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Meta Platforms, Inc. (META)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was a strong beat: revenue $42.31B (+16% YoY) and diluted EPS $6.43, both above S&P Global consensus; operating margin expanded to 41% on lower tax rate and continued cost discipline .
  • Management raised 2025 CapEx to $64–72B (from $60–65B) to accelerate AI/data center capacity, while lowering 2025 total expense guidance to $113–118B (from $114–119B) .
  • Q2 2025 revenue guidance of $42.5–$45.5B implies healthy mid-teens YoY growth with ~1% FX tailwind; near-term headwinds include reduced spend from Asia-based e-commerce exporters due to de minimis changes and EU DMA-related model changes that could significantly impact European revenue starting Q3 2025 .
  • Strategic focus remains on AI monetization and engagement (GEM ads model, Advantage+), business messaging, Threads ad ramp, and AI devices (Ray-Ban Meta AI glasses) as medium-term drivers .

What Went Well and What Went Wrong

What Went Well

  • Revenue, EPS beats and margin expansion: Revenue $42.31B (+16% YoY), operating margin 41% (+300 bps YoY), EPS $6.43 (+37% YoY) with effective tax rate at 9% .
  • Ads performance: Ad impressions +5% YoY and average price per ad +10% YoY; online commerce was the largest contributor to ad revenue growth; strong pricing supported by improved ad systems (GEM model up to +5% conversions on Reels) .
  • AI engagement and devices: Nearly 1B monthly actives for Meta AI; Threads reached 350M MAUs; Ray-Ban Meta AI glasses monthly actives >4x YoY with new features (live translations) .

What Went Wrong

  • Reality Labs: Revenue $412M, down 6% YoY; operating loss widened to -$4.21B as expenses rose (+8% YoY) on higher employee compensation .
  • Regulatory overhang: EC determined Subscription for No Ads non-compliant with DMA; expected modifications could materially worsen EU user experience and significantly impact European business/revenue as early as Q3 2025 .
  • Macro and vertical headwinds: Reduced spend from Asia-based e-commerce exporters in U.S. tied to de minimis changes; gaming and politics were soft (post-U.S. election) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$40.59 $48.39 $42.31
Diluted EPS ($)$6.03 $8.02 $6.43
Operating Margin (%)43% 48% 41%
Net Income ($USD Billions)$15.69 $20.84 $16.64
Consensus vs Actual (S&P Global)Q3 2024Q4 2024Q1 2025
EPS Consensus Mean ($)*5.306.745.21
EPS Actual ($)6.03 8.02 6.43
EPS Beat/MissBeatBeatBeat
Revenue Consensus Mean ($USD Billions)*40.4346.9941.36
Revenue Actual ($USD Billions)40.59 48.39 42.31
Revenue Beat/MissBeatBeatBeat
EBITDA Consensus Mean ($USD Billions)*24.0628.6623.99
EBITDA Actual ($USD Billions)*21.3826.3721.46
EBITDA Beat/MissMissMissMiss

Values retrieved from S&P Global.*

Segment Breakdown ($USD Millions)Q1 2024Q1 2025
Advertising Revenue35,635 41,392
Other Revenue380 510
Family of Apps Revenue36,015 41,902
Reality Labs Revenue440 412
Family of Apps Operating Income17,664 21,765
Reality Labs Operating Loss(3,846) (4,210)
KPIs and Cash FlowQ3 2024Q4 2024Q1 2025
Family DAP (Billions)3.29 3.35 3.43
Ad Impressions YoY (%)+7% +6% +5%
Avg Price per Ad YoY (%)+11% +14% +10%
CapEx incl Finance Leases ($USD Billions)$9.20 $14.84 $13.69
Free Cash Flow ($USD Billions)$15.52 $13.15 $10.33
Cash & Marketable Securities ($USD Billions)$70.90 $77.81 $70.23
Headcount72,404 74,067 76,834

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueQ2 2025—$42.5–$45.5BNew guide
Total ExpensesFY 2025$114–$119B $113–$118BLowered
Capital ExpendituresFY 2025$60–$65B $64–$72BRaised
Tax RateFY 202512–15% 12–15%Maintained
FX Impact to Q2 Rev GrowthQ2 2025—~+1% tailwindNew disclosure

Additional note: DMA-related model changes could materially affect EU user experience and significantly impact European business/revenue as early as Q3 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 / Q4 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesLlama 3.2; strong AI-driven recs; Meta AI scaling; plan for significant infra spend in 2025 Llama 4 released; focus on general intelligence, low latency voice, long context; Meta AI ~1B MAUs, stand-alone app launched Accelerating model capability and user scale
Ads performance & monetizationAndromeda ML for retrieval (+8% ads quality); Advantage+ growth; CPM +11% YoY GEM recommendation model (up to +5% conversions in Reels); Advantage+ Creative adoption; incremental attribution (+46% incremental conversions in tests) Continued algorithmic gains lifting pricing and conversions
Business messagingPaid messaging growth; click-to-WhatsApp scaling FoA other revenue +34% driven by WhatsApp business platform; testing business AIs for sales/support Building toward AI agents; revenue contribution rising
Threads275M MAUs with growth; early ad tests; not meaningful for 2025 350M MAUs; ads opened to eligible advertisers across 30+ markets; not meaningful in 2025 Engagement up; monetization gradual
AI devices/glassesStrong demand; Orion prototype; Quest 3S launch Ray-Ban Meta AI glasses monthly actives >4x YoY; new live translation features; tripled sales YoY Momentum improving; investment increasing
CapEx & infrastructureExpect significant 2025 infra expense growth; MTIA deployment 2025 CapEx raised to $64–$72B; accelerated build to bring capacity online; supply chain uncertainties noted Higher near-term spend to support AI
Regulatory/legalEU/U.S. headwinds flagged EC DMA non-compliance decision; potential significant EU revenue impact starting Q3 2025 Elevated regulatory risk
Regional/vertical trendsAPAC deceleration in Q3; pricing growth Ad revenue strongest in RoW/N America (19%/18%); Europe/APAC +14%/+12%; softness in U.S. spend from Asia exporters; gaming/politics weak Mixed; underlying demand healthy

Management Commentary

  • “We’ve had a strong start to an important year… We’re making good progress on AI glasses and Meta AI, which now has almost 1 billion monthly actives.” — Mark Zuckerberg .
  • “We expect second quarter 2025 total revenue to be in the range of $42.5–45.5 billion… Full year 2025 total expenses $113–118 billion… CapEx $64–72 billion.” — Susan Li .
  • “We’re testing a new ads recommendation model for Reels, which has already increased conversion rates by 5%.” — Mark Zuckerberg .
  • “WhatsApp now has more than 3 billion monthly actives… business messaging should be the next pillar of our business.” — Mark Zuckerberg .
  • “Ray-Ban Meta AI glasses have tripled in sales in the last year… exciting new launches with EssilorLuxottica later this year.” — Mark Zuckerberg .

Q&A Highlights

  • CapEx/Infra drivers: 2025 CapEx increase reflects additional data center investments and higher hardware costs amid trade uncertainties; servers remain the largest growth driver; flexibility built into deployment .
  • Macro/verticals: Reduced U.S. spend from Asia-based e-commerce exporters tied to de minimis changes; gaming and politics soft YoY post-election .
  • Regulatory: DMA non-compliance decision for EU subscription model; potential significant revenue impact in Europe as early as Q3 2025 .
  • AI monetization: Focus near term on scaling Meta AI; monetization opportunities include ads/recommendations and premium tiers over time; Threads ads ramp gradual, not meaningful in 2025 .
  • LLM/agents: Llama 4 optimized for low-latency voice and long context; vision for AI coding agents reaching mid-level engineer capability timeline later this year into next .

Estimates Context

  • Q1 2025 delivered broad beats vs S&P Global consensus: EPS $6.43 vs $5.21*, revenue $42.31B vs $41.36B*; EBITDA missed ($21.46B* vs $23.99B*). Prior quarters also saw EPS/revenue beats .
  • Q2 2025 consensus ahead of guide mid-point: revenue $44.84B*, EPS $5.86*; management’s range implies continued healthy growth with FX tailwind .
  • Target Price consensus $841.42* with ~60 estimates. Values retrieved from S&P Global.*
Consensus vs Actual (S&P Global)Q3 2024Q4 2024Q1 2025
Revenue Consensus Mean ($B)*40.4346.9941.36
Revenue Actual ($B)40.59 48.39 42.31
EPS Consensus Mean ($)*5.306.745.21
EPS Actual ($)6.03 8.02 6.43
EBITDA Consensus Mean ($B)*24.0628.6623.99
EBITDA Actual ($B)*21.3826.3721.46

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Broad-based beat with operating leverage: EPS and revenue outperformed consensus while maintaining a 41% operating margin; tax rate support provided additional upside .
  • Guidance mix: Expenses lowered and CapEx raised, signaling confidence in AI ROI and urgency to scale infrastructure; expect ongoing depreciation/opex step-up .
  • Ads engine momentum: GEM and Advantage+ are driving conversion and pricing; expect continued CPM support from performance gains, even as lower-monetizing surfaces (video) expand .
  • Reality Labs remains an investment area: losses widened; upside hinges on AI glasses category expansion and upcoming product cycles .
  • Regulatory risk path: DMA-driven EU changes could significantly impact European revenue starting Q3; monitor next quarter for clarity .
  • Near-term trading catalysts: Q2 print vs $42.5–$45.5B guide; any update on EU DMA compliance changes; Threads monetization pace; Meta AI usage scaling .
  • Medium-term thesis: AI-driven engagement/monetization and business messaging expansion, backed by substantial infra investments, can sustain double-digit revenue growth and margin resilience as AI products scale .

Other Relevant Press Releases (Q1 2025 context)

  • Meta Reports First Quarter 2025 Results (press release) .
  • Meta to Announce First Quarter 2025 Results (pre-announcement) .
  • Quarterly cash dividend declared $0.525 per share, payable June 26, 2025 (post Q1) .

Notes on non-GAAP: Free cash flow subtracts purchases of property & equipment and principal payments on finance leases; FX-adjusted revenue metrics provided for comparability .