According to Meta’s third-quarter earnings released Wednesday after the Closing Bell, the company generated $51.24 billion in revenue for the 3rd quarter, seeing a 26% surge from last year’s $40.59 billion.
Operating income rose to $20.53 billion, up 18% from $17.35 billion in the same period a year ago. But despite the revenue surge, the company’s net income plunged 83% to $2.71 billion, compared to $15.69 billion last year, due to a massive one-time tax hit tied to new U.S. corporate tax laws under the Trump administration.
Meta said its effective tax rate skyrocketed to 87%, up from 12% in 2024, after recognizing a $15.93 billion non-cash income tax charge resulting from the One Big Beautiful Bill Act and the U.S. Corporate Alternative Minimum Tax.
Excluding that one-time charge, the tax rate would have been 14%, net income would have reached $18.64 billion, and diluted earnings per share would have climbed to $7.25, instead of the reported $1.05.
Reality Labs drags with $4.4 billion loss
Meta’s metaverse division continues to burn cash. Reality Labs, responsible for VR and AR hardware, reported an operating loss of $4.4 billion in the quarter, while sales totaled only $470 million.
Analysts had expected a larger loss of $5.1 billion on $316 million in revenue. The unit builds the Quest VR headsets and the Ray-Ban and Oakley AI smart glasses designed with EssilorLuxottica.
The company’s Reality Labs division has now recorded over $70 billion in cumulative losses since late 2020, with Meta blaming it on the high costs of building VR, AR and other consumer hardware.
“Clearly there is a lift coming from Ray-Ban Meta wearables as a product category,” EssilorLuxottica CFO Stefano Grassi said during a third-quarter earnings call.
In September, CEO Mark Zuckerberg unveiled the $799 Ray-Ban Display glasses, the company’s first consumer-ready AI glasses featuring an integrated display and a neural wristband for gesture input. “We had a strong quarter for our business and our community,” Mark said. “Meta Superintelligence Labs is off to a great start, and we continue to lead the industry in AI glasses. If we deliver even a fraction of the opportunity ahead, then the next few years will be the most exciting period in our history.”
Despite the upbeat tone, Reality Labs remains a financial sinkhole. Meta’s main business, however, is carrying the weight through its ad operations.
Operational data and 2025 guidance
Across Meta’s Family of Apps, daily active people averaged 3.54 billion in September 2025, up 8% from last year. Ad impressions grew 14%, and the average price per ad increased 10% year-over-year. Total costs and expenses reached $30.71 billion, up 32%, as spending intensified across infrastructure and AI development.
Capital expenditures for the quarter totaled $19.37 billion, including lease payments. Meta spent $3.16 billion repurchasing Class A shares and paid $1.33 billion in dividends and equivalents. Cash, cash equivalents, and marketable securities were $44.45 billion as of September 30. Operating cash flow reached $30 billion, and free cash flow stood at $10.62 billion. The company employed 78,450 people, 8% more than a year ago.
Looking ahead, Meta expects fourth-quarter revenue between $56 billion and $59 billion, helped by a 1% tailwind from foreign exchange rates. The company anticipates continued strong ad revenue growth, but weaker Reality Labs sales due to last year’s Quest 3S launch and early retail stocking this quarter.
Total expenses for 2025 are now projected at $116 billion to $118 billion, up from the previous $114 billion to $118 billion range, representing a 22-24% increase year-over-year. Capital expenditures are forecast between $70 billion and $72 billion, rising from prior guidance of $66 billion to $72 billion.
Meta expects its Q4 tax rate to land between 12% and 15%, assuming no changes to current U.S. tax laws.
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