Facebook second-quarter earnings: What to expect
Wall Street analysts are expecting another solid quarter for Facebook (FB), which reports second-quarter earnings on Wednesday afternoon — its first full quarter following a massive data-harvesting scandal.
Analysts are generally expecting earnings-per-share of $1.71 on revenues of $13.34 billion, up from earnings-per-share of $1.32 on revenues of $9.32 billion during the same period in 2017. They’re also expecting 2.25 billion monthly active users for the quarter — up 2% from the first quarter.
“FB has reported revenue above consensus in each of the last 12 quarters, beating expectations by an average of 4% ($250-$300mn),” Goldman Sachs analyst Heather Bellini pointed out in a report published Monday. She sees potential for similar outperformance this quarter.
Weathering a scandal
Those estimates come despite one of Facebook’s biggest scandals to date. In mid-March, The New York Times reported that Cambridge Analytica, a voter-profiling company, had effectively harvested the data of up to 87 million Facebook users.
From a corporate standpoint, at least, the company weathered a rocky second quarter, which included U.S. and European politicians grilling CEO Mark Zuckerberg and an apology tour, of sorts, for the company: a series of media interviews with Zuckerberg and COO Sheryl Sandberg, as well as an ad campaign that ran in movie theaters, TV and on Facebook. Last week, Zuckerberg riled up the public again when discussing controversial misinformation on the social network. In a Recode interview, Facebook’s chief executive said that some Holocaust deniers who posted to the social network aren’t “intentionally getting it wrong.”
While Facebook is now investing heavily in safety and security, those controversies haven’t permanently hurt the company’s financial performance. Case in point: Facebook stock is up over 17% so far this year, having recovered from the pummeling it took in March and April after the Cambridge Analytica scandal.
Michael Olson, a senior analyst at Piper Jaffray, still sees significant growth potential for Facebook advertising, which continues to improve as the social network rolls out more back-end analytics tools and improvements for advertisers.
“Ad budgets shifted into Facebook have consistently exhibited strong growth and stickiness across a diverse base of customers — advertisers do what works, and Facebook works,” Olson wrote in a report published last Friday. “We expect this underlying strength to continue and manifest across Instagram, Messenger, and WhatsApp, which will benefit from advertisers being able to allocate budgets across them from a single interface.”