Q1 2025 Meta Platforms Earnings

Q1 2025 Meta Earnings Call Summary

CEO Mark Zuckerberg said the business is performing very well and thinks that they are well positioned to navigate macro uncertainty. "Our business is also performing very well, and I think we're well-positioned to navigate the macroeconomic uncertainty," he said.
CFO Susan Li said there is uncertainty but the $3 billion in their guidance range aims to factor it. "On the Q2 guide, there is uncertainty, obviously, on how the macro environment will evolve over time and how that could impact different segments of our business. Our Q2 revenue outlook aims to factor that in and partly -- that's partly why the $3 billion range reflects the potential for a wider range of outcomes," she said. (Q&A).
Li said they have started seeing reduced ad spend in the US from Asia-based advertisers in anticipation of de minimis rule going away in May 2nd. "We have seen some reduced spend in the US from Asia-based e-commerce exporters, which we believe is in anticipation of the de minimis exemption going away on May 2nd. A portion of that spend has been redirected to other markets, but overall spend for those advertisers is below the levels prior to April. But our Q2 outlook reflects the trends we're seeing so far in April, which have generally been healthy. So it's very early and hard to know how things will play out over the quarter, and certainly harder to know that for the rest of the year." (Q&A).

Li said it's too early to say what the changes caused by the DMA will be since they are in the process of engaging with the EU Commission. "It is really too early to speak about what those changes could be because we are in the process of engaging with the European Commission. I think maybe the most useful sort of metric I could give you is just that our advertising revenue in the European economic area in Switzerland, which would be the geographies impacted here, was 16% of our worldwide total revenue in 2024. Again, we are continuing to engage actively with the European Commission further on this. So we hope to have more clarity by next quarter's call." (Q&A).

Li said majority of their CapEx this year will go to both generative AI and core business, with the majority going to the core business.
Li said they continue to deploy CapEx in a way that grants them the maximum flexibility to react to technology and industry developments.
Li said even with the capacity they are bringing in 2025, they are having a hard time meeting the compute demands across the company.
Li said the higher infrastructure cost they expect this year is driven by tariff uncertainty (Q&A).
Li said the are funding the Llama training and don't expect this will change (i.e. find a partner).
Li said their updated OpEx guidance reflects their updated expectations for employee compensation as well as non-headcount related expenses. "The lowered outlook reflects more refined forecasts, including updated expectations for both employee compensation as well as some other non-headcount-related operating expenses this year. And that's partially offset by higher expected infrastructure costs related to our increased CapEx outlook as well as higher expected Reality Labs cost of goods sold," she said (Q&A).
Li said the capacity situation is dynamic, making it hard to project where demand and supply will be (Q&A).
Li said it's too early to discuss the 2026 CapEx, reiterating that the CapEx situation is dynamic and they continue to find a lot of good use cases to put "capacity toward our core AI ranking and recommendations work." (Q&A).