Facebook Earnings for Q2 – Expectations and What to Watch

Facebook will post and share their report for earnings in the second quarter, late Wednesday. The hopes for revenue and profit are high and it will be interesting to see whether Facebook has surpassed expectations.

According to many experts and analysts, Facebook should report 47 cents share in profit which is more than the 42 cents Facebook reported one year ago. However, many believe that the change might be impacted by a stronger dollar.

Facebook Q2 results

Facebook’s stocks have risen by 15% in the past three months and expectations will be high for the social network on Wednesday. The consensus among experts, first reported by the Wall Street Journal is around $4 billion Facebook earnings in Q2.

Expectations will also be high for the expenses by Facebook. If the expenses are high and the social network fails to beat consensus revenue, there might be problems. In the past, the company has established goodwill for investors that they can execute and surpass all ambitious goals.

Compared to the previous quarter, the number of monthly active users has increased to 1.47 billion with more than 970 million active users per day. In previous quarter, the number of active monthly users was 1.44 billion. The social network reported 1.25 million active monthly users on mobile platforms in Q1 and we can expect that number to go even higher.

With that being said, there are couple of things you should invest extra attention on, during the presentation of the Q2 earnings.

First thing to pay attention on is advertisement monetization trends during the quarter. Facebook could and should report growth in ad revenues and monetization of advertisements. The result is due to higher prices for ads, as well as lower overall number of advertisement engagements. The price-volume ratio results from increased usage on smartphones, where there are fewer ads. Ad pricing will be the key for revenue growth in the future. There should be improvements in quality, target-ability, relevance and measurement of advertisements. Expect to see growth in mobile advertising revenues.

Facebook earnings

The second area to focus your attention on is the growth in the user base. The growth rate of active users per month has rose to 3.6% in the first quarter and that trend should continue. What will be interesting to see is an update of user bases of Messenger, WhatsApp and Instagram.

Next, make sure to check the numbers for video ads, as Facebook is focusing more and more attention on videos in order to raise the growth outlook. In April 2015, the video views per day reached four billion. Just for comparison, in September 2014, that number was one billion. It will be interesting to see how the increase of video views impacts monetization.

Other platforms run by Facebook, such as Messenger, Oculus and WhatsApp contribute marginally to the overall revenue. However, that should change in the coming years and Q2 earnings report is a good place to start looking for clues.

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