After starting the year with data scandals and trust issues, Facebook Inc. (FB - Get Report) will be reporting its quarterly earnings on Wednesday after the market close.

The social network has been under fire for its lack of transparency and data privacy policies after the Cambridge Analytica scandal over the past few weeks, and Deutsche Bank analyst Lloyd Walmsley said traditional financial metrics will "take a back seat" to metrics related to user growth, advertising and the impact of new privacy regulations.

TheStreet will be hosting a live blog covering Facebook's first-quarter earnings at 4 p.m. ET. Please check our home page for more details.

Analysts polled by FactSet estimate that Facebook's first-quarter GAAP earnings per share will be $1.35, with sales of $11.4 billion. Here are three key things that analysts will be watching for during the company's earnings announcement:

1. User engagement and growth

Analysts estimate that Facebook will report about 1.45 billion daily active users (DAUs), compared to last quarter's average of 1.4 billion DAUs. When the company reported earnings last quarter, CEO Mark Zuckerberg said in a news release that news feed changes meant to encourage "meaningful connections" and show users fewer viral videos led to reduced engagement on the social media platform by roughly 5%, or 50 million hours every day. 

Jefferies analyst Brent Thill wrote in a research note that new offerings such as Facebook Watch, the platform's on-demand video service which was introduced in August 2017, will increase time spent on the platform and drive engagement higher, "albeit with a lower margin profile in the near term."

GBH analyst Daniel Ives wrote that Facebook's Instagram is the company's "golden jewel," as the social media platform has avoided much of Facebook's public scrutiny while boasting monetization and ad growth potential.

"Combined with a rapidly growing user base, Instagram continues to attract additional attention from advertisers and have growth drivers of both pricing and impression growth," Thill wrote.

2. GDPR compliance

The European Union's new privacy law, called the General Data Privacy Regulation, will go into effect on May 25 and will likely be an overhang on the stock during the second quarter, according to Thill.

"Regulators are likely targeting big American technology companies like Facebook & Google in the first wave of reviewing compliance with the regulation," Thill wrote.

Jefferies has raised its 2018 estimate for annual growth in Facebook's operating expenses to 50%, because Thill anticipates that the company will follow through "with significant hiring of employees (and consultants) to focus on data privacy and security" that will affect margins in the near future. 

Though Zuckerberg alleviated some analysts' concerns within the U.S. after testifying before Congress about the data misuse scandal, lawmakers abroad are still unsatisfied. Facebook's chief technology officer, Mike Schroepfer, will be appearing before a U.K. Parliament committee Thursday morning to address privacy and data security concerns.

3. ARPU and advertising revenue

Thill said that that the biggest risk posed by the Cambridge Analytica scandal is to Facebook's average revenue per user (ARPU) as the company makes changes to its privacy and ad policies. But Thill does not think GDPR will impact Facebook's ability to deliver ads on the platform going forward.

Facebook's global ARPU in the fourth quarter of 2017 was $6.18, but analysts polled by FactSet expect that to drop to $5.35 in the first quarter. Overall, they estimate advertising revenue will be about $11.3 billion for the first quarter.

"We picked up minimal advertising disruption thus far in the field, however Facebook still faces a long winding road ahead to hand hold advertisers, users, and investors through this choppy period ahead," Ives wrote.

Walmsley said there is potential for additional regulation to limit ad targeting, but Facebook stands to ride out potential impacts better than smaller players in the digital advertising space. 

Facebook shares were down 1.23% to $157.74 during morning trading Wednesday. Since the beginning of the year, the stock has fallen 9.5%.

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