Facebook’s Fourth Quarter Earnings Ought To Impress, But How Much?

When Facebook announces its fourth-quarter earnings on Wednesday, it’s widely expected to meet or beat analyst expectations. The tech giant has been on a roll for the past five quarters, after all. But even as analysts expect big financial growth, there is reason to believe that some cracks might start to show as well.

Here’s some of what we’re eager to learn about during the call:

Facebook Live growth: A big focus will be on how well Facebook’s Live Video service performed at the end of last year, and whether it has become a meaningful source of user engagement as well as one that has revenue potential. A recent report from Recode indicates that the company will cease its program of paying publishers to post live content. But it’s not clear whether that’s because the service has simply matured and no longer needs professional content, or if the company has decided to de-emphasize live video as a source of revenue.

Gartner analyst Brian Blau thinks Facebook Live is likely to be an important platform for the company in the future, but that it’s too early for the company to focus too much on monetizing the service across all users given that putting ads on live video would interrupt the user experience. Still, Facebook has reportedly begun testing ads in live video with some users. It’s not known if the company will talk about that program on Wednesday.

Instagram Stories: The performance of ads in Instagram Stories will also be worth closer examination. Facebook has already warned that its News Feed-based ad revenue might finally start to slow. That puts pressure on Instagram to begin showing serious revenue growth.

Instagram, by more or less cloning Snapchat’s Stories feature, has stolen quite a number of users, recent reports have concluded. The question is whether that has resulted in meaningful increases in ad revenue. The answer should also shed some light on Facebook’s plans to include ads in Messenger, which it began testing internationally earlier this month.

Oculus sales figures: Facebook’s high-end virtual reality system, the Oculus Rift, will be a source of great interest on Wednesday. VR is slowly making its way into the mainstream, and Facebook CEO Mark Zuckerberg has made it clear that the technology is one he’s intensely interested in. But there have been indications that the Rift isn’t selling as well as competing systems from HTC (the Vive) and Sony (the PlayStation VR), Blau said, so “if you’re in third (place) out of three, I don’t know if it’s something you highlight.”

All that said, Facebook has become a money machine, and it’s very likely that it will report a highly successful fourth quarter. Overall, analysts are predicting revenues of $8.5 billion, up 45.6% from a year earlier, and earnings per share of $1.31, up 65% year-over-year from 79 cents in Q4 2015.

If there is in fact a slowdown in advertising revenue on the News Feed, it could lead to insights about the company’s future plans. Executives are likely to highlight the growth of Facebook’s subsidiary services, and their evolution into substantial platforms in their own right. Facebook for some time has followed a pattern of introducing new services, or buying existing ones, then tweaking them before converting them into more robust platforms. The more of those it has—Messenger, WhatsApp, Instagram, Oculus, and even Facebook Live Video—the more protected it is from any one of them faltering. Similarly, the more platforms it owns, the more growth opportunities it has.

“If you’re a parent, you hope all your children grow up to be successful,” Blau said of Facebook, even if “some of them are slower than others.”