Facebook Inc (NASDAQ:FB) will report its second-quarter results on July 23th after the close of markets. In a report dated July 16, 2014, Goldman Sachs analysts Heather Bellini, Heath P. Terry and Justin Rowley, expect revenue to be of $2.80 billion and non-GAAP Earnings per Share of $0.30.The revenue estimate of Goldman is in-line with consensus whereas EPS estimate is $0.02 below.

Facebook Stock

Based on the field work, analysts expect “potential upside risk to consensus this quarter on both the top and bottom line.”

Facebook must focus on early-stage mobile advertisers

Goldman Sachs analysts expect 16% quarter-to-quarter CPMs growth to $0.49 compared to 118% year-on-year growth last quarter. Ad-impressions for Facebook are projected to decline by 20% year-on-year compared to 17%, in the first quarter.

Analysts expect a sequential growth in CPMs with “varying degree of magnitude,” where some checks show CPMs “slightly up” sequentially while some suggest pricing up over 60% quarter-to-quarter. The checks indicate a momentum, which analysts believe could compensate for any weakness witnessed in the previous quarters.

Based on checks, analysts conclude that the ad-budgets for Facebook will grow significantly with a growth in the number of advertisers. Much against the consensus of narrowing ad revenue, analysts expect an outperformance. Analysts believe that deepening ties with the existing advertising is not important compared to expanding relationship with still early-stage mobile advertisers, which is much more important.

No material contribution from WhatsApp, Oculus in 2014

Facebook first -quarter acquisition announcement of WhatsApp for $19 Billion and Oculus VR for $2 Billion is yet to be closed. As per the social networker, the Oculus deal will be completely closed in the second-quarter of 2014 while WhatsApp deal in 2014. Analysts do not see any material contribution from the deal in 2014, but they expect an increase in operating expenses due to the deals. During the first-quarter earnings call, Facebook maintained its non-GAAP operating expense guidance of 40-45% year on year growth, which excludes the acquisitions.

Analysts at Goldman Sachs reiterate Buy rating on Facebook as they expect the social networker to benefit immensely from the shift to mobile. Limiting ad-load is a wise strategy from Facebook, in terms of improving user-experience, believes analysts. Also, rising CPMs would keep on pushing-up the consensus forecasts.