Meta CEO Mark Zuckerberg makes a keynote speech at the Meta Connect annual event, at the company's headquarters in Menlo Park, California, Sept. 25, 2024.
Manuel Orbegozo | Reuters
Meta shares dropped 9% after the company reported third-quarter earnings on Wednesday that beat on sales.
Here's how the company did, compared with estimates from analysts polled by LSEG:
- Earnings per share: $7.25 adj. vs. $6.69 estimated
- Revenue: $51.24 billion vs. $49.41 billion estimated
Meta said that the implementation of President Donald Trump's One Big Beautiful Bill Act resulted in a one-time, non-cash income tax charge of $15.93 billion. The company said it expects the act to result in "a significant reduction" in its U.S. federal cash tax payments for the rest of 2025 and future years.
The social media company's third-quarter sales rose 26% year-over-year, which is its highest revenue growth since the first quarter of 2024.
The company said it expects fourth quarter revenue to be in the range of $56 billon to $59 billion. The midpoint of that range comes in above what was expected by analysts, according to StreetAccount.
Meta raised the low end of its total expenses for the year by $2 billion, saying expenses will come in between $116 billion to $118 billion. That figure was previously $114 billion to $118 billion.
Meta CEO Mark Zuckerberg commented on the company's rising expenses during a call with analysts, saying that it consistently requires more computing power to help with its AI initiatives, thus leading to more spending on related data center 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 added.
The company also raised its 2025 guidance for capital expenditures, which will now come in the range of $70 billion to $72 billion. It's prior outlook was between the range of $66 to $72 billion.
Meta's Reality Labs hardware unit reported a third-quarter loss of $4.4 billion on $470 million in sales.
Susan Li, the company's finance chief, said during an earnings call that the lower third-quarter sales for Reality Labs compared to the previous year, was due to the company not debuting a new Quest-branded VR headset for 2025.
""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 said about the company's Ray-Ban Meta smart glasses.
The company said that it saw 3.54 billion daily active people across its apps for the quarter, ahead of Wall Street's expectations of 3.5 billion daily active people.
Meta's advertising sales were $50.08 billion during the third quarter, ahead of Wall Street's expectations of $48.5 billion.
The company has spent the year investing heavily in AI, and it conducted a massive overhaul of the organization leading those efforts after the lukewarm debut of its open-source Llama 4 software in April.
The social media firm said last Wednesday that it would lay off about 600 workers in its Superintelligence Labs AI unit, but it left that group's top-tier TBD Labs unscathed. A day before, Meta said it formed a joint venture agreement with Blue Owl Capital in a deal worth $27 billion to help fund and build a gigantic data center in Richland Parish, Louisiana.
Meta said that its employee headcount was 78,450 as of Sept. 30, representing an 8% year-over-year increase.
The company debuted on Sept. 25 its Vibes AI-powered short-video tool and social feed for the Meta AI standalone app. Since Vibes was released, downloads of Meta AI on both iOS and Android are up 56% month-to-month to a total of 3.9 million downloads as of Oct. 18, according to data provided to CNBC by mobile research firm Appfigures.
"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 said during the earnings call.
This is breaking news. Please check back for updates.
Correction: Analysts expected Meta revenue to come in at $49.41 billion. That number was misstated in the earlier version of this story.
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