LinkedIn 2015 Annual Report Download - page 65

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Cost of revenue increased $90.9 million in 2014 compared to 2013. The increase was primarily
attributable to increases in headcount related expenses of $47.7 million as we continued to hire to
support the growth of our business, other direct costs of $15.7 million (primarily consisting of credit
card processing fees), web hosting service expenses of $13.7 million, and facilities and related costs of
$11.8 million.
Sales and Marketing
Our sales and marketing expenses primarily consist of salaries, benefits, stock-based
compensation, travel expense and incentive compensation for our sales and marketing employees. In
addition, sales and marketing expenses include customer acquisition marketing, branding, advertising,
public relations costs, and commissions paid to agencies, as well as allocated facilities and other
supporting overhead costs. We plan to continue to invest heavily in sales and marketing to expand our
global footprint, grow our current customer accounts and continue building brand awareness.
Consistent with our investment philosophy for 2016, we expect sales and marketing expenses to
increase on an absolute basis and remain flat as a percentage of revenue.
Year Ended Year Ended
December 31, December 31,
2015 2014 % Change 2014 2013 % Change
($ in thousands) ($ in thousands)
Sales and marketing .......... $1,048,129 $774,411 35% $774,411 $522,100 48%
Percentage of net revenue ...... 35% 35% 35% 34%
Headcount (at period end) ...... 4,147 2,989 39% 2,989 2,159 38%
Sales and marketing expenses increased $273.7 million in 2015 compared to 2014. The increase
was driven by an increase in headcount related expenses of $227.5 million as we continue to expand
our field sales organization globally. We also experienced increases in marketing expenses of
$18.9 million related to advertising for Lynda.com and facilities and related costs of $15.4 million.
Sales and marketing expenses increased $252.3 million in 2014 compared to 2013. The increase
was primarily attributed to an increase in headcount related expenses of $204.9 million as we
continued to expand our field sales organization globally. We also experienced increases in facilities
and related costs of $19.7 million, consulting services of $11.7 million, marketing and public relations
expenses of $9.0 million, and agency commissions of $3.6 million.
Product Development
Our product development expenses primarily consist of salaries, benefits and stock-based
compensation for our engineers, product managers and developers. In addition, product development
expenses include outside services and consulting, as well as allocated facilities, and other supporting
overhead costs. We believe that continued investment in features, software development tools, and
code modification is important to achieving our strategic objectives. Consistent with our investment
philosophy for 2016, we expect to continue to invest heavily in product development. Accordingly, we
expect product development expense to increase on an absolute basis and remain flat as a percentage
of revenue.
Year Ended Year Ended
December 31, December 31,
2015 2014 % Change 2014 2013 % Change
($ in thousands) ($ in thousands)
Product development ......... $775,660 $536,184 45% $536,184 $395,643 36%
Percentage of net revenue ..... 26% 24% 24% 26%
Headcount (at period end) ..... 2,454 1,795 37% 1,795 1,378 30%
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