Meta Platforms Reports Strong Q1 2025 Earnings with Robust Revenue Growth

Meta Platforms (META) announced first-quarter 2025 earnings of $6.43 per share, surpassing the Zacks Consensus Estimate by 23.18%. This represents a significant increase of 36.5% compared to the same period last year.

Revenues reached $42.31 billion, exceeding the Zacks Consensus Estimate by 2.61%, and grew 16.1% year over year. When adjusted for constant currency (cc), revenue growth was an impressive 19% year over year.

Strong Growth Driven by User Engagement

The Family of Apps, which comprises Facebook, Instagram, Messenger, WhatsApp, and other services, generated 99% of total revenues. This segment’s revenue rose 16.3% from the previous year, totaling $41.9 billion.

The Family Daily Active People (DAP), defined as users who interacted with at least one app daily, reached 3.43 billion—up 5.9% compared to the prior year.

Meta Platforms, Inc. Price, Consensus, and EPS Surprise

Meta Platforms, Inc. price-consensus-eps-surprise-chart | Meta Platforms, Inc. Quote

Regionally, revenues from the United States & Canada, Asia-Pacific, Europe, and the Rest of the World (RoW) grew 17.6%, 12.8%, 14.1%, and 19.8%, respectively, year over year.

Advertising Revenues Surge

Advertising revenues, making up 98.8% of the Family of Apps revenue, climbed 16.2% year over year to $41.39 billion, constituting 97.8% of total revenues for the quarter. In constant currency, advertising revenue increased by 20% year over year.

Advertising revenue growth varied by region, with increases of 18.2% in the United States & Canada, 12.1% in Asia-Pacific, 14.4% in Europe, and 19.1% in the RoW.

The number of ad impressions delivered across the Family of Apps rose by 5%, while the average price per ad increased by 10% in this quarter. Impression growth rates were 9% in Asia-Pacific, 1% in the RoW, 4% in the United States & Canada, and 5% in Europe.

Other revenues from the Family of Apps soared 34.2% year over year to $510 million, while Reality Labs, which accounts for 1% of total revenues, saw a drop of 6.4% year over year to $412 million.

Operating Margin Expands Amid Rising Costs

In Q1 2025, total costs and expenses rose by 9.4% year over year to $24.76 billion. Despite this increase, costs and expenses represented 58.5% of revenues—down 360 basis points (bps) from the previous year.

Expenses related to the Family of Apps totaled $20.1 billion, making up 81% of Meta’s overall expenditures. These expenses rose 10% year over year, primarily due to increased infrastructure and headcount costs. Costs for Reality Labs increased by 8% to $4.6 billion.

Notably, marketing and sales expenses decreased by 50 bps, while general and administrative expenses declined by 410 bps compared to the prior year. Research & development expenses, as a percentage of revenue, rose to 28.7%, up 130 bps year over year.

As of the end of Q1 2025, Meta’s employee count was 76,834, reflecting an 11% increase compared to the same period last year. Operating income surged 27% year over year to $17.56 billion, with an operating margin of 41.5%, expanding by 360 bps.

Strong Balance Sheet

As of March 31, 2025, Meta reported cash and cash equivalents along with marketable securities totaling $70.23 billion, down from $77.82 billion at December 31, 2024. Long-term debt remained stable at $28.83 billion.

For the quarter, capital expenditures reached $13.69 billion, while free cash flow was reported at $10.33 billion.

Positive Q2 Guidance

Looking ahead, Meta Platforms anticipates total revenues between $42.5 billion and $45.5 billion for the second quarter of 2025. The Zacks Consensus Estimate suggests revenues of $43.33 billion, indicating an expected growth of 10.9% compared to the prior year. The consensus estimate for earnings stands at $5.49 per share, projecting a growth of 6.4% from last year.

For 2025, Meta forecasts total expenses between $113 billion and $118 billion and capital expenditures ranging from $64 billion to $72 billion.

Zacks Rank & Stocks to Consider

Currently, Meta Platforms holds a Zacks Rank #3 (Hold). Affirm (AFRM), Criteo (CRTO), and InterDigital (IDCC) are better-ranked stocks in the Zacks Computer & Technology sector, each with a Zacks Rank #1 (Strong Buy) as of now.

Affirm will report its first-quarter 2025 results on May 8, while Criteo’s results are expected on May 2, and InterDigital’s on May 1.

This article originally published on Zacks Investment Research (zacks.com).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.