Meta Surges on Earnings Strength
Here's our initial take on Meta Platforms' (NASDAQ: META) first-quarter financial report.
Key Metrics
| Metric | Q1 2024 | Q1 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $36.5 billion | $42.3 billion | +16% | Beat |
| Adjusted earnings per share | $4.71 | $6.43 | +37% | Beat |
| Family daily active people | 3.24 billion | 3.43 billion | +6% | n/a |
| Operating margin | 38% | 41% | +3 pp | n/a |
Riding the AI Wave
Meta reported first-quarter financial results that reflected a great start to 2025. Revenue rose 16% year over year, but foreign currency adjustments cost the company what would have been an additional 3 percentage points of growth. The number of ad impressions Meta had across its platform rose 5%, while pricing was even stronger, picking up 10% per ad on average. Family daily active people engaging on platform products rose by about 190 million to 3.43 billion.
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Even more importantly, Meta kept costs in line. The expense side of the income statement rose only 9%, with a big decline in overhead expenses helping to offset a rise in research-and-development spending of over 20%. Meta also kept its marketing and sales budget in check. As a result, operating income jumped 27%, and favorable declines in income taxes helped boost net income to $16.6 billion, up 35% from the same period a year ago.
In the press release, Meta founder/CEO Mark Zuckerberg pointed to the Meta AI artificial intelligence and augmented reality unit as a source of encouraging results. In particular, offerings of its Ray-Ban Meta AI glasses earned a specific mention from the Meta founder. The company is coming close to a key milestone of reaching 1 billion monthly active users on the AI front.
Immediate Market Reaction
Meta investors were generally pleased with the results. The stock was up about 4% in after-hours trading half an hour after the release of the quarterly financial report. In addition to topping past guidance for the first quarter, Meta projected that second-quarter revenue would be between $42.5 billion and $45.5 billion.
The move higher comes after Meta stock had lost nearly a third of its value since late February. The social media giant had been just one of many companies that saw shares fall sharply as markets digested geopolitical and macroeconomic issues.
What to Watch
Meta did warn that it continues to monitor the regulatory environment for potential threats, particularly with the European Commission's recent decision about Meta's subscription-based ad-free service not complying with the Digital Markets Act.
Another area investors have traditionally looked at is capital spending, and Meta boosted its projections on expenditures by $4 billion to $7 billion to a new range of $64 billion to $72 billion for the full year. The move confirms that Meta isn't slowing down on investing in data centers and infrastructure hardware to support AI. That could be good news for the companies that supply Meta's needs as well.
Helpful Resources
- Full earnings release
- Investor relations page
- Additional Meta coverage from Fool.com on how tariffs could affect its growth
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Dan Caplinger has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
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