Meta Platforms Reports Increased Users and Higher Advertising Revenue

Meta Platforms has reported a significant increase in user engagement across its platforms, including Facebook, Instagram, Messenger, Threads, and WhatsApp, with 3.43 billion users accessing these services at least once in March. This marks a growth of approximately six percent year-over-year. Accompanying this surge in user activity, Meta has also raised its advertising rates by ten percent.

As advertising remains the primary revenue source for Meta, this combination of increased user engagement and higher advertising prices has resulted in a notable rise in revenue. The company's advertising income surged by 16.2 percent, reaching $41.4 billion, while overall revenue climbed by 16.1 percent to $42.3 billion. Meanwhile, the proportion of operating and sales expenses relative to total revenue has remained stable, with a slight increase in research and development costs. However, general and administrative expenses were nearly halved, declining from nine percent to five percent of total revenue.

This financial performance has led to a substantial increase in operational cash flow, which grew by approximately 25 percent to $24 billion. The profit margin has also improved, rising from 38 percent in the first quarter of 2024 to 41 percent in the first quarter of 2025, a significant increase from 25 percent two years ago. The operating profit has seen a year-over-year growth of 27 percent, reaching $17.6 billion.

According to the latest financial results released on Wednesday, the operating profit primarily stems from its core products including Facebook, Instagram, Messenger, Threads, and WhatsApp. In contrast, the Reality Labs segment, which is focused on developing the Metaverse, continues to operate at a loss, with a $4.2 billion operating loss, an increase of 9.5 percent.

Additionally, Meta has more than doubled its profits from interest and other investments, amounting to $827 million in the first quarter. This brings the pre-tax profit for the first quarter of 2025 to $18.4 billion, reflecting an increase of around 30 percent. The company has also seen a significant reduction in its tax burden, decreasing from 13 percent to nine percent, resulting in a decline in absolute tax reserves from $1.8 billion to $1.7 billion. Consequently, this has led to a net quarterly profit of $16.6 billion, up approximately 35 percent.

Looking ahead, Meta's management expects revenues for the current quarter to be between $42.5 billion and $45.5 billion, translating to a year-over-year increase of nine to sixteen percent. The projected annual operating expenses are set to be between $113 billion and $118 billion, which is one billion less than previously anticipated.

Investment expenditures for 2025 are expected to rise significantly from an initial estimate of $60 to $65 billion to a new range of $64 to $72 billion. This increase is attributed to Meta's focus on artificial intelligence, as CEO Mark Zuckerberg aims to develop a personalized AI service that can remember user interactions across Meta's platforms. This strategy necessitates the establishment of additional data centers, alongside rising hardware costs due to tariffs.

Institutional investors have responded positively to these developments, with Meta's stock price increasing by over five percent in after-hours trading.