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Meta Surges on Earnings Strength

In This Article:

Key Points

  • Meta Platforms grew sales at a faster pace than most investors had expected, and earnings topped the consensus forecast among investors by more than $1 per share.

  • Founder/CEO Mark Zuckerberg heralded the progress that Meta is making on the artificial intelligence front.

  • Meta expects to spend more than previously forecast on capital expenditures during 2025 as it boosts investment on data centers and infrastructure hardware to support its AI efforts.

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.