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LinkedIn: The First Social Network to IPO

The rumor is true.

In my earlier post, LinkedIn Gives Away Advertising Credits, I discussed about the rumor that LinkedIn might be trying to create its cash coffers through this offer because of a possible initial public offering (IPO) early on 2011. On January 27th, LinkedIn filed a registration statement with the Securities and Exchange Commission (SEC), which sets in motion the IPO process in the United States.

You can access the official S-1 registration statement from LinkedIn Corporation at the SEC website.

Given that LinkedIn Coporation has files the Form S-1 with the SEC, all issuers, company insiders, analysts, and other parties are legally restricted in their ability to discuss or promote the upcoming IPO of the company. However, here are some key insights that the S-1 form provides:

  • Morgan Stanley & Co. will be the lead underwriter for the IPO. It will be joined by Merrill Lynch, Allen & Company and UBS Securities. This is very positive for LinkedIn, because it has a strong team leading the process, which in turn increases the probability of a successful IPO.
  • LinkedIn has been profitable since the end of the third quarter of 2010.
  • As of September 30, 2010, LinkedIn has liquid assets (defined as “Cash on hand”) of $89.6 million.
  • Here’s the breakdown of LinkedIn’s revenue mix for part of 2010:
    • Job listings, Jan-Sept 2010: $65.9 million (41% of revenue)
    • Advertising, Jan-Sept 2010:$51.37 million (32% of revenue)
    • Premium subscriptions, Jan-Sept 2010: $44.1 million (27% of revenue)
  • LinkedIn has switched its focus from premium subscriptions (41% of 2009’s revenue) to job listings (29% of 2009’s revenue) as its main source of revenue.
  • LinkedIn Founder and Chairman, Reid Hoffman (together with his wife, Michelle Yee) owned the largest share of LinkedIn: 19,066,032 shares, which is 21.4% of total ownership.

What do you think will be the implications of LinkedIn’s IPO to Facebook and Twitter?

Article by Damian Davila, online marketing and web analytics blogger at Connect with him in LinkedIn. Follow him at @idaconcpts.

Post image by tychay

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2 Replies

  1. Definitely think the LinkedIn IPO and now the Groupon IPO will push up Facebooks effort for an IPO. This may also encourage twitter to sell itself or also shoot for an IPO

  2. Hi Travis, You’re absolutely right. I think that particularly Facebook as there has been a lot of buzz about their declining number of users on its top countries (e.g. Canada). It’ll be interesting how the upcoming IPOs will perform.

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