LinkedIn Files for $175 Million IPO, Reveals Financial and Membership Details
Nearly eight years after its founding, LinkedIn, the professional social networking site funded by Sequoia Capital, Greylock Partners, and Bessemer Venture Partners, today began the process of going public. The Mountain View, CA-based firm filed S-1 registration papers with the Securities and Exchange Commission, saying that it intends to raise up to $175 million in an offering of common stock on either the Nasdaq exchange or the New York Stock Exchange (the company is apparently being courted by both).
LinkedIn was founded by PayPal veteran Reid Hoffman, who is one of Silicon Valley’s most active “super angel” investors and today runs Greylock’s $20 million Discovery Fund, a seed investment fund for early-stage startups. According to the S-1, Hoffman and his wife Michelle Yee are the largest shareholders in LinkedIn, owning 21.4 percent of its shares. Sequoia Capital is the second-largest shareholder, with 18.9 percent, followed by Greylock (15.8 percent) and Bessemer (5.1 percent). LinkedIn’s venture investors are thought to have put approximately $103 million into the company since 2003.
The filing of an S-1 is always an interesting moment for outside observers, as the forms contain details on revenues and other matters that privately held companies don’t have to share until they want to go public. Some of the highlights in LinkedIn’s case:
—The company had more than 90 million users in over 200 countries at the end of 2010, up from 55 million at the end of 2009. (That’s a lot, but still small compared to at least one rival social networking site: 600-million-member Facebook.) The company says membership growth is still accelerating—it added a million members every 10 days during the second half of 2010.
—The company’s services—premium online subscriptions plus hiring and marketing services used by corporations—have started to bring in serious income in the past couple of years. Net revenue grew from $32.5 million in 2007 to $120.1 million in 2009. In the first nine months of 2010, LinkedIn brought in earnings before interest, taxes, deductions, and amortization (EBITDA) of $80.6 million, up 100 percent over the 2009 figures.
—In 2010, 3,900 companies used LinkedIn’s hiring and marketing services as part of their recruiting efforts. That included 69 of the Fortune 100 companies.
—LinkedIn itself has been on a massive hiring binge. It had 990 employees at the end of 2010. Some 57 percent of them had been with the company for less than one year, and 74 percent had been at LinkedIn for less than two years.
—Unique visitors to LinkedIn’s websites averaged 36 million per month in 2009, and the figure jumped to 65 million per month in 2010. (But the company said that “a substantial majority of our page views are generated by a minority of our members.”)
—The company warns that as it begins to saturate its market of job seekers and other professional networkers, its revenues won’t keep increasing at the current rate (a whopping 92 percent compound annual growth rate between 2007 and 2009).
The next steps will be for LinkedIn and its bookrunners—Morgan Stanley, BofA Merrill Lynch, and J.P. Morgan—to set a share-price target and zero in on a date for the offering.