Meta, formerly known as Facebook, announced its third-quarter earnings report, revealing lower-than-expected user numbers and projecting a significant increase in infrastructure expenses for 2025. Although the company’s stock price dipped slightly in after-hours trading, its earnings per share of $6.03 surpassed Wall Street’s expectations of $5.25. Additionally, Meta reported revenue of $40.59 billion, slightly higher than the expected $40.29 billion.
Despite a 19% increase in sales year over year and a 35% growth in net income, reaching $15.7 billion, Meta’s net income growth was the lowest since the second quarter of 2023. The company reported 3.29 billion daily active users for the third quarter, a 5% increase from the previous year but below analysts’ projections of 3.31 billion.
Meta raised its capital expenditures guidance for 2024 to between $38 billion and $40 billion and anticipates continued growth in infrastructure expenses in 2025 due to ongoing investments in artificial intelligence (AI). CEO Mark Zuckerberg highlighted the importance of AI investments and their impact on the company’s core online ad business.
With over a million advertisers utilizing Meta’s generative AI advertising tools, the company is focusing on expanding its AI capabilities by investing in Nvidia’s graphics processing units and building more data centers to support its AI strategy. Meta’s advertising revenue for the quarter totaled $39.9 billion, representing an 18.7% increase year over year and accounting for 98.3% of its total revenue.
Meta’s Asia-Pacific region experienced slower growth in the third quarter, with revenue increasing by 15%, attributed to reduced digital ad spending by Chinese online retailers. The company expects fourth-quarter revenue to range between $45 billion and $48 billion, surpassing analyst estimates of $46.3 billion.
The Reality Labs hardware unit reported an operating loss of $4.4 billion, lower than anticipated, with sales increasing by 29% to $270 million. Meta’s overall headcount grew by 9% year over year, reaching 72,404 employees as of September 30.
The announcement of Meta’s earnings comes after other digital ad companies such as Alphabet, Reddit, and Snap reported strong quarterly results. Microsoft also beat expectations with its third-quarter earnings, highlighting the growth in its Azure cloud unit, driven by AI services.
Looking ahead, Meta’s focus on AI investments and infrastructure expansion indicates its commitment to enhancing its technological capabilities and solidifying its position in the digital advertising space. As the company navigates evolving market dynamics and competitive pressures, its strategic investments in AI are expected to drive future growth and innovation in the digital landscape.
