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3 Key Estimates for Facebook's Q1 Earnings Report

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Shares of Facebook (FB - Free Report) closed slightly lower on Monday, just two trading periods before the controversial social media behemoth is scheduled to release its Q1 earnings report. The stock has rebounded a bit from its post-scandal lows, but as investors gear up for its latest report, the company finds itself at what could be a major turning point.

Facebook has experience considerable volatility since reports of the Cambridge Analytica story emerged in late March. Since then, the incident has ballooned to become a global conversation about personal privacy on the internet, and Facebook CEO Mark Zuckerberg was called to answer questions in front of Congress related to his company’s business model.

The social media leader is now faced with a tarnished reputation and the possibility of increased regulatory pressure on the horizon. It will also likely have to spend more cash to vet content and protect data.

But up to this point, Facebook has overcome whatever challenges it has faced by continuing to innovate and expand. So what should investors expect from the company this quarter? Well, our latest consensus estimates are calling for Facebook to post adjusted earnings of $1.36 per share and total revenue of $11.46 billion in the soon-to-be-reported quarter.

These results would represent impressive year-over-year growth rates of 10.6% and 42.7%, respectively. However, our consensus estimate for earnings has been trending downward recently, and a closer look at other key estimates reveals that Facebook’s primary growth catalysts might finally be slowing down.

Key Report Items

It is entirely possible that Facebook’s post-earnings momentum is based on its performance in what investors have determined to be its key report items, especially if the stock hopes to shake off concerns about the data privacy scandal.

To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

Of course, one of the most compelling figures in any Facebook report is the company’s monthly active users (MAUs) total. According to our latest consensus estimates, Facebook is expected to report that it finished the quarter with 2.196 billion worldwide MAUs. That would represent growth of about 13.4% on a year-over-year basis—slightly behind the 14.5% growth witnessed last quarter.

Another thing that investors will likely hone in on is Facebook’s average revenue per user (ARPU) figure. This gives investors a better idea of how well Facebook is capitalizing on each individual user, and steady growth in this category will become even more important as user growth eventually plateaus.

Our consensus estimates are calling for Facebook to report ARPU of $5.29 per share for the quarter. That result would represent year-over-year growth of 25% and would be down significantly from the $6.18 witnessed in the previous quarter. It would also lag the 28% growth rate seen in the previous quarter.

Finally, we should also highlight growth in Facebook’s Asia-Pacific region, which has been one of its key expansion catalysts recently. Based on our most recent consensus estimates, we expect that Facebook will report Asia-Pacific revenues of $2.02 billion, up about 46.4% from the year-ago period. That is a notably slower growth rate than the 52.6% expansion seen in Q4.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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