Feeling a bit disconnected to the business world? LinkedIn wants to help. The firm operates an online professional network designed to help members find jobs, connect with other professionals, and locate business opportunities. The site has grown to reach more than 340 million users in some 200 countries since its launch in 2003. LinkedIn is free to join; it offers a paid premium membership with additional tools and sells advertising. It additionally earns revenue through its job listing service, which allows companies to post job openings and search for candidates on LinkedIn.
In addition to free services such as creating profiles, connecting and communicating with other LinkedIn members, and viewing business and job listing pages, the company generates revenue through three product lines: Talent Solutions, Marketing Solutions, and Premium Subscriptions.
Talent Solutions represents LinkedIn's largest segment, accounting for about 60% of revenue, and includes recruitment and job listing services for enterprises and job seeker subscriptions for individuals. Marketing Solutions (advertising services for enterprises and individuals) and Premium Subscriptions (advanced listing, search, and communication services and tools) each generate about 20% of sales.
The US is LinkedIn's largest market, contributing about 60% of sales. Europe, the Middle East, and Africa (EMEA) brings in about a quarter of revenue. Revenue is growing at a faster pace in the EMEA and Asia-Pacific (APAC) regions than in the US.
The company has office space across the US and internationally, including Ireland where additional office space is being built. It has data centers in the US and Singapore.
Sales and Marketing
LinkedIn markets its products and services to large and small enterprise customers through a field sales force and also offers subscriptions via an online, self-serve channel.
The increase in membership over the years has led to explosive revenue growth, with 2014 revenue up 45% to $2.2 billion. All three revenue-producing segments rose by 40+% that year, with Talent Solutions having the most impact as LinkedIn's largest segment. Tracking along with revenue, cash from operations rose 30% to $569 million with deferred revenue increasing $129 million and accounts payable and other liabilities increasing $150 million.
The company reported its first net loss in five years, however, as its expenses related to talent (employees jumped by 37% in 2014), technology, and product development rose significantly and its provision for income taxes more than doubled.
Key to LinkedIn's success is the growth of its member network, specifically through current members inviting others to join. That growth has been substantial, rising from 150 million at the end of 2011 to nearly 350 million at the end of 2014. Membership is growing at double-digit rates across all geographies, with particularly strong growth in the EMEA and APAC regions, which is in line with the company's focus on expanding its international presence. In 2014 it made a major move in its largest potential market by introducing LinkedIn in Simplified Chinese. The following year it launched a version in Arabic.
Along with its growing network of members, the company is looking to increase its ability to monetize its products and services through both organic investment and acquisitions.
Mergers & Acquisitions
LinkedIn made seven acquisitions in 2014, the two largest being Bizo for $160 million and Bright Media for $100 million. Both based in San Francisco, Bizo provides B2B display and social advertising programs and Bright Media, which offers an online job board and candidate matching services. The prior year it purchased another San Francisco firm, Alphonso Labs (Pulse), a mobile news reader and content distribution platform.
Previous growth efforts include the 2012 purchase of SlideShare for some $119 million. SlideShare is an application that allows users to share slide show presentations, and LinkedIn made the deal to strengthen its professional content offerings.
In 2015 the company agreed to acquire online education company lynda.com for about $1.5 billion.
LinkedIn's 2011 public offering was significant in that, as the precursor to Facebook's IPO, it was the first major social networking company to file an IPO and was initially the biggest US Internet IPO since Google. Through the offering, LinkedIn raised more than $352 million. That figure was at the high end of underwriters' expectations and valued LinkedIn at about $4.25 billion.