Image source: LinkedIn

LinkedIn (NYSE:LNKD.DL) shares have risen about 7% since late April, when the online network turned in a better-than-expected first quarter earnings report. LinkedIn's earnings and revenue exceeded analyst expectations and its own guidance, while its outlook for the current quarter was particularly strong.

But what was driving those improved results? During LinkedIn's subsequent earnings call, management emphasized a few key metrics that underscore the growing strength of its business.

LinkedIn's membership base is expanding

LinkedIn's business depends on its network. It's free to join LinkedIn, but some members pay for extra features both as recruiters and job-seekers. Premium subscriptions generated more than 17% of revenue last quarter. And the more people that use LinkedIn, the more valuable its advertising and recruiting products become. LinkedIn's member base continues to grow at a rapid rate -- the company now reaches almost half a billion people. During the earnings call, LinkedIn CEO Jeff Weiner noted the growing size of LinkedIn's community. "In the quarter, cumulative members grew 19% to 433 million, our strongest net-add quarter since the beginning of 2014," he said.

Engagement is surging

There's a lot more to LinkedIn than page views, but traffic and engagement remain important aspects of the company's story. Last quarter, LinkedIn's unique monthly visitors rose to an average of 106 million, up 9% on an annual basis. But more impressive than the size of LinkedIn's user base is its rising level of engagement -- LinkedIn members are using the platform to a much greater extent. During the call, Weiner offered up three numbers as evidence:

Page views per unique visting member hit an all-time high in Q1 with 23% year-over-year growth. ... Daily shares were up nearly 40%, and traffic to third-party publishers grew more than 150%.

The more LinkedIn members engage with the platform, the more value they're likely deriving from it. That bodes well for the company's long-term ability to attract and retain more members.

Companies are buying more ads on LinkedIn's platform

That engagement should also benefit LinkedIn's advertising business. Indeed, LinkedIn is enjoying rising demand for its advertising services. Companies and organizations can pay LinkedIn for sponsored content -- ads or LinkedIn updates members see in their news feeds when they log on. Sponsored content falls within LinkedIn's marketing solutions segment, a business that generated about 18% of total revenue last quarter. This segment includes other products in addition to sponsored content (such as display ads), but management has made sponsored content its primary focus and is seeing some success. Weiner noted the rapid growth of sponsored content revenue during the call, emphasizing that "sponsored content grew nearly 80%, [and] now [it represents] 56% of total marketing solutions revenue."

LinkedIn isn't profitable, but it's generating more cash

On an adjusted basis, LinkedIn earned $0.74 per share last quarter, but under generally accepted accounting principles, it wasn't profitable with a net loss of almost $46 million. Fortunately, LinkedIn's business is generating cash, and it's doing so at a growing rate. During the call, LinkedIn CFO Steven Sordello noted that the company's operating cash flow was "a record $252 million versus $165 million a year ago."

Overall, LinkedIn ended the quarter with over $200 million more cash than it started with. That's not GAAP profitability, but it's welcome news for shareholders. "We are positioned to create greater leverage through increasing profitability, and growing free cash flow," Sordello said.

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