Meta Q1: Bottom Line Shines While Top Line Growth is Decelerating

Meta reported a strong Q1 with revenue nearly $1 billion ahead of consensus, while EPS grew 37% YoY versus expectations for less than 11% growth. Meta also boosted its capex outlook, signaling at least 73% YoY growth at midpoint after Q1 capex surged nearly 104% YoY.

The market is pleased with Meta’s results (today) yet it’s important to note that revenue growth has been decelerating, while key metrics are mixed with some decelerating on tough comps like ad impressions while ad pricing increased YoY by 4 points.

Overall, revenue growth of 16% is a strong report, yet this is down from 27% growth in the year ago quarter. Looking further out, Q2’s revenue guide only marginally topped estimates and pointed to a sequential deceleration to below 13% YoY. Notably, EPS growth is outpacing top line growth, which is fine by me.

All things equal, this is a strong report – yet the market will be weighing the future impact of tariffs on an advertising platform such as Meta. Therefore, the earnings report is unlikely to make a dent if tariffs persist.