Not so long ago, LinkedIn reported its Q1 results. Moreover, after the significant drop three months ago (just to remind you that the stock dropped because of the weak guidance for Q1), the stock has gained more than 36% of its value coming back from $100 to $136. It's still far away from $250+ level it was a year ago, but even 36% jump is a huge return in three months. Here I want to check whether the stock still has any upside potential or it's fairly valued. The first step is to check its unit-economics in order to get better understanding of how LinkedIn is making money from the active members and check if it's still profitable (Hint: yes, the company has a positive margin per user, but there are some important facts that we should take into account). In order to check the margin per each active member on LinkedIn, we need to check the number of active users for both mobile and desktop. According to 10-Q report, the company increase the number of active members by 9% from 96,847k to 105,501k. Let's compare it with numbers we had for the whole 2015 fiscal year: in 2014 the company had 87,222k active members compared to 98,452k members in 2015. So as we can see, the growth rate dropped from 12.88% last year to 9% this year. First: member growth rate dropped by 3% Coming to revenue calculations, it's better to provide you with some information about revenue sources that LinkedIn has:Talent Solutions. Talent Solutions revenue is comprised of Hiring and Learning and Development products. Hiring products primarily consist of LinkedIn Recruiter, Job Slots, Career Pages, Job Postings, Job Seeker and Recruiter Lite. This Talent Solutions also include the revenue from Lynda.com which was acquired around a year ago;Marketing Solutions. Marketing Solutions revenue is earned from advertisements (consisting of content-based, graphic display, and text link) shown primarily on LinkedIn.com and its mobile applications based on either a cost per click or cost per advertisement model. That's basically the advertising you see on a right hand side on LinkedIn.com and the sponsored ads in the feed. LinkedIn has its own ad exchange, the company doesn't use Google or any other solutions available on the market;Premium Subscriptions. Premium Subscriptions revenue is derived primarily from selling various subscriptions that allow members to have further access to premium services on LinkedIn.com. The Company offers its members monthly or annual subscriptions. Revenue from Premium Subscription services is recognized ratably over the contractual period, which is generally from one to 12 months. Very powerful and useful feature for LinkedIn members, help you reach people from your network without adding them to connections, with pro account you have unlimited number of searches you can make on LinkedIn.com. Talent Solutions is the most significant revenue source for the company at the moment, in 2015 LinkedIn earned $1.88B in their talent solutions business which is more than 41% higher than in 2014. Q1 was also efficient for LinkedIn, they increase their talent solutions sales by 26.75% reaching more than $502M for first three months of 2016 fiscal year. As we can see from the Similarweb stats, LinkedIn increased its traffic. I assume that the reason for that is their blog entries tool that they introduced in 2015. People want to spread the word, share their professional experience on LinkedIn to get more clients or business partners. That's why the traffic on LinkedIn increased from 800M unique visitors in November 2015 to 941M in April 2016. Hence their marketing solutions revenue should improve. The company earned $154M from the advertising which is almost 30% higher than in Q1 FY2015. That's even higher than 28% growth rate in 2015 compared to 2014. So this is the positive sign that the company is improving their traffic monetization. For the premium subscription the company is in line with previous year providing almost 28% growth rate. Second: Overall revenue growth rate is 35% which is in line with FY2015. As soon as we know the revenue size and a number of active members (ones that visited a website or an app more than 1 time a month), we can calculate the average revenue per each active member. Why do you think it's important to know for each internet business? The answer is pretty straight-forward - because all the revenue is based on the audience you have on the website. It also depends on your sales department, how many clients they can attract, but if there is no traffic on your website, they even don't have anything to sell. That's why this metric is really important and can show if the business is making money from its business or not. So average revenue per one active member was around $7.63 for Q1 FY2016 which is 16% higher than in Q1 FY2015. However, the company reached 19.42% growth rate in average revenue for the whole 2015 fiscal year. Third: average revenue is going up significantly. +16% this quarter. Now we need to check the margins. In order to check the unit-economics, we need to calculate the average costs per one active member. Don't want to overload this article with huge amount of numbers, that's why want to share with you the results I got. Fourth: margin per one active user increase by 8% from $0.59 to $0.64, while the company had 8% for FY2015. Conclusion The company is still growing, I'm pretty sure that it will surpass $3.3B in sales this year, but we need to pay attention to its metrics. The company is still earning $1.41 per user which is a lot. Just try to compare this number to what Salesforce has, for example, or Box, or any other internet company, publisher or software provider. Personally, I'll wait for the upcoming results, buy some calls and as soon as the unit economics show a positive trend, I'll buy some stocks. Now I see some negative signs that stopped me from buying the stock right now.