LinkedIn Corp Class A LNKD
Q4 2012 Earnings Call Transcript
Transcript Call Date 02/07/2013

Operator: Good day, ladies and gentlemen, and welcome to the LinkedIn Fourth Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded.

I would now like to hand the conference over to Mr. Matt Sonefeldt, Head of Investor Relations. Sir, please go ahead.

Matt Sonefeldt - Head of IR: Good afternoon. Welcome to LinkedIn's fourth quarter 2012 earnings call. Joining me today are CEO, Jeff Weiner and CFO, Steve Sordello.

Before we begin, I would like to remind you that during the course of this conference call, management will make forward-looking statements which are subject to various risks and uncertainties. These include statements relating to expected member growth and engagement, our product offerings including mobile; results of our R&D efforts, including the acceleration of our product deployment process; revenue, including revenue growth rate, adjusted EBITDA, depreciation and amortization, stock-based compensation, share dilution, taxes, the product mix between online and field sales, churn rate and expenses.

Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. A discussion of risks and uncertainties related to our business is contained in our filings with the Securities and Exchange Commission, in particular, the section entitled 'Risk Factors' in our quarterly and annual reports, and we refer you to these filings.

Also, I would like to remind you that during the course of this conference call we may discuss some non-GAAP measures and talking about the Company's performance. Reconciliations to the most directly comparable GAAP financial measures are provided in the tables in the press release. This conference call is also being broadcast on the Internet and is available through the Investor Relations section of the LinkedIn website.

With that, I will turn the call over to our CEO, Jeff Weiner.

Jeff Weiner - CEO: Thank you, Matt. Welcome to today's conference call. I will start by summarizing the operating results for the fourth quarter and full year and I'll recap some of the highlights and key milestones since our last call and for 2012. I'll then turn it over to Steve for a more detailed look at the numbers and outlook.

2012 was a transformative year for LinkedIn. We exited 2011 having successfully revamped our underlying development infrastructure. Based on that investment, we said that 2012 would be a year of accelerated product innovation and it was. The products we delivered throughout the year drove member engagement and financial results to record levels in the fourth quarter.

For Q4, overall revenues grew 81% to a record $304 million. We delivered adjusted EBITDA of $79 million translating to non-GAAP EPS of $0.35. For the full year of 2012, revenues were a record $972 million, up 86% and we delivered adjusted EBITDA of $223 or non-GAAP EPS of $0.89.

At the end of the fourth quarter, cumulative membership grew 39% year-over-year and in December we passed the 200 million member milestone, ending the year with nearly 202 million members. We continue to add approximately two member signups per second.

With regard to engagement as measured by comScore, LinkedIn averaged 155 million unique visitors in Q4 when including SlideShare. In December, we were the 25th most visited web property in the world. When excluding SlideShare, we averaged 116 million monthly unique visitors during Q4, growing 26% year-over-year.

Additionally, we generated 9.8 billion page views, excluding mobile, growing 28% year-over-year. Our internal engagement metrics, which include mobile also showed strong growth. Overall, unique visiting members grew approximately 29% year-over-year versus 22% in Q3.

More importantly, member page views grew approximately 67% in Q4, our highest page view growth quarter in 2012. Our internal unique visitor and page view metrics showed accelerating year-over-year growth in Q4, indicating that members are becoming increasingly active on LinkedIn.

One year ago, we undertook Project InVersion, an effort to re-architect our software development and deployment process. Our success enabled us to materially accelerate the speed with which we released new products from once every two weeks for the entire site to as much as twice per day for each individual product.

Our product innovation strategy has been built around the themes of simplify, grow and every day.

Over the last four months of 2012, we introduced more new product than during any other similar timeframe in the Company's history. These new products have had significant impact on the member' engagement with the platform.

Simply is all about making it easier for our members to unlock value from the core products and services we offer. In July, we redesigned our homepage to enable our members to discover, share and discuss the professional information that is most relevant to them.

Homepage page views are now up nearly 70% since the introduction, while status updates and social gestures such as sharing, liking and commenting are at all-time highs. Also, in July, we made it simpler for members to access professional content on the platform with people integration of LinkedIn today into the homepage. Since that upgrade traffic to third-party publishers is up nearly 60%.

In addition, we made it easier for SlideShare users to seamlessly post their presentations to their LinkedIn accounts. Even prior to this integration, SlideShare was already seeing record traffic, reaching over 47 million unique users in Q4, representing 68% growth versus 2011.

In the fall, we introduced a new version of the LinkedIn profile, the Professional Profile of Record. The new profile makes it easier for members to build their professional brands, discover new people and opportunities and engage with their networks.

In the fourth quarter, on average the number of members updating their profiles doubled versus Q4 2011.

Grow is about two priorities, expanding our global membership and extending our monetization efforts in ways that benefit both members and customers.

Product localization continues to be a strong driver of member growth. In 2012, we added five new languages bringing the total to 19. More than 64% of all LinkedIn numbers now come from international markets.

In March, we introduced a new version of people you may know. We saw number invitations increased 80% from 2011 to 2012, leading to an increase in connection density for the average number of connections per member.

This is important as more connects leads to more relevant and fresh content in a member fees this driving greater engagement. Regarding monetization in talent solutions 2012 was marked by new product’s design add value to our corporate customers across all aspects of Talent acquisition.

For example our larger customers are more deeply integrated Talent Pipeline into existing recruiting workflows. Jobs on mobile is also gaining increasing traction, introduced just six months ago nearly 20% of job views, and nearly 30% of job viewers now come from mobile devices

Finally, we are focused on growing the international value of the recruiter platform. Already available in French, we are now rolling out recruiter in German and Portuguese, allowing us to better serve much of Europe and Brazil.

Within marketing solutions in 2012 we introduced a number of new products that strengthen LinkedIn’s position as a most effective place for companies to engage with professional. We completely redesign company pages introduced targeted status updates and release new analytics and APIs and the number of status updates posted by company's inner followers increased more than seven times in 2012.

Last month we introduced Rich Media sharing on these pages. Leveraging slideshows of content host. Additionally, companies like Citi, Staples and Capital One are using LinkedIn Managed Groups to engage their audiences with compelling professional content.

Citi’s Managed Group now has more than 100,000 members. Finally for the past few months, we have been internally testing the ability for companies to promote sponsored content in the stream of updates to the peers and our member’s homepages.

Last week we began external testing with a handful of partners in both the desktop and the iPad streams. Based on how these tests evolve, we anticipate expanding this offering to smartphone devices as well.

Within premium subscriptions, 2012 saw an emphasis on creating value for specific verticals including outbound sales professionals. Our sales solutions which include sales navigator are still nascent, but represent our fastest growing premium subscription products.

Our third product theme is delivering value to our members every day, by helping them build out their professional identities and gain valuable insights. For example, endorsements allow members to easily recognize the skills of their colleagues. In just over four months since the launch of this service, our members have generated nearly 1 billion endorsements.

Additionally in the fall, we introduced LinkedIn Influencers, furthering our efforts to develop LinkedIn as a professional publishing platform. Richard Branson, the most influencer, have surpassed 1.3 million followers and we’ve already seen a LinkedIn Influencer post generate over 1 million views. The success of the Influencer program has helped drive an eight-fold increase in traffic to LinkedIn Today content over the last year.

Mobile products are also central to delivering value every day and remains our fastest-growing consumer service. In Q4, we averaged 27% of unique visiting members coming to our mobile apps versus just 15% a year ago. The value we create for members allows us to deliver useful offerings to customers of our Talent Solutions, Marketing Solutions and Premium Subscriptions products. In Q4, these three diverse revenue stream all performed well.

Talent solutions grew 90% to $161 million; marketing solutions was up 68% to $83 million and premium subscriptions increased 79% to $59 million. As we move into 2013, our strategy remains the same. For our members we will continue to build great products to deliver on the value propositions of identify, insights and everywhere. For our enterprise customers, we will focus on transforming the way they hire, market and sell on a global basis.

Lastly, an update on our talent, which is our top operating priority. We entered 2013 with nearly 3,500 employees around the world. The transformation of LinkedIn in the last year is a result of their hard work and dedication to our ultimate vision of creating economic opportunity for every professional. The culture that shapes LinkedIn has emerged as one of our strongest competitive advantages and will continue to serve us well in 2013 and beyond.

Now, I will turn it over to Steve for a deeper dive into our operating metrics and financials.

Steve Sordello - SVP and CFO: Thanks, Jeff. Before I discuss the result, I want to remind you that my comments on growth rates will refer to year-over-year changes unless I indicate otherwise. Also, non-GAAP financial measures exclude stock-based compensation expenses, amortization of intangibles and the tax impacts of these adjustments. Please refer to our press release for the GAAP to non-GAAP reconciliations.

As Jeff described, 2012 was a transformative year for LinkedIn. Continued investment in our talent and technology infrastructure drove momentum in both product and monetization. The strong fourth quarter and full-year financial results reflect this progress.

Starting with members, crossing the 200 million milestone, illustrates LinkedIn's global reach. In the fourth quarter, international represented 64% of total members compared to 60% last year. While member growth remained steady, engagement accelerated across many key metrics, results driven by the success of product releases towards the end of the year.

In the fourth quarter, comScore unique visitors increased by 26% year-over-year versus 25% last quarter, while comScore page views, which exclude mobile, grew 28% compared to 17% last quarter.

Using our internal metrics, unique visiting members grew 29% year-on-year versus 22% in the third quarter and the percent of members visiting the site increased slightly. Desktop page view growth increased to approximately 38% year-over-year compared to 22% last quarter, and when including mobile, total page views grow approximately 67%, the highest rate of growth of any quarter in 2012. Our business directly benefitted from greater member engagement, yielding strong financial results. Overall revenues grew 81% year-over-year to $304 million.

Before going into product lines, I want to call out a small portion of field sales revenue of approximately $4.4 million related to selling through outside agencies that we began recognizing on a growth basis in the fourth quarter. This had a net zero impact to adjusted EBITDA due to the offset in increase in sales and marketing expense. Going forward, we expect the amount to decrease as a percent of sales. Without the impact, revenue in the fourth quarter would have been $299 million, a growth of 78% year-on-year, materially exceeding our own expectations.

Turning to our product lines. Talent solutions displayed sustained momentum in both field and online channels despite larger scale. Talent solutions generated $161 million in revenue, up 90% to 53% of total sales versus 51% last year. We continue to gain traction with new enterprise clients. Growth remained strong as we added approximately 2,400 customers in the quarter ending the year with over 16,400 organizations under contract.

With existing customers, average revenue per customer again exhibited positive growth and renewals and add-ons ended the year at a high point reflecting the increasing value we provide customers as we broaden our product portfolio.

We remain encouraged by our growing scale outside the U.S., especially in newer geographies. In Southern Europe, we added Pirelli in Italy as a new customer and expanded business with Telefonica in Spain and L'Oreal in France. We also signed noteworthy new customers in nascent regions, including Bally in Brazil and Etihad Airlines to our new Dubai office.

LinkedIn jobs once again performed well as the number of open jobs increased nearly 100%. We also maintained strong growth from online Talent Finder and Job Seeker subscriptions, which once again grew at a higher rate and overall talent solutions revenues.

One last note, we will pass through a moderate price increase on recruiter and job slots beginning in the second quarter in the Americas and other select regions. In those geographies, we expect a blended contract value to increase mid-single-digits year-on-year.

Since our last increase the LinkedIn member base has doubled and we have greatly strengthened the value delivered across the product portfolio. It is worth noting, that this is the first time we have raised prices on LinkedIn job slots in addition to recruiter.

Marketing solutions generated $83 million in revenue with growth accelerating to 68% year-on-year from 60% in the third quarter. Marketing solutions represented 27% of total revenue versus 30% last year.

Field sales continue to show improved performance, with help from new product offerings including follower campaigns and custom groups, as well as a growing contribution from CPM based recruitment media.

LinkedIn ad also showed positive gains benefiting from strong engagement in the quarter with the year-on-year growth nicely increasing compared to the third quarter. LinkedIn ads remains one of our most efficient mechanisms for monetizing increased engagement and demand remained strong as the number of active advertisers nearly doubled compared to last year.

Finally, premium subscriptions generated $59 million in revenues with growth accelerating to 79% versus 74% last quarter. Greater engagement and higher conversion rates resulted in improved new subscriber growth year-over-year.

Our sales solutions product grew more quickly than other subscriptions and we continue to improve the product functionality and while early we are encouraged by the trend. International revenue growth accelerated in the fourth quarter to 106% year-on-year versus 97% last quarter.

Non-U.S. revenue increased 38% of sales in the fourth quarter versus 33% a year ago and the gap between international revenues and international members continues to narrow. A little more than three years ago, international revenue was just 25% of sales and we had only one location outside the U.S. This compares to 20 international offices today.

Moving to revenue by channel; online sales performed well on the back of strong member engagement. Online growth accelerated to 74% comprising 41% of revenue compared to 43% last year.

It is important to call out that we would have expected more of a mix shift towards the field sales channel given typical seasonality. However, strong engagement let to better online contribution which positively impacted EBITDA.

Turning to the non-GAAP income statement, strong flow-through from engagement to online products drove a higher level of profitability that significantly outpaced our expectations.

Gross margin excluding depreciation and amortization was 89% versus 86% last year. The fourth quarter is consistently the highest gross margin quarter given revenue seasonality.

Sales and marketing was up slightly to 31% of revenue from 30% last year, while R&D improved to 21% from 22% last year.

In 2012 we had success tracking, engineering and product talent to LinkedIn, maintaining a similar pace of headcount growth as in 2011.

G&A as a percentage of revenue declined 11% versus 13% last year. A similar trend relative to the third quarter.

We generated a record $79 million in adjusted EBITDA in the fourth quarter, a 26% margin. This compares to $34 million in adjusted EBITDA and a 21% margin last year.

Depreciation and amortization totaled $24 million while stock-based compensation was $28 million.

GAAP taxes on an absolute basis were above expectations but the GAAP and non-GAAP rates were lower than expected due to a greater level of pre-tax profit and improving profitability in our international entities.

Bottom line results reached record high. GAAP net income was $11 million, leading to EPS of $0.10 on 114 million fully diluted weighted shares. This compares to $7 million in net income and $0.06 per share last year.

On a non-GAAP basis, net income more than tripled t0 $40 million translating to $0.35 in EPS versus $30.12 per share last year. The balance sheet remains well-positioned with $750 million in cash, cash equivalents and short-term investment against zero debt.

Cash flow remains strong with $69 million in operating cash flow and $37 million in free cash flow. For the full year operating cash flow was $267 million compared to $133 million last year and free cash flow more than tripled to $142 million compared to just $44 million last year.

I will close the call with guidance for the first quarter and full year 2013. For the first quarter we expect revenue between $305 million and $310 million, a range of 62% to 64% year-over-year. For the full year we expect revenues of $1.410 billion to 1.440 billion growth of 45% to 48% year on year.

For adjusted EBITDA we expect $67 million to $69 million in the first quarter a 22% margin at the midpoint. For the full year we expect a range of $315 million to $330 million, a 23% margin at the midpoint.

I want to take a moment to reflect our performance in IPO. During the past 18 months, we have exceeded our own expectations by a wide margin on the top line and pass through higher profitability as a result. Driven by new products and high member engagement our results were especially strong in the second half of 2012.

While 2012 was an investment year, the business’s outperformance allowed us to achieve a 23% adjusted EBITDA margin much higher than our initial guidance of 19%. The profitability flow through has allowed us to reinvest over performance back into the Company especially in product and engineering and these investments have shown strong returns.

Our 2013 guidance reflects where we plan to be at this point in time as we progress towards our long-term operating target of 30% adjusted EBITDA. We continue to invest for the Company's long-term success.

Our investment plan incorporates recruiting aggressively for top tier engineering and sales talent in order to achieve scale in our current roadmap, while also investing in new strategic initiatives, including mobile, enterprise, higher education, and non-U.S. markets.

Growing our team requires increased investment in support infrastructure, such as building our global facilities footprint, but we have committed to grow occupancy over 60% to 1.2 million square feet across 26 locations. We also expect to continue to invest heavily in our data center expansion.

For the remaining expense line items, we expect depreciation and amortization of $25 million to $27 million in the first quarter and $130 million to $135 million for the full year. We estimate that stock-based compensation expense of $32 million to $34 million in the first quarter and $160 million to $165 million for the full year.

We continue to have limited visibility on tax rates, but we would assume GAAP and non-GAAP rates similar to what we saw in 2012. One small note on tax, the R&D tax credit was recently extended through 2013 and we expect an approximate $11 million one-time benefit in the first quarter for both GAAP and non-GAAP taxes. On diluted share count, we expect approximately 115 million shares in the first quarter and an average of approximately 160 million for the full year.

To conclude, we achieved success on many fronts in 2012, we exited the year on the momentum of a dynamic period of product development and member engagement. Each of our diverse product lines continue to grow at impressive rates and exhibited healthy underlying fundamentals.

Growth combined with greater operating scale led to record high revenues, earnings and cash flow. As we look forward to 2013, we remain excited about the value LinkedIn will provide for our members and our customers in the coming year.

Thank you for your time and we will now take questions.

Transcript Call Date 02/07/2013

Operator: Scott Devitt, Morgan Stanley.

Scott Devitt - Morgan Stanley: The LCS number, the 2,400 ads, that was a big number in the quarter and this question though relates more to, once you get customers onboard, I think Steve, on the last call that you mentioned that you were seeing 3X headroom for spending with existing LCS customers domestically based on your existing set of products. So I was wondering if you could just talk about how your sales teams contract renewal pictures have evolved over the last year or so and how new products help you increase spend with existing clients, you've actually already maxed out in their recruiter seats? Then secondly, Jeff, could you talk a bit about the progress selling LCS products internationally. There is a critical mass of users you need to reach in a given market before your enterprise tools really gain traction, and if that is the case, could you talk about any regions that you've recently hit critical mass or that you'd anticipate reaching in 2013?

Steve Sordello - SVP and CFO: Scott, this is Steve. So, we haven't seen a change this quarter. We still have, what we believe is 3X headroom, particularly with the larger accounts on the smaller companies probably more like 2X. That's in the U.S., internationally it's stronger. We had a very strong quarter this year in terms of both, new booking as well as add-ons and renewals. Our churn was roughly stable, but when you look at our net ratio which is add-ons, renewals, net of churn, it was the highest of all of 2012, which is great off an increasing base and we have been able to maintain a record ARPU despite the fact that we've been adding more and more SMBs. So to your point, what we've been successful at is broadening that product portfolio and selling additional products and services to have a larger upfront sales which has been helping our ARPU while increasing our SMBs as well, so a lot of good news on that front this last quarter.

Jeff Weiner - CEO: Scott, this is Jeff. With regard to market entry and how we're prioritizing, where we're selling our talent solutions product. The 26 cities we're in now around the world have really followed a very specific methodology in terms of understanding critical mass, not only with regard to members but also the quality of the profiles and the experience that our recruiter customers would have in those markets. So when we enter a market, we've already reached the conclusion that we're able to generate the right kind of value and then obviously we continue to invest in growth and engagement to increase that value proposition. So recent entry points includes things Hong Kong – areas like Hong Kong, we've invested increasingly in Brazil where we're getting good traction, we continue to invest throughout Europe, we've had a lot of expansion there. Southern Europe, in particular, was a surprise in terms of exceeding expectations on member growth year-over-year. Then going forward, we continue to look at other opportunities in South America, Latin America and Southeast Asia. But I think for the most part, we're going to focus on continuing to grow and invest in many of this cities we've expanded to over the last two-plus years.

Operator: Douglas Anmuth, JPMorgan.

Douglas Anmuth - JPMorgan: I just wanted to ask two things. First, just on the recruiter side and the price increase that you talked about. Just wanted to confirm that that’s fully contemplated in the ’13 guidance and what’s the feedback then from corporate subscribers thus far? Then also can you just talk about the adoption and usage that you’ve seen at talent pipeline at this point?

Steve Sordello - SVP and CFO: Okay, Doug, I’ll take the guidance portion of the question. It is taken into account. Roughly it’s a mid-single digit increase in U.S. in select regions. One thing in terms for the guidance to take into consideration, it’s starting to phase in the second quarter. So as customers renew from that point on, most of our renewals in the year are in the fourth quarter. So the impact in this particular year is not as meaningful as it will be going into 2014.

Jeff Weiner - CEO: It’s Jeff. In terms of the level of engagement with tough pipeline, we mentioned several months ago that we had seen over half of our customers activating; and the engagement is healthy. We’re seeing deeper and deeper integration in leverage. We’re also seeing some original used cases, which companies are starting to leverage and create for themselves, which I think is a very healthy sign in terms of adoption as a platform and we want to continue to listen to those customers and make sure we’re evolving the product accordingly. I think another sign of strength has been winning some RFPs on talent pipeline specifically. I think that’s a very healthy sign in terms of the value added in some (work proposition) with regard to talent acquisition and that continues.

Operator: Mark May, Barclays.

Mark May - Barclays: Question on international monetization. Is most of the international revenue that your report focused on the talent solution side? If so, how would you characterize the opportunities in your strategies for monetizing on the marketing and premium services side outside the U.S.? Then a second question on hiring plans for this year. It looks that in 2012 headcount went up by a little over 60% or 1300. What should we expect this year as a comparable rate of hiring, something less or more?

Steve Sordello - SVP and CFO: So international, as I mentioned, is up to 38% of revenue. We saw reacceleration this last quarter. In terms of the mix of businesses, it is actually pretty roughly even between field and online in terms of the overall online contribution. We still view the field that’s having large opportunities as we continue to add seals people and products to the portfolio. In terms of the headcount, we added about 1,300 people this year. Next year we are approximating slightly more than that overall. Most of the weight will go towards R&D and sales and marketing.

Operator: James Lee, CLSA.

James Lee - CLSA: Can we get an update on your progress of testing mobile apps in general? Trying to get a sense of the performance your iPad adds versus desktop you experienced? Also wondering are you also testing (indiscernible) apps in smartphones at this point in time. Any timetable on your commercial launch or your mobile apps will be helpful.

Jeff Weiner - CEO: From a growth and engagement perspective, we are pleased with the continued rate of adoption of our mobile product and services, both tablet and smartphone, iOS, Android, et cetera. We are up to about 27% of our unique members visiting on a weekly basis and that's up considerably from the same time a year ago. In terms of our mobile monetization efforts, I think it's important to bear in mind that unlike a number of other consumer web companies, for us mobile monetization includes three lines of businesses and not just ad sales. So talent solutions, marketing solutions and premium subscriptions and with regard to talent solutions and premium subscription specifically we’re in a position where we can add value to our existing customers by virtue of making the services if they are already paying for more ubiquitous and more accessible. With regard to marketing solutions specifically your ad sales, I think it’s important to draw distinction between the tablet environment and the smartphone environment. The tablet environment is lot more conducive to leveraging the same kinds of ads, display ads that are currently running on the desktop and we had some tests running for sometimes and we’ve been pleased with the results again still early days, but where there's potentially even larger opportunity is, with regard to smartphone by virtue of inventory being generated there. Given the more limited real estate, we've always want to be very thoughtful in terms of how we’re integrating ads into that experience. One of the things we recognized was going to be a necessary component of that would be serving sponsored content with stream that people are seeing on their homepage experience. Just this last month we began a test, working with some very large scale enterprises, some Blue Chip marketers, folks like GE and Xerox, the Economist, BlackBerry and they are taking repositories of content that they’ve built up over time Whitepapers, expertise, customs-related practices and they are now able to serve that content at a status update and target specific followers of theirs on LinkedIn with over 2.4 million active company profiles each one of those companies can generate followers. What we've seen thus far has been encouraging and to the extent we continue to make progress to the extent we've already seen, we're going to be rolling out those same tests in the smartphone environment.

James Lee - CLSA: Let me ask a follow-up here. I think recently you guys added a number of key advertising partners. I was wondering what kind of role are playing in terms of unlocking the ad buying process in LinkedIn? Also, I noticed your list is little smaller than Facebook per se as your goal to continue adding new advertising partners on to the platform?

Jeff Weiner - CEO: Yes, the goal is definitely to continue to grow the number of marketing solutions customers and we've seen a nice rate of growth of there, both in terms of our field sales capability and in terms of our self-serve. So we also have a pay for performance self-serve platform that continues to grow nicely as well. I think one of the things that we are increasingly focused on in 2013 is going to be the opportunity to support content marketing. I was just talking a little bit about that in terms of examples where companies are able to leverages content repositories they've already built up for the sake of generating leads and targeting prospects. One of the things where we are making – one of the areas we're making strong traction is LinkedIn as a professional publishing platform and you see with the momentum we're generating now with LinkedIn Influencers, LinkedIn Groups, SlideShare, people are increasingly turning to LinkedIn to publish professionally relevant content. We think that's going to create a very strong platform and very valuable context for large enterprises, for small and medium size businesses who want to target and engage with professionals.

Operator: Justin Post, Merrill Lynch.

Justin Post - Merrill Lynch: First, Jeff, on the Enterprise side, obviously you are doing great in the recruiting verticals. Maybe if you could let us know what you think about other opportunities in different verticals on the enterprise side. You did mention it's an investment area, and do you think you have some opportunities that could be as big as recruiting some day? Then maybe, Steve, I think your guidance for the year contemplates some pretty big deceleration after the Q1 on revenue growth. Maybe you could talk about some of the puts and takes of the deceleration and what might drive that and what kind of conservatism you factored in?

Jeff Weiner - CEO: This is Jeff. With regard to your first question, when it comes to our customer base and in particular the enterprise, we are focused on creating values by helping them transform the way they hire, market, and sell. We've made good progress thus far to-date in terms of our Talent Solutions business and we've kind of touched on some of those key data points early on today's call. I was just talking about Marketing Solutions, both field sales and self-serve and what we believe to be an increasingly exciting opportunity with regard to content marketing and then expanding our Marketing Solutions from the desktop into the mobile channel. The third area is an area that we believe has significant potential and that’s our sales solutions. The core value proposition there is enabling companies to eliminate cold calls in favor of one prospects and thinking of that by virtue of leveraging a sales person or business development professionals LinkedIn network, they can not only identify the most valuable target prospect, but they can determine the most efficient way and most effective way to connect with that person. Thus far to-date, we have introduced our Sales Navigator product, the Premium Subscriptions products that also enables for integration into CRM environments. We recently enhanced that model with key link functionality in our search results and we've seen a very positive response from large scale enterprises that continue to be excited about the potential of leveraging our sales solutions. We are also making good traction in terms of our go-to-market strategies. We're learning from the interactions thus far we’ve had with our early stage customers and we’re starting to take that learning and now expand that go-to-market footprint on a global basis.

Steve Sordello - SVP and CFO: Justin, so in terms of our annual top line guidance, some of the things we're taking into account is we had extremely strong kind of Q4 second half 2012 which was driven by product introductions. We had a series of product introductions that was the most in a very short period of time in the Company’s history and that drove accelerating engagement which in particular drove a lot of our online businesses to really over perform. So, as we look at 2013 and we look at the comp against that on a year-on-year basis, it’s a much more difficult comp. So we are that into account, in addition to just the larger revenue base overall. We’re really trying to utilize a prudent approach to year-on-year growth given the strength that we saw in particular in the second half of 2012.

Operator: John Blackledge, Cowen and Company.

John Blackledge - Cowen and Company: Two questions. First one, when will the promoted posts be rolled out fully across desktop, tablet and smartphones and across what geographies first and maybe just the impact on the marketing solutions segment in 2013? Then the second question will be, what percent of customers exiting '12 are total recruiter customers that are up for the pricing increase in 2013? Thank you.

Jeff Weiner - CEO: This is Jeff. I’ll start with the first question. We just started testing on the desktop last month and as I mentioned earlier we now have a number of customers and we’re seeing some good traction and seeing some good data there and we’re going to continue to build off of that. We’re not going to preannounce a specific timetable or calendar. We’re going to do what makes the most sense for our members and as long as we can continue to create value for our members with regard to relevant posts and as long as we can create value for our customers, we’re going to roll it out and we’re encouraged by what we’ve seen thus far. The rollout wouldn’t be measured in years. I think it’s going to happen considerably sooner than that, but again we want to make sure that we’re being (fossil) in terms of the relevancy and the value we can create from the experience.

Steve Sordello - SVP and CFO: In terms of the renewals, the way to look at it is, the outside – the U.S. in select market, so outside of Europe, I would say roughly 50% of our bookings. So the majority of that will be up for renewal, but again starting in Q2 and phasing in and really weighted towards Q4 given that’s where the majority of our renewals are.

Operator: Kerry Rice, Needham & Co.

Kerry Rice - Needham & Co.: Kerry Rice. Just a quick question on what you thought was the most impact for product launch, I mean most of them were in Q4, is there one that you would highlight, or a couple of them that you had the biggest impact on driving engagement for the quarter?

Jeff Weiner - CEO: Yeah, this is Jeff. I think there wasn’t really any one product that we launched that stands out above the others and the reason for that because of the compounding effect that we believe took place. So if you go back to late summer and the rollout of our new homepage, our homepage 2.0, which made it a lot easier to fund relevant content. Then in addition to that, we added notifications so that people could see when other members were engaging with their content through social gestures. The combination of those two things led to a substantial increase in homepage, page views and social gestures been generated on the site. So that was kind of the earlier part of that, and then that was followed by Endorsements. As we mentioned earlier on the call, Endorsements has been essentially the fastest growing new product launch in the history of the Company. In just roughly four and a half months, we are already nearing almost $1 billion Endorsements generated and Endorsements was developed not only to create value in terms of the search capability and people being able to demonstrate and communicate their skill set, their expertise, but there are some very positive virtuous dynamics there in terms of being endorsed, coming back to LinkedIn, endorsing others. The team has done a nice job there of creating the right kind of viral loops. Then following the launch of Endorsements, we were able to rollout influencers and that has exceeded all of our expectations. We are in every measure, LinkedIn today, which houses our influencer content has seen an eightfold increase in engagement. The quality of the influencers participating, we’ve not got about 200 folks we've been inundated with requests for people to participate several thousand well in excess of the number of people who are actually on the platform today. We welcome to Jeff Immelt, the Chairman and CEO of GE. Mark Cuban just recently joined Richard Branson, the most popular influencer with over 1.3 million followers. We’ve seen Post Now generating in excess of 1 million views. So that’s certainly helped contribute. Then, of course, we introduced our Profile 2.0 and really starting to open up our Profile Experience where people can demonstrate and communicate their skill sets through things like rich media and presentations and sharing their knowledge, et cetera. So when you look at all of those things over that call it three to five months’ stretch, while in isolation we could see needle movement, I think it was the compounding effect of all those things in combination that really led to the kind of quarter that we had.

Steve Sordello - SVP and CFO: I’ll just add one thing to that and it’s really not a product introduction but towards the end of 2011, we had a project called InVersion, which was a significant re-architecting of our code and that has done has enabled us to be able to release products much more quickly and I think that was a very critical enabler to the execution we saw on the product side in 2012 and what you'll see in 2013.

Operator: Dan Salmon, BMO Capital Markets.

Dan Salmon - BMO Capital Markets: I was wondering if you could provide a little bit more insight on advertisers who have a Managed Group versus those who don't. You tend to see more spending from that group. More sort of auxiliary marketing workaround simply what they are doing with the Managed Group?

Steve Sordello - SVP and CFO: We do. Citi, Staples, Capital One, excellent examples of that dynamic whereby virtue of the group, you take Citi the group that they created, the Managed Group they created around professional women on LinkedIn and we now are seeing in excess of 100,000 members on a per capita basis one of that's not the most engaged groups we've seen on the platform and that really provides a mechanism for Citi to get more deeply engaged and leverage a whole host of product and services. So through display and graphical media, attracting people into the group, generating followers, I would expect that the same kinds of companies that are engaging through Managed Groups are also going to have very interesting opportunities with sponsored content in our network update extreme. Influencers is actually starting to play a role in that. I was talking just a moment ago about Citi's Managed Group and the woman who helps run their effort with regard to their content repository Women & Co is an Influencer and so we do see broader engagement across multiple products and services as a result of that kind of relationship.

Dan Salmon - BMO Capital Markets: Just one quick follow-up on mobile. Are you expecting – are those tests on iPad being done through field sales and online only and likewise when you start more on the smartphone rollout, would you expect that to be field or online or both?

Jeff Weiner - CEO: The tablet thus far to-date has been largely through field. It’s been specific targeted companies as part of really a pilot program. So we can continue to learn. With regard to sponsored content in our network update stream, still very early days, but you could imagine that being sold through both a field sales force and through self-service capabilities.

Operator: Randy Reece, Avondale Partners.

Randle Reece - Avondale Partners: In my work with the experienced recruiters on their side of your business, I found companies increasingly using LinkedIn as a place where they could advertise a wider range of jobs, and proportion of jobs on your side that would be lower salary entry level or maybe associate level seems to be rising faster than the hire in. I was wondering what you could say about how you are going to market with LinkedIn as a solution, broader solution to the recruiting process, not just professional top 20% of jobs?

Jeff Weiner - CEO: This is Jeff. Historically, we’ve always started with a core focus on knowledge workers, which is how we narrowly define professionals, and that plays directly into our mission statement to connect the world’s professionals, make them more productive and successful. Through various methodologies, we’ve determined there’s roughly $600 million workers in the world and that remains the heart of our focus, the core of our focus. But our vision is something broader than that. Our vision is to create economic opportunity for every professional, where a professional is defined as someone that earns a living from their skill. Using that much broader definition there's as many as 3.3 billion people in the (public) work force and that vision is a dream. I mean, that's our true north and much longer term, that where we want to be able to focus. For now we continue to be prioritizing knowledge workers and starting with some of those higher value professional opportunities. When you see recruiters starting to add jobs that would be potentially lower down in terms of the value continuum, I think that's a natural extension of the value proposition and the critical mass of the platform and our broadening reach on a global basis into developing economies where those kinds of jobs are going to be more readily available.

Operator: Heath Terry, Goldman Sachs.

Heath Terry - Goldman Sachs: Looking at the growth in Marketing Services, can you give us a sense of how much of that is related to volume versus the yield that you are getting off that inventory, and particularly to the extent that there is any impact from sort of the non-impression based marketing that you have worked – work that you are doing like Company Pages? Then, just, I would also appreciate, Jeff, your thoughts on the off-LinkedIn retargeting opportunity and how significant that could become for LinkedIn given the high value of the customer you serve?

Steve Sordello - SVP and CFO: Heath, this is Steve. I'll take the first part. So, I would say it's definitely a combination of a kind of volume and the sales force selling successfully. Naturally, we see seasonal strength in the fourth quarter which helps in our CPMs. The number of the newer products, the Follower, Custom Groups, higher price point products, better execution on the sales side. Then, finally as well, I think price-yield management is becoming more important for us. What we've done is a better job optimizing our inventory based on where the demand is for that inventory in terms of pricing. Then, of course, when you look at the volume size, direct ads or LinkedIn ads product, we have more demand than we have inventory. So when we're able to get more traffic to the site, we can sell it. So it's a combination of better execution in the sale front as well as more engagement.

Jeff Weiner - CEO: This is Jeff. With regard to the retargeting opportunity, given our context and given our audience, you're right. There is potential there and it is a really interesting opportunity. But one of the things we're trying to do more than ever before is focus on fewer things done better. With regard to marketing solutions, we think sponsored content in our network update stream for both the desktop and through our mobile channels represents a very large opportunity for us, something we're excited about, some we want to make sure we get right and ensure that our members and our customers are having valuable experience with. Then you look back over the course of the last 12 month, the managed group introduction, the APIs, the new relationships we are forging with social media management and social media agencies and we want to make sure we continue to invest in those areas and get those areas right before we'll be moving on to extensions like the one that you were just asking about. Thank you all. We very much appreciate you taking the time and we look forward to catching up with your next quarter. Take care.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes our program for today. You may all disconnect and have a wonderful day.