Facebook Inc (FB): Progess in Mobile Monetization Continues

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Facebook Inc (NASDAQ:FB) will be releasing its financial numbers for the March quarter on April 22, after the market closes, followed by a Conference call on the same day.

One of the factors to help Facebook Inc (NASDAQ:FB) enjoy the leading position in social media was its continuous innovation. This comes in the form of fresh apps time and again that the users like. This has undoubtedly given them a dominant position in the social network arena. As a result, the company has been able to monetize its position better than its peers.

What To Expect For Earnings

The company has guided higher capital expenditures in 2015 noted that it  expects substantial spending on products, infrastructure and global expansion. In the longer term gross margins should continue to improve reflecting progress in mobile advertising. 

Facebook Inc (NASDAQ:FB) has also been clearing the doubts and skeptics on the sustainability of its business models to generate continuous growth in revenue. The company has also expanded by acquisition in the past through WhatsApp and Instagram. Now it will de-link messenger from the main page for the benefit of the users.

This apart, the company also allowed third-party developers to establish apps, which could be activated through its platform and the ‘like’ button. The diversified easy access to features has given the social networking company a big acceptance among people. At the end of the year 2014, it had solid daily active users of 890 million. During the fourth quarter, it generated free cash flow of $1.07 billion, while its cash and cash equivalents stood at $11.20 billion.

Facebook Inc (NASDAQ:FB) has also reportedly discussed several proposals during its F8 developer conference held in March. This included a focus on video content that will provide a tough fight to Google Inc (NASDAQ:GOOGL)’s YouTube.

Mobile Factor

Facebook’s mobile revenues increased from very low levels in the third quarter of 2012 to $2.5 billion in the fourth quarter of 2014.

Whatever doubts there may be about the company’s ability to serve in the mobile space have been cleared long ago and the company has been witnessing growth in it. For instance, mobile daily active users increased 34%, to 745 million, in December last year. Similarly, mobile monthly active users advanced 26% to 1.19 billion at the end of December.

Advertising revenue from mobile witnessed a 69% growth in the December quarter. The growth rate was higher than about 53% witnessed in the preceding year quarter. Facebook Inc (NASDAQ:FB) is likely to extend its hold in the mobile space.

Street Expectations

Street analysts are predicting the social networking site to earn 40 cents a share and $3.57 billion in revenue. In the previous year first quarter, it delivered earnings of 34 cents a share and $2.50 billion revenue. This means that analysts are projecting 17.7% EPS growth on a 42.5% uptick in revenue. During the last four quarters, Facebook Inc (NASDAQ:FB)’s earnings have surpassed the Street predictions by between 7.5% and 41.7%.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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