Xing 1

XING AG
Recommendation: Risk: Price Target:

BUY (-) MEDIUM (-) EUR 60.00 (-) 22 February 2011
Professional networking is pervasive
Share price (dark) vs. TecDAX
Sound cash generating with high return business
▪ XING is a bellwether share in the German internet/IT-technology sector.
However, considering the current market valuations of social media
companies XING has by far the lowest multiples. At latest after Facebook‟s
IPO we expect to see a trend towards mature companies with „realistic‟
multiples (contrary to second market evaluations). Therefore, as XING is
already listed since 2006 and has proven sustainable profitability with a high
return business the mid-term outlook on stock valuation basis seems Sources: CBS Research AG, Bloomberg
favourable.
Change 2010E 2011E 2012E
new old new old new old
▪ Two current market trends 1) growing impact of social community and 2) Revenues
EBITDA
52.9
16.8
-
-
62.7
20.4
-
-
74.0
26.6
-
-
high demand for mobile devices (smart phones, tablet-pc, game consoles, EPS 1.45 - 1.94 - 2.75 -
etc.) should be a perfect support for the general market performance as
Internet: www.xing.com Sector: Internet
both trends will lead to increasing online traffic resulting from the ongoing WKN: XNG888 ISIN: DE000XNG8888
mobile trend towards high-street internet (especially mobile) availability. A Reuters: OBCGn.DE Bloomberg: O1BC GY
noteworthy side-effect (also for XING) is expected to be the rising demand

Short company profile:
for online and mobile advertising.
XING AG is a Germany-based company and
provides a social network for business
▪ We see accelerated growth in social and professional networking

professionals.
businesses supported by the current market momentum (a.o. LinkedIn IPO,

Facebook) albeit from a low base especially in the DACH region. Share data:
Networking platforms have not yet fully unfolded its real potential. In case Share price (last closing price): EUR 39.54
the LinkedIn IPO will not breach the positive market sentiment we expect Shares outstanding (m): 5.29
Market capitalisation (EURm): 209.0
that from 2H11E on social/professional communities will see another
Enterprise value (EURm): 152.7
speeding up. Hence, XING should benefits both on top line growth as well Ø daily trading volume (3m, no. of shares): 18,869
as on investor‟s view about XING‟s „fair‟ market valuation.
Performance data:
▪ Considering the company´s sound cash generating, we expect XING´s High 52 weeks (EUR):
Low 52 weeks (EUR):
43.50
25.54
growth momentum to continue. Thus, we project net revenues of EUR Absolute performance (12 months): 39.8%
52.9m, 62.7m and 74.0m for the FY2010E, 2011E and 2012E, respectively. Relative performance (vs. TecDAX):
With higher margins we see group‟s EPS at EUR 1.45, EUR 1.94 and EUR 1 month: -6.1%
3 months: 8.3%
2.75 for the years 2010E to 2012E, respectively.
6 months: 13.6%
12 months: 27.0%
▪ We start our coverage with a BUY recommendation and a price target of
Shareholders:
EUR 60.00 per share. Our multiple valuation approach corresponds to a
weighted fair value per share of EUR 57.03, of which our long-term DCF Burda Digital GmbH: 29.6%
Allianz Global Investors: 5.1%
valuation indicated a fair value per share of EUR 57.68.
Langfrist TGV: 6.5%
Key data Ennismore: 5.2%
Others: 53.6%
Y/E 31 Dec, EURm 2008 2009 2010E 2011E 2012E
Freefloat (per definition Deutsche Börse) 65.4%
Revenues 34.7 44.0 52.9 62.7 74.0
EBITDA 12.2 11.8 16.8 20.4 26.6 Financial calender:
EBIT 9.7 0.9 11.8 14.6 20.0
Preliminary figures FY2010 03 March 2011
Net income/loss 7.3 -1.7 7.6 10.3 14.5
EPS 1.41 -0.32 1.45 1.94 2.75
CPS 3.41 2.67 4.48 3.47 4.08
EBITDA margin 35.1% 26.9% 31.8% 32.5% 36.0% Author: Marcus Silbe (Analyst)
EBIT margin 28.1% 2.1% 22.2% 23.3% 27.0%
Net margin 21.1% -3.8% 14.4% 16.4% 19.6%
Close Brothers Seydler Research AG
EV/EBITDA 12.6 12.9 9.1 7.5 5.7
Phone: +49 (0)69 - 977 84 56 0
EV/EBIT 15.7 168.1 13.0 10.5 7.6 E-Mail: research@cbseydlerresearch.ag
P/E 28.1 n.m. 27.4 20.3 14.4
www.cbseydlerresearch.ag
Source: XING AG, CBS Research AG
Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by § 34b WpHG (Securities Trading Law) at
the end of this document. This financial analysis in accordance with § 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of others
in connection with their trading activities, occupation, or employment.
XING AG
Table of Contents:
Investment Thesis ..................................................... 3
SWOT ......................................................................... 5
Strengths ...................................................................................................... 5
Weaknesses ................................................................................................. 5
Opportunities ................................................................................................ 6
Threats.......................................................................................................... 6
Valuation ................................................................... 7
Valuation summary ....................................................................................... 7
Multiples overview ...................................................................................... 8
Market multiple valuation .............................................................................. 8
DCF valuation ............................................................................................. 10
Valuations in social media market............................................................... 11
The Company ........................................................... 15

Short company profile ................................................................................. 15
Company structure...................................................................................... 15
Shareholder Structure ................................................................................. 16
Management ............................................................................................... 16
Company milestones .................................................................................. 17
Business model ....................................................... 18

Market trends .............................................................................................. 19
Memberships (Basic & Paid) ....................................................................... 19
Paid Membership ........................................................................................ 21
E-Recruiting ................................................................................................ 23
Advertising .................................................................................................. 25
Events ......................................................................................................... 26
Strategy ................................................................... 28
Growth strategy & vertical integration ......................................................... 28
Market entry barriers ................................................................................ 30
New mega-trend –mobile internet ........................... 31

Financials ................................................................ 32
Historical financial development ................................................................. 32
9M10 Review .............................................................................................. 33
Financial forecast ........................................................................................ 33
Mid-term outlook ......................................................................................... 34
Memberships & Subscriptions .................................................................. 34
E-Recruiting ............................................................................................. 36
Advertising ............................................................................................... 36
Events ...................................................................................................... 36
Appendix .................................................................. 39
www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 2

XING AG
Investment Thesis
XING AG is a Germany-based company and provides a social network for business Professional
professionals. More than 10m members worldwide (10.11m as of 30 September networking platform
2010, 10.47m at the end of 2010E) use XING to boost their business, job, and
career. XING is a platform where professionals from all kinds of different industries
can meet up, find jobs, colleagues, new assignments, cooperation partners, experts
and generate business ideas. Members can meet and exchange views in over
40,000 specialist groups, while also getting together at networking events.
As a focused medium-sized internet and technology company, XING focuses Strong market
particularly on the Social/Professional networking market which will reveal its huge momentum
potential within the next few years. First indications about an improved market
momentum came along since the valuation debate about Facebook (currently
>USD 60bn) as well as the upcoming IPO of LinkedIn (estimated value of USD 2-
3bn) has started. Recently, also the Chinese social networking site Renren.com
announced to go public in the US this year, with an expected IPO value of USD
500m.
XING is well prepared for the next generation as the mobile internet market is the Mobile internet trend is
most trendsetting sector at the moment. Up to now already more than 500m people a growth driver
are using internet via mobile devices (smart phones, tablet-pc, etc.). IDC forecast
the exceeding of 1bn mobile internet users in 2013E. We are more bullish on that
issue as we think that this magic number could already be reached at the mid of
2012E. Our bullish approach is backed by estimates of Gartner which predicts that
next year 85% of all shipped handsets are preinstalled with a browser.
Given the recent market momentum in the social media market (social community, Promising strategic
professional networking), we consider XING´s strategic approach to expand and approach
diversify its customer base and product portfolio very promising which should lead
to accelerated long-term growth. Innovations, new products as well as
technologically improved versions of its platform will attract not only new
customers, but also stimulate the opportunities to generate more traffic on the
platform.
Although the company has meanwhile achieved a higher revenue diversification (E- Business model with
Recruiting and Advertising), the group´s “bread and butter“ business still remains four segments
the development of the paid membership segment as revenues in other business
segments are yet in an early-stage (but with promising growth prospects). In late
December 2010, XING acquired the German event marketing company amiando
AG for about EUR 5.1m (plus earn-out of up to EUR 5.25m) expanding the
business model by the segment Events (event marketing and ticketing services).
Overall, XING has established an attractive business model which is superior in

many respects as it enables to remain highly innovative while keeping at the same
time operating expenses on a manageable level. The strategic focus in XING´s
business model is its versatile platform strategy which allows the company to
pursue a cross-product strategy instead of focusing on just subscription revenue
streams. The highly developed proprietary software approach provides the
company with the flexibility to react faster on technological shifts without tying too
much capital into the new projects. Besides, the company‟s monetisation plans has
the advantage of providing a broad customer access by keeping at the same time
the costs per customer contact on a relatively low level.

XING AG
We expect XING‟s growth story to continue over the next years as the change in Growth story will
the core businesses will further boost the company‟s earnings situation in short- to continue
mid-term.
Based on the recent development the share of XING started a nice upside trend Possible TecDAX
and eventually has the opportunity to get the promotion to the TecDAX. To achieve candidate
that goal it should be mentioned that XING‟s daily average trading volume (on 12
th
months basis) has to rise at least 50% (current ranking: market cap free float: 35 ;
th
daily trading volume: 39 ). While this is a big step for the company we think that in
the course of the ongoing market momentum not only the stock price will rise but
also the trading volume due to the increasing interest of investors. In case the
TecDAX criteria (35/35 rule) will be reached and no other company provides better
figures we might see XING in the TecDAX already in September 2011.
We expect that this fiscal year will end very positively after already very promising 4QE preview
9M2010 figures. Overall, we expect the group to achieve total revenues of EUR
52.94m in 2010E, indicating a 20.3% growth YoY. Therefore, 4QE revenues will
amount to EUR 14.06m (23.7% YoY). On profit level the estimated EBITDA margin
of 37.9% in 4QE should leads to a margin for full year of 31.8%, corresponding to
EUR 16.83m. Summing up, the net income attributable for shareholders should
come in at EUR 7.62m for full year 2010E (4QE: EUR 2.91m).
Regarding financial figures the cash flow development deserves a positive mention. Propel growth over the
The company was able to generate a business model of sound cash generating next years
with high returns. From 2011E on we expect a solid sales growth and a stabilisation
of profit margins at a higher level than in current fiscal year. We expect group
revenues to increase up to EUR 62.66m in 2011E and in the long run the company
should achieve y-o-y sales growth of 5%. On the bottom line the group also will
generate a significant boost within the next few years and in 2011E we estimate
that the EBITDA-margin will be up to 32.5%, indicating an EBITDA of EUR 20.37m.
Overall, we expect EPS to come in at EUR 1.45, EUR 1.94 and EUR 2.75 in
2010E, 2011E and 2012E respectively.
Based on the expected figures for 2010E the EV/EBITDA-Multiple is about 9.1x and Multiples indicate
about 7.5x for 2011E. Based on our forecasts for 2012E, currently the share is under valuation
traded with a P/E-ratio of about 14.4x. XING‟s P/E is not only clearly below
LinkedIn‟s and Facebook‟s P/E but also way below the industry averages (internet
and software & services). Hence, an indication that XING is clearly undervalued vs.
its closest peers.
Overall, the business model as well as the strategic approach of XING is prepared BUY recommendation
to participate in the next internet mega-trend of mobile internet and social media in
general. We start our coverage with a BUY recommendation and a price target of
EUR 60.00 per share. Our multiple valuation approach (DCF, market multiple)
corresponds to a weighted fair value per share of EUR 57.03, of which our long- Price Target of EUR
term DCF valuation indicated a fair value per share of EUR 57.68 (based on a long- 60.00
term EBIT-margin of 25%). With an estimated long-term EBIT-margin of about 27%
(reached in 2012E), the assumed fair value per share would have been at EUR
60.43 per share.

XING AG
SWOT
Strengths
▪ Strong market position and brand awareness: XING is the leading professional
networking platform in the DACH region and has a strong presence in the
media over years
▪ Strong, experienced management team: CEO Mr. Dr. Stefan Selbeck and his
excellent management team led the company to become a successful player in
the internet business
▪ Cash cow business model: XING provides a sound cash generating and high
return business model with strong growth over the next years
▪ Working capital: Due to the advanced collection of subscription revenues the

working capital is not an issue for the company
▪ Loyal customer relationships: Especially in the DACH region the premium

members are very loyal to XING and a change of platforms is very rare
▪ Track record: The company has a strong track record of identifying growth
opportunities and implementing with a fast-time-to-market
▪ Vertical integration towards a roughly balanced product mix: After XING

acquired amiando at the end of the last year the group now has achieved an
excellent mix with its four product areas premium membership, E-Recruiting,
Advertising and now Events
▪ Solid shareholder structure: Burda Digital GmbH currently holds almost 30%
and is not expected that they will sell its share in the short-term
Weaknesses
▪ Low geographic business diversification: The company has generated most of
its revenues up to now in DACH region despite the worldwide strategic
positioning
▪ Low revenue diversification: The company still generates between 70% - 80%
of its revenues in the subscription business. However, over the next years it is
expected that the share of the subscription unit will decrease towards 60% in
2013E
▪ The dependency on the success of the newly shifted business model might lead
to high volatility in the operational success

XING AG
Opportunities
▪ Promising market prospects: The increasing pace of digitisation could bring a
multifold jump in profits over the next 3 to 5 years
▪ Trend in advertising business: As location based services seem to propel

growth in the advertising business a future focus on local advertisers could
provide additional strength to the revenue model as growing businesses of local
advertisers attracting higher ad spends
▪ Strong growth potential in E-Recruiting: We believe that revenues in E-

Recruiting business could be driven by annual rate hikes of 20% and more
▪ Takeover rumours: As the social community market is very fast-moving with a

tremendous expected market growth a company like XING always can be
considered as a promising takeover candidate. XING‟s major competitor
LinkedIn recently reported to go public with an expected IPO of roughly USD
175m. In case LinkedIn plans to strengthen its business in the DACH region a
take-over of XING might be a possibility for LinkedIn. However, we do not
believe that this will happen as we see the major shareholder Burda Digital as a
long-term investor
Threats
▪ High competition in the future: In case the competition will get fierce, opex run
rate might increase (staff, marketing, R&D expenses)
▪ Negative impacts on working capital: Due to the shift towards a more balanced
revenue model the working capital needs could rise as the „new‟ business
segments did not have the opportunity to collect the revenues in advance as
with the premium memberships
▪ Fast innovation cycles and mobile technology development: There is always

pressure on companies with focus on technological developments to come up
with something better, and cheaper. That pressures the companies to
implement new technology rapidly to meet customers‟ needs, and to stay
abreast of technological changes

XING AG
Valuation
Valuation summary
We applied multiple valuation approaches to derive the company´s fair value. While
the DCF valuation can appropriately indicate very well the long-term growth
potential of a company our indicated market multiple give more insights about the
current market momentum. We focused on the multiples for 2010E to 2012E on
details to have more certainty in considering the estimates for the market sentiment
and from 2010E to 2019E with our DCF valuation.
Overall, our valuation is based on two main following assumptions:
 Due to the business model of XING focussing on social media it is for the Most companies are
time being quite difficult to find adequate companies whose business not comparable to
models are comparable to the one of XING as the „real‟ competitors like XING
LinkedIn or Facebook (to a limited extent) are not yet listed. Indeed we
could choose single dating service companies like Meetic or Cupid but we
do not think that on long-term perspective these companies will provide
the same margin levels as XING. Alternatively, neither the choice of
companies in the general E-Commerce market nor pure internet
companies seems to be adequate as such a comparison would not
indicate the right potential for XING given that most of these market
participants provides other margin levels and prospects. Therefore, we
decided not to evaluate the multiples of XING with a standard peer-group
valuation but taking into account a current market multiple based on
historical multiples as well as on recent M&A transactions.
 A DCF model can appropriately indicate organic and external growth. The DCF can appropriately
company has long-term relationships with its customers (Subscriptions indicate the growth
and E-Recruiting) which are bound by contracts. Moreover, we see a potential of XING
structural change (improving) of XING‟s margins which are not yet fully
accountable (and priced in) in short-term observation. In 1-2 years XING‟s
margins will achieve a level which we expect to be adequate for a
company in a trend-market.
Consolidation of the valuation method
Source: CBS Research AG
Since the company is currently in a stage with strong growth, the long-term growth Growth momentum is
targets are ambitious but achievable. In our opinion, XING´s growth momentum is sustainable
sustainable as the company is currently at the sweet spot of the social media
(professional networking) market, as demand for networking and personalised E-
Recruiting solutions is strong. Both growing online traffic (increasing activity on
social media platforms) as well as increasing demand of corporates to present itself
on social platforms are the main growth drivers for the markets XING is active in.

XING AG
Meanwhile XING has expanded its business activities far beyond pure subscription Much broader business
(premium membership on XING) offerings towards the also strong E-Recruiting model
business, online advertising as well as the recently established Events segment
(through the acquisition of amiando) and is therefore able to participate to a
stronger degree on the promising growth prospects in its underlying markets. The
company showed sustainable success in its operational business as expected and
increased its market presence.
Our DCF model results in a fair value of EUR 57.68 per share and our market Valuation indicates FV
valuation indicated a fair value per share of EUR 56.37, corresponding to a per share of EUR 57.03
weighted fair value per share of EUR 57.03. We start our coverage with a BUY
recommendation and a price target of EUR 60.00 per share. We think that XING´s
share moved into focus of many investors resulting from the high IPO-valuation
approach for XING‟s main competitor LinkedIn (estimated value of USD 2-3bn), but PT of EUR 60.00
also the high valuations for the non-listed companies Facebook (USD 60bn),
Groupon (USD 9bn), and Twitter (all based on secondary market valuation).
Overall, our assumption is that the company will continue the achieved growth
momentum over the next years as well, which is not reflected in the current share
price yet and illustrates the 50% upside potential to our price target.
Furthermore, the ongoing take-over rumours can create prerequisites for an Takeover rumours
additional upside potential in the future. Especially around the time of LinkedIn‟s
IPO we expect the rumours will start to spread again. Should LinkedIn plans to
strengthen its business in the DACH region a takeover of XING might be a
possibility for LinkedIn. However, we do not believe that this will happen as we see
the major shareholder Burda Digital as a long-term investor.
Multiples overview
On the basis of our derived price target we calculated an EV/EBIT multiple of 17.9x 2011E & 2012E
for 2011E and an EV/EBIT multiple for 2012E of 13.1x. EV/EBITDA for 2011E and multiples
2012E on basis of the derived price target is about 12.8x and 9.8x. Furthermore,
we calculated the multiples based on the current stock market price, which are
stated in the last row of the table below.
Multiples of XING on basis of price target per share
Source: CBS Research AG
Market multiple valuation

In order to reflect XING‟s market value, we tried to form a peer group of listed Peer group valuation
companies which are active mainly in the social media segment. Companies like somewhat difficult
Meetic, Cupid, and Tencent Holding would be comparable to XING partially.
However, the comparison of XING with other listed companies is somewhat limited
due to the following reasons:

XING AG
 None of the peer group companies really specialises to that extent in the
segment of social media (professional networking) and E-Recruiting
 The comparable companies (LinkedIn and Facebook to a limited extent)
mostly are not yet listed and/or have no provided estimates
 Compared to pure player in the E-commerce business, the recruiting

business as well as companies from online dating services XING‟s
business model is much broader
 The margin structure is not comparable to XING for the time being
(Tencent Holding: net margin of roughly 40% vs. XING‟s net margin of
approx. 14% in 2010E)
Due to the reasons stated above, an analysis of the multiples is troublesome and,
therefore, we decided not to evaluate the company‟s multiples with a peer group
valuation which would not result the right indication of XING‟s market potential.
A peer group valuation on basis of multiples enabling an analysis of the peers on

operating level seems to be less meaningful. This is mainly due to the fact that
some of the peers which we would have considered have already established
businesses in partly different business areas where they generate significant
revenues.
In order to include a market-oriented approach to our valuation, we applied a Market valuation

market multiple based on different assumptions. Apart from social media providers, approach
we also considered online marketing players and recruiting businesses in our
comparison since XING provides online advertising and E-Recruiting services as
well. Although, there are two non-listed players which would fit almost perfectly
(LinkedIn, Facebook), the number of listed companies showing a similar revenue
basis and market cap as XING is rather small.
We have retrospectively analysed the previous M&A deals in the media and
internet sector that took place over the period 2007-2010. Compared to the
acquired companies XING would have been a very attractive takeover candidate.
EBITDA market multiples

18.0 16.9
16.0
14.0 12.3
12.0 11.2 10.7
10.0 8.4 9.1
8.0
6.0
4.0
2.0
0.0
Source: Bloomberg, CBS Research AG
To find an adequate market multiple to evaluate XING we decided to choose an Multiple based on
EBITDA-multiple based on historical figures, on M&A deals (2007-2010), and several assumptions
incorporated a few companies which are slightly comparable to XING like Monster
Worldwide Inc, Meetic, and Cupid Plc. More than 70% of the deals (the total

XING AG
amount of sample size taken for calculation: 426) were closed with EV/EBITDA
multiple above 10x. After weighting the average EBITDA-multiple and deducting a
discount of 20% to the multiple we derived a weighted average EBITDA-multiple of
9.1x.
We applied the multiple for 2012E to our financial forecasts for XING. Our multiple Market valuation
valuation of the company resulted in a fair value of equity of EUR 298.0m. shows FV of EUR 56.37
According to our multiple valuation, the fair value per share amounts to EUR 56.37.
Market multiple and derived valuation
Source: CBS Research AG, Bloomberg
DCF valuation
Over the period 2007-2009 the company experienced a top line growth of CAGR Assumptions:
52.0% which we expect to slowdown to a CAGR of 18.9% over the period 2009-
2012E. Overall our DCF model is based on the following assumptions:
Weighted average cost of capital (WACC): On basis of the current long-term

WACC 8.89%
yields of German federal bonds, we set the risk-free rate at 3.5%. We assumed an
equity risk premium of 6.0%, and a debt risk premium of 3.0%. Although the
company´s stocks have been listed for a long period, we did not apply XING´s
historical beta to our WACC calculation. We decided to apply a beta of 1.30. The
reason for this adjustment was mainly due to high volatility of the share price as
well as the positive upside potential related to success of the current strategic
approach. With high beta we furthermore took into account the cyclical
characteristics of company´s business and the higher volatility at equity market and
high revenue variability in the past. We furthermore assumed a long-term target
equity ratio of 70%. These premises lead to a WACC of 8.89%.
Phase 1 (2010-12E): We estimated the free cash flows (FCF) of phase 1 according Phase 1: Detailed
to our detailed financial forecasts for these years. financial forecasts
Phase 2 (2013-19E): For Phase 2, we made more general assumptions. We Phase 2: Decreasing
allowed annual sales growth to decrease successively to 5.0% in 2019E, resulting growth rates
in a CAGR 2013-19E of 7%. In view of the much stronger expected market growth,
this appears sufficiently conservative as our CAGR for 2010-2013E is at about
18%. Moreover, we assumed a stabilisation of the EBIT margin at 25%. XING was
able to step up its margins after the structural changes and the shift in the business
model towards a more broad business approach (Subscriptions, E-Recruiting,
Advertising, Events). We think that an long-term EBIT-margin of 25% is still higher
than the group will achieve in 2010E (22.3%) but also can be seen as a
conservative approach. According to our estimates, XING should reach its EBIT-
margin high in 2013E with 28.3% and even with a higher opex run rate the

XING AG
discrepancy of 28.3% and 25% seems relatively high. Therefore, further upside
potential (in our valuation model) could kick-in as soon as the mid-term prospects
of XING and its underlying market will exceed our general market expectations.
Phase 3: For the calculation of the terminal value, we applied a long-term FCF Phase 3: 2% growth for
growth rate of 2.0% which approximates the estimated inflation rate. This terminal value
assumption theoretically corresponds to a real-term zero growth, since we use a
nominal discount rate (WACC).
Based on these assumptions, we calculated a fair value of the operating business DCF model results in a
of EUR 248.6m. We added XING‟s net cash in the amount of EUR 56.4m. The fair value per share of
resulting fair value of equity is EUR 304.9m. The fair value per share of the DCF EUR 57.68
model amounts to EUR 57.68.
Discounted Cash Flow Model
Source: XING AG
Valuations in social media market

XING is a bellwether share in the German internet/IT-technology sector. However, Strong growth
considering the current market valuations of social media companies XING has by momentum in social
far the lowest multiples. However, we expect that with the IPO of XING‟s major media market
competitor LinkedIn and further upcoming IPO‟s of companies like Facebook
(expected within 2012E), the earnings and multiple visibilities in the social media
market should improve. At latest after Facebook‟s IPO we expect to see a trend
towards mature companies with „realistic‟ multiples (contrary to second market
XING is favourably
evaluations). Therefore, as XING is already listed since 2006 and has proven
positioned
sustainable profitability with a high return business the mid-term outlook on stock
valuation basis seems favourable.
For a short overview of the valuations of social media companies we exclusively

focus on XING, LinkedIn, Facebook but compare these figures both on industry

XING AG
averages (internet, software & services) as well as on the big three tech companies
(Google, Microsoft, Apple).
First of all, we compared XING with LinkedIn and Facebook on basis ARPU While XING is lower
(roughly: all members divided by all revenues), net income per member and market valued vs. peers...
cap per member. As can be seen in the chart below each Facebook member is
worth USD 100, according to recent secondary market valuations of roughly USD
60bn and about 600m members. While LinkedIn‟s 90m members are worth of USD
33.33 per member (recent company estimate of USD 2-3bn; in our scenario USD
3bn) XING‟s members are not priced in as at the two above mentioned
communities (USD 26.79, EUR 19.85).
However, analysing the quality of the members you can see, that both US ... XING provides much
communities (Facebook, LinkedIn) are not able to generate an ARPU in the amount more quality (growth
of XING so far (based on 2010E). XING‟s ARPU accounts to USD 6.81 which is prospect is high)
even double as high as the ARPU of Facebook / LinkedIn (each USD 3.33). The
same scenario on net income/member, as XING generates roughly USD 1.09 per
member and year Facebook currently only generates USD 0.83 per member.
XING‟s major competitor is expected to achieve USD 0.07 per member (expected
net income of USD 6m in 2010E).
MCap/member vs. ARPU vs. Net income/member (from left to right)

120.00
100.00
100.00
80.00
60.00
40.00 33.33
26.79
19.85
20.00
6.81 5.05
3.33 0.83 3.33 1.09 0.81
0.07
0.00
Facebook LinkedIn XING in USD XING in EUR
Source: company data, CBS Research AG * XING in USD: EUR/USD ~1.35
Even though XING wins all quality categories the company is valued only on third Valuation gap could
place. Noteworthy is that both market cap valuations are based not on actual close in future
values rather than the current secondary market evaluations. Therefore, the high
valuation gap could close in case the IPO‟s of both companies will not generate
such high multiples as it achieved on the secondary market.
XING has already been listed since 2006 and is expected to achieve a remarkable
net margin of 14% in 2010E, however, the multiples (especially P/E) are not yet by
far on a level which could be seen as fairly valued, in comparison to such high
valuations for XING‟s counterparts.
The chart on the next page shows the 2010E P/E ratios of XING and several other XING has lowest P/E
companies in the field of internet and social media. We highlighted XING‟s P/E of ratio based on 2010E...
24.6x which is not only clearly below LinkedIn‟s and Facebook‟s P/E but also way
below the industry averages (internet and software & services). Hence, this is an ...despite high
indication that XING is clearly undervalued vs. its closest peers. Needless to say, profitability; clearly
that a valuation based on the already completed 2010E is might not the best undervalued

XING AG
multiple. However, as LinkedIn mentioned in its IPO filings that they will not achieve
profitability in 2011E and no accurate 2011E estimates for Facebook are available
for the time being this year‟s figures are yet the best figures to compare.
Overview P/E-ratio on basis 2010E
Google 21.61
Microsoft 13.22
Apple 24.54
Software & services average 42.52
Internet average 54.17
XING 24.59
Tencent 73.78
LinkedIn 500.00
Facebook 120.00
0 100 200 300 400 500 600
Hence, we tried to give a better implication about the under appreciation of XING P/E scenario analysis
by comparing the 2012E P/E. Analysing three P/E scenarios (25x, 20x, 15x) only
three of the companies provide an upside potential compared to its current market
capitalisation. Besides XING only the two tech giants Apple and Microsoft indicate
an undervaluation on P/E level. Interestingly, all three other social media
companies imply a valuation which could be too high.
Especially LinkedIn‟s valuation shows that a secondary market valuation not always Facebook, LinkedIn
fits to the multiples of listed companies. Even with an exorbitant high net income of show high downside
USD 75m in 2012E (roughly estimated on basis of a P/E 2012E of 40x) the current risks
market valuation of USD 3bn appears not to be justified. Roughly assuming that
LinkedIn will achieve a net income of about USD 20-30m in 2012E (after net loss in
2011E) the multiples would have indicated an even higher downside risk (based on
a valuation of USD 3bn).
2012E P/E overview (in local currency m)
Source: Bloomberg, CBS Research AG (Note: Net income (2012E) of Facebook and LinkedIn are roughly based on our assumptions.
While the net income of Facebook seems rather achievable we intentionally set LinkedIn’s net income to such high level to show the high
discrepancy between a fairly valued P/E ratio and the partially exorbitant ratios)
Aside from LinkedIn, also Facebook‟s extreme valuation of currently USD 60bn
seems very ambitious. With an expected net income of USD 1.5bn in 2012E (based

XING AG
on 40x 2012E P/E and market value of USD 60bn) and a fairly valued P/E of 25x
implies a market cap of USD 37.5bn which is still very reasonable. Overall, it should
be noted that the current market sentiment benefits from the secondary market
valuations. However, as soon as these companies are listed on the stock exchange
and the value is lower than the previously given company estimate, this could lead
to a reconsideration of the values in the segment in general. However, XING should
benefit both on top line growth as well as on investor‟s view about XING‟s „fair‟
market valuation over the next years.
A little fact at the end: Based on its current market cap and an estimated 2012E Another sign of
P/E ratio of 40x XING‟s net income could even decrease down to EUR 5m in case positive prospects for
the current valuation levels of Facebook and LinkedIn will persist. With an expected XING
net income (2012E) of about EUR 14.5m XING should therefore close its valuation
gap towards its closest peer LinkedIn and Facebook. Our current price target for
XING is EUR 60.00 per share (yesterday‟s closing price: EUR 39.54).
2012E 40x P/E: Net income 2010E (dark) vs. 2012E (light)
5
XING
8.5
75
LinkedIn
6
1,500
Facebook
500
0 50 100 150 200

XING AG
The Company
Short company profile
XING AG is a Germany-based company and is the social network for business Social network
professionals. More than 10m members worldwide (10.11m as of 30 September company for business
2010) use XING to boost their business, job, and career. XING is a platform where professionals
professionals from all kinds of different industries can meet up, find jobs,
colleagues, new assignments, cooperation partners, experts and generate
business ideas. Members can meet and exchange views in over 40,000 specialist
groups, while also getting together at networking events.
Although the company has meanwhile achieved a higher revenue diversification (E- Business model with
Recruiting and Advertising), the group´s “bread and butter“ business still remains four segments
the development of the paid membership segment as revenues in other business
segments are yet in an early-stage (but with promising growth prospects). In late
December 2010, XING acquired the German event marketing company amiando
AG for about EUR 5.1m (plus earn-out of up to EUR 5.25m) expanding the
business model by the segment Events (event marketing and ticketing services).
Company structure
XING AG recently has expanded its corporate structure by acquiring amiando AG Corporate structure
(with effect from 1 January 2011). In this context, XING Events GmbH (originally a
stock company called Kronen tausend615 GmbH) was founded. At the end of
2010, XING AG held 100% of the shares of Kronen tausend615 GmbH (now XING
Events GmbH). The overall current corporate structure can be seen in the following
chart:
Corporate structure
The subsidiaries and shareholdings of the XING Group can be roughly sub-divided
into three classes: Core subsidiaries, international subsidiaries, and other entities.

XING AG
Shareholder Structure
XING AG currently has 5.29m shares in circulation with 65.4% being free float (as Free float is 65.4%
per definition of Deutsche Börse AG) and others while 29.6% is held by Burda
Digital GmbH. Despite Burda has given no clear commitment we are confident that
the Burda Group does not intend to sell its share within short-term. Overall, such
expectations should relief the possible pressure on worries about a take-over.
Shareholder structure (as of end of January 2011)

Others 43.1%
Cyrte
Investments 5.0%
Treasury shares
2.1%
HVB 3.4%
Ennismore 5.2%
Langfrist TGV
6.5% Burda Digital
GmbH 29.6%
Allianz Global
Investors 5.1%
Management
Chief Executive Officer (CEO): Dr. Stefan Gross-Selbeck
Dr. Stefan Gross-Selbeck (CEO) has been responsible for the Internationalisation Dr. Stefan Gross-
strategy as well as the corporate Strategy, the corporate Development, HR and Selbeck
Corporate Communications divisions since January 2009. Bejore joining XING AG
he was head of eBay Germany. He studied law and economics at the Universities
of Freiburg, Lausanne, Montpellier and Cologne. In 1996 he received the title of
Master of Business Administration (MBA) from INSEAD in Fontainebleau, France.
Dr. Gross-Selbeck is married and has two children.
Chief Financial Officer (CFO): Ingo Chu
As Chief Financial Officer, Mr. Ingo Chu is responsible for the Controlling, Investor Ingo Chu
Relations, Accounting, Legal as well as Business Intelligence divisions. Before
XING he worked 14 years for Bertelsmann group.
Chief Customer Officer (CCO): Dr. Helmut Becker
As Chief Commercial Officer, Dr. Helmut Becker is responsible for the Product, Dr. Helmut Becker
Marketing and Revenues divisions.
Chief Technological Officer (CTO): Jens Pape
Mr. Jens Pape is to become the new Chief Technological Officer (CTO) at XING Jens Pape (as of 1
AG as from 1 March 2011. He will take over from current CTO Michael Otto who March 2011)
has decided to leave on 31 January 2011 at his own request after seven years. Mr.
Pape is currently Vice President Online at Telefónica o2 Germany where he is
responsible for turning the company into an online-centric business. Prior to this
position, he was CIO and member of the board at Hansenet.

XING AG
Company milestones
Over the years the group reached several milestones which are shown in the Company milestones
following chart:
Company milestones
2003
Foundation as openBC
2006
Rebranding to XING IPO-listing
2007
Acquisition of eConozco (Spain) Acquisition of Neurona (Spain)
2008
Acquisition of Cember (Turkey)
2010
Acquisition of amiando (Germany)


XING AG
Business model
XING breaks its business activities after the amiando takeover into four major Four major business
categories: Membership (Basic & Paid), E-Recruiting, Advertising (including segments
Company Profiles) and the newly integrated Events. Although the company has
meanwhile achieved a higher revenue diversification (E-Recruiting and
Advertising), the group´s “bread and butter “business still remains the development
of the paid membership segment as revenues in other business segments are yet
in an early-stage (but with promising growth prospects).
Current business model
Paid
Second level E-Recruiting Advertising Events
Membership
First level
Basic Membership
The company developed its own proprietary software platform including a search Own proprietary
algorithm (for E-Recruiting) which allows to run a scalable business and to remain software platform
highly innovative. Overall, XING has established a business model that ensures a
fast time-to-market and its intention is to develop solutions to satisfy the customers‟
demand in the fast-moving social and professional community universe. In
technical terms, the platform of XING AG is characterised by a considerable degree
of scalability. The expansion of the technical infrastructure has enabled new
members to be recruited without resulting in a direct proportionate increase in IT
costs or without having a negative impact on performance.
Despite the highly competitive opponent LinkedIn, XING is market leader in the Market leader in DACH
group‟s Tier 1 region DACH (Germany, Austria, Switzerland) with currently more region with more than
than 4.5m members (at the end of 2010E). In addition, XING is also market leader 4.1m member
in the key strategic core markets of Spain and Turkey.
By looking on the chart below it should give a clear insight about the importance of Social networking
social/professional networks nowadays. It is expected that already within the end of already more
2009 social networking users have surpassed the global users of emails. important than emails
Social networking usage vs. email usage
Source: Morgan Stanley, comScore global

XING AG
Market trends
By reviewing the market related to XING, several market trends can be observed. General market trends
Some of these market trends are listed below:
Higher penetration of professional networking platforms, especially in the

DACH region
Higher brand awareness of listed companies like XING as a result of the
upcoming IPO‟s of LinkedIn, Facebook and Groupon
Strong growth in Mobile Internet traffic volume
Market growth depends on high-quality of technology platforms
Roll-out of high-speed internet (4G, LTE) faster than previous expected
Memberships (Basic & Paid)

The company operates, as measured by the activity of its members, a leading site XING platform
for professional networking under the name XING on its website www.xing.com.
The XING platform gives members the opportunity to find new business contacts,
maintain existing contacts and deepen extending their operations into new markets
and to exchange views and information. Over the last couple of years, XING AG
has extended its business models to cover new markets and target groups, and
has further developed its core business.
To become a member, users must register and create an individual profile Easy registration
containing personal information. The members can use advanced functions that process
allow them to offer other members to join their personal network within the platform.
Regarding the privacy XING recognised this issue already in the early-stage of its Customised privacy
platform development and nowadays members may determine the degree of settings
privacy itself, stating in their profiles that they want to make their data available to
other members. The privacy settings can be adjusted largely to the individual needs
of each member.
Overview of provided applications (as of February 2011)
Source: XING AG

XING AG
To give the user the opportunity to maximise the consumer behaviour XING XING provides several
developed several plugins which can be downloaded and installed to use the plugins...
networking opportunities on the internet with a browser and non obligatory to be on
the website xing.com. Currently, there are five plugins to use which range from
synchronising the address book with Microsoft Outlook (XING Connector for
Microsoft Outlook) over integrated search plugins for the browser (“XING
Quickfinder plugin”, “XING Searchbox“) up to Windows-Widgets on the Desktop
screen (“XING Windows Vista App“).
The company also decided to expand the functionality of the account by adding
various useful applications comparable to apps on smartphones. The applications
are created either by XING or by one of their selected cooperation partners.
As of the beginning of February 2011 the XING platform provides 18 applications .... and applications
(as can be seen in the chart on the previous page) of which 16 were created by
selected partners. The own created applications including the function to ask fellow
XING members an individual questions “Ask XING”, as well as the opportunity to
connect XING with a Twitter account “Twitter Buzz”.
To measure the success of a social/professional networking platform like XING the As of September 2010
main driver is the development of the memberships (free / paid). Analysing the last XING has 10.11m
two years, XING has increased its number of members from 7.00m (end of 2008) member worldwide
up to 10.11m (end of September 2010), indicating a growth of about 45%.
Noteworthy is that XING was able to boost its membership in all four geographic ...with all regions
segments. While the DACH-members incremented by 44% in the mentioned showing strong growth
period, Spain (+62%) and Turkey (+115%) could even exceed the average growth
potential. Turkey reached in 3Q2010 almost the 1m memberships and it should be
no surprise that the 1m level should be reached within 4Q2010. Therefore, both
markets have achieved the critical mass required to push member activity and to
implement a profitable monetarisation strategy. In line with this, the company will
continually reduce its marketing expenditures in this area to focus on increasing
activity levels in those countries.
Overview member development (in m)

12
9.63 10.11
10 9.17
8.75
3.31
8 7.00 3.23
3.17
3.10
6 0.91 0.99
2.63 0.81
0.72 1.54
1.29 1.42
4 0.46 1.19
0.95
2 3.74 3.9 4.07 4.27
2.96
0
2008 2009 1Q2010 2Q2010 3Q2010
DACH Spain Turkye Others
New Members are being acquired through so-called viral marketing as well as
classical online marketing campaigns. This strategy has proven effective to
introduce new members to the platform as can be seen by the growth in the chart

XING AG
above. In addition, premium members also receive special conditions under “Best
Offers”.
Overall, members can choose between a non-contributory “Basic Membership'' and Members can choose
a “Premium Membership''. As of 30 September 2010, approximately 7.3% of all between basic and
global members were paying premium Members, of which approx. 96% came from premium membership
the DACH countries. Premium members pay a monthly membership fee in
advance.
Paid Membership
Up to now most of XING‟s revenue streams are generated via its subscription Cost overview
model (premium membership). The cost per subscription ranges from EUR 4.95 to premium membership
EUR 6.95 per month with savings potential of up to 40%.
Pricing structure paid memberships (incl. VAT)
The member subscription payments are received in advance which is a clear Payments are
advantage for the company‟s working capital. Furthermore, the conversion costs for collected in advance
premium memberships is characterised particularly by low costs of acquiring. The
company itself noted that the platform gains most of its new members via the
mentioned viral marketing effect of the platform.
With achieved revenues EUR 10.07m in 1Q10 the clear upside effect was already 2010E revenues should
visible. At that particular time even a steady development over 2Q to 4Q would clearly surpass 2009
have been a positive development for the group (4x EUR 10.07m = 40.28). level
Subscriptions: Revenue (in EURm) and proportion development (in %)

45.000 42.238 86,0%
40.000 37.114
84,4% 84,0%
35.000 31.381
30.000 79,8% 82,0%
25.000 21.649 80,0%

20.589
20.000 78,0%
15.000 10.792 10.857
10.074 10.515 76,0%
10.000
5.000 74,0%
0 72,0%

XING AG
However, XING was able to extend its quarter-revenues both in 2Q as well as in

3Q. And also in 4Q the group is expected to grow again QoQ from EUR 10.79m in
3Q up to EUR 10.86m in 4QE, indicating a full year revenue proportion of EUR
42.24m in the segment subscriptions. Noteworthy is that the overall share of
subscriptions will decrease from 84.4% at the end of 2009 down to 79.8% at the
end of 2010E. Especially the share of the business segment E-Recruiting is
expected to increase from 10% up to 13.3% (at the end of 2010E).
Amongst others, recent product developments and innovations are showing Positive development
positive impact on the member and help the company to increase its conversion on total numbers
rate on total numbers. The number of premium memberships rose from 0.61m at
the end of 1Q09 (End of March 2009) up to 0.73m at the end of 3Q10 (End of
September 2010), corresponding to an overall increase of 21%.
Premium memberships development (in m)

0,8 8,2%
0,7 8,0%
0,6 7,8%
0,5
7,6%
0,4
7,4%
0,3
0,2 7,2%
0,1 7,0%
0 6,8%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
Premium
0,606 0,635 0,662 0,687 0,708 0,718 0,733
memberships
Share of total
8,1% 8,0% 8,0% 7,9% 7,7% 7,5% 7,3%
members in %
However, despite the positive development in total numbers the share of premium
memberships has been decreasing since the end of 1Q09 (end of March 2009)
from 8.1% down to 7.3%. As long as the company is able to further enhance the
premium membership basis on total numbers with a solid growth a downsizing of
the share can be neglected to a large extent.
Members (left: DACH; right: Non-DACH) vs. share of premium memberships in %

4,5 17,9% 4,27 18,0% 7,00 0,84% 0,90%
4,07
3,9 5,84
4 3,74 0,80%
3,58 6,00 5,56
3,39 17,5% 5,27
3,5 3,19 5,01 0,70%
5,00 4,52 4,73
3 4,29 0,60%
17,0% 4,00
2,5 0,50%
0,50%
2 3,00 0,40%
16,5%
1,5 16,5% 0,30%
2,00
1 16,0% 0,20%
0,5 1,00 0,10%
0 15,5% 0,00 0,00%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
Subdivided into the two geographic segments (DACH, Non-DACH) the trend is
comparable but not in absolute figures. While XING has about 4.27m members in
DACH-region (end of September 2010) and a premium share of 16.5% (vs. 17.9%

XING AG
at the end of 1Q09) the Non-DACH region has about 5.84m members (end of
September 2010) but only roughly 0.5% of a premium share (vs. 0.8% at the end of
1Q09).
This higher penetration of premium conversion in the DACH-region should also Recent development in
remain in the future as the group recently announced pulling operations back to its Spain and Turkey
German headquarters, which now becomes its sole base. Both Spain as well as
Turkey will be closed due to little activity generated by Spanish and Turkish
members. However, this should not be misconceived. Despite the fact, that XING
will control its international business back from its German headquarters does not
mean that the group intends to end its internationalisation plans. After reaching
critical mass both in Spain as well as in Turkey the group now focuses on
improving the activity of the members rather than further increasing the total
members. Hence, the group will reduce its marketing expenses over the next
quarters which makes its much more comprehensible that the group also reduces
its personnel expenses in these two countries (as discussed already at the end of
2010).
E-Recruiting
XING AG further expanded its activities in the relatively new business segment E- New business segment
Recruiting in the fourth quarter of 2009. Since then this segment has already since 4Q09
achieved significant revenue streams. The company developed its own proprietary
software platform including a search algorithm (for E-Recruiting) which allows to
run a scalable business and to remain highly innovative.
Overall, XING provides a platform for job advertisements based on two billing 2 billing models
models. Advertisers can either choose the performance-based method using the
pay-per-click model (EUR 0.69 per click) or can use the normal fixed price model CPM or fixed price
(from EUR 395 to EUR 595 per advert) with a predefined duration of 30 days. model
Aside from that, the company has also offered this specialist target group of But also recruiting
recruiters the option of a customised Recruiter Membership with cost savings memberships
opportunities of up to 67% (as can be seen in the chart).
Pricing structure Recruiting membership (net price excl. VAT)
An essential step to develop the E-Recruiting segment was to set up a field sales Positive development
team. By the means of this sales team XING was able to grow on such tremendous in the past...
speed. It is expected that the company will further enlarge the manpower in this
specific field which should propel the growth in the future.
Therefore, it has been no surprise that more and more companies and recruitment ...and expected for the
future
agencies are choosing XING as a recruitment channel as the XING platform offers
various benefits over other online job portals. Companies also have the opportunity

XING AG
to get in touch with a highly attractive target group of job-seekers (active and
passive) while also being able to request candidate references. The above
mentioned reasons are the major benefits why companies see considerable growth
potential in this area over the next years.
Besides the organic process the group also expanded its E-Recruiting business in Cooperation with job
Switzerland through the job platform jobs.ch. Since 4Q2010, jobs.ch has been platform jobs.ch
marketing all XING job advertisements in Switzerland. In addition to posting job
advertisements, this also involves marketing recruiter memberships. Swiss
customers have the opportunity to access two top-quality channels from a single
source (XING and jobs.ch).
By continuously adding new customers, the company is able to offer such a Excerpt of customer
glamorous customer portfolio, as seen in the chart below. portfolio
Excerpt from current E-Recruiting customers (as of February 2011)
Source: XING AG
Similar to the positive progress at the core business Subscriptions, the group also Strong growth within
managed to improve its figures in the E-Recruiting segment. While XING‟s 2010
revenues in 1Q came in at EUR 1.44m, the group achieved about EUR 1.90m in
3Q, indicating an increase of about 32% within two quarters.
E-Recruiting: Revenue (in EURm) and proportion development (in %)

8.000 16,0%
7.015
7.000 14,0%
13,3%
6.000 10,0% 12,0%
4.890
5.000 4.412 10,0%
4.025
4.000 8,0%
2.990
3.000 6,0%
1.900 2.125
2.000 1.437 1.553 4,0%
1.000 2,0%
0 0,0%

XING AG
Therefore, it is no surprise that the unit already surpassed the 2009 level within the
first nine months with EUR 4.89m (2009: EUR 4.41m). We expect that 4QE will
further propel the growth with quarter sales of EUR 2.13m, corresponding to full
year revenues of EUR 7.02m (+59% YoY).
As the market leader in Germany with such a significant customer portfolio, XING XING is excellent
AG is excellently positioned to significantly increase its revenues in this segment positioned
over the coming years. Taking a look at the historical development over the last
quarters it is already visible that XING managed to decrease its dependency on
subscription revenues as well as enhance the quality of the members by providing
such a clearly represented and serviceable platform with strong market advantages
(especially in the field of E-Recruiting).
Advertising
The third business segment in the group business model is the “Advertising” Advertising segment
segment. In this area, the company generates most of its revenues by way of
marketing online advertising on the XING platform. In this way, advertisers are able
to access the traditional advertising forms on the basis of the TKP model (thousand Online advertising
contact price) via a marketing company. The company generates additional
revenues with its “Best Offers” segment, in which it provides a marketing platform Best offers
to B2B customers.
XING AG has also provided companies with a platform called “Company Profiles” ... and Company
since 4Q2009. More and more companies are now discovering XING Enterprise Profiles
Groups and as of 3Q2010 more than 200 thousand Company Profiles has been
registered. This is in part due to the launch of a new basic profile that allows
companies to create a free Company Profile that includes a description of the firm 22k basic company
along with their logo (22 thousand companies). Regarding the premium model, profiles
corporate clients are able to choose between the alternatives “Standard” for EUR
24.90 per month and “Plus” for EUR 129 per month. Lately, XING also announced
New cooperation with
that they started to cooperate with kununu. The kununu platform offers employees
kubunu
the possibility to inform each other about the working climate in companies with
rating systems which will be integrated into the “Standard” and “Plus” Company
Profiles.
Since XING has been listed in the Informationsgemeinschaft zur Feststellung der
Verbreitung von Werbeträgern e.V. (IVW – German Information Association for the
Establishment of the Distribution of Advertising Media) and the Arbeitsgemeinschaft
Online Forschung (AGOF – Working Group for Online Media Research), XING‟s
excellent range and attractive target group in Germany have been made
transparent for the advertising market.
Recent highlights in this business unit have been the introduction of two new Steadily development
display advertising formats (i.e. wallpapers) allowing companies to reach out to of new advertising
business professionals in a highly effective way. These new formats have already formats
proven highly popular among brand-oriented Premium customers, and the average
CPM rose yet again to four times the level seen at the start of 2010.
XING mentioned that it has attracted a number of large, well-known companies

who signed up to the Enterprise Groups section as it provides them with a platform
for creating and maintaining employee loyalty as well as publishing company news
and information. XING‟s social media teams and the companies‟ agencies have
been working hand in hand over the last few months to put the right pieces into
place to create and manage these communities.

XING AG
In 1H2010 the group achieved revenues of EUR 1.65m in the advertising segment, 4QE performance
indicating a growth of 50% YoY. Growth rates have accelerated every quarter with should even top 3Q10
a new record quarter of EUR 0.89m in 3Q10.
Advertising: Revenues and proportion development

4.000 8,0%
3.579
3.500 7,0%
5,4% 6,8%
3.000 6,0%
2.544
2.500 2.370 5,0%
1.928
2.000 1.651 4,0%
1.500 3,0%
1.035
774 877 893
1.000 2,0%
500 1,0%
0 0,0%
Hence, the 9M results in 2010 already exceeded the full year figures of 2009 by
roughly 7%. With expected revenues of EUR 1.04m in 4QE, full year figures should
come in at EUR 3.58m, corresponding to an increase of 51% YoY. Besides the
absolute progress this segment also achieved growth on a relative basis as the
segment share rose from 5.4% at the end of 2009 up to 6.5% at the end of 9M2010
and expected 6.8% end of 2010E.
Events
This new fourth segment in the business model is based on the operational Newest business
business of amiando AG which is operative in online event management and model through
ticketing services. In December 2010 the company announced its acquisition of acquisition of amiando
amiando AG, based in Munich, effective as of 1 January 2011. amiando is the AG
leading provider of online event management and ticketing services in Europe with
more than 170,000 events with more than 750,000 participants successfully
organised and processed via the XING platform. Through this platform-tool, the
company offer its 10.11m members (end of 9M2010) integrated business event
services ranging from organisation to marketing, billing and execution. With the
acquisition, XING intends to form a fully integrated service provider for the
promotion and fulfilment of business related events. Overall, the group‟s decision to
take over amiando helps XING cover the most attractive parts of the value chain of
event management (fulfilment, event promotion, as well as post-event).
The services of amiando can be used to manage invitations, promote events Event marketing and
online, handle the event registration process, host integrated billing services, and ticketing
manage events. All of the tools are available online on the XING-platform. The
XING management sees a perfect combination in the business event segment that
will provide XING‟s members with new, relevant value added through the platform‟s
reach and amiando‟s technology and market position. At the end of 2010, amiando
had a staff of 35. As amongst others XING will build up a field sales team in the
events segment, the staff will rise significantly in 2011E.

XING AG
According to the company, the acquisition price comprises of an initially payment of Initial payment of EUR
approx. EUR 5.1m. An additional payment of up to EUR 5.25m will also be made 5.1m + earn-out
on 31 March 2013, if various conditions are met, including: component of up to
EUR 5.25m
Current amiando management team (founders) stays on board for at least
18 months after closing
The new “events” entity generates cumulated revenues of EUR 12m in
2011 & 2012
The new “events” entity achieves a cumulated positive result in 2011 &
2012
The company mentioned it expected amiando to achieve total revenues of approx. We expect earn-out to
EUR 1.5m for 2010. For 2011E and 2012E we do not believe for the time being that be at roughly EUR 3m
amiando and XING will be able to fullfill the „high‟ sales expectations of around
EUR 12m (cumulated). We decided on a very conservative approach as the
visibility of this new entity is still very low. While we see revenues in 2011E at
around EUR 2.6m, the forecasted revenues in 2012E should reach roughly EUR
Cumulated revenues
4.6m, corresponding to cumulated revenues of EUR 7.2m. Hence, the earn-out
should achieve EUR
sum of about EUR 5.25m seems too high at this time. Corresponding to our
7.2m
conservative approach an earn-out payment of about 3m seems reasonable.

XING AG
Strategy
XING AG has redefined its strategy in the course of the past years. Whereas the Redefined strategy
business model between 2003 and the end of 2007 were almost entirely based on towards vertical
the “subscriptions” business with premium memberships, the company nowadays integration as business
has four main pillars which will propel growth in the future. Overall, XING aims for a focus changed
higher vertical integration.
Besides premium memberships, XING AG has developed new market potential New market potential
particularly as a result of further developing its E-Recruiting offerings and services. in the field of E-
In addition, it is also pressing ahead with the model of advertising space which is Recruiting and Events
widespread on the Internet, and is also establishing new sources of revenues in the
B2B field. Recently, the group acquired amiando AG and therefore also plans to
enhance its business towards events.
The activities also continue to focus on the members. This is because, only if the XING aims to increase
company continuously focuses on the needs of its members will the platform traffic on plattform
continue to be a regular component of the work of millions of business
professionals throughout the entire world. Accordingly, the company focused to an
even greater extent on further developing and improving the core functionalities of
the XING platform within 2010 and it is expected that the group will extent this
strategic objective also in 2011. Moreover, the company plans to achieve a higher
revenue diversification by expanding its portfolio of standard products and at the
same time maintain its expense structure on a favourable level.
As a focused medium-sized internet and technology company, XING focuses Market environment
particularly on the Social/Professional networking market which will reveal its huge has huge market
potential within the next few years. First indications about an improved market potential
momentum came along since the valuation debate about Facebook (currently
>USD 60bn) as well as the upcoming IPO of LinkedIn (estimated value of USD 2-
3bn) has started.
In an industry, that continually produces cutting-edge technology, a diversified Diversified business

business model is becoming increasingly a key competitive factor as it allows the model helpful to
company to remain highly innovative without tying up too many financial resources remain highly
into one major project. This strategic decision provides the company with the innovative
advantage to remain highly innovative by utilising the most up-to-date market
trends at the same time. Moreover, the company achieved a faster time-to-market
for its innovations as more resources can be utilised in product development and
commercialisation.
CEO of the group, Dr. Stefan Gross-Selbeck, stated that XING will continue to Needs of the
focus work on the needs of the customer. XING‟s aim is to turn the platform into a customers remains a
tool used every day by professionals and companies which helps them to do their major topic
job even better. Hence, the group characterises itself by lean structures and
flexible, innovative strength. From the company‟s perspective, its top priorities are
increased profitability and sustained growth in company value which is expected to
kick-in over the next five years.
Growth strategy & vertical integration

By adding E-Recruiting and the recently established Events segments to its Vertical integrated
business activities XING has already taken the first steps in implementing its processing
strategy of an vertical integrated professional networking platform. To achieve a
higher vertical integration, as part of its new strategy, XING will align its future

XING AG
software developments to a stronger degree towards its customer‟s process chain.

Overall, the group is expected to increase its general investment in order to
develop its platform and teams even further to position XING as a driving force on
the market.
Vertical integration
After having achieved a higher integration on the product side, XING is expected to Subscriptions and E-
push ahead with its then two major business units subscriptions and E-Recruiting. Recruiting will be the
The company aims for an approach that is aligned along the customer´s value major units
chain. Along with the acquisition of new members, the company plans to monetise
on cross selling potentials within its broad business units which ranges from
premium membership and E-Recruiting towards event marketing.
The present focus and the introduction of new products/apps are expected to play a Innovation is important
more important role over the next few years as XING mentioned it aims to boost the to achieve more traffic
activity of members on the platform. The main focus of the company‟s business
model is to further strengthen the shift in the revenue structure to a more balanced
level. It achieves these long term customer relations by ensuring customer loyalty
through high product quality and focused networking opportunities.
In XING´s underlying market is the rapid evolution of the new trend of mobile Mobile trend should
devices packed with advanced capabilities, one of the most highly anticipated propel the growth
growth drivers. As mobile devices, particularly Smart phones, increasingly package opportunities of XING
a lot of PC type functionalities, demand for efficient internet usage combined with
increased networking opportunities are becoming increasingly popular.
One of the key elements of XING‟s strategy is the extension of the product portfolio Further expansion of
with innovations that allow the company to increase its share as the company will product portfolio
benefit from its first-mover-advantage. As the company provides all key factors in
the field of social/professional networking, the mid-term outlook for the company is
very promising. Hence, the company can count on achieving higher revenues and
customer diversification by expanding its portfolio of standard products, and at the
same time extending its market share.

XING AG
Overall, the competitive advantage for the company arises from its unique quality Strong USP’s regarding
approach combined with a promising market positioning and longstanding monetisation
expertise. As XING has only one „real‟ competitor, LinkedIn, the group should be compared to
able to capitalise on its advantages to maintain and enhance its high market share competition clear
in the near future, especially in the DACH region. Regarding the monetisation of its market advantage
business model, XING can not be seen as a direct competitor to a company like
Facebook as Facebook currently generates most of its revenue by online
advertising.
Market entry barriers

Generally the risk of new market entrants is very low as they require significant High market entry
expertise, brand awareness, customer loyalty and financial power to deliver high- barriers
quality products, technological infrastructure, and years to establish the required
competency and reputation in the industry. Especially in the DACH-markets it is not
likely to happen as these members are very loyal customers generally with
premium memberships.

XING AG
New mega-trend –mobile internet

The Rapid growth in internet usage in the US, Europe and Asia/Pacific regions was Internet usage will
one of the main catalysts for the growing popularity of social/professional grow significantly
communities. According to Internet World Stats roughly 2bn of the world population
was using the internet in 2010 with North America and Europe achieving the
highest penetration rates while BRIC countries showing the highest growth. Going
forward Forrester Research estimates 2.4bn Internet users worldwide by 2013
(Source: Forrester Research, Global Online Population Forecast).
Presently the mobile internet market is the most trendsetting sector. According to Mobile Internet will be
several institutions and market experts, the number of people accessing the mobile the next mega-trend
Internet is expected to overtake the PC as the most popular way to get on the Web
within the next four to five years. Up to now already more than 500m people using
internet via mobile devices (smart phones, tablet-pc, etc.). IDC forecast the
exceeding of 1bn mobile internet users in 2013E. We are more bullish on that issue
as we think that this magical number could already be reached at the mid of 2012E.
Our bullish approach is backed by estimates of Gartner which predicts that next
year 85% of all shipped handsets are preinstalled with a browser.
In the course of the growth of mobile internet traffic it is expected that mobile Mobile Internet
ramping will be faster than desktop internet did and will outpace it in the next few ramping faster than
years. In 2009 the volume of mobile internet generated approx. the same traffic desktop internet did
than desktop internet back in 2000.
One of the keys to success of mobile internet is the data signalling rate. Since the Roll-out of LTE and
introduction of 3G technology the speed of mobile internet has reached the development of 3G will
required level. ITU forecast that at the end of this year there will be over 940m 3G support the market
subscriptions, corresponding to 18% of total subscriptions. Hence, the potential for growth
media companies for all kinds of communication in the course of the mobile trend is
tremendous.
Supported by several research reports and especially mentioned by a Cisco

analysis, the growth of mobile internet in the next five years is forecasted to
outperform the growth period of fixed internet during 2000 – 2005. Already in
2014E the traffic of mobile internet should exceed the volume of fixed internet in
2005 and, thus, narrowing the lag from currently 9 years down to 8 years.
Amongst others Forrester Research expects that the Western European Mobile Western European
Internet penetration will increase from 17% in 2009 up to 30% in 2014E, Mobile internet
corresponding to 136m mobile internet users vs. 58m in 2009. The compound penetration up to 30%
annual growth rate is 18%. till 2014E
Based on the above mentioned figures, Forrester also estimates that in 2014E
about 87m users have mobile data flat-rates against 36m in 2009, indicating a
CAGR of about 25%. The extremely fast growth scenario mostly results from the
excellent 3G network coverage and the upcoming penetration of LTE or 4G
networks.
Regarding online-advertising the mid-term outlook is also outstanding. According to Outstanding mid-term
general market forecasts it is expected that global internet ad spending will outlook; CAGR 13%
increase by about 13% p.a. up to USD 82.71bn in 2012E, of which the share of until 2012E
Europe will be at around one third of all spending.

XING AG
Financials
Historical financial development
As a consequence of reshifting the business model and tightening the strategic Highly profitable
goals of the group the company has stabilised its operative performance over the business model from
last quarters. With stable growth in the past and for the upcoming years it is 2010E on
expected that the company will again display a remarkable and accelerated growth
performance.
Over the period 1Q 2009 – 3Q 2010 the company experienced a top line growth of Strong growth over
31% on quarterly basis and managed to improve EBITDA figures after a slight last several years
decrease over 2009. Excluding 4Q 2009 in net income, the company pushed ahead
with implementing a more focused business model with the main target on the
vertical integration of its „new‟ business approach. In addition, the company realised
its strategic plans of further expansion of the business model and installed new
products in the Advertising segment (Company Profiles) and Events segment
(acquisition of amiando AG).
Historical figures development (in EUR 1,000)

16.000
13.611
14.000 12.948
12.317
11.571 11.365
12.000 10.690
10.374
10.000
8.000
6.000
4.000
2.000
0
-2.000
-4.000
-6.000
1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010
Revenues 10.374 10.690 11.571 11.365 12.317 12.948 13.611
EBITDA 3.401 2.494 2.925 3.025 3.303 3.742 4.456
Net income 1.686 490 344 -4.201 1.257 1.346 2.108
Source: XING AG, CBS Research AG.
Currently, the company achieved a significant growth momentum after achieving a Currently a nice
sustainable level of profitability. The development of a broader product portfolio in growth momentum
new potential growth segments (e.g. E-Recruiting) enabled the company to improve
its profitability and achieve its current sophisticated growth potential.
EBITDA-margin (upper line) vs. EBIT-margin (lower line)

40,0%
32,8% 32,7%
28,9%
30,0% 25,3% 26,6% 26,8%
23,3%
20,0%
22,2% 23,3%
16,8% 19,6%
12,7%
10,0%
8,1%
0,0%
-10,0%
-20,0%
-30,0%
-40,0% -32,9%
1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010

XING AG
As seen in the chart on the previous page, XING boosted its EBITDA-margin to
over 30%, which is likewise the targeted margin level for the mid-term.
The negative effect on EBIT-level in 4Q is largely attributable to one-time One-time effect

impairment losses in the amount of EUR 5.4m. These losses were due in particular burdened 4Q09
to write-downs for equity participations and acquisitions made by the Executive
Board based on the current market environment and XING AG‟s strategic
alignment in 4Q. Excluding these one-time effects, the company would have
reported an overall net income of EUR 3.9m.
9M10 Review
Revenues from services rose in 3Q2010 by 20% to EUR 13.61m (3Q2009: EUR 3Q showed a clear
11.37m), with other operating income taking total revenues to EUR 13.77m. A large upside potential
part of this rise can be attributed to accelerating growth levels in the E-Recruiting
business unit which grew by 82% to EUR 1.90m (3Q2009: EUR 1.04m). The
Advertising business unit reported growth of 46% up to EUR 0.89m (3Q2009: EUR
0.61m) and paying premium member revenues also rose by 11% to EUR 10.79m
after EUR 9.69m a year earlier. In the corresponding period XING AG reported an
EBITDA of EUR 4.46m, which was the company‟s highest ever operating result in
corporate history. Compared to 3Q2009 (EUR 2.92m) this implicates a 52%
increase YoY.
Within the first nine months of 2010 XING posted revenues of EUR 38.88m, 9M figures considered
indicating an increase of 19.1% on y-o-y basis. Over the same period, EBITDA- very positive
margin was at 29.6%, corresponding to EUR 11.50m. Overall, the company
achieved a net profit of EUR 4.71m or EUR 0.89 per share, indicating a current net
margin of around 12.1%.
IFRS EURm 9M 2009 9M 2010 Change
Revenues 32.64 38.88 19.1%

YoY grow th - 19.1%
EBITDA 8.82 11.50 30.4%

as % of revenues 27.0% 29.6%
EBIT 4.65 7.77 67.3%

as % of revenues 14.2% 20.0%
Net income attributable to shareholders 2.52 4.71 86.9%
Financial forecast
Preview 4Q10E
We expect that this fiscal year will end very positively after already very promising Strong growth on top
9M2010 figures. Overall, we expect the group to achieve total revenues of EUR line...
52.94m in 2010E, indicating a 20.3% growth YoY. Therefore, 4QE revenues will
amount to EUR 14.06m (23.7% YoY). On segment level the major contributor
remains the subscriptions segment with revenues of EUR 10.86m in 4QE and EUR
42.24m for FY2010E (+14.3% YoY). Besides the above mentioned segment also
the segments E-Recruiting (Revenues: 4QE EUR 2.13m; 2010E: EUR 7.02m;
+42% YoY) and Advertising (Revenues: 4QE EUR 1.03m; 2010E: EUR 3.58m;
+25% YoY) will end with strong growth both QoQ as well as YoY. The recently
acquired events company amiando reached revenues of roughly EUR 1.5m in 2010

XING AG
according to the company. However, this will not contributed to XING since the
consolidation is as of 1 January 2011.
On profit level the estimated EBITDA margin of 37.9% in 4QE should leads to a ...as well as on
margin for full year of 31.8%%, corresponding to EUR 16.83m. The operating profit operating level
(EBIT) of the group is expected to amount to EUR 3.98m in 4QE and, thus, EUR
11.75m on full year 2010E, indicating an EBIT-margin of 22.2%. Summing up, the
net income attributable for shareholders should come in at EUR 7.62m for full year
2010E (4QE: EUR 2.91m).
Mid-term outlook
The operational success of XING will benefit from improved margins as well as
manageable start-up expenses resulting from the recently acquired event
management and ticketing company amiando.
XING aims to sustain its profitability at a higher level (first steps already achieved) Improving profitability
with an operating EBITA-margin of >30%. Overall, we consider the improved and seems reasonable
now broader business model of XING, in particular the E-Recruiting segments and
the potential of the core business subscriptions, as the current and future cash
cows of the group. By successfully settling the planned business units the company
will yield its fruits of its early-moving-advantage in the specific area of E-Recruiting
and Events. We believe that the company‟s growth momentum will continue and
the company will even manage to boost its top and bottom line to a higher level in
the mid-term driven by the combination of following trends and assumptions:
Memberships & Subscriptions

XING‟s business networking platform is favourably positioned in the growth Memberships will grow
segments of both general mobile trend as well as in the growing interest in social significantly over the
media. The group is well positioned with its developed business platform, whose next years
brand awareness is already high especially in DACH-region. We expect that within
the next few quarters the memberships (particularly basic memberships) will further
grow. At the end of 2013E we estimate the total worldwide memberships to reach
16.53m of which 7.11m is contributed to DACH countries, corresponding to 43% of
total memberships.
The present focus and the introduction of new products/apps are expected to play a More traffic will bring
more important role over the next few years as XING mentioned it aims to boost the more member
activity of members on the platform. We expect that the focus on increasing traffic

XING AG
in 2011E will be one of the major growth drivers for the accelerated platform
upswing from 2012E on. This is backed up with the higher attention of social media
as more and more companies plan to go public (LinkedIn, Facebook, Renren.com).
Aside from that, the ongoing trend towards mobile internet (see section „New mega- Mobile internet trend is
trend –mobile internet‟) is another factor for a company like XING to boost its also a growth factor
memberships and eventually its subscription memberships.
Memberships development (in m)

18.00
16.53
15.89
16.00 15.28
14.69
14.13
14.00 13.56
13.01
12.49
11.98
12.00 11.56
11.17
10.47 10.81
10.11
9.63
10.00 9.17
8.75
8.00
6.00
4.00
2.00
0.00
4Q09 1Q10 2Q10 3Q10 4Q10E 1Q11E 2Q11E 3Q11E 4Q11E 1Q12E 2Q12E 3Q12E 4Q12E 1Q13E 2Q13E 3Q13E 4Q13E
Memberships worldwide 8.75 9.17 9.63 10.11 10.47 10.81 11.17 11.56 11.98 12.49 13.01 13.56 14.13 14.69 15.28 15.89 16.53
Memberships DACH 3.74 3.9 4.07 4.27 4.51 4.69 4.86 5.03 5.21 5.42 5.70 5.95 6.23 6.44 6.68 6.91 7.11
Memberships Non-DACH 5.01 5.27 5.56 5.84 5.96 6.12 6.31 6.53 6.77 7.07 7.31 7.61 7.90 8.26 8.60 8.98 9.42
The group intends to further enhance its operational success. The full potential for XING with promising
new paying customers (premium memberships) is not yet fully developed (7.1% of outlook on premium
total memberships, as of end of 2010E) as the marketing effects are still not as memberships
effective as it could. Despite the competition (LinkedIn on professional level,
Facebook on general level) in this specific area, we are convinced that XING will
further enhance its customer base in the course of business networking and,
therefore, in the long run further improve the profitability of the business segment
subscriptions and therefore, the group as a whole.
Subscriptions outlook (in m)

1.00 0.06
0.90
0.05
0.80
0.70
0.04
0.60
0.50 0.03
0.40
0.02
0.30
0.20
0.01
0.10
0.00 0.00
1Q10 2Q10 3Q10 4Q10E 1Q11E 2Q11E 3Q11E 4Q11E 1Q12E 2Q12E 3Q12E 4Q12E 1Q13E 2Q13E 3Q13E 4Q13E
Subscriptions DACH 0.68 0.69 0.70 0.71 0.74 0.75 0.77 0.78 0.80 0.82 0.84 0.86 0.89 0.91 0.93 0.95
Subscriptions Non-DACH 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.04 0.05 0.05 0.05 0.05 0.06
As seen in the chart above the premium memberships are expected to grow 1m premium member
constantly over the next quarters and should reach 1m subscribers at the end of at the end of 4Q13E

XING AG
4Q2013E, of which 0.95m are from DACH countries. Overall, the adjusted
addressable market size of the DACH region is estimated to be at around 19m
members in 2015E, which gives XING a high potential market with promising
outlook for the upcoming years. On revenue side we see this segment to achieve
EUR 42.24m in 2010E and expect this unit to increase its revenues up to EUR
52.37m in 2013E (CAGR of 7.4%).
E-Recruiting
In this segment XING was able to achieve an early-mover-advantage with its quick Fast establishment
establishment of its E-Recruiting platform. The company developed its own with strong growth
proprietary recruiting platform on XING including a search algorithm which allows to potential
run a scalable business and to remain highly innovative. Already in this short time
the group was able to market more than 75,000 recruiters and already generate
significant revenues in 2010.
This fast market entry had already an effect on the financial statement of 2010E Revenue CAGR of
and will also rise over the next years, which can be seen at the Appendix. Overall, 41.5% 2010E-2013E
resulting from this kick-start the group should achieve revenues of about EUR
7.02m in this unit in 2010E and EUR 9.96m in 2011E. This segment will boost the
company‟s top and bottom line towards a higher level as we see a clear upside
effect till 2013E (revenues of EUR 19.87m; CAGR 2010E-2013E of 41.5%).
Advertising
This segment in general will not be a strong growth driver (on total numbers) for the Conservative approach
group within this current fiscal year (revenues of EUR 4.47m in 2011E) as the
revenue share of the advertising segment still remains low (7.1% in 2011E).
However, we believe that this segment can generate revenues up to EUR 7.52m in
2013E, corresponding to a very conservative approach. In case this unit would kick-
in faster than expected, its revenue share could increase exponentially. Despite the
conservative approach representing a low share on the group‟s future growth, it fits
very well in the product portfolio of XING.
One future step which could bring a higher growth is location and customised Locastion-based and
based advertising: User on platforms like XING volunteer vast amounts of personal customised-based
data. But XING also sees the customers/members behaviour on the platform which advertising could be
allows for aggregated data that offers the opportunity to target advertising both future trends
location based as well as personalised. We do not include such scenarios as we
prefer to assume a conservative approach for the time being.
Events
The company mentioned it expected amiando to achieve total revenues of approx. Cumulated revenues of
EUR 1.5m for 2010 (no effect on XING‟s P&L as the first consolidation is in 2011). EUR 7.2m
For 2011E and 2012E we do not believe for the time being that amiando and XING (2011E+2012E)
will be able to fullfill the „high‟ sales expectations of around EUR 12m (cumulated). expected
We decided on a very conservative approach as the visibility of this new entity is
still very low. While we see revenues in 2011E at around EUR 2.6m, the forecasted
revenues in 2012E should reach roughly EUR 4.6m, corresponding to cumulated
revenues of EUR 7.2m. Hence, the earn-out sum of about EUR 5.25m seems to be
too high at this time. Corresponding to our conservative approach an earn-out
payment of about 3m seems reasonable.

XING AG
Summing up all these growth drivers, the mid-term prospects for XING seem very All segments will
promising. Dividing the group revenues of EUR 52.94m into the four business units contribute to
especially the E-Recruiting unit will bring the strongest growth in 2010E up to forecasted growth over
around EUR 7.02m after EUR 4.41m in previous year (+59% YoY). Besides E- the next years
Recruiting, also the core business subscriptions will bring a solid growth in this
current fiscal year, ending with EUR 42.24m (2009: 37.11m; +14.3% YoY).
Overall, all operating segments will not only contribute growth in 2010E but also in
2011E – 2013E.
Analysing the proportion of sales by each product area it is not surprising that the More balanced revenue
share of E-Recruiting will increase from 10.0% in 2009 up to 23.1% in 2013E. split
Although Subscriptions will still contribute the highest share of revenues, the share
of this product is expected to decline from 84.4% in 2009 down to 60.8%, indicating
however a still very high figure with a CAGR 2009-2013E of 9.0% (EUR 37.11m in
2009 vs. EUR 52.37m in 2013E).
Profit key figures forecast (in EURk and %)

35,000 31,159
40.0% 36.0% 36.2%
30,000 26,638 31.8% 32.5%
35.0%
25,000 30.0% 26.9%
20,365
20,000 18,122 25.0%
16,834
14,517 20.0%
15,000 11,845 21.0%
10,281 15.0%
10,000 7,620 10.0%
5,000 5.0%
0.0%
0 -5.0% -3.8%
-5,000 -1,681 -10.0%
2009 2010E 2011E 2012E 2013E 2009 2010E 2011E 2012E 2013E
EBITDA 11,845 16,834 20,365 26,638 31,159 EBITDA margin 26.9% 31.8% 32.5% 36.0% 36.2%
EBIT 908 11,752 14,600 19,979 24,355 EBIT margin 2.1% 22.2% 23.3% 27.0% 28.3%
Net income -1,681 7,620 10,281 14,517 18,122 Net margin -3.8% 14.4% 16.4% 19.6% 21.0%

XING AG
Similar to the revenue growth in 2010E the profit figures will also further rise. In Strong growth in
comparison to the previous year, the group should achieve an EBITDA of EUR EBITDA with margin of
16.83m in 2010E, corresponding to an EBITDA-margin of 31.8%. Despite the over 30%
increasing personnel expenses in 2010E and 2011E (sales-teams at amiando and
XING) we are confident that XING will also be able to keep its cost structure
manageable in the mid-term. Until 2013E EBITDA-margin should rise up to 36.2%.
Regarding net margin XING has already achieved a level which is excellent
(2010E: 14.4%). Given the tremendous growth perspectives of the group and
especially for E-Recruiting we think that a net margin of roughly 21% in 2013E is
achievable on a long-term scenario. Supported by a positive development of the E-
Recruiting segment in 2010E this unit should further help the group to improve
profitability as the expenses for the recruiting is simply structured.
With a current equity ratio of 70%, XING has a sound balance sheet with no bank Sound balance sheet;
debts. Given the profitability in its underlying business, XING should be able to no debts
further improve its equity basis by retaining earnings. While the group reported
cash & cash equivalents of EUR 56.37m at 9M2010, we expect cash to increase to CAGR of 16.6% at cash
EUR 59.93m at the end of 2010E. With a CAGR 2010E – 2012E of 16.6% cash & flow (2010E-2012E)
cash equivalents should achieve EUR 81.49m at the end of 2012E.
Overall, we think the company´s growth prospects and fundamentals are very Promising future and
promising in the next years. XING has achieved an excellent mix between existing continuation of growth
core products (subscriptions) as well as „new‟ units which also generate significant momentum
revenue streams. Given the company´s product portfolio we think XING will
successfully establish the new unit Events (amiando) within the group and continue
to maintain its growth momentum.

XING AG
Appendix

XING AG

XING AG

XING AG
Research
Schillerstrasse 27 - 29
60313 Frankfurt am Main
Phone: +49 (0)69 – 977 8456-0
Roger Peeters +49 (0)69 -977 8456- 12

Member of the Board Roger.Peeters@cbseydlerresearch.ag
Martin Decot +49 (0)69 -977 8456- 13 Kristina Kardum +49 (0)69 -977 8456- 21
Martin.Decot@cbseydlerresearch.ag Kristina.Kardum@cbseydlerresearch.ag
Rabeya Khan +49 (0)69 -977 8456- 10 Igor Kim +49 (0)69 -977 8456- 15
Rabeya.Khan@cbseydlerresearch.ag Igor.Kim@cbseydlerresearch.ag
Ralf Marinoni +49 (0)69 -977 8456- 17 Manuel Martin +49 (0)69 -977 8456- 16
Ralf.Marinoni@cbseydlerresearch.ag Manuel.Martin@cbseydlerresearch.ag
Enid Omerovic +49 (0)69 -977 8456- 19 Marcus Silbe +49 (0)69 -977 8456- 14
Enid.Omerovic@cbseydlerresearch.ag Marcus.Silbe@cbseydlerresearch.ag
Veysel Taze +49 (0)69 -977 8456- 18

Veysel.Taze@cbseydlerresearch.ag
Institutional Sales
Schillerstrasse 27 – 29 25 Dowgate Hill

60313 Frankfurt am Main London EC4R 2GA
Phone: +49 (0)69 – 9 20 54-400
Raimar Bock +49 (0)69 -9 20 54-115

Head of Sales Raimar.Bock@cbseydler.com
Henriette Domhardt +49 (0)69 -9 20 54-137 Rüdiger Eich +49 (0)69 -9 20 54-119
(Germany) Henriette.Domhardt@cbseydler.com (Germany, Switzerland) Ruediger.Eich@cbseydler.com
Uwe Gerhardt +49 (0)69 -9 20 54-168 Klaus Korzilius +49 (0)69 -9 20 54-114
(Germany, Switzerland) Uwe.Gerhardt@cbseydler.com (Austria, Benelux, Germany) Klaus.Korzilius@cbseydler.com
Stefan Krewinkel +49 (0)69 -9 20 54-118 Markus Laifle +49 (0)69 -9 20 54-120
(Execution, UK) Stefan.Krewinkel@cbseydler.com (Execution) Markus.Laifle@cbseydler.com
Bruno de Lencquesaing +49 (0)69 -9 20 54-116 Janine Theobald +49 (0)69 -9 20 54-106
(Benelux, France) Bruno.deLencquesaing@cbseydler.com (Austria, Benelux, Germany) Janine.Theobald@cbseydler.com

XING AG
Disclaimer and statement according to § 34b German Securities Trading Act

(“Wertpapierhandelsgesetz”) in combination with the provisions on financial analysis
(“Finanzanalyseverordnung” FinAnV)
This report has been prepared independently of the company analysed by Close Brothers Seydler Research AG
and/ or its cooperation partners and the analyst(s) mentioned on the front page (hereafter all are jointly and/or
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its cooperation partners, the Company or its shareholders has independently verified any of the information given
in this document.
Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise prepa ring
a security analysis to point out possible conflicts of interest with respect to the company that is the subject of the
analysis.
Close Brothers Seydler Research AG is a majority owned subsidiary of Close Brothers Seydler Bank AG (hereafter
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and liquidity providing services (designated sponsoring). CBS or CBSR may possess relations to the covered
companies as follows (additional information and disclosures will be made available upon request):
a. CBS holds more than 5% interest in the capital stock of the company that is subject of the analysis.
b. CBS was a participant in the management of a (co)consortium in a selling agent function for the issuance of
financial instruments, which themselves or their issuer is the subject of this financial analysis within the last
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analysed for which compensation has been or will be paid for.
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g. CBS has a significant financial interest in relation to the company that is subject of this analysis.
In this report, the following conflicts of interests are given at the time, when the report has been published: d,e
CBS and/or its employees or clients may take positions in, and may make purchases and/ or sales as principal or
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Recommendation System:
Close Brothers Seydler Research AG uses a 3-level absolute share rating system. The ratings pertain to a time
horizon of up to 6 months:
BUY: The expected performance of the share price is above +10%.

HOLD: The expected performance of the share price is between 0% and +10%.
SELL: The expected performance of the share price is below 0%.
Recommendation history over the last 12 months for the company analysed in this report:
Date Recommendation Price at change date Price target
22 February 2011 BUY (Initiating Coverage) EUR 39.54 EUR 60.00
Risk-scaling System:
Close Brothers Seydler Research AG uses a 3-level risk-scaling system. The ratings pertain to a time horizon of up
to 6 months:
LOW: The volatility is expected to be lower than the volatility of the benchmark
MEDIUM: The volatility is expected to be equal to the volatility of the benchmark
HIGH: The volatility is expected to be higher than the volatility of the benchmark
The following valuation methods are used when valuing companies: Multiplier models (price/earnings, price/cash
flow, price/book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer group comparisons, historical valuation

XING AG
approaches, discounting models (DCF, DDM), break-up value approaches or asset valuation approaches. The
valuation models are dependent upon macroeconomic measures such as interest, currencies, raw materials and
assumptions concerning the economy. In addition, market moods influence the valuation of companies.
The figures taken from the income statement, the cash flow statement and the balance sheet upon which the
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The opinions and forecasts contained in this report are those of the author alone. Material sources of information
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Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin, Federal Financial Supervisory Authority)

XING AG
Graurheindorferstraße 108
53117 Bonn
and
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60439 Frankfurt
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Tel.: 0049 - (0)69 - 97 78 45 60

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XING AG

Recommendation: Risk: Price Target:

noteworthy side-effect (also for XING) is expected to be the rising demand

▪ We see accelerated growth in social and professional networking

businesses supported by the current market momentum (a.o. LinkedIn IPO,

The Company ........................................................... 15

Business model ....................................................... 18

New mega-trend –mobile internet ........................... 31

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 2

Overall, XING has established an attractive business model which is superior in

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 3

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 4

▪ Working capital: Due to the advanced collection of subscription revenues the

▪ Loyal customer relationships: Especially in the DACH region the premium

▪ Vertical integration towards a roughly balanced product mix: After XING

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 5

▪ Trend in advertising business: As location based services seem to propel

▪ Strong growth potential in E-Recruiting: We believe that revenues in E-

▪ Takeover rumours: As the social community market is very fast-moving with a

▪ Fast innovation cycles and mobile technology development: There is always

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 6

Overall, our valuation is based on two main following assumptions:

Consolidation of the valuation method

Source: CBS Research AG

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 7

Multiples of XING on basis of price target per share

Source: CBS Research AG

Market multiple valuation

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 8

 Compared to pure player in the E-commerce business, the recruiting

A peer group valuation on basis of multiples enabling an analysis of the peers on

In order to include a market-oriented approach to our valuation, we applied a Market valuation

EBITDA market multiples

Source: Bloomberg, CBS Research AG

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 9

Market multiple and derived valuation

Source: CBS Research AG, Bloomberg

Weighted average cost of capital (WACC): On basis of the current long-term

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 10

Discounted Cash Flow Model

Valuations in social media market

For a short overview of the valuations of social media companies we exclusively

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 11

MCap/member vs. ARPU vs. Net income/member (from left to right)

Source: company data, CBS Research AG * XING in USD: EUR/USD ~1.35

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 12

Overview P/E-ratio on basis 2010E

0 100 200 300 400 500 600

Source: Bloomberg, CBS Research AG

2012E P/E overview (in local currency m)

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 13

0 50 100 150 200

Source: Bloomberg, CBS Research AG

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 14

Source: XING AG, CBS Research AG

www.cbseydlerresearch.ag Close Brothers Seydler Research AG | 15

Shareholder structure (as of end of January 2011)

Source: XING AG, CBS Research AG

Chief Executive Officer (CEO): Dr. Stefan Gross-Selbeck

Chief Financial Officer (CFO): Ingo Chu

Chief Customer Officer (CCO): Dr. Helmut Becker

Chief Technological Officer (CTO): Jens Pape