Meta Platforms Inc. saw its shares temporarily decline by as much as 9% on Wednesday despite posting a strong third-quarter earnings report that exceeded Wall Street forecasts. The initial negative market reaction stemmed from the revelation of a significant $15.93 billion one-time tax charge, overshadowing otherwise positive financial results.
Here’s a look at the key figures, compared against analyst expectations compiled by LSEG:
- Adjusted Earnings per Share: $7.25 vs. $6.69 estimated
- Revenue: $51.24 billion vs. $49.41 billion estimated
The company attributed the substantial tax expense to the enactment of the “One Big Beautiful Bill Act,” a tax reform initiative. Meta anticipates this legislation will lead to a “significant reduction” in its U.S. federal cash tax payments for the remainder of 2025 and in subsequent years, suggesting a long-term financial benefit despite the immediate impact.
Meta’s revenue growth for the third quarter reached an impressive 26% year-over-year, marking its strongest revenue expansion since the first quarter of 2024. This growth is fueled by resilient advertising sales and increasing user engagement, indicating robust performance across its core platforms.
Looking ahead, Meta projects fourth-quarter revenue to range between $56 billion and $59 billion. The midpoint of this guidance surpasses consensus analyst expectations, signaling continued confidence in the company’s trajectory.
However, the company has revised its full-year expense guidance upward, increasing the lower end of the range by $2 billion. Total expenses are now projected to fall between $116 billion and $118 billion, compared to the previous range of $114 billion to $118 billion. The increased spending primarily reflects escalated investments in artificial intelligence (AI) infrastructure.
CEO Mark Zuckerberg emphasized the company’s growing need for computational resources to support its ambitious AI initiatives. This necessitates increased expenditure on data centers and cloud services. “That suggests that being able to make a significantly larger investment here is very likely to be a profitable thing over, over some period,” Zuckerberg noted, highlighting the strategic importance of AI to Meta’s long-term growth.
Furthermore, capital expenditure guidance for 2025 has been adjusted upwards, now expected to be in the range of $70 billion to $72 billion, compared to the prior range of $66 billion to $72 billion. This increased investment underscores Meta’s commitment to building out the infrastructure required to power its AI ambitions and support its expanding business operations.
Meta’s Reality Labs division, responsible for its virtual reality (VR) and augmented reality (AR) hardware, reported a third-quarter loss of $4.4 billion on revenue of $470 million. This reveals the substantial investment required to develop and market immersive technologies, which currently represent a long-term bet for the company. While showing promising progress, the division’s heavy losses are being examined by investors, especially given the overall investment being placed in AI.
Meta’s CFO Susan Li indicated that Reality Labs revenue in the fourth quarter is expected to be lower than the same period in 2024. This is attributed to the absence of a new VR headset release this year and shifting inventory dynamics with retailers who stocked up on previous-generation headsets during the third quarter for the holiday season.
“We’re still expecting significant year-over-year growth in AI glasses revenue in Q4 as we benefit from strong demand for the recent products that we’ve introduced, but that is more than offset by the headwinds to the Quest headsets,” Li clarified, pointing to the success of Meta’s new AI-powered glasses despite headwinds in the VR headset market.
In September, Meta unveiled the $799 Meta Ray-Ban Display glasses, its first consumer-ready AI glasses featuring a built-in display and a companion wristband with neural technology. Zuckerberg reported that the product is currently sold out, with demo slots fully booked through the end of November, signaling strong consumer interest.
“We’re going to have to invest in increasing manufacturing and selling more of those,” he stated, suggesting Meta’s plans to ramp up production to meet high demand.
Meta reported a staggering 3.54 billion daily active people across its apps during the third quarter, exceeding Wall Street’s expectations of 3.5 billion. This reinforces the company’s dominant reach and influence in social media and communications.
Advertising revenue, a key driver of Meta’s overall performance, reached $50.08 billion in the third quarter, surpassing analyst forecasts of $48.5 billion. This demonstrates the resilience of Meta’s advertising business despite evolving privacy regulations and increased competition.
Throughout the year, Meta has been heavily investing in AI, including a significant restructuring of its AI organization following the initial tepid reception of its open-source Llama 4 software in April. This highlights Meta’s commitment to refining its AI strategy and improving the performance of its models.
Recently, Meta announced layoffs of approximately 600 employees in its Superintelligence Labs AI unit. Just prior, it revealed a joint venture with Blue Owl Capital in a deal worth $27 billion to co-fund and construct a gigantic data center in Richland Parish, Louisiana. These actions reflect Meta’s ongoing efforts to optimize its workforce and secure crucial infrastructure for its AI initiatives.
As of September 30, Meta’s employee headcount stood at 78,450, representing an 8% year-over-year increase, signaling Meta’s continued growth and expansion.
In September, Meta introduced Vibes to its Meta AI app, offering a feed of AI-generated videos. Since the launch of Vibes, downloads of Meta AI on both iOS and Android have surged 56% month-to-month, reaching a total of 3.9 million downloads as of October 18, according to data from Appfigures. This data suggests Vibes is a successful feature and demonstrates the growing appetite for AI in general audience apps。
“Vibes is an example of a new content type enabled by AI, and I think that there are more opportunities to build many more novel types of content ahead,” Zuckerberg concluded, hinting that AI will continue impacting user experiences and driving future development.
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