Meta's ad revenue growth boosts sentiments as profit jumps 35% YoY in Q1

Meta’s first-quarter revenue for FY25 increased 16% to $42.3 billion, from $36.45 billion in the year-ago period, while net profit surged 35%.

May 1, 2025 - 08:22

Meta's ad revenue growth boosts sentiments as profit jumps 35% YoY in Q1

WhatsApp parent Meta reported growth in revenue and profit in the January-March 2025 quarter, driven by strong ad revenue.

The tech giant’s topline increased to $42.3 billion, a 16% year-on-year (YoY) jump from $36.45 billion a year ago. Meanwhile, its net profit surged 35% YoY to $16.6 billion, from $12.3 billion in Q1 FY24.

The company made a capital expenditure of $13.7 billion during the quarter, specifically in servers, data centres, and network infrastructure. The annual capital expenditure budget has been increased to $64-72 billion from the prior estimate of $60-65 billion.

“We've had a strong start to an important year, our community continues to grow and our business is performing very well,” Mark Zuckerberg, Founder and CEO, Meta, said during the earnings call.

He said that the company is well-positioned to navigate the macroeconomic uncertainty.

“We're making good progress on AI glasses and Meta AI, which now has almost 1 billion monthly actives,” the CEO added.

Family of apps

Meta saw 16.15% growth in its ad revenue—its main revenue source—which increased to $41.3 billion from $35.6 billion in the year-ago period. The total ad revenue across the family of apps reached $41.9 billion.

“Within ad revenue, the online commerce vertical was the largest contributor to year-over-year growth,” said Susan Li, CFO, Meta.

The company’s average price per ad increased by 10% YoY, and the ad impressions delivered across its family of apps increased by 5% YoY.

“Family of apps other revenue was $510 million, up 34%, driven mostly by business messaging

revenue growth from our WhatsApp Business Platform as well as Meta Verified subscriptions,” added Li.

In its Reality Labs segment, the company’s first-quarter revenue stood at $412 million, down 6% year-over-year due to lower Meta Quest VR headset sales, which were partially offset by increased sales of Ray-Ban Meta AI glasses. Reality Labs’ operating loss was $4.2 billion.

The sales of Ray-Ban Meta AI glasses tripled over the last year. “We've got some exciting new launches with our partner EssilorLuxottica later this year as well that should expand that category and add some new technological capabilities to the glasses,” said Zuckerberg.

On Quest, he added that the company is seeing deeper engagement with Quest 3S, and more people creating experiences in Horizon with AI tools.

AI infrastructure

As the social media giant continues to increase its investments and focus resources on AI, Zuckerberg listed the five major opportunities that the company is currently focused on—improved advertising, more engaging experiences, business messaging, Meta AI, and AI devices.

“The increased productivity from AI will make advertising a meaningfully larger share of global GDP than it is today. In just the last quarter, we're testing a new ads recommendation model for Reels, which has already increased conversion rates by 5%. And we’re seeing 30% more advertisers are using AI creative tools in the last quarter as well,” he said.

“Everything that I've talked about today is built on top of our AI models and our infrastructure. We released the first Llama 4 models earlier this month—and they are some of the most intelligent, best multi-modal, lowest latency, and most efficient models that anyone has built. We have more models on the way, including the massive Llama 4 Behemoth model. Overall, we are focused on building full general intelligence,” the CEO added.

Outlook

“We’re focused both on enhancing our core Family of Apps today and building the next generation of devices and experiences through Reality Labs,” said the CFO.

The company will also focus on developing increasingly efficient recommendation systems to continue scaling up the complexity and computing used to train models while avoiding diminishing returns. “There are promising techniques we’re working on that will incorporate the innovations from LLM model architectures to achieve this,” said Li.

The company expects its total revenue for Q2 2025 to be in the range of $42.5-45.5 billion.

Edited by Kanishk Singh