Meta’s big bet on AI pays off in strong Q1 results

Overview

Meta Platforms started 2025 with strong momentum across its core platforms, delivering double-digit revenue and earnings growth, driven by strength in digital advertising and continued progress in AI development.

CEO Mark Zuckerberg stated: “We’ve had a strong start to an important year, our community continues to grow and our business is performing very well. We’re making good progress on AI glasses and Meta AI, which now has almost 1 billion monthly actives.”

Q1 2025 vs. Q1 2024:

• Revenue increased to $42.31bn (+16% YoY), driven by higher ad impressions (+5% YoY) and a +10% increase in average price per ad.
  • Family Daily Active People (DAP) was 3.43bn (+6% YoY).
  • Ad impressions delivered across Family of Apps increased by 5% YoY.
  • Family of Apps revenue rose to $41.9bn (+16% YoY).
  • Reality Labs revenue was $412m (-6% YoY), posted an operating loss of $4.21bn, continuing its investment-heavy development of AR/VR products.
• Operating income grew to $17.56bn (+27% YoY), reflecting margin expansion from cost discipline and revenue growth.
• Operating margin recorded a value of 41% (vs. 38% in Q1 2024), supported by leverage on fixed costs and improving ad monetization.
• Net income rose to $16.64bn (+35% YoY), boosted by operational efficiency and lower effective tax rate.
• In the same way, diluted EPS grew to $6.43 (+37% YoY), a strong earnings per share growth enhanced by share repurchases.
• Total costs and expenses increased to $24.76bn (+9% YoY).
• Capital expenditures were $13.69bn, reflecting AI infrastructure build-out.
• Cash, cash equivalents, and marketable securities were $70.23bn as of March 31, 2025.
• Cash flow from operating activities was $24.03bn (+25% YoY) and free cash flow was $10.33bn (-18% YoY).
• Share repurchases of Class A common stock were $13.40bn and total dividend and dividend equivalent payments were $1.33bn.

Meta expects Q2 2025 revenue to range between $42.5bn and $45.5bn, with a ~1% FX tailwind. For the full year, total expenses are projected between $113bn and $118bn, down slightly from prior guidance, while capital expenditures have been raised to $64bn-$72bn (from $60bn-$65bn) to support AI infrastructure and data center investments. Meta continues to monitor regulatory risks, especially in Europe, where potential changes to the “no ads” subscription model could negatively impact user experience and revenue starting as early as Q3 2025.

After a slight decrease in the price of META shares by approximately -1% before the publication of the quarterly report, it re-entered a fairly strong upward slope in the after-market, increasing by approximately +4% after the presentation of financial results that beat the estimates of Wall Street analysts. This increase brings the stock price of the company’s shares to the 50-day moving average, although still remaining below its level. However, since the beginning of the year, the price of META shares has been quite seriously influenced by the issue of trade tariffs imposed by Donald Trump, falling by over -8% in the first four months of 2025. In addition, the forecasts for the rest of the year could give investors something to think about, given that the company has slightly adjusted its future estimates.

Author: Ionuț-Adrian Lazar