Facebook Inc (NASDAQ:FB) is scheduled to announce its first quarter results on May 1. Raymond James said in its latest research report that it expects the company’s earnings to beat consensus estimates due to solid monetization driven by new ad formats and increasing ad load.

Facebook Earnings

Raymond James estimates Facebook Inc (NASDAQ:FB)’s Q1 revenues to grow 39% YoY to $1.47 billion, which is slightly higher than the Wall Street consensus of $1.44 billion. It expects advertising revenues to rise 46% during the quarter to $1.27 billion, above the consensus estimate of $1.24 billion. Raymond James said other revenues are expected to rise 5% to $195.6 billion. It expects mobile advertising revenues to rise 6% QoQ to $324 million, and desktop ad revenues are expected to increase 9% YoY to $948 million. Raymond James expects Facebook to report non-GAAP earnings per share of 13 cents versus the consensus of 12 cents.

Raymond James analyst Aaron Kessler said his checks suggest that e-commerce advertisers have increased spending in the first quarter, which should reflect in the company’s earnings. That is surprising given first quarter advertising expenditure is seasonally slower. Advertisers are lured by increased mobile adoption and newer ad units like page posts and mobile app installs.

Analysts believe that the rising advertiser adoption for new ad formats and increasing ad loads would result into strong advertising growth in Q1. During its Q4 conference call, Facebook said that it had limited the quantity of ads to maintain a higher user experience. But Raymond James checks suggest that the company has increased its ad loads in the first quarter.

Over the last year, Facebook Inc (NASDAQ:FB) launched eight new major ad units. Of them, App-Install ads, Page Posts and Facebook Ad-Exchange have witnessed strong demands. There are also reports that the Menlo Park, California-based company is planning to launch video ads this summer.

For the first quarter, mobile advertising revenue is expected to rise sharply amid increased smartphone usage to $324 million, accounting for 25.5% of Facebook Inc (NASDAQ:FB)’s estimated Q1 ad revenues.

Raymond James has a Strong Buy rating on the stock with $37 price target. Facebook Inc (NASDAQ:FB) shares were up 2.68% to $26.84 at 11:29 AM EDT.