Facebook Inc (NASDAQ:FB) is set to post its third quarter earnings on Wednesday, October 30th and RBC Capital analysts Mark S. Mahaney, Kevin Potterton, Andre Sequin and Brian Peak are expecting revenue to come in at $1.89 billion, which is marginally below the consensus estimate of $1.91 billion. RBC analysts expect EBITDA/Non GAAP EPS to come in at $1,034 mm/ $0.18, which is in line with Street estimates of $1,040MM/$0.18.Facebook

Ad revenues for Facebook to increase

For the third quarter, ComScore desktop traffic data came down, but the drop in time spent per visitor remained moderate. Analysts believe that users are drifting towards mobile use, citing the recent trend of increased usage on mobile. In their proprietary survey of advertising professionals, analysts noted that the results were positive, reflecting growth in ad revenue for Facebook.

The user base of Facebook Inc (NASDAQ:FB) is expanding rapidly along with user engagement, which remains high. The Facebook user base is vast with over 1 billion users, and it continues to grow over 20% year on year.

In the previous quarter, ad revenue grew 63% ex-FX, fueled primarily by mobile, which has grown to 41%, up from 14%, 23%, and 30% over the past three quarters. The social networking site has maintained its guidance for a 50% surge in operational expenditure for 2013 as it is focusing on the development of new products. Analysts feel that this will work in favor of Facebook, which is determined to reinvigorate its pace of product improvement.

Instagram, video advertizing key factors

Facebook Inc (NASDAQ:FB) is well-positioned to benefit from the monetization of Instagram and additional video advertising. However, according to the analysts, the largest social network company remains attractive even without these factors, and will see an increasing pace of ad revenue growth.

The report suggests that investors are more interested in knowing the performance of video ads on Facebook, as well as a soon-to-be-launched plan for advertising on Instagram. There is no word yet over the timing of a full-fledged release of ads, and an increase in ads will be the most important growth driver for Facebook in the near term.

“Based on intra-quarter datapoints, channel checks, and our model sensitivity work, we view Street estimates as reasonable for the quarter, with a greater likelihood of upside than downside variance,” says the report from RBC Capital.

RBC analysts have an Outperform rating on Facebook with a price target of $50.