Facebook Inc (FB) Fourth Quarter Earnings Preview: RBC

Facebook is expected to report Q4 results after the market close on Wednesday, January 30th. Analysts are expecting Revenue/Non-GAAP EPS of $1.50B/$0.14, slightly below consensus $1.52B/$0.15. Analysts’ Revenue estimate implies (modest) Revenue growth acceleration for Facebook Inc (FB), due to both materially easing comps as well as more concentrated monetization moves by Facebook Inc (FB). RBC Capital analysts also estimate Q4 EBITDA of $828MM.

Facebook Inc (FB) Fourth Quarter Earnings Preview: RBC

Key Points To Focus On

1. Mobile Monetization – in Q3, Mobile accounted for a surprisingly high 14% of Facebook’s Advertising Revenue; analysts would expect that % to increase significantly again in Q4.

2. New Product Launches and their P&L impact – Facebook Inc (NASDAQ:FB) announced the introduction of Graph Search on January 15th and rolled out Facebook Gifts in late 2012. RBC’s analysts will look for any color on the current and potential financial impact of these launches.

3. User Growth & Engagement – User growth is slowing down close to 20% – Large Numbers Law at work. But signs of a falloff in engagement – analysts focus on the DAU/MAU ratio – could be problematic.

4. Payments Revenue stabilization – segment growth  decelerated to 13% Y/Y growth in Q3. The most important question here is what  is the sustainable growth post the Q4 catchup.

Google Inc (NASDAQ:GOOG) reported Q4 earnings on January 22nd, and core results were largely positive. RBC estimate that Google’s Core Organic Revenue grew 20% Y/Y, which should be a positive indicator for the Online Advertising segment.

RBC Capital research firm reiterate its Outperform Rating on Facebook Inc (NASDAQ:FB), despite the fact that shares have surged. Facebook shares have surged approx. 60% since the Q3 print. Key factors have been signs of reduced reliance on Zynga Inc (NASDAQ:ZNGA), Mobile monetization traction, the passing of  lock-up expirations, and a more reasonable valuation floor. The research firm continue to like Facebook Inc (NASDAQ:FB) shares and view the company as arguably the most under-levered name in the Internet sector – i.e. it’s the company that has pulled the least number of growth levers to date. Analysts think this creates the potential for significant upside from current levels.

Facebook Inc (NASDAQ:FB) shares closed Friday at $31.54.