Meta’s 1Q Profit Soars 35%

Meta Platforms, Inc., the parent company of Facebook, Instagram, WhatsApp, and Threads, reported a robust financial performance for the first quarter of 2025, with a 35% surge in net income and its second-highest quarterly revenue ever. 

Key Financial Highlights

• Net Income: Meta’s net income reached $16.64 billion in Q1 2025, a 35% increase from $12.37 billion in Q1 2024. This marked the second-best profit in the company’s history, surpassed only by the $20.84 billion reported in Q4 2024 during the holiday season. Earnings per share (EPS) were $6.43, exceeding analysts’ expectations of $5.22, according to Zacks Investment Research.
• Revenue: Total revenue was $42.31 billion, up 16% year-over-year, making it Meta’s second-highest revenue quarter ever, behind only Q4 2024’s $48.39 billion. This figure surpassed analyst projections of $41.22 billion. Advertising revenue, which accounted for 98% of total sales, was the primary driver.
• Daily Active Users (DAUs): Meta reported 3.43 billion DAUs across its family of apps, a 6% annual increase, reflecting continued user growth. This metric underscores Meta’s ability to maintain engagement despite privacy changes and competition from platforms like TikTok and YouTube.
• Operating Margin: While not explicitly stated for Q1 2025, Meta’s operating margin in Q4 2024 was 48%, up from 41% a year prior, suggesting sustained efficiency gains.

Meta’s near-total reliance on ad revenue (98%) highlights its strength in digital advertising, bolstered by AI-driven ad targeting improvements. The 16% revenue growth contrasts with slower ad growth at competitors like Google (11% in Q4 2024), suggesting Meta is gaining market share, partly due to heavy spending by Chinese retailers like Temu and Shein.

Meta’s reliance on advertising, while a strength, exposes it to risks like economic downturns or shifts in advertiser behavior. The significant contribution from Chinese retailers raises questions about sustainability if geopolitical tensions or tariffs disrupt this revenue stream.

AI Investment Risks: The $72 billion planned expenditure for 2025, particularly for AI, is a high-stakes bet. While Meta AI’s 1 billion monthly actives are promising, competition from cheaper AI models (e.g., DeepSeek’s offerings) could undermine profitability, as evidenced by a recent tech stock selloff.

Meta’s first-quarter 2025 performance, with a 35% profit increase to $16.64 billion and $42.31 billion in revenue, underscores its resilience in digital advertising and user engagement, with 3.43 billion daily active users. The results reflect Meta’s ability to outperform analyst expectations despite heavy AI investments and Reality Labs losses. The company’s projected Q2 2025 revenue of $42.5 billion suggests continued optimism, but investors will closely watch AI returns and legal outcomes.