Advertising & AI boost Meta’s Q1 2025 performance
Meta Platforms Inc. reported a robust start to 2025, with first-quarter revenue rising 16% year-over-year to $42.31 billion, surpassing analyst expectations. Net income increased by 35% to $16.64 billion, reflecting efficient scaling and high-margin performance across its core advertising business. Diluted earnings per share stood at $6.43, up 37% from Q1 2024.
The company's advertising revenue reached approximately $40.97 billion in Q1 2025, driven by a 6% increase in daily active users across its family of apps—Facebook, Instagram, Messenger, and WhatsApp—totalling 3.43 billion users. Ad impressions grew by 5%, while the average price per ad rose 10%, indicating higher user engagement and stronger monetisation.
Meta's advancements in artificial intelligence (AI) significantly contributed to its performance. The company invested heavily in AI infrastructure, with capital expenditures surging to $13.69 billion in Q1, primarily allocated to AI and data centers. Meta AI, the company's AI assistant, now boasts nearly 1 billion monthly active users, and CEO Mark Zuckerberg anticipates it will surpass that milestone within the year.
The company's AI-driven advertising tools, such as the Advantage+ suite, have seen widespread adoption. More than 4 million advertisers are utilising Meta's generative AI offerings, including image, video, and text generators, enhancing ad effectiveness and efficiency.
Despite the strong quarter, Meta faces regulatory challenges. The European Commission ruled that Meta's ad-free subscription model is non-compliant with the Digital Markets Act, potentially necessitating a redesign of data usage choices in the EU, which could impact ad effectiveness and user satisfaction.
Looking ahead, Meta projects second-quarter revenue between $42.5 billion and $45.5 billion, aligning with analyst expectations. The company remains focused on expanding its AI capabilities and navigating regulatory landscapes to sustain its growth trajectory.
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