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LinkedIn Valuation

Open Source Model

Pristine has created an integrated valuation model of LinkedIn based on


publically available information. It is available as an open-source model for
any user. Kindly note that this model is meant for information purpose only.

From this sheet you will learn how to create the full-blown equity valuation
model for professional networking company LinkedIn. The model builds the
financial statements from scratch to find the equity value and also uses ratio
analysis for better understanding.

The complete structure of the model and formulas, linkages etc. have been
kept open to allow for any modification on the part of the user.

To download more Open Series spreadhseets please visit our website.

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Pristine
n

model of LinkedIn based on


le as an open-source model for
nt for information purpose only.

the full-blown equity valuation


y LinkedIn. The model builds the
e equity value and also uses ratio

rmulas, linkages etc. have been


he part of the user.

ts please visit our website.


1
1
1 Linked
1
1
4,000,000
1
FY 08A
Revenue from Hiring Solutions 17,352
3,500,000 Revenue from Marketing Solutions 25,972
Revenue from Premium Subscriptions 35,449
Cash & Cash Equivalents 80,495
3,000,000 Stockholders' Equity 5,230
Profit Before Taxes (1,012)

2,500,000

2,000,000

1,500,000

1,000,000

500,000

-
FY 08A FY 09A FY 10A FY 11A

(500,000)
LinkedIn Summary

FY 09A 10 11 12 13 14 15
36,136 101,379 247,948 534,411 1,064,633 1,980,863 3,508,512
38,278 74,176 121,793 179,865 244,022 316,663 395,491
45,713 60,777 76,157 85,511 96,176 115,485 133,462
89,979 104,209 292,552 363,043 519,900 786,033 1,240,777
9,082 25,971 208,869 270,323 410,063 656,451 1,075,002
284 25,586 11,966 93,113 211,726 373,316 634,168

FY 11A FY 12A FY 13A FY 14A FY 15A


Premium Subscription

Hiring Solution

Marketing Solutions

Cash & Cash Equivalents

Stockholder's Equity

Profit Before Taxes

Revenue from Hiring


Solutions

Revenue from Premium


Subscriptions

Cash & Cash Equivalents

Revenue from Marketing


Solutions

Stockholders' Equity

Profit Before Taxes


FY 15A
1 FY 08A FY 09A FY 10A FY 11A FY 12A
EBITDA Margins 1% 7% 14% 4% 12%
EBIT Margins -7% -3% 9% Ratio Analysis of LinkedI
1% 10%
EBT Margins -7% -3% 9% 1% 10%
20.00%Net Profit Margin -2% 0% 7% 2% 8%
Return on Assets (ROA)
Return on Invested Capital (RoIC)
Return on Stockholder's Equity
15.00%Asset Turnover Ratio
Average Day's Sales
No. of Days of Receivables
Working Capital Turnover
10.00%Current Ratio
Acid Test Ratio

5.00%

0.00%
FY 08A FY 09A FY 10A FY 11A FY 12A FY 13A

-5.00%

-10.00%
FY 13A FY 14A FY 15A
15% 15% 15% Profitability Ratios
Analysis of LinkedIn
14% 14% 15%
14% 14% 15% Return on Investment Ratios
10% 10% 10%
Activity Ratios

Liquidity & Solvency Ratio

EBITDA Margins
EBIT Margins
Return on Stockholder's Equity
Working Capital Turnover
FY 12A FY 13A FY 14A FY 15A Current Ratio
EBT Margins
Net Profit Margin
Return on Assets (ROA)
Return on Invested Capital (RoIC)
Asset Turnover Ratio
Acid Test Ratio
Assumptions
(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

Income Tax Rate 34%

Balance Sheet Assumptions

Accounts Receivables No. of Days CAGR 69

Prepaid Expenses as % of Revenue Scroll Bar 3%

Other Assets Growth Rate Actual 112%

Account Payable No. of Days CAGR 12

Deferred Revenue as % of Revenue CAGR 19%

Interest Rates
Interest rate on Cash Balance 4% 4%
Interest rate on Overdraft 6% 6%
FY 09A 10 11 12 13 14 15

34% 34% 34% 34% 34% 34% 34%

4000% 0%
74 72 72 72 72 72 72

200% 200% 200% 200% 200% 2


4% 2% 2% 2% 2% 2% 2%

0%
116% 16% 181% 24% 43% 51% 58%

15 13 13 13 14 13 13

0%
21% 20% 20% 20% 20% 20% 20%

4% 4% 4% 4% 4% 4% 4%
6% 6% 6% 6% 6% 6% 6%
Assumptions
Assumptions
Revenue Build-Up
(Unless otherwise specified, all financials are in US $ Thousand) 31-Mar-09 30-Jun-09
FY 2009 FY 2009

Quarterly Schedule of Revenue

Number of Registered Members 37,355 42,012

Growth Rate of Registered Members 12%

LinkedIn Corporate Solutions Customers 1,008 1,116

Growth Rate of LinkedIn Corporate Solutions Customers 11%

Hiring Solution Revenue 6,277 8,113

Hiring Charges per Registerd Members Cents 623 727

Maketing Solution Revenue 6,103 8,727

Marketing charges per Registered Member Cents 16 21

Premium Solution Revenue 10,862 10,914

Premium Solution charges per Registered MemberCents 29 26

Total Revenue per Quarter 23,242 27,754

Annual Schedule
Yearly Revenue FY 2009 FY 2010
Hiring Solution Revenue 36,136 101,379
Maketing Solution Revenue 38,278 74,176
Premium Solution Revenue 45,713 60,777

Number of Registered Members 182,482 306,617


Growth Rate of Registered Members 68%

LinkedIn's Corporate Customers 4,969 10,451


Growth Rate of Corporate Customers 110%
30-Sep-09 31-Dec-09 31-Mar-10 30-Jun-10 30-Sep-10 31-Dec-10 31-Mar-11
FY 2009 FY 2009 FY 2010 FY 2010 FY 2010 FY 2010 FY 2011

48,004 55,111 64,177 71,825 80,553 90,062 102,175

14% 15% 16% 12% 12% 12% 13%

1,260 1,585 1,827 2,306 2,849 3,469 3,859

13% 26% 15% 26% 24% 22% 11%

9,363 12,383 16,929 21,723 27,274 35,453 42,264

743 781 927 942 957 1,022 1,095

8,990 14,458 14,336 18,308 18,836 22,696 25,669

19 26 22 25 23 25 25

11,445 12,492 13,561 14,864 15,682 16,670 17,981

24 23 21 21 19 19 18

29,798 39,333 44,826 54,895 61,792 74,819 85,913

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015


247,948 534,411 1,064,633 1,980,863 3,508,512
121,793 179,865 244,022 316,663 395,491
76,157 85,511 96,176 115,485 133,462

467,093 638,360 801,465 962,374 1,112,186


52% 37% 26% 20% 16%

20,852 36,531 59,079 89,211 128,258


100% 75% 62% 51% 44%
30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12
FY 2011 FY 2011 FY 2011 FY 2012 FY 2012 FY 2012 FY 2012

111,285 121,469 132,164 145,975 154,612 164,123 173,650

9% 9% 9% 10% 6% 6% 6%

4,716 5,637 6,640 7,122 8,419 9,727 11,263

22% 20% 18% 7% 18% 16% 16%

53,871 67,587 84,226 95,359 118,534 144,299 176,220

1,142 1,199 1,268 1,339 1,408 1,483 1,565

28,887 31,729 35,508 39,857 43,105 46,583 50,321

26 26 27 27 28 28 29

18,711 19,390 20,076 21,105 21,281 21,488 21,637

17 16 15 14 14 13 12

101,469 118,706 139,810 156,320 182,920 212,369 248,178


31-Mar-13 30-Jun-13 30-Sep-13 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14
FY 2013 FY 2013 FY 2013 FY 2013 FY 2014 FY 2014 FY 2014

188,324 195,700 203,824 213,617 229,532 236,227 243,672

8% 4% 4% 5% 7% 3% 3%

11,856 13,778 15,644 17,801 18,382 20,995 23,419

5% 16% 14% 14% 3% 14% 12%

195,488 239,318 286,377 343,449 373,736 449,816 528,774

1,649 1,737 1,831 1,929 2,033 2,142 2,258

55,615 58,938 62,580 66,888 73,277 76,898 80,879

30 30 31 31 32 33 33

22,599 23,484 24,459 25,634 27,544 28,347 29,241

12 12 12 12 12 12 12

273,702 321,740 373,417 435,972 474,557 555,062 638,894


31-Dec-14 31-Mar-15 30-Jun-15 30-Sep-15 31-Dec-15
FY 2014 FY 2015 FY 2015 FY 2015 FY 2015

252,943 269,258 274,419 280,323 288,186

4% 6% 2% 2% 3%

26,415 27,014 30,584 33,809 36,851

13% 2% 13% 11% 9%

628,536 677,383 808,179 941,498 1,081,452

2,379 2,508 2,642 2,785 2,935

85,609 92,920 96,562 100,578 105,431

34 35 35 36 37

30,353 32,311 32,930 33,639 34,582

12 12 12 12 12

744,498 802,613 937,672 1,075,714 1,221,466


Cost Build-Up
(Unless otherwise specified, all financials are in US $ Thousand) 31-Mar-09 30-Jun-09
FY 2009 FY 2009

Cost of Revenue 5,597 6,025


Cost of Revenue as % of Total Revenue 24% 22%

Sales and Marketing 5,331 5,936


Sales & Marketing as % of Total Revenue 23% 21%

Product Development 8,547 8,747


Product Development Cost as % of Total Revenue 37% 32%

General and Administrative 3,908 4,042


General & Administrative as % of Total Revenue 17% 15%

Depreciation and Amortization 2,499 2,788


Depreciation & Amortization as % of Total Revenue 11% 10%

Stock Based Compensation Included in:

Cost of Revenue $ US 79 74

Sales and Marketing $ US 161 137

Product Development $ US 519 546

General and Administrative $ US 668 619

Yearly Cost
FY 2009 FY 2010
Cost of Revenue 25,857 45,245
Sales and Marketing 26,847 55,460
Product Development 39,444 67,094
General and Administrative 19,480 34,999
30-Sep-09 31-Dec-09 31-Mar-10 30-Jun-10 30-Sep-10 31-Dec-10 31-Mar-11
FY 2009 FY 2009 FY 2010 FY 2010 FY 2010 FY 2010 FY 2011

6,399 7,836 8,305 9,842 11,835 15,263 17,933


21% 20% 19% 18% 19% 20% 21%

6,310 9,270 10,454 13,055 14,831 17,120 21,370


21% 24% 23% 24% 24% 23% 25%

10,013 12,137 12,141 14,822 17,188 22,943 27,313


34% 31% 27% 27% 28% 31% 32%

4,881 6,649 6,672 7,667 9,092 11,568 14,835


16% 17% 15% 14% 15% 15% 17%

3,112 3,455 3,940 4,201 4,845


10% 9% 9% 8% 8%

75 142 89 90 122

160 199 250 277 317

581 700 690 675 790

687 805 905 913 1,002

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015


92,524 153,248 257,428 448,826 746,115
114,735 189,969 324,711 563,285 937,669
141,390 237,748 407,025 675,544 1,140,086
79,044 125,266 210,556 367,933 610,454
30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12
FY 2011 FY 2011 FY 2011 FY 2012 FY 2012 FY 2012 FY 2012

21,059 24,514 29,018 29,816 35,189 40,879 47,364


21% 21% 21% 19% 19% 19% 19%

25,745 30,830 36,791 37,114 43,420 50,330 59,106


25% 26% 26% 24% 24% 24% 24%

32,299 37,485 44,293 45,860 54,275 63,576 74,037


32% 32% 32% 29% 30% 30% 30%

17,913 21,172 25,123 24,089 28,565 33,437 39,176


18% 18% 18% 15% 16% 16% 16%
31-Mar-13 30-Jun-13 30-Sep-13 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14
FY 2013 FY 2013 FY 2013 FY 2013 FY 2014 FY 2014 FY 2014

51,536 59,697 68,166 78,028 88,883 103,558 118,659


19% 19% 18% 18% 19% 19% 19%

64,771 75,354 86,096 98,490 111,172 129,785 149,097


24% 23% 23% 23% 23% 23% 23%

80,886 94,035 107,884 124,220 134,641 156,451 178,483


30% 29% 29% 28% 28% 28% 28%

42,625 49,150 55,679 63,102 72,797 84,928 97,350


16% 15% 15% 14% 15% 15% 15%
31-Dec-14 31-Mar-15 30-Jun-15 30-Sep-15 31-Dec-15
FY 2014 FY 2015 FY 2015 FY 2015 FY 2015

137,727 148,100 172,884 198,616 226,515


18% 18% 18% 18% 19%

173,232 186,300 217,369 249,562 284,438


23% 23% 23% 23% 23%

205,968 227,909 265,146 303,237 343,794


28% 28% 28% 28% 28%

112,858 121,192 141,349 162,409 185,504


15% 15% 15% 15% 15%
Assets Schedule
Estimated Life of Computer Equipment Years 1.5
Estimated Life of Software Years 2.5
Estimated Life of Web Dev. & Internal-Use Software Years 2.0
Estimated Life of Furniture & Fixtures Years 4.5
Estimated Life of Leasehold Improvements Years 2.0
(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

Property & Equipments

Computer Equipment
Opening Balance
Addition of Asset
Removal of Asset
Closing Balance 19,699
Accumulated Depreciation 5,976
Net 13,723

Software
Opening Balance
Addition of Asset
Removal of Asset
Closing Balance 4,708
Accumulated Depreciation 1,428
Net 3,280

Capitalized Website Development & Internal-Use Software


Opening Balance
Addition of Asset
Removal of Asset
Closing Balance 4,625
Accumulated Depreciation 1,402
Net 3,223

Furniture & Fixtures


Opening Balance
Addition of Asset
Removal of Asset
Closing Balance 1,144
Accumulated Depreciation 346
Net 798
Leasehold Improvements
Opening Balance
Addition of Asset
Removal of Asset
Closing Balance 1,006
Accumulated Depreciation 306
Net 700

Total Gross Assets 31,182


Accumulated Depreciation 9,458
Depreciation Expense
Computer Equipment
Software
Capitalized Website Development & Internal-Use Software
Furniture & Fixtures
Leasehold Improvements
Total Depreciation Expense

Intangible Assets
Patents
Opening Balance-Gross 628
Addition of Asset -
Removal of Asset -
Closing Balance-Gross 628 628
Accumulated Amortization 122
Net Patents 506

Developed Technology
Opening Balance-Gross -
Addition of Asset -
Removal of Asset -
Closing Balance-Gross - -
Accumulated Amortization -
Net -

Non-Compete Agreements
Opening Balance-Gross -
Addition of Asset -
Removal of Asset -
Closing Balance-Gross - -
Accumulated Amortization -
Net -

Workforce in Place
Opening Balance-Gross -
Addition of Asset -
Removal of Asset -
Closing Balance-Gross - -
Accumulated Amortization -
Net -

Amortization Expense
Patents 122
Developed Technology -
Non-Compete Agreements -
Workforce -
Total Amortization Expense 122

Total Intangible Assets 628


Amortization 122
FY 09A 10 11 12 13 14 15

19,699 29,178 37,490 46,213 53,886 60,280 66,010


9,479 8,312 8,723 7,673 6,394 5,730 4,915
- - - - - - -
29,178 37,490 46,213 53,886 60,280 66,010 70,925
13,927 21,781 29,925 37,912 45,368 52,249 58,474
15,251 15,709 16,288 15,974 14,912 13,761 12,451

4,708 6,623 8,550 10,535 12,285 13,742 15,049


1,915 1,927 1,985 1,749 1,458 1,306 1,120
- - - - - - -
6,623 8,550 10,535 12,285 13,742 15,049 16,169
2,658 3,836 5,176 6,598 8,027 9,431 10,779
3,965 4,714 5,359 5,687 5,716 5,618 5,390

4,625 7,193 9,193 11,193 13,193 15,193 17,193


2,568 2,000 2,000 2,000 2,000 2,000 2,000
- - - - - - -
7,193 9,193 11,193 13,193 15,193 17,193 19,193
2,964 4,521 6,189 7,940 9,753 11,613 13,508
4,229 4,672 5,004 5,253 5,440 5,580 5,685

1,144 1,365 1,865 2,365 2,865 2,965 3,065


221 500 500 500 100 100 100
- - - - - - -
1,365 1,865 2,365 2,865 2,965 3,065 3,165
472 627 820 1,047 1,260 1,461 1,650
893 1,238 1,545 1,818 1,705 1,604 1,515

1,006 2,175 2,175 2,175 2,175 2,175 2,175


1,169 - - - - - -
- - - - - - -
2,175 2,175 2,175 2,175 2,175 2,175 2,175
783 1,131 1,392 1,588 1,735 1,845 1,927
1,392 1,044 783 587 440 330 248

46,534 59,273 72,482 84,404 94,356 103,492 111,628


20,804 31,897 43,503 55,085 66,143 76,599 86,339
7,951 7,854 8,144 7,987 7,456 6,881 6,225
1,230 1,178 1,340 1,422 1,429 1,404 1,348
1,562 1,557 1,668 1,751 1,813 1,860 1,895
126 155 193 227 213 201 189
477 348 261 196 147 110 83
11,346 11,093 11,606 11,583 11,058 10,456 9,740

628 628 628 628 628 628 628


- - - - - - -
- - - - - - -
628 628 628 628 628 628 628
331 541 628 628 628 628 628
297 87 - - - - -

- - 2,206 2,206 2,206 2,206 2,206


- 2,206 - - - - -
- - - - - - -
- 2,206 2,206 2,206 2,206 2,206 2,206
- 267 1,129 1,991 2,206 2,206 2,206
- 1,939 1,077 215 - - -

- - 424 424 424 424 424


- 424 - - - - -
- - - - - - -
- 424 424 424 424 424 424
- 67 298 424 424 424 424
- 357 126 - - - -

- - 3,259 3,259 3,259 3,259 3,259


- 3,259 - - - - -
- - - - - - -
- 3,259 3,259 3,259 3,259 3,259 3,259
- 426 2,045 3,259 3,259 3,259 3,259
- 2,833 1,214 - - - -

209 210 87 - - - -
- 267 862 862 215 - -
- 67 231 126 - - -
- 426 1,619 1,214 - - -
209 970 2,799 2,202 215 - -

628 6,517 6,517 6,517 6,517 6,517 6,517


331 1,301 4,100 6,302 6,517 6,517 6,517
DuPont Analysis
Sales
236,332
-
Earnings
Cost of Sales
Available
45,015 13,003
-
Income Statement

Operating
Net Profit Margin
Expense
divided by
169,615 5.5%
-

Interest Expense Sales

- 236,332
-
Tax Expense
8,699
-

Others
multiplied by
-

Sales
236,332
Total Asset
Current Assets
Turnover
158,414 divided by 1.24
+
Net Fixed Assets
Total Assets
(PPE)
32,592 191,006
Balance Sheet

Total Liabilities
77,054
Current Liabilities
Total Liab + SE =
76,526
+ Total Assets
+ 191,006
Long Term Debt
Stockholder
528
Equity (SE) divided by
113,952
Common stock
equity
113,952
Return on Total Assets
(ROA)
6.8%

Return on
Common Equity
multiplied by (ROE)

11.4%

Financial Leverage
multiplier
1.68
Income Statements
(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

Revenue
Hiring Solutions 7,467 17,352
Marketing Solutions 7,780 25,972
Premium Subscriptions 17,239 35,449
Total Revenue 32,486 78,773

Interest Income - 3,220


Other Income 773 1,277

Total Income 33,259 83,270

Expenses
Cost of Revenue 7,384 18,589
Sales and Marketing 5,037 16,986
Product Development 11,578 29,366
General and Administrative 6,812 12,976
Depreciation and Amortization 2,107 6,365
Total Expenses 32,918 84,282

Profit Before Tax 341 (1,012)

Provision for Income Taxes 13 290

Profit After Tax 328 (1,302)

Undistributed Earnings Allocated to Preferred SH 328 -

Balance Transfer to Balance Sheet - (1,302)


FY 09A 10 11 12 13 14 15

36,136 101,379 247,948 534,411 1,064,633 1,980,863 3,508,512


38,278 74,176 121,793 179,865 244,022 316,663 395,491
45,713 60,777 76,157 85,511 96,176 115,485 133,462
120,127 236,332 445,898 799,787 1,404,831 2,413,011 4,037,465

3,409 3,884 7,935 13,112 17,659 26,119 40,536


230 230 230 230 230 230 230

123,766 240,446 454,063 813,129 1,422,719 2,439,360 4,078,231

25,857 45,245 92,524 153,248 257,428 448,826 746,115


26,847 55,460 114,735 189,969 324,711 563,285 937,669
39,444 67,094 141,390 237,748 407,025 675,544 1,140,086
19,480 34,999 79,044 125,266 210,556 367,933 610,454
11,854 12,063 14,405 13,785 11,273 10,456 9,740
123,482 214,860 442,098 720,016 1,210,993 2,066,044 3,444,063

284 25,586 11,966 93,113 211,726 373,316 634,168

848 8,699 4,068 31,658 71,987 126,927 215,617

(564) 16,886 7,897 61,454 139,739 246,388 418,551

- - - - - - -

(564) 16,886 7,897 61,454 139,739 246,388 418,551


Over Draft
(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

Cash/Overdraft 80,495

Interest rate on Cash Balance 4%


Interest rate on Overdraft 6%

Interest Earned/Expensed 3,220


FY 09A 10 11 12 13 14 15

89,979 104,209 292,552 363,043 519,900 786,033 1,240,777

4% 4% 4% 4% 4% 4% 4%
6% 6% 6% 6% 6% 6% 6%

3,409 3,884 7,935 13,112 17,659 26,119 40,536


Stockholders
(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

No. of Shares
Reedemable Convertible Preferred Stock
Opening Balance - 4,357,644
Series C 4,357,644 -
Series D - 6,599,987
Clossing Balance 4,357,644 10,957,631

Convertible Preferred Stock


Opening Balance - 34,619,205
Series A 17,168,214 -
Series B 17,450,991 -
Clossing Balance 34,619,205 34,619,205

Common Stock
Opening Balance 34,779,864 42,417,258
Issuance of Common Stock 8,286,424 1,048,310
Repurchase 649,030 1,552,467
Clossing Balance 42,417,258 41,913,101

Amount
Reedemable Convertible Preferred Stock
Series C
Opening Balance (100) 12,700
Addition during the year 12,800 -
Removal during the year - -
Closing Balance 12,700 12,700

Series D
Opening Balance - -
Addition during the year - 75,281
Removal during the year - -
Closing Balance - 75,281

Convertible Preferred Stock


Opening Balance 15,413 15,413
Series A - -
Series B - -
Clossing Balance 15,413 15,413

Warrants 15 15

Common Stock
Opening Balance 3 3
Issuance of Common Stock - -
Repurchase - -
Clossing Balance 3 3
Additional Paid in Capital
Opening Balance 292 2,592
Issuance of Common Stock 327 778
Vesting Early Excercised Stock Options 133 913
Repurchase - 3,197
Stock Based Compensation 1,840 4,692
Clossing Balance 2,592 5,778

Accumulated Other (Income) Loss - (23)

Accumulated Deficit
Opening Balance (11,762) (11,434)
Cummulative Effect of Accounting Change - (3,220)
Net Income 328 (1,302)
Closing Balance (11,434) (15,956)

Closing Balance 6,589 5,230


FY 09A FY 10A FY 11A FY 12A FY 13A FY 14A FY 15A

10,957,631 10,957,631 10,957,631 10,957,631 10,957,631 10,957,631 10,957,631


- - - - - - -
- - - - - - -
10,957,631 10,957,631 10,957,631 10,957,631 10,957,631 10,957,631 10,957,631

34,619,205 34,619,205 34,619,205 34,619,205 34,619,205 34,619,205 34,619,205


- - - - - - -
- - - - - - -
34,619,205 34,619,205 34,619,205 34,619,205 34,619,205 34,619,205 34,619,205

41,913,101 41,745,728 42,841,084 42,841,084 42,841,084 42,841,084 42,841,084


1,704,436 1,095,356 - - - - -
1,871,809 - - - - - -
41,745,728 42,841,084 42,841,084 42,841,084 42,841,084 42,841,084 42,841,084

12,700 12,700 12,700 12,700 12,700 12,700 12,700


- - - - - - -
- - - - - - -
12,700 12,700 12,700 12,700 12,700 12,700 12,700

75,281 75,281 75,281 75,281 75,281 75,281 75,281


- - - - - - -
- - - - - - -
75,281 75,281 75,281 75,281 75,281 75,281 75,281

15,413 15,413 15,413 15,413 15,413 15,413 15,413


- - - - - - -
- - - - - - -
15,413 15,413 15,413 15,413 15,413 15,413 15,413

- - - - - - -

3 4 4 175,004 175,004 175,004 175,004


1 - 175,000 - - - -
- - - - - - -
4 4 175,004 175,004 175,004 175,004 175,004
5,778 13,725 13,725 13,725 13,725 13,725 13,725
1,083 - - - - - -
792 - - - - - -
198 - - - - - -
6,270 - - - - - -
13,725 13,725 13,725 13,725 13,725 13,725 13,725

(3)

(15,956) (20,057) (3,171) 4,727 66,181 205,921 452,309


(3,537) - - - - - -
(564) 16,886 7,897 61,454 139,739 246,388 418,551
(20,057) (3,171) 4,727 66,181 205,921 452,309 870,860

9,082 25,971 208,869 270,323 410,063 656,451 1,075,002


Balance Sheet
(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

Assets
Fixed Assets
Gross Block 31,182
Less: Accumulated Depreciation 9,458
Net Block 21,724

Intangible Assets
Gross Block 628
Less: Accumulated Amortization 122
Net Block 506

Total Fixed Assets 22,230

Current Assets & Loans and Advances


Cash & Cash Equivalents 80,495
Accounts Receivables 14,987
Prepaid Expenses and Other Current Assets 2,718
Restricted Cash 218
Income Tax Receivables 62
Deferred Income Taxes 731
Other Assets 621
Total Current Asstes 99,832

Total Assets 122,062

Liabilities
Current Liabilities
Overdraft -
Accounts Payable 2,510
Accrued Liabilities 10,224
Deferred Revenue 14,858
Income Tax Payable 133
Deferred Tax Liabilities 731
Total Current Liabilities 28,456

Long Term Liabilities 395

Total Liabilities 28,851

Net Worth
Redeemable Convertible Preferred Stock
Series C 12,700 12,700
Series D - 75,281
Total RCPS 12,700 87,981

Stockholders Equity
Convertible Preferred Stock 15,413
Warrants Issued 15
Common Stock 3
Additional Paid in Capital 5,778
Accumulated Other Comprehensive Loss (23)
Accumulated Deficit (15,956)
Total Stockholders Equity 5,230

Total Net Worth 93,211

Total Net Worth & Liabilities 122,062

Check 1
FY 09A 10 11 12 13 14 15

46,534 59,273 72,482 84,404 94,356 103,492 111,628


20,804 31,897 43,503 55,085 66,143 76,599 86,339
25,730 27,376 28,979 29,319 28,212 26,893 25,289

628 6,517 6,517 6,517 6,517 6,517 6,517


331 1,301 4,100 6,302 6,517 6,517 6,517
297 5,216 2,417 215 - - -

26,027 32,592 31,396 29,534 28,212 26,893 25,289

89,979 104,209 292,552 363,043 519,900 786,033 1,240,777


24,324 46,409 87,561 157,055 278,015 474,767 794,768
5,160 4,727 8,918 15,996 28,097 48,260 80,749
- - - - - - -
- - - - - - -
1,695 1,695 1,695 1,695 1,695 1,695 1,695
1,374 1,374 1,374 1,374 1,374 1,374 1,374
122,532 158,414 392,100 539,163 829,080 1,312,129 2,119,364

148,559 191,006 423,496 568,697 857,293 1,339,023 2,144,652

- - - - - - -
4,919 8,604 16,233 29,117 52,740 88,533 148,421
18,352 18,352 18,352 18,352 18,352 18,352 18,352
25,450 47,323 89,286 160,148 285,382 484,930 812,122
552 552 552 552 552 552 552
1,695 1,695 1,695 1,695 1,695 1,695 1,695
50,968 76,526 126,118 209,864 358,721 594,062 981,141

528 528 528 528 528 528 528

51,496 77,054 126,646 210,392 359,249 594,590 981,669

12,700 12,700 12,700 12,700 12,700 12,700 12,700


75,281 75,281 75,281 75,281 75,281 75,281 75,281
87,981 87,981 87,981 87,981 87,981 87,981 87,981

15,413 15,413 15,413 15,413 15,413 15,413 15,413


- - - - - - -
4 4 175,004 175,004 175,004 175,004 175,004
13,725 13,725 13,725 13,725 13,725 13,725 13,725
(3) - - - - - -
(20,057) (3,171) 4,727 66,181 205,921 452,309 870,860
9,082 25,971 208,869 270,323 410,063 656,451 1,075,002

97,063 113,952 296,850 358,304 498,044 744,432 1,162,983

148,559 191,006 423,496 568,697 857,293 1,339,023 2,144,652

1 1 1 1 1 1 1
Cashflow Statement
(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

Cashflow from Operations


PAT
Add: Depreciation
Add: Amortization
Less: Increase in Accounts Receivables
Less: Increase in Other Current Assets
Less: Increase in Restricted Cash
Less: Increase in Income Tax Receivables
Less: Increase in Deferred Income Taxes
Less: Increase in Other Assets
Add: Increase in Accounts Payable
Add: Increase in Accrued Liabilities
Add: Increase in Deferred Revenue
Add: Increase in Income Tax Payable
Add: Increase in Deferred Tax Liabilities
Net Cashflow from Operations

Cashflow from Investment Activities


Less: Increase in Gross Block(Fixed Assets)
Less: Increase in Gross Block(Intangible Assets)
Net Cashflow from Investment Activities

Cashflow from Financing Activities


Add: Increse in Long Term Liabilities
Add: Increase in RCPS Series C
Add: Increase in RCPS Series D
Add: Increase in Convertible Preferred Stock Series A
Add: Increase in Warrants Issued
Add: Increase in Common Stock
Add: Increase in Additional Paid in Capital
Add: Increase in Accumulated Other Comprehensive Loss
Add: Increase in Accumulated Deficit
Net Cashflow from Financing Activities

Net Change in Cash

Opening Cash Balance


Net Cashflow
Closing Cash Balance

Cash Balance in Balance Sheet 80,495

Check
FY 09A 10 11 12 13 14 15

(564) 16,886 7,897 61,454 139,739 246,388 418,551


11,346 11,093 11,606 11,583 11,058 10,456 9,740
209 970 2,799 2,202 215 - -
(9,337) (22,085) (41,153) (69,493) (120,960) (196,752) (320,002)
(2,442) 433 (4,191) (7,078) (12,101) (20,164) (32,489)
218 - - - - - -
62 - - - - - -
(964) - - - - - -
(753) - - - - - -
2,409 3,685 7,629 12,884 23,623 35,794 59,888
8,128 - - - - - -
10,592 21,873 41,963 70,862 125,234 199,548 327,191
419 - - - - - -
964 - - - - - -
20,287 32,856 26,551 82,414 166,808 275,270 462,879

(15,352) (12,739) (13,208) (11,922) (9,952) (9,137) (8,135)


- (5,889) - - - - -
(15,352) (18,628) (13,208) (11,922) (9,952) (9,137) (8,135)

133 - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
(15) - - - - - -
1 - 175,000 - - - -
7,947 - - - - - -
20 3 - - - - -
(3,537) - - - - - -
4,549 3 175,000 - - - -

9,484 14,230 188,342 70,491 156,856 266,134 454,743

80,495 89,979 104,209 292,552 363,043 519,900 786,033


9,484 14,230 188,342 70,491 156,856 266,134 454,743
89,979 104,209 292,552 363,043 519,900 786,033 1,240,777

89,979 104,209 292,552 363,043 519,900 786,033 1,240,777

1 1 1 1 1 1 1
Ratios & Valuations

(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

Profitability Ratios
EBITDA Margins 5% 1%

EBIT Margins -1% -7%

EBT Margins -1% -7%

Net Profit Margin 1% -2%

Return on Investment Ratios


Return on Assets (ROA) -1%

Return on Invested Capital (RoIC) -1%

Return on Stockholder's Equity -1%

Activity Ratios
Asset Turnover Ratio 0.65

Average Day's Sales 216

No. of Days of Receivables 69

Working Capital Turnover 1.10

Solvency and Leverage Ratios


Current Ratio 3.51

Acid Test Ratio 3.36


FY 09A 10 11 12 13 14 15

7% 14% 4% 12% 15% 15% 15%

-3% 9% 1% 10% 14% 14% 15%

-3% 9% 1% 10% 14% 14% 15%

0% 7% 2% 8% 10% 10% 10%

0% 9% 2% 11% 16% 18% 20%

0% 22% 4% 26% 42% 50% 55%

-1% 15% 3% 17% 28% 33% 36%

0.81 1.24 1.05 1.41 1.64 1.80 1.88

329 647 1222 2191 3849 6611 11062

74 72 72 72 72 72 72

1.68 2.89 1.68 2.43 2.99 3.36 3.55

2.40 2.07 3.11 2.57 2.31 2.21 2.16

2.24 1.97 3.01 2.48 2.22 2.12 2.07


Valuation Sheet
Risk Free Rate % 4.67%
Market Risk Premium % 5%
Beta 1.368
Cost of Equity % 12%
Tax Rate % 34%
Terminal Growth Rate % 3%
No of Shares Outstanding Thousands 87,884
Tax Rate % 34%

(Unless otherwise specified, all financials are in US $ Thousand) FY 07A FY 08A

Free Cash Flow Calculation


Profit After Tax (1,302)
Add: Depreciation & Amortization 6,365
Add: Interest*(1-Tax Rate) (2,125)
Less: Increase in Working Capital
Increase in Accounts Receivables
Increase in Prepaid Expenses and Other Current Assets
Increase in Restricted Cash
Increase in Income Tax Receivables
Increase in Deferred Income Taxes
Increase in Other Assets
Decrease in Accounts Payable
Decrease in Accrued Liabilities
Decrease in Deferred Revenue
Decrease in Income Tax Payable
Decrease in Deferred Tax Liabilities
Less: Fixed Investments
Free Cash Flow to the Firm

Less: Interest*(1-Tax) (2,125)


Add: Net Borrowings
Free Cash Flow to the Equity (FCFE)

Present Value of FCFE 678,865


Terminal Value of FCFE 2,456,246
Total Free Cash Flow to Equity 3,135,110
Value Per share $ US 36
FY 09A 10 11 12 13 14 15

(564) 16,886 7,897 61,454 139,739 246,388 418,551


11,854 12,063 14,405 13,785 11,273 10,456 9,740
(2,250) (2,563) (5,237) (8,654) (11,655) (17,238) (26,754)

9,337 22,085 41,153 69,493 120,960 196,752 320,002


2,442 (433) 4,191 7,078 12,101 20,164 32,489
(218) - - - - - -
(62) - - - - - -
964 - - - - - -
753 - - - - - -
(2,409) (3,685) (7,629) (12,884) (23,623) (35,794) (59,888)
(8,128) - - - - - -
(10,592) (21,873) (41,963) (70,862) (125,234) (199,548) (327,191)
(419) - - - - - -
(964) - - - - - -
15,352 18,628 13,208 11,922 9,952 9,137 8,135
3,109 11,664 8,105 61,838 145,201 248,895 427,990

(2,250) (2,563) (5,237) (8,654) (11,655) (17,238) (26,754)


133 - - - - - -
5,493 14,227 13,342 70,491 156,856 266,134 454,743
Comparable Valuation
FY 07A FY 08A

EBITDA 1,675 856


Profit after Tax (PAT) 328 (1,302)
Book Value of Equity 93,211
Debt 395
Cash and Equivalents 80,495

(Unless otherwise specified, all financials are in US $ Thousand)

P/ E (x)
Peer Group Company FY12E
Google 22.5x
EBAY 23.1x
Amazon 71.4x
Baidu 76.9x
Oracle 23.8x
Mean 43.5
Median 23.8

Valuation on the basis of: Mean


Multiple (x)
FY10E EV/EBITDA 27.7x
FY11E EV/EBITDA 26.7x

Valuation on the basis of: Mean


Multiple (x)
FY10E P/E 43.5x
FY11E P/E 42.5x

Valuation on the basis of: Mean


Multiple (x)
FY10E P/BV 5.9x
FY11E P/BV 5.4x

Share Price a
EV/ EBITDA (x)
P/E (x) Multipl
P/BV (x) Multip
Price from Discounted Cash Flow
FY 09A 10 11 12 13 14 15

8,499 33,535 18,205 93,556 205,111 357,423 603,142


(564) 16,886 7,897 61,454 139,739 246,388 418,551
97,063 113,952 296,850 358,304 498,044 744,432 1,162,983
528 528 528 528 528 528 528
89,979 104,209 292,552 363,043 519,900 786,033 1,240,777

P/ E (x) P/BV(x) EV/ EBITDA (x)


FY13E FY12E FY13E FY12E FY13E
21.5x 3.78 3.3x 13.01 12.0x
22.1x 2.27 1.8x 12.24 11.2x
70.4x 11.53 11.0x 40.59 39.6x
75.9x 32.1 31.6x 61.2 60.2x
22.8x 4.35 3.9x 11.58 10.6x
42.5 5.9x 5.4x 27.7x 26.7x
22.8 3.8x 3.3x 13.0x 12.0x

EBITDA EV Net Debt Mkt Cap Share Price


93,556 2,593,733 (103,681) 2,697,415 31
205,111 5,481,375 (292,024) 5,773,399 66

EPS Share Price


0.70 30
1.59 68

BVPS Share Price


4.08 24
6 30

Min Max Diff


30.7 65.7 35.0
30.4 67.6 37.2
23.9 30.4 6.5
ce from Discounted Cash Flow 35.7
Foo

P/BV (x) Multiple 23.9

P/E (x) Multiple 30.4

EV/ EBITDA (x) Multiple 30.7

- 10.0 20.0 30.0 40.0

S
Football Field

30.4

67.6

65.7

40.0 50.0 60.0 70.0 80.0 90.0

Share Price
67.6

65.7

90.0 100.0 110.0


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