Facebook Q1 Earnings: What to Expect

Image: Manu Fernandez/Associated Press

Facebook has beat Wall Street estimates with each of its last three earnings reports. Will it manage to do the same this time around?

The social network is scheduled to report its March quarter earnings after the market closes on Wednesday. The consensus among analysts surveyed by Thomson Reuters is that Facebook will post earnings of $0.24 a share on revenue of $2.36 billion. That would be a significant increase from the same quarter a year ago when it reported revenue of $1.46 billion.

Advertising revenue is expected to come in around $2.13 billion, thanks to strong growth on mobile. Shyam Patil, an analyst with Wedbush, wrote in an investor note that mobile ad revenue should total nearly $1.2 billion for the quarter, up more than 200% year-over-year.

The ability to monetize on mobile was a key concern when Facebook went public in May, 2012. Since then, Facebook has redesigned its mobile apps and introduced successful new mobile ad products like app install ads, an idea which other competitors are now trying out as well. If Patil's estimate is on point, mobile ads would account for about 55% of total ad revenue, compared to 53% in the previous quarter and 30% a year earlier.

Analysts see strong revenue potential from recent products like Instagram ads and video ads, the latter which is currently being rolled out slowly. Expect some questions on the Facebook earnings call about progress on either or both of these fronts.

On the user front, Facebook could reveal some eye-popping numbers. Arvind Bhatia, an analyst with Sterne Agee, wrote in an investor note that he expects Facebook to report having 1.26 billion monthly active users, up from 1.23 billion in the previous quarter. Facebook will also report more than one billion monthly active users on mobile.

FB data by YCharts

During the March quarter, Facebook announced plans to acquire WhatsApp and Oculus VR, the company's two largest acquisitions to date.

The company has also begun investing in a standalone app strategy with the launch of Facebook Paper and it's rumored to be launching a mobile ad network and getting into the financial services industry in Europe. Facebook execs may be asked to provide more insight on some of these efforts.

Facebook stock hit a new high of $70 in March, but dipped amid a broader downturn in tech stocks. The stock is still up from the beginning of the year.

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