Facebook (FB) is set to report second quarter fiscal 2018 earnings results after the closing bell Wednesday.
The company’s shares have skyrocketed some 30% since it reported Q1 financial results in April, which suggests investors have applauded the company’s efforts to repair the PR damage done amid Cambridge Analytica scandal. What’s more, the likelihood of increased U.S. government regulations, once seen as an inhibitor to growth, is now regarded as a potential catalyst towards improving the utility of the platform and boosting engagement for its ad-based business model.
Facebook stock closed Tuesday at $214.76, shortly after briefly netting yet another all-time high at $216.20. The stock is now up 21.65% year to date, thanks to three-month returns of more than 34%. As such, there are high expectation for this quarter, as analysts have steadily increased their estimates since late April, professing confidence in the company’s digital ad dominance. Investors are eager to see whether such confidence was warranted.
For the three months that ended June, the Menlo Park, Calif.-based company is expected to earn $1.72 per share on revenue of $13.36 billion. This compares to the year-ago quarter when earnings came to $1.32 per share on revenue of $9.32 billion. For the full year, ending in December, earnings are projected to rise 42.8% year over year to $7.70 per share, while full-year revenue of $56.77 billion would rise 39.6% year over year.
Numbers for the just-ended quarter would translate to year-over-year growth of 30% and 43%, respectively. The social media giant must also show that it can still grow users in the U.S. — a region that accounts for some 40% of its revenue. And its user engagement, particularly among younger consumers, is of interest given that the company has been reported to lose some of that demographic to Snapchat (SNAP).
On Wednesday, for the core Facebook platform (together with Messenger), analyst expect the company to report 2.24 billion monthly active users (MAUs), while its daily active users (DAUs) is projected to be 1.5 billion globally. While those total would represent 12% growth annually, would it be enough to keep Facebook’s momentum going? Meanwhile, in the more saturated North America, MAU growth is expected to be more muted at 2%, while DAU growth is expected to be at 1%.
Elsewhere, analysts will want to see some progress with the company’s attempts to monetize Messenger and WhatsApp, which boasts 1.3 billion-plus and 1.5 billion-plus MAUs, respectively. Native ads and in-app transactions have been among the monetization strategies mentioned. These topics, in addition to the company’s spending guidance will be closely watched. But given that some 10% of ad spending in the U.S. this year is expected to go to Facebook, I expect a strong across-the-board numbers from Facebook.