Social network operator Meta Platforms (NASDAQ:META) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 16.1% year on year to $42.31 billion. The company expects next quarter’s revenue to be around $44 billion, close to analysts’ estimates. Its GAAP profit of $6.43 per share was 23.1% above analysts’ consensus estimates.
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Meta (META) Q1 CY2025 Highlights:
- Revenue: $42.31 billion vs analyst estimates of $41.35 billion (16.1% year-on-year growth, 2.3% beat)
- EPS (GAAP): $6.43 vs analyst estimates of $5.22 (23.1% beat)
- Adjusted EBITDA: $25.6 billion vs analyst estimates of $23.99 billion (60.5% margin, 6.7% beat)
- Revenue Guidance for Q2 CY2025 is $44 billion at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 41.5%, up from 37.9% in the same quarter last year
- Free Cash Flow Margin: 24.4%, down from 27.2% in the previous quarter
- Daily Active People: 3.43 billion, up 190 million year on year
- Market Capitalization: $1.4 trillion
"We've had a strong start to an important year, our community continues to grow and our business is performing very well," said Mark Zuckerberg, Meta founder and CEO.
Company Overview
Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ:META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Meta’s sales grew at a decent 12.5% compounded annual growth rate over the last three years. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.
This quarter, Meta reported year-on-year revenue growth of 16.1%, and its $42.31 billion of revenue exceeded Wall Street’s estimates by 2.3%. Company management is currently guiding for a 12.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 12% over the next 12 months, similar to its three-year rate. This projection is above average for the sector and implies its newer products and services will help maintain its historical top-line performance.
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Daily Active People
User Growth
As a social network, Meta generates revenue growth by increasing its user base and charging advertisers more for the ads each user is shown.
Over the last two years, Meta’s daily active people, a key performance metric for the company, increased by 6.4% annually to 3.43 billion in the latest quarter. This growth rate is slightly below average for a consumer internet business and is largely a function of its already massive scale and penetrated market. If Meta wants to reach the next level, it likely needs to innovate with new products. 
In Q1, Meta added 190 million daily active people, leading to 5.9% year-on-year growth. The quarterly print isn’t too different from its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns from the ads shown to its users. ARPU can also be a proxy for how valuable advertisers find Meta’s audience and its ad-targeting capabilities.
Meta’s ARPU growth has been exceptional over the last two years, averaging 13.3%. Its ability to increase monetization while growing its daily active people demonstrates its platform’s value, as its users are spending significantly more than last year. 
This quarter, Meta’s ARPU clocked in at $12.34. It grew by 9.6% year on year, faster than its daily active people.
Key Takeaways from Meta’s Q1 Results
We enjoyed seeing Meta beat analysts’ revenue, EPS, and EBITDA expectations this quarter. Overall, this print had some key positives. The stock traded up 3.3% to $565.50 immediately after reporting.
Indeed, Meta had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.