Meta shares rose as much as 5% Wednesday 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 expectedRevenue: $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 the range of $42.5 billion to $45.5 billion, said Meta finance chief Susan Li. That was in line with analysts expectations of $44.03 billion. However, Li also added that the company has begun to see some reduced ad spend from Asia e-commerce exporters.
“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 on Wednesday.
Meta said that it lowered the range of its 2025 total expenses, which will now come in between $113 billion to $118 billion. That figure was previously $114 billion to $119 billion.
However, Meta increased its 2025 capital expenditures to come in 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.
The increase in expected infrastructure hardware is the result of “suppliers who source from countries around the world,” Li said.
“There’s just a lot of uncertainty around this, given the ongoing trade discussions,” said Li, adding that Meta is “working on our end on mitigations by optimizing our supply chain.”
The company also 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.
“We are continuing to engage actively with the European Commission further on this, so we hope to have more clarity by next quarter’s call,” Li said.
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.
The company’s Threads microblogging service now has 350 million monthly users, Zuckerberg said. That’s up from 320 million in January. Meta last week said that all “eligible advertisers globally” will be able to run ads on Threads. Meta does not expect Threads ads to meaningfully drive revenue growth in 2025, Li said Wednesday.
The Meta AI digital assistant now has nearly 1 billion monthly users, Zuckerberg said. In January, the company said the AI service had 700 million monthly users. WhatsApp is the primary way people access Meta AI, Li said. The company on Tuesday released a standalone Meta AI app, confirming a February report from CNBC.
Zuckerberg said that he envisions Meta AI as a place to show ads and that the company could charge for a premium version of the assistant, but Meta will focus on building the product for at least the next year before beginning to monetize it.
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.
Li told analysts that the company has “seen some reduced spend in the U.S. from Asia based e-commerce exporters.” The company believes that is in anticipation of the de minimis loophole ending on Friday, Li said.
“A portion of that spend has been redirected to other markets, but overall spend for those advertisers is below the levels prior to April,” Li said.
Snap on Tuesday and Google last week warned of potential headwinds affecting their respective advertising businesses due to macroeconomic 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.
