Can mobile help Facebook keep up growth?

Facebook shares have been on a tear, up 40 percent over the past 12 months on growth across all its metrics. But that growth is projected to slow way down in light of tough comparisons and a steep jump in expenses.

On Wednesday afternoon Facebook will be under pressure to continue its streak, and answer key investor questions about mobile, video, international monetization and its plans for other apps. These key growth areas are in particular focus in light of Facebook’s warning last quarter that it expects expenses to rise between 50 percent and 70 percent this year.

Earnings Projections Breakdown

Jason Alden | Bloomberg | Getty Images

Jason Alden | Bloomberg | Getty Images

Facebook revenue is expected to grow 46 percent to $3.773 billion, up from $2.585 billion a year ago, while earnings per share growth is expected to slow to just 58 percent, to 48 cents in Q4, according to Thomson.

Analysts expect Facebook to report 885 million daily active users, and 1.38 billion monthly active users, with 1.16 billion of those on mobile devices, according to StreetAccount. Daily active users are projected to top 918 million in Q1 while monthly active users are projected to hit 1.43 billion.

The key indicator of just how well Facebook is turning its popularity into profits is average revenue per user, which StreetAccount reports analysts expect to hit $2.73 in Q4 and at $2.51 next quarter.

Mobile

There’s no question that CEO Mark Zuckerberg has successfully turned Facebook into a mobile first company.

Following last quarter’s 114 percent mobile ad growth, analysts expect mobile to more than double yet again. In Q4 2013, mobile was responsible for just over half of all ad dollars. In this most recent quarter, mobile ads are expected to comprise at least two-thirds of advertising revenue.

One question: Will we see mobile daily active users account for even more than 80 percent of the daily active user base, which is where mobile stood at the end of Q3.

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RBC Capital markets analyst Mark Mahaney praises Facebook as one of the most “underlevered” Internet companies, saying it has “effectively addressed one of the most significant overhangs from its IPO days, the lack of mobile monetization.”

Video

With more than 1 billion video views delivered to Facebook’s core platform every day, there’s no question the company is starting to make progress in its competition with Google. The social network has made a big push to persuade content creators and advertisers to post video with its own player, instead of with YouTube, as a way to grow ad revenue and engagement. So, how much money are these video ads bringing in?

Stern Agee’s Arvind Bhatia is bullish. “We estimate video ads could represent as much as 5 percent to 10 percent of Facebook’s advertising dollars near term, depending on how aggressively Facebook rolls them out. Ultimately, video ads will help Facebook more directly go after the $200 billion worldwide TV advertising market. We note that in the U.S. alone roughly 90 million to 100 million people are using Facebook during prime-time TV hours.”

International

Facebook’s revenue-per-user from emerging markets dramatically lags that from users has long lagged the money it makes from users in the US and Europe. But now that India is on track to overtake the US as Facebook’s top mobile audience in the next few years, many analysts are hoping Facebook will figure out how to start to close that gap.

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Another question is how F/X exposure will impact results. MKM analyst Rob Sanderson warns that the company’s international exposure is likely close to 60%, and F/X will “create a meaningful growth headwind.”

Other apps

Now that Instagram has over 300 million users and has been carefully rolling out ads for a few months now, will Facebook reveal just how much money it’s bringing in?

And with WhatsApp topping 700 million users and Messenger 500 million, will Facebook reveal its plans to make money from that massive user base?

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