I used the opportunity of LinkedIn’s IPO to read through the company’s SEC Form S-1 Registration Statement.
LinkedIn makes money by combining 3 business models:
- Hiring / job placement services
- SaaS (freemium style)
Here are some rough metrics deduced from SEC filing and published prices:
- Avg. hiring services rev. / customer = $87MM (est. 2010 rev) / 3,900 customers (declared) ~= $22,500
- Advertising rev. / user = $70MM (est. 2010 rev. from “marketing services”) / 90 mil users ~= $0.77 / user [there were 33,000 advertising customers (declared in filing)]
- % users subscribers to premium services = $60MM (est. 2010 rev. from “premium”) / $45 (est. avg. monthly subscription revenue / 90 mil user * 100 ~= 1.5%
To learn more details about LinkedIn’s product portfolio, revenue, and cost structure I extracted 14 pages of content from the 140 page SEC filing which are more relevant to understanding the business model.
Here’s also a good infographic originally published here.