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May 19, 2011, 12:23 AM EDT
By Lee Spears and Ari Levy
May 19 (Bloomberg) -- LinkedIn Corp., the first major U.S. social-media company to sell shares to the public, raised $352.8 million in an initial public offering after pricing its shares at the top end of the range.
The Mountain View, California-based company sold 7.84 million shares at $45 each, according to a statement released yesterday. At that price, the company has a market value of $4.25 billion, or 11.3 times projected annual sales, compared with 13.8 for Facebook Inc. and 8.3 for Salesforce.com Inc. The company raised the proposed range on May 17, to $42 to $45 each from $32 to $35.
Members of LinkedIn use the site to search for jobs, recruit employees and find industry experts. While users can create personal profiles for free, paid subscriptions were introduced in 2005, giving recruiters more access to candidates and providing professionals ways to communicate with one another. The company gets 70 percent of revenue from business subscriptions, a model that’s similar to Salesforce.com.
“The valuation for LinkedIn is rich,” said Michael Moe, chief investment officer of GSV Capital Management in Woodside, California, in a televised interview yesterday with Bloomberg West. “To earn the valuation, it has to continue to grow very, very fast.”
Proceeds from the offering will be used to fund existing operations and expand the business, including possibly buying other companies or technologies, LinkedIn said in a filing with the U.S. Securities and Exchange Commission. Including an overallotment option for underwriters to buy an additional 1.18 million shares, LinkedIn may raise as much as $405.7 million.
Software as a Service
While LinkedIn is often compared with social networks such as Facebook and Twitter Inc., which depend on advertising to consumers, the company said in its prospectus that a “substantial portion” of revenue comes from a business that’s comparable to the software-as-a-service model. That’s where companies deliver software over the Internet, a market expected to climb 16 percent this year to $10.7 billion, according to Gartner Inc., a research firm in Stamford, Connecticut.
SaaS companies, including Salesforce, NetSuite Inc. and SuccessFactors Inc., sell subscriptions over the Internet rather than long-term licenses like traditional business-software companies.
LinkedIn’s hiring solutions business, targeted at recruiters, accounted for about half of LinkedIn’s $93.9 million in first-quarter revenue, with 30 percent coming from ads. LinkedIn’s net income rose 14 percent to $2.08 million in the first quarter as sales more than doubled.
Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co. led the offering. The stock will trade on the New York Stock Exchange under the symbol LNKD.
About 62 percent of the shares in the offering were being sold by LinkedIn, according to the prospectus. Other sellers include a venture capital affiliate of Bain Capital LLC, McGraw- Hill Cos., Goldman Sachs Group Inc. and founder and Chairman Reid Hoffman.
Venture capital backers Sequoia Capital, Greylock Partners and Bessemer Venture Partners aren’t selling shares, according to the filing.
--With assistance from Cory Johnson and Jon Erlichman in San Francisco. Editors: Elizabeth Wollman, Jillian Ward
To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net;
To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net
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May 19 (Bloomberg) -- LinkedIn Corp., the first major U.S. social-media company to sell shares to the public, raised $352.8 million in an initial public offering after pricing its shares at the top end of the range.
The Mountain View, California-based company sold 7.84 million shares at $45 each, according to a statement released yesterday. At that price, the company has a market value of $4.25 billion, or 11.3 times projected annual sales, compared with 13.8 for Facebook Inc. and 8.3 for Salesforce.com Inc. The company raised the proposed range on May 17, to $42 to $45 each from $32 to $35.
Members of LinkedIn use the site to search for jobs, recruit employees and find industry experts. While users can create personal profiles for free, paid subscriptions were introduced in 2005, giving recruiters more access to candidates and providing professionals ways to communicate with one another. The company gets 70 percent of revenue from business subscriptions, a model that’s similar to Salesforce.com.
“The valuation for LinkedIn is rich,” said Michael Moe, chief investment officer of GSV Capital Management in Woodside, California, in a televised interview yesterday with Bloomberg West. “To earn the valuation, it has to continue to grow very, very fast.”
Proceeds from the offering will be used to fund existing operations and expand the business, including possibly buying other companies or technologies, LinkedIn said in a filing with the U.S. Securities and Exchange Commission. Including an overallotment option for underwriters to buy an additional 1.18 million shares, LinkedIn may raise as much as $405.7 million.
Software as a Service
While LinkedIn is often compared with social networks such as Facebook and Twitter Inc., which depend on advertising to consumers, the company said in its prospectus that a “substantial portion” of revenue comes from a business that’s comparable to the software-as-a-service model. That’s where companies deliver software over the Internet, a market expected to climb 16 percent this year to $10.7 billion, according to Gartner Inc., a research firm in Stamford, Connecticut.
SaaS companies, including Salesforce, NetSuite Inc. and SuccessFactors Inc., sell subscriptions over the Internet rather than long-term licenses like traditional business-software companies.
LinkedIn’s hiring solutions business, targeted at recruiters, accounted for about half of LinkedIn’s $93.9 million in first-quarter revenue, with 30 percent coming from ads. LinkedIn’s net income rose 14 percent to $2.08 million in the first quarter as sales more than doubled.
Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co. led the offering. The stock will trade on the New York Stock Exchange under the symbol LNKD.
About 62 percent of the shares in the offering were being sold by LinkedIn, according to the prospectus. Other sellers include a venture capital affiliate of Bain Capital LLC, McGraw- Hill Cos., Goldman Sachs Group Inc. and founder and Chairman Reid Hoffman.
Venture capital backers Sequoia Capital, Greylock Partners and Bessemer Venture Partners aren’t selling shares, according to the filing.
--With assistance from Cory Johnson and Jon Erlichman in San Francisco. Editors: Elizabeth Wollman, Jillian Ward
To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net;
To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net
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