Thanks, Mark, and good afternoon, everyone. Let's begin with our consolidated results. All comparisons are on a year-over-year basis unless otherwise noted. Q1 total revenue was $42.3 billion, up 16% or 19% on a constant currency basis. Q1 total expenses were $24.8 billion, up 9% compared to last year.
In terms of the specific line items, cost of revenue increased 14%, driven primarily by higher infrastructure costs and payments to partners, partially offset by a benefit from the previously announced extension of server useful lives. R&D increased 22%, mostly due to higher employee compensation and infrastructure costs. Marketing and sales increased 8%, driven mainly by an increase in professional services related to our ongoing platform integrity efforts. G&A decreased 34%, driven primarily by lower legal-related costs. We ended Q1 with over 76,800 employees, up 4% quarter-over-quarter.
First quarter operating income was $17.6 billion, representing a 41% operating margin. Our tax rate for the quarter was 9%, as we recognized excess tax benefits from share-based compensation due to the increase in our share price versus prior periods. Net expenditures, including principal payments on finance leases, were $13.7 billion, driven by investments in servers, data centers, and network infrastructure. Free cash flow was $10.3 billion. We repurchased $13.4 billion of our Class A common stock and paid $1.3 billion in dividends to shareholders, ending the quarter with $70.2 billion in cash and marketable securities, and $28.8 billion in debt.
Moving now to our segment results. I'll begin with our Family of Apps segment. Our community across the Family of Apps continues to grow, and we estimate more than 3.4 billion people used at least one of our Family of Apps on a daily basis in March. Q1 total Family of Apps revenue was $41.9 billion, up 16% year-over-year. Q1 Family of Apps' ad revenue was $41.4 billion, up 16% or 20% on a constant currency basis.
Within ad revenue, the online commerce vertical was the largest contributor to year-over-year growth. On a user geography basis, ad revenue growth was strongest in Rest of World and North America at 19% and 18%, respectively. Europe and Asia-Pacific grew 14% and 12%. In Q1, the total number of ad impressions served across our services increased 5%, and the average price per ad increased 10%. Impression growth was mainly driven by Asia-Pacific. Pricing growth benefited from increased advertiser demand, in part driven by improved ad performance. This was partially offset by impression growth, particularly from lower monetizing regions and surfaces.
Family of Apps' other revenue was $510 million, up 34%, driven mostly by business messaging revenue growth from our WhatsApp Business platform, as well as Meta Verified subscriptions. We continue to direct the majority of our investments toward the development and operation of our Family of Apps. In Q1, Family of Apps' expenses were $20.1 billion, representing 81% of our overall expenses. Family of Apps' expenses were up 10%, mainly due to growth in employee compensation and infrastructure costs, which were partially offset by lower legal-related expenses. Family of Apps' operating income was $21.8 billion, representing a 52% operating margin. Within our Reality Labs segment, Q1 revenue was $412 million, down 6% year-over-year due to lower Meta Quest sales, which were partially offset by increased sales of RayBan Meta AI glasses. Reality Labs' expenses were $4.6 billion, up 8% year-over-year, driven primarily by higher employee compensation. Reality Labs' operating loss was $4.2 billion. Turning now to the business outlook.
There are two primary factors that drive our revenue performance our ability to deliver engaging experiences for our community and our effectiveness at monetizing that engagement over time. On the first, we're focused both on enhancing our core Family of Apps today and building the next generation of devices and experiences through Reality Labs. I'll start with our Family of Apps. In the first quarter, we saw strong growth in video consumption across both Facebook and Instagram, particularly in the U.S., where video time spent grew double-digits year-over-year. This growth continues to be driven primarily by ongoing enhancements to our recommendation systems, and we see opportunities to deliver further gains this year. We're also progressing on longer-term efforts to develop innovative new approaches to recommendations. A big focus of this work will be on developing increasingly efficient recommendation systems, so that we can continue scaling up the complexity and compute used to train our models, while avoiding diminishing returns. There are promising techniques we're working on that will incorporate the innovations from LLM model architectures to achieve this. Another area that is showing early promise is integrating LLM technology into our content recommendation systems. For example, we're finding that LLM's ability to understand a piece of content more deeply than traditional recommendation systems can help better identify, what is interesting to someone about a piece of content leading to better recommendations. We began testing using Llama and Threads recommendation systems at the end of last year, given the app's text-based content, and have already seen a 4% lift in time spent from the first launch. It remains early here, but a big focus this year will be on exploring how we can deploy this for other content types, including photos and videos.
We also expect this to be complementary to Meta AI, as it can provide more relevant responses to people's queries by better understanding their interests and preferences through their interactions across Facebook, Instagram, and Threads. Earlier this year, we began testing the ability for Meta AI to better personalize its responses by remembering certain details from people's prior queries and considering what that person engages with on our apps. We are already seeing this lead to deeper engagement with people we've rolled it out to, and it is now built into Meta AI across Facebook, Instagram, Messenger, and our new standalone Meta AI app in the U.S. and Canada.
We're also continuing to focus on helping people connect over content. In Q1, we launched a new experience on Instagram in the U.S., that consists of a feed of content your friends have left a note on or liked, and we're seeing good results. We also just launched Blend, which is an opt-in experience in direct messages that enables you to blend your reels algorithm with your friends to spark conversations over each other's interests. These features all lean into Instagram's position at the intersection of entertainment and social connection. WhatsApp remains at its core a private messaging app, but it has evolved to also become a place people come to get updates from accounts they are connected to or follow. Today, there are tens of billions of views of status posts on WhatsApp each day, and we continue to invest in the Updates tab, as a place people can go to do more. Creators remain another big focus for us, and we're investing in tools to help them produce the best original content on our platforms. Last week, we launched our standalone Edits app, which supports the full creative process for video creators from inspiration and creation to performance insights. Edits has an ultra-high resolution short-form video camera and includes generative AI tools that enable people to remove the background of any video or animate still images, with more features coming soon.
Moving to Reality Labs, we're seeing very strong traction with RayBan Meta AI glasses with over 4 times as many monthly actives as a year ago, and the number of people using voice commands is growing even faster as people use it to answer questions and control their glasses. This month, we fully rolled out live translations on RayBan Meta AI glasses to all markets for English, French, Italian, and Spanish. Now, when you are speaking to someone in one of these languages, you'll hear what they say in your preferred language through the glasses in real time. Now to the second driver of our revenue performance, increasing monetization efficiency.
The first part of this work is optimizing the level of ads within organic engagement. We continue to optimize ad supply across each service to better deliver ads at the time and place they are most relevant to people. We are also starting to introduce ads on unmonetized surfaces like Threads, which we opened up to all eligible advertisers this month to reach people in over 30 different markets to start, including the U.S. As we do for any newly monetized surface, we expect to gradually ramp ad supply as we optimize the ad formats and ensure they feel native to the app. We don't expect Threads to be a meaningful driver of overall impression or revenue growth in 2025. The second part of increasing monetization efficiency is improving marketing performance. We're continuing to improve our ad systems by developing new modeling technologies to more efficiently predict the right ad to show. In Q1, we introduced our new Generative Ads Recommendation Model, or GEM for ads ranking. This model uses a new architecture we developed that is twice as efficient at improving ad performance for a given amount of data and compute. This efficiency gain enabled us to significantly scale up the amount of compute we use for model training with GEM trained on thousands of GPUs, our largest cluster for ads training to date. We began testing the new model for ads recommendations on Facebook Reels earlier this year and have seen up to a 5% increase in ad conversions.
We're now rolling it out to additional services across our apps. On the ads product side, we're seeing continued momentum with our Advantage+ suite of AI-powered solutions. We've been encouraged by the initial tests of our streamlined campaign creation flow for sales, app, and lead campaigns, which starts with Advantage+ turned on from the beginning for advertisers. In April, we rolled this out to more advertisers and expect to complete the global rollout later this year. We're also seeing strong adoption of Advantage+ creative. This week, we are broadening access of video expansion to Facebook Reels for all eligible advertisers, enabling them to automatically adjust the aspect ratio of their existing videos by generating new pixels in each frame to optimize their ads for full-screen surfaces. We also rolled out Image Generation to all eligible advertisers, and this quarter, we plan to continue testing a new virtual try-on feature that uses Gen AI to place clothing on virtual models, helping customers visualize how an item may look and fit. Last, we continue to evolve our ads platform to drive results that are optimized for each business's objectives and the way they measure value. One example of this is our incremental attribution feature, which enables advertisers to optimize for driving incremental conversions or conversions we believe would not have occurred without an ad being shown. We're seeing strong results in testing so far with advertisers using incremental attribution in tests, seeing an average 46% lift in incremental conversions compared to their business-as-usual approach. We expect to make this available to all advertisers in the coming weeks.
Next, I would like to discuss our approach to capital allocation. Our primary focus remains investing capital back into the business, with infrastructure and talent being our top priorities.
Starting with headcount, our hiring continues to be targeted at technical roles within our company priorities. In the first quarter, the significant majority of the roughly 2,800 employees we added were to support our priorities of monetization, infrastructure, generative AI, regulation and compliance, and Reality Labs. On infrastructure, we have two primary focuses to meet the growing compute needs of our services and AI initiatives. The first way is by significantly scaling up our infrastructure footprint. Our CapEx growth this year is going toward both generative AI and core business needs, with the majority of overall CapEx supporting the core. We expect the significant infrastructure footprint we are building will not only help us meet the demands of our business in the near term, but also provide us an advantage in the quality and scale of AI services we can deliver.
We continue to build this capacity in a way that grants us maximum flexibility in how and when we deploy it to ensure we have the agility to react to how the technology and industry develop in the coming years. The second way we're meeting our compute needs is by increasing the efficiency of our workloads. In fact, many of the innovations coming out of our ranking work are focused on increasing the efficiency of our systems.
This emphasis on efficiency is helping us deliver consistently strong returns from our core AI initiatives. For example, we shared on the Q3 2024 call that improvements to our AI-driven feed and video recommendations drove a roughly 8% lift in time spent on Facebook and a 6% lift on Instagram over the first nine months of last year. Since then, we've been able to deliver similar gains in just six months' time with improvements to our AI recommendations delivering 7% and 6% time spent gains on Facebook and Instagram, respectively. Before moving to our financial guidance, I want to acknowledge the dynamic macro environment and note that our range reflects the potential for a wider set of outcomes. We continue to feel good about the fundamental drivers of revenue growth and believe the past work we've done to streamline our operations and cost profile puts us in a strong position to navigate a variety of outcomes. Moving to our financial outlook.
We expect second quarter of 2025 total revenue to be in the range of $42.5 billion to $45.5 billion. Our guidance assumes foreign currency is an approximately 1% tailwind to year-over-year total revenue growth based on current exchange rates. Turning now to the expense outlook. We expect full year 2025 total expenses to be in the range of $113 billion to $118 billion, lowered from our prior outlook of $114 billion to $119 billion. Turning now to the CapEx outlook. We anticipate our full year 2025 capital expenditures, including principal payments on finance leases, will be in the range of $64 billion to $72 billion, increased from our prior outlook of $60 billion to $65 billion. This updated outlook reflects additional data center investments to support our AI efforts as well as an increase in the expected cost of infrastructure hardware.
The majority of our CapEx in 2025 will continue to be directed to our core business. On to tax. Absent any changes to our tax landscape, we expect our full-year 2025 tax rate to be in the range of 12% to 15%. In addition, we continue to monitor an active regulatory landscape, including legal and regulatory headwinds in the EU and the US, that could significantly impact our business and our financial results. The European Commission recently announced its decision that our subscription for no ads model is not compliant with the DMA. Based on feedback from the European Commission in connection with the DMA, we expect we will need to make some modifications to our model, which could result in a materially worse user experience for European users and a significant impact to our European business and revenue as early as the third quarter of 2025. We will appeal the Commission's DMA decision, but any modifications to our model may be imposed before or during the appeal process.
In closing, this was another solid quarter for our business. We believe the investments we're making across our company priorities will position us well in the coming years to continue delivering engaging services for our community, compelling results for advertisers, and strong business performance. With that, Krista, let's open up the call for questions.