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  • LinkedIn Earnings Released, Revenue Up 47%

    LinkedIn Earnings Released, Revenue Up 47%

    LinkedIn just released its earnings report for the second quarter with revenue of $534 million, up 47% year-over-year. Net loss (attributable to common stockholders) was $1 million, compared to net income of $3.7 million for the same quarter last year. Non-GAAP net income was $63 million compared to $44 million for the same quarter last year.

    GAAP diluted EPS for Q2 was $(0.01), compared to GAAP diluted EPS of $0.03 last year. non-GAAP diluted EPS was $0.51, compared to $0.38 last year.

    CEO Jeff Weiner said, “LinkedIn delivered strong financial results in the second quarter while maintaining investment in our member and customer offerings. We made significant progress against several key strategic priorities including increasing the scale of job opportunities on LinkedIn; expanding our professional publishing platform; and continuing the strategic shift towards content marketing through Sponsored Updates.”

    60% of LinkedIn’s total revenue was from the U.S. ($318 million). Revenue for the full year is expected to be between $2.14 billion and $2.15 billion.

    The company is still touting the same “over 300 million members” stat it shared last quarter.

    In addition to releasing its earnings, LinkedIn announced the launch of a new Sales Navigator, which it says enables “buyers to build relationships with the most relevant sales professionals through an enterprise focused SaaS product.”

    In the prepared comments on the earnings call, Weiner said, LinkedIn delivered strong financial results in the second quarter while maintaining continued investment in our member and customer offerings. We made significant progress against several key strategic priorities including increasing the scale of job opportunities on LinkedIn; expanding our professional publishing platform; adding to our growing portfolio of mobile apps; and successfully positioning our Marketing Solutions business for the future through the growth of Sponsored Updates.”

    He went on to say the launch of Sales Navigator and the recent acquisition of Bizo “underscore the opportunities we have to continue building a scalable, diverse business that adds value for our members and customers based on the critical mass of the LinkedIn network.”

    “We continue to see healthy member engagement dynamics across LinkedIn, especially in light of the challenging year over year comparison that we discussed last quarter,” he said. “During Q2, cumulative members grew 32 percent to 313 million, internally-measured unique visiting members to LinkedIn grew 13 percent to an average of 84 million per month, and internal member pageviews grew 22 percent to 25 billion for the quarter, well ahead of unique member growth.”

    Organic engagement is one area of particular strength, driven by our mobile and content efforts,” he said. “Homepage traffic, as measured by unique visiting members, continues to outpace overall site traffic growth, increasing approximately 40 percent faster over the past year. Mobile also continues to drive a growing share of engagement, growing more than three times as fast as overall uniques. Mobile now accounts for 45 percent of total traffic to LinkedIn.”

    67% of members come from outside the U.S.

    They surpassed 30,000 weekly long-form posts on their publishing platform, and traffic to publisher and influencer posts is up over 100% since launch in February.

    Since it launched its new search architecture, pageviews to content driven by search have accelerated.

    Here’s what Weiner said about Sales Navigator on the call:

    “Within Subscriptions, today we are pleased to announce the launch of the all-new Sales Navigator. This new SaaS product delivers a customized view into LinkedIn to better connect sales professionals with the right buyers by leveraging key insights and connections across the LinkedIn network. Our research shows that social selling transforms the sales process — buyers are over five times more likely to engage with sales professionals when introduced through a common connection versus a cold call. Just as the launch of our flagship Recruiter product transformed the way talent professionals recruit, we expect Sales Navigator will similarly transform the effectiveness of sales professionals.”

    Here’ the release in its entirety:

    MOUNTAIN VIEW, Calif., July 31, 2014 (GLOBE NEWSWIRE) — LinkedIn Corporation (NYSE:LNKD), the world’s largest professional network on the Internet, with over 300 million members, reported its quarterly results for the second quarter of 2014:

    • Revenue for the second quarter was $534 million, an increase of 47% compared to $364 million in the second quarter of 2013.
    • Net loss attributable to common stockholders for the second quarter was $1.0 million, compared to net income of $3.7 million for the second quarter of 2013. Non-GAAP net income for the second quarter was $63 million, compared to $44 million for the second quarter of 2013. Non-GAAP measures exclude tax-affected stock-based compensation expense and tax-affected amortization of acquired intangible assets.
    • Adjusted EBITDA for the second quarter was $145 million, or 27% of revenue, compared to $89 million for the second quarter of 2013, or 24% of revenue.
    • GAAP diluted EPS for the second quarter was $(0.01), compared to GAAP diluted EPS of $0.03 for the second quarter 2013; non-GAAP diluted EPS for the second quarter was $0.51, compared to non-GAAP diluted EPS of $0.38 for the second quarter of 2013.

    “LinkedIn delivered strong financial results in the second quarter while maintaining investment in our member and customer offerings,” said Jeff Weiner, CEO of LinkedIn. “We made significant progress against several key strategic priorities including increasing the scale of job opportunities on LinkedIn; expanding our professional publishing platform; and continuing the strategic shift towards content marketing through Sponsored Updates.”

    Second Quarter Operating Summary

    Please note, in the second quarter of 2014, we reclassified recruitment media products from Marketing Solutions to Talent Solutions. Accordingly, prior period amounts have been recast to conform to the current period presentation. See our “Selected Company Metrics and Financials” table on the quarterly earnings section of the investor relations website for additional information.

    • Talent Solutions(1): Revenue from Talent Solutions products totaled $322 million, an increase of 49% compared to the second quarter of 2013. Talent Solutions revenue represented 60% of total revenue in the second quarter of 2014 and 2013.
    • Marketing Solutions(1): Revenue from Marketing Solutions products totaled $106 million, an increase of 44% compared to the second quarter of 2013. Marketing Solutions revenue represented 20% of total revenue in the second quarter of 2014 and 2013.
    • Premium Subscriptions: Revenue from Premium Subscriptions products totaled $105 million, an increase of 44% compared to the second quarter of 2013. Premium Subscriptions represented 20% of total revenue in the second quarter of 2014 and 2013.
    (1) Recruitment media revenue was $18 million and $12 million in the second quarter of 2014 and 2013, respectively.

    Revenue from the U.S. totaled $318 million, and represented 60% of total revenue in the second quarter of 2014. Revenue from international markets totaled $216 million, and represented 40% of total revenue in the second quarter of 2014.

    Revenue from the field sales channel totaled $319 million, and represented 60% of total revenue in the second quarter of 2014. Revenue from the online, direct sales channel totaled $215 million, and represented 40% of total revenue in the second quarter of 2014.

    Second Quarter Highlights and Strategic Announcements

    In the second quarter of 2014:

    • LinkedIn launched “Limited Listings” to grow dramatically the number of job opportunities made available on LinkedIn for active job searchers. This initiative was accelerated by the Bright acquisition in February, and there are now one million jobs on LinkedIn.
    • LinkedIn continued to gain traction with its professional publishing platform, now generating over 30,000 weekly long-form posts after ramping posting capability to 15 million LinkedIn members. Since launching in February, traffic to publisher and Influencer posts has risen more than 100%.
    • LinkedIn added to its growing multi-app mobile portfolio with the launch of several new mobile experiences including: Connected; the LinkedIn Job Search App for iPhone; and a new SlideShare app for Android.

    Additionally, this afternoon, LinkedIn announced the launch of the all-new Sales Navigator, enabling buyers to build relationships with the most relevant sales professionals through an enterprise focused SaaS product. Also, Last week LinkedIn announced the acquisition of Bizo with the goal of creating a comprehensive B2B marketing platform.

    “LinkedIn achieved strong results across the business,” said Steve Sordello, CFO of LinkedIn. “The success of Sponsored Updates, scaling jobs, and the launch of the new Sales Navigator underscore the positive impact of recent strategic investments, and we will continue to invest aggressively in our member and customer platforms.”

    Business Outlook

    LinkedIn is providing guidance for the third quarter and full year of 2014:

    • Q3 2014 Guidance: Revenue is expected to range between $543 million and $547 million. Adjusted EBITDA is expected to range between $134 million and $136 million. Non-GAAP EPS is expected to be approximately $0.44. The company expects depreciation of approximately $50 million, amortization of approximately $8.0 million, stock-based compensation of approximately $80 million, and 126 million fully-diluted weighted shares.
    • Full Year 2014 Guidance: Revenue is expected to range between $2.14 billion and $2.15 billion. Adjusted EBITDA is expected to range between $545 and $550 million. Non-GAAP EPS is expected to be approximately $1.80. The company expects depreciation of approximately $202 million, amortization of approximately $28 million, stock-based compensation of approximately $305 million, and 126 million fully-diluted weighted shares.

    Quarterly Results Webcast and Conference Call

    LinkedIn will host a webcast and conference call to discuss its second quarter 2014 financial results and business outlook today at 2:00 p.m. Pacific Time. Jeff Weiner and Steve Sordello will host the webcast, which can be viewed on the investor relations section of the LinkedIn website at http://investors.linkedin.com/. This call will contain forward-looking statements and other material information regarding the company’s financial and operating results. Following completion of the call, a recorded replay of the webcast will be available on the website.

    Upcoming Events

    Management will participate in upcoming financial Q&A discussions at industry events on September 3, 2014. LinkedIn will furnish a link to these events on its investor relations website, http://investors.linkedin.com/ for both the live and archived webcasts.

    About LinkedIn

    Founded in 2003, LinkedIn connects the world’s professionals to make them more productive and successful. With over 300 million members worldwide, including executives from every Fortune 500 company, LinkedIn is the world’s largest professional network on the Internet. The company has a diversified business model with revenue coming from Talent Solutions, Marketing Solutions and Premium Subscriptions products. Headquartered in Silicon Valley, LinkedIn has offices across the globe.

    Non-GAAP Financial Measures

    To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the company uses the following non-GAAP financial measures: adjusted EBITDA, non-GAAP net income, and non-GAAP diluted EPS (collectively the “non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

    The company excludes the following items from one or more of its non-GAAP measures:

    Stock-based compensation. The company excludes stock-based compensation because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. The company further believes this measure is useful to investors in that it allows for greater transparency to certain line items in its financial statements and facilitates comparisons to peer operating results.

    Amortization of acquired intangible assets. The company excludes amortization of acquired intangible assets because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. In addition, excluding this item from the non-GAAP measures facilitates internal comparisons to historical operating results and comparisons to peer operating results.

    Accretion of redeemable noncontrolling interest. The accretion of redeemable noncontrolling interest represents the accretion of the company’s redeemable noncontrolling interest to its redemption value. The company excludes the accretion because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operating performance. In addition, excluding this item from the non-GAAP financial measures facilitates internal comparisons to historical operating results and comparisons to peer operating results.

    Income tax effects and adjustments. The company adjusts non-GAAP net income by considering the income tax effects of excluding stock-based compensation and the amortization of acquired intangible assets. Beginning in the first quarter of 2014, the company has implemented a long-term non-GAAP tax rate for evaluating its operating performance as well as for planning and forecasting purposes. This projected long-term non-GAAP tax rate eliminates the effects of non-recurring and period specific items, which can vary in size and frequency and does not necessarily reflect our long-term operations. Historically, the company computed a non-GAAP tax rate based on non-GAAP pre-tax income on a quarterly basis. Based on our current forecast, a long-term non-GAAP tax rate of 35% has been applied to our non-GAAP financial results for the current period. The company believes that adjusting for these income tax effects and adjustments provides additional transparency to the overall or “after tax” effects of excluding these items from non-GAAP net income.

    Dilutive shares under the treasury stock method. During periods with a net loss, the company excluded certain potential common shares from its GAAP diluted shares because their effect would have been anti-dilutive. On a non-GAAP basis, these shares would have been dilutive. As a result, the company has included the impact of these shares in the calculation of its non-GAAP diluted net income per share under the treasury stock method.

    For more information on the non-GAAP financial measures, please see the “Reconciliation of GAAP to Non-GAAP Financial Measures” table in this press release. This accompanying table has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. Additionally, the company has not reconciled adjusted EBITDA or non-GAAP EPS guidance to net income (loss) or GAAP EPS guidance because it does not provide guidance for either other income (expense), net, or GAAP provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA and non-GAAP EPS. As items that impact net income (loss) are out of the company’s control and/or cannot be reasonably predicted, the company is unable to provide such guidance. Accordingly, a reconciliation to net income (loss) is not available without unreasonable effort.

    Safe Harbor Statement

    “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release and the accompanying conference call contain forward-looking statements about our products, including our investments in products, technology and other key strategic areas, certain non-financial metrics, such as customer and member growth and engagement, and our expected financial metrics such as revenue, adjusted EBITDA, non-GAAP EPS, depreciation and amortization and stock-based compensation for the third quarter of 2014 and the full fiscal year 2014. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

    The risks and uncertainties referred to above include – but are not limited to – risks associated with: our limited operating history in a new and unproven market; engagement of our members; the price volatility of our Class A common stock; general economic conditions; expectations regarding the return on our strategic investments; execution of our plans and strategies, including with respect to mobile products and features; security measures and the risk that they may not be sufficient to secure our member data adequately or that we are subject to attacks that degrade or deny the ability of members to access our solutions; expectations regarding our ability to timely and effectively scale and adapt existing technology and network infrastructure to ensure that our solutions are accessible at all times with short or no perceptible load times; our ability to maintain our rate of revenue growth and manage our expenses and investment plans; our ability to accurately track our key metrics internally; members and customers curtailing or ceasing to use our solutions; our core value of putting members first, which may conflict with the short-term interests of the business; privacy and changes in regulations in the United States, Europe, Asia and elsewhere, which could impact our ability to serve our members or curtail our monetization efforts; litigation and regulatory issues; increasing competition; our ability to manage our growth; our international operations; our ability to recruit and retain our employees; the application of U.S. and international tax laws on our tax structure and any changes to such tax laws; acquisitions we have made or may make in the future; and the dual class structure of our common stock.

    Further information on these and other factors that could affect the company’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2013, and additional information will also be set forth in our Form 10-Q that will be filed for the quarter ended June 30, 2014, which should be read in conjunction with these financial results. These documents are or will be available on the SEC Filings section of the Investor Relations page of the company’s website at http://investors.linkedin.com/. All information provided in this release and in the attachments is as of July 31, 2014, and LinkedIn undertakes no duty to update this information.

    LINKEDIN CORPORATION
    TRENDED CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands)
    (Unaudited)
    As of
    June 30, September 30, December 31, March 31, June 30,
    2013 2013 2013 2014 2014
    ASSETS
    CURRENT ASSETS:
    Cash and cash equivalents  $ 262,670  $ 1,396,292  $ 803,089  $ 508,850  $ 645,092
    Marketable securities  610,728  875,993  1,526,212  1,797,373  1,721,847
    Accounts receivable  203,585  208,956  302,168  328,661  347,152
    Deferred commissions  29,710  28,507  47,496  46,575  45,941
    Prepaid expenses  26,785  33,831  32,114  47,513  49,503
    Other current assets  30,672  28,259  44,391  50,933  61,042
    Total current assets  1,164,150  2,571,838  2,755,470  2,779,905  2,870,577
    Property and equipment, net  292,715  336,656  361,741  406,543  476,058
    Goodwill  150,831  150,831  150,871  228,893  228,943
    Intangible assets, net  38,284  43,209  43,046  101,597  99,175
    Other assets  41,980  41,744  41,665  44,931  46,133
    TOTAL ASSETS  $ 1,687,960  $ 3,144,278  $ 3,352,793  $ 3,561,869  $ 3,720,886
    LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
    CURRENT LIABILITIES:
    Accounts payable  $ 74,605  $ 70,340  $ 66,744  $ 79,711  $ 90,728
    Accrued liabilities  106,118  139,898  183,004  142,141  164,051
    Deferred revenue  331,187  335,700  392,243  479,576  481,450
    Total current liabilities  511,910  545,938  641,991  701,428  736,229
    DEFERRED TAX LIABILITIES  22,905  15,861  14,879  23,900  24,088
    OTHER LONG TERM LIABILITIES  42,128  51,347  61,529  70,226  80,298
    Total liabilities  576,943  613,146  718,399  795,554  840,615
    COMMITMENTS AND CONTINGENCIES
    REDEEMABLE NONCONTROLLING INTEREST  —  —  5,000  5,126  5,226
    STOCKHOLDERS’ EQUITY:
    Class A and Class B common stock  11  12  12  12  12
    Additional paid-in capital  1,055,870  2,478,813  2,573,449  2,718,321  2,833,030
    Accumulated other comprehensive income (loss)  (64)  470  314  682  863
    Accumulated earnings  55,200  51,837  55,619  42,174  41,140
    Total stockholders’ equity  1,111,017  2,531,132  2,629,394  2,761,189  2,875,045
    TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY  $ 1,687,960  $ 3,144,278  $ 3,352,793  $ 3,561,869  $ 3,720,886
    LINKEDIN CORPORATION
    TRENDED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except per share data)
    (Unaudited)
    Three Months Ended
    June 30, September 30, December 31, March 31, June 30,
    2013 2013 2013 2014 2014
    Net revenue  $ 363,661  $ 392,960  $ 447,219  $ 473,193  $ 533,877
    Costs and expenses:
    Cost of revenue (exclusive of depreciation and amortization shown separately below)  49,264  53,395  57,865  62,455  69,536
    Sales and marketing  122,276  133,172  157,235  166,522  184,494
    Product development  95,608  106,223  113,140  120,622  128,731
    General and administrative  56,225  61,767  64,790  74,618  80,688
    Depreciation and amortization  32,193  33,767  42,750  49,740  56,306
    Total costs and expenses  355,566  388,324  435,780  473,957  519,755
    Income (loss) from operations  8,095  4,636  11,439  (764)  14,122
    Other income (expense), net  (252)  156  1,820  1,026  1,197
    Income before income taxes  7,843  4,792  13,259  262  15,319
    Provision for income taxes  4,109  8,155  9,477  13,581  16,253
    Net income (loss)  3,734  (3,363)  3,782  (13,319)  (934)
    Accretion of redeemable noncontrolling interest  —  —  —  (126)  (100)
    Net income (loss) attributable to common stockholders  3,734  (3,363)  3,782  (13,445)  (1,034)
    Net income (loss) per share attributable to common stockholders:
    Basic  111,214  113,940  119,849  120,967  122,170
    Diluted  116,627  113,940  124,438  120,967  122,170
    Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
    Basic  $ 0.03  $ (0.03)  $ 0.03  $ (0.11)  $ (0.01)
    Diluted  $ 0.03  $ (0.03)  $ 0.03  $ (0.11)  $ (0.01)
    LINKEDIN CORPORATION
    TRENDED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (Unaudited)
    Three Months Ended
    June 30, September 30, December 31, March 31, June 30,
    2013 2013 2013 2014 2014
    OPERATING ACTIVITIES:
    Net income (loss)  $ 3,734  $ (3,363)  $ 3,782  $ (13,319)  $ (934)
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:
    Depreciation and amortization  32,193  33,767  42,750  49,740  56,306
    Provision for doubtful accounts and sales returns  1,639  568  1,254  1,207  4,118
    Stock-based compensation  48,354  54,445  57,177  67,769  74,828
    Excess income tax benefit from stock-based compensation  (5,003)  (10,188)  (16,008)  (15,982)  (18,639)
    Changes in operating assets and liabilities:
    Accounts receivable  8,577  (7,719)  (94,627)  (26,764)  (23,462)
    Deferred commissions  1,185  1,236  (20,028)  1,116  712
    Prepaid expenses and other assets  (8,448)  3,707  2,926  (11,742)  (4,455)
    Accounts payable and other liabilities  24,313  49,591  44,307  (18,428)  24,726
    Income taxes, net  3,522  (531)  4,377  7,928  13,362
    Deferred revenue  14,099  4,513  56,543  87,333  1,874
    Net cash provided by operating activities  124,165  126,026  82,453  128,858  128,436
    INVESTING ACTIVITIES:
    Purchases of property and equipment  (93,184)  (83,158)  (57,394)  (88,871)  (96,430)
    Purchases of investments  (98,715)  (385,517)  (851,312)  (737,739)  (649,803)
    Sales of investments  17,389  34,937  68,547  72,239  117,359
    Maturities of investments  33,897  83,652  129,646  393,044  604,231
    Payments for intangible assets and acquisitions, net of cash acquired  (6,321)  (8,756)  (3,894)  (85,061)  (4,800)
    Changes in deposits and restricted cash  (3,488)  (1,355)  (6)  (1,404)  (3,357)
    Net cash used in investing activities  (150,422)  (360,197)  (714,413)  (447,792)  (32,800)
    FINANCING ACTIVITIES:
    Proceeds from follow-on offering, net of issuance costs  —  1,348,419  (360)  —  —
    Proceeds from issuance of preferred shares in joint venture  —  —  4,600  —  —
    Proceeds from issuance of common stock from employee stock options  7,681  7,408  5,678  8,147  4,759
    Proceeds from issuance of common stock from employee stock purchase plan  11,500  —  13,089  —  16,324
    Excess income tax benefit from stock-based compensation  5,003  10,188  16,008  15,982  18,639
    Other financing activities  797  (2)  (419)  (7)  31
    Net cash provided by financing activities  24,981  1,366,013  38,596  24,122  39,753
    EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS  (993)  1,780  161  573  853
    CHANGE IN CASH AND CASH EQUIVALENTS  (2,269)  1,133,622  (593,203)  (294,239)  136,242
    CASH AND CASH EQUIVALENTS—Beginning of period  264,939  262,670  1,396,292  803,089  508,850
    CASH AND CASH EQUIVALENTS—End of period  $ 262,670  $ 1,396,292  $ 803,089  $ 508,850  $ 645,092
    LINKEDIN CORPORATION
    TRENDED SUPPLEMENTAL REVENUE INFORMATION
    (In thousands)
    (Unaudited)
    Three Months Ended
    June 30, September 30, December 31, March 31, June 30,
    2013 2013 2013 2014 2014
    Revenue by product:
    Talent Solutions (1)  $ 216,938  $ 237,668  $ 261,359  $ 291,594  $ 322,227
    Marketing Solutions (1)  73,747  75,510  97,732  86,064  106,476
    Premium Subscriptions  72,976  79,782  88,128  95,535  105,174
    Total  $ 363,661  $ 392,960  $ 447,219  $ 473,193  $ 533,877
    Revenue by geographic region:
    United States  $ 224,277  $ 245,302  $ 271,140  $ 284,878  $ 317,774
    International
    Other Americas (2)  26,857  27,027  31,612  31,904  35,527
    EMEA (3)  84,691  90,087  108,309  117,871  134,930
    APAC (4)  27,836  30,544  36,158  38,540  45,646
    Total International revenue  139,384  147,658  176,079  188,315  216,103
    Total revenue  $ 363,661  $ 392,960  $ 447,219  $ 473,193  $ 533,877
    Revenue by geography, by product:
    United States
    Talent Solutions (1)  $ 140,420  $ 152,371  $ 164,207  $ 180,403  $ 197,852
    Marketing Solutions (1)  41,259  45,789  55,269  49,038  59,383
    Premium Subscriptions  42,598  47,142  51,664  55,437  60,539
    Total United States revenue  $ 224,277  $ 245,302  $ 271,140  $ 284,878  $ 317,774
    International
    Talent Solutions (1)  76,518  85,297  97,152  111,191  124,375
    Marketing Solutions (1)  32,488  29,721  42,463  37,026  47,093
    Premium Subscriptions  30,378  32,640  36,464  40,098  44,635
    Total International revenue  $ 139,384  $ 147,658  $ 176,079  $ 188,315  $ 216,103
    Total revenue  $ 363,661  $ 392,960  $ 447,219  $ 473,193  $ 533,877
    Revenue by channel:
    Field sales  $ 209,227  $ 227,588  $ 270,672  $ 275,262  $ 318,984
    Online sales  154,434  165,372  176,547  197,931  214,893
    Total  $ 363,661  $ 392,960  $ 447,219  $ 473,193  $ 533,877
    (1) Prior period amounts have been recast to conform to the current year presentation.
    (2) Canada, Latin America and South America
    (3) Europe, the Middle East and Africa (“EMEA”)
    (4) Asia-Pacific (“APAC”)
    LINKEDIN CORPORATION
    TRENDED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
    (In thousands, except per share data)
    (Unaudited)
    Three Months Ended
    June 30, September 30, December 31, March 31, June 30,
    2013 2013 2013 2014 2014
    Non-GAAP net income and net income per share:
    GAAP net income (loss) attributable to common stockholders  $ 3,734  $ (3,363)  $ 3,782  $ (13,445)  $ (1,034)
    Add back: accretion of redeemable noncontrolling interest  —  —  —  126  100
    Add back: stock-based compensation  48,354  54,445  57,177  67,769  74,828
    Add back: amortization of intangible assets  5,677  3,832  4,056  4,813  7,224
    Income tax effects and adjustments (1)  (13,307)  (8,120)  (16,776)  (11,914)  (17,827)
    NON-GAAP NET INCOME  $ 44,458  $ 46,794  $ 48,239  $ 47,349  $ 63,291
    GAAP diluted shares  116,627  113,940  124,438  120,967  122,170
    Add back: dilutive shares under the treasury stock method  —  5,248  —  3,884  3,087
    NON-GAAP DILUTED SHARES  116,627  119,188  124,438  124,851  125,257
    NON-GAAP DILUTED NET INCOME PER SHARE  $ 0.38  $ 0.39  $ 0.39  $ 0.38  $ 0.51
    Adjusted EBITDA:
    Net income (loss)  $ 3,734  $ (3,363)  $ 3,782  $ (13,319)  $ (934)
    Provision for income taxes  4,109  8,155  9,477  13,581  16,253
    Other (income) expense, net  252  (156)  (1,820)  (1,026)  (1,197)
    Depreciation and amortization  32,193  33,767  42,750  49,740  56,306
    Stock-based compensation  48,354  54,445  57,177  67,769  74,828
    ADJUSTED EBITDA  $ 88,642  $ 92,848  $ 111,366  $ 116,745  $ 145,256
    (1) Excludes accretion of redeemable noncontrolling interest


    Image via LinkedIn (Flickr)

  • LinkedIn Is Acquiring B2B Marketing Platform Bizo

    LinkedIn Is Acquiring B2B Marketing Platform Bizo

    LinkedIn announced that it is acquiring B2B brand marketing platform Bizo. The price is about $175 million (subject to adjustment) in a combination of about 10% stock and 90% cash.

    Bizo offers products to help brands with their display and social advertising programs. It specifically caters to B2B customers.

    “B2B marketers use Bizo to target prospects within professional segments, and nurture them at every stage of their sales and marketing funnel,” said LinkedIn. “Fueled by proprietary data management and targeting technology, their platform enables precise and measurable multi-channel marketing programs. Since 2008, the company has been helping brands meet their marketing objectives by getting the right message in front of the right audiences on the web.”

    “It’s exciting for us to bring Bizo’s expertise and technology into our ecosystem,” said Deep Nishar, LinkedIn’s SVP of Product and User Experience. “Our ability to integrate their B2B solutions with our content marketing products will enable us to become the most effective platform for B2B marketers to engage professionals.”

    Bizo co-founder and CEO Russell Glass said in a blog post:

    We have been a LinkedIn partner for a while now, and when we started to develop that relationship a few years ago, it became readily apparent that we shared very strong and positive employee cultures, and that we both had a similar way of thinking about building out our respective businesses, with core customer-first and member-first mindsets.

    LinkedIn’s mission is to connect the world’s professionals to make them more productive and successful, while Bizo’s is to help B2B marketers get to the right people. We realized that our respective missions are incredibly well aligned, and we believe that combining forces will accelerate our ability to execute against the huge opportunities ahead. The combination of LinkedIn and Bizo greatly increases our ability to be the most effective platform for B2B marketers to reach their audiences, nurture prospects and acquire customers.

    The acquisition is expected to close in the third quarter. “Many” members of Bizo’s team are expected to join LinkedIn.

    Image via Bizo

  • Newegg Launches B2B Marketplace

    Newegg Launches B2B Marketplace

    Online electronics retailer Newegg announced the launch of a new B2B marketplace called NeweggBusiness. It serves as a third-party channel to connect B2B buyers and sellers, focusing on product selection and competitive pricing.

    Newegg Business, which is a subsidiary of Newegg North America, was founded in 2010, and the marketplace has been in pilot phase.

    The marketplace offers is aimed at businesses both large and small. Newegg Business provides store categories for computer hardware and peripherals, PCs and laptops, networking, software, data storage, servers and workstations, point of sale, electronics, office products, industrial and commercial, and refurbished.

    “We’re very excited to officially announce the launch of NeweggBusiness Marketplace,” said Soren Mills, Chief Marketing Officer for Newegg North America. “With NeweggBusiness Marketplace, we’re providing an attractive online destination for businesses to buy and sell a multitude of products. It’s also a great way for businesses to magnify their brand awareness.”

    “The launch of NeweggBusiness Marketplace expands our assortment of complementary business products for our customers,” said Merle McIntosh, Newegg’s Head of B2B for North America. “With one of the lowest commission rates of any major online marketplace, NeweggBusiness Marketplace is an attractive proposition for sellers seeking access to over 150,000 registered business customers at NeweggBusiness.”

    The company says the marketplace fits the needs of government sectors, educational institutions and nonprofits, in addition to businesses.

    Image via NeweggBusiness

  • Which Social Networks & Types Of Posts Are Working For B2B?

    Which Social Networks & Types Of Posts Are Working For B2B?

    B2B Marketing recently released its Social Media Benchmarking Report for 2014, and pulled some key findings together into an interesting infographic.

    It looks at the social networks and types of posts that B2B businesses are using, and what’s working. LinkedIn has a sizable lead over Twitter, Facebook, YouTube, and Google+ in the “most used” department, and LinkedIn is helping these companies drive revenue far more than the other platforms, though it’s second to Twitter when it comes to boosting brand awareness.

    After many years of businesses facing this challenge, difficulty proving ROI is still the biggest challenge by far. Only 16% are able to demonstrate ROI completely or most of the time, though 44% said they can some of the time compared to 34% who said rarely or not at all.

    Video was found to be the best performing content, followed by written copy, then images. The marketing team is posting to the social channels much more often than experts within the companies or the senior management team.

    The entire report is for sale here.

    Via Marketing Charts

    Image via B2B Marketing

  • Survey: Businesses Not Satisfied With Their B2B Lead Generation Processes

    Survey: Businesses Not Satisfied With Their B2B Lead Generation Processes

    A recent survey from Salesfusion and Demand Metric found that most small and mid-sized companies have lead generation processes in place, but few (less than 10%) think they’re highly effective. Over half (58%) say they don’t produce enough leads.

    The survey of 200 businesses also indicates that the most common approaches include email marketing (78%), tradeshow or event marketing (73%), and content marketing (67%).

    “Lead generation is quite often the greatest point of friction in the marketing and sales relationship, and a goal of our study was to understand what marketers are doing, and what kind of success they are having,” said Demand Metric Chief Analyst Jerry Rackley. “The marketing team experiences constant pressure to produce more and better leads, and when they do generate them, where they’re stored has much to do with overall process effectiveness. Almost 60 percent of organizations whose leads are stored in CRM or marketing automation systems report that their lead generation process is moderately or highly effective. Less than half of organizations that store their leads in spreadsheets, in-house databases, email folders or other places report this same level of process effectiveness. CRM and marketing automation systems provide marketing and sales with the tools needed to more effectively execute, measure and improve the lead generation process.”

    “The study verified what we’ve been hearing,” said Salesfusion CEO Christian Nahas. “Marketers need an easier way to accurately identify leads as interested and qualified and they need to deliver those leads to their sales teams at the right time. Marketing professionals are being held increasingly more accountable for budgets and business impact. As the demand for data on marketers continues to increase, smarter tools and more accurate and easy-to-read data will also be increasingly important.”

    Content marketing, based on the survey’s findings, is the lead generation tactic targeted for the greatest increase in investment (70%). Tradeshow and event marketing will see the biggest decrease in investment among these companies (40%).

    Web forms were found to be the most common mechanism for capturing leads (73%), followed by data entry (66%). The most common lead storage repository is a CRM system (45%) followed by spreadsheets (17%).

    According to the report, only 16% of those using and storing their leads in CRM or marketing automation systems say they have no standard for lead quality. 62% say their standard or definition is moderate to very effective.

    Hat tip to Direct Marketing News

    Image via Thinkstock

  • Report: B2B Trending Towards Mobile Before PC

    Report: B2B Trending Towards Mobile Before PC

    eMarketer has a new report out called, “B2B Mobile Marketing: As Buyers Harken to Mobility, Sellers Hasten to Keep up.” The firm references data from Forrester Research, Forbes Insights, and Google.

    For one, it says (citing Forrester) that 91% of “connected employees” used a computer at their work desk in Q4 2012, and 64% also used a smartphone. We can only imagine that percentage has grown significantly over the past year.

    eMarketer looks at locations where connected employees use their tablets, smartphones and computers. Again, this data is over a year old, so it’s likely to have skewed to increased mobility.

    It then looks at data from a year ago from Forbes and Google, showing that over half of business executives in the U.S. said that within the next three years, they’d be using mobile devices as their primary business platform as opposed to PCs.

    The paid report delves into the role mobile tech is playing in informing B2B buying decisions, how B2B marketers are factoring mobile into their budgets, strategies and tactics, and how these marketers are integrating mobile at different phases of the buying process.

    Image via eMarketer

  • Report: Content Sharing Circles Have Big Impact On B2B Vendor Selection

    Report: Content Sharing Circles Have Big Impact On B2B Vendor Selection

    The Chief Marketing Officer (CMO) Council and NetLine Corporation recently put out a report (via MarketingProfs) finding that customer content sharing circles strongly impact pre-sale vendor selection. More and more, “insight-hungry” businesses are relying on trusted third-party information to make their decisions.

    It also found that buyers are often clustered in “distinctly different content sharing circles”.

    The report is based on data from 352 business buyers during January. Participants came from all executive levels across 30 different industries. It identifies three primary types of sharing circles:

    • From the middle out (35 percent): Content sourcing and purchase decisions are driven by tactically focused executives, but senior management is informed about how and why key decisions were made.
    • From the bottom up (30 percent): Junior or mid-level managers source primary content and share upstream to members of senior management, who then make the final purchase decision.
    • From the top down (29 percent): Senior management consumes content, sending information downstream for product identification and final purchase and execution.

    These circles are being powered by three segments of content personas, the report suggests:

    • Researchers: Primarily seek out the most broad and expansive content and are focused on new industry reports and research to inform them of advancements in solutions, trends impacting the market and opportunities for improvement
    • Influencers: Interested in both the broad thought leadership consumed through trusted third-party channels, as well as vendor-branded technology specifications, data sheets and use cases. This group emerges as the segment most interested in summarized content, including infographics, video and blog commentary.
    • Decision Makers: Want to stay informed through research reports and analyst commentary but also expect to have access to data in order to speed and enable better decision making in the tail end of the decision funnel

    According to the report, the web is the main place business buyers begin their path to purchase with 68% starting at search engines. It also found that while buyers are seeking out input from trusted third-parties, facts and data-driven insights from vendors are the second most valued source of content in purchasing decisions.

    “B2B marketers annually invest an estimated $16.6 billion in digital content publishing to acquire business leads, influence customer specification and consideration, as well as educate and engage prospects,” says Donovan Neale-May, Executive Director of the CMO Council. “Despite spending about 25 percent of their marketing budgets on content creation, most companies lack the necessary strategies, competencies and best practices to effectively engage their markets, and very few have content performance metrics in place to measure effectiveness and calculate ROI.”

    As far as the actual reasons buyers are using content, the top five were: identifying best practices/best-of-breed solutions, determining where competitive differentiation can be achieved, clarifying the position of a specific vendor or partner, setting the strategic agenda and assessing areas of need and prioritization, and providing perspective from trusted/neutral sources.

    You can find the complete report here.

    Image via CMO Council

  • Gartner: European CRM Budgets To Be Strong In 2014

    European customer relationship management (CRM) budgets remain strong, despite economic uncertainty, according to a survey from Gartner. About half of those polled intend to increase CRM spending this year at an average increase of 2.5% over last year’s budgets.

    While plenty of them don’t yet know which way they’re going to go with their budgets, and more intend to keep them the same, as you can see from the graph below, very few plan to decrease. Less than any of the previous three years, in fact.

    Gartner research director Jim Davies said, “The survey findings highlight the continuing trend for organizations to commit to improving the management of their customer relationships. We are observing an increasing number of large, transformational projects being undertaken as organizations look to embrace social and mobile interactions for sales, marketing and customer support.”

    “Organizational commitment to the customer experience continues to rise, as business leaders appreciate the benefits of providing differentiated and consistent cross-channel experiences,” he added. “A new objective added to the list of options this year was “increase customer engagement,” which jumped into the No. 2 position and further demonstrates the growing desire of European organizations to get closer to their customers and have a more mutually beneficial relationship.”

    The firm projects that the CRM market in Western Europe will grow at over 9%, hitting $5.5 billion by the end of the year.

    The poll was conducted in Q4, and included organizations from 20 industries and 30 countries. According to the firm, both B2B and B2C companies were represented, and were evenly split between those with a business and those with an IT focus. There were 102 respondents in all.

    Image via Gartner

  • Infographic Looks At B2B Social Media Potential For 2014

    Infographic Looks At B2B Social Media Potential For 2014

    UK-based Real Business Rescue has gathered some findings about B2B social media use to project what’s in store for the remainder of the year. Data comes from a bunch of sources including eMarketer, Social Media Examiner, InternetRetailer, BusinessInsider, MediaBistro, AdAge and others.

    Among said projections is that social media advertising will see “explosive growth” throughout the year and into the future.

    It looks at the top social media sites by unique monthly visitors, as well as those adopted by B2B businesses (guess which one is tied with Facebook). It goes on to examine B2B social media budgets, marketing tactics and marketing goals, and throws in a few tips for good measure.

    Take a look.

    [via Social Media Today]

    Image via Real Business Rescue

  • Forrester: Brands Are Disillusioned With Facebook

    Facebook is failing marketers, according to Forrester’s Vice President and Principal Analyst, who says he’s talked to brands, who are becoming increasingly frustrated.

    This isn’t the first time Nate Elliott has criticized Facebook. Last fall, he wrote an open letter to Mark Zuckerberg about Facebook failing marketers, generating a fair amount of industry discussion. In that, he told the CEO that a Forrester survey of nearly 400 marketers and eBusiness executives told the firm that “Facebook creates less business value than any other digital marketing opportunity.”

    He included this graph:

    Facebook

    And that was before the company implemented its devastating News Feed algorithm changes, which all but killed organic visibility for brands who spent years acquiring “likes” from customers who wanted to see updates in their feeds.

    Even since then, Facebook has started cramming in more content from Pages users actually haven’t liked.

    But organic reach is one thing. Paid is another, right? According to Elliott, Facebook’s paid ad products “aren’t delivering results for most marketers” either.

    “Brands and agencies are now openly talking about their discontent,” he writes in a new blog post (via Business Insider). “Every day I talk to brands that are disillusioned with Facebook and are now placing their bets on other social sites — but few of them want to go on the record. Lately, though, more brands and agencies have started speaking openly to the media about how Facebook is failing them. One former Facebook advertiser referred to Facebook as ‘one of the most lucrative grifts of all time.’”

    That would be James Del, head of Gawker’s content studio in a recent DigiDay article. The rest of his statement was, “First, they convinced brands they needed to purchase all their fans and likes — even though everyone knows you can’t buy love; then, Facebook continues to charge those same brands money to speak to the fans they just bought.”

    “Marketers are worried many of their fans are ‘fake,’” continues Elliott. “Many marketers and many publishers are reporting that huge percentages of their fans come from emerging markets where they didn’t expect to find an audience. The kicker? They’re saying many of those fans don’t seem to interact with people or with branded content — they seem to do little other than ‘like’ thousands and thousands of brand pages. The conclusion some marketers are coming to: The paid ads Facebook encourages them to buy often lead to ‘fake’ fans generated by ‘like farms.’”

    He goes on to mention that one B2B marketer told him that Facebook’s “constant rule changes” are the biggest problem they have, and concludes that marketers don’t believe Facebook will ever “live up to its promise and become a valuable marketing channel.”

    This hasn’t stopped Facebook from raking in the ad dollars. In January, Facebook reported that its ad revenue was up 75% year-over-year at $2.34 billion (with 53% of that from mobile, which itself was up 23%).

    And yes, on the organic side of Facebook’s News Feed, things really are that bad. Earlier this month, research from Ogilvy found that the average organic reach of content published on brands’ Facebook Pages had fallen to 6% by last month (compared to 12% in October).

    As you can see, it’s even worse for Pages with more likes. Way to reward the brands creating the most engagement, Facebook.

    Those are some depressing lines, eh? They don’t exactly look like they’re about to change paths in March do they?

    Images via Forrester, Ogilvy

  • Oracle Is Buying BlueKai For Big Data Marketing

    Oracle Is Buying BlueKai For Big Data Marketing

    Oracle announced on Monday that it has signed an agreement to acquire cloud-based big data platform BlueKai, which offers a solution for personalizing marketing campaigns.

    According to Oracle, BlueKai has the “world’s largest third party data marketplace to augment a company’s proprietary customer data with actionable information” with over 700 million profiles.

    The company intends to integrate BlueKai with its Responsys offering for B2C purposes as well as Eloqua for B2B.

    “Modern marketers require new ways of acquiring, centralizing, interpreting, and activating customer data across marketing channels so that they can enhance the customer experience and maximize the return on their marketing spend,” said Steve Miranda, Executive Vice President, Applications Development, at Oracle. “The addition of BlueKai to the Oracle Marketing Cloud enables marketers to act on data across both known customers and new audiences and precisely target customers with a personalized message across all channels.”

    “As a leader in marketing data management, BlueKai’s innovative products convert fragmented and disparate marketing data into high-performance results for companies,” added BlueKai CEO Omar Tawakol. “We are thrilled to join Oracle and extend Oracle’s Customer Experience portfolio to include the industry’s most effective big data cloud platform for marketers.”

    Terms of the deal were not disclosed. AdExchanager estimates it at between $350M and $450M.

    Image via BlueKai

  • LinkedIn Releases Earnings, Announces Acquisition Of Bright

    LinkedIn Releases Earnings, Announces Acquisition Of Bright

    LinkedIn just released its Q4 and full year 2013 earnings, and announced an agreement to acquire data insights provider Bright for $120 million – 73% stock and 27% cash.

    “What LinkedIn does best is connect talent with opportunity at massive scale,” said Deep Nishar, SVP of Products and User Experience. “By leveraging Bright’s data-driven matching technology, machine-learning algorithms and domain expertise, we can accelerate our efforts and build out the Economic Graph.”

    Bright Founder Eduardo Vivas added, “We’re excited to join LinkedIn because the company shares a similar vision and is equally obsessed about using data and algorithms to connect prospects and employers.”

    LinkedIn will gain “several” of Bright’s employees including engineering and product talent.

    In its earnings report, LinkedIn reported $447.2 million in revenue for the fourth quarter, up 47% year-over-year. Net income was $3.8 million, compared to $11.5 million for the same quarter last year.

    LinkedIn

    “Solid fourth quarter performance capped another successful year where improvements in scale and relevance across our platform led to strong member engagement,” said CEO Jeff Weiner. Moving forward, we are investing significantly in a focused number of long-term initiatives that will allow us to realize our vision to create economic opportunity for every member of the global workforce.”

    The social network has about 277 million members. It’s been getting over 2 new members per second, and has 187 million monthly unique visitors.

    Professionals outside of the U.S. make up 66% of LinkedIn’s membership, Weiner said on the earnings call. He expects most access to come from mobile in 2014.

    Here’s the release in its entirety:

    MOUNTAIN VIEW, Calif., February 6, 2014 – LinkedIn Corporation (NYSE: LNKD), the world’s largest professional network on the Internet, with approximately 277 million members, reported its quarterly results for the fourth quarter of 2013:

     

    • Revenue for the fourth quarter was $447.2 million, an increase of 47% compared to $303.6 million in the fourth quarter of 2012.
    • Net income for the fourth quarter was $3.8 million, compared to net income of $11.5 million for the fourth quarter of 2012. Non-GAAP net income for the fourth quarter was $48.2 million, compared to $40.2 million for the fourth quarter of 2012. Non-GAAP measures exclude tax-affected stock-based compensation expense and tax-affected amortization of acquired intangible assets.
    • Adjusted EBITDA for the fourth quarter was $111.4 million, or 25% of revenue, compared to $78.6 million for the fourth quarter of 2012, or 26% of revenue.
    • GAAP diluted EPS for the fourth quarter was $0.03, compared to GAAP diluted EPS of $0.10 for the fourth quarter 2012; non-GAAP diluted EPS for the fourth quarter was $0.39, compared to non-GAAP diluted EPS of $0.35 for the fourth quarter of 2012.

     

    “Solid fourth quarter performance capped another successful year where improvements in scale and relevance across our platform led to strong member engagement,” said Jeff Weiner, CEO of LinkedIn. “Moving forward, we are investing significantly in a focused number of long-term initiatives that will allow us to realize our vision to create economic opportunity for every member of the global workforce.”

    Fourth Quarter Operating Summary

     

    • Talent Solutions: Revenue from Talent Solutions products totaled $245.6 million, an increase of 53% compared to the fourth quarter of 2012. Talent Solutions revenue represented 55% of total revenue in the fourth quarter of 2013, compared to 53% in the fourth quarter of 2012.
    • Marketing Solutions: Revenue from Marketing Solutions products totaled $113.5 million, an increase of 36% compared to the fourth quarter of 2012. Marketing Solutions revenue represented 25% of total revenue in the fourth quarter of 2013, compared to 27% in the fourth quarter of 2012.
    • Premium Subscriptions: Revenue from Premium Subscriptions products totaled $88.1 million, an increase of 48% compared to the fourth quarter of 2012. Premium Subscriptions represented 20% of total revenue in the fourth quarter of 2013 and 2012.

     

    Revenue from the U.S. totaled $271.1 million, and represented 61% of total revenue in the fourth quarter of 2013. Revenue from international markets totaled $176.1 million, and represented 39% of total revenue in the fourth quarter of 2013.

    Revenue from the field sales channel totaled $270.7 million, and represented 61% of total revenue in the fourth quarter of 2013. Revenue from the online, direct sales channel totaled $176.5 million, and represented 39% of total revenue in the fourth quarter of 2013.

    For additional information, please see the “Selected Company Metrics and Financials” page on LinkedIn’s Investor Relations site.

    Fourth Quarter Highlights and Strategic Announcements

    In the fourth quarter of 2013:

     

    • LinkedIn launched several new products including a re-imagined iPad app, and a new Pulse app integrated with LinkedIn to deliver the most relevant news and professional insights. Mobile apps continue to drive deeper mobile engagement, with mobile now representing 41% of traffic to LinkedIn.
    • LinkedIn hosted its annual Talent Connect conference, the largest talent acquisition conference in the world with over 3,000 attendees in the US and 1,000 attendees in the UK. During the conference, LinkedIn unveiled a completely mobilized version of its product experience with the launch of Recruiter Mobile, Mobile Work With Us ads, Sponsored Jobs for the homepage feed, and the ability for candidates to apply for jobs via mobile.
    • LinkedIn broadened its Marketing Solutions product offerings with the launch of Showcase pages, giving B2B marketers the most effective tool to connect their brands with professionals. Marketing Solutions also benefited from the first full quarter of Sponsored Updates, contributing 13% of product segment revenue.

     

    “We ended 2013 in a strong position across engagement and monetization, and we are investing aggressively in 2014 for both our member and customer platforms,” said Steve Sordello, CFO of LinkedIn.

    Business Outlook

    LinkedIn is providing guidance for the first quarter and full year of 2014:

     

    • Q1 2014 Guidance: Revenue is expected to range between $455 million and $460 million. Adjusted EBITDA is expected to range between $106 million and $108 million. The company expects depreciation and amortization to be approximately $48 million, and stock-based compensation to be approximately $68 million.
    • Full Year 2014 Guidance: Revenue is expected to range between $2.02 billion and $2.05 billion. Adjusted EBITDA is expected to be approximately $490 million. The company expects depreciation and amortization to be approximately $225 million, and stock-based compensation to be approximately $325 million.

     

    Quarterly Results Webcast and Conference Call

    LinkedIn will host a webcast and conference call to discuss its fourth quarter 2013 financial results and business outlook today at 2:00 p.m. Pacific Time. Jeff Weiner and Steve Sordello will host the webcast, which can be viewed on the investor relations section of the LinkedIn website at http://investors.linkedin.com/. This call will contain forward-looking statements and other material information regarding the company’s financial and operating results. Following completion of the call, a recorded replay of the webcast will be available on the website.

    Upcoming Events

    Management will participate in upcoming financial Q&A discussions at industry events on February 11, 2014, March 3, 2014, and March 12, 2014. LinkedIn will furnish a link to these events on its investor relations website, http://investors.linkedin.com/ for both the live and archived webcasts.

    About LinkedIn

    Founded in 2003, LinkedIn connects the world’s professionals to make them more productive and successful. With approximately 277 million members worldwide, including executives from every Fortune 500 company, LinkedIn is the world’s largest professional network on the Internet. The company has a diversified business model with revenue coming from Talent Solutions, Marketing Solutions and Premium Subscriptions products. Headquartered in Silicon Valley, LinkedIn has offices across the globe.

    Non-GAAP Financial Measures

    To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the company uses the following non-GAAP financial measures: adjusted EBITDA, non-GAAP net income, and non-GAAP diluted EPS (collectively the “non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

    The company excludes the following items from one or more of its non-GAAP measures:

    Stock-based compensation. The company excludes stock-based compensation because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. The company further believes this measure is useful to investors in that it allows for greater transparency to certain line items in its financial statements and facilitates comparisons to competitors’ operating results.

    Amortization of acquired intangible assets. The company excludes amortization of acquired intangible assets because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. In addition, excluding this item from various non-GAAP measures facilitates internal comparisons to historical operating results and comparisons to competitors’ operating results.

    Income tax effect of non-GAAP adjustments. The company adjusts non-GAAP net income by including the income tax effects of excluding stock-based compensation and the amortization of acquired intangible assets. The company believes that the inclusion of the income tax effects provides additional transparency to the overall or “after tax” effects of excluding these items from non-GAAP net income.

    For more information on the non-GAAP financial measures, please see the “Reconciliation of GAAP to Non-GAAP Financial Measures” table in this press release. This accompanying table has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. Additionally, the company has not reconciled adjusted EBITDA guidance to net income guidance because it does not provide guidance for either other income (expense), net, or provision for income taxes, which are reconciling items between net income and adjusted EBITDA. As items that impact net income are out of the company’s control and/or cannot be reasonably predicted, the company is unable to provide such guidance. Accordingly, a reconciliation to net income is not available without unreasonable effort.

    Safe Harbor Statement

    “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release and the accompanying conference call contain forward-looking statements about our products, including our investments in products, technology and other key strategic areas, certain non-financial metrics, such as member growth and engagement, and our expected financial metrics such as revenue, adjusted EBITDA, depreciation and amortization and stock-based compensation for the first quarter of 2014 and the full fiscal year 2014. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

    The risks and uncertainties referred to above include – but are not limited to – risks associated with: our limited operating history in a new and unproven market; engagement of our members; the price volatility of our Class A common stock; general economic conditions; expectations regarding the return on our strategic investments; execution of our plans and strategies, including with respect to mobile products and features; security measures and the risk that they may not be sufficient to secure our member data adequately or that we are subject to attacks that degrade or deny the ability of members to access our solutions; expectations regarding our ability to timely and effectively scale and adapt existing technology and network infrastructure to ensure that our solutions are accessible at all times with short or no perceptible load times; our ability to maintain our rate of revenue growth and manage our expenses and investment plans; our ability to accurately track our key metrics internally; members and customers curtailing or ceasing to use our solutions; our core value of putting members first, which may conflict with the short-term interests of the business; privacy and changes in regulations in the United States, Europe or elsewhere, which could impact our ability to serve our members or curtail our monetization efforts; litigation and regulatory issues; increasing competition; our ability to manage our growth; our ability to recruit and retain our employees; the application of US and international tax laws on our tax structure and any changes to such tax laws; acquisitions we have made or may make in the future; and the dual class structure of our common stock.

    Further information on these and other factors that could affect the company’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2012, as well as the company’s most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and additional information will also be set forth in our Form 10-K that will be filed for the year ended December 31, 2013, which should be read in conjunction with these financial results. These documents are or will be available on the SEC Filings section of the Investor Relations page of the company’s website athttp://investors.linkedin.com/. All information provided in this release and in the attachments is as of February 6, 2014, and LinkedIn undertakes no duty to update this information.

    Image via LinkedIn (Flickr)

  • IT Spending to Reach $3.8 Trillion This Year

    As the world has become more connected, the global economy has shifted significantly toward information technology. On the eve of the Consumer Electronics Show in Las Vegas, Market research firm Gartner this week predicted that global IT spending is set to grow 3.1% during 2014.

    The firm predicts global IT spending to reach $3.8 trillion by the end of this year, a modest increase over the $3.7 trillion that Gartner estimates was spent in the industry in 2013.

    The growth represents a shift from 2013, in which a nearly stagnant 0.4% growth was seen in IT spending. Last year’s spending was hindered by a 1.2% contraction in the devices segment, in which Gartner includes PCs and mobile devices. Tech device manufacturers in the last year have had to contend with heavy competition in increasingly saturated markets, which have driven down prices for smartphones, tablets, and PCs. Last year also saw further cannibalization of the PC market by tablets sales.

    Still, device spending is set to grow in 2014, up 4.3% to an estimated $697 billion, according to Gartner.

    Most of the growth in the IT market this coming year is predicted by Gartner to come from enterprise software. The segment is forecasted to grow 6.8% to around $320 billion in spending. As companies have come up against the crowded devices market, more of them (HP, Dell, and even Samsung being major examples) have been shifting focus toward enterprise solutions.

    “Investment is coming from exploiting analytics to make B2C processes more efficient and improve customer marketing efforts,” said Richard Gordon, managing VP at Gartner. “Investment will also be aligned to B2B analytics, particularly in the SCM space, where annual spending is expected to grow 10.6 percent in 2014. The focus is on enhancing the customer experience throughout the presales, sales and post sales processes.”

  • Amazon Kinesis Is Now Available To All AWS Customers

    Are you an Amazon Web Services customer looking for a new way to process streaming data in real-time? Well, you might have heard of a new service from AWS called Kinesis. It was previously only available to a few as part of a limited preview, but Amazon is now letting it out of the gate.

    Amazon Web Services announced today that Kinesis is now available to all its customers. It says the new service will help businesses and developers create applications that “take action on real-time data, and location-tracking events.” While this functionality can already be built into apps, AWS notes that many developers have to built it themselves and is oftentimes unreliable. With Kinesis, AWS promises a service that can do all the heavy lifting without developers having to lift a finger.

    “When we set out to build Amazon Kinesis, we wanted to eliminate the cost, effort, and expertise barriers that have prevented our customers from processing streaming data in real-time,” said Terry Hanold, Vice President, Cloud Commerce, AWS. “We’ve gotten great feedback from our preview customers, and it’s inspiring to see the innovative ways customers are using Amazon Kinesis, across applications as diverse as gaming, mobile, advertising, manufacturing, healthcare, e-commerce, and financial services.”

    So, how does Amazon Kinesis work in the real world? A few developers have had access to it for a while and shared their thoughts on what Kinesis has helped them achieve. The best example comes from Supercell, a mobile games developer that has a very real need for real-time data services.

    “Our player base has scaled at an incredible pace. Using AWS means we can rely on AWS tools in managing our infrastructure to match our growth,” said Sami Yliharju, Services Lead at Supercell. “We are using Amazon Kinesis for real-time delivery of game insight data sent by hundreds of our game engine servers. Amazon Kinesis enables our business-critical analytics and dashboard applications to reliably get the data streams they need, without delays. Amazon Kinesis also offloads a lot of developer burden in building a real-time, streaming data ingestion platform, and enables Supercell to focus on delivering games that delight players worldwide.”

    In a completely different use case scenario, Bizo, a B2B digital marketing platform, utilized Kinesis to free up their engineers’ time so they could work on advancing the company’s technology instead of maintaining what was already there.

    “Our business runs with a talented but small engineering staff; tools that save us time and reduce operational complexity allow us to focus on innovation,” said Donnie Flood, Vice President of Engineering at Bizo. “An Amazon Kinesis-based pipeline allows us to replace our existing, batch-oriented, data ingestion and aggregation mechanism, which forms the backbone of our data pipeline and reporting infrastructure. This reduces our operational burden and frees up our engineers’ time to focus on building targeted advertising solutions for our clients while Amazon Kinesis does the heavy lifting of scaling elastically in response to our growing business.”

    If you want to learn more about Kinesis, you can do so here.

    As a bonus, here’s a video that explains in greater detail what Kinesis can do for your app or business:

    Image via Amazon Web Services/YouTube

  • Forrester Report Finds Behavioral Marketing Data Is Working, But 45% Aren’t Capturing Data

    Forrester Report Finds Behavioral Marketing Data Is Working, But 45% Aren’t Capturing Data

    Forrester has put out a new report commissioned by Silverpop, surveying 157 U.S. marketers on behavioral data and automation.

    “Of the findings, the most notable might be that while marketers who leverage buyer insight / data in their campaigns experience significant biz benefits above their peers, behavioral data still remains, per Forrester, ‘the greatest untapped marketing asset’—with only 45% actually capturing this data in a way that’s both efficient and actionable,” a spokesperson tells WebProNews. “Having data is important, but remember, brands have to be able to use it—this means consolidating it within a single unified database for easy handling, etc. ”

    Essentially marketers have a lot of data, but it’s inherently disorganized and messy.

    The study was conducted in May, and found that when asked to assess the potential gain of taking specific actions with prospective customers based on their behaviors across channels, ROI and customer satisfaction/loyalty were the biggest perceived benefits (44%/42%).

    It also found that behavioral marketers are getting more sales. In the B2B space, they attributed 34% of total sales pipelines to behavioral marketing (about 10% higher than their peers at 26%). B2C marketers attributed 26% of their revenues to their behavioral programs (with peers at just 21%).

    “While marketers have come a long way in automating their efforts, not all are using marketing automation at its full potential and incorporating buyer behavior into their campaigns in order to deliver the most personal and engaging customer experiences possible,” said Bryan Brown, Silverpop director of product strategy. “Data is the fuel that powers today’s digital marketing campaigns and no insight is more valuable than what buyers tell you based on the actions they take. By capturing and then quickly acting on this behavioral data, marketers can form very rewarding individual relationships that lead to revenue and a deep sense of loyalty that can last a lifetime.”

    The report can be found here (download page).

    Image: Forrester

  • Study: Almost Everyone Is ‘Homing From Work,’ But More Are Working Longer Hours

    According to a new study, more workers are reporting a better work/life balance than they were two years ago. Captivate’s Office Pulse surveyed over 4,000 “white-collar” workers across North America, and found an 11% increase in the number of people reporting a health balance since 2011.

    “Though workers report working longer hours, they’re happier due to ‘homing from work,’ or taking care of personal and family needs during the work day,” a spokesperson for Captivate tells WebProNews. “It’s making workers happier.”

    The survey also found a 30% increase in respondents reporting working more than nine hours a day, making the findings even more interesting. They’re working more, but also claiming to have a better work/life balance.

    As many as 93% of respondents reported “homing from work”.

    “People seem to be getting more comfortable with putting in longer hours,” said Scott Marden, research director at Captivate Network. “Part of that appears to come from the growing ability to take care of personal business during the workday… It’s a definite shift and it’s impacting not only the way people work but also the types of issues and activities that are on their minds during the workday.”

    “What ‘Homing from Work’ says to me is that the channels that reach people during the workday should be used for more than B2B brands,” said Dan Levi, Captivate’s chief marketing officer. “This research points to new opportunities for reaching consumers when they are researching and purchasing products and services for themselves and their families.”

    The fastest growing “homing from work” activities, according to the firm, are entertainment (up 80% from 2011), surfing and shopping online (up 63%), running errands (up 31%), and shopping in retail stores (up 34%). Here’s a look at the types of products and services people are engaging with during the work day:

    Homing from Work

    “The workplace presents an under-utilized advertising opportunity,” said Levi. “People are researching and purchasing products, they are stepping out to take care of personal business and highly-targeted media channels like Captivate Network can effectively educate them on their options and alternatives. This study reinforces that there is an opportunity for marketers to make the phenomenon of ‘Homing from Work’, work for them.”

    You can find the full report here.

  • Demand Media To Split Into Two Public Companies, Earnings Released

    Demand Media announced today that its board of directors has authorized a plan for the company to explore separating into two separate public companies – one for its media business and one for its domain business.

    CEO Richard Rosenblatt said, “Both businesses have grown to become leaders in their respective markets, and we now want to provide additional operational and strategic flexibility to drive sustainable growth. We believe a separation will position each business to better pursue its specific strategic priorities and vision, as well as improve transparency for investors and enable the capital markets to better assess each company’s value, performance and potential.”

    “We intend to appropriately capitalize both companies to pursue their distinct growth opportunities, such as the upcoming launch of new generic Top Level Domains that is a transformative event for our domain services business, as well as further diversifying our content offerings in our media business,” he added.

    Demand Media expects a potential transaction to come within the next nine to twelve months. In the meantime, the company will work with outside advisers to develop plans for the the board’s further consideration and approval.

    The company also just released its Q4 and Fiscal 2012 financial results.

    On the earnings call, Rosenblatt said the company intends to increase its investment in its people, its content production, and its gTLD initiative. On the content side of things, it will evolve its content production arm (Demand Studios), and expects to double its investment in content this year, further develop its algorithm, add additional quality improvements (like those that helped it achieve recovery from the Panda update), and expand production capabilities.

    The company will also increase distribution by expanding its partner network, which doubled revenues in 2012. Rosenblatt says he expects its revenues to double again this year.

    They’re also planning on launching eHow in two more countries this year (after launching in Germany in Q4).

    Rosenblatt says they’ll diversify into new content models, and will expand beyond their core ad-driven model with new paid opportunities including subscription video and elearning content.

    On the gTLD front, he noted that Amazon and Google were the biggest players, and that their participation will lead to a bigger market for everyone.

    Demand Media ranked as a top 20 US web property throughout last year, and was ranked at number 13 in January, according to comScore. The company reached over 125 million unique visitors worldwide in January, and eHow (which was once famously hit by Google’s Panda update) was ranked number 12 in the U.S. with 62 million unique visitors in January.

    “We finished the year on a high note, posting record fourth quarter results and completing our fifth consecutive year of record revenue and Adjusted EBITDA,” said Rosenblatt. “We improved content quality and diversified our distribution channels by successfully revamping our content platform in 2012, and are now prepared to significantly increase our content investments in 2013. In addition, we became a leader in the generic Top Level Domain opportunity, due to substantial investments we made in 2012. We plan to increase this investment ahead of the expected launch later this year.”

    “As a result of these two different growth opportunities, we also announced today that our Board of Directors has authorized a plan to explore the separation of our business into two independent publicly-traded companies via a tax-free spin-off,” he added. “If approved, the separation will facilitate better operational and strategic flexibility, enabling each business to focus on its distinct priorities and growth opportunities.”

    Here’s the earnings release in its entirety:

    SANTA MONICA, Calif.–(BUSINESS WIRE)–Feb. 19, 2013– Demand Media, Inc. (NYSE: DMD), a leading digital media and domain services company, today reported financial results for the fourth quarter and fiscal year ended December 31, 2012.

    “We finished the year on a high note, posting record fourth quarter results and completing our fifth consecutive year of record revenue and Adjusted EBITDA,” saidRichard Rosenblatt, Chairman and CEO of Demand Media. “We improved content quality and diversified our distribution channels by successfully revamping our content platform in 2012, and are now prepared to significantly increase our content investments in 2013. In addition, we became a leader in the generic Top Level Domain opportunity, due to substantial investments we made in 2012. We plan to increase this investment ahead of the expected launch later this year.”

    Rosenblatt added: “As a result of these two different growth opportunities, we also announced today that our Board of Directors has authorized a plan to explore the separation of our business into two independent publicly-traded companies via a tax-free spin-off. If approved, the separation will facilitate better operational and strategic flexibility, enabling each business to focus on its distinct priorities and growth opportunities.”

    Financial Summary
    In millions, except per share amounts
    Three months ended Year ended
    December 31, December 31,
    2011 2012 Change 2011 2012 Change
    Total Revenue $ 84.4 $ 103.1 22% $ 324.9 $ 380.6 17%
    Content & Media Revenue ex-TAC(1) $ 49.9 $ 62.3 25% $ 193.0 $ 227.0 18%
    Registrar Revenue 31.4 34.5 10% 119.4 134.2 12%
    Total Revenue ex-TAC(1) $ 81.3 $ 96.8 19% $ 312.4 $ 361.1 16%
    Income (loss) from Operations $ (4.8 ) $ 6.1 NA $ (13.1 ) $ 8.7 NA
    Adjusted EBITDA(1) $ 23.7 $ 29.4 24% $ 86.0 $ 103.4 20%
    Net income (loss) $ (6.4 ) $ 4.7 NA $ (18.5 ) $ 6.2 NA
    Adjusted net income(1) $ 6.8 $ 10.8 60% $ 21.9 $ 34.3 57%
    EPS – diluted $ (0.08 ) $ 0.05 NA $ (0.27 ) $ 0.07 NA
    Adjusted EPS(1) $ 0.08 $ 0.12 50% $ 0.25 $ 0.39 56%
    Cash Flow from Operations $ 27.2 $ 26.0 (4)% $ 85.3 $ 91.0 7%
    Free Cash Flow(1)(2) $ 18.3 $ 17.1 (7)% $ 19.5 $ 62.3 219%
     
    (1) These non-GAAP financial measures are described below and reconciled to their comparable GAAP measures in the accompanying tables. Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA.
    Reconciliations for both measures are available on the investor relations section of the Company’s website.
    (2) In 2012, the Company invested $18.2 million in generic Top Level Domain (“gTLD”) applications, which did not impact its recurring Free Cash Flow metric.

    Q4 2012 Financial Summary:

    • Content & Media revenue ex-TAC grew 25% year-over-year, driven by 24% page view growth on the Company’s owned & operated properties as well as 37% growth in network RPMs ex-TAC, reflecting higher revenue from network content partners.
    • Registrar revenue grew 10% year-over-year, driven by an increase in the number of domains on our platform, due primarily to growth from new partners.
    • Adjusted EBITDA increased 24% year-over-year, resulting in 110 basis points of margin expansion to 30.3% of Revenue ex-TAC. This improvement was driven by the growth in higher margin Content & Media revenue and operating leverage.

    “In 2012 we generated over $60 million of free cash flow, which more than funded our acquisition of Name.com and the repurchase of nearly $9 million of our common stock,” said Demand Media’s CFO Mel Tang. “We plan to continue reinvesting our strong cash flows into long-term growth opportunities, such as our gTLD initiative as well as growing and diversifying our content offerings.”

    Business Highlights:

    • Demand Media ranked as a top 20 US web property throughout 2012, and ranked #13 in January 2013.(1)
    • Demand Media reached more than 125 million unique visitors worldwide in January 2013.(1)
    • eHow.com ranked as the #12 website in the US, with 62.0 million unique users inJanuary 2013.(1)
    • LIVESTRONG.COM/eHow Health ranked as the #3 Health property in the US inJanuary 2013.(1)
    • Cracked ranked as the #1 Humor property in the US in January 2013.(1)
    • On December 31, 2012, Demand Media acquired retail registrar Name.com, expanding its registrar platform as it prepares for the historic release of new gTLDs.
    • During the fourth quarter of 2012, Demand Media repurchased approximately 572,000 shares of common stock for $4.9 million under its Board-authorized $50.0 million share repurchase program. To date, the Company has repurchased approximately 4.0 million shares of common stock for $30.8 million.
    • On February 19, 2013, the Company announced that its Board of Directors has authorized a plan to explore the separation of its business into two distinct publicly traded companies.

    (1) Source: comScore.

    Operating Metrics:
    Three months ended Year ended
    December 31, December 31,
    % %
    2011 2012 Change 2011 2012 Change
    Content & Media Metrics:
    Owned and operated
    Page views(1) (in millions) 2,696 3,354 24 % 10,378 13,192 27 %
    RPM(2) $ 14.53 $ 14.55 — $ 15.14 $ 13.53 (11 )%
    Network of customer websites
    Page views(1)(in millions) 4,935 4,530 (8 )% 17,436 18,989 9 %
    RPM(2) $ 2.81 $ 4.38 56 % $ 2.77 $ 3.58 29 %
    RPM ex-TAC(3) $ 2.18 $ 2.98 37 % $ 2.06 $ 2.55 24 %
    Registrar Metrics:
    End of Period # of Domains(4) (in millions) 12.7 13.7 8 % 12.7 13.7 8 %
    Average Revenue per Domain(5) $ 10.08 $ 10.09 — $ 10.08 $ 10.19 1 %
    ____________________
    (1) Page views represent the total number of web pages viewed across (a) our owned and operated websites and/or (b) our network of customer websites, to the extent that the viewed customer web pages host the Company’s monetization, social media and/or content services.
    (2) RPM is defined as Content & Media revenue per one thousand page views.
    (3) RPM ex-TAC is defined as Content & Media Revenue ex-TAC per one thousand page views.
    (4) Domain is defined as an individual domain name paid for by a third-party customer where the domain name is managed through our Registrar service offering.
    (5) Average revenue per domain is calculated by dividing Registrar revenue for a period by the average number of domains registered in that period. Average revenue per domain for partial year periods is annualized.
    Beginning July 1, 2011, the number of net new domains has been adjusted to include only new registered domains added to our platform for which the Company has recognized revenue. Excluding the impact of this change, average revenue per domain during the three months and year ended December 31, 2012 would have increased 1% and decreased 4%, respectively, compared to the corresponding prior-year periods.

    Q4 2012 Operating Metrics:

    • Owned & Operated page views increased 24% year-over-year, driven primarily by strong traffic growth on eHow.com and LIVESTRONG.COM. Owned & Operated RPMs were relatively flat year-over-year.
    • Network page views decreased 8% year-over-year to 4.5 billion, due primarily to lower traffic from our social media partners. Network RPM ex-TAC increased 37% year-over-year, reflecting higher revenue from our growing network of content partners, primarily YouTube.
    • End of period domains increased 8% year-over-year to 13.7 million, driven primarily by the addition of higher volume customers and continued growth from existing resellers, with average revenue per domain flat year-over-year.

    Business Outlook

    The following forward-looking information includes certain projections made by management as of the date of this press release. The Company does not intend to revise or update this information, except as required by law, and may not provide this type of information in the future. Due to a variety of factors, actual results may differ significantly from those projected. The factors that may affect results include, without limitation, the factors referenced later in this announcement under the caption “Cautionary Information Regarding Forward-Looking Statements.” These and other factors are discussed in more detail in the Company’s filings with the Securities and Exchange Commission.

    Excluding $5 to $10 million of estimated expenses in 2013 associated with the formation of the Company’s gTLD initiative, the Company’s guidance for the first quarter endingMarch 31, 2013 and fiscal year ending December 31, 2013 is as follows:

    First Quarter 2013

    • Revenue in the range of $100.0 – $102.0 million
    • Revenue ex-TAC in the range of $94.0 – $96.0 million
    • Adjusted EBITDA in the range of $23.5 – $25.5 million
    • Adjusted EPS in the range of $0.07 – $0.08 per share
    • Weighted average diluted shares 89.0 – 90.0 million

    Full Year 2013

    • Revenue in the range of $435.0 – $443.0 million
    • Revenue ex-TAC in the range of $410.0 – $418.0 million
    • Adjusted EBITDA in the range of $110.0 – $115.0 million
    • Adjusted EPS in the range of $0.39 – $0.43 per share
    • Weighted average diluted shares 89.0 – 91.0 million

    Conference Call and Webcast Information

    Demand Media will host a corresponding conference call and live webcast at 5:00 p.m. Eastern time today. To access the conference call, dial 877.565.1268 (for domestic participants) or 937.999.3108 (for international participants). The conference ID is 90583374. To participate on the live call, analysts should dial-in at least 10 minutes prior to the commencement of the call. A live webcast also will be available on the Investor Relations section of the Company’s corporate website at http://ir.demandmedia.com and via replay beginning approximately two hours after the completion of the call.

    About Non-GAAP Financial Measures

    To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we use certain non-GAAP financial measures described below. The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation of Non-GAAP Measures to Unaudited Consolidated Statements of Operations” included at the end of this release.

    Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA. While the dollar value of each measure is the same, a comparison of the historical reconciliation of both measures is provided in our supplemental financial schedules posted on the investor relations section of our corporate website athttp://ir.demandmedia.com. The non-GAAP financial measures presented in this release are the primary measures used by the Company’s management and board of directors to understand and evaluate its financial performance and operating trends, including period to period comparisons, to prepare and approve its annual budget and to develop short and long term operational plans. Additionally, Adjusted EBITDA is the primary measure used by the compensation committee of the Company’s board of directors to establish the funding targets for and fund its annual bonus pool for the Company’s employees and executives. We believe our presented non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) management frequently uses them in its discussions with investors, commercial bankers, securities analysts and other users of its financial statements.

    Revenue ex-TAC is defined by the Company as GAAP revenue less traffic acquisition costs (TAC). TAC comprises the portion of Content & Media GAAP revenue shared with the Company’s network customers. Management believes that Revenue ex-TAC is a meaningful measure of operating performance because it is frequently used for internal managerial purposes and helps facilitate a more complete period-to-period understanding of factors and trends affecting the Company’s underlying revenue performance of its Content & Media service offering.

    Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is defined by the Company as net income (loss) before income tax expense, other income (expense), interest expense (income), depreciation, amortization, stock-based compensation, as well as the financial impact of acquisition and realignment costs, the formation expenses directly related to its gTLD initiative, expenditures related to the separation of Demand Media into two distinct publicly traded companies, and any gains or losses on certain asset sales or dispositions. Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these expenses to be indicative of the Company’s ongoing operating results or future outlook.

    Management believes that these non-GAAP financial measures reflect the Company’s business in a manner that allows for meaningful period to period comparisons and analysis of trends. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period to period comparisons of the Company’s underlying recurring revenue and operating costs, which is focused more closely on the current costs necessary to utilize previously acquired long-lived assets. In addition, management believes that it can be useful to exclude certain non-cash charges because the amount of such expenses is the result of long-term investment decisions in previous periods rather than day-to-day operating decisions. For example, due to the long-lived nature of a majority of its media content, the revenue generated by the Company’s media content assets in a given period bears little relationship to the amount of its investment in media content in that same period. Accordingly, management believes that content acquisition costs represent a discretionary long-term capital investment decision undertaken at a point in time. This investment decision is clearly distinguishable from other ongoing business activities, and its discretionary nature and long-term impact differentiate it from specific period transactions, decisions regarding day-to-day operations, and activities that would have an immediate impact on operating or financial performance if materially changed, deferred or terminated.

    Adjusted Earnings Per Share is defined by the Company as Adjusted Net Income divided by the weighted average number of shares outstanding. Adjusted Net Income is defined by the Company as net income (loss) before the effect of stock-based compensation, amortization of intangible assets acquired via business combinations, accelerated amortization of intangible assets removed from service, acquisition and realignment costs, the formation expenses directly related to its gTLD initiative, expenditures related to the separation of Demand Media into two distinct publicly traded companies, and any gains or losses on certain asset sales or dispositions, and is calculated using the application of a normalized effective tax rate. Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these expenses to be indicative of the Company’s ongoing operating results or future outlook.

    Management believes that Adjusted Net Income and Adjusted Earnings Per Share provide investors with additional useful information to measure the Company’s underlying financial performance, particularly from period to period, because these measures are exclusive of certain non-cash expenses not directly related to the operation of its ongoing business (such as amortization of intangible assets acquired via business combinations, as well as certain other non-cash expenses such as purchase accounting adjustments and stock-based compensation) and include a normalized effective tax rate based on the Company’s statutory tax rate.

    Discretionary Free Cash Flow is defined by the Company as net cash provided by operating activities excluding cash outflows from acquisition and realignment activities, the formation expenses directly related to its gTLD initiative, and expenditures related to the separation of Demand Media into two distinct publicly traded companies, less capital expenditures to acquire property and equipment. Free Cash Flow is defined by the Company as Discretionary Free Cash Flow less investments in intangible assets and is not impacted by gTLD application payments, which were $18.2 million in 2012. Management believes that Discretionary Free Cash Flow and Free Cash Flow provide investors with additional useful information to measure operating liquidity because they reflect the Company’s underlying cash flows from recurring operating activities after investing in capital assets and intangible assets. These measures are used by management, and may also be useful for investors, to assess the Company’s ability to generate cash flow for a variety of strategic opportunities, including reinvestment in the business, pursuing new business opportunities, potential acquisitions, payment of dividends and share repurchases.

    The use of these non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense, or cash flows that affect the Company’s operations. An additional limitation of these non-GAAP financial measures is that they do not have standardized meanings, and therefore other companies may use the same or similarly named measures but exclude different items or use different computations. Management compensates for these limitations by reconciling these non-GAAP financial measures to their most comparable GAAP financial measures within its financial press releases. Non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore comparability may be limited. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The accompanying tables have more details on the GAAP financial measures and the related reconciliations.

    About Demand Media

    Demand Media, Inc. (NYSE: DMD) is a leading digital media and domain services company that informs and entertains one of the internet’s largest audiences, helps advertisers find innovative ways to engage with their customers and enables publishers, individuals and businesses to expand their online presence. Headquartered in Santa Monica, CA, Demand Media has offices in North America, South America and Europe. For more information about Demand Media, please visit www.demandmedia.com.

    Cautionary Information Regarding Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements involve risks and uncertainties regarding the Company’s future financial performance, and are based on current expectations, estimates and projections about our industry, financial condition, operating performance and results of operations, including certain assumptions related thereto. Statements containing words such as guidance, may, believe, anticipate, expect, intend, plan, project, projections, business outlook, and estimate or similar expressions constitute forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered an indication of future performance. Potential risks and uncertainties include, among others: our ability to complete a separation of our business as announced herein and unanticipated developments that may delay or negatively impact such a transaction; the possibility that we may decide not to proceed with the separation of our business as announced herein if we determine that alternative opportunities are more favorable to our stockholders; the possibility that we decide to separate our business in a manner different from that disclosed herein; the impact and possible disruption to our operations from pursuing such a separation transaction announced herein; our ability to retain key personnel; the high costs we will likely incur in connection with such a transaction, which we would not be able to recoup if such a transaction is not consummated; the expectation that the transaction announced herein will be tax-free; revenue and growth expectations for the two independent companies following the separation of our business; the ability of each business to operate as an independent entity upon completion of such a transaction; changes in the methodologies of internet search engines, including ongoing algorithmic changes made by Google as well as possible future changes, and the impact such changes may have on page view growth and driving search related traffic to our owned and operated websites and the websites of our network customers; changes in our content creation and distribution platform, including the possible repurposing of content to alternate distribution channels, reduced investments in intangible assets or the sale or removal of content; our ability to successfully launch, produce and monetize new content formats; the inherent challenges of estimating the overall impact on page views and search driven traffic to our owned and operated websites based on the data available to us as internet search engines continue to make adjustments to their search algorithms; our ability to compete with new or existing competitors; our ability to maintain or increase our advertising revenue; our ability to continue to drive and grow traffic to our owned and operated websites and the websites of our network customers; our ability to effectively monetize our portfolio of content; our dependence on material agreements with a specific business partner for a significant portion of our revenue; future internal rates of return on content investment and our decision to invest in different types of content in the future, including premium video and other formats of text content; our ability to attract and retain freelance creative professionals; changes in our level of investment in media content intangibles; the effects of changes or shifts in internet marketing expenditures, including from text to video content as well as from desktop to mobile content; the effects of shifting consumption of media content from desktop to mobile; the effects of seasonality on traffic to our owned and operated websites and the websites of our network customers; our ability to continue to add partners to our registrar platform on competitive terms; our ability to successfully pursue and implement our gTLD initiative; changes in stock-based compensation; changes in amortization or depreciation expense due to a variety of factors; potential write downs, reserves against or impairment of assets including receivables, goodwill, intangibles (including media content) or other assets; changes in tax laws, our business or other factors that would impact anticipated tax benefits or expenses; our ability to successfully identify, consummate and integrate acquisitions; our ability to retain key customers and key personnel; risks associated with litigation; the impact of governmental regulation; and the effects of discontinuing or discontinued business operations. From time to time, we may consider acquisitions or divestitures that, if consummated, could be material. Any forward-looking statements regarding financial metrics are based upon the assumption that no such acquisition or divestiture is consummated during the relevant periods. If an acquisition or divestiture were consummated, actual results could differ materially from any forward-looking statements. More information about potential risk factors that could affect our operating and financial results are contained in our annual report on Form 10-K for the fiscal year endingDecember 31, 2011 filed with the Securities and Exchange Commission(http://www.sec.gov) on February 24, 2012, and as such risk factors may be updated in our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, including, without limitation, information under the captions Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

    Furthermore, as discussed above, the Company does not intend to revise or update the information set forth in this press release, except as required by law, and may not provide this type of information in the future.

    Demand Media, Inc. and Subsidiaries
    Unaudited Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts)
    Three months ended Year ended
    December 31, December 31,
    2011 2012 2011 2012
    Revenue $ 84,415 $ 103,142 $ 324,866 $ 380,578
    Operating expenses
    Service costs (exclusive of amortization of intangible assets shown separately below) (1) (2) 40,198 48,865 155,830 181,018
    Sales and marketing (1) (2) 9,325 12,823 37,394 46,501
    Product development (1) (2) 9,462 9,719 38,146 40,708
    General and administrative (1) (2) 13,803 16,171 59,451 63,025
    Amortization of intangible assets 16,393 9,460 47,174 40,676
    Total operating expenses 89,181 97,038 337,995 371,928
    Income (loss) from operations (4,766 ) 6,104 (13,129 ) 8,650
    Other income (expense)
    Interest income 4 8 56 42
    Interest expense (151 ) (157 ) (861 ) (622 )
    Other income (expense), net (75 ) (34 ) (413 ) (111 )
    Total other expense (222 ) (183 ) (1,218 ) (691 )
    Income (loss) before income taxes (4,988 ) 5,921 (14,347 ) 7,959
    Income tax expense (1,438 ) (1,172 ) (4,177 ) (1,783 )
    Net (loss) income $ (6,426 ) $ 4,749 $ (18,524 ) $ 6,176
     
    (1) Stock-based compensation expense included in the line items above:
    Service costs $ 711 $ 679 $ 2,052 $ 2,820
    Sales and marketing 1,416 1,597 4,857 6,118
    Product development 1,364 1,283 5,013 6,452
    General and administrative 3,263 3,823 16,934 15,978
    Total stock-based compensation expense $ 6,754 $ 7,382 $ 28,856 $ 31,368
    (2) Depreciation included in the line items above:
    Service costs $ 3,770 $ 3,663 $ 16,075 $ 14,452
    Sales and marketing 127 108 423 453
    Product development 308 238 1,466 1,025
    General and administrative 861 1,025 2,994 3,728
    Total depreciation $ 5,066 $ 5,034 $ 20,958 $ 19,658
    Income (loss) per common share:
    Net income (loss) $ (6,426 ) $ 4,749 $ (18,524 ) $ 6,176
    Cumulative preferred stock dividends (3) — — (2,477 ) —
    Net income (loss) attributable to common stockholders $ (6,426 ) $ 4,749 $ (21,001 ) $ 6,176
    Net income (loss) per share – basic (0.08 ) 0.06 (0.27 ) 0.07
    Net income (loss) per share – diluted (0.08 ) 0.05 (0.27 ) 0.07
    Weighted average number of shares – basic 83,592 86,140 78,646 84,553
    Weighted average number of shares – diluted 83,592 88,444 78,646 87,237
    ____________________
    (3) As a result of the Company’s initial public offering which was completed on January 31, 2011, all shares of the Company’s preferred stock were converted to common stock.
    Demand Media, Inc. and Subsidiaries
    Unaudited Condensed Consolidated Balance Sheets
    (In thousands)
    December 31, December 31,
    2011 2012
    Current assets
    Cash and cash equivalents $ 86,035 $ 102,933
    Accounts receivable, net 32,665 45,517
    Prepaid expenses and other current assets 8,656 6,041
    Deferred registration costs 50,636 57,718
    Total current assets 177,992 212,209
    Property and equipment, net 32,626 35,467
    Intangible assets, net 111,304 91,061
    Goodwill 256,060 267,034
    Deferred registration costs 9,555 11,320
    Other long-term assets 2,566 20,906
    Total assets $ 590,103 $ 637,997
    Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
    Current liabilities
    Accounts payable $ 10,046 $ 10,471
    Accrued expenses and other current liabilities 33,932 40,489
    Deferred tax liabilities 18,288 18,892
    Deferred revenue 71,109 75,142
    Total current liabilities 133,375 144,994
    Deferred revenue 14,802 15,965
    Other liabilities 1,660 4,847
    Total liabilities 149,837 165,806
    Stockholders’ equity (deficit)
    Common stock and additional paid-in capital 528,042 562,703
    Treasury stock (17,064 ) (25,932 )
    Accumulated other comprehensive income 59 15
    Accumulated deficit (70,771 ) (64,595 )
    Total stockholders’ equity (deficit) 440,266 472,191
    Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $ 590,103 $ 637,997
    Demand Media, Inc. and Subsidiaries
    Unaudited Condensed Consolidated Statements of Cash Flows
    (In thousands)
    Three months ended Year ended
    December 31, December 31,
    2011 2012 2011 2012
    Cash flows from operating activities:
    Net income (loss) $ (6,426 ) $ 4,749 $ (18,524 ) $ 6,176
    Adjustments to reconcile net loss to net cash provided by operating activities:
    Depreciation and amortization 21,459 14,494 68,132 60,334
    Stock-based compensation 6,741 7,382 28,730 31,368
    Other 1,128 1,134 3,491 1,717
    Net change in operating assets and liabilities, net of effect of acquisitions 4,322 (1,722 ) 3,520 (8,612 )
    Net cash provided by operating activities 27,224 26,037 85,349 90,983
    Cash flows from investing activities:
    Purchases of property and equipment (4,222 ) (5,283 ) (18,246 ) (17,708 )
    Purchases of intangibles (5,294 ) (4,647 ) (49,283 ) (13,237 )
    Payments for gTLD applications — — — (18,202 )
    Cash paid for acquisitions (38 ) (16,200 ) (31,010 ) (17,480 )
    Other — — — (855 )
    Net cash used in investing activities (9,554 ) (26,130 ) (98,539 ) (67,482 )
    Cash flows from financing activities:
    Proceeds from issuance of common stock, net (145 ) — 78,480 —
    Repurchases of common stock (13,336 ) (4,913 ) (17,064 ) (8,869 )
    Proceeds from exercises of stock options and contributions to ESPP 3,242 1,451 7,599 12,467
    Net taxes paid on RSUs vesting and options exercised (364 ) (6,151 ) (725 ) (9,496 )
    Other (168 ) (258 ) (1,354 ) (668 )
    Net cash provided by (used in) financing activities (10,771 ) (9,871 ) 66,936 (6,566 )
    Effect of foreign currency on cash and cash equivalents (18 ) (19 ) (49 ) (37 )
    Change in cash and cash equivalents 6,881 (9,983 ) 53,697 16,898
    Cash and cash equivalents, beginning of period 79,154 112,916 32,338 86,035
    Cash and cash equivalents, end of period $ 86,035 $ 102,933 $ 86,035 $ 102,933
    Demand Media, Inc. and Subsidiaries
    Reconciliations of Non-GAAP Measures to Unaudited Consolidated Statements of Operations
    (In thousands, except per share amounts)
    Three months ended Year ended
    December 31, December 31,
    2011 2012 2011 2012
    Revenue ex-TAC:
    Content & Media revenue $ 53,032 $ 68,633 $ 205,450 $ 246,399
    Less: traffic acquisition costs (TAC) (3,111 ) (6,332 ) (12,495 ) (19,441 )
    Content & Media Revenue ex-TAC 49,921 62,301 192,955 226,958
    Registrar revenue 31,383 34,509 119,416 134,179
    Total Revenue ex-TAC $ 81,304 $ 96,810 $ 312,371 $ 361,137
    Adjusted EBITDA(1):
    Net income (loss) $ (6,426 ) $ 4,749 $ (18,524 ) $ 6,176
    Income tax expense 1,438 1,172 4,177 1,783
    Interest and other expense, net 222 183 1,218 691
    Depreciation and amortization(2) 21,459 14,494 68,132 60,334
    Stock-based compensation 6,754 7,382 28,856 31,368
    Acquisition and realignment costs(3) 271 314 2,099 446
    gTLD expense(4) — 1,061 — 2,650
    Adjusted EBITDA $ 23,718 $ 29,355 $ 85,958 $ 103,448
    Discretionary and Total Free Cash Flow:
    Net cash provided by operating activities $ 27,224 $ 26,037 $ 85,349 $ 90,983
    Purchases of property and equipment (4,222 ) (5,283 ) (18,246 ) (17,708 )
    Acquisition and realignment cash flows 602 25 1,670 25
    gTLD expense cash flows(4) — 974 — 2,198
    Discretionary Free Cash Flow 23,604 21,753 68,773 75,498
    Purchases of intangible assets (5,294 ) (4,647 ) (49,283 ) (13,237 )
    Free Cash Flow(4)(5) $ 18,310 $ 17,106 $ 19,490 $ 62,261
    Adjusted Net Income:
    GAAP net income (loss) $ (6,426 ) $ 4,749 $ (18,524 ) $ 6,176
    (a) Stock-based compensation 6,754 7,382 28,856 31,368
    (b) Amortization of intangible assets – M&A 2,974 2,572 12,773 10,904
    (c) Content intangible assets removed from service(2) 5,898 237 5,898 2,055
    (d) Acquisition and realignment costs(3) 271 314 2,099 446
    (e) gTLD expense(4) — 1,061 — 2,650
    (f) Income tax effect of items (a) – (e) & application of 38% statutory tax rate to pre-tax income (2,707 ) (5,473 ) (9,229 ) (19,262 )
    Adjusted Net Income $ 6,764 $ 10,842 $ 21,873 $ 34,337
    Non-GAAP Adjusted Net Income per share – diluted $ 0.08 $ 0.12 $ 0.25 $ 0.39
    Shares used to calculate non-GAAP Adjusted Net Income per share – diluted(6) 86,758 88,444 88,541 87,237
    ___________________
    (1) Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA. While the dollar value of each measure does not differ, a comparison of the historical reconciliation of both measures is provided in our supplemental financial schedules available on the investor relations section of our corporate website.
    (2) In conjunction with its previously announced plans to improve its content creation and distribution platform, the Company elected to remove certain content assets from service, resulting in accelerated amortization expense of $5.9 million in the fourth quarter of 2011, and $1.8 million and $0.2 million in the first and fourth quarter of 2012, respectively.
    (3) Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these costs to be indicative of the Company’s core operating results.
    (4) Comprises formation expenses directly related to the Company’s gTLD initiative that did not generate associated revenue in 2012.
    (5) In 2012, the Company invested $18.2 million in gTLD applications, which did not impact its recurring Free Cash Flow metric.
    (6) Shares used to calculate non-GAAP Adjusted Net Income per share – diluted include the weighted average common stock for the periods presented and all dilutive common stock equivalents at each period. Amounts have been adjusted in 2011 to reflect the revised capital structure following the Company’s initial public offering which was completed on January 31, 2011, whereby the Company issued 5,175 shares of common stock and converted certain warrants and all of its previously outstanding convertible preferred stock into 62,155 shares of common stock as if those transactions were consummated on January 1, 2011.
    Demand Media, Inc. and Subsidiaries
    Unaudited GAAP Revenue, by Revenue Source
    (In thousands)
    Three months ended Year ended
    December 31, December 31,
    2011 2012 2011 2012
    Content & Media:
    Owned and operated websites $ 39,172 $ 48,796 $ 157,089 $ 178,511
    Network of customer websites 13,860 19,837 48,361 67,888
    Total Revenue – Content & Media 53,032 68,633 205,450 246,399
    Registrar 31,383 34,509 119,416 134,179
    Total Revenue $ 84,415 $ 103,142 $ 324,866 $ 380,578
    Three months ended Year ended
    December 31, December 31,
    2011 2012 2011 2012
    Content & Media:
    Owned and operated websites 46 % 47 % 48 % 47 %
    Network of customer websites 16 % 19 % 15 % 18 %
    Total Revenue – Content & Media 63 % 67 % 63 % 65 %
    Registrar 37 % 33 % 37 % 35 %
    Total Revenue 100 % 100 % 100 % 100 %

     

    Source: Demand Media, Inc.

  • LinkedIn Launches Highly Requested Ad API Program

    LinkedIn is rolling out a new ads API program on the LinkedIn Ads platform. Early partners include Adobe, Bizo, and Unified.

    “API access will empower the tens of thousands of advertisers who use the LinkedIn Ads platform to achieve their goals using custom-built tools and solutions,” a spokesperson for the company tells WebProNews.

    “Advertisers will benefit from a number of new opportunities made possible by the ads API program,” she adds. “They can now automatically generate dozens of campaigns and test hundreds of creative elements across LinkedIn’s B2B targeting facets. In addition, they can reallocate marketing spend across channels, including LinkedIn, in real time to optimize their goals.”

    Previously, advertisers have had to manage campaigns through LinkedIn’s self-serve interface.

    The company is offering API support for approved developers, who will gain access to LinkedIn’s online operations and sales team, as well as developer marketing programs and a direct line of communication with the product management team.

    LinkedIn says API access has been one of its most requested features. The company says it has 187 million members in over 200 countries, and nearly 3 billion monthly pageviews.

    Developers can apply for the partner program here.

  • Here’s What’s Working In Email Subject Lines

    Adestra put out an interesting report on what works in email subject lines and what doesn’t. Character count, word count and the keywords themselves are all key ingredients, and the study compares variables across different types of emails.

    For the report (via MarketingCharts), the firm analyzed 1.159 billion emails sent within the last year. They looked at the length of subject lines, as well as word selection.

    “In the B2B world, it’s clear that either short or long subject lines work best. Short subject lines (<30 characters) perform strongly, as do long subject lines (>90),” write Parry Malm and Mark Bonner, the authors of the report. “The key point here is to consider what the end objective for your campaign is, and tailor your subject line around that.”

    “More benefits can be communicated by using more characters,” they say. “In contrast to this, shorter, snappier subject lines that used 30 characters or less also performed well: this is the case for transactional or direct-action emails. Using a mid-range of characters in subject lines doesn’t yield strong results: the worst of both worlds. Anywhere between 30 and 60 characters is a dead zone, and will reduce the chances of opens and clicks in an email.”

    Subject Line Character Count

    Whe picture for word count looks similar:

    Subject line word count

    The report also examines different keywords for different types of emails. For discount offers, the word “sale” worked far better than “discount,” “free,” “save,” or “voucher”. For news emails, “news,” “update,” “breaking,” “alert,” and “bulletin” all worked better than “newsletter”. “Issue” worked better than “forecast,” “report,” “research,” “top stories,” “interview,” “video” “whitepaper” or “download”. “Latest” worked better than “special,” “exclusive,” or “innovate”.

    For business emails, using words like “money,” “revenue,” or “profit” worked better than using words like “ROI,” “asset,” or “industry”.

    It’s a pretty interesting study. You can download the whole thing here (it’s free).

  • Without Realtime Search, Google Risks Pushing News Seekers Away To Twitter

    Will Google ever restore its realtime search feature? Will Google and Twitter ever reach another agreement giving Google the access to Twitter’s firehose it needs to make the feature useful? Would the feature ever work without Twitter?

    These are questions we’ve asked repeatedly since the deal expired last year, and the realtime search feature went way. Given that Google’s mission is to organize the world’s information and make it universally accessible, with search being the flagship product, it seems that this is an area that Google should have nailed down. Unfortunately, that’s far from the case.

    Now, the best place to search if you want to find up to the second news and commentary about something that is happening “right now,” is undeniably Twitter. That might have still been the case even when Google had the feature, but Google had/has the luxury of being the starting point for search for most people.

    We recently had a conversation with Mark Schaefer, author of The Tao Of Twitter, and wanted to see what he thinks about this. We asked:

    How badly does Google need to get Twitter’s firehose back for realtime search? Do you think that Google is missing an important function without it? At the same time, is Twitter benefiting from people not going to Google for these kinds of searches?

    “Twitter is trying to reign things in as a way to create more opportunities for monetization,” Schaefer tells WebProNews. “To the extent they can do that, then yes, Twitter will benefit. The real-time results from Twitter are an irreplaceable, unique and highly valuable asset, especially when it comes to providing ‘warm’ search results based on timely comments from friends.”

    “It’s quite ironic that Google+ has been so conservative with providing access to their API,” he adds. “At SXSW last year, Google’s Vic Gundrota said before they made it available, they wanted to make sure it was the right thing to do so people would not be disappointed down the road. In hindsight, his comments seem prescient!”

    Since Google got rid of the feature, Twitter has done things to improve its own realtime search. If Google is not careful, this thing could snowball in Twitter’s favor. Twitter is already a major source of news on the web, and publishers are increasingly distancing themselves from Google News.

    “New data from The Social Habit project reveals that Twitter is benefiting from a youth movement,” Schaefer tells us. “People between 12-17 appear to be piling on to Twitter now. Are they using it for straight news? Probably not!”

    “By comparison, I have surrounded myself on Twitter with the brightest marketing experts I can find,” he adds. “To a large extent, on this topic, Twitter is my trusted RSS feed and it is a very effective one. Today, the news breaks on Twitter. So, yes, Twitter can be an excellent news feed if that is what you want it to be.”

    Could Twitter replace Google News for more and more people? Twitter cares about news. They even recently put out a set of best practices for journalists.

    “News breaks on Twitter, whether local or global, of narrow or broad interest,” Twitter analytics research scientist Jimmy Lin recently said. “When news breaks, Twitter users flock to the service to find out what’s happening. Our goal is to instantly connect people everywhere to what’s most meaningful to them; the speed at which our content (and the relevance signals stemming from it) evolves make this more technically challenging, and we are hard at work continuously refining our relevance algorithms to address this.”

    “Just to give one example: search, boiled down to its basics, is about computing term statistics such as term frequency and inverse document frequency,” he added. “Most algorithms assume some static notion of underlying distributions — which surely isn’t the case here!”

    “During major events, the frequency of queries spike dramatically,” Lin noted. ”For example, on October 5 [2011], immediately following news of the death of Apple co-founder and CEO Steve Jobs, the query ‘steve jobs’ spiked from a negligible fraction of query volume to 15% of the query stream — almost one in six of all queries issued!”

    It’s interesting that even Google is acknowledging Twitter’s growing role in news seekers’ content consumption habits. One of Google’s official twitter accounts tweeted this out today:

    That links to a Brand Republic piece, which says:

    The research, seen exclusively by Media Week, from Ipsos Media shows that 20% of top European businessmen, including chief executives and finance directors, are spending more time on Twitter in an average month, than on global business websites such as Reuters, Bloomberg, and the Economist.

    The data also reveals that the business elite have dropped off in their daily consumption of the Financial Times and The Economist.

    Beyond just news, there is also the social element of Twitter, and Google is increasingly looking to personalize search based on social connections. Twitter (not to mention Facebook) could play a significant role here too, even in real-time terms, when relevant, but it doesn’t look like that’s going to happen any time soon.

    By the way, Twitter (like other Google competitors) is poaching Googlers. They reportedly just got Google business development director, Matthew Derrella.

  • People Are Increasingly Turning To Social Over Search

    To be clear, people are still turning mostly to search for seeking the answers to their questions. However, the gap between search and social networks is narrowing.

    Are you getting more traffic from social media than you were a year ago? How’s it looking compared to search? Let us know in the comments.

    There are plenty of sites out there that are getting more traffic from social media sites than they are from search engines. In fact, Google’s constantly changing algorithm almost demands that sites diversify their traffic sources and rely less on Google (the clearly dominant search engine) for the bulk of their traffic.

    Doing great in Google now? There’s no guarantee that will last. You’re relying on an algorithm, and algorithms don’t care whether or not they have a substantial impact on your business.

    Social media, on the other hand, is much more about people, and regardless of where they share it, people will always share good content, and are not necessarily influenced by over 200 mysterious signals when they share it with their own networks of friends and followers.

    With that in mind, it might be good news that social media is apparently gaining ground against search in terms of the traffic it can drive to websites.

    Paid Content’s Robert Andrews has a short, but interesting piece on the subject, citing UK Experian Hitwise data indicating that UK visits to major search engines dropped by 100 million through the month of August to 2.21 billion, and dropped by 40 million year-over-year. He shares the following comentary from Hitewise:

    “The key thing here is the growing significance of social networks as a source of traffic to websites. Search is the still the number-one source of traffic, but social networks are growing as people increasingly navigate around the web via recommendations from Twitter, Facebook etc.”

    This bodes well for Facebook, should it launch its own search offering in the near future, as CEO Mark Zuckerberg has hinted at.

    “We’re basically doing 1 billion queries a day and we’re not even trying,” he’s quoted as saying, adding that “Facebook is pretty uniquely positioned to answer the questions people have. At some point we’ll do it. We have a team working on it,” and “Search engines are really evolving to give you a set of answers, ‘I have a specific question, answer this question for me.’”

    As Andrews notes, people are increasingly finding answers to their questions in social networks. This is why a Facebook search engine could be worth something to users. It’s why the search engines like Google and Bing have added more social content to search results, and it’s why Google is now failing in its mission to index the world’s information and make it universally accessible.

    A recent survey from Greenlight Digital suggested that a Facebook search engine could instantly grab 22% of the market share.

    According to recent research from Webmarketing123 (pdf), the number of marketers able to attribute leads and sales to particular social channels more than doubled (leads from 15 to 31%, sales from 23% to 60%) year-over-year.

    “Compared to last year, nearly 50% more B2Bs now identify social media as having the most impact on lead generation (2011 vs 2012),” the firm said in its report.

    In social media engagement, the firm says, “B2c marketers are ahead with 70% moderately to highly engaged (40% highly engaged), but B2B is catching up, with 63% at those levels of engagement (27% highly engaged), overall, only 1 in 10 have no social
    media program.”

    90% of B2Bs have some level of Social Media engagement, according to the research, with 63% describing themselves as “moderately to fully engaged,” and 25% “very” to “fully” engaged. The majority of this group, Webmarketing123 says, are seeing a return on their investment. Top areas of investment (for the 60% that spend) are Facebook & LinkedIn (where 40% are active), and Twitter (30%).

    Other research from RichRelevance indicates that for ecommerce, Pinterest is increasing in terms of traffic value (specifically average order value).

    Webmarketing123 says that 20% of the marketers active on social media aren’t sure if they’re generating leads, and a full 40% aren’t sure if they’ve closed sales attributable to social media.

    We looked more at the search-related data the firm collected here.

    Are you finding social media to be valuable for traffic? Leads? Conversions? Let us know in the comments.