The TRUTH about How LTT SPENDS Money

Linus Media Group (LMG), the parent company behind the influential technology channel Linus Tech Tips, has released a granular breakdown of its operational expenses and compensation structure for the 2024–2025 fiscal period. In a rare move for a private media enterprise, founder Linus Sebastian disclosed that while inventory and payroll account for half of the company's expenditures, the firm maintains a net profit margin of approximately 15% without reliance on outside investors.

Key Takeaways

• Major Expense Drivers: Inventory procurement and employee payroll combined represent 50% of LMG's total annual expenses, with global distribution channels costing an additional 10%.
• Salary Transparency: The median employee salary rose to over $80,000 CAD in 2025, a 9% year-over-year increase despite flat revenue growth.
• Executive Compensation: The CEO-to-median-worker pay ratio currently sits between 5:1 and 10:1, a figure Sebastian describes as "reasonable" by historical standards.
• Profitability: The company retains approximately 15% of revenue as net profit, with a strategic goal to push this to 20% for reinvestment and reserves.

Operational Costs and Inventory Challenges

The financial disclosure reveals that LMG operates with a heavy reliance on physical goods, a significant pivot from its origins as a purely digital media entity. Inventory purchases for its e-commerce arm, ltstore.com, constitute roughly 25% of total company expenses. This outlay is split between apparel (4%), backpacks and gear (8%), and hard goods like screwdrivers (14%).

Sebastian highlighted the volatility of managing cash flow within a merchandise-heavy business model, noting that shipping and distribution channels consume 10% of total expenses. Selling costs, including Shopify fees and payment processing charges from Stripe and PayPal, add another 3% to the operational overhead.

By contrast, the expenses most visible to the audience—high-end camera gear and production equipment—comprise a surprisingly small fraction of the budget. Production purchases account for approximately 1% of expenses, while capital expenditures (CapEx) for major projects, such as the Labs acoustic chamber and set upgrades, total less than 1%.

Workforce Compensation and Salary Data

With a headcount of 120 employees, payroll stands as the company’s single largest expense category alongside inventory, absorbing 25% of the budget. In an effort to address cost-of-living concerns in Greater Vancouver, LMG implemented salary increases for 2025 despite a period of stagnant revenue.

According to the data released, the median base salary for full-time employees active for the full year rose from approximately $73,500 CAD in 2024 to just over $80,000 CAD in 2025. The average salary, skewed slightly by executive pay, sits at $115,000 CAD.

"This 9% change was made in spite of actually flat revenues across those years to hire and retain key talent as well as to better support our valued team members through the current cost of living crisis."

Sebastian emphasized that the company prioritizes full-time employment over the gig-economy contractor model prevalent in digital media. This structure ensures staff receive benefits, including health coverage and retirement matching, which are often absent in the creator economy.

regarding executive pay, LMG disclosed that founders Linus and Yvonne Sebastian each draw a salary of $121,000 CAD. However, the company's CEO, Terren Tong, commands a compensation package resulting in a pay ratio of 5:1 to 10:1 compared to the median worker. Sebastian defended this ratio as conservative compared to modern corporate standards, though he noted plans to adjust executive compensation based on performance targets in 2026.

Profit Margins and Corporate Structure

The company reports a net profit margin of roughly 15% after taxes, which account for nearly 8% of expenses. Sebastian stated his intention to improve efficiencies to reach a 20% profit margin. This capital is utilized for operating cash flow, a "rainy day" fund, and shareholder dividends.

The report also clarified the company’s real estate strategy. LMG’s physical offices are owned by separate holding companies controlled by the founders, to which LMG pays market-rate rent. This structure is designed for liability protection and tax efficiency, specifically regarding loan interest deductibility.

Addressing the wealth generated by the company, Sebastian defended the dividend structure as the return on risk for self-funding the enterprise without institutional loans or venture capital.

"This is the pot at the end of the rainbow in a capitalist system that we didn't choose but do have to operate in. Yvonne and I took a big risk both providing capital to grow this thing and working our butts off... We beat the odds and we're also making concrete efforts not to pull the ladder up behind us."

Strategic Reinvestment and Future Growth

Looking ahead to 2026, LMG plans to deploy its retained earnings into new content verticals and infrastructure. Confirmed projects include a "tech house" renovation series and an undisclosed acquisition described as a "big content-related" purchase.

The company is also refining its human resources policies to encourage employee growth outside of LMG. This includes relaxing restrictions on side hustles and directly sponsoring former employees who launch their own brands, a move Sebastian frames as building a legacy of talent development within the tech media industry.