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LinkedIn Business Model Analysis

2011 May 20

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:

  1. Hiring / job placement services
  2. Advertising
  3. SaaS (freemium style)

Here are some rough metrics deduced from SEC filing and published prices:

  1. Avg. hiring services rev. / customer = $87MM (est. 2010 rev) / 3,900 customers (declared) ~= $22,500
  2. 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)]
  3. % 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.

Enjoy!

4 Responses leave one →
  1. Kartik permalink
    November 12, 2011

    Hi Stefann,
    I’m not able to access the 14-page pdf which you have extracted. Could you check the link please?

  2. Stevelk Latt permalink
    February 24, 2012

    When a VC like Bain buys into the private placement, do they now own restricted securities in LinkedIn?

  3. Sonja permalink
    June 18, 2013

    3. Premium services subscriber revenue = $60Million
    (Across 90 million users at an average of $45 monthly average subscription by 12 = $540 annual. This gives you 111 111 users on their premium service / 90 million * 100 = 0.12% of their client only)

    Shouldn’t that be 0.12 % ??

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