In an impressive third quarter, Meta, the parent company of Facebook, Instagram, and various other platforms, reported a staggering 26% increase in top-line revenue, reaching a remarkable $51.2 billion. This achievement marks a new quarterly record for the tech giant. However, a provision from President Trump's One Big Beautiful Bill Act triggered a significant tax liability, resulting in earnings that fell short of Wall Street's expectations.
Meta attributed part of its financial challenges to the implementation of the One Big Beautiful Bill Act, which necessitated “the recognition of a valuation allowance against our U.S. federal deferred tax assets.” This was primarily due to the effects of the U.S. Corporate Alternative Minimum Tax. As a consequence, Meta faced a hefty one-time, non-cash income tax charge of $15.93 billion in its earnings report for Q3.
Despite these challenges, Meta expressed optimism, noting, “We expect a significant reduction in our U.S. federal cash tax payments for the remainder of 2025 and future years,” highlighting the potential benefits of the new tax legislation.
For the third quarter, Meta reported a net income of $2.71 billion, which reflects a dramatic 83% decline primarily influenced by the tax charge. This translates to earnings of $1.05 per share, a stark contrast to the analysts' consensus estimate of $6.69 per share. If the one-time tax charge were excluded, Meta's diluted earnings per share (EPS) would have been $7.25, showcasing the underlying strength of the company's performance.
During September, Meta's suite of applications, which includes Facebook, Instagram, WhatsApp, Messenger, and Threads, boasted an average of 3.54 billion daily active users, marking an 8% increase year-over-year. Mark Zuckerberg, the founder and CEO of Meta, commented on the company’s robust performance, stating, “We had a strong quarter for our business and our community.” He also highlighted the promising start of Meta Superintelligence Labs and the company's leadership in the development of AI glasses.
Despite strong revenue figures overall, Meta's Reality Labs segment, which encompasses products like the Quest headset and various virtual reality (VR) and augmented reality (AR) initiatives, continued to face significant losses. In Q3, Reality Labs generated $470 million in revenue, an increase from $270 million in the same period last year, but reported an operating loss of $4.43 billion, remaining relatively stable compared to the previous quarter.
As of September 30, Meta concluded the quarter with $44.45 billion in cash, cash equivalents, and marketable securities. The company's workforce also saw growth, reaching 78,450 employees, which represents an 8% increase from the previous year. Looking ahead, Meta anticipates fourth-quarter total revenue to range between $56 billion and $59 billion. Additionally, the company expects its full-year 2025 capital expenditures to be between $70 billion and $72 billion, up from the earlier forecast of $66 billion to $72 billion.
Meta also indicated that capital expenditures are expected to significantly increase in 2026 as the company plans to invest more in computing infrastructure for artificial intelligence than previously expected, positioning itself for future growth and innovation.
