Will Higher Ad Revenues Aid Meta Platforms in Q1 Earnings?

Meta Platforms’ META first-quarter 2025 results, set to be reported on April 30, are expected to reflect the benefits of higher advertising revenues.

The Zacks Consensus Estimate for Meta Platforms’ first-quarter advertising revenues is pegged at $40.44 billion, indicating growth of 13.5% year over year.

We believe higher ad revenues will help META shares move higher after the first-quarter 2025 earnings release despite concerns over higher tariffs, monetization of its AI services, and growing regulatory headwinds, particularly in Europe.

Meta Platforms’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 13.77%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
 

Meta Platforms, Inc. Revenue (TTM)

Meta Platforms, Inc. revenue-ttm | Meta Platforms, Inc. Quote

Click here to learn how Meta Platforms’ overall first-quarter performance is likely to be.

Strong Ad Revenue Growth to Aid META’s Q1 Top Line

META’s staggering reach and increasing ad impressions (up 6% year over year in the fourth quarter of 2024) make it one of the most important players in the digital ad sales market, apart from Alphabet and Amazon. Meta Platforms’ focus on improving ad ranking and measurement by leveraging AI has been a key catalyst driving advertisers’ return on investment. 

The Zacks Consensus Estimate for advertising revenues in Asia-Pacific is pegged at $8.32 billion, indicating year-over-year growth of 13.4% in the first quarter of 2025. The consensus mark for advertising revenues in Europe, the United States and Canada, and the Rest of the World is pegged at $9.51 billion, $17.93 billion and $5.15 billion, respectively, indicating 14.2%, 16% and 14% growth.

META has been leveraging AI and machine learning to boost the potency of WhatsApp, Instagram, Facebook and Threads. Effective usage of AI has been helping the company keep its users engaged. AI-driven feed recommendations have been a key catalyst. Meta Platforms is committed to prioritizing user safety and well-being through initiatives to enhance parental supervision, messaging privacy, and time management on its platforms. These factors are expected to have driven user base growth in the first quarter of 2025. 

The consensus mark for Family Daily Active People or DAP, defined as a registered and logged-in user who visited at least one of the Family products (Facebook, Instagram, Messenger or WhatsApp) on a given day, is expected to be 3.38 billion for the first quarter of 2025.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the exact case here.

META currently has an Earnings ESP of +3.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some other companies worth considering, as our model shows that these, too, have the right combination of elements to beat on earnings in their upcoming releases:

Affirm AFRM presently has an Earnings ESP of +63.27% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Affirm shares have declined 19.3% year to date. Affirm is set to report its third-quarter fiscal 2025 results on May 8.

Compass COMP has an Earnings ESP of +16.67% and a Zacks Rank of 2 at present. 

Compass shares have gained 26.2% year to date. Compass is set to report its first-quarter 2025 results on May 8.

CyberArk Software CYBR currently has an Earnings ESP of +3.90% and a Zacks Rank #2.

CyberArk Software shares have climbed 4.2% year to date. CyberArk Software is set to report its first-quarter 2025 results on May 13.

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This article originally published on Zacks Investment Research (zacks.com).

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