Facebook (FB) Q1 2014 Earnings Preview: Profits Continue To Grow From Mobile Advertising

 @ryanWneal
on April 22 2014 1:52 PM
  • Facebook Sandberg
    Facebook COO Sheryl Sandberg. Reuters
  • Facebook Zuckerberg
    Facebook CEO Mark Zuckerberg Reuters
  • Facebook-ad-network
    Facebook saw more than half its total advertising revenue being generated by mobile ads in the last quarter of 2013. Reuters
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Facebook Inc.’s (NASDAQ: FB) recent multibillion-dollar acquisitions may have spooked investors and triggered a stock market slide, but they’re not likely to impact the social media giant’s ability to make money in the first quarter of 2014.

The Menlo Park, Calif.-based social networking company is expected to continue its steady earnings growth when it releases a report on Wednesday after markets close, thanks to an increase in mobile users and improved tools to advertise to them.

Analysts polled by Thomson Reuters expect Facebook to show a net income of $613 million for the three-month period that ended March 31, compared to the $312 million it reported in the same period last year.  Excluding one-time events, Facebook is expected to report earnings per share of 24 cents, a 99 percent increase from the first quarter of 2013.

Facebook had some pretty big one-time events in the first three months of 2014, including the $19 billion purchase of WhatsApp in February and the $2 billion purchase of Oculus VR in March. Neither of those deals finalized, so they are unlikely to impact Facebook’s earnings.

In all, Facebook brought in $2.4 billion in revenue in the first quarter, a 61 percent increase from the same period last year.

Facebook will host a conference call to discuss the report at 5:00 p.m. EDT, and will live stream the call on its investor relations page.

Mobile ads will likely be a major focus, and Facebook has made a number of moves to encourage mobile user growth. Facebook released a new app, Paper, in February to provide a new mobile-optimized experience of Facebook. The company has also encouraged users to download the Messenger app to use Facebook chat.

Mobile ads made up more than 50 percent of Facebook’s total revenue in its last earnings report, and will likely account for more in this one.

Not only are there more people using mobile Facebook, but brands find it to be a more effective platform for advertising.  Digital marketing agency 3Q Digital said that brands have increased their mobile advertising budget by 45 percent, and new features make it easier target users on mobile devices.

“It’s safe to say we’ve moved beyond the ‘Year of Mobile’ to the ‘Decade of Mobile’ and can continue to place bets on the next targeting craze,” Dayna Moon, the senior director of social at 3Q Digital, told International Business Times. Moon named Mobile App Install Ads as a favorite new tool, as well as the ability to target mobile Facebook users who “look like” their fans.

Adobe Systems Inc. noted in a study that Facebook’s “revenue per visit” had increased year-over-year, and also found that auto-play video ads have had a major impact on engagement with video ads. 

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