Meta beats Q3 sales and EPS forecasts, but legal charge hits profit
Meta Platforms reported third-quarter earnings of $3.83 per share and revenue near $64.6 billion, both ahead of forecasts, while a $9.9 billion legal charge pulled operating profit far below expectations.
Per-share profit exceeded the $3.57 figure analysts had penciled in, and overall sales of roughly $64.6 billion surpassed the near $63.3 billion consensus. Ad sales, which make up the vast majority of Meta’s business, totaled around $63.1 billion versus projections of about $61.9 billion. The Family of Apps division, which includes Facebook, Instagram and WhatsApp, generated close to $64.2 billion, outperforming estimates near $62.8 billion.
Despite the strong top line, margins disappointed. Operating profit landed near $13 billion, far beneath the roughly $20.9 billion that Wall Street had projected. Within the Family of Apps unit specifically, operating income of about $17.1 billion also came in under the approximately $23.3 billion expected.
The Reality Labs division, responsible for virtual and augmented reality products, posted revenue of around $440 million, missing the roughly $518 million forecast. Still, its operating shortfall of close to $4.1 billion was less severe than the $5.1 billion loss analysts had anticipated.
Meta raised its projection for total annual spending to a span of $175 billion to $179 billion, up from the earlier $165 billion-to-$169 billion range, attributing most of the increase to the $9.9 billion legal provision. Meanwhile, planned capital outlays were tightened into a $135 billion to $145 billion band, lifting the bottom end from the previously stated $130 billion floor.
Looking to the final quarter of the year, Meta forecasts revenue between $73 billion and $76 billion, with the midpoint sitting above the roughly $73.6 billion that analysts expected. The company also revealed plans to introduce a new non-voting Class C common stock, though it offered no explanation of what the shares would be used for, and it declined to issue any revenue projection for 2027.
Market implications: The combination of better-than-expected sales, EPS and fourth-quarter guidance suggests advertising demand remains firm, a positive signal for Meta shares and the wider group of large technology companies, including firms supplying AI infrastructure tied to Meta’s growing capital budget. However, the steep miss on operating income, driven mainly by the one-time legal expense, could limit the market’s enthusiasm until it becomes clearer whether cost increases are temporary or ongoing. The Meta Q3 earnings report therefore leaves investors weighing a strong revenue story against a murkier profitability outlook.
Source: investingLive