As Q2 Earnings Approaches, the Street Stays Bullish on Facebook's Mobile Prospects

Facebook's S-1 filing in early 2012 came with a rude awakening we're all quite familiar with by now: The world is going mobile, and Facebook's ad business needed to adapt fast in order to keep up with it.

Now, as Facebook prepares to report its second-quarter earnings this afternoon, something has shifted: Wall Street is actually optimistic about Facebook's mobile monetization prospects.

The Street's consensus calls for earnings per share of 14 cents on revenue of $1.62 billion, an estimate up from the EPS of 12 cents on revenue of $1.18 billion reported during Q2 of last year.

"While quarterly results at FB will likely remain volatile, we remain bullish on the direction and growth trajectory of the company," Sterne Agee analyst Arvind Bhatia wrote in a research note this week.

The biggest boon for some? The trending surge in Facebook's mobile revenue figures seen in recent quarters.

Mobile revenue accounted for nearly 30 percent of Facebook's ad business in the first quarter of this year, which was already a jump up from 23 percent in the fourth quarter of 2012. That's expected by some analysts to grow, albeit slightly, to a daily run rate of nearly $5 million on mobile ads alone.

Facebook has made it clear that at least one of its more recent ad products - mobile app installation ads - has been quite successful in driving growth, and J.P. Morgan's Doug Anmuth expects that to continue.

"We remain bullish as we believe ad dollars are increasingly shifting to online, mobile, and social and we expect Facebook to capture a growing portion of ad budgets going forward," Anmuth wrote in a research note.

The big unknowns are the usuals that we'll be looking for. Will the company break out any metrics beyond its usual stats on daily and monthly active users? That may be something to watch for, given Facebook's increasing competition for mindshare from other mobile-based sites like Snapchat, WhatsApp and International competitors like Line and KakaoTalk.

Perhaps Facebook will detail some engagement-based stats that could rebut the chatter that the social giant is losing its cool with younger audiences.

Another wild card: The oft-speculated eventual appearance of auto-play video ads in the News Feed. Bhatia and Anmuth both expect the ads to debut in the latter half of the year, a potential multibillion-dollar revenue-driving opportunity for the company. "We see online video advertising as a key incremental growth driver for FB in 2014," Bhatia wrote.

And lastly, the payments question still remains. Driven largely by social games on the platform, Facebook's payments business has changed much over the past two years, again a result of the sweeping shift to mobile. Zynga, which once reigned supreme as Facebook's largest gaming partner, has taken a drastic hit as users have moved away from playing games on the desktop to more casual gaming on the phone and tablet.

As a result, Facebook's payments revenue cut has flattened. The past year has seen Facebook try to distance itself from being too connected to Zynga, giving way to the rise of other smaller, more mobile-focused gaming outfits like King and, to a lesser extent, Wooga.

Analysts expect flat sequential revenue in the payments business, though a slight uptick in year-over-year growth.

I'll be covering the print as it hits the wire at 1 pm PT, with a liveblog of the earnings call from my colleague Peter Kafka to follow.

Google Wallet For Gmail Invites Start Rolling Out To More Users

In May, Google announced that its online and mobile payments solution Google Wallet would be integrated within Gmail in the coming months, but no exact time frame for the rollout was given. Now, it appears as if more users are gaining access to the Google Wallet in Gmail feature, as invitations are hitting Gmail inboxes.

These invites are arriving in Gmail's new "Updates" tab. (Update: Originally, we were hearing they were arriving in the main inbox, but Google informs us this is not the case.)

Anyway, below is the example of what the invite looks like:

For those unfamiliar, Google Wallet is the company's payments platform and answer to PayPal, which allows users to store their debit and credit cards in a secure service for easy access. Wallet can be used when shopping online, including on e-commerce websites, and within Android applications where virtual goods, in-app purchases, and even physical goods and services, are sold. On Android, an NFC-based Google Wallet mobile app allows for transactions at supported point-of-sale and other NFC-based terminals, but adoption there is limited due to mobile operators' restrictions enacted because they invest in their own competitor called Isis. (Greed is why we can't have nice things, folks).

With the announcement in May, Google informed us that it would soon offer another way for the payments service to be used - that is, within Gmail. A new dollar sign icon in Gmail will appear, allowing you to "attach money" to your message. The icon sits near the attachment paperclip icon and Google Drive icon for attaching files from the cloud in the new "Compose" experience in Gmail.

Since early beta testers could invite others to Google Wallet for Gmail by sending money, some came up with ingenious ways to invite others by sending small amounts - like a penny - to those who asked. But most of us simply waited for Google to send the invitation after registering our interest. These invites are arriving first to Google Wallet's early adopters, before the feature is more broadly rolled out to all of Gmail's user base.

After clicking on the "Get started" button in the invite, or heading directly to wallet.google.com/p2pAccess, you'll have to confirm your identify in order to comply with U.S. financial regulations before being able to use Google Wallet in Gmail. This will involve providing your date of birth and last four of your Social Security Number, Google explains.

This verification process takes only a second or two, and then the new "attach money" icon will appear when you return to Gmail. (Note that users who have declined to upgrade to the new "Compose" interface in Gmail won't have the option to send money until they make that switch.)

We reached out to Google to ask for more details as to the progress of the rollout itself, and the company explains that the invites arriving now are going to those who had previously signed up to receive the next version of Wallet at http://www.google.com/wallet.

It also appears that several users have been excited enough to post about their invitation's arrival on Twitter. (I'm about to do the same.)

Google Wallet has hit some hurdles in recent months, following the departure of Google Wallet head Osama Bedier. Google also scrapped plans to launch its physical Google-branded payment card which had been tested as an alternative to NFC, but found to not be up to par by CEO Larry Page.

Wallet in Gmail gives the maligned service another way to grow - by tapping into a user base of some 425 million plus email users. However, Wallet for Gmail is only available to those over 18 and in the United States for now. Expansions to other parts of the world have yet to be announced.

American Express to Let Cardholders Pay NYC Taxi Fares With Membership Rewards Points

American Express's loyalty program is set to make a big splash in the offline payment world by letting cardholders pay for their fares in New York City taxis with rewards points.

Through a deal with point-of-sale hardware company VeriFone, American Express will offer the new payment option in about 7,000 New York City taxis - about half of all taxis in the city.

The move marks the loyalty program's first step in what will likely be a major expansion into the physical world. After all, AmEx partner VeriFone also has a presence in plenty of brick-and-mortar retail establishments.

"We built this tech which is very flexible and can be used in a variety of different ways," said Leslie Berland, SVP, digital partnerships and development at American Express. "We are assessing what are the most meaningful powerful areas in the physical world to bring this to life."

Starting with New York City taxis made sense for a few reasons. For one, there was an attractive density of cardholders in the city, specifically in Manhattan. And for cardholders in the city, taking a taxi is a relatively frequent occurrence.

Before this expansion, American Express membership rewards could be used for a variety of different purchases - from gift cards to iPads to purchases on Amazon.com, all of which had to be made online. And, other than those American Express customers who use points for Amazon.com purchases, cardholders don't really have a way to pay for a product or service with points on a daily or even weekly basis.

That changes with this move; American Express is making its program more attractive to cardholders in the area, since they can now use points for a service they use more frequently.

And redeeming points for fares won't require a lot of work on the part of taxi riders. They can simply choose to pay with credit, swipe their card, and then are given the choice on the payment screen to pay with Membership Rewards points if they'd like.

Fares will cost 100 points per dollar, so a $10 fare would cost taxi riders 1,000 points. For taxi drivers, there's no difference between the payout they get for a credit-card purchase and what they'd earn for one of these new types of payment methods, American Express execs said.