Meta shares rose more than 5% after the company reported stronger-than-expected revenue in the first quarter and provided second-quarter guidance that was in line with Wall Street’s expectations.
Here’s how the company did, compared with estimates from analysts polled by LSEG:
- Earnings per share: $6.43 vs. $5.28 expected
- Revenue: $42.31 billion vs. $41.40 billion expected
Meta’s first-quarter sales rose 16% year over year while net income jumped 35% to $16.64 billion, up from $12.37 billion a year earlier.
Second-quarter sales will be in range of $42.5 billion to $45.5 billion, Meta said. Analysts were expecting $44.03 billion.
“Our business is also performing very well, and I think we’re well positioned to navigate the macroeconomic uncertainty,” Meta CEO Mark Zuckerberg told analysts on an earnings call.
Meta said that it lowered the range of its 2025 total expenses, which will now come in the range of $113 billion to $118 billion. That figure was previously $114 billion to $119 billion.
However, Meta increased its 2025 capital expenditures to come in between the range of $64 billion to $72 billion, up from its prior outlook of $60 billion to $65 billion.
“This updated outlook reflects additional data center investments to support our artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware,” the company said in the earnings release.
Meta warned that a recent decision by the European Commission could result in a materially worse user experience for European users and cause “a significant impact” to Meta’s European business and revenue as soon as the third quarter. The company said this is the result of the EC deciding that Meta’s no-ads subscription service for European users is not in compliance with one of its regulations.
The company’s advertising revenue for the first quarter came in at $41.39 billion, ahead of Wall Street projections of $40.44 billion.
Meta’s Reality Labs hardware division posted an operating loss of $4.2 billion in the first quarter, which was less than the $4.6 billion figure that Wall Street was expecting. However, Reality Labs’ sales came in at $412 million, which was down 6% from a year ago and came in below analysts’ expectations of $492.7 million.
Daily active users rose to 3.43 billion in the first quarter, topping analyst estimates of 3.39 billion. That’s up from 3.35 billion in the previous quarter.
Meta said its employee headcount was 76,834 as of March 31, representing an 11% year-over-year increase. The company in February laid off 5% of its workforce that it deemed as its lowest performers.
The company recorded $8.22 billion in first-quarter advertising sales stemming from the Asia-Pacific region. Analysts expected Meta to post $8.42 billion in Asia-Pacific ad sales for the quarter.
Zuckerberg said during the earnings call that the company’s Threads microblogging service has over 350 million monthly actives, up from 320 million in January. The company said last week that it expanded the testing of online ads on Threads to all “eligible advertisers globally.”
The executive said that the company’s Meta AI digital assistant has nearly 1 billion monthly active users, but did not give a more specific number. The company released yesterday a Meta AI standalone app, confirming a February report from CNBC.
Zuckerberg said that he envisions Meta AI as a place to show ads and charge subscriptions, but will focus on building the product for at least the next year before beginning to monetize it.
Snap on Tuesday and Google last week warned of potential headwinds affecting their respecting advertising businesses due to macro-economic uncertainty.
When Google reported first-quarter earnings last Thursday, company executives told analysts that it is likely the search giant will experience headwinds to its online ad business stemming from Asia. Regarding the broader economy, Google Chief Business Officer Philipp Schindler said “it’s still too early in the second quarter to have a more specific view of things.”
Snap, which also relies on online advertising, reported its first-quarter earnings on Tuesday. Its stock price plunged after the company said it couldn’t provide forward guidance due to macroeconomic uncertainties. Reddit and Amazon will report earnings on Thursday.
This is breaking news. Please check back for updates.
