Meta’s first-quarter earnings report exceeded market expectations, triggering a significant after-hours stock surge of 5.6%. The technology giant reported earnings per share of $6.43, substantially higher than the anticipated $5.25, while revenue reached $42.31 billion, marking a 16% year-over-year increase and surpassing estimates of $41.38 billion.
The company’s advertising segment demonstrated robust performance, generating $41.39 billion in revenue, up 16% from the previous year. The Family of Apps division contributed $41.90 billion to overall revenue, while Reality Labs, despite posting a $4.21 billion operating loss, showed better results than analysts’ projected losses of $4.54 billion.
Operating income climbed to $17.56 billion, representing a 27% increase year-over-year, with an impressive operating margin of 41%, up from 38% in the previous year. The company’s user metrics remained strong, with daily active users across Meta’s family of services reaching 3.43 billion, a 5.9% increase from the previous year.
In a significant development, Meta revised its capital expenditure forecast upward to $64-72 billion from the previous $60-65 billion range. This increase reflects the company’s enhanced investment in data center infrastructure to support its artificial intelligence initiatives, although actual first-quarter capital expenditure of $12.94 billion fell short of the expected $14.239 billion.
The company’s expense outlook for the full year was slightly reduced to $113-118 billion, down from the previous projection of $114-119 billion. Looking ahead to the second quarter, Meta projects revenue between $42.5-45.5 billion, aligning with market expectations of $44.1 billion.
Meta’s advertising metrics showed mixed results, with ad impressions increasing by 5%, below the estimated 6.87%, while the average price per ad rose by 10%, exceeding expectations of 6.75%. The company’s performance in artificial intelligence remains crucial, as these technologies continue to enhance advertising effectiveness, algorithm performance, and personalization capabilities.
The earnings report comes at a time when Meta’s stock had experienced a significant decline, falling more than 6% year-to-date before the announcement, though still outperforming many other major technology companies during the recent market downturn. This marked a substantial shift from earlier in the year when the company had enjoyed a remarkable 20-day winning streak.
Geographic revenue distribution remained diverse, with the Family of Apps segment demonstrating particularly strong performance, achieving an operating income of $21.77 billion, a 23% increase year-over-year. The Reality Labs division, while still operating at a loss, showed signs of improvement compared to analyst expectations.
Meta’s strategic focus on artificial intelligence investment appears to be paying off, as evidenced by improvements in advertising efficiency and user engagement metrics. The company’s decision to increase capital expenditure, particularly in data center investments, signals a strong commitment to developing and implementing AI technologies across its platforms.
This financial performance demonstrates Meta’s resilience in a challenging market environment and its ability to maintain growth while investing in future technologies. The company’s successful navigation of market pressures while expanding its technological capabilities suggests a balanced approach to current operations and future development.