Following a tumultuous 2018, Facebook's (FB) - Get Facebook, Inc. Class A Report stock has roared back with a vengeance in 2019, and is up about 50% on the year heading into the social media giant's Q2 report.
To keep its momentum going, Facebook might need to both deliver another sales and earnings beat and calm lingering worries about usage trends for the company's core app in its most valuable markets. On average, analysts polled by FactSet expect Facebook to report Q2 revenue of $16.5 billion (up 25% annually) and GAAP EPS of $1.87 (up 8%).
In addition to Facebook's revenue and EPS numbers, here are some things to keep an eye on as Mark Zuckerberg's firm reports after the bell on Wednesday and hosts an earnings call at 5 P.M. Eastern Time.
1. Revenue Growth and Spending Guidance
Facebook doesn't provide formal revenue guidance. However, CFO Dave Wehner does usually provide some comments on the call about how Facebook sees revenue growth trending in the near-term. On April's Q1 call, Wehner reiterated that Facebook expects its annual revenue growth, which clocked in at 26% in Q2 and 30% in Q1, to continue decelerating over the course of 2019.
Wehner also shares formal cost/expense and capital spending guidance. In April, he guided for Facebook's GAAP costs and expenses to rise 47% to 55% this year, and for its capex to be in a range of $17 billion to $19 billion (up from a 2018 level of $13.9 billion). With the FTC having recently hit Facebook with a $5 billion fine, and with April's cost/expense guidance only taking a $3 billion fine into account, it wouldn't be surprising to see the guidance hiked.
2. MAUs and DAUs
In Q1, monthly active users (MAUs) and daily active users (DAUs) for Facebook's core service and Messenger were both up 8% annually. For Q2, the consensus is for both user counts to once more be up 8%, with MAUs coming in at 2.41 billion and DAUs at 1.59 billion.
In addition to the global MAU/DAU numbers, keep an eye on the figures Facebook shares for North America and Europe, which respectively accounted for 48% and 24% of its Q1 revenue. The consensus is for North American DAUs to be up just 1% to 187 million, and for European DAUs to be up 3% to 287 million. Anecdotally, this North American user has seen Facebook get more aggressive lately about using mobile notifications to try and drive daily app usage.
Also worth watching: The user counts Facebook shares for its entire "family" of services (Instagram and WhatsApp included). In April, the company said it estimated about 2.7 billion people use at least one of its services each month, and that more than 2.1 billion do so each day on average.
3. Ad Impressions and Prices
In recent quarters, Facebook has been registering strong ad impression growth, thanks in large part to growing ad impressions on Instagram Stories and Instagram's main feed. On the flip side, the shift in Facebook's ad mix towards Instagram and stories services has pressured its average ad price.
With Facebook moving aggressively as of late to monetize Instagram in particular and its stories services in general, there's a good chance this trend continued in Q2. Also -- though he forecast this will be more of a problem in the second half of the year -- Wehner indicated Facebook has begun seeing "ad targeting-related headwinds" following the arrival of new privacy regulations, Facebook's rollout of new data-sharing controls and efforts by mobile platforms to restrict data-collection.
4. Stories Commentary
In April, COO Sheryl Sandberg disclosed that Facebook's stories services now claimed over 3 million advertisers, up from over 2 million as of January. Mark Zuckerberg, for his part, disclosed that all three of Facebook's stories platforms -- WhatsApp Status, Instagram Stories and Facebook Stories -- now have over 500 million DAUs.
With Facebook making an all-out push to grow both stories usage and monetization, the company could share some new stats on the Q2 call, as well as share more details about how it's working to get marketers who have been buying Facebook and Instagram feed ads to embrace stories ads.
5. Libra Commentary
Zuckerberg likes to use Facebook's earnings calls to do some PR work. In the past, he has used his prepared remarks to highlight Facebook's efforts in areas such as improving user privacy, moderating content and cracking down on election interference.
In light of this, it wouldn't be surprising to see Zuck spend a bit of time defending the recently-announced Libra cryptocurrency, which Facebook has argued will enable much lower fees for many financial transactions and provide financial services to consumers lacking bank accounts and credit cards. Facebook blockchain chief David Marcus was recently grilled in Congressional hearings about Libra, and many politicians and regulators in other countries have also voiced concerns about how the cryptocurrency will function.
6. Stock Buybacks
Facebook spent a modest $613 million on stock repurchases in Q1, after having spent $3.5 billion on them in Q4 2018. With the company having added $9 billion to its buyback authorization in December, it had ample funds to step up its buyback activity if it wished.