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Sina Tech News, Beijing time, October 30th, morning report: Meta, the parent company of Facebook, today released its unaudited financial report for the third quarter of fiscal year 2025 ended September 30. The report shows that Meta's revenue in the third quarter was $51.242 billion, an increase of 26% compared to $40.589 billion in the same period last year; net profit was $2.709 billion, a significant decrease of 83% compared to $15.688 billion in the same period last year; diluted earnings per share were $1.05, a significant decrease of 83% compared to $6.03 in the same period last year.
Meta's revenue in the third quarter exceeded the previous expectations of Wall Street analysts, and its outlook for fourth-quarter revenue also surpassed expectations. Meanwhile, due to the impact of income tax provisions brought by the 'Big and Beautiful Act,' Meta's diluted earnings per share in the third quarter were $1.05, which significantly fell short of analysts' expectations.
Following the announcement of the earnings report, the company's stock price plummeted more than 8% in after-hours trading on Nasdaq.
Key Performance Indicators:
— Meta's revenue in the third quarter was $51.242 billion, an increase of 26% compared to $40.589 billion in the same period last year;
— Meta's operating profit in the third quarter was $20.535 billion, an increase of 18% compared to $17.350 billion in the same period last year. Meta's operating profit margin in the third quarter was 40%, a decrease compared to 43% in the same period last year;
— Meta's net profit in the third quarter was $2.709 billion, a significant decrease of 83% compared to $15.688 billion in the same period last year;
— Meta's diluted earnings per share in the third quarter were $1.05, a significant decrease of 83% compared to $6.03 in the same period last year.
Operational Highlights:
——In September 2025, the average daily active users of the Meta service 'family' (including Meta, Instagram, WhatsApp, and Messenger) reached 3.54 billion, representing an 8% year-on-year increase;
——The ad impressions per advertisement for the Meta app 'family' increased by 14% year-on-year in the third quarter;
——The average price per advertisement for the Meta app 'family' rose by 10% year-on-year in the third quarter;
——Meta’s total costs and expenses for the third quarter amounted to $30.71 billion, reflecting a 32% increase compared to the same period last year;
——Meta’s capital expenditures for the third quarter (including principal payments on financial leases) totaled $19.37 billion;
——During the third quarter, Meta repurchased Class A common stock worth $3.16 billion and distributed total dividends and dividend equivalents amounting to $1.33 billion;
——As of September 30, 2025, Meta held a total of $44.45 billion in cash, cash equivalents, and marketable securities. In the third quarter of 2025, Meta'sfree cash flowwas $10.62 billion;
——As of September 30, 2025, Meta’s total workforce stood at 78,450 employees, marking an 8% increase compared to the same period last year.
Financial Analysis:
Revenue:
Meta's revenue for the third quarter was $51.242 billion, representing a 26% increase compared to $40.589 billion in the same period last year.
By business segment:
——Meta’s “Family of Apps” revenue for the third quarter was $50.772 billion, showing growth compared to $40.319 billion in the same period last year. Specifically:
(1) Meta’s advertising revenue for the third quarter was $50.082 billion, reflecting growth from $39.885 billion in the same period last year.
(2) Meta’s other services revenue for the third quarter was $690 million, showing growth compared to $434 million in the same period last year.
——Meta’s “Reality Labs” revenue for the third quarter was $470 million, reflecting growth compared to $270 million in the same period last year.
Costs and Expenses:
Meta’s total costs and expenses for the third quarter were $30.707 billion, marking a 32% increase compared to $23.239 billion in the same period last year. Specifically, cost of revenue was $9.206 billion, up from $7.375 billion in the same period last year; research and development expenses were $15.144 billion, up from $11.177 billion in the same period last year; marketing and sales expenses were $2.845 billion, slightly higher than $2.822 billion in the same period last year; and general and administrative expenses were $3.512 billion, up from $1.865 billion in the same period last year.
Operating Profit:
Meta's operating profit for the third quarter was $20.535 billion, representing an 18% increase compared to $17.350 billion in the same period last year.
Operating profit margin:
Meta’s operating margin for the third quarter was 40%, a decline compared to 43% in the same period last year.
Income tax expenditure:
Meta's income tax provision for the third quarter was $18.954 billion, marking a significant increase of 788% compared to $2.134 billion in the same period last year. Meta’s effective tax rate for the third quarter was 87%, a substantial rise from 12% in the same period last year.
Net profit:
Meta's net profit for the third quarter was $2.709 billion, reflecting an 83% decrease compared to $15.688 billion in the same period last year.
Meta's diluted earnings per share for the third quarter were $1.05, representing an 83% decline compared to $6.03 in the same period last year.
Capital expenditure:
Meta’s capital expenditure for the third quarter was $19.37 billion, including principal payments under finance leases.
Cash and Marketable Securities:
As of the end of the third quarter of 2025, Meta's total cash, cash equivalents, and marketable securities amounted to $44.45 billion.
Free Cash Flow:
Meta’s free cash flow for the third quarter was $10.62 billion, a decrease compared to $15.52 billion in the same period last year.
Income Tax Provision — Impact of One-Time Non-Cash Charge
Due to the implementation of the One Big Beautiful Bill Act, Meta expects its U.S. federal cash tax payments for the remainder of 2025 and future years to be significantly reduced. However, the enactment of this legislation also led Meta to record a valuation allowance against its U.S. federal deferred tax assets, reflecting the impact of the corporate alternative minimum tax. As a result, the third quarter of 2025 includes a one-time non-cash income tax expense of $15.93 billion. Excluding this one-time tax charge, for the third quarter of 2025:
——The effective tax rate would decrease by 73 percentage points to 14%, compared to the reported effective tax rate of 87%.
——Net income would increase by $15.93 billion to $18.64 billion, compared to the reported net income of $2.71 billion.
——Earnings per share would increase by $6.20 to $7.25, compared to the reported diluted earnings per share of $1.05.
Comparison of performance metrics against analyst expectations:
Meta's revenue for the third quarter was $51.242 billion, surpassing Wall Street analysts' expectations. According to data compiled by Yahoo Finance, the average revenue forecast by 49 analysts for Meta’s third quarter was $49.41 billion.
Due to the impact of income tax provisions resulting from the 'Inflation Reduction Act,' Meta's diluted earnings per share for the third quarter were $1.05, falling short of Wall Street analysts' expectations. According to data compiled by Yahoo Finance, the average earnings per share forecast by 48 analysts for Meta’s third quarter was $6.71.
Performance Outlook:
Meta expects its fourth-quarter revenue to range between $56 billion and $59 billion, with an average midpoint of $57.5 billion, exceeding analysts' expectations. This outlook assumes that currency fluctuations will have a 1% positive impact on total revenue in the fourth quarter. According to Yahoo Finance data, the average revenue forecast by 48 analysts for Meta’s fourth quarter is $57.26 billion.
Additionally, Meta forecasts that its total expenditures for the full fiscal year 2025 will be between $116 billion and $118 billion, revised upwards from the previous estimate of $114 billion to $118 billion, representing a year-over-year growth of 22% to 24%.
Meta also anticipates that its capital expenditures for the full year 2025 will range between $70 billion and $72 billion, revised upwards from the prior estimate of $66 billion to $72 billion.
In the absence of any changes to U.S. tax law, Meta expects its tax rate for the fourth quarter of this year to be between 12% and 15%.
Furthermore, Meta continues to monitor the active regulatory environment, including increasing legal and regulatory pressures in the European Union and the United States, which could significantly impact the company's business and financial performance.
Stock Price Movement:
On the same day, Meta's stock price rose by $0.23 in regular trading on the Nasdaq market, closing at $751.67, with a gain of 0.03%. In the subsequent after-hours trading, as of 5:17 PM Eastern Time on the 29th (5:17 AM Beijing Time on the 30th), Meta's stock price plummeted by $63.23 to $688.44, representing an 8.41% decline. Over the past 52 weeks, Meta's highest price was $796.25 and its lowest price was $479.80.
