Social network operator Meta Platforms (NASDAQ:META) reported Q1 CY2025 results topping the market’s revenue expectations , with sales up 16.1% year on year to $42.31 billion. On the other hand, next quarter’s revenue guidance of $44 billion was less impressive, coming in 0.9% below analysts’ estimates. Its non-GAAP profit of $7.69 per share was 47.7% above analysts’ consensus estimates.

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  • Revenue: $42.31 billion vs analyst estimates of $41.35 billion (16.1% year-on-year growth, 2.3% beat)

  • Adjusted EPS: $7.69 vs analyst estimates of $5.21 (47.7% beat)

  • Adjusted EBITDA: $25.6 billion vs analyst estimates of $23.99 billion (60.5% margin, 6.7% beat)

  • Revenue Guidance for Q2 CY2025 is $44 billion at the midpoint, below analyst estimates of $44.39 billion

  • Operating Margin: 41.5%, up from 37.9% in the same quarter last year

  • Free Cash Flow Margin: 24.4%, down from 27.2% in the previous quarter

  • Daily Active People: 3.43 billion, up 190 million year on year

  • Market Capitalization: $1.44 trillion

Meta’s first quarter results reflected ongoing momentum in its advertising business and the growing impact of artificial intelligence across its platforms. Management attributed the quarter’s outperformance to improvements in ad targeting and creative tools powered by AI, as well as user growth on both established and emerging platforms like Threads and Ray-Ban Meta AI glasses. CEO Mark Zuckerberg pointed to AI-driven enhancements in ad performance and user engagement, saying, “Our community keeps growing with more than 3.4 billion people now using at least one of our apps each day.”

Looking ahead, management set a cautious tone regarding its revenue outlook, citing macroeconomic uncertainty and new regulatory headwinds—especially in Europe. CFO Susan Li noted that the company’s second quarter guidance factored in “reduced spend in the US from Asia-based e-commerce exporters” and potential impacts from the European Commission’s Digital Markets Act. She added, “We continue to feel good about the fundamental drivers of revenue growth,” but acknowledged that a dynamic operating environment could lead to a wider range of outcomes.

Meta’s management focused on how AI advancements are shaping both the user experience and the core advertising business. The leadership team also discussed progress in newer business areas and the challenges posed by regulatory changes.

  • AI-Powered Advertising: Meta’s ongoing upgrades to ad recommendation systems, such as the Generative Ads Recommendation Model (GEM), have improved ad conversion rates and enabled more advertisers to utilize AI-driven creative tools. Management highlighted that 30% more advertisers used AI creative tools in the last quarter, with a new model increasing Reels ad conversion rates by 5%.

  • User Engagement Gains: Improvements in AI-driven recommendation systems drove higher user engagement across platforms. Time spent on Facebook increased 7%, Instagram 6%, and Threads 35% over the past six months. Threads now has over 350 million monthly active users, signaling traction as a new social platform.

  • Business Messaging Growth: Meta continued to expand business messaging capabilities, especially on WhatsApp. While business messaging already drives revenue in certain markets, management believes AI will play a key role in making these tools viable in higher-cost markets over time.

  • AI Glasses and Reality Labs: Sales of Ray-Ban Meta AI glasses tripled year-on-year, and new features like live translation were rolled out. However, Reality Labs remains a source of significant investment and operating losses, as Meta continues to prioritize scale and product development over near-term profitability.

  • Regulatory and Market Dynamics: Management acknowledged regulatory risks in the European Union, where new requirements under the Digital Markets Act could negatively impact user experience and revenue beginning as early as the third quarter. They are appealing the decision but preparing for potential changes to their subscription model.