Meta Platforms (NasdaqGS:META) Q3 2025 Earnings Call October 29, 2025 04:30 PM ET Company ParticipantsMark Zuckerberg - CEOKenneth Dorell - Director of Investor RelationsSusan Li - CFOConference Call ParticipantsDoug Anmuth - AnalystEric Sheridan - AnalystRoss Sandler - AnalystJustin Post - AnalystBrian Nowak - AnalystYoussef Squali - AnalystKen Gawrelski - AnalystMark Shmulik - AnalystRonald Josey - AnalystMark Mahaney - AnalystOperatorGood afternoon. My name is Krista, and I will be your conference operat ...

Financial Data and Key Metrics Changes - Q3 total revenue reached $51.2 billion, up 26% year over year, with family of apps revenue at $50.8 billion, also up 26% [13][14] - Q3 operating income was $20.5 billion, representing a 40% operating margin [15] - Net income was $2.7 billion, or $1.05 per share, with a one-time tax charge impacting the tax rate, which was 87% [16] Business Line Data and Key Metrics Changes - Family of apps ad revenue was $50.1 billion, up 26%, with a 14% increase in ad impressions served [13][14] - Reality Labs segment revenue was $470 million, up 74% year over year, driven by Quest headset sales and AI glasses [14] - Average price per ad increased by 10% year over year, benefiting from improved ad performance [13] Market Data and Key Metrics Changes - Over 3.5 billion people used at least one Meta app daily, with Instagram reaching 3 billion monthly active users [3][13] - Video time spent on Instagram increased by over 30% since last year, with Reels achieving an annual run rate of over $50 billion [6][7] Company Strategy and Development Direction - The company aims to establish itself as a leading AI lab, focusing on building personal superintelligence and enhancing app experiences [3][4] - There is a strong emphasis on advancing AI recommendation systems to improve user engagement and ad performance [6][8] - The company is investing heavily in infrastructure to support AI initiatives, with capital expenditures expected to grow significantly [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of ad revenue and user engagement, driven by ongoing improvements in recommendation systems [17][18] - The company anticipates a reduction in Reality Labs revenue in Q4 due to the timing of headset sales [29] - Future investments will focus on AI capabilities and infrastructure to meet expanding compute needs [32] Other Important Information - The company ended Q3 with $44.4 billion in cash and marketable securities, and $28.8 billion in debt [17] - The tax rate for Q4 is expected to be between 12% to 15% [30] Q&A Session Summary Question: Insights on core improvements and CapEx - Management highlighted that growth in CapEx for 2026 is driven by needs in Meta Superintelligence Labs and core AI, with strong year-over-year growth in value-weighted conversion rates [37][39] Question: Reality Labs revenue headwind - Management noted that Q4 Reality Labs revenue is expected to be lower due to the absence of new headset launches and the timing of sales [40][41] Question: CapEx and expense growth impact on earnings - Management is in the process of budgeting for 2026, emphasizing the need for capacity to support AI initiatives and core business growth [44][45] Question: Consumer interaction with Meta AI - Management reported over a billion monthly users of Meta AI, with improvements in model quality leading to increased usage [54][55] Question: Adoption rates of automation tools - Management discussed the successful rollout of Advantage Plus, which automates campaign setup and optimizes ad performance [84]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $51.2 billion, up 26% year over year, with a constant currency growth of 25% [13][15] - Family of apps revenue reached $50.8 billion, also up 26% year over year, with ad revenue contributing $50.1 billion, reflecting a 26% increase [13][14] - Operating income was $20.5 billion, resulting in a 40% operating margin [16] - Net income was reported at $2.7 billion, or $1.05 per share, with a potential adjusted net income of $18.6 billion or $7.25 per share excluding a one-time tax charge [17] - Total expenses increased by 32% year over year to $30.7 billion, driven by legal expenses, employee compensation, and infrastructure costs [15][16] Business Line Data and Key Metrics Changes - Reality Labs segment revenue was $470 million, up 74% year over year, attributed to increased sales of Quest headsets and AI glasses [14] - Other revenue from the family of apps, including WhatsApp paid messaging and Meta verified subscriptions, grew by 59% to $690 million [14] - The annual run rate for video content on Instagram Reels surpassed $50 billion, with video time spent on Instagram increasing by over 30% since last year [6][14] Market Data and Key Metrics Changes - Daily active users across Meta's family of apps reached 3.5 billion, with Instagram achieving 3 billion monthly active users [3][13] - Threads app saw a significant increase, surpassing 150 million daily active users [3] - Engagement on Facebook increased by 5% and 10% on Threads due to improved AI recommendation systems [5][19] Company Strategy and Development Direction - The company aims to establish itself as a leading AI lab, focusing on building personal superintelligence and enhancing app experiences [3][4] - There is a strong emphasis on advancing open-source AI, which is expected to benefit the entire ecosystem [3] - The strategy includes front-loading capacity for AI development to prepare for potential rapid advancements in superintelligence [4][5] - The company is also focused on integrating AI into its advertising systems to improve performance and efficiency [8][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in AI and its applications across existing and new products [11][32] - The company anticipates continued strong ad revenue growth, although Reality Labs revenue is expected to decline in Q4 due to last year's product launch timing [30][34] - There are concerns regarding legal and regulatory challenges, particularly in the EU and U.S., which could impact future revenue [34] Other Important Information - Capital expenditures for 2025 are projected to be between $70 to $72 billion, reflecting increased investments in infrastructure and AI capabilities [31][33] - The company ended Q3 with $44.4 billion in cash and marketable securities, indicating a strong financial position [18] Q&A Session Summary Question: Can you provide insights on the early quantifiable signals from A/B tests regarding core improvements for 2026? - Management highlighted strong year-over-year growth in value-weighted conversion rates, indicating confidence in the return on investment from capital expenditures [38][40] Question: What is the expected Reality Labs revenue headwind in Q4? - Management noted that Q4 Reality Labs revenue is expected to be lower than last year due to the timing of product launches and inventory management [41] Question: How does the company plan to balance CapEx growth with core business growth and free cash flow? - The focus is on ensuring sufficient compute capacity for AI research and core business needs, with flexibility for future growth [44][46] Question: What signals are being observed regarding consumer interaction with Meta AI? - Over a billion monthly users are engaging with Meta AI, with increased usage correlating with model improvements [53][55] Question: How is the company approaching the monetization path for Meta AI? - Management is optimistic about improving engagement and monetization through enhanced AI capabilities and automation for advertisers [74][76]

Core Insights - Meta Platforms Inc. recorded a nearly $16 billion one-time charge in Q3, significantly impacting its earnings, with reported net income at $2.71 billion instead of an adjusted $18.64 billion without the charge [1] - Following the announcement, Meta's shares fell approximately 6% in after-hours trading [1] Capital Expenditure - Meta raised its full-year capital expenditure forecast to $70–72 billion from a previous range of $66–72 billion, with expectations for notably larger spending in 2026 [2] - The company plans to invest aggressively in infrastructure to meet expanding compute needs, both through building its own facilities and contracting with third-party cloud providers [2] Rising Costs - Employee compensation costs, particularly for AI hires, are expected to be the second-largest contributor to rising expenses [3] - Despite recent job cuts of around 600 in the AI division to streamline operations, Meta's investments in AI infrastructure are increasing, leading to short-term cost pressures [5][6] AI Initiatives - Meta is focused on artificial intelligence, aiming for superintelligence, and has reorganized its AI initiatives under a new unit called Superintelligence Labs [4] - The company has committed to spending hundreds of billions to develop advanced AI infrastructure, including a recent $27 billion financing deal for a data center project in Louisiana [5] Advertising Strategy - Meta leverages its 3.2 billion daily active users to enhance ad revenue through an AI-optimized ad platform that automates campaign delivery and improves ad quality [7] - The company has expanded its advertising reach to platforms like WhatsApp and Threads, competing with other social media giants [7] Industry Trends - Meta's significant investment in AI reflects a broader trend in the tech industry, with major firms expected to spend $400 billion on AI infrastructure by 2025 [8] - However, the aggressive spending amid economic uncertainty raises concerns about a potential AI bubble and scrutiny over executive decisions [9]

By Jaspreet Singh and Echo Wang (Reuters) -Meta on Wednesday forecast "notably larger" capital expenses next year thanks to investments in artificial intelligence, including aggressively building data centers to power its AI push. The Facebook and Instagram parent reported third-quarter revenue growth of 26% that beat market estimates, but that jump was outpaced by a ​32% increase in costs. Shares of the company - that have risen 28% so far this year - fell 8% after the bell, as Wall Street digested Zuc ...

The concern is if you create entities that are more powerful than human beings and you have no idea how to maintain power over them, uh then you're just asking for trouble. I think pretty much every American understands that. Uh and the polls are extremely lopsided uh against proceeding with super intelligence. Um, when we look at this from a technical point of view, the basic problem is not only are we trying to build these systems that are more powerful than us, um, but we actually have no idea how the sy ...

Joining us now first on CNBC, one of those researchers, UC Berkeley computer science professor Stuart Russell, also the director of the Center for Human Compatible Artificial Intelligence. Stuart, thanks for joining us. We obviously could spend a great deal of time on this.We don't have that today. So, as briefly as you can just kind of give me a sense as to your concerns, those who are signing the petition, and what those concerns are rooted in. So I think from a common sense point of view, the concern is ...

Earnings Reports - Tesla reported quarterly revenue higher than the previous year, ending two consecutive down quarters, but earnings per share fell below Wall Street expectations due to rising capital expenditures, leading to a more than 3% drop in premarket trading [1][5] - Southwest Airlines exceeded expectations for both revenue and earnings per share, posting a profit when analysts had anticipated a loss, although shares were down over 1% before the market opened [2] - American Airlines also outperformed analyst forecasts and provided a positive outlook for the remainder of the year, resulting in nearly a 4% increase in shares following the earnings release [3] Oil Market - Oil prices experienced a mixed response as investors weighed OPEC's potential output cuts against concerns of slow U.S. growth, with Brent crude prices rising over 5% following new sanctions imposed by the White House on Rosneft and Lukoil, Russia's largest oil companies [4][6] Technology Sector - Meta is cutting approximately 600 roles from its AI business, which has been described as bloated, while the division that includes major AI hires remains unaffected [7] - Prominent figures in technology, including Richard Branson and Steve Wozniak, are advocating for a pause on the development of "Superintelligence," a form of AI that could surpass human capabilities [8] Labor Relations - The Starbucks Workers United union is set to vote on authorizing a strike, with plans for rallies and pickets nationwide, as they seek higher pay and improved working conditions after negotiations broke down late last year [10][11]

Core Insights - Meta is cutting approximately 600 jobs in its artificial intelligence unit to enhance competitiveness against rivals [1][2] - The layoffs primarily affect the superintelligence lab, which employs several thousand workers, as part of a strategy to streamline decision-making and increase individual impact [2][3] - Employees impacted by the layoffs were informed on Wednesday and have the option to apply for other roles within the company [3] Company Strategy - The job cuts follow a recent hiring spree where Meta offered attractive compensation packages to attract top talent, including the hiring of Alexandr Wang from Scale AI [4][5] - Meta has invested significantly in AI, spending billions to advance technology and aiming to develop "superintelligence" that surpasses human intelligence [2][5] - The company is also expanding its infrastructure by building new data centers and developing AI-integrated hardware, such as smartglasses [6] Industry Context - The competition in the AI sector is intensifying, with major players like Google and Microsoft rapidly launching new AI products [6] - The rise of AI technologies has led to increased anxiety among workers regarding potential job automation [6][7]

Core Insights - Meta is cutting approximately 600 roles in its artificial intelligence unit to enhance agility and decision-making efficiency [1][2] - The layoffs will specifically target the FAIR AI research, product-related AI, and AI infrastructure units, while the newly formed TBD Lab unit remains unaffected [2] - Meta anticipates that most affected employees will find new positions within the company, and hiring continues for the TBD Lab unit [3] Company Strategy - Meta's Chief AI Officer, Alexandr Wang, emphasized that a smaller team would lead to fewer conversations needed for decision-making, allowing individuals to have a greater impact [2] - CEO Mark Zuckerberg has expressed frustration with the company's AI limitations and has been actively recruiting AI talent [3][4] - Meta's vision includes developing "personal superintelligence" that surpasses human intelligence, aiming to make it accessible to everyone [5] Recent Developments - Meta has formed a joint venture with Blue Owl Capital to develop the Hyperion data center campus in Louisiana, which will support its AI initiatives [5] - The company had previously engaged in a significant recruitment drive for AI professionals but paused hiring in late August to restructure its AI division [4]