Here's what investors want to hear about from Facebook today
Wall Street is expecting strong revenue growth, despite potential offsets by foreign exchange fluctuations, and an increase in the percentage of its ad revenue that Facebook makes from mobile (about 73% last quarter).
And the company's fast-growing video business, which has cranked up the competition with rival YouTube, is sure to be in the spotlight.
Other items on investors' radars this quarter include: the monetization of Facebook's Instagram photo-sharing app, an update on its Oculus virtual reality group and new numbers on Facebook's Atlas ad network.
Video has become an increasingly important money-maker for Internet companies, with Google's YouTube video site standing out as the star of the company's second quarter earnings report.
Video Fight
Facebook is emerging as the biggest threat to YouTube. Facebook revealed in Q1 that people view its videos more than 4 billion times per day, a staggering number that has been underscored in importance by Facebook's recent video ad efforts, like a new video ad buying format and a revenue-sharing experiment that puts it in closer competition with YouTube.
"The growth of native video should not be understated," CEO of social media analytics firm Socialbakers, Jan Rezab, told Business Insider. "We're continuing to see huge adoption and higher investment into native video by brands and other content creators. Video is sure to be an increasingly important part of Facebook's growth."
The automated advertising company Nanigans reported that 16% of the ad dollars its customers spent on Facebook went to video content this quarter, up from 13% in Q1, equating a 23% quarter-over-quarter share increase. Most of Nanigans customers are direct response focused - meaning they're trying to drive a specific action, like an install or a purchase -which is particularly interesting given that video ads have traditionally been attractive to company's trying to raise brand awareness.
"This is thanks to Facebook releasing units like the video-enabled mobile app install ad, which have clear, embedded calls to action that these advertisers need to meet their goals," AndrewWaber of Naningans tells Business Insider. "The fact that mobile ad spending growth is accelerating even faster than the overall number is a testament to how video ads have performed in that format."
Instagram update
While Facebook doesn't usually break out individual revenue from Instagram, the company could provide more color on the business as it's been a news-filled quarter. Instagram rolled out a major app update and announced plans to open up all of Facebook's ad targeting tools to the photo sharing service. That development, coupled with Instagram's new ad format that lets advertisers create slideshows of multiple photos, with links, has eMarketer predicting that Instagram could make more net mobile display ad revenue than either Twitter or Google by 2017.
We'll also be looking for news on Facebook's rapidly-scaling ad network, Atlas, as well as the mobile ad network which it opened to all advertisers back in October. Most of Facebook's ad revenue comes from its site alone, but its future growth is often pinned on its ability to sell ads off-site.
Analysts want some update that growth there has been significant.
"Key catalysts such as video ads, Instagram monetization, and off-platform monetization should become more meaningful growth drivers for the company," Stifel analysts write in a pre-earnings note.
Other interesting topics of note for today's earnings:
Facebook recently started experimenting with ecommerce. It's letting certain stores sell their products directly through the social network via a "buy" button on their Pages.
Facebook also changed the way it charges advertisers this quarter, allowing them to choose to pay only when a user actually clicks a link to their brand's website or app. Although this changed occurred after the quarter technically ended, we'll be hoping for some color on the move during the call.