Meta Reports 35% Net Profit Surge, 16% Revenue Growth in Q1 2025

Meta, the technology giant, has reported a 35% year-over-year increase in net profit for the first quarter of its 2025 fiscal year, ending March 31, 2025. The company's revenue for the quarter was $423.14 billion, a 16% increase from the previous year and surpassing market expectations. The earnings per share, on a diluted basis, grew by 37% to $6.43. The operating profit margin improved from 38% in the previous year to 41%.

Meta's CEO, Mark Zuckerberg, highlighted the company's strong start to the year, noting the continued growth of its communities and the robust performance of its businesses. He also mentioned significant progress in AI glasses and Meta AI, with the latter nearing 1 billion monthly active users. Meta's flagship social platform, Facebook, saw a 6% increase in daily active users to 3.43 billion, exceeding market expectations of 3.39 billion.

Despite the positive financial results, Meta's Chief Financial Officer, Susan Li, noted during the earnings call that the company has observed a decrease in advertising spending from Asian e-commerce exporters due to tariffs. Some of this spending has been redirected to other markets, but overall, the total advertising expenditure by these exporters has decreased compared to levels before April. This trend is attributed to the impact of tariffs on the cost of goods, which has led to a reduction in advertising budgets for these exporters.

In response to these challenges, Zuckerberg expressed confidence in the company's ability to navigate macroeconomic uncertainties. Meta has adjusted its full-year capital expenditure forecast, increasing it from a range of $600 billion to $650 billion to a new range of $640 billion to $720 billion. This increase is primarily to support investments in generative AI and core business areas. The company has also lowered its total expenditure forecast for the year from $1140 billion to $1190 billion to $1130 billion to $1180 billion.

The increase in capital expenditure is attributed to additional investments in data centers to support AI initiatives and rising costs of infrastructure hardware. Li mentioned that the increased demand for infrastructure hardware is due to global procurement by suppliers, adding that there is significant uncertainty in this area due to ongoing trade negotiations. Meta is working to mitigate these impacts by optimizing its supply chain.

Meta's Family of Apps, which includes Instagram, Facebook, and WhatsApp, generated $419.02 billion in revenue for the quarter, a 16% year-over-year increase. Advertising revenue from social media platforms reached $413.92 billion, with ad impressions growing by 5% and ad prices increasing by 10% compared to the previous year. This growth in advertising revenue is a testament to the continued strength of Meta's social media platforms and their ability to attract advertisers despite macroeconomic challenges.

Zuckerberg also provided an update on Threads, Meta's social platform, revealing that it has reached 3.5 billion monthly active users, up from 3.2 billion in January. The company recently announced that all qualified advertisers globally can now place ads on Threads. However, Meta does not expect Threads' advertising revenue to significantly impact its total revenue in 2025. This is due to the fact that Threads is still in its early stages of development and has not yet reached the scale of Meta's other social media platforms.

Regarding AI applications, Zuckerberg mentioned that Meta AI, the company's intelligent assistant, has nearly 1 billion monthly active users, with WhatsApp being the primary access point. Meta recently launched an independent AI application, Meta AI App, which is designed to compete with ChatGPT. Zuckerberg indicated that Meta plans to monetize Meta AI by displaying ads and potentially charging for a premium version, although the company will focus on product development for at least the next year before shifting to profitability. This focus on AI is part of Meta's broader strategy to stay at the forefront of technological innovation and maintain its competitive edge in the market.

Reality Labs, Meta's division focused on AR and VR technologies, continued to struggle, with revenue declining by 6% to $4.12 billion and a net loss of $42.1 billion, a 9% increase in losses compared to the previous year. This division has been a significant drain on Meta's resources, and the company has yet to find a sustainable business model for its AR and VR technologies. Additionally, Meta is facing a $2 billion fine from the European Union for its ad-free business model, which could significantly impact its European operations and revenue starting as early as the third quarter. Li stated that Meta will continue to engage with the European Commission to address this issue and provide more clarity in the next quarterly earnings call.