Will Facebook's Earnings Reveal Mobile Advertising As Greatest Source Of Growth?
Facebook Inc (NASDAQ: FB) is scheduled to report its quarterly earnings post the closing bell on Wednesday.
Scott Kessler, S&P Capital IQ analyst, was on CNBC recently to discuss what kind of result investors should expect from the company.
Looking For Expenses
"I think people are understandably focused on Facebook as a growth company, so we want to see continuing indications that the company is capitalizing on its opportunities," Kessler said.
"I think secondly, the company has been speaking consistently about higher expenses and how those will restrain margins. So, we want to see kind of how those expenses come out and what they speak about in terms of what the rest of 2015 might hold."
Kessler was asked about the advertising revenue the company is poised to generate. He replied, "At this point, it is fair to say that advertising is really is where Facebook generates not only a majority of its revenues, but a majority of its growth.
"In fact, you can go a little bit deeper and really say that at this point, it's mobile advertising that is really the single most important kind of component to the overall mix of Facebook's revenues and earnings. And so that's something that people are going to be looking at very closely."
Kessler continued, "The metric that the company articulates on a quarterly basis is the percentage of advertising revenues coming from mobile. That's been continuing to trend higher. We look for something in the ballpark of, say, two thirds to maybe up to three quarters of revenue – advertising revenue – from mobile," Kessler concluded.
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