Meta saw shares tumble by up to 9% on Wednesday after posting Q3 earnings that surpassed sales expectations, but included a one-time tax burden of $15.93 billion.
Here’s a summary of the company’s performance against analyst predictions from LSEG:
- EPS: $7.25 adjusted vs. $6.69 forecasted
- Revenue: $51.24 billion vs. $49.41 billion projected
According to Meta, the implementation of President Donald Trump’s One Big Beautiful Bill Act led to the one-off, non-cash income tax expense. The firm anticipates that Trump’s legislation will lead to “a significant reduction” in its federal cash tax liabilities for the remainder of 2025 and in future years.
The company’s Q3 sales increased by 26% year-over-year, marking its most significant revenue advancement since Q1 2024.
Meta forecasts that its Q4 revenue will fall between $56 billion and $59 billion. The mid-point of this spectrum aligns above analysts’ expectations, as reported by StreetAccount.
The company elevated the lower end of its total expenses for the year by $2 billion, now estimating costs to range from $116 billion to $118 billion, compared to the previous prediction of $114 billion to $118 billion.
CEO Mark Zuckerberg emphasized that Meta continually seeks greater computational capability for its AI projects, necessitating increased expenditure on corresponding data center and cloud services.
“This implies that making a considerably larger investment here is likely to yield profits over time,” Zuckerberg remarked.
Additionally, the firm has raised its 2025 capital expenditure forecast, now predicting it to be between $70 billion and $72 billion, up from the earlier estimate of $66 billion to $72 billion.
Meta’s Reality Labs hardware division reported a loss of $4.4 billion in Q3 against $470 million in sales.
Reality Labs’ revenue in Q4 is expected to be lower than in the comparable 2024 period, according to Meta’s finance officer Susan Li, who noted that this is due to the absence of a new VR headset release this year and the fact that retailers purchased inventory of prior Meta models in Q3 for the holiday sales.
“We still predict considerable year-on-year growth in AI glasses revenue in Q4, benefitting from robust demand for recently launched products, though this is more than offset by challenges regarding Quest headsets,” Li stated.
In September, the company unveiled the $799 Meta Ray-Ban Display glasses, which are Meta’s inaugural consumer-ready AI eyewear equipped with an integrated display and a wristband featuring neural technology. Zuckerberg confirmed the product is already sold out and that demo appointments are fully booked through the end of November.
“We need to invest in ramping up production and selling more of those,” he said.
The company stated that it recorded 3.54 billion daily active users across its applications for the quarter, surpassing Wall Street’s forecast of 3.5 billion daily active users.
Meta’s advertising revenue reached $50.08 billion in Q3, exceeding Wall Street’s anticipated $48.5 billion.
This year, the firm has invested heavily in AI while also undergoing a substantial reorganization of the team overseeing these initiatives following the lukewarm reception of its open-source Llama 4 software launch in April.
Last Wednesday, Meta announced plans to reduce its workforce by approximately 600 employees in its Superintelligence Labs AI division, leaving the top-tier TBD Labs unaffected. A day earlier, Meta had disclosed a joint venture with Blue Owl Capital in a worth $27 billion aimed at financing and constructing a massive data center in Richland Parish, Louisiana.
As of September 30, Meta’s employee count stood at 78,450, indicating an 8% rise year-over-year.
In September, the company incorporated Vibes into its Meta AI app, which offers a feed of AI-generated videos. Since Vibes’ launch, downloads of Meta AI across both iOS and Android have surged by 56% month-over-month, accumulating to 3.9 million downloads as of October 18, as per data provided to CNBC by mobile research firm Appfigures.
“Vibes exemplifies a new type of content made possible by AI, and I believe there are numerous opportunities ahead to develop even more innovative content,” Zuckerberg remarked.
Correction: Analysts had anticipated Meta’s revenue to reach $49.41 billion. This figure was inaccurately stated in an earlier draft of this report.
WATCH: Meta announces Q3 earnings surpass, company incurs one-time tax charge
