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Will International User Growth Aid Facebook's (FB) Q2 Earnings?

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Facebook’s FB growing popularity in international markets, particularly Asia, is expected to have expanded its user base in second-quarter 2021, the earnings results of which is set to be reported on Jul 28.

The Zacks Consensus Estimate for Monthly Active Users (“MAU”) in Asia stands at 1.255 billion, indicating 10% growth from the year-ago quarter’s reported figure.

The consensus mark for MAU in Europe is pegged at 424 million, suggesting 3.4% growth from the year-ago quarter’s reported figure.

The consensus mark for Rest of World’s MAU is pegged at 967 million, indicating 8.4% growth from the year-ago quarter’s reported figure.

Further, strength in user base is expected to reflect on advertising revenue growth amid an improving ad-spending environment.

Click here to know how the company’s overall second-quarter performance is likely to be.

E-commerce Initiatives to Aid Revenue Growth

Facebook’s monthly active user base of more than 2.853 billion (including its Family of services — Instagram, WhatsApp and Messenger) presents a large canvas for advertisers and makes the platform highly attractive.

Moreover, a recovery in ad demand on an improving spending scenario and momentum in Facebook for Business is expected to have driven the top line. Facebook Business Suite enables businesses to post on Facebook and Instagram at the same time as well as manage and receive messages, notifications and alerts in one place.

Facebook, Inc. Revenue (TTM)

Facebook, Inc. Revenue (TTM)
Facebook, Inc. Revenue (TTM)

Facebook, Inc. revenue-ttm | Facebook, Inc. Quote

Facebook is expected to have benefited from its e-commerce endeavors in the to-be-reported quarter. Initiatives to build tools and functionalities for small- and medium-sized businesses (SMBs) are helping them provide e-commerce services to users.

Markedly, SMBs have become a revenue-generating source for the social-media giant, driven by coronavirus-induced shift in consumer demand for e-commerce services.

In February, this Zacks Rank #3 (Hold) company launched Facebook Shop in the U.K. and Canada, expanding its global footprint. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other new Shops tools rolled out included new design layouts, real-time collection previews, automated shop creation for new sellers and analytics insights in Commerce Manager.

Facebook expanded its e-commerce tool, Facebook Shops, to its WhatsApp messaging app in several countries, last quarter. Shops product listings have been expanded to Facebook Marketplace in the United States, providing more ways for brands to connect with interested shoppers and more ways for Facebook to encourage browsing and buying activity.

Moreover, the social media giant introduced Shops ads solutions that provide unique ads experiences based on user’s shopping preferences. Facebook is also investing in immersive technologies like augmented reality and artificial intelligence to enhance user shopping experience.

However, ad-targeting-related headwinds are expected to have hurt ad-revenue growth rate. Changes made by Apple AAPL and Alphabet’s GOOGL Google in their mobile operating systems and browser platforms limited Facebook’s ability to track user-activity trend.

Facebook expects changes made by Apple in its iOS 14.5 platform to limit its ability to track user-activity trend. Additionally, intensifying competition for ad-dollars from the likes of Google, Snap SNAP and Twitter remains a headwind.

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