Analyst: Expect Facebook to Be Buoyed by Mobile Ads
The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
Facebook Inc. (NASDAQ:FB) will report Q3:13 (ending September) results after market close on Wednesday and host a conference call at 2 p.m. PDT (dial-in: 866-554-3009, conf. ID: 71787026; webcast: http://investor.fb.com/results.cfm).
We expect Q3 results above consensus. We expect revenue of $1.94 billion and EPS of 20 cents versus consensus of $1.91 billion and 18 cents; Facebook did not provide guidance. We expect top-line growth to be driven by mobile ads (up to roughly $656 million in Q2:13 from just over $300 million in Q4:12 and $0 in Q2:12), and increasing Custom Audiences and News Feed ads. Our Q3 mobile ad revenue estimate of $753 million is likely too conservative given recent growth. The EPS beat will be the result of opex growth that lags top-line growth.
We do not expect Facebook to adjust limited FY:13 guidance. Management expects FY non-GAAP opex to increase by around 50 percent. By setting the spending bar so high, the company could cut spending should EPS be tracking below expectations.