Facebook Inc (NASDAQ:FB) is set to announce its first quarter results on Wednesday, April 23 after the market close. In the past few quarters, the company has proved its mettle in mobile advertising. Wall Street expects the social networking giant to report $2.36 billion in revenues and $0.24 per share in non-GAAP earnings.

Facebook Ad Revenue

 

Facebook’s Q1 revenues to jump 56.6%

Cantor Fitzgerald analysts Youssef Squali and Naved Khan said in a research note that they expect Q1 revenues to jump 56.6% YoY to $2.28 billion, and earnings to come at $1.25 billion with 54.7% margins. The research firm says Facebook Inc (NASDAQ:FB)’s monthly active users (MAUs) are likely to increase by 16% to 1.288 billion. However, Cantor Fitzgerald expects the social networking giant’s advertising revenue to go up by 64.5% to $2.04 billion in the first quarter, decelerating from the 76.4% growth witnessed in Q4 of 2013.

Squali and Khan believe that continued proliferation of smartphones and increasing usage of mobile will help Facebook Inc (NASDAQ:FB)’s revenues. They expect mobile ad revenue to account for 60% of its total Q1 revenues, up from just 3.5% in Q2 of 2012. Revenues from payments and other fees are expected to grow just 10.5% YoY to $235.3 million. Cantor Fitzgerald has a Buy rating on the stock with $67 price target.

Mobile is driving up Facebook’s user engagement

In a separate note, RBC Capital Markets analysts Mark S. Mahaney and Rohit Kulkarni said that Facebook Inc (NASDAQ:FB) will easily beat the Street estimates. However, they have a lower than consensus revenue estimate of $2.28 billion. RBC Capital Markets expects the Menlo Park-based company’s non-GAAP earnings to come at $1.32 billion or $0.23 per share. The research firm has an Outperform rating on the stock with a $76 price target.

Facebook

The comScore statistics show that Facebook Inc (NASDAQ:FB)’s monthly mobile users grew 24% in the first two months of this year, compared to 19% growth in the fourth quarter of 2013. Moreover, user engagement, which is measured by minutes/visitor, grew 28% YoY through January and February. That’s a positive indicator. Increasing use of mobile is driving up overall user growth and engagement.

Facebook Traffic

RBC Capital Markets expects Facebook Inc (NASDAQ:FB)’s advertising revenue to surge 64% in the first quarter. Mobile revenues grew 300% YoY in Q4 2013, and accounted for 53% of the company’s total ad revenue. The research firm says Instagram monetization and Auto-play video ads will be key catalysts in future growth. Also, Facebook’s focus on ad quality should lead to effective pricing and increased ads over time.

Facebook Inc (NASDAQ:FB) shares tanked 1.40% to $62.15 at 11:43 AM EDT on Wednesday.