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LinkedIn Document Transcript

  • 1. Jan 5th, 2013LinkedIn Corporation Naveen GargNYSE: LNKD Portfolio Manager (Tech & Telecom), RSIF CFA Level III Candidate, CFA Institute, VA, USARecommendation: Buy MBA Candidate, Rotman School of Management, UofTTarget Price: $129.64 naveen.garg13@rotman.utoronto.caLast Close Price: $110.30 Cell: +1 (416) 671 6440Stock Price 110.30 Industry/Sector Internet/ Tech TTM P/E 735.6552 Week Price Range 61.90 - 125.50 Market Cap. 12.16B Current Ratio 2.613-Month Avg. Vol. 2,012,160 Enterprise Value 12.04B Price/Sales 12.03 Shares Outstanding 107.45M Debt/ Equity 0Basis of recommendation Summary: LinkedIn continues to grow at a high growth rate (2008- 2011 Revenue CAGR 87.5%) and we expect the revenue CAGR to be 49% over next 4 years. In our opinion with increased monetization of its user base and technology through a focus on sales and marketing, LinkedIn will be able to improve its profitability going further. Considering its revenue and earnings growth potential we believe Volume that LinkedIn is an undervalued stock. Revenue:  Increasing enterprise customer base is expected to provide steady and predictable revenue stream  New features like New Profile Page, Endorsements and Influencers Source: Yahoo Finance have improved user engagement and page views which in our opinion might result in stronger performance by marketing segment  We expect that the high growth rate in the user base in the emerging markets could lead to continuing high revenue growth  Improved economic outlook and recent trend in employment are expected to drive up recruitment Earnings:  We expect the net income and EPS growth to be consistently high in the coming years as a result of higher profit margins and growing revenues Source: LinkedIn Threat: 2011 2010 2009 2008 Revenue 522.0 243.0 120.0 79.0  Poor performance by Monster Worldwide had a significant Gross Profit 440.7 198.3 94.3 60.2 negative impact on LinkedIn’s share price even though LinkedIn’s Operating Income 25.84 19.58 -3.35 -5.51 numbers were stellar. In our opinion the two companies are very Net Income 11.91 3.43 -3.97 -4.52 different and in completely different stages of life cycles EPS 0.13 0.04 -0.04 -0.05 Valuation: (In millions of USD except EPS)  We value LinkedIn with a DCF to arrive at a price target of $129.64 Source: LinkedIn per share, 17.5% higher than the current market price of $110.30  Our target price is an equal weighted average (50:50) of DCF value using 3% terminal growth rate and 17.1x exit EV/EBITDA multiple based DCF value
  • 2. Valuation SummaryLinkedIn continues to grow at a significantly high rate in all of its three product categories: Talent Solutions, MarketingSolutions and Premium Subscriptions; however as the base increases, the growth rate is expected to come down in thecoming years. Following chart shows revenue growth forecast and the adjacent table shows some key projectednumbers through 2016. 2011 A 2012 2013 2014 2015 2016 Revenue 522,189 964,065 1,640,592 2,533,070 3,518,288 4,820,415 EBITDA 68,945 101,227 246,089 455,953 703,658 1,012,287 EBIT 25,845 20,496 92,321 240,665 418,967 634,311 Net Income 11,912 14,074 71,535 190,210 332,851 505,127 FCFF 1,667 99,212 191,315 401,655 553,458 Source: LinkedIn, Research Forecast Note: All numbers in thousands of USD Source: LinkedIn, Research ForecastsCurrent Enterprise Value (EV) of LinkedIn is $12.04B. Forward 2012E 2013E 2014E 2015E 2016EEV/EBITDA for the forecasted EBITDA is shown in the adjacent EV / EBITDA 135.4x 55.7x 30.1x 19.5x 13.5xtable. Considering the current and future high growth rate of the company, forward EV/EBITDA indicates headroom forthe stock price.Target Price Calculation: Using DCF method, with terminal growth rate of 3%, the calculated per share value is $119.37.Considering terminal value using exit EV/EBITDA multiple of 17.1x1, the target price per share is $139.91. The suggestedtarget price of $129.64 is average of target price given by the two methods. At current market price of $110.30/share,the expected upside is close to 17.5%.Comparable Company AnalysisLinkedIn has three very distinct revenue streams and a very unique underlying business model based on professionalconnections. We believe not one single company is truly comparable to LinkedIn. Below is a snapshot of somecomparable companies in the three revenue streams based on the closest match of the revenue model. In our opiniontaking average or median multiples to value LinkedIn might not be a practical approach as these companies are atdifferent stages in their growth cycles and have different business models. Overall, LinkedIn is priced at higher multiplesin all three revenue categories. These higher multiples can be attributed to the significantly higher growth rate ofLinkedIn’s user base and revenue as compared to the competitors. Comparable companies valuation ratios Last Close No. of Mkt Cap EV Sales EBITDA P/E EV / Rev. EV / EBITDA P/Sales (Jan 05, 13) Shares Marketing Solutions LinkedIn NYSE:LNKD 113.15 12,160 107.5 11,481 964 206 735.65 11.91 55.73 12.61 Facebook NASDAQ:FB 28.76 62,310 2,170.0 52,756 5,024 2,805 267.34 10.50 18.81 12.42 Renren NYSE:RENN 3.76 1,390 370.2 588.02 174 -82 -0.03 3.38 - 8.00 Google NASDAQ: GOOG 737.97 242,490 328.6 202,975 41,548 18,536 23.12 4.89 10.95 5.84 Yahoo! NASDAQ: YHOO 19.86 23,490 1,180.0 15,157 4,457 1,656 6.02 3.40 9.15 5.26 Talent Solutions LinkedIn NYSE:LNKD 113.15 12,160 107.5 11,481 964 206 735.65 11.91 55.73 12.61 51Job NASDAQ: JOBS 53.02 1,530 28.8 1,150 1,434 510 21 0.80 2.26 1.07 Monster Worldwide NYSE:MWW 5.97 699.1 117.1 720 896 126 9.38 0.80 5.71 0.78 Dice Holdings NYSE:DHX 9.52 567.7 59.6 560 194 76 15.91 2.89 7.36 2.93 Premium Subscriptions LinkedIn NYSE:LNKD 113.15 12,160 107.5 11,481 964 206 735.65 11.91 55.73 12.61 NetFlix NASDAQ: NFLX 95.98 5,330 55.6 4,933 3,599 142 121 1.37 34.74 1.48 Monster Worldwide NYSE:MWW 5.97 699.1 117.1 720 896 126 9.38 0.80 5.71 0.78 51Job NASDAQ: JOBS 53.02 1,530 28.8 1,150 1,434 510 21 0.80 2.26 1.07Note: Market Cap, No. of Shares, EV, Revenue and EBITDA numbers are millions. Sales and EBITDA are analyst consensus forecast for FY 2012.Source: Thomson Reuters1 EV/EBITDA multiple for internet industry as per NYU-Stern publication
  • 3. Business OverviewLinkedIn is world’s largest online professional network with more than 200 million members across the world. Itsmembers manage professional identity and stay connected with their network through the website. Additionally,LinkedIn is also used by the corporations for marketing and recruitment purposes. LinkedIn has adapted to variousplatforms such as desktop computers, smartphones and tablet computers. There are three main product lines:Talent Solutions: Offerings in this product line provide an effective way for enterprises and professional organizations toefficiently identify and acquire the right talent for their needs.Marketing Solutions: Through offerings in this product line, LinkedIn enables marketers and advertisers to reach andengage with the audience and connect them to relevant products and services.Premium Subscriptions: Premium subscription services target small- and medium-sized enterprises and professionalorganizations, individual members and business groups in larger enterprises. Offerings in this product line are designedto manage their professional identity, grow their business and connect with talent. Source: LinkedInAll three revenue streams are growing at a high rate with the largest segment – Talent Solutions, growing at the highestrate. LinkedIn’s revenue share from Talent Solutions is increasing while from Marketing is decreasing. Increasing use ofsmartphones and tablets is posing a challenge in growing revenue from marketing stream. Smaller size of screen in thesedevices provides less or no space to show advertisements. However, as LinkedIn’s business model is relatively lessdependent on online advertising, in our opinion this is not as big threat for the company as it is for other players likeFacebook and Google.Geographic Diversification: Revenue Growth (2012Q3 YoY) 117% 108% 125%Along with well-established diversified revenue streams, other 89% 100% 73%important aspect of LinkedIn’s business model is geographic 75%diversification of revenue. The user base in countries outside the 50%United States is growing at a significantly higher pace. Adjacent 25%figure shows regional revenue growth in Q3-2012. 0% USA Other EMEA APAC AmericasCompany StrategyA large and connected user base is the key to the success for LinkedIn. To increase the user base quickly, companyfocuses on multiple things such as registration optimization, seamless integration with other applications and suggestedconnections. LinkedIn aspires to be the professional profile of every professional in the world. To achieve this, thecompany emphasizes to gain trust of its members and continuously develops features which appeal to a broader base ofprofessionals. In the recent times, LinkedIn has launched new features using which members can share information with
  • 4. each other. This initiative is increasing the engagement of its existing user base. We believe this can be useful ingenerating more revenue from the marketing segment as this revenue is dependent on page views.Another key aspect of LinkedIn’s strategy is to adapt to the need of its workforce, customers and partners. It hasreleased application libraries using which developers can create new applications. The company has opened officesacross the world and increasing number of sales personnel is driving the monetization of investments in technology.Recognizing changing market landscape, LinkedIn has put conscious efforts to adapt to tablet and mobile platforms as asignificant number of users are accessing LinkedIn through these devices.Recent Business Highlights:200 Million Milestone: Last week LinkedIn crossed 200 million users. This reinforces LinkedIn’s consistent high growthrate of the user base. This is approximately 35% growth during 2012.Acquisitions: In May, 2012 LinkedIn paid $74.1M to acquire Slideshare, Inc., a privately held provider of a professionaland educational content platform that allows users to upload documents to share ideas, conduct research and connectwith others. Offerings of Slideshare are already integrated with LinkedIn by Q3-2012. In first nine months of 2012,LinkedIn also acquired 5 other smaller companies for a total of $58.2M.Growth in international markets: Following are key milestones in terms of the user base achieved by the company inrecent months: 10 million in UK, 2 million in South Africa, 1 million in Denmark, 1 million in Malaysia among others. Thisshows that the company is able to consistently broaden its user base globally. We believe this larger user base will pavea way for future business development in international markets.Industry OverviewLinkedIn’s industry can be broadly described as online networking; however the company has focused itself in theprofessional networking space. The market for online professional networks is new and rapidly evolving. In this newmarket LinkedIn is an undisputed industry leader.CompetitionLinkedIn faces significant competition in all aspects of its business. Other companies such as Facebook, Google,Microsoft and Twitter are developing or could develop competing solutions. Further, some of these companies arepartnering with third parties to offer products and services that could compete with LinkedIn’s offerings.LinkedIn also faces competition from a number of smaller companies in the international markets, such as Xing inGermany and Viadeo in France provide online professional networking solutions, as well as Internet companies in thecustomer relationship management market, such as salesforce.com (Chatter and Jigsaw).LinkedIn also competes with established online recruiting companies such as Monster, CareerBuilder and Indeed.com,talent management companies, such as Taleo (acquired by Oracle), and traditional recruiting firms. Additionally, othercompanies, including newcomers to the recruiting industry, may partner with internet companies, including socialnetworking companies, to provide services that compete with our solutions, either on their own or as third partyapplications, such as BranchOut. Additionally, LinkedIn competes with online and offline outlets that generate revenuefrom advertisers and marketers.In this challenging market space LinkedIn has been able to redefine the business model by building a huge user base andproviding them an ability to connect with others in a professional capacity. This value proposition has not beenreplicated by others at the large scale as done by LinkedIn. Taking example from Orkut and Facebook we can argue thata larger user base is critical in engaging people and the survival is also dependent on this. We think that this aspect putLinkedIn in an advantageous position as compared to others.
  • 5. Facebook ThreatFacebook does have a much larger use base than LinkedIn; however, a large part of that user base is not a targetsegment for the company. LinkedIn primarily targets recruiters, professionals and business owners. In many studies ithas been shown that people generally prefer not to mix their personal and professional networks. This provides furthersupport to the belief that LinkedIn will be able to maintain its niche market.Risk FactorsLinkedIn faces multiple business risks. Some of the main risks which could affect company’s financial performance andhence valuations are as follows:Competition: Competitors are developing features which overlap with the functionality provided by LinkedIn. Forexample, recently Facebook revamped its search feature to allow users to find connections and content more easily. Ifcompetitors find a better way to allow the users to build a professional network or find professional connections, it canbe a significant challenge for the company.Monetization of platform and products: In last two years LinkedIn has increased its workforce by twofold and hasinvested heavily in revamping the platform and developing new features. Going further, the focus will be monetizationof these investments. If company fails to realize the expected benefits, there can be significant downside risk in terms ofvaluation. In particular, there are concerns around advertisement revenue as more and more people are using handhelddevices to access LinkedIn.Information Security: LinkedIn stores and transmits member and customer information some of which is private andsensitive in nature. Security breach might expose the company to litigation or business disruption. In June, 2012password information of 6.5 million LinkedIn users was compromised.Acquisitions: Lately, LinkedIn has been very aggressive in terms of acquisitions. In May 2012, it acquired Slideshare Inc.for $74.1M, LinkedIn’s largest acquisition so far. Additionally, the company also acquired five other companies for$58.2M in 2012. 78% of the transaction value of these acquisitions is recognized as goodwill which might result inimpairment charges in the future. These acquisitions will also have dilutive effect on LinkedIn’s existing shareholders asboth cash and equity component is being used for these deals. One of the prime motives behind these acquisitions is toget access to the talent of these smaller companies; however, if these people leave the company in large numbers, thismotive might not be fulfilled.Low number of active users: Number of registered members in LinkedIn network is higher than the number of actualmembers due to multiple registrations, dead people and fictitious profiles. Additionally, substantial majority of pageviews are generated by a minority of members who use LinkedIn regularly.Corporate Governance: As of Sep 30, 2012, 63% of the voting rights are held by Mr. Reid Hoffman, the founder of thecompany. This type of situation might generate corporate governance issues as shareholders, apart from the founder,are always in minority from voting right perspective.Foreign Currency Risk: LinkedIn is generating increasing share of revenue from international markets which exposes thecompany to foreign currency risk.Cyclicality of business: LinkedIn considers first quarter of the year a lull period for talent solutions business and thirdquarter for Marketing Solutions. Currently, as the growth is significantly high, these lull periods do not show significanteffect in the numbers; however, as the growth rate is expected to go down in the coming years, the cyclicality of thebusiness might be more pronounced.
  • 6. ValuationRevenue ForecastLinkedIn is witnessing a significant growth rate in all of its revenue segments over past some years. As the base grows,the growth rate is expected to go down but still it will maintain a high level for next some years. Marketing segmentgrowth rate is expected to be the slowest as the increased usage of mobile devices provides limited opportunity to showadvertisements.As the user base builds up in the international markets, the revenue growth is expected to in general remain high.Additionally, LinkedIn has started focusing on building a strong and international field presence through sales andmarketing personnel. This could further support revenue growth from the enterprise customers in Talent Solutions andMarketing Solutions revenue streams. In the recently reported numbers LinkedIn also showed increase in userengagement trends due to recently launched features. Following are the estimated revenue growth forecast:Sales Forecast ------------------ Actuals ------------------ ------------------------------ Forecast ------------------------------------ Projected Fiscal Years Ending Dec 31 Unit Type 2009 2010 2011 2012 2013 2014 2015 2016 Segm ented sales Hiring Solutions [#] [input] 36,136.0 101,884.0 260,885.0 521,770.0 939,186.0 1,502,697.6 2,103,776.6 2,945,287.3 [%] [calc], [input] 181.9% 156.1% 100.0% 80.0% 60.0% 40.0% 40.0% Marketing Solutions [#] [input] 38,278.0 79,309.0 155,848.0 252,473.8 378,710.6 530,194.9 689,253.4 896,029.4 [%] [calc], [input] 107.2% 96.5% 62.0% 50.0% 40.0% 30.0% 30.0% Premium Subscriptions [#] [input] 45,713.0 61,906.0 105,456.0 189,820.8 322,695.4 500,177.8 725,257.8 979,098.1 [%] [calc], [input] 35.4% 70.3% 80.0% 70.0% 55.0% 45.0% 35.0% TOTAL [#] [calc] 120,127.0 243,099.0 522,189.0 964,064.6 1,640,592.0 2,533,070.3 3,518,287.8 4,820,414.7 [%] [calc] 102.4% 114.8% 84.6% 70.2% 54.4% 38.9% 37.0%Forecasted Income StatementAs the monetization of investments in platform and features is expected to improve in the coming years, we estimatesome further improvements in the profit margins. The future addition to the workforce is expected to be focused onsales and marketing staff which cost relatively less than the recent large number of newly hired software engineers.Income Statement ------- Actuals ------- ---------------------------- Forecast ------------------------------------ Projected Fiscal Years Ending Dec 31(in thousands of U.S. dollars) 2010 2011 2012 2013 2014 2015 2016Total Revenues 243,099.0 522,189.0 964,064.6 1,640,592.0 2,533,070.3 3,518,287.8 4,820,414.7Cost of goods sold (44,826.0) (81,448.0) (125,328.4) (213,277.0) (303,968.4) (422,194.5) (530,245.6)Gross profit 198,273.0 440,741.0 838,736.2 1,427,315.0 2,229,101.9 3,096,093.3 4,290,169.1SG&A (159,146.0) (371,796.0) (737,509.4) (1,181,226.2) (1,773,149.2) (2,392,435.7) (3,277,882.0)EBITDA 39,127.0 68,945.0 101,226.8 246,088.8 455,952.7 703,657.6 1,012,287.1Depreciation & amortization (19,551.0) (43,100.0) (80,731.0) (153,767.4) (215,287.5) (284,691.0) (377,975.9)EBIT 19,576.0 25,845.0 20,495.7 92,321.4 240,665.2 418,966.5 634,311.2Other Non- operating Income (expense) (610.0) (2,903.0) (2,903.0) (2,903.0) (2,903.0) (2,903.0) (2,903.0)Earnings before taxes 18,966.0 22,942.0 17,592.7 89,418.4 237,762.2 416,063.5 631,408.2Tax expense (3,581.0) (11,030.0) (3,518.5) (17,883.7) (47,552.4) (83,212.7) (126,281.6)Net earnings(loss) from continuing item s 15,385.0 11,912.0 14,074.2 71,534.7 190,209.8 332,850.8 505,126.6Extraordinary gains / losses (11,956.0)Minority interestNet income 3,429.0 11,912.0 14,074.2 71,534.7 190,209.8 332,850.8 505,126.6
  • 7. Forecasted Cash Flow StatementCash Flow Statement ------- Actuals ------- ---------------------------- Forecast ------------------------------------ Projected Fiscal Years Ending May 31 2010 2011 2012 2013 2014 2015 2016Funds From Operating ActivitiesNet income 15,385.0 11,912.0 14,074.2 71,534.7 190,209.8 332,850.8 505,126.6Depreciation of PP&E 19,551.0 43,100.0 80,731.0 153,767.4 215,287.5 284,691.0 377,975.9Provision for doubtful accounts and sales returns 1,811.0 3,109.0 2,892.2 6,562.4 10,132.3 14,073.2 19,281.7Stock based compensation 8,832.0 29,768.0 86,283.8 97,615.2 145,398.2 185,765.6 251,336.4Excess Income tax benefit from exercise of stock options (129.0) (1,600.0) (4,314.2) (4,880.8) (7,269.9) (9,288.3) (12,566.8) Funds from operations 45,450.0 86,289.0 179,667.0 324,598.9 553,757.8 808,092.3 1,141,153.7(Increase) / decrease in accounts receivable (35,677.0) (54,908.0) (52,519.0) (82,197.8) (133,871.7) (77,416.9) (169,276.5)(Increase) / decrease in deferred comission (5,798.0) (5,271.0) (3,759.2) (12,177.5) (13,531.5) (16,748.7) (17,315.7)(Increase) / decrease in other currents assets (4,259.0) (14,111.0) (15,105.6) (22,139.3) (33,021.7) (22,379.9) (42,970.2)Increase / (decrease) in accounts payable 15,595.0 36,950.0 23,842.5 36,532.5 48,193.8 53,201.7 70,314.9Increase / (decrease) in accrued liabilities 39,535.0 84,475.0 28,121.8 60,887.5 80,323.0 88,669.6 117,191.4Increase / (decrease) in Deferred Revenue 72,296.2 148,836.0 196,345.2 216,747.9 286,467.9 Change in w orking capital 9,396.0 47,135.0 52,876.8 129,741.3 144,437.1 242,073.7 244,411.8 Cash flow from operating activities 54,846.0 133,424.0 232,543.8 454,340.3 698,194.9 1,050,166.0 1,385,565.5Funds From Investing ActivitiesAcquisitions (4,467.0) (7,404.0)Net (increase) decrease in Investments - (239,419.0) (243,576.3) (10,145.3) (141,090.0) (70,390.0) (19,404.6)(increase) decrease in restricted cash and deposits (1,140.0) (2,681.0)Increase/Decrease to PP&E (50,026.0) (88,978.0) (65,556.4) (95,154.3) (121,587.4) (133,694.9) (134,971.6) Cash flow from investing activities (55,633.0) (338,482.0) (309,132.7) (105,299.7) (262,677.4) (204,084.9) (154,376.3)Cash available for principal debt service after paying interest (787.0) (205,058.0) (76,588.9) 349,040.6 435,517.6 846,081.1 1,231,189.2Funds From Financing ActivitiesIssuance (purchase) of Equity Shares 910.0 439,627.0Issuance (repayment) of Stock Options 3,590.0 12,882.0Repurchase of common stock (175.0) (44.0) Cash flow from financing activities 4,325.0 452,465.0 - - - - -Effect of exchange rate changes (73.0) (1,310.0)Beginning cash balance 89,979.0 93,444.0 339,541.0 262,952.1 611,992.8 1,047,510.4 1,893,591.5Change in cash & equivalents 3,465.0 246,097.0 (76,588.9) 349,040.6 435,517.6 846,081.1 1,231,189.2Ending cash balance 93,444.0 339,541.0 262,952.1 611,992.8 1,047,510.4 1,893,591.5 3,124,780.7
  • 8. Forecasted Balance SheetLinkedIn has not recognized any impairment of goodwill in past many quarters even when it has been consistentlyacquiring smaller companies. In 2012, 78% of the transaction value was recognized as Goodwill. Taking conservativeestimates, we believe that there can be some impairment (20% yearly) of goodwill in the coming years.As a result of its IPO in 2011, LinkedIn currently has high level of cash and cash equivalents. we estimate this to go downin the future. In past some quarters, this has already shown a downward trend as a result of a series of acquisitions.Balance Sheet Statement ------- Actuals ------- ---------------------------- Forecast ------------------------------------ Projected Fiscal Years Ending May 31 2010 2011 2012 2013 2014 2015 2016AssetsCash & equivalents 92,951.0 339,048.0 262,952.1 611,992.8 1,047,510.4 1,893,591.5 3,124,780.7Short Term Investments - 238,456.0 482,032.3 492,177.6 633,267.6 703,657.6 723,062.2Accounts receivable 58,263.0 111,372.0 163,891.0 246,088.8 379,960.5 457,377.4 626,653.9Deffered Commisions 8,684.0 13,594.0 17,353.2 29,530.7 43,062.2 59,810.9 77,126.6Other current assets and prepaid expenses 12,308.0 23,457.0 38,562.6 60,701.9 93,723.6 116,103.5 159,073.7Total current assets 172,206.0 725,927.0 964,791.1 1,440,491.7 2,197,524.3 3,230,540.8 4,710,697.1Property Plant and Equipm ent Net PP&E 56,743.0 114,850.0 180,406.4 275,560.7 397,148.1 530,843.0 665,814.7Net goodw ill - 12,249.0 115,501.0 92,400.8 73,920.6 59,136.5 47,309.2Intangible Assets 5,232.0 8,095.0 35,841.6 41,217.8 47,400.5 54,510.6 62,687.2Other non-current assets 4,007.0 12,576.0 31,440.0 62,880.0 106,896.0 160,344.0 240,516.0Total assets 238,188.0 873,697.0 1,327,980.1 1,912,551.1 2,822,889.5 4,035,375.0 5,727,024.2Liabilities & Shareholders EquityAccounts payable 12,886.0 28,217.0 52,059.5 88,592.0 136,785.8 189,987.5 260,302.4Accrued Liabilities 27,601.0 58,644.0 86,765.8 147,653.3 227,976.3 316,645.9 433,837.3Deferred Revenue 64,985.0 139,798.0 212,094.2 360,930.2 557,275.5 774,023.3 1,060,491.2Short term debt - - - - - - -Total current liabilities 105,472.0 226,659.0 350,919.5 597,175.5 922,037.6 1,280,656.8 1,754,631.0Long-term debt/liabilities - - - - - - -Deferred Tax Liabilities 6,625.0 18,551.0 50,087.7 100,175.4 170,298.2 255,447.3 383,170.9Other non-current liabilities 1,861.0 3,508.0 21,048.0 42,096.0 71,563.2 107,344.8 161,017.2Total Liabilities 113,958.0 248,718.0 422,055.2 739,446.9 1,163,899.0 1,643,448.8 2,298,819.1Total common equity 4.0 10.0 11.0 11.0 11.0 11.0 11.0Additional paid-in capital 25,074.0 617,629.0 884,602.7 1,080,247.3 1,375,923.9 1,776,008.7 2,307,161.0Retained earnings (4,675.0) 7,340.0 21,311.2 92,845.9 283,055.7 615,906.5 1,121,033.1Other equity 103,827.0 - - - - - -Total Shareholders Equity 124,230.0 624,979.0 905,924.9 1,173,104.2 1,658,990.6 2,391,926.1 3,428,205.1Total Liabilities & Shareholders Equity 238,188.0 873,697.0 1,327,980.1 1,912,551.1 2,822,889.5 4,035,375.0 5,727,024.2Sensitivity AnalysisA sensitivity analysis on the average price given by Terminal Growth Rate based target price and EV/EBITDA exit multiplebased target price produces following results. EV/ EBITDA for Terminal Value Terminal Growth Rate 16.0x 16.5x 17.1x 17.5x 18.0x 2.50% 119.66 121.47 123.64 125.08 126.89 2.75% 122.49 124.29 126.46 127.90 129.71 3.00% 125.67 127.47 129.64 131.08 132.89 3.25% 129.28 131.09 133.26 134.70 136.51 3.50% 133.42 135.22 137.39 138.83 140.64DisclaimerInformation used in this report and underlying analysis is public information and is gathered from sources likeBloomberg, Google Finance, Thomson Reuters’ Investext, EDGAR, Company websites etc. we do not hold any securitiesrelated to the companies mentioned in this report.