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What to expect in Facebook's earnings call today

Sharon Gaudin | July 24, 2014
Analysts predict a focus on mobile and efforts to ignore that controversial mood experiment.

With Facebook set to release its second quarter earnings this afternoon, it's a safe bet company execs will talk about the on-going push into areas like mobile and user growth.

Analysts, meanwhile, will be watching for any sign of weakness.

"When you're the company that defines and leads an entire category, like Facebook does with social networking, every earnings announcement is important," said Dan Olds, an analyst with The Gabriel Consulting Group. "Analysts will pore over every sentence and every number and closely parse every word company officials use when explaining Facebook's results on their earnings call."

Facebook's earnings call, which will be webcast, begins at 5 p.m. ET (2 p.m. PT.

Although the social network's user base is growing more slowly — particularly among teenage users — analysts still expect positive numbers when it comes to Facebook's mobile base and its ad revenue.

The world's largest social network with more than 1 billion users also is focused on its international markets, where most of its growth will have to come from in the next several years.

"Facebook does need to look strong, mainly because they have done well and are expected to do well again this quarter," said Brian Blau, an analyst with Gartner, Inc. "Revenues and engagement are the key metrics that I usually look for. Now that Facebook has established itself on mobile, I'll be looking for how far they can penetrate globally and how well they can attract ad business outside of their traditional strong regions."

The company has exceeded Wall Street's expectations for eight quarters in a row. Today, we'll find out whether it can make it nine.

Another focus will be on Facebook's growth. While it's easily the largest social network, eclipsing competitors like Google+ and Twitter, can the company maintain historically astronomical growth or will younger users forgo the network for hipper sites and apps like Instagram and Snapchat?

"In Facebook's last quarterly financial earnings report, the CFO stated that we would start to see some softening in overall growth, so I'm now wondering how much this growth slowdown will impact their bottom line, if at all," said Blau. "Also I'll be looking for data on how their new businesses — Whatsapp and Oculus — are doing, and will also watch out for comments on how well their developer platform is doing, as that is an indication of partner engagement."

What we mostly likely will not hear Facebook executives address is the recent hubbub about how the company allowed about 700,000 of its users to be the subject of an emotional experiment. The week-long study took place in 2012 and tested the notion that happy or sad posts, photos and comments would affect a user's own emotions.

 

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