LinkedIn Hired 531 Sales And Marketing Execs Last Year And Is Barely Profitable
Mar 08, 2012 13:02
LinkedIn doubled their revenue last year to $522 million but it also rendered itself less profitable by nearly tripling its sales and marketing costs. It only had a net income of $26 million. How is that possible?
Its because it increased its sales and marketing staff to 844 people (from 313 in 2010). The increase had an effect on the S&M budget line which went from $59 million in 2010 to $165 million last year.
"We plan to continue to invest heavily in sales and marketing to expand our global footprint, grow our current customer accounts and continue building brand awareness. In the near term and consistent with our investment philosophy for 2011, we expect sales and marketing expenses to increase on an absolute basis and as a percentage of revenue and to be our largest expense on an absolute basis and as a percentage of revenue."
This chart, from page 53 of LinkedIn's annual report, shows how sales and marketing is growing much faster than LinkedIn's underlying business. Note the increase in "percentage of net revenue":
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