Facebook (Nasdaq: FB) Earnings: It's All About Mobile

[Update to story after earnings report release: After releasing second quarter 2013 results, Facebook (Nasdaq: FB) stock did something it hasn't done since it debuted as a public company: it rallied.

By all accounts, it was a very good quarter.

Shares jumped more than 18% after handily beating on earnings and revenue.

The social networking behemoth posted earnings per share of $0.19, better than the expected $0.14, and up from $0.12 per share a year ago.

Revenue came in at $1.81 billion, beating the projected $1.62 billion, and up from $1.18 billion in the year ago quarter.

Daily user count grew to 699 million, up 27% year-over-year, and monthly user count swelled to 1.15 billion, up 21%.

Mobile user activity rose to 819 million, a whopping 51% from a year ago.

Analysts say some profit taking is likely tomorrow should gains hold. After hours traders were already selling into the rally. By 4:15 EDT, FB stock was already off the highs but still up 14%.]

One of the most closely watched earnings reports comes after the close Wednesday when Facebook Inc. (Nasdaq: FB) earnings for the second quarter are released.

Wall Street analysts expect the company to post earnings of $0.14 per share on revenue of $1.62 billion, up from $0.12 per share on $1.18 billion in revenue from the same quarter a year ago.

After scouring the numbers, the key question will be how well the company is monetizing its massive mobile user base.

But, with Google Inc. (Nasdaq: GOOG) and Yahoo! Inc. (Nasdaq: YHOO) both already explaining that mobile growth was indeed difficult in their last quarters, it's highly doubtful Facebook will buck the trend.

Since 2012, the social network leader has been taking aggressive steps to accelerate its mobile business in efforts to offset a steep and steady decline in desktop usage-its true cash cow. Facebook is paid less for mobile ads than it is paid for ads on PCs, but mobile is becoming a significantly bigger portion of Facebook's business.

Indeed, when Facebook debuted as a public company in May 2012, its mobile ad revenue was nonexistent. Since then, FB's mobile ad revenue has soared-to some 30%, or $374 million, in Q1 of 2013.

Helping here is that Facebook has heeded pleas from overwhelmed advertisers by cutting the number of ad products it offers and making its advertising products easier to use.

"One point we heard loud and clear is that we need to simplify our product offering," Fidji Simo, a Facebook project manager wrote on a blog site in June.

Mobile percentage is projected to show further gains in Q2. But because Facebook has some control of the mobile ad placement, many analysts will place substantial weight on the overall top-line ad revenue figure.

Mobile growth is crucial to this company's future…