch new products and services that we do not offer and that could gain market acceptance quickly. Government Regulation...

  • Page 19
    ... a talented group of employees and strive to hire the best employees to solve significant challenges in our markets. As of December 31, 2014, we had 6,897 employees, consisting of 2,838 employees in engineering, product development and customer operations, 2,989 employees in sales and marketing, and...

  • Page 20
    ...-K, Quarterly Reports on Form 10-Q, and our Proxy Statements for our annual meetings of stockholders. We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website. Additionally, we provide notifications of news...

  • Page 21
    ... all of the other information in this Annual Report on Form 10-K, including our consolidated financial statements and related notes, before deciding whether to purchase shares of our Class A common stock. If any of the following risks are realized, our business, operating results and prospects could...

  • Page 22
    ...our total user traffic increases. If our services are unavailable when users attempt to access them or they do not load as quickly as users expect, users may seek other websites or services to obtain the information for which they are looking, and may not return to our website or use our services as...

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

  • Page 24
    ... of our member base or traffic levels, or if we discover material inaccuracies in our metrics, our reputation may be harmed and our operating and financial results could be adversely affected, causing our stock price to decline. In addition, historically, we reported information regarding certain...

  • Page 25
    ...our members who use our online services on mobile devices also access LinkedIn through personal computers, we have seen substantial growth in mobile usage. While we offer Sponsored Updates on mobile devices, historically, our Marketing Solutions products have not been made widely available on mobile...

  • Page 26
    ... our reputation and our business. Public scrutiny of Internet privacy and security issues may result in increased regulation and different industry standards, which could deter or prevent us from providing our current products and solutions to our members and customers, thereby harming our business...

  • Page 27
    ... privacy and security practices of a number of online social media companies. These reviews can and have resulted in changes to our products and policies, and could result in additional changes in the future. If we are unable to comply with any such reviews or decrees that result in recommendations...

  • Page 28
    ... disruptions or outages in the availability of our websites or services, actual or perceived breaches of privacy, and compromises of our member data; • 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 29
    ... and accounting expenses related to being a public company with an expanding global presence; and • capital expenditures, including facilities and build-out of our data centers. These investments may not result in increased revenue or business growth, or increased network growth or member value...

  • Page 30
    ... fail to continue to grow our revenue and overall business, our operating results and business would be harmed. We face competition in the market for online professional networks from social networking sites and Internet search companies, among others, as well as continued competition for customers...

  • Page 31
    ...compete with online and offline companies for customers with lead generation and customer intelligence and insights. Our Sales Solutions product is in the early stages, and we may not be able to compete effectively in this area. If we fail to effectively manage our growth, our business and operating...

  • Page 32
    ...our websites and mobile applications are available in numerous languages. For the year ended December 31, 2014, international revenue represented 40% of our total revenue. We expect to continue to expand our international operations in the future, particularly in emerging markets, by opening offices...

  • Page 33
    ... is in its early stages. The PRC's laws and regulations, as they apply to our business operations in Mainland China, have resulted in modifications to our products and services in Mainland China and subject us to additional privacy and security regulations. For example, the PRC government has laws...

  • Page 34
    ... 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 valuable and high-quality solutions, which we may...

  • Page 35
    ...' useful technology under open source licenses, there is no assurance that we will receive the business benefits we expect. If we fail to maintain, protect and enhance our intellectual property rights, our business and operating results may be harmed, and the market price of our Class A common stock...

  • Page 36
    ..., our operating results, our reputation or the market price of our Class A common stock. If we do not continue to attract new customers, or if existing customers do not renew their subscriptions, renew on less favorable terms, or fail to purchase additional solutions, we may not achieve our revenue...

  • Page 37
    ... be able to retain the services of any of our long-term employees or other members of senior management in the future. For example, two members of our executive team left the company in 2014. We do not have employment agreements other than offer letters with any key employee, and we do not maintain...

  • Page 38
    ... prohibit listing the employers' names on the employees' LinkedIn profiles in order to minimize the risk that employees will be contacted and hired by other employers. In some cases, certain governments may seek to restrict the Internet or our service providers' websites, services and solutions and...

  • Page 39
    ... broadband and Internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies, and government-owned service providers, any of whom could take actions that degrade, disrupt, or increase the cost of user access to our products or solutions, which...

  • Page 40
    ... in the future, the results of our operations, which are reported in U.S. dollars, could be adversely affected. As we continue to expand our international operations, we become more exposed to the effects of fluctuations in currency exchange rates. We incur expenses for employee compensation and...

  • Page 41
    ... to support our business growth and may require additional funds to respond to business challenges, including the need to develop new features and products or enhance our existing solutions, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly...

  • Page 42
    ...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 and marketing function; • assumption of contractual obligations that contain terms...

  • Page 43
    ... litigation in the future. Securities litigation against us could result in substantial costs and divert our management's attention from other business concerns, which could harm our business. There may be a limited market for investors in our industry. There are few publicly traded companies in the...

  • Page 44
    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 invest in other companies, including our competitors. As a result, demand for our Class A common stock could decline, which would result...

  • Page 45
    ... community, or have a negative tone regarding our business, financial or operating performance, industry or end-markets, our share price could decline. In addition, if one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility...

  • Page 46
    ... accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital. Note hedge and warrant transactions we have entered into may affect the value of the...

  • Page 47
    ... with respect to our common stock. We can provide no assurances as to the financial stability or viability of any of the option counterparties. Item 1B. None. Item 2. Properties Unresolved Staff Comments Our headquarters is located in Mountain View, California, where we lease approximately 373...

  • Page 48
    ... Equity Securities Our Class A common stock is listed on the New York Stock Exchange (''NYSE'') under the symbol ''LNKD.'' There is no public trading market for our Class B common stock. The following table sets forth the high and low sales price per share of our Class A common stock as reported on...

  • Page 49
    ...Corporation RDG Internet Composite Index Period Ending Index LinkedIn Corporation ...NASDAQ Composite Index RDG Internet Composite Index 5/19/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 3/28/2013 6/28/2013 9/30/2013 12/31/2013 3/28/2014 6/30/2014 9/30/2014 12/31/2014...

  • Page 50
    ... related notes under Item 8 ''Financial Statements and Supplementary Data'' of this Annual Report on Form 10-K to fully understand factors that may affect the comparability of the information presented below. The consolidated statements of operations data for the years ended December 31, 2014, 2013...

  • Page 51
    ... audited consolidated financial statements not included in this report. Our historical results are not necessarily indicative of future results. 2014 Year Ended December 31, 2013 2012 2011 (in thousands, except per share data) 2010 Consolidated Statements of Operations Data: Net revenue ...$2,218...

  • Page 52
    Stock-based compensation included in the consolidated statements of operations data above was as follows: 2014 Year Ended December 31, 2013 2012 2011 (in thousands) 2010 Cost of revenue ...Sales and marketing ...Product development ...General and administrative ... ... ... ... ... ... ... ... $ ...

  • Page 53
    ...companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure. Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net...

  • Page 54
    ... our members, as well as continuing to expand our product offerings on both mobile and desktop devices and international presence, which we believe will result in increased sales of our Talent Solutions, Marketing Solutions and Premium Subscriptions to new and existing customers. As our net revenue...

  • Page 55
    ...in our product development efforts, specifically around mobile, to enable our members and customers to derive more value from our platform. For example, in 2014, the Company launched Sponsored Updates in Marketing Solutions and the next generation of Sales Navigator in Premium Subscriptions, both of...

  • Page 56
    .... • Unique Visiting Members. In the second quarter of 2014, we transitioned to disclosing our internal measure of unique visiting members, which we track and define as the total number of members who have visited LinkedIn.com on desktop and mobile at least once during the month. Historically, we...

  • Page 57
    .... For example, members can respond to InMails they receive from other members without accessing their LinkedIn account or our website. In addition, mobile page views may be lower than they would otherwise be on desktop because a well-designed mobile app reduces the number of clicks and pages a user...

  • Page 58
    ... Media and LinkedIn Career Pages, which are all part of Talent Solutions. LCS products do not include LinkedIn Jobs or Subscriptions. LCS customers have historically purchased through our field sales channel, which represents approximately 75% of Talent Solutions revenue. We believe the number...

  • Page 59
    ...adjusted EBITDA 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 and employees. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding...

  • Page 60
    ... of future results. Year Ended December 31, 2014 2013 2012 (as a percentage of net revenue) Consolidated Statements of Operations Data:(1) Net revenue ...Costs and expenses: Cost of revenue (exclusive of depreciation and amortization below) ...Sales and marketing ...Product development ...General...

  • Page 61
    ... sales channel. We offer our members monthly or annual subscriptions. Revenue from Premium Subscriptions is recognized ratably over the contract period, which is generally one to 12 months. In the second quarter of 2014, recruitment media products were reclassified from Marketing Solutions to Talent...

  • Page 62
    ..., by page views on our website. Net revenue from our Premium Subscriptions increased $116.1 million as a result of an increase in the number of premium subscribers due to increases in member engagement. In addition, although still in their early stages in 2013, our Sales Solutions products, which...

  • Page 63
    ... Marketing Solutions ...182,321 131,794 Premium Subscriptions ...184,291 127,300 Total International revenue ...$ 884,789 $ 586,423 Total ...$2,218,767 $1,528,545 Cost of Revenue Our cost of revenue primarily consists of salaries, benefits and stock-based compensation for our production operations...

  • Page 64
    ...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, as well...

  • Page 65
    ... and stock-based compensation for our executive, finance, legal, information technology, human resources and other administrative employees. In addition, general and administrative expenses include outside consulting, legal and accounting services, and facilities and other supporting overhead costs...

  • Page 66
    ... centers, increases in leasehold improvements as we lease additional facilities to accommodate our headcount growth, and increases in capitalized website and internal-use software. The increase in amortization expense of $18.2 million was primarily the result of amortization of developed technology...

  • Page 67
    ...percentage of net revenue for each of the eight quarters ended December 31, 2014. We have prepared the quarterly data on a consistent basis with the audited consolidated financial statements included in this Annual Report on Form 10-K. In the opinion of management, the financial information reflects...

  • Page 68
    ...of the results of operations for a full year or any future period. Dec 31, 2014 Sep 30, 2014 For the Three Months Ended Jun 30, Mar 31, Dec 31, Sep 30, 2014 2014 2013 2013 (in thousands, except per share data) Jun 30, 2013 Mar 31, 2013 Consolidated Statements of Operations Data: Net revenue ...$643...

  • Page 69
    ...Three Months Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2014 2014 2014 2014 2013 2013 2013 2013 (as a percentage of net revenue) Consolidated Statements of Operations Data:(1) Net revenue ...Costs and expenses: Cost of revenue ...Sales and marketing ...Product development...

  • Page 70
    ... Data: Net revenue by product: Talent Solutions(1) ...$369,348 $344,568 $322,227 $291,594 $261,359 $237,668 $216,938 $194,292 Marketing Solutions(1) ...152,729 109,231 106,476 86,064 97,732 75,510 73,747 64,788 Premium Subscriptions ...121,355 114,466 105,174 95,535 88,128 79,782 72,976 65,625 Total...

  • Page 71
    ... net, depreciation and amortization, and stock-based compensation. See ''Adjusted EBITDA'' in Item 6 ''Selected Financial Data'' for more information. For the Three Months Ended Jun 30, Mar 31, Dec 31, Sep 30, 2014 2014 2013 2013 (in thousands) Dec 31, 2014 Sep 30, 2014 Jun 30, 2013 Mar 31, 2013...

  • Page 72
    ... in technology hardware to support our growth, software to support website functionality development, website operations and our corporate infrastructure. Purchases of property and equipment may vary from period to period due to the timing of the expansion of our operations. Our planned purchases of...

  • Page 73
    ...stock purchase plan. Off Balance Sheet Arrangements We did not have any off balance sheet arrangements in 2014, 2013 or 2012. Contractual Obligations Our principal obligations consist of our operating leases and 0.50% convertible senior notes. Our headquarters is located in Mountain View, California...

  • Page 74
    ...intangible assets, website and internal-use software development costs, leases, income taxes and legal contingencies have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information...

  • Page 75
    ... average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers consist of several public companies in the technology industry similar in size, stage of life cycle and financial leverage...

  • Page 76
    ... acquired assets or assumed liabilities are recorded to earnings in our consolidated statements of operations. Website and Internal-Use Software Development Costs We capitalize certain costs related to the development of our website and mobile applications, or software developed for internal-use. We...

  • Page 77
    If the lease is considered an operating lease, it is not recorded on our balance sheet and rent expense is recognized on a straight-line basis over the expected lease term. The most significant estimates used by management in accounting for property leases and the impact of these estimates are as ...

  • Page 78
    ...on our results of operations. See Note 11, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements under Item 8 for additional information on our legal proceedings and litigation. Recently Issued Accounting Guidance Derivatives and Hedging In November 2014, the Financial...

  • Page 79
    ... of December 31, 2014 and 2013, respectively. This amount was invested primarily in money market funds and highly liquid investment grade fixed income securities. The cash, cash equivalents and marketable securities are held for working capital purposes. Our investment policy and strategy is focused...

  • Page 80
    ... Senior Notes, under Item 8 for additional information on the Notes, including the carrying value of the Notes. 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 subject to significant...

  • Page 81
    Item 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 82
    ... 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, 2014 and 2013, and the related consolidated statements of operations, comprehensive income...

  • Page 83
    LINKEDIN CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share data) December 31, 2014 2013 ASSETS CURRENT ASSETS: Cash and cash equivalents ...Marketable securities ...Accounts receivable (net of allowance for doubtful accounts of $6,138 at December 31, 2014 and 2013, respectively) ...

  • Page 84
    ... CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Year Ended December 31, 2014 2013 2012 Net revenue ...Costs and expenses: Cost of revenue (exclusive of depreciation and amortization shown separately below) ...Sales and marketing ...Product development...

  • Page 85
    LINKEDIN CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Year Ended December 31, 2014 2013 2012 Net income (loss) ...Other comprehensive income (loss): Change in unrealized gains (losses) on investments, net of tax . . Less: reclassification adjustment for net ...

  • Page 86
    ... stock in connection with employee stock purchase plan ...Issuance of common stock related to acquisitions, net of reacquired shares ...Vesting of early exercised stock options ...Repurchase of unvested early exercised stock options ...Stock-based compensation ...Excess income tax benefit from stock...

  • Page 87
    ... Total BALANCE-December 31, 2013 ...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 acquisitions, net...

  • Page 88
    ... of preferred shares in joint venture . . Proceeds from issuance of common stock from employee stock Proceeds from issuance of common stock from employee stock Excess income tax benefit from stock-based compensation ...Other financing activities ...options ...purchase plan ... Net cash provided by...

  • Page 89
    ... technology and network infrastructure; 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...

  • Page 90
    ... securities, U.S. agency securities, corporate debt securities and municipal securities, and are classified as available-for-sale securities. As the Company views these securities as available to support current operations, it has classified all available-for-sale securities as short-term. Available...

  • Page 91
    ... Company's pricing service against fair values obtained from another independent source. 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 products...

  • Page 92
    ... December 31, 2014, 2013 and 2012, respectively. Website and Internal-Use Software Development Costs The Company capitalizes certain costs to develop its website, mobile applications and internal-use software when preliminary development efforts are successfully completed, management has committed...

  • Page 93
    ... the Company's policy for each respective element. The Company generates revenue primarily from sales of the following services: • Talent Solutions-Talent Solutions revenue is derived primarily from providing access to the LinkedIn Recruiter product and job postings. The Company provides access to...

  • Page 94
    ... of the contract period, if unutilized. • Marketing Solutions-The Company earns revenue from the display of advertisements (both graphic and text link) on its website primarily based on a cost per advertisement model. Revenue from Internet advertising is generally recognized on a gross basis, with...

  • Page 95
    ...included in sales and marketing expense in the consolidated statements of operations. The Company incurred advertising costs of $5.7 million, $3.9 million and $3.6 million for the years ended December 31, 2014, 2013 and 2012, respectively. Stock-Based Compensation Stock-based compensation expense is...

  • Page 96
    ... quarter of 2016; however, the Company may elect to early adopt. The Company is currently evaluating whether this standard will have a material impact on its financial statements. Revenue Recognition In May 2014, the FASB issued new authoritative guidance on revenue from contracts with customers...

  • Page 97
    ...by level, within the fair value hierarchy as of December 31, 2014 and 2013, are summarized as follows (in thousands): Level 1 Level 2 Level 3 Total December 31, 2014: Assets: Cash equivalents: Money market funds ...Commercial paper ...U.S. treasury securities ...U.S. agency securities ...Marketable...

  • Page 98
    ... the date of acquisition. As the shares are subject to post-acquisition employment, the Company is accounting for them as post-acquisition compensation expense. Bright On February 28, 2014, LinkedIn completed its acquisition of Bright Media Corporation (''Bright''), a San Francisco, California-based...

  • Page 99
    ... dates. The results of operations of these acquisitions have been included in the consolidated financial statements from the date of each respective acquisition. The Company has recognized $22.9 million in revenue related to its acquisition of Bizo. The following table presents the purchase price...

  • Page 100
    ... on the Company's consolidated financial statements include the accretion to the redemption value. Fiscal 2013 Acquisition Pulse On April 17, 2013, LinkedIn completed its acquisition of Alphonso Labs, Inc. (''Pulse''), a San Francisco, California-based privately held leading mobile news reader and...

  • Page 101
    ..., the total purchase price has been allocated to the tangible and intangible assets acquired and the liabilities assumed based on their respective fair values on the acquisition date. Slideshare's results of operations have been included in the consolidated financial statements from the date of...

  • Page 102
    ... intangible assets acquired in the purchase of the companies was 4.5 years, which will be amortized on a straight-line basis over their estimated useful lives. The Company's consolidated financial statements include the operating results of all acquired businesses from the date of each acquisition...

  • Page 103
    ... and available-for-sale investments for the periods presented (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Market Value December 31, 2014: Cash ...Cash equivalents: Money market funds ...Commercial paper ...U.S. treasury securities . . U.S. agency...

  • Page 104
    ...347,545 32,103 80,074 28,786 116,887 Total ...Less accumulated depreciation and amortization ...Property and equipment, net ... 605,395 (243,654) $ 361,741 In 2014, the Company purchased land for $179.2 million, of which $159.8 million was accounted for as a business combination in accordance with...

  • Page 105
    ... Carrying Amount Net Carrying Amount WeightedAverage Remaining Life(1) Accumulated Amortization December 31, 2014: Developed technology Trade name ...Patents ...Customer relationships Other intangible assets December 31, 2013: Developed technology Trade name ...Patents ...Customer relationships...

  • Page 106
    ...of the product of the last reported sales price of the Company's Class A common stock and the conversion rate; or • upon the occurrence of specified corporate events. On or after May 1, 2019, up until the close of business on the second trading day immediately preceding the maturity date, a holder...

  • Page 107
    ... 4.7% The total estimated fair value of the Notes as of December 31, 2014 was $1,405.2 million. The fair value was determined based on the closing trading price of the Notes as of the last day of trading for the period. The Company considers the fair value of the Notes to be a Level 2 measurement...

  • Page 108
    ... to diluted earnings per share until the average price of our Class A common stock exceeds the conversion price of $294.54 per share because the principal amount of the Notes is intended to be settled in cash upon conversion. Under the treasury stock method, in periods the Company reports net income...

  • Page 109
    ... common shares outstanding during the period. The Company's potential common shares consist of shares issuable upon the release of RSUs, and to a lesser extent, the incremental common shares issuable upon the exercise of stock options and purchases related to the 2011 Employee Stock Purchase Plan...

  • Page 110
    ...$ 26,769 $ 5,039 $ 21,609 $ 7,776 Denominator: Number of shares used in basic calculation . . Weighted-average effect of dilutive securities Add: Conversion of Class B to Class A common shares outstanding ...Employee stock options ...RSUs and other dilutive securities ...106,518 16,282 95,282 18,361...

  • Page 111
    ... which would likely increase its regulatory compliance costs. Adverse results of litigation or regulatory matters could also result in the Company being required to change its business practices, which could negatively impact its membership and revenue growth. The Company records a liability when it...

  • Page 112
    ... As of December 31, 2014, the Company had reserved shares of common stock for future issuances in connection with the following: Options outstanding ...RSUs outstanding ...Available for future stock option and RSU grants ...Available for future employee stock purchase plan awards ...3,027,717 5,140...

  • Page 113
    ... stock at a discount through payroll deductions of up to 10% of their eligible 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...

  • Page 114
    ...the-money options. The Company's closing stock price as reported on the New York Stock Exchange as of December 31, 2014 was $229.71. The total intrinsic value of options exercised was approximately $440.3 million, $655.9 million and $553.5 million for the years ended December 31, 2014, 2013 and 2012...

  • Page 115
    ...dividends. Beginning in 2014, the Company transitioned from using the simplified method for calculating the expected term of options as described in the SEC's Staff Accounting Bulletin No. 107, Share-Based Payment, because it believes there is sufficient historical information to derive a reasonable...

  • Page 116
    ... the amount of stock-based compensation related to stock-based awards to employees on the Company's consolidated statements of operations during the periods presented (in thousands): Year Ended December 31, 2014 2013 2012 Cost of revenue ...Sales and marketing ...Product development ...General and...

  • Page 117
    ... rate and the Company's effective tax rate for the periods presented: Year Ended December 31, 2014 2013 2012 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...

  • Page 118
    ... allowance for 2014 is primarily related to California research and development credits. Pursuant to authoritative guidance, the benefit of stock options will only be recorded to stockholders' equity when cash taxes payable is reduced. As of December 31, 2014, the portion of net operating loss...

  • Page 119
    ... to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Company believes an...

  • Page 120
    ..., the Company has determined that it has one operating segment, and therefore, one reportable segment. In the second quarter of 2014, recruitment media products were reclassified from Marketing Solutions to Talent Solutions as they are generally sold to Talent Solutions customers. Accordingly...

  • Page 121
    ... 2014 December 31, 2013 2012 United States ...Other Americas ...Total Americas ...EMEA ...APAC ...Total ...15. Subsequent Events $657,788 11,326 669,114 40,944 30,851 $740,909 $328,384 3,836 332,220 13,918 15,603 $361,741 $172,278 1,071 173,349 6,714 6,614 $186,677 In January 2015, the Company...

  • Page 122
    ... 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 of December 31, 2014. Changes in Internal...

  • Page 123
    ... 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, 2014, based on...

  • Page 124
    ... 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 2015 annual meeting of stockholders (the ''Proxy...

  • Page 125
    ... 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-K. 123

  • Page 126
    ...Chief Executive Officer and Director (principal executive officer) Senior Vice President and Chief Financial Officer (principal financial officer) Vice President, Corporate Controller and Chief Accounting Officer (principal accounting officer) Director February 12, 2015 February 12, 2015 February...

  • Page 127
    ..., dated November 12, 2014, between LinkedIn Corporation and U.S. Bank National Association. Form of Global 0.50% Convertible Senior Note due 2019 (included in Exhibit 4.4). Amended and Restated 2003 Stock Incentive Plan and Form of Stock Option Agreement. 2011 Equity Incentive Plan and Form of Stock...

  • Page 128
    ...Number Exhibit Description Form Incorporated by Reference Exhibit(s)/ File No. Appendix Filing Date 10.3+ Form of Indemnification Agreement by and between LinkedIn Corporation and each of its directors and executive officers. Offer Letter, between LinkedIn Corporation and Jeffrey Weiner, dated...

  • Page 129
    ...2011. Sublease by and between LinkedIn Corporation and Actel Corporation, dated February 18, 2010. 2011 Employee Stock Purchase Plan. Form of Supplement to Offer Letter by and between LinkedIn Corporation and certain named executive officers. Form of Restricted Stock Unit Agreement under 2011 Equity...

  • Page 130
    ... LinkedIn Corporation Executive Bonus Compensation Plan Agreement and Plan of Merger By and Among the Company, Bizo, Inc. and other parties. List of subsidiaries. Consent of Deloitte & Touche LLP, independent registered public accounting firm. Power of Attorney (see the signature page to this Annual...

  • Page 131
    ...Number Exhibit Description Form Incorporated by Reference Exhibit(s)/ File No. Appendix Filing Date 32.1 Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities... a management contract or compensatory plan. Portions of...