Meta beats analyst estimates in Q3 earnings report

Meta beat analyst estimates on its latest quarterly report on Wednesday, posting earnings per share of $6.03 and revenue of $40.59 billion. It earned $39.9 billion in advertising revenue, an increase of 18.7% year-over-year.

"We had a good quarter driven by AI progress across our apps and business," Meta CEO Mark Zuckerberg said in a press release. "We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses."

Ad impressions on Meta’s suite of apps, including Facebook and Instagram, went up 7% year-over-year (YoY), and the average price per ad jumped 11% YoY. 

On a call with analysts, CEO Mark Zuckerberg said more than one million marketers have used its generative AI for advertising. Its AI tools through its Advantage+ program allow for full image and text creation based on a brand’s messaging tone, among other features. 

However, the company expects to spend “significantly” more money to continue to improve its AI systems. Capital expenses are expected to increase in 2025, including buying more data centers to power its AI technologies. 

“Our AI investments continue to require serious infrastructure,” Zuckerberg said on the call.

The company said it had 3.29 billion active daily users this past quarter, a 5% increase. Though it may seem like good news for the company, it was lower than analysts expected. It also lost $4.4 billion through its Reality Labs Unit, its division dedicated to Metaverse, hardware and AR/VR technologies.

Commenting on the company's performance, Mike Proulx, VP and research director at Forrester, offered his perspective:

"As expected, Meta had a good quarter following its renewed momentum at the start of this year. AI continues to be the company’s center of gravity, and for good reason: it’s improving the user experience of Meta’s apps and, as a result, increasing time spent."

Proulx also noted that Meta’s focus on AI has been beneficial for advertisers:

"All of this bodes well for advertisers looking to address an engaged audience, including on Facebook, which seems to be getting a second life thanks to young adults."

Interestingly, Zuckerberg avoided focusing on the metaverse throughout his initial remarks. Proulx pointed out the significance of this omission, saying:

"It’s notable that Mark Zuckerberg didn’t say ‘the M word’ (metaverse) in his opening statement. With Reality Labs continuing to amass losses, focusing on that segment to balance long-term investments with short-term wins is critical."

In the Asia-Pacific region, Meta reported slowing ad revenue growth, with sales rising by only 15% this quarter compared to 28% in the previous quarter. Ad impressions also grew at a slower pace, increasing by 9% versus 15% in the prior quarter. Meta CFO Susan Li attributed this slowdown to reduced demand from Chinese advertisers, with companies like Shein and Temu pulling back on their digital ad spending.

Proulx also touched on the evolving role of Threads, Meta's text-based social platform:

"Threads is entering its ‘adolescence’ phase as a social media platform. With users and engagement growing, it seems to be on track to become the de facto replacement for what Twitter once was, if it hasn’t already solidified that title."

Campaign UK's original story has been edited to include the view from Forrester.