LinkedIn Corporation has filed its second amended registration statement with the SEC regarding its upcoming Initial Public Offering. There is still no size nor any indicated price range. A ticker symbol is not disclosed either. What was interesting is that the data is all as of December 31, 2010 when LinkedIn crossed the 100 million user mark.
LinkedIn has private equity and venture capital backing from Sequoia Capital, Greylock Partners, Bessemer Venture Partners, Bain Capital Ventures, European Founders Fund, The Goldman Sachs Group (NYSE: GS), The McGraw-Hill Companies (NYSE: MHP) and a unit of SAP AG (NYSE: SAP) called SAP Ventures. Underwriters in this IPO are listed as Morgan Stanley, BofA Merrill Lynch, J.P. Morgan, Allen & Company, and UBS.
The company did note some standard caveats in its growth, “From 2008 to 2010, our net revenue grew from $78.8 million to $243.1 million, which represents a compounded annual growth rate of approximately 76%. We expect that, in the future, as our net revenue increases to higher levels our revenue growth rate will decline over time, and we may not be able to generate sufficient revenue to sustain our profitability. We also expect our costs to increase in future periods, which could negatively affect our future operating results. In particular, in 2011, our philosophy is to continue to invest for future growth, and as a result we do not expect to be profitable on a GAAP basis in 2011.”
Another issue is that most staff is new. The company noted, “We continue to experience rapid growth in our headcount and operations… As of December 31, 2010, approximately 57% of our employees had been with us for LESS THAN ONE YEAR and approximately 74% for less than two years. The biggest issue that comes up in subscriber usage is that such a large percentage of its use is by such a small percentage of its user base, but that is true for many web services and social networking. One new angle is its news feed.”
LinkedIn also noted that Class B holders will continue to hold the majority voting interest because the votes are 10 to 1 over the Class A shares. Class A common stock is 1,000,000,000 shares authorized and outstanding. Class B common stock is 120,000,000 shares authorized, with 88,955,943 shares issued and outstanding. As far as the use of proceeds: The principal purposes of this offering are to increase company capitalization and financial flexibility, increase the visibility in the marketplace and create a public market for its Class A common stock. The company intends to use the net proceeds for general corporate purposes. LinkedIn does not anticipate that it will have to utilize any of the net proceeds to fund operations during the next 12 months.
Hiring solutions is now 42 percent of the business with some $101.88 million in sales; marketing solutions is now 33 percent of the business at $79.3 million; and premium subscriptions now accounts for 25 percent of the business with $61.9 million in sales.
This is part joke and part truth about the world of social networking… MySpace is where you discuss what you want to do for a living when you grow up, LinkedIn is how you get your job, and Facebook is how you lose your job.
Amended filings themselves are not as important unless key offering data changes. The reason this matters so much is because the LinkedIn IPO is being viewed as a preview to the Facebook IPO.
JON C. OGG
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