Facebook (NASDAQ:FB) is slated to report its fourth-quarter and full-year 2019 results after the market closes on Wednesday, Jan. 29.

The social media leader is going into its report on a mixed note. On the positive side, it's beat Wall Street's revenue and earnings estimates in the past two quarters. On the other hand, some investors remain concerned about increased regulatory scrutiny and declining margins.

Like many of the larger tech stocks, Facebook stock started 2020 with a bang. It's up 8.2% though Friday, Jan. 17, versus the S&P 500's 3.1% return. In 2019, shares bounced back strongly, gaining 56.6%, after falling 25.7% in 2018. For context, the broader market returned 31.5% last year and had a negative 4.3% return in 2018. Putting this all together, since the start of 2018, Facebook stock is up 25.9% -- a solid gain, but slightly trailing the S&P 500's 29.7% return. 

Here's what to watch in the technology behemoth's upcoming report.

Sign with a thumbs-up in front of Facebook's headquarters.

Image source: Facebook.

Key quarterly numbers

Here are Facebook's year-ago results and Wall Street's estimates to use as benchmarks. The company doesn't provide official guidance.

Metric Q4 2018 Result

Wall Street's Q4 2019 Consensus Estimate

Wall Street's Projected Change 

Revenue

$16.91 billion

$20.87 billion

23.4%

Adjusted earnings per share (EPS)

$2.38

$2.52

5.9% 

Data sources: Facebook and Yahoo! Finance. 

Revenue growth

In the third quarter, Facebook's revenue jumped 29% year over year, or 31% in constant currency. The reported revenue growth rate accelerated sequentially, as it was 28% year over year in the second quarter, while the constant-currency growth rate moved slightly lower from 32% in the second quarter. The fact that the constant-currency growth rate edged down just 1% was probably a pleasant surprise for many investors. That's because management had guided for this metric to decelerate sequentially throughout the year. 

Investors shouldn't get their hopes up for a similarly small sequential revenue growth deceleration in the fourth quarter. On last quarter's earnings call, CFO Dave Wehner said, "We continue to expect a more pronounced deceleration of our revenue growth rate in Q4. We expect our Q4 reported revenue growth rate will decelerate by a mid-to-high single-digit percentage compared to our Q3 rate." In Q3, reported revenue grew 29% year over year, so management essentially guided for Q4 reported revenue to grow in the range of about 20% to 25% year over year. 

Margins

Analysts expect Facebook's earnings to continue to grow significantly slower than its revenue. In other words, profit margins are projected to continue to contract. The reason is the company's increased spending on initiatives to improve data security and user privacy.

Facebook's 2019 settlement with the U.S. Federal Trade Commission (related to the Cambridge Analytica data scandal) included not only a $5 billion fine, but a mandate to beef up the areas previously noted to better protect its users. 

Key user stats

Last quarter, daily active users (DAUs) of the company's flagship platform increased 9% year over year to 1.62 billion, and monthly active users (MAUs) grew 8% to 2.45 billion. User growth has been coming from developing countries for some time. This isn't a positive, as ads in those countries don't garner nearly the same prices as ads in developed countries. Moreover, Facebook's ad mix has been shifting toward Stories, which are lower priced. Nonetheless, the company has been able to keep revenue growing robustly, thanks to continued strong growth in the number of ad impressions, which was up 37% year over year last quarter.

Once again, Facebook is scheduled to report its Q4 results after the market closes on Wednesday, Jan. 29.