By Adam Levine

Meta Platforms roundly beat first-quarter earnings expectations Wednesday afternoon. Its shares were rising in after-hours trading, though the company's latest outlook around capital expenditures could give some investors pause.

Earnings-per-share were up sharply to $6.43 versus Wall Street's consensus estimate of $5.23, according to Factset, and up from $4.71 last year. Revenue for the quarter reached $42.3 billion, above expectations of $41.3 billion, and up 16% on the year.

Two of Meta's main revenue drivers, users and ad views, came in as expected. But ad price growth of 10% from a year ago more-than-doubled projections.

Investors are watching big tech capital expenditures closely, and Meta may have disappointed those who would like to see them moderated. While $14 billion capex in the quarter was slightly behind the pace of the $60 billion to $65 billion that Meta previously forecast, the company boosted its annual capex range to $64 billion to $72 billion. That leaves up to $58 billion in additional capex spending in the remaining nine months of the year.

Perhaps because of the accelerated pace of capex, quarterly share buybacks were down 11% from last year, after doing no buybacks in the fourth quarter.

Meta's guidance for second quarter revenue was $44 billion at the midpoint, just above analyst expectations. Meta also slightly lowered its projected expenses for the full year, which a notable feat given that its headcount is up by 4% since the end of 2024, and up 11% over the year.

Exchange rates have a lot of influence on multinational corporate earnings, and Meta saw a three percentage point headwind to annual revenue growth in the first quarter, a penalty it has been paying while the dollar remained strong. But the weakened 2025 dollar has flipped that dynamic on its head. Meta is now projecting a one percentage point currency tailwind to revenue growth in the second quarter. Other big tech companies may see the same thing.

Meta stock was up 5% in after-hours trading following the earnings release.

This is breaking news. Read a preview of Meta's earnings below and check back for more analysis soon.

Meta Platforms' earnings, due after the close of trading on Wednesday, will be more complicated than normal because the social media company faces new risks.

Of the big tech companies, Meta's financials are the simplest, with 98% of revenue coming from advertising on apps such as Facebook and Instagram, as well as ads newly launched on Threads, Meta's competitor to X. Conversations on its earnings calls generally revolve around things like new ad technology, and growth in users, ad prices, and ad views.

These topics will still be discussed when management speaks with investors and analysts after disclosing the numbers. Wall Street expects continued double-digit growth from the social media company. The consensus calls among analyst tracked by FactSet are for quarterly earnings per share of $5.23, up 11% from 2024, and revenue rising to $41.3 billion, a 13% increase.

Though the start of ad sales on Threads may bring more growth than analysts expect, those numbers would mark a slowdown from 2024, when Meta's revenue grew by 22%, driven by 10% growth in both ad views and average prices.

The twist this quarter is that because of all the rapid shifts in policy coming from the White House, there likely will be additional questions from analysts. The first quarter ended just before President Donald Trump announced the current round of tariffs on April 2, tanking the stock market before modifying them on April 9. Almost two-thirds of Meta's 2024 revenue came from outside the U.S., so analysts may want to know if Meta has seen shifts in international ad spending this month.

The main U.S. adversary in the trade war is China, and none of Meta's apps operate there. But it does have ad sales to Chinese companies who ship to the rest of the world, which accounted for 11% of 2024 revenue. Key customers are the Chinese e-commerce platforms Temu and Shein, who aren't only big buyers, but who often push up ad prices in bidding.

Temu seems to have some inventory already in the U.S., but it is adding "import charges" of up to 143% on goods that have to be shipped from China. Temu's U.S. business is built on ultra-low-cost goods, so that is likely to be a major setback, even if just in the short term. Investors likely will want to know how this dynamic has affected ad volume and pricing in April.

Meta is also seeing challenges from the European Union. While Meta has been piling up relatively small fines in Europe since at least 2017, treating them as a cost of doing business, the situation may be changing.

The latest fine was EUR200 million ($228 million) for violations of the EU Digital Markets Act, which together with its companion legislation, the Digital Services Act, imposes harsh new requirements on large U.S. tech companies. For repeated violations of the DMA, fines can reach as high as 20% of annual revenue. The number is 7% for the DSA.

Meta's Europe segment, which includes more than just the EU countries, represented 23% of Meta's 2024 revenue. Sales were up 23% from 2023.

Shares are down 2.5% in Wednesday afternoon trading ahead of the print.

Write to Adam Levine at adam.levine@barrons.com

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April 30, 2025 16:56 ET (20:56 GMT)

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