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Meta Platforms:Quarterly Results/2025 Q1: Difference between revisions
→Q1 2025 Meta Earnings Call Summary
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* '''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. | * '''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. | * '''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." | * '''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). | ||
* | * | ||
=== CapEx === | === CapEx and OpEx === | ||
* 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 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 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 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). | |||
=== Artificial Intelligence (AI) === | === Artificial Intelligence (AI) === | ||
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==== Llama 4 and Meta AI ==== | ==== Llama 4 and Meta AI ==== | ||
* '''Zuckerberg said that in building Llama 4, they focused on low latency and context window. Low latency will aid voice conversation while context window will help in their personalization efforts. High context window will incorporate all the background that a user has shared across Meta Apps.''' | * '''Zuckerberg said that in building Llama 4, they focused on low latency and context window. Low latency will aid voice conversation while context window will help in their personalization efforts. High context window will incorporate all the background that a user has shared across Meta Apps. (Q&A)''' | ||
* Zuckerberg said the reason they want to build Llama out is because they want to control their own destiny by not depending on another company for something that is critical. They also want to be able to optimize it based on their user cases. | * Zuckerberg said the reason they want to build Llama out is because '''they want to control their own destiny by not depending on another company for something that is critical. They also want to be able to optimize it based on their user cases. (Q&A)''' | ||
* Zuckerberg said they cannot do distillation from other closed models. | * Zuckerberg said they cannot do distillation from other closed models. (Q&A) | ||
* Li said Meta continues to see the biggest usage in WhatsApp followed by Facebook. | * Li said Meta continues to see the biggest usage in WhatsApp followed by Facebook. | ||
* Zuckerberg said the standalone Meta AI app will serve some people who want to use it outside an app like WhatsApp. It will also be particularly important in the US where they have a low number of WhatsApp users. | * Zuckerberg said the standalone Meta AI app will serve some people who want to use it outside an app like WhatsApp. It will also be particularly important in the US where they have a low number of WhatsApp users. (Q&A). | ||
==== AI opportunities ==== | ==== AI opportunities ==== | ||
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* Zuckerberg said over time, he sees monetization opportunities in Meta such as showing ads and offering a premium service to people who want more compute. However, over they next year, they will focus on deepening its engagement and usage. " I think that there will be a large opportunity to show product recommendations or ads, as well as a premium service for people who want to unlock more compute for additional functionality or intelligence. But I expect that we're going to be largely focused on scaling and deepening engagement for at least the next year, before we'll really be ready to start building out the business here," he said. | * Zuckerberg said over time, he sees monetization opportunities in Meta such as showing ads and offering a premium service to people who want more compute. However, over they next year, they will focus on deepening its engagement and usage. " I think that there will be a large opportunity to show product recommendations or ads, as well as a premium service for people who want to unlock more compute for additional functionality or intelligence. But I expect that we're going to be largely focused on scaling and deepening engagement for at least the next year, before we'll really be ready to start building out the business here," he said. | ||
* Zuckerberg said sales of Ray-Ban Meta glasses have tripled in the last year. | * Zuckerberg said sales of Ray-Ban Meta glasses have tripled in the last year. | ||
===== '''AI agents''' ===== | |||
* Zuckerberg said the timing of when the expect the mid-level engineer to arrive hasn't changed. "So I'd say, it's basically still on track for something around a mid-level engineer, kind of starting to become possible sometime this year, scaling into next year. So I'd expect that by the middle to end of next year, AI coding agents are going to be doing a substantial part of AI research and development. So, we're focused on that." (Q&A). | |||
* Li said they are currently testing business AI agents with a small set of businesses in the US and a few other countries in WhatsApp and Messenger, and on ads in Facebook and Instagram (Q&A). | |||
* Li said they have launched a new agent management experience and dashboard that makes it easier for businesses to train AI based on existing information in their WhatsApp profile and Facebook and Instagram pages, and they are starting with AI chat agents (Q&A). | |||
* They are also testing AI agents on Facebook and AI ads that help customers with purchase and return policies (Q&A). | |||
* Li said they are hearing encouraging feedback from businesses (Q&A). | |||
* '''Zuckerberg said internally, they are focused on building AI agents that run different experiments to increase the ad recommendations''' (Q&A). | |||
==== Ad recommendation system ==== | ==== Ad recommendation system ==== | ||
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=== Q1 2025 results === | === Q1 2025 results === | ||
* | * Li said online commerce verticals was the biggest contributor to year-over-year growth in ad revenue. | ||
* Ad revenue growth was strongest in Rest of World (+19%), followed by North America (+18%), Europe (+14%) and then Asia-Pacific (+12%). | * Ad revenue growth was strongest in Rest of World (+19%), followed by North America (+18%), Europe (+14%) and then Asia-Pacific (+12%). | ||
* Li said ad pricing during the quarter benefited from increased advertiser demand, in part driven by strength in ad performance but offset by impression growth, particularly in lower monetizing regions. | * Li said ad pricing during the quarter benefited from increased advertiser demand, in part driven by strength in ad performance but offset by impression growth, particularly in lower monetizing regions. | ||