Facebook Inc (NASDAQ:FB) is scheduled to report Q2 2013 results on July 24 after the close. Analysts are modeling total revenue and non-GAAP EPS of $1.635bn and $0.14, respectively, compared with consensus of $1.614bn and $0.14. Based on analysts field work, they see potential upside risk to their estimates this quarter.


Facebook’s Revenue

Analysts at Goldman Sachs are modeling total ad revenue of $1.42bn (+43% yoy and +14% qoq), compared with consensus of $1.40bn, while they are forecasting payment revenue of $216mn (+13% yoy and +1% qoq), essentially in line with the Street at $217mn. Analysts at the firm are modeling mobile ad revenue of $425mn, up 13% qoq and representing 30% of total ad revenue for Q2 2013, similar to last quarter. This compares to consensus of roughly $443mn in Q2 2013 mobile revenue, up 18% qoq and representing 32% of the total. With many of analysts’ contacts reporting mobile came in at 35% of client spend in the quarter and a few even seeing 40%, they see potential upside risk to both mobile estimate and consensus.

Facebook’s Performance

Analysts’ contacts again reported meaningful sequential growth in spend with Facebook Inc (NASDAQ:FB), with performance of the entire Facebook Inc (NASDAQ:FB) platform beginning to rival that of search for some of their contacts’ clients. For many, App Install ads were a key driver of mobile performance, with custom audiences and FBX continuing to deliver improved performance and to drive incremental spend. For the desktop business (which consists of news feed ads as well as right hand rail), Goldman Sachs’ analysts expect revenues of $994mn, up 14% qoq and up 1% yoy. Using the consensus mobile number they infer the Street forecast for desktop to be approximately $955mn, representing qoq growth of 9% and yoy growth of –3%.

On the CPM front analysts are modeling CPMs for Q2 2013 to grow 4% yoy (+16% qoq) to $0.23. Their estimated desktop revenue of $994mn and impressions of 6,190bn implies CPMs of just $0.16, down 25% yoy, which compares to their estimate of down 27% yoy last quarter. Looking out to Q3 2013, analysts at the research firm are modeling total ad revenue to grow 7% qoq to $1.51bn, +39% yoy. This compares to consensus of +6% qoq at $1.48bn, +36% yoy, and to Q3 2012 at +9% qoq.

Facebook’s Mobile Ad Revolution

Analysts at Goldman continue to believe Facebook Inc (NASDAQ:FB) is at the center of the mobile ad revolution. While they still expect engagement growth to remain at somewhat muted levels given its 1bn+ users, analysts see significant opportunity for FB to drive higher pricing on its ad units as brand and direct marketers alike take advantage of its broad reach and precise targeting. At around $25, Facebook Inc (NASDAQ:FB) trades at 30X firm’s 2014 FCF estimate of $2.26bn, and at 13X their 2014 non-GAAP EBITDA estimates.