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Linkedin evaluation.2

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  • 1. Exhibit A: Pro Forma Forecast of Free Cash Flows: Forecasts ($m) Sales Growth vs Prior Year Cost of Revenue (average 14% of Rev) Gross Profit 2012 2013 2014 2015 2016 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 972.00 86% 1944.00 100% 3499.20 80% 5598.72 60% 7278.34 30% 8734.00 20% 9694.74 11% 10761.17 11% 11944.89 11% 13258.83 11% 14717.30 11% (136.08) (272.16) (489.89) (783.82) (1018.97) (1222.76) (1357.26) (1506.56) (1672.29) (1856.24) (2060.42) 835.92 1671.84 3009.31 4814.90 6259.37 7511.24 8337.48 9254.60 10272.61 11402.60 12656.88 SG&A (Sales/MKT =33%+ Admin = 11%) total= Average 46% of rev (447.12) (894.24) (1609.63) (2575.41) (3348.03) (4017.64) (4459.58) (4950.14) (5494.65) (6099.06) (6769.96) Research and Development average 25% of Rev) (243.00) (486.00) (874.80) (1399.68) (1819.58) (2183.50) (2423.69) (2690.29) (2986.22) (3314.71) (3679.33) (77.76) (155.52) (279.94) (447.90) (582.27) (698.72) (775.58) (860.89) (955.59) (1060.71) (1177.38) 68.04 136.08 244.94 391.91 509.48 611.38 678.63 753.28 836.14 928.12 1030.21 - Income Tax at 40% (27.22) (54.43) (97.98) (156.76) (203.79) (244.55) (271.45) (301.31) (334.46) (371.25) (412.08) Unlevered Net Income 40.82 Add: Depreciation 77.76 81.65 155.52 146.97 279.94 235.15 447.90 305.69 582.27 366.83 698.72 407.18 775.58 451.97 860.89 501.69 955.59 556.87 1060.71 618.13 1177.38 SUB: Capital Expenditures (average 13% of rev) SUB Increase in NWC (average at 9% of Rev) Stock based compensation (average 5% of revenues) Free Cash Flow 126.36 252.72 454.90 727.83 946.18 1135.42 1260.32 1398.95 1552.84 1723.65 1913.25 (68.04) 86.32 (136.08) 97.20 (272.16) 174.96 (544.32) 279.94 (1088.64) 363.92 (1524.10) 436.70 (1691.75) 484.74 (1877.84) 538.06 (2084.40) 597.24 (2313.69) 662.94 (2568.19) 735.87 146.58 217.73 419.13 779.47 1394.33 1890.92 2098.93 2329.81 2586.09 2870.56 3186.32 Depreciation average 8% of rev EBIT Actual'unlvered'Free'Cashflow 144.18
  • 2. Exhibit B- Common size income statement to analyze LNKD corporate performance 7
  • 3. Exhibit C: Beta Estimation and Rwacc calculation 8
  • 4. Exhibit D: Discounted cash flow valuation 9
  • 5. Exhibit E: Sensitivity analysis Sensi&v8y  analysis  for  average   growth  for  next  10  years   Sensi&vity  Analysis  for  g  (long   term  growth)   $250.00   $170.00   $150.00   $200.00   $130.00   $150.00   $110.00   $90.00   $100.00   $70.00   $50.00   $50.00   3%   4%   5%   6%   7%   8%   9%   10%  11%  12%  13%  14%  15%   20%   Sensi&vity  Analysis  for  Rwacc   25%   30%   35%   40%   45%   50%   60%   70%   Sensi&vity  Analysis  for  β     $400.00   $350.00   $350.00   $300.00   $300.00   $250.00   $250.00   $200.00   $200.00   $150.00   $150.00   $100.00   $100.00   $50.00   $50.00   8%   9%   10%  11%  12%  13%  14%  15%  16%  17%  18%  19%  20%   0.7   0.8   0.9   1.0   1.1   1.1   1.2   1.2   1.3   1.4   1.5   1.6   1.7   10
  • 6. Exhibit F: TEV/Total Revenues 25.00x 20.00x 15.00x 10.00x 5.00x 0.00x -5.00x LinkedIn Corporation (NYSE:LNKD) - Monthly TEV/Total Revenues Monster Worldwide, Inc. (NYSE:MWW) - Monthly TEV/Total Revenues Facebook, Inc. (NasdaqGS:FB) - Monthly TEV/Total Revenues 11
  • 7. 12
  • 8. Exhibit G: Comparative cash flow statement of LNKD and peers Cash from Operating Activity FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FYTD13 Linkedin Monster Facebook Taleo Salesforce 0.0 0.0 0.0 -1.2 -13.2 0.0 43.1 0.0 10.9 5.2 0.0 92.5 0.0 -8.5 21.8 0.0 209.0 0.0 -0.9 55.9 0.0 268.2 0.0 9.4 95.9 0.0 269.2 0.0 30.2 111.2 9.2 225.8 0.0 17.8 204.3 21.4 44.7 155.0 50.7 229.6 54.4 93.1 698.0 35.8 270.9 133.4 149.7 1549.0 31.4 459.1 267.1 53.3 1612.0 0.0 591.5 384.9 32.0 2972.0 0.0 736.9 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FYTD13 Linkedin Monster Facebook Taleo Salesforce 0.0 0.0 0.0 -2.0 -0.7 0.0 -41.6 0.0 -2.3 -9.6 0.0 -137.1 0.0 -3.6 -21.1 0.0 -274.1 0.0 -8.5 -149.2 0.0 -453.1 0.0 -12.0 -47.8 0.0 12.6 0.0 -13.8 -168.6 -20.5 -36.5 0.0 -62.8 -102.7 -13.0 7.9 -62.0 -8.7 -99.4 -55.6 -261.3 -324.0 -151.6 -378.6 -338.5 -62.2 -3023.0 -63.4 -1062.6 -433.0 -60.9 -7024.0 0.0 -489.7 -511.3 -45.9 -678.0 0.0 -938.9 Cash from Financing Activity FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FYTD13 Linkedin Monster Facebook Taleo Salesforce 0.0 0.0 0.0 -0.5 3.5 0.0 -28.1 0.0 0.7 1.0 0.0 97.8 0.0 -0.2 1.1 0.0 67.9 0.0 63.0 118.9 0.0 43.3 0.0 2.2 15.8 0.0 -217.3 0.0 10.1 45.0 73.9 -71.8 0.0 8.5 92.7 1.0 -11.4 243.0 151.7 75.3 4.3 60.6 781.0 12.6 637.2 452.5 5.1 1198.0 7.7 14.1 96.6 -98.8 6283.0 0.0 75.9 104.3 -66.2 -1400.0 0.0 334.5 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FYTD13 0.0 0.0 0.0 -3.7 -10.5 0.0 -23.4 0.0 9.2 -3.0 0.0 55.9 0.0 -12.4 1.8 0.0 -1.5 0.0 53.6 25.3 0.0 -137.9 0.0 -0.6 64.1 0.0 71.1 0.0 27.4 -13.2 62.5 92.5 0.0 -36.7 192.5 9.5 53.2 336.0 194.8 204.7 3.0 -112.3 1152.0 -102.6 527.5 246.1 87.1 -273.0 -25.6 -587.0 -68.6 -102.1 872.0 0.0 183.0 -23.7 -78.1 903.0 0.0 140.0 Cash from Investing Activity Net Change in Cash Linkedin Monster Facebook Taleo Salesforce 13
  • 9. Cash  from  Opera&ng  Ac&vity   3250.0   3000.0   2750.0   2500.0   2250.0   2000.0   1750.0   1500.0   1250.0   1000.0   750.0   500.0   250.0   0.0   -­‐250.0   FY02   FY03   FY04   LinkedIn   FY05   FY06   Monster   FY07   Facebook   FY08   Taleo   FY09   FY10   Salesforce   FY11   FY12   FYTD13   FY12   FYTD13   Linear  (LinkedIn)   Cash  from  Inves&ng  Ac&vity   200.0   0.0   -­‐200.0   FY02   FY03   FY04   FY05   FY06   FY07   FY08   FY09   FY10   FY11   -­‐400.0   -­‐600.0   -­‐800.0   -­‐1000.0   -­‐1200.0   Linkedin   Facebook   Taleo   Salesforce   Linear  (Linkedin)   14
  • 10. Cash  from  Financing  Ac&vity   8000.0   6000.0   4000.0   2000.0   0.0   FY02   FY03   FY04   FY05   FY06   FY07   FY08   FY09   FY10   FY11   FY12   FYTD13   FY12   FYTD13   -­‐2000.0   Linkedin   Monster   Facebook   Taleo   Salesforce   Linear  (Linkedin)   Net  Change  in  Cash   1500.0   1000.0   500.0   0.0   FY02   FY03   FY04   FY05   FY06   FY07   FY08   FY09   FY10   FY11   -­‐500.0   -­‐1000.0   Linkedin   Monster   Facebook   Taleo   Salesforce   Linear  (Linkedin)   15
  • 11. Exhibit H: Capital Structure Year 1 Total Debt Outstanding Year 2 Year 3 Year 4 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FYTD13 Linkedin Monster Facebook Taleo 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 40.4 63.2 47.1 23.7 0.0 1.0 23.7 1.0 0.0 1.0 55.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 473.0 677.0 2360.0 2167.0 0.3 3.6 1.0 1.0 0.4 0.1 1.6 0.5 0.2 0.0 0.0 0.0 Salesforce 1.9 0.6 0.1 1.3 0.8 0.0 Total Common Equity (Sum - Common & Preferred) 2.1 7.6 Year 1 Year 2 463.7 Year 3 498.0 Year 4 568.2 Year 5 647.9 Year 6 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FYTD13 Linkedin Monster Facebook 0.0 0.0 0.0 0.0 0.0 0.0 93.2 97.1 124.2 625.0 908.4 1111.0 0.0 468.2 779.6 933.3 1109.7 1116.5 1047.3 1133.2 1128.7 1164.1 880.0 827.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2162.0 4899.0 11755.0 12349.0 Taleo 8.3 14.2 9.1 73.4 78.2 86.0 172.4 337.2 368.5 379.2 0.0 0.0 Salesforce 9.1 5.2 14.9 14.9 145.1 281.8 452.1 671.8 1043.8 1276.5 1587.4 2317.6 Year 1 FY02 Year 2 FY03 Year 3 FY04 Year 4 FY05 Year 5 FY06 Year 6 FY07 Year 7 FY08 Year 8 FY09 Year 9 FY10 Year 10 FY11 Year 11 FY12 Year 12 FYTD13 0.0 0.0 0.0 0.0 0.0 0.0 80.5 90.0 93.0 577.5 749.5 873.4 0.0 142.3 198.1 320.3 596.6 578.4 223.7 284.7 163.2 250.3 148.2 79.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1785.0 3908.0 3908.0 9626.0 10252.0 9.0 18.2 5.8 59.3 58.8 86.1 49.5 244.2 141.6 116.0 0.0 0.0 11.7 16.0 35.8 118.8 207.6 252.4 450.8 697.6 1242.0 497.0 777.9 867.6 Total Cash and STI Linkedin Monster Facebook Taleo Salesforce FIRST (6) YEARS OF BUSINESS Total Cash and STI Linkedin Monster Facebook Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 80.5 90.0 93.0 577.5 749.5 873.4 142.3 198.1 320.3 596.6 578.4 223.7 0.0 1785.0 3908.0 3908.0 9626.0 10252.0 Taleo 9.0 18.2 5.8 59.3 58.8 86.1 Salesforce 11.7 16.0 35.8 118.8 207.6 252.4 16
  • 12. Monster   Facebook   1500.0   20000.0   1000.0   15000.0   10000.0   500.0   5000.0   0.0   0.0   Year   Year   Year   Year   Year   Year   Year   Year   Year   Year   Year   Year   1   2   3   4   5   6   7   8   9   10   11   12   Year  1   Year  2   Year  3     Year  4   Total  Common  Equity        (Sum  -­‐  Common  &  Preferred)   Total  Common  Equity        (Sum  -­‐  Common  &  Preferred)   Total  Debt  Outstanding   Total  Debt  Outstanding   LinkedIn   Salesforce   4000.0   2000.0   0.0   Year   Year   Year   Year   Year   Year   Year   Year   Year   Year   Year   Year   1   2   3   4   5   6   7   8   9   10   11   12   Total  Common  Equity        (Sum  -­‐  Common  &  Preferred)   Total  Debt  Outstanding   3500.0   3000.0   2500.0   2000.0   1500.0   1000.0   500.0   0.0   Year  1     Year  2   Year  3   Year  4   Year  5   Year  6   Total  Common  Equity        (Sum  -­‐  Common  &   Preferred)   17
  • 13. Cash  and  STI  (First  6yrs  Business)   12000.0   10000.0   8000.0   6000.0   4000.0   2000.0   0.0   Year  1   Year  2   Year  3   Linkedin   Monster   Year  4   Facebook   Taleo   Year  5   Year  6   5   6   Salesforce   Cash  and  STI  (First  6yrs  Business)   900.0   800.0   700.0   600.0   500.0   400.0   300.0   200.0   100.0   0.0   1   2   3   Linkedin   4   Taleo   18