3 Metrics Investors Need to Watch on Facebook’s Earnings Report on Wednesday

Facebook (FB) will release their Q2 2016 earnings report on Wednesday, with analysts expecting the social media giant to post exceptional results across the board. The company has been able to increase revenue by 46% over the past 12-month period leading up to Q2, and Facebook has a history of outpacing analyst expectations.

1.     Revenue Increase Year-over-Year

Analysts forecast that the social media giant will post a 48.8% – 62% year-over-year increase in revenue and non-GAAP EPS. Facebook has been able to boost their revenue by 46% in the past 12-month period, so look the company should hit the mark.

A miss would indicate a slowdown for the company amid a track record of beating analyst expectations.

2.     User Engagement

Facebook has thrived due to user engagement, and this will provide a better understanding of the company’s immediate future. It’s daily active users will demonstrate if the company’s users are relying on the social media site less despite higher earnings.

The company’s last report showed user engagement at 66% – it’s highest level yet. The engagement level in Q1 2014 was 63%, so users are remaining active and engaged on Facebook. Analysts forecast engagement to be at a minimum of 66%.

Daily active users are equally as important for investors.

Monthly active users hit 1.65 billion users in Q1. The company’s daily active users rose 16% year-over-year to 1.09 billion users. Sequential growth from Q4 2015 to Q1 2016 by 5%.

3.     Facebook’s Social App Growth

Facebook’s main website only represents a portion of the company’s active users. The company also owns WhatsApp, Messenger and Instagram. All platforms grew year-over-year in the first-quarter.

WhatsApp user growth rose from 800 million to 1 billion, Messenger users grew from 600 million to 900 million, and Instagram users grew from 300 million to 400 million users. The company has been quiet on WhatsApp growth, which may be a concern for investors, but Instagram has hit the 500-million-user milestone, while Messenger has surpassed the 1 billion mark, according to company reports.

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Daniel Simmons