Meta beat Wall Street’s revenue and profit targets during its third quarter and forecast a strong finish to the year in the holiday quarter. But the company’s plans to continue spending heavily on AI infrastructure may have tempered investor enthusiasm with the results.
Shares of the Facebook parent fell almost 3% in after hours trading immediately after revealing its third quarter results. Nevertheless, Meta said revenue for the quarter grew 19% year-over-year, to $40.59 billion, above analysts’ expectations. Net income rose 35% to $15.68 billion, and earnings per share came in $6.03, also above expectations.
The total number of people using one of Meta’s apps each day, including Facebook, Instagram and WhatsApp, grew by 5% to 3.29 billion.
Meta’s CEO Mark Zuckerberg has emphasized the company’s focus on cost discipline, describing an ongoing effort at “efficiency” which has included layoffs. Operating expenses growth of 13% during the quarter was slower than the company’s revenue growth, helping lift Meta’s operating profit margins to 43% versus the 40% level one year ago.
Yet Meta reported that its total headcount was up 9% year-over-year to more than 72,000 employees. Meta’s Reality Labs, the organization within Meta responsible for VR and AI work, lost a whopping $4.42 billion in the third quarter, up 18% from a year ago, and Meta warned that it expected the division’s “operating losses to increase meaningfully.”
The company’s AI efforts have called for massive investments that show no sign of slowing down. Meta lifted the bottom-end of its planned capital expenditures range for the year, forecasting a cap ex between $38 billion to $40 billion, up from the previously guided range of $37 billion to $40 billion. And the company warned that it would continues to expect “significant capital expenditure growth in 2025.”
CFO Susan Li said that revenue in the fourth quarter should ranged between $45 billion and $48 billion, representing 12% to 20% growth from the prior year.
In a prepared statement, CEO Mark Zuckerberg said: “We had a good quarter driven by AI progress across our apps and business. We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses.”
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