Where Are We in the Mobile Internet Transition? Stifel Internet Equity Research

Stifel does and seeks to do business with companies covered in its research reports. As a result, investors
should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
All relevant disclosures and certifications appear on pages 71-74 of this report.
All prices are as of the close of business on May 8, 2015
Where Are We in the Mobile
Internet Transition?
Scott Devitt | swdevitt@stifel.com
John Egbert | egbertj@stifel.com
Lamont Williams, CFA | williamsl@stifel.com
Alex Chavdaroff | chavdaroffa@stifel.com
Ansel Parikh | parikha@stifel.com
May 2015

1
Stifel Mobile Update: Table of Contents
• 2015: Where Are We in the Mobile Transition?
• Mobile Usage Trends
• Mobile Advertising Takeaways
• Mobile eCommerce Takeaways
• Mobile Travel Takeaways
• Digital Media Company Impacts
2
3-10
11-18
19-30
31-33
34-52
• eCommerce Company Impacts 53-60
• Online Travel Company Impacts 61-65
• Price Target Methodologies & Disclosures 66-74

• Internet companies have greatly benefited from an inflection in traffic
driven by the proliferation of mobile Internet devices.
• However, with smartphone penetration approaching saturation in
developed markets, we may be nearing the flat part of the S-curve in usage
growth and could soon see signs of mobile maturity domestically.
• Mobile monetization initially lagged usage growth but later saw an
inflection as companies adopted better strategies for monetizing smaller
screens. Facebook’s mobile-driven acceleration in 2Q:13 proved digital
media companies could make money on mobile, leading to upward
estimate revisions and significant multiple expansion.
• eCommerce companies have seen significant customer usage shift to
mobile, but mobile sales have lagged due to lower conversion rates and
lower average order values.
• Overall, monetization has a longer growth runway than usage but
companies’ ability to make money will on mobile be tested as usage
tailwinds fade. Companies with mobile-optimized business models, other
usage growth drivers, international expansion stories, and / or product
catalysts should prove to be attractive long-term investments.
Summary: Where Are We in the Mobile Transition?
Source: Stifel Research 2

3Source: ITU, Forrester Research
Mobile Broadband Penetration Approaching Saturation
in Most Developed Markets
Mobile broadband reach in developed markets doubled to 84%
in the last 4 years, while developing markets lag at just 21%
84%
21%
32%
0
10%
20%
30%
40%
50%
60%
70%
80%
90%
2007 2008 2009 2010 2011 2012 2013 2014
MobileBroadbandPenetration
Developed Markets Developing Markets Global Average
The Americas Africa Arab States
Asia & Pacific CIS Europe

4Source: eMarketer 2015 data (Time Spent), Internet Advertising Bureau (U.S. Ad Spend), Stifel Research
Time Spent with Mobile Devices is Eating into Other
Forms of Content Consumption in the U.S.
Mobile now makes up one-quarter of time spent with media in
the U.S., 4% higher than desktop Internet and second only to TV
8%
16%
44%
24%
8%
4%
13%
38%
21%
25%
0%
10%
20%
30%
40%
50%
Print Radio TV Desktop Mobile
U.S.TimeSpentwithMedia
2010 2011 2012 2013 2014

3%
10%
25%
42%
-20%
0%
20%
40%
60%
80%
100%
3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
comScoreU.S.TrafficGrowth%y/y
Desktop Visitors Desktop Usage Mobile Visitors Mobile Usage
5Source: comScore (March 2015 data, desktop includes Video Metrix), Stifel Research estimates (gaps in comScore data for tablets)
U.S. Mobile Traffic Growing Much Faster Than Desktop;
Mobile Time Spent Now Makes Up ~60% of Total
Mobile
61%
Desktop
39%
Time Spent – 1Q:15
Mobile visitors / usage are growing much faster than desktop in
the U.S. but both have decelerated recently, especially visitors

6Source: comScore (March 2015 data), U.S. Census Bureau (population), Stifel Research
Younger Demos Highly Penetrated; Future Growth in
U.S. Mobile Reach Will Come From Older Generations
In the U.S., mobile Internet usage is widespread among young
people but still has a long growth runway ahead in older demos
0
5
10
15
20
25
30
35
40
45
50
Age 18-24 Age 25-34 Age 35-44 Age 45-54 Age 55-64 Age 65+
U.S.InternetReachbyDemo(mm)
Mobile Internet Total Internet Total Population
86%
95%
91%
75%
79%
36%
91%
99%
93% 87%
85%
61%
76%
85%
Total Ages 18+

30
34
39 40
43
55
0
10
20
30
40
50
60
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15 Mature
MobileTimeSpent(HoursinBillions)
U.S. Smartphone / Tablet Usage is Likely Nearing the
Flat Portion of S-Curve; We Think It Is ~77% There
We estimate U.S. mobile growth will “mature” in 1-2 years with
215mm users age 18+ using mobile devices 2.8 hours per day
Greater
Engagement
~77% to
Maturity as of
1Q:15
+7
+5
Increased
Reach

73%
> 80%
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
MobileTimeSpent-%toMaturity
Younger Demographics More Highly Penetrated; Much
of Remaining U.S. Growth Driven by Users Age 65+
We estimate all younger demos are >80% to mature usage levels
and most of the remaining growth should come from ages 45+

We Outline Bear / Bull Case Expectations for Mobile
Maturity; Expect Usage Growth <20% y/y by 2015-2017
43
55
1Q:15 Base Case
+2.0
+1.7
+1.9
+2.7
+1.3
+3.1
43
51
1Q:15 Bear Case
8-24 Age 25-34 Age 35-44 Age 45-54 Age 55-64 Age 65+
+1.4
+1.0
+1.4
+1.6
+0.8
+1.7
43
59
1Q:15 Bull Case
Age 18-24 Age 25-34 Age 35-44 Age 45-54 Age 55-64
+2.7
+2.3
+2.6
+3.6
+1.5
+3.8
MobileMaturityScenarios–QuarterlyHours(B)
Bear Case - 2015
80% Mobile Reach
202mm Mobile Users
2.7 Hours per Day
Base Case - 2016
85% Mobile Reach
215mm Mobile Users
2.8 Hours per Day
Bull Case – 2017
88% Mobile Reach
223mm Mobile Users
2.9 Hours per Day
85% to
Maturity
77% to
Maturity
72% to
Maturity

10Source: comScore (March 2015 data), Stifel Research
We Expect Mobile Growth to Moderate in 2015 / 2016,
Fall to Sub-20% Growth (i.e. Mid-2000’s Desktop Levels)
0
10
20
30
40
50
60
70
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
S-CurveofU.S.QuarterlyMobileHours(B)
GrowthTransitionPhase
*Note: Chart is representative of general mobile usage growth phases and not precise traffic data
Scenarios
Mobile should grow faster than other media for years to come
but we expect a transition to mature growth (<20% y/y) by 2016

• U.S.-based digital media companies are at varying points of the mobile
transition but most have seen significant usage shift to mobile. Many
companies already receive the majority of their traffic from mobile apps.
• As usage tailwinds slow in the U.S., we think the pressure will be on digital
media companies to prove out their mobile ad monetization models before
they no longer have the benefit of rapid user growth.
• Although the U.S. advertising market is far from the only market deeply
affected by trends in mobile, it represents a disproportionate amount of
global ad spend and we believe it will be a key testing ground for
determining the winners / losers of the mobile Internet transition.
• Despite recent inflections in growth from specific ad trends (native, video,
programmatic), mobile ad dollars continue to significantly trail usage and
this gap represents a $28B opportunity in the U.S. alone.
• We view Facebook as a clear winner with multiple platforms serving
hundreds of millions of mobile users. Google may fare better in mobile
than investors believe as search disintermediation fears seem overblown.
Twitter faces tougher competition for dollars from emerging platforms.
Advertising: Where Are We in the Mobile Transition?

13Source: Internet Advertising Bureau (U.S. Ad Spend), Stifel Research
Mobile is the Fastest Growing Ad Category in the U.S.
but Remains the Smallest
Mobile now makes up roughly 8% of U.S. ad revenue among the
5 major ad categories in the U.S., up from <1% just 4 years ago
32%
9%
42%
16%
0%
18%
11%
41%
23%
8%
0%
10%
20%
30%
40%
50%
Print Radio TV Desktop Mobile
U.S.AdSpendbyCategory
2010 2011 2012 2013 2014

14Source: eMarketer 2015 data (Time Spent), Internet Advertising Bureau (U.S. Ad Spend), KPCB, Stifel Research
Mobile Ad Spend Still Under-Indexes Time Spent in U.S.;
TV Joins Print Ads in Decline; Desktop & Radio Stable
4%
13%
38%
21%
25%
18%
11%
41%
23%
8%
0%
10%
20%
30%
40%
50%
Print Broadcast
Radio
TV Desktop
Internet
Mobile
Internet
U.S.TimeSpentvs.AdSpend-2014
Time Spent Ad Spend Ad Dollar Opportunity
$28BOppty
$162B spent in
these 5 categories
in 2014
Usage / Spend
Trends
We think mobile ad spend parity is a $28B opportunity in the U.S.

15Source: comScore (March 2015 data), Stifel Research
Search Activity Had Been Less Prevalent on Mobile
Devices, but Gap Appears to Be Narrowing
52% 52% 51% 55% 58% 53% 50% 46% 41%
48% 48% 49% 45% 42% 47% 50% 54% 59%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1Q:13 2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
U.S.SearchUsage/TotalBrowsing
U.S.SearchMins-Desktopvs.Mobile(%)
Desktop Search Share Mobile Search Share
Desktop Search / Total Desktop Browsing Mobile Search / Total Mobile Browsing
Crossover
Mobile search traffic overtook desktop last year and is growing
in traffic share, debunking search disintermediation theories

Search Advertising Monetizes at Lower Rates on Mobile
Today; Desktop Still Dominates Search Dollars
Despite mobile generating more search activity, mobile search
dollars lag desktop despite recent monetization improvements
2.6 2.7
3.2
2.8 3.0 3.1
3.5
3.1 3.2
2.9
3.7
1.2
1.3
1.5
$101 $106
$148
$42 $47
$54
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2Q:12 3Q:12 4Q:12 1Q:13 2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14
Revenueper1,000SearchMins(RPM)
U.S.SearchAdRevenue($B)
Desktop Search Rev. Mobile Search Rev. Desktop RPM Mobile RPM

17
Search a Much Bigger Ad Business on Desktop, but
Display Surpassed Search on Mobile in 2014
Search generally monetizes at lower rates on mobile, but some
forms of mobile display (e.g. native ads) garner higher pricing
Source: IAB (historical U.S. ad spend), IDC, SNL Kagan, Stifel Research estimates (projected U.S. ad spend)
5.8 5.9 6.0
7.0
4.3 4.5 4.5
5.7
1.3 1.4 1.4 1.8
1.2 1.3 1.5 2.0
0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
1Q:14 2Q:14 3Q:14 4Q:14
U.S.DigitalAdSpend($B)
Desktop Search Desktop Display Mobile Search Mobile Display
4.6
3.1
4.4
3.2
4.5
2.9
5.2
3.7

18
Mobile Advertising is the Fastest-Growing Ad Category
Globally; Mobile Ads Expected to Top $50B in 2016
Mobile advertising is expected to grow +40% y/y in 2015; none
of the other major ad categories is growing in the double digits
Source: IDC ad forecasts, Stifel Research estimates
244 255 268 281 298 318
36 37 36 37 37 38131 129 122 120 120 120
103 107 107 109 110 11017 28 39 53
69
88
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
100
200
300
400
500
600
700
800
2013 2014 2015E 2016E 2017E 2018E
GlobalAdSpendbyCategory($B)
TV Radio Print Desktop Mobile
TV y/y Radio y/y Print y/y Desktop y/y Mobile y/y

• Mobile commerce is earlier in the monetization growth curve relative to
digital media as friction / barriers to transactions on mobile devices have
held back widespread consumer adoption.
• As smartphone and tablet penetration has grown, time spent online
through a mobile device has accelerated well ahead of transactions,
resulting in a wide gap between usage and monetization.
• Barriers to mobile monetization are slowly waning, setting the stage for
sizable growth and strong eCommerce sales in the years ahead.
• The key debate at this point remains… will monetization reach / surpass
usage? Overall we believe that monetization will close the gap, though
consumers’ use of multiple devices to shop could limit mobile’s ability to
surpass usage.
• We see Amazon and Alibaba as the primary beneficiaries of the mobile
transition, with mixed/slightly positive impact to eBay’s operations.
• We view Zulily as having already greatly benefited from the mobile
transition early in its growth curve, while we think RetailMeNot faces
multiple hurdles in efficiently monetizing its growing mobile traffic mix.
eCommerce: Where Are We in the Mobile Transition?

21Source: comScore, Stifel Research
Mobile Usage Gaining Share from Desktop in the Retail
Category
Time spent in the retail category online is shifting from PC
and Tablet to Smartphone in the U.S.
36%
34%
51%
14%
8%
52%
41%
0%
10%
20%
30%
40%
50%
60%
Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
comScoreU.S.TrafficGrowth%y/y
Smartphone Tablet Desktop

22Source: comScore, Euromonitor, Stifel Research
Mobile Monetization Lags Far Behind Usage
More time is spent on retail platforms online through mobile
devices but online sales are predominantly generated by PCs
39%
82%
46%
18%15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total Minutes Spent in Retail Category by Device in the U.S.
(2014 Average)
2014 U.S. eCommerce Sales by Device
Desktop Smartphone Tablet
Includes both
Smartphone
and Tablets
Note: Euromonitor eCommerce sales excludes C2C sales, sales of motor vehicles and parts, and event and travel tickets.

23Source: IBM Digital Analytics Benchmark: Retail Industry Online Holiday Mobile Shopping Report 2014, Stifel Research
Mobile Conversion and Average Order Values Are Well
Below Desktop PCs
Smartphone conversion is roughly 330bp below PC and
average order value is 21% lower than PC, driving the gap
in monetization
$99.31 $112.73 $125.12
1.2%
3.5%
4.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
$150
ConversionRate(%)
AverageOrderValue($)
U.S. Average Order Value and Conversion Rate by Device
2014 Holiday Season (Nov/Dec)
Average Order Value Conversion Rate

24Source: Monetate: Ecommerce Quarterly EQ4 2014, Stifel Research
Lower Engagement / Add-to-Cart Rates Are Additional
Drivers of the Mobile Monetization Gap
Add-to-cart rates and average page views remain
considerably higher on PCs and tablets relative to
smartphones due to ease of use and convenience
8.35%
7.83% 7.54% 7.69%
9.26%
8.43%
7.89% 8.06% 7.90%
9.05%
5.41% 5.47%
4.45% 4.01% 4.72%
2%
3%
4%
5%
6%
7%
8%
9%
10%
4Q:2013 1Q:2014 2Q:2014 3Q:2014 4Q:2014
Global Add-to-Cart Rate by Device
Traditional Tablet Smartphone
8.88 8.66
8.88 9.11
10.12
8.46 8.52
9.02
9.33
10.04
4.60 4.81 4.71
4.87
6.71
0.00
2.00
4.00
6.00
8.00
10.00
12.00
4Q:2013 1Q:2014 2Q:2014 3Q:2014 4Q:2014
Global Average Page Views by Device
Traditional Tablet Smartphone

25Source: Stifel Research
Barriers to Mobile Commerce Remain … Though
Waning
Barriers to Mobile Purchases:
• Smaller screen size
• Payment security concerns
• Lack of mobile optimized
websites and mobile apps
• Limited and/or slow connectivity
• Lack of smartphone/tablet
penetration
• Buying on mobile device is not
user friendly in many cases
How Barriers are Being Addressed:
• Introduction of larger mobile devices
with larger screen sizes (iPhone 6 &
Galaxy S6)
• More secure mobile payment options
(particularly from payments made
through apps)
• Mobile optimized sites and app
development (accelerated by
Google’s mobile search algorithm
change)
• Greater WiFi availability (particularly
in shopping locations in the U.S. and
in International locations)
Barriers to mobile commerce are slowly waning,
setting the stage for rapid growth in the years ahead

26Source: Euromonitor, Stifel Research
Strong Growth Opportunity Ahead for Mobile Commerce
Global mobile commerce totaled over $150B in 2014,
representing just 18% of eCommerce sales and is expected to
reach $440B by 2018
86%
95%
91%
75%
79%
36%
mCommerc
e
2014-2019E
CAGR: 28%
$56 $97
$154
$220
$291
$363
$443
$574
$694
$840
$992
$1,150
$1,320
$1,493
10%
14%
18%
22%
25%
27%
30%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
$0B
$200B
$400B
$600B
$800B
$1,000B
$1,200B
$1,400B
$1,600B
2012 2013 2014 2015E 2016E 2017E 2018E
MobileCommercePenetration(%)
Global mCommerce Sales Global eCommerce Sales mCommerce Penetration (%)
Sales(US$B)
Note: Euromonitor eCommerce sales excludes C2C sales, sales of motor vehicles and parts, and event / travel tickets.

Mobile Commerce Extending the eCommerce Growth
Profile
As barriers to mobile commerce
slowly wane, mobile commerce is
poised to drive eCommerce sales in
the years ahead.
• Mobile commerce is expected to grow at over
twice the rate of eCommerce (PC only) sales
through 2018.
• Higher penetration of eCommerce sales will
come largely at the expense of brick-and-
mortar sales, particularly in developed markets
with higher traditional retail density.
• In emerging markets, where traditional retail is
less developed, we expect eCommerce,
enhanced by mobile, to drive incremental
sales.
15% 15% 15% 13% 11% 11% 10%
87%
73%
59%
43%
32%
25%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015E 2016E 2017E 2018E
Global eCommerce Sales Growth (PC Only) Global mCommerce Sales Growth
3%
4%
4%
5%
5% 5% 6%
6%
4%
4%
5%
6%
7%
7%
8%
8%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2011 2012 2013 2014 2015E 2016E 2017E 2018E
eCommerce Penetration (PC Only) eCommerce Penetration (PC + Mobile)
Note: Euromonitor eCommerce sales excludes C2C sales, sales of motor vehicles and parts, and event and travel tickets.
Global eCommerce Sales Growth
Global Penetration of Retail Sales

Mobile Commerce Penetration Varies Widely Across
Geographies
Higher smartphone penetration and greater mobile
connectivity in APAC regions and the UK are driving higher %
of mobile commerce sales
36%
18% 18%
29%
31%
13%
35%
11%
5%
18%
14%
27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
World China Japan South
Korea
India Australia Russia Brazil USA Germany UK
Mobile Commerce Penetration (2014)

29Source: Criteo: State of Mobile Commerce Q1 2015, Stifel Research
Mobile Commerce Different Across Product Categories
Consumers are more comfortable buying certain categories
through mobile devices
36%
$86
$80
$91
$45
$86
$36
$114
$95 $96
$70
$102
$85
$0
$20
$40
$60
$80
$100
$120
Fashion & Luxury Sporting Goods Health & Beauty Home Mass Merchants Travel
Mobile Average Order Value in Relation to Desktop (100)

30Source: PayPal: PayPal Mobile Research 2014/2015 Global Snapshot, comScore, Stifel Research
Will Mobile Monetization Reach Usage?
Ultimately we believe mobile monetization will approach its
usage level though it may not surpass it
36%
• Smartphones are an important tool
for product/merchant research prior
to a purchase. Purchases, however,
are frequently completed on another
device.
• Over 60% of consumers use multiple
devices to shop for products.
• While we expect mobile commerce
to grow handsomely in the years
ahead, a sizable portion of the
population will continue to use
smartphones as an agent for
research and complete purchases on
PCs and/or in stores.
10%
15%
18%
21%
25%
27%
36%
0% 10% 20% 30% 40%
Make a purchase while on
the go
Make a purchase at
home/work
Scan barcode or QR code
Price comparisons while in
store
Read customer / user
reviews
Find information about
store and/or location
Search for product
information
Smartphone Uses Related to
Shopping
% of Consumers Who Have Done Over the Last 12 Months

• Online travel is at a similar stage of the mobile monetization curve as
eCommerce, but convergence between mobile usage and monetization will be
driven by conversions and unique travel related use cases; Research and a
collaborative planning process will drive cross-device usage.
• Due to the lower purchase frequency / high AOV of travel products, mobile
apps are not a primary source of transactions relative to media / eCommerce.
• Mobile web constitutes a large portion of mobile traffic, which highlights the
continued significance of paid channels such as Google mobile search and
meta-search.
• To better position themselves for mobile tailwinds and maintain growth online
travel companies like Priceline and TripAdvisor have expanded into the post-
booking ecosystem where mobile facilitates the local discovery process.
• The key debate revolves around which tactics best position a company to take
advantage of increasingly mobile user bases and whether companies should
focus on core travel products or expand to more mobile-centric verticals.
• Overall, travel is in the early innings, but we are positive on Priceline and
TripAdvisor’s efforts to better monetize mobile users through in-destination
verticals.
Online Travel: Where Are We in the Mobile Transition?

Source: Company reports, PhocusWright, eMarketer, Visa Consumer report, Criteo, comscore, Stifel estimates
Online Travel: Post-Booking Presents A Long-Term
Opportunity
To close the gap between mobile usage and
monetization, online travel companies focus
on mobile web for core travel products and,
more recently, apps that address the post-
booking market.
• Usage: In 2014 mobile accounted for
32% of time spent on online travel
services; However mobile web
constitutes a large portion of mobile
usage, highlighting the continued
importance of paid channels.
• Booking Penetration: According to a
study by Criteo, 21% of hotel bookings
are made on mobile, but the value of
these bookings are 30% lower, primarily
due to last-minute deals.
• Post-Booking: Approximately 58% of
travel spend occurs in-destination,
including dining (14%) and attractions
(12%). These activities are more mobile-
centric due to the local discovery process
involved.
10%
14%
17%
22%
26%
31%
11%
15%
20%
25%
29%
33%
7%
9%
11%
15%
18%
22%
3%
5%
7%
9%
12%
15%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
FY:13 FY:14 FY:15E FY:16E FY:17E FY:18E
Mobile Bookings Penetration
US Europe APAC LATAM
%ofOnlineBookings
1Q:15 (U.S.)
App %of
Mobile Usage
Web %of
Mobile Usage
Priceline 31% 69%
Expedia 48% 52%
TripAdvisor 15% 85%
HomeAway 20% 80%
Travel 35% 65%
33

Facebook: Dominant Mobile Audience, Revenue
Growth Levers from New Mobile Businesses
Dominant global user base
• Facebook has amassed arguably the largest /
most engaged audience on the Internet today,
though core growth is increasingly being driven
by late adopters / users in emerging markets.
• Facebook has unique optionality from its
growing family of apps, most notably Instagram,
Messenger, WhatsApp, and Oculus VR. Several
of these services have user bases in the
hundreds of millions.
Strong monetization model, beneficiary
of mobile / key secular growth themes
• Facebook’s native ad units cracked the code for
mobile display advertising and the company is
poised to be the biggest beneficiary of the shift
of ad dollars to mobile, in our view.
• Facebook also benefits from other secular
themes in Internet; digital video consumption,
cross-screen ad targeting, programmatic
buying, and off-platform advertising.
Facebook U.S. Visitors
Facebook U.S. Time Spent
130 142 147 148 155
62
59 58 56 53
68%
71% 72% 72% 75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
50
100
150
200
250
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
comScoreU.S.MonthlyVisitors(mm)
Mobile MAUs Total MAUs Mobile %
179 183 183 163 159
408 453 505 519
618
69% 71% 73% 76%
80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
100
200
300
400
500
600
700
800
900
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
comScoreU.S.Minutes(B)
Desktop Mins Mobile Mins Mobile %
NASDAQ: FB
Buy, $95 PT

Facebook Continues Grow Usage Across All
Screens; Older Demos Growing the Fastest
Facebook users / engagement continue to grow, even in mature markets like
the U.S. However, much of the core platform growth is being fueled by older
demographics, which are valuable to some advertisers but less so to others.
Facebook Cross-Screen Growth – 1Q:15 vs. 1Q:14
NASDAQ: FB
Buy, $95 PT
3%
6% 7%
13%
22% 23%
30%
28% 28%
33%
49%
74%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Persons:
18-24
Persons:
25-34
Persons:
35-44
Persons:
45-54
Persons:
55-64
Persons:
65+
FacebookGrowhy/y
Visitor Growth Time Spent Growth

97
142
300
308
600
700
700
1,441
0 200 400 600 800 1,000 1,200 1,400 1,600
LinkedIn
YELP
Instagram
Twitter
Messenger
Facebook Groups
Whatsapp
Facebook
Monthly Active Users (mm)
Facebook’s Portfolio of Highly-Used Apps Bodes
Well for the Company’s Future Growth
Facebook’s growing portfolio of
apps offer future growth levers
• Facebook’s family of apps includes
several with hundreds of millions of
users, including WhatsApp (700mm),
Groups (700mm), Messenger
(600mm), and Instagram (300mm).
• Each of these standalone platforms is
larger than notable Internet platforms
Twitter, Yelp, and LinkedIn.
• These apps continue to grow at rapid
rates and, importantly, skew toward
younger demographics more than the
core Facebook platform does. This
enables Facebook to ensure it hits the
younger demographics highly sought
after by advertisers.
• WhatsApp also notably skews toward
non-U.S. countries, many of which are
in regions where Facebook is relatively
under-penetrated (notably eastern
Europe and Asia Pacific).
Total Usage % by Users 13-34
40%
48%
52%
42%
57%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Facebook Whatsapp Instagram
% Total Usage by U.S. Users 13-34
% Total Users % Total Minutes
NASDAQ: FB
Buy, $95 PT
Facebook’s Portfolio of Apps vs. Social
Peers

Facebook Has Both Platform and Monetization
Developments as Avenues of Growth
38Source: Stifel Research, IDC (ad forecasts), company reports
3
7
12
17
22
27
4
4
4
5
6
6
7
11
16
22
27
33
3% 4%
6%
9%
11%
13%
0%
5%
10%
15%
20%
$0
$5
$10
$15
$20
$25
$30
$35
$40
2013 2014 2015E 2016E 2017E 2018E
%Share
FacebookAdRevenue($B)
Mobile Ad Rev Desktop Ad Revenue % global digital ad market
Facebook has numerous sources of positive optionality from its emerging
platforms, off-platform ad monetization, and digital video ads. Of these, only
video ads are in our estimates today, but even still, Facebook seems poised
to continue to take a greater share of global digital advertising expenditure.
NASDAQ: FB
Buy, $95 PT

Google: Fears of Search Disintermediation from
Mobile Apps Appear Overblown
Google U.S. Active Users
Google U.S. Time Spent
136 151 156 157 165
95 85 78 80 76
59%
64% 66% 66% 69%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
50
100
150
200
250
300
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
212 218 239 248 232
158 172
191 177 210
43% 44% 44%
42%
48%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
50
100
150
200
250
300
350
400
450
500
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
NASDAQ: GOOGL
Hold, $550 FV
Not seeing evidence of widespread
search disintermediation
• The bear thesis that vertical-specific mobile
apps would disrupt Google search queries does
not appear to be playing out, as Google recently
disclosed that mobile search queries in 10+
countries, including the U.S. and Japan. Mobile
search minutes also represent a similar
proportion of total browsing activity as desktop.
• However, mobile search does appear to be
cannibalizing desktop search dollars; desktop
search advertising grew just +2% y/y in 2014,
which was significantly below overall desktop ad
spend of +9% y/y, implying mobile search may
not be as incremental as previously thought.
Mobile does appear incremental to
Android / Google Play / YouTube
• Mobile does appear incremental in other ways;
Android solidifies Google’s mobile query share
and Google has multiple mobile apps among the
top 10 most used (Search, Google Maps, Gmail,
and YouTube) on both iOS and Android.

0
2
4
6
8
10
12
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15
Minutes(inBillions)
Time Spent on Google Search in U.S.
Desktop Mobile
40Source: comScore
Mobile Search Now Larger than Desktop in 10+
Markets Including the U.S. and Japan
Consumers in the U.S. and several other markets now spend
more time searching on mobile devices than on desktop
NASDAQ: GOOGL
Hold, $550 FV

$39.3
$18.4
$3.5
$43.6
$18.8
$5.9
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
U.S. Desktop Ad
Expenditure
U.S. Desktop Search Ad
Expenditure
U.S. Mobile Search Ad
Expenditure
TotalU.S.AdDollars(inBillions)
2013 2014
41
However, Mobile Search Revenue May Be Less
Incremental than Previously Thought
Google’s recent disclosure of higher mobile search query share than
previously thought, coupled with stalling desktop search growth /
slowing overall growth, suggests mobile search may not be as
incremental to revenue as some investors thought early on.
Source: IAB
NASDAQ: GOOGL
Hold, $550 FV

114
83
52
0
20
40
60
80
100
120
Google Desktop
Search
Google Mobile
Search
Google Play
MinutesinBillions
Mobile Driving Growth in Google’s Key Growth
Segments – YouTube and Google Play
42Source: Company reports, comScore, Stifel Research
YouTube video views now 50%
mobile despite the smaller screen
• YouTube’s Global video views continue to
grow at healthy rates, led by mobile
devices / international markets despite
smaller screen sizes and bandwidth
limitations.
Google Play could make up for
potentially slower search growth
• Google Play usage is now at roughly 25%
of the level of time spent on Google Search
and over half of mobile search time spent.
• Google Play is stronger internationally
where Android holds much higher
smartphone market share in many
countries and has over a billion users in
total.
• Google also just launched app-install ads
in Google Play earlier this year, tapping
into a fast-growing revenue stream that
Facebook and Twitter have benefited from.
Global Video Views from Mobile
U.S. Time Spent in 2014
29%
40%
50%
0%
10%
20%
30%
40%
50%
60%
2013 2014 2015
NASDAQ: GOOGL
Hold, $550 FV

GrubHub: Business Model Made for Mobile
GrubHub U.S. Active Users
GrubHub U.S. Time Spent
0.9
2.1
2.6 2.5
3.9
1.6
1.6
1.5 1.5
1.5
35%
56%
64% 62%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
1
2
3
4
5
6
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
0.4
1.1 1.2 1.1 1.20.6
1.7
2.1
1.8
2.0
61%
62%
64% 64% 62%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
NYSE: GRUB
Buy, $52 PT
GrubHub was made for mobile devices
• At 1Q:15 earnings, GrubHub disclosed that
~53% of orders were placed through mobile
devices, and management expects orders to
continue to transition to mobile.
• Online takeout orders were made for on-the-go
consumers and as more restaurants adopt
GrubHub’s OrderHub / DeliveryHub mobile
apps, consumers know more about the
progress of food deliveries than ever before.
• GrubHub Active Diner growth should not be
limited by slowing mobile growth since the
service is very early in most markets in the U.S.
No difference in mobile economics
• Unlike digital media or eCommerce companies
that often have lower conversion rates on
mobile due to screen size limitations / friction
related to payments, we think GrubHub likely
converts mobile orders as well or better than
desktop orders since native apps are actually a
smoother / simpler experience than the
GrubHub and Seamless websites.

LinkedIn: Less Mobile Than Peers, and That’s
OK; Over 50% Mobile Visits, Ads Growing Fast
LinkedIn Reported Monthly Visitors
Sponsored Update Revenue Growth
45 49 49 45 47 46 48 48 48
20
26 29 31
35 38
42 45 49
31% 35% 37% 41% 43% 45% 47% 48% 51%
0%
20%
40%
60%
80%
100%
120%
140%
0
20
40
60
80
100
120
1Q:13 2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
LinkedInReportedMonthlyVisitors(mm)
Total Visitors Mobile Visitors % Mobile Visitors
Total Visitors y/y Mobile Visitors y/y
2 5 6 9 8 12 104
10
14
21 22
35 37
373%
153%
89%
530%
241%
161%
0%
100%
200%
300%
400%
500%
600%
0
10
20
30
40
50
60
3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
LinkedInMarketingRevenue($mm)
Desktop SU Revenue Mobile SU Revenue
Desktop Growth y/y Mobile SU Growth y/y
NYSE: LNKD
Buy, $250 PT
LinkedIn late to the mobile party, but
now catching up
• As a professionally-focused service, LinkedIn
generates more usage from desktop computers
than most Internet sites from members at work.
Because of this, LinkedIn’s mobile transition has
taken place more gradually than its peers.
• However, in 1Q:15 LinkedIn saw 51% of unique
visiting members come from mobile devices,
and the company has been investing a great
deal in its multiple mobile app experiences.
Marketing benefiting from mobile shift,
other businesses boosted indirectly
• LinkedIn’s mobile monetization model mirrors
those of FB / TWTR (in-stream sponsored ads),
but with four diverse businesses (talent, sales,
marketing, and premium subs), LinkedIn is less
dependent on mobile ad dollars than its peers.
• LinkedIn’s other businesses benefit indirectly
from the increased usage that its mobile
services generate, by giving its customers
greater access to its professional members.

Pandora: Most Mobile Service of the Bunch,
Biggest Winner from Connected Car Adoption
45
Pandora Active Listeners by Format
Pandora 1Q:15 Usage vs. Peers
66 70 71 70 72
8 7 5 9 7
89% 91% 94% 89% 91%
0%
20%
40%
60%
80%
100%
0
10
20
30
40
50
60
70
80
90
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
PandoraAvg.ActiveListeners(mm)
0.0
0.0
0.2
0.3
0.5
3.5
4.9
10.3
0.0B 2.0B 4.0B 6.0B 8.0B 10.0B 12.0B
Yelp
Linkedin
eBay
Twitter
Amazon
Google
Pandora
Facebook
U.S.TimeSpentin1Q:15
NYSE: P
Buy, $25 PT
Like Radio, Pandora is all about mobile
• Over 90% of Pandora’s ~80mm monthly active
users listen from mobile devices each month
and we estimate roughly 84% of hours are
streamed on mobile, which is not surprising as
radio is inherently a “mobile” activity.
• Pandora has ridden the wave of mobile device
adoption to impressive usage levels for a <$5B
company; in 1Q:15 Pandora served more
domestic usage hours (5B) than every U.S.-
based Internet company other than Facebook
(10B), and more than Google, Amazon, Twitter,
eBay, LinkedIn, and Yelp combined.
Upside from connected car listening
• Although growth in listener hours has been
slowing, we think Pandora is 2-3 years ahead of
its peers in penetrating the in-car listening
opportunity, which makes up close to half of all
radio listening in the U.S. today.
• Pandora’s listenership currently represents 10%
of total radio listening, but it estimates its share
is only 2% of listening in the car currently.
Source: comScore, Stifel Research

Pandora’s Proportional Share of U.S. Digital &
Radio Ad Budgets is 5x What It Generates Today
46Source: IDC (2015 ad markets), company documents (LTM = last 12 months), comScore (7% = P minutes / total Internet), Stifel Research estimates
NYSE: P
Buy, $25 PT
Despite steady monetization upticks, Pandora under-indexes its
share of radio & digital advertising; at parity Pandora would
generate ~$3.8B in ad revenue in 2015
Broadcast
Radio Ad Market
$18.5B
Digital & Mobile
Display Ad Market
$27.0B
P Share @ 10% = $1.85B
P LTM Audio Revenue
~$500mm (3%)
P LTM Display Revenue
~$250mm (1%)
P Share @ 7% = $1.93B
Revenue
@ Parity
= $3.8B
~5x LTM revenue

72%
76%
80%
64%
77%
85%
27%
41%
49%
38%
44%
53%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2012 2013 2014
Twitter Facebook LinkedIn Yelp
Twitter: Mobile First, But Now What?
47Source: Company reports, MAUs are as of end of each period
Twitter is the archetype of a
mobile-first company
• Twitter was born a mobile company and up
until 2013, it was an even more mobile
company than Facebook in terms of
percentage of users coming from mobile
devices.
• Despite Twitter’s logged in user base being
a minority of the visitors coming to the site,
registered monthly active user growth has
stalled over the past few quarters and we
believe an early emphasis on monetization
distracted the company from making
necessary platform improvements build a
long-term, sustainable audience.
• Twitter has recently stepped up its product
efforts in attempts to reverse this trend, but
it may be too little, too late for it to have
any chance of reaching its goal of a billion
daily users.
Mobile MAUs - % of Total
FB and Twitter User Growth
68
56 51
211
172 16558%
30%
21%
25%
16%
13%
0%
10%
20%
30%
40%
50%
60%
70%
0
50
100
150
200
250
2012 2013 2014
Y/YUserGrowth
Users(mm)
Twitter Net Adds Facebook Net Adds
Y/Y Growth - Twitter Y/Y Growth - Facebook
NYSE: TWTR
Hold, $36 FV

$1.62 $1.68
$2.10
$1.77 $1.85 $1.98
$2.50
$2.05
$3.85
$4.63
$6.34
$5.84
$6.61
$8.01
$12.52
$10.78
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
AdRevenueperMAUper1,000Mins
FB Time-Adjusted ARPU TWTR Time-Adjusted ARPU
48
We Do Not Believe Management’s Assertion that
Monetization is in its “Early Days” on Twitter
Source: Company reports, comScore, Stifel estimates
Unlike many other Internet companies, we do not believe Twitter will be able
to combat industry headwinds of slowing mobile usage with ad pricing, as
Twitter already monetizes at over 5x the rate of Facebook today in the U.S.
when adjusting for time spent – a valuable measure of potential ad inventory.
NYSE: TWTR
Hold, $36 FV

49
1Q:15 Saw Twitter Begin to Hit a Wall with How
Much Advertisers Are Willing to Pay
Source: Company reports, comScore, Stifel estimates
100 121
153
220 226
277
320
432
388
423
519
644126%
113%
123% 121% 125% 129%
109%
96%
72% 52%
62%
49%
0%
20%
40%
60%
80%
100%
120%
140%
0
100
200
300
400
500
600
700
Y/YGrowth
TwitterAdRevenue($mm)
Desktop Ad Revenue Mobile Ad Revenue Total Ad Revenue - y/y growth
NYSE: TWTR
Hold, $36 FV
The compelling part of Twitter’s investment story had been persistent
hyper-growth advertising; however, the company’s 1Q revenue miss
was a worrisome sign that advertisers could be questioning its ROI.

Specifically, Twitter Seems to be Losing Share to
Other Social Media Platforms
50Source: comScore U.S. cross-screen reports
Twitter’s share losses in mobile
time spent seem to indicate
diminishing social relevance
• The proliferation of mobile devices has
allowed social / mobile startups to rapidly
gain share in short periods of time.
• Other startups seem to be flourishing as
Twitter’s engagement stalls; private
companies like Snapchat and Pinterest
have continued to see strong user and
engagement growth in the U.S. and now
rival Twitter’s domestic size.
• Instagram growth also continues to
outpace Twitter; U.S. consumers now
spend more than 2x as much time on
Instagram as Twitter.
• We think Facebook was wise to take its
time monetizing Instagram; pushing the
envelope on invasive advertising too early
could have negatively impacted the
platform’s growth trajectory.
Twitter’s Y/Y Growth and Share of U.S.
Social Minutes
Twitter vs. Other Social Platforms in U.S.
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
Feb-2013 Aug-2013 Feb-2014 Aug-2014 Feb-2015
Y/YGrowthinMinutes
U.S.ShareofSocialMinutes
Share of Total U.S. Social Media Time Y/Y Growth
55
24 23 23
0
10
20
30
40
50
60
Instagram Twitter Snapchat Pinterest
Billions
NYSE: TWTR
Hold, $36 FV

(6)
(4)
(2)
0
2
4
6
8
10
12
14
2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
YelpMonthlyUniqueVisitors(mm)
Total Adds Mobile Adds
102
108
117 120
132
138 139 135
142
40
45
50 53
61
68
73 72
79
57%
59%
62%
59% 60% 61%
64% 65% 65%
43%
29%
8%
52%
29%
0%
10%
20%
30%
40%
50%
60%
70%
0
20
40
60
80
100
120
140
160
1Q:13 2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
YelpMonthlyUniqueVisitors(mm)
Total Visitors Mobile Visitors Mobile Share of Searches
Total Growth y/y Mobile Growth y/y
Yelp: Mobile Responsible for User / Engagement
Growth, But Usage Appears to Be Slowing
51Source: Company reports, Stifel Research
NYSE: YELP
Hold, $48 FV
Yelp Monthly Visitor Growth
Yelp Monthly Visitor Additions
Mobile-first company, but mobile
user growth slowing
• With 56% of users / 65% of local
searches coming from mobile and a
quality app experience, Yelp exhibits
all the signs of a mobile-first company.
• Despite the quality of Yelp’s local
content, both overall and mobile user
growth has slowed in recent quarters
domestically and international growth
has practically come to a halt.
User growth fuels business signups,
the lifeblood of Yelp’s local business
• Yelp’s investment story has centered
around paying local advertisers, which
Yelp acquires through its valuable
funnel of 2mm+ claimed businesses
• However, slowing user additions may
be challenging advertiser growth

Yelp’s User Growth Fueled Its Business; May Be
Impacting Local Advertiser / Revenue Growth
NYSE: YELP
Hold, $48 FV
6.1 5.7
8.0
9.1
5.9
7.5 7.1
6.2
84% 71%
66%
54%
42%
68% 69%
66%
60%
51%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1
2
3
4
5
6
7
8
9
10
2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
Y/YGrowth
YelpLocalAdvertiserAdds(k)
Local Advertisers Added Advertiser Growth y/y Local Ad Revenue y/y
Yelp’s slowing user growth may be responsible for the material
deceleration of Local Business Advertisers / Local Revenue

54Source: Company reports, comScore, PayPal research, Criteo,
Amazon & eBay Have Leading Mobile
Commerce Platforms
Smartphones are multi-functional
for eCommerce shoppers:
• Mobile shoppers primarily use
smartphones for 1) product research, 2)
business details, and 3) reviews.
• Moreover, shoppers spend more on apps
and are more likely to make repeat
purchases on mobile apps vs. mobile web.
Amazon / eBay well-positioned vs.
traditional retail:
• Both Amazon / eBay have strong mobile
app usage relative to traditional retailers.
The commission models employed by both
allow each to benefit from incremental
mCommerce transactions without having
to bridge a monetization gap as some ad-
based models do.
• Additionally as, leading platforms Amazon
and eBay control a disproportionate share
of mobile transaction activity.
36%
1Q:15
(U.S.)
App %of Mobile
Usage
Web %of Mobile
Usage
Mobile App vs.
Web Engagement
Amazon 72% 28% 4.2x
eBay 70% 30% 4.7x
Etsy 78% 22% 7.8x
Wayfair 13% 87% 2.7x
Zulily 75% 25% 10.6x
Average 62% 38% 6.0x
Best Buy 16% 84% 3.5x
Gap 7% 93% 1.4x
Nordstrom 18% 82% 15.6x
Target 74% 26% 3.7x
Wal-Mart 63% 37% 2.8x
Average 36% 64% 5.4x
27%
35%
29%
38%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1Q:14 1Q:15
Average Top Quartile
Mobile Share of eCommerce Transactions
Note: Top quartile consists of retailers with the highest share of mobile transactions

Amazon: Benefits from Mobile in eCommerce
and AWS
Amazon is a beneficiary of mobile in
its retail and AWS businesses
• During the holiday season nearly 60% of
customers shopped using mobile devices.
• Amazon has escaped many of the
challenges of mobile monetization in the
retail business given the company monetizes
by % of transaction.
• Amazon has benefitted from showrooming
(facilitated by mobile usage) due to its
business model built on low price ad
convenience.. Mobile is also a competitive
differentiator versus traditional retailers
which have been late to develop mobile
commerce platforms.
• The growth in mobile usage has also driven
demand for AWS services due to strong
growth in app development.
Mobile benefits outside of retail
• Mobile based services such as Instant Video
and Prime Now are driving stickiness in the
ecosystem.
Amazon U.S. Active Users
Amazon U.S. Time Spent
101 99 104 112 119
63 60
63
62 57
62% 62% 62% 64%
68%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
20
40
60
80
100
120
140
160
180
200
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
12 10 11 13 12
22 24 24
25 28
66%
70% 69% 66%
70%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
5
10
15
20
25
30
35
40
45
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
NASDAQ: AMZN
Hold, $358 FV

eBay: Mobile Could be a Key, Long-term Growth
Lever for Marketplaces
eBay sees tailwinds from mobile in
its Marketplace business
• Mobile GMV grew 59% y/y to $17 billion in
4Q:14, representing 23% of total GMV (vs.
21% in 3Q:14).
• Similar to Amazon, Marketplaces’ draws a
significant portion of mobile traffic through
its app, creating a unified experience from
discovery to purchase.
• Though still in the early stages, effective
mobile engagement with new and old users
through features, like daily deals, could
lead to a reinvigoration in growth.
eBay U.S. Active Users
eBay U.S. Time Spent
60 66 70 73
83
37 34
38 41
39
62%
66% 65% 64%
68%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
20
40
60
80
100
120
140
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
9 8 8 9 10
14 15
16 15 13
62%
65% 66%
62%
57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
5
10
15
20
25
30
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
NASDAQ: EBAY
Buy, $65 PT

57Source: Company reports, PayPal, Payfirma
PayPal: Mobile Presents Opportunities but also
New Competition
PayPal acquired Braintree in 2013 to boost its mobile payment
capabilities and mobile accounted for 20% of TPV generated in 2014.
However, due to the low barriers to entry created by the ubiquity of
mobile devices, the competitive environment has become more intense.
36%
3%
9%
15%
20%
0%
5%
10%
15%
20%
25%
$0
$50
$100
$150
$200
$250
FY:11 FY:12 FY:13 FY:14
Desktop TPV Mobile TPV Mobile Penetration
TPV($B)
%ofTotalTPV
PayPal Mobile TPV Increasing Competition
NASDAQ: EBAY
Buy, $65 PT

58Source: Company reports, Alibaba Merchant forum, Stifel estimates
Alibaba: Setting Up for Mobile Tailwinds
36%
7% 19%
39%
48%
56%
61%
1%
6%
23%
35%
42% 42%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$0
$100
$200
$300
$400
$500
$600
$700
FY:13 FY:14 FY:15 FY:16E FY:17E FY:18E
($Billions)
Mobile GMV vs. Mobile Revenue
Non-Mobile GMV Mobile GMV Mobile % of Total Revenue
2.50% 2.55% 2.44% 2.36%
2.62%
2.82%
0.49%
0.91%
1.79%
1.94%
2.33%
2.53%
2.66%
2.94% 2.89% 2.87%
3.07%
3.30%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
FY:13 FY:14 FY:15 FY:16E FY:17E FY:18E
TakeRate
Mobile vs. Desktop Take Rates
Blended Take Rate Mobile Take Rate Non-Mobile Take Rate
Alibaba’s hybrid ad model gives it
the ability to close the monetization
gap between desktop and mobile
through improvements in
conversion.
• Usage: Mobile traffic now accounts for 55%
of total traffic (vs. 25% last year) and the
company expects this to exceed 70% by the
end of 2015; However, mobile currently only
accounts for 23% of revenues.
• Investments into Monetization: Alibaba is
making investments focused on mobile users
such as new ad formats, improving ad
relevancy, and social media tools for
merchants.
• Early Innings for Monetization: We believe
Alibaba’s current investments will position it to
take advantage of long-term mobile usage
tailwinds as it climbs the steepening
monetization S-curve.
NYSE: BABA
Buy, $102 PT

59Source: Company reports, comscore, Stifel estimates
RetailMeNot: Multiple Hurdles to Mobile
Monetization
36%
RetailMeNot has seen faster than
expected adoption of its mobile
platform, but faces multiple hurdles
to effectively monetize its mobile
traffic.
• Attrition: 20-25% of mobile visits go un-
monetized despite delivering a customer to a
retail partner’s site; The company is
experimenting with single use coupon codes,
CPC pricing, and full marketing packages for
retailers to address this issue.
• Lower Mobile AOV: Comscore estimates
87% of time is spent on coupon platforms
through mobile. RetailMeNot started on
desktop, but needs to improve mobile
conversions to offset monetization
headwinds.
• Retailer Adoption: The long-term focus
remains the $20-30B in-store addressable
market, but retailers have been slow to
integrate beacon and mobile PoS technology.
$0.42
$0.44 $0.43 $0.43 $0.42 $0.42
$0.36
$0.34
$0.29
$0.26
$0.23 $0.22
$0.06
$0.08 $0.09
$0.11
$0.12 $0.13
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
RevenueperVisit(monetization)
Mobile vs. Desktop Revenue per Visit
Desktop Monetization Blended Monetization Mobile Monetization
18%
28%
41%
54%
64%
72%
3.0%
5.9%
11.0%
17.2%
23.5%
29.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
($Milions)
Mobile Visits vs. Mobile Revenue
Desktop Visits Mobile Visits Mobile Revenue % of Total
NASDAQ: SALE
Hold, $20 FV

60Source: Company reports, comscore, Stifel estimates
Zulily: Further Along the Monetization
Curve than Peers
Flash sales companies rode the mobile
adoption wave more than traditional
eCommerce players.
• Flash sales models saw early tailwinds from
the mobile transition due to the frequent
engagement, time sensitive nature, and
entertainment aspects of the promotions.
• As a result, we believe zulily is further along the
S-curve than eCommerce peers in other
verticals and will see less incremental benefits
from mobile adoption trends going forward.
36%
2.9 2.8
3.7
4.8
5.5 5.4
5.9
6.8
6.339%
42%
45% 45%
47%
49% 50% 50%
55%
0%
10%
20%
30%
40%
50%
60%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
1Q:13 2Q:13 3Q:13 4Q:13 1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
Total Orders Mobile Orders % of Total (N.A.)
Mobile Orders % of
TotalOrders(mm)
%ofNorthAmericanOrders
1Q:15 (U.S.) Mobile %of Total Usage Desktop %of Total Usage App %of Mobile Usage Web %of Mobile Usage
Zulily 58% 42% 74% 26%
Hautelook 52% 48% 54% 46%
Joss and Main 38% 62% 68% 32%
MyHabit 34% 66% N/A N/A
NASDAQ: ZU
Hold, $12 FV

Priceline: Exploring In-Destination Opportunities
and Refining Core Products
62Source: Stifel Research, comScore
Focusing on mobile web, but
positioning to capture app-heavy
use cases.
• In the last 12 months leading up to 1Q:15
Priceline saw over 100mm reservations on
smartphones – we expect high-20%/low-
30% of bookings are made through mobile.
• Rolled out last minute Booking Now mobile
app in Jan. 2015.
• Priceline acquired Kayak (2012) and
OpenTable (2014) which are app-centric
with 77% and 60% of mobile usage
through apps in 1Q:15.
Priceline U.S. Active Users
Priceline U.S. Time Spent
6 7 8
6 7
11
14 13
12
15
35% 34%
39%
33% 33%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
5
10
15
20
25
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
Mobile MAUs Desktop MAUs Mobile %
63 68 77
52 54
129
162 148
113
153
33%
30%
34%
32%
26%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
comScoreU.S.Minutes(mm)
Mobile Mins Desktop Mins Mobile %
NASDAQ: PCLN
Buy, $1,350 PT

Expedia: Investing in Core Competencies
Concentrating on optimizing
mobile for core travel products.
• 25% of transactions were booked on
mobile devices (4Q:14) and Hotels.com
saw mobile traffic penetration exceed 50%
on peak days.
• The pending acquisition of Orbitz should
increase the company’s mobile presence
with Orbitz’s instant mobile rewards and
loyalty program.
• Continued investment in meta-search
platform, Trivago, should position the
company to better address the traveler
using mobile devices for trip research.
Expedia U.S. Active Users
Expedia U.S. Time Spent
11 11 12
10
14
13 15
15 14
18
46%
42%
44%
41%
43%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
5
10
15
20
25
30
35
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
110 86 93 66
115
194
210 217
174
267
36%
29% 30%
28%
30%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
300
350
400
450
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
NASDAQ: Expedia
Hold, $109 FV

HomeAway: Investing & Partnering to Extend
Mobile Capabilities
Exploring in-destination
opportunities.
• Unlike hotels or flights, vacation rentals
typically require collaboration with spouses,
family members, or friends, reducing the
emphasis on last-minute mobile bookings.
• HomeAway partnered with Uber and
Instacart in Sept. 2014 to give guests
access to transportation and grocery
delivery services while staying at a
vacation home.
• The company acquired property
management app Glad to Have You in
March 2014 to enable better
communication between owners and
guests.
HomeAway U.S. Active Users
HomeAway U.S. Time Spent
5 6 6
5
7
6
6 6
5
6
44%
48% 50% 50%
54%
0%
10%
20%
30%
40%
50%
60%
0
2
4
6
8
10
12
14
16
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
81 94 87 66
134
217
174 169
116
214
27%
35% 34%
36% 38%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
50
100
150
200
250
300
350
400
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
NASDAQ: AWAY
Hold, $30

TripAdvisor: Strengthening Mobile Presence from
Pre-Trip Research to Post-Booking Activities
Diversifying away from advertising
model and accompanying mobile
headwinds.
• ~50% of monthly active users navigate to
the site from mobile devices.
• Rolled out commission based, mobile
Instant Booking in the U.S. and
internationally to boost revenue per mobile
user.
• Acquired Viator and LaFourchette in 2014
to expand into the attractions and
restaurant reservation verticals.
TripAdvisor U.S. Active Users
TripAdvisor U.S. Time Spent
14 14 18 16
32
13 13
14
17
23
52% 52%
55%
48%
58%
0%
10%
20%
30%
40%
50%
60%
70%
0
10
20
30
40
50
60
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
144 124 125 97
256
117
117 137
122
242
55%
51%
47%
44%
51%
0%
10%
20%
30%
40%
50%
60%
0
100
200
300
400
500
600
1Q:14 2Q:14 3Q:14 4Q:14 1Q:15
NASDAQ: TRIP
Hold, $84 FV

Price Target
Methodology & Risks

67
Alibaba
• Price Target Methodology: We arrive at our $102 target price through a DCF analysis with an 11% discount rate and 4.5% terminal growth
rate.
• Risks: Difficulty with international expansion outside of China and into new businesses, concentrated voting ownership, and Chinese
geopolitical and macro concerns present key risks to future share performance, in our view.
eBay
• Price Target Methodology: Our $65 price target is derived from our sum-of-the-parts (SOTP) analysis combined with a probability-weighted
acquisition premium. We apply 2016E EBITDA multiples of 10x for eBay, 14x for PayPal, and 9x for eBay Enterprise in our SOTP. Additionally,
we expect that unlike Expedia and TripAdvisor the new eBay and PayPal entities could be potential strategic assets. To account for this
optionality, we assume a 20% acquisition premium with a 25% probability, which adds $3 to our $62 SOTP implied price.
• Risks: In addition to general market and macroeconomic risks, we believe risks for eBay include increased eCommerce and payments
competition, adverse effects resulting from the separation of the marketplace and payments business, and slower eCommerce growth
domestically and in international markets.
Facebook
• Price Target Methodology: We use a DCF approach to arrive at our $97 target price, utilizing a perpetual growth rate of 4.5% and discount rate
of 10%.
• Risks: In addition to general market and macroeconomic risks, the risks to Facebook include: competition for consumer time spent, reliance on
product cycles for growth, user engagement for certain demographics, and shifts in advertising trends.
LinkedIn
• Price Target Methodology: We use a 12-month DCF valuation approach to arrive at our $250 target price, utilizing a WACC of 10.5% and
terminal growth rate of 4.5%.
• Risks: Cyclical pressures on recruitment activity, uncertain ceiling on target addressable market opportunities, engagement gap vs. other social
media services, transition to a more content-focused marketing platform, and potential competition from larger technology companies making a
push into professional networking.
Priceline
• Price Target Methodology: We use a 12 month DCF approach to arrive at our $1,350 price target with a perpetual growth rate of 2.75% and
discount rate of 11.0%.
• Risks: There are always risks that the target price for any security will not be realized. In addition to general market and macroeconomic risks
and currency fluctuations, for Priceline, these risks include: increased competition from other travel operators, competition from other payment
solutions, a reduction in participation from major travel suppliers, and the ability to produce an effective return on marketing spend to drive new
bookings.
Source: Company reports, Stifel Research
Price Target Methodology & Risks: Market Cap >$10B

68
GrubHub
• Price Target Methodology: We arrive at our $52 price target using a 12-month forward DCF analysis with an 11.5% discount rate and 4.5%
terminal growth rate.
• Risks: Competition from larger Internet players, difficulty in small / mid-tier city expansion, potential merger integration issues, and challenges in
international expansion.
MercadoLibre
• Price Target Methodology: We use a 12-month DCF approach to arrive at our $160 target price, with a perpetual growth rate and discount rate
assumption of 4.5% and 11%, respectively.
• Risks: There are geopolitical and macroeconomic risks in addition to the persistent risk of competition from other e-commerce companies, such
as Submarino, Rakuten, and Amazon.
Pandora
• Price Target Methodology: We arrive at our 12-month target price of $25 through a DCF approach utilizing a 4.5% perpetual growth rate and
11% discount rate.
• Risks: Intensifying competition from several types of music services (radio broadcasters, other Internet radio services, on-demand music
platforms, digital downloads, music video streaming sites, piracy, etc.), uncertain impact of the upcoming Copyright Royalty Board arbitration
process on content cost structure, constrained investment capacity in an increasingly innovative digital music space due to limited near-term
profitability, and challenges to international expansion.
Source: Company reports, Stifel Research
Price Target Methodology & Risks: Market Cap <$10B

69
Amazon
• Fair Value Methodology: We arrive at our $358 fair value using a 12-month forward DCF analysis with an 10.0% discount rate and 4.0%
Expedia
• Fair Value Methodology: We arrive at our $109 fair value using a 12-month forward DCF analysis with an 11.5% discount rate and 2.5%
Google
• Fair Value Methodology: We arrive at our $550 fair value using a 12-month forward DCF analysis with an 9.0% discount rate and 3.0% terminal
growth rate.
TripAdvisor
growth rate.
Twitter
growth rate.
HomeAway
growth rate.
RetailMeNot
growth rate.
Yelp
growth rate.
zulily
growth rate.
Fair Value Methodology: All Market Caps

Important Disclosures & Certifications
I, Scott Devitt, and I, John Egbert, certify that the views expressed in this research report accurately reflect my personal views about
the subject securities or issuers; and I, Scott Devitt, and I, John Egbert, certify that no part of my compensation was, is, or will be
directly or indirectly related to the specific recommendations or views contained in this research report. Our European Policy for
Managing Research Conflicts of Interest is available at www.stifel.com.
For applicable current disclosures for all covered companies please visit the Research Page at www.stifel.com or write to the Stifel Research
Department at the following address.
US Research
Stifel Research Department
Stifel, Nicolaus & Company, Inc.
One South Street
16th Floor
Baltimore, Md. 21202
71

The equity research analyst(s) responsible for the preparation of this report receive(s) compensation based on various factors, including Stifel’s
overall revenue, which includes investment banking revenue.
Our investment rating system is three tiered, defined as follows:
• BUY -We expect a total return of greater than 10% over the next 12 months with total return equal to the percentage price change plus
dividend yield.
• HOLD -We expect a total return between -5% and 10% over the next 12 months with total return equal to the percentage price change
plus dividend yield.
• SELL -We expect a total return below -5% over the next 12 months with total return equal to the percentage price change plus dividend
yield.
Of the securities we rate, 52% are rated Buy, 45% are rated Hold, and 3% are rated Sell.
Within the last 12 months, Stifel or an affiliate has provided investment banking services for 20%, 8% and 0% of the companies whose shares
are rated Buy, Hold and Sell, respectively.
Important Disclosures & Certifications (continued)
72

Additional Disclosures
Please visit the Research Page at www.stifel.com for the current research disclosures and respective target price methodology applicable to
the companies mentioned in this publication that are within Stifel's coverage universe. For a discussion of risks to target price please see our
stand-alone company reports and notes for all Buy-rated and Sell-rated stocks.
The information contained herein has been prepared from sources believed to be reliable but is not guaranteed by us and is not a complete
summary or statement of all available data, nor is it considered an offer to buy or sell any securities referred to herein. Opinions expressed are
subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual
investors. Employees of Stifel, or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that
differ from the opinions expressed within. Past performance should not and cannot be viewed as an indicator of future performance.
As a multi-disciplined financial services firm, Stifel regularly seeks investment banking assignments and compensation from issuers for services
including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement
agent in private transactions.
Affiliate Disclosures
“Stifel”, includes Stifel Nicolaus & Company (“SNC”), a US broker-dealer registered with the United States Securities and Exchange
Commission and the Financial Industry National Regulatory Authority and Stifel Nicolaus Europe Limited (“SNEL”), which is authorized and
regulated by the Financial Conduct Authority (“FCA”), (FRN 190412) and is a member of the London Stock Exchange.
Registration of non-US Analysts: Any non-US research analyst employed by SNEL contributing to this report is not registered/qualified as a
research analyst with FINRA and is not an associated person of the US broker-dealer and therefore many not be subject to NASD Rule 2711 or
NYSE Rule 472 restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst
account.
73

Country Specific and Jurisdictional Disclosures
United States: Research produced and distributed by SNEL is distributed by SNEL to “Major US Institutional Investors” as defined in Rule 15a-6
under the US Securities Exchange Act of 1934, as amended. SNEL is a non-US broker-dealer and accordingly, any transaction by Major US
Institutional Investors in the securities discussed in the document would need to be effected by SNC. SNC may also distribute research prepared
by SNEL directly to US clients that are professional clients as defined by FCA rules. In these instances, SNC accepts responsibility for the
content. Research produced by SNEL is not intended for use by and should not be made available to retail clients, as defined by the FCA rules.
Canadian Distribution: Research produced by SNEL is distributed in Canada by SNC in reliance on the international dealer exemption. This
material is intended for use only by professional or institutional investors. None of the investments or investment services mentioned or described
herein is available to other persons or to anyone in Canada who is not a “permitted client” as defined under applicable Canadian securities law.
In certain instances CIBC World Markets Inc. (“CIBC WM”) may also distribute research produced by SNEL to clients of CIBC WM. This report has
not been prepared in accordance with the disclosure requirements of Dealer Member Rule 3400-Research Restrictions and Disclosure
Requirements of the Investment Industry Regulatory Organization of Canada (“IIROC”). Disclosures contained in this report are made in
accordance with requirements of the Financial Conduct Authority (“FCA”) and the Financial Industry National Regulatory Authority (“FINRA”).
UK and European Economic Area (EEA): This report is distributed in the EEA by SNEL, which is authorized and regulated in the United
Kingdom by the FCA. In these instances, SNEL accepts responsibility for the content. Research produced by SNEL is not intended for use by and
should not be made available to non-professional clients.
In jurisdictions where Stifel is not already licensed or registered to trade securities, transactions will only be affected in accordance with local
securities legislation which will vary from jurisdiction to jurisdiction and may require that a transaction carried out in accordance with applicable
exemptions from registration and licensing requirements. Non-US customers wishing to effect transactions should contact a representative of the
Stifel entity in their regional jurisdiction except where governing law permits otherwise. US customers wishing to effect transactions should contact
their US salesperson.
Additional information is available upon request
© 2015 Stifel. This report is produced for the use of Stifel customers and may not be reproduced, re-distributed or passed to any other person or
published in whole or in part for any purpose without the prior consent of Stifel. Stifel, Nicolaus & Company, Incorporated, One South Street,
Baltimore, MD 21202.
74

Where Are We in the Mobile Internet Transition? Stifel Internet Equity Research

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Where Are We in the Mobile Internet Transition? Stifel Internet Equity Research

Similaire à Where Are We in the Mobile Internet Transition? Stifel Internet Equity Research (20)

Dernier

Dernier (20)

Where Are We in the Mobile Internet Transition? Stifel Internet Equity Research