Updated from July 28 to include additional analyst comments in the sixth paragraph.
NEW YORK (TheStreet) -- Facebook's (FB) - Get Report second-quarter results are poised to show the social network giant continues to attract enormous amounts of ad revenue, as advertisers rethink how they're going to reach customers.
There have been no signs of a slowdown at Facebook, SunTrust analyst Robert Peck wrote in a research note. "Based on discussions with industry participants, we believe FB could report another quarter of strong growth, driven by mobile," Peck penned in the note. "We expect 15% [quarter over quarter] ad revenue growth, above consensus at ~13%." The analyst rates Facebook a buy with a $125 price target.
Analysts surveyed by Thomson Reuters expect Facebook to earn an adjusted 47 cents a share on revenue of $3.99 billion in the second quarter. That's up from the first quarter when the Palo Alto, Calif.-based Facebook earned an adjusted 42 cents a share on $3.54 billion in revenue.
Facebook reports earnings tonight after the close of trading.
Mobile continues to be the big driver for Facebook, having accounted for 73% of the $3.32 billion in first-quarter advertising revenue, up from 59% in the year-earlier quarter. Nearly two-thirds of the 1.44 billion monthly active users access Facebook on a mobile device every day (798 million mobile daily active users) and 1.25 billion access the service at least once a month, a metric known as monthly active users, which demonstrates the moat around the service and its stickiness.
Investors will also be looking for clues to see how engaged people are on Facebook's mobile app, with recent stats suggesting continued strength. "comScore data suggests continued strong engagement in 2Q as a whole as FB's share of mobile Internet time excluding Instagram and WhatsApp in June was 24%, and its share of total U.S. Internet time including desktop was 19.3%," JPMorgan analyst Doug Anmuth wrote in a research note.
Looking ahead, it won't be just mobile that is the driver for Facebook -- it has many more levers to pull to boost engagement and revenue.
"While mobile has been the main driver of growth in the last two years, video should start moving the needle more meaningfully throughout 2015 and 2016, while Instagram, WhatsApp, Messenger, and Oculus provide further upside optionality longer term, in our view," Cantor Fitzgerald analyst Youssef Squali wrote in a research note, previewing the company's second-quarter results.
Instagram has been boosting its ad loads as it starts to turn on the revenue generating machine for parent company Facebook.
Research firm eMarketer noted that Instagram may reach $2.8 billion in mobile ad revenue by 2017 and may surpass Google (GOOG) - Get Report (GOOGL) - Get Report by that time, as advertisers flock to the service which currently has more than 300 million monthly active users.
Instagram was acquired by Facebook in 2012 for $1 billion in cash and stock, though the final amount was less due to the subsequent drop in Facebook's share price.
Investors will also be looking for clarity on Facebook's video ads, in light of the recent disclosure that they generate more than 4 billion video views per day.
"Checks remain strong pointing to uptick in video ad fill rate, further adoption of custom audiences, and onboarding of more direct marketers to DPA (which is more of a 3Q/4Q revenue catalyst)," Deutsche Bank analyst Ross Sandler wrote in a note to clients. Sandler has a buy rating and a $100 price target on Facebook.
As with all large tech companies, Facebook has seen a negative impact from volatile foreign exchange rates. In the first quarter, Chief Financial Officer Dave Wehner noted revenue was 10% lower than it would have been before the impact of currency rates. That volatility is expected, going forward. In a note previewing earnings, Oppenheimer analyst Jason Helfstein expects exchange rates to impact revenue by about 9%, "consistent with our prior model."