Facebook will give investors and the world their first
official look at its post-IPO earning for Q2 2012 at 2pm PST on July
26th, according to a brief note posted to its investor relations page just
now. There’s been no indication of whether CEO Mark Zuckerberg will
participate in an earnings call or if more business focused execs COO
Sheryl Sandberg and CFO David Ebersman will be the ones fielding
questions.
The company pulled in $1.058 billion in Q1 2012 revenue with a net
income of $205 million. Critics will want to see both of those increase
and will likely focus on its mobile revenue. Facebook only began showing
ads on mobile at the end of February, but monetizing the medium is
believed to be the linchpin of Facebook’s future success.
The company’s share price closed at $31.095 today,
down $0.265 or 0.85% and beneath the recent peak it hit at $32.86 on
June 25th. It’s still closer to the $38 IPO price than its been for most
of the time since its May 18th public debut, though. Here’s a look at
the last earnings and revenue info it released in its S-1 prior to its
IPO.
Facebook gave potential investors a scare when its showed that
despite revenue going up 44.7% from Q1 2012, it was down 6.5% from Q4
2011. While surely influenced by the waning of holiday advertising, many
suspected this was the first sign of slowing momentum due to the shift of its user base to mobile where it wasn’t monetizing as effectively.
But recent data first published by TechCrunch showed very strong potential for Sponsored Stories ads
in the news feed to make mobile a significant revenue stream.
Facebook’s biggest advertising API partners showed users were 13 times
more likely to click mobile Sponsored Stories than its desktop ads, and
they earn the social network 11 times more each.
Facebook is purposefully throttling the ramp up the presence of these
ads as not to shock users who’ve had their mobile experience ad-free
for years. Finding the maximum number of ads it can show without
decreasing usage and engagement, or leaving sour taste in users’ mouths
will be crucial.
While their power won’t be reflected in the Q2 2012 earnings, there
are three new Facebook ads products that could make future earnings
releases a lot shinier:
- Facebook Exchange – a retargeting system that lets third-party websites drop cookies on visitors and then target them with ads on Facebook designed to get them to complete purchases they may have been considering
- Hyper-Local Ad Targeting – While not confirmed, Facebook is reportedly working on more accurate local ad targeting that could show users ads related to businesses they’re within a few hundred feet of
- Off-Site Facebook Ads – Facebook last week began showing ads on Zynga.com in a revenue sharing agreement that could eventually blossom into a lucrative ad network on more third-party sites
Taking these new developments into account, the three lead investment
banks who underwrote Facebook’s IPO, JP Morgan, Goldman Sachs, and
Morgan Stanley all issued the equivalent of a”buy” ratings this week. Other banks issued “neutral” or “hold” ratings.
Many want to see signs that Facebook will weather the transition to
mobile gracefully. If it can show as much on July 26th and the price
stays where it is now, investors might flock to Facebook. Regardless of
the financials, the sheer presence of Mark Zuckerberg on the earnings
call could reassure investors who may worry they’re far down the young
CEO’s list of priorities after he skipped several meetings with them
during the pre-IPO roadshow.
And if he does join the call, I better not hear one analyst mention of hoodies, pokes, or any of those awful Facebook puns.
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