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Facebook earnings preview: Mobile revenue, growth are the spots to watch

The Facebook logo is displayed on a computer screen in London, on Dec. 12, 2007. (Leon Neal/AFP/Getty Images)

Analysts will be eyeing the results of Facebook’s new ad revenue programs and counting its user base on the Web and on mobile when the company reports its earnings Wednesday.

Facebook is expected to report $1.4 billion in revenue. Profit estimates are around $308 million, with analysts heeding Facebook’s warning that its expenses will rise by 50 percent in 2013 as it hires engineers, develops new products and acquires new companies for technology and talent.

But the real numbers to watch have to do with ads and users. As Facebook fans shift their usage to mobile, ads on mobile devices, which are less profitable for companies, are starting to take up a bigger share of company revenues. Facebook has seen strong growth in mobile ads since it began focusing on products for smaller screens late last year. The company is expected to account for about 30 percent of all mobile display ad revenue for the year, according to an eMarketer report.

Analysts will be looking at the performance of Facebook’s new advertising products, including the company’s online ad exchange. Sterne Agee analyst Arvind Bhatia, in a note to investors ahead of the report, said he expects Facebook to report about $360 million in mobile advertising revenue, up by about 18 percent from last quarter.

Along with an increase in mobile revenues, Facebook also has to show strong growth on mobile platforms — considered to be an indication of how the network is faring with younger users. There have been concerns that, with increasing competition from services such as SnapChat and WhatsApp, Facebook is losing its cachet among the younger set.

To keep ahead, the company must continue expanding its 1 billion-strong user base, and it has taken steps to woo users on mobile devices, including redesigning its News Feed to feature larger pictures and to better highlight video posts.

The company’s latest push into mobile, incorporating a launcher called Facebook Home into the Android smartphone platform, has not shown much success so far. The feature puts Facebook at the heart of users’ phones, making it easier to keep up with the social network and to use the messaging function. But although many users have downloaded Home, the app has an average two-star rating on Google Play.

(Washington Post Co. chairman and chief executive Donald E. Graham is a member of Facebook’s board of directors.)

Related stories:

Facebook rejects ad criticizing actions of Zuckerberg political group

Facebook flexes political muscle with provision in immigration bill

Facebook makes a major foray into mobile

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Hayley Tsukayama covers consumer technology for The Washington Post.



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